Today’s News December 27, 2015

• Washington's "Empire Of Chaos" & The Cold War 2.0 'New Normal'

  Authored by Pepe Escobar, Op-Ed via RT.com,

  In his seminal 'Fall of Rome: And the End of Civilization,' Bryan Ward-Perkins writes, "Romans before the fall were as certain as we are today that their world would continue forever… They were wrong. We would be wise not to repeat their complacency.”

  The Empire of Chaos, today, is not about complacency. It’s about hubris – and fear. Ever since the start of the Cold War the crucial question has been who would control the great trading networks of Eurasia – or the “heartland”, according to Sir Halford John Mackinder (1861–1947), the father of geopolitics.

  We could say that for the Empire of Chaos, the game really started with the CIA-backed coup in Iran in 1953, when the US finally encountered, face to face, that famed Eurasia crisscrossed for centuries by the Silk Road(s), and set out to conquer them all.

  Only six decades later, it’s clear there won’t be an American Silk Road in the 21st century, but rather, just like its ancient predecessor, a Chinese one. Beijing’s push for what it calls “One Belt, One Road” is inbuilt in the 21st century conflict between the declining empire and Eurasia integration. Key subplots include perennial NATO expansion and the empire’s obsession in creating a war zone out of the South China Sea.

  As the Beijing-Moscow strategic partnership analyses it, the oligarchic elites who really run the Empire of Chaos are bent on the encirclement of Eurasia – considering they may be largely excluded from an integration process based on trade, commerce and advanced communication links.

  Beijing and Moscow clearly identify provocation after provocation, coupled with relentless demonization. But they won’t be trapped, as they’re both playing a very long game.

  Russian President Vladimir Putin diplomatically insists on treating the West as “partners”. But he knows, and those in the know in China also know, these are not really “partners”. Not after NATO’s 78-day bombing of Belgrade in 1999. Not after the purposeful bombing of the Chinese Embassy. Not after non-stop NATO expansionism. Not after a second Kosovo in the form of an illegal coup in Kiev. Not after the crashing of the oil price by Gulf petrodollar US clients. Not after the Wall Street-engineered crashing of the ruble. Not after US and EU sanctions. Not after the smashing of Chinese A shares by US proxies on Wall Street. Not after non-stop saber rattling in the South China Sea. Not after the shooting down of the Su-24.

  It’s only a thread away

  A quick rewind to the run-up towards the downing of the Su-24 is enlightening. Obama met Putin. Immediately afterwards Putin met Khamenei. Sultan Erdogan had to be alarmed; a serious Russian-Iranian alliance was graphically announced in Teheran. That was only a day before the downing of the Su-24.

  France’s Hollande met Obama. But then Hollande met Putin. Erdogan was under the illusion he fabricated the perfect pretext for a NATO war, to be launched following Article 5 of the NATO Charter. Not by accident failed state Ukraine was the only country to endorse – in haste – the downing of the Su-24. Yet NATO itself recoiled – somewhat in horror; the empire was not ready for nuclear war.

  At least not yet. Napoleon knew history turns on a slender thread. As much as Cold War 2.0 remains in effect we were, and will remain, just a thread away from nuclear war.

  Whatever happens in the so-called Syrian peace process the proxy war between Washington and Moscow will continue. Hubristic US Think-Tank Land  can’t see it any other way.

  For Exceptionalist neocons and neoliberalcons alike, the only digestible endgame is a partition of Syria. The Erdogan system would gobble up the north. Israel would gobble up the oil-rich Golan Heights. And House of Saud proxies would gobble up the eastern desert.

  Russia literally bombed all these elaborate plans to ashes because the next step after partition would feature Ankara, Riyadh – and a “leading from behind” Washington – pushing a Jihadi Highway all the way north to the Caucasus as well as Central Asia and Xinjiang (there are already at least 300 Uyghurs fighting for ISIS/ISIL/Daesh.) When all else fails, nothing like a Jihadi Highway plunged as a dagger in the body of Eurasia integration.

  In the Chinese front, whatever “creative” provocations the Empire of Chaos may come up with, they won’t derail Beijing’s aims in the South China Sea – that vast basin crammed with unexplored oil and gas wealth and prime naval highway to and from China. Beijing is inevitably configuring itself by 2020 as a formidable haiyang qiangguo – a naval power.

  Washington may supply $250 million in military “aid” to Vietnam, Philippines, Indonesia and Malaysia for the next two years, but that’s mostly irrelevant. Whatever “creative” imperial ideas would have to take into account, for instance, the DF-21D “carrier killer” ballistic missile, with a 2,500 km range and capable of carrying a nuclear warhead.

  On the economic front, Washington-Beijing will remain prime proxy war territory. Washington pushes the TPP – or NATO on trade pivoting to Asia? It’s still a Sisyphean task, because the 12 member nations need to ratify it, not least the US featuring an extremely hostile Congress.

  Against this American one-trick pony, Xi Jinping, for his part, is deploying a complex three-pronged strategy; China’s own counterpunch to the TPP, the Free Trade Area of the Asia-Pacific (FTAAP); the immensely ambitious “One Belt, One Road”; and the means to finance a tsunami of projects, the Asian Infrastructure Investment Bank (AIIB) – the Chinese counter-punch to the World Bank and the US-Japan-controlled Asian Development Bank (ADB).

  For Southeast Asia, for instance, the numbers tell the story. Last year, China was the top ASEAN partner, to the tune of $367 billion. This will grow exponentially with One Belt, One Road – which will absorb $200 billion in Chinese investment up to 2018.

  Heart of Darkness – revisited

  Prospects for Europe are nothing but bleak. French-Iranian researcher Farhad Khosrokhavar has been one of the few who identified the crux of the problem. A jihadi reserve army across Europe will continue to feed on batallions of excluded youth in poor inner cities. There is no evidence EU neoliberalcons will be fostering sound socio-economic policies to extract these alienated masses from the ghettos, employing new forms of socialization.

  So the escape route will continue to be a virus-like version of Salafi-jihadism, sold by wily, PR-savvy profiteers as a symbol of resistance; the only counter-ideology available on the market. Khosrokhavar defined it as the neo-umma – an “effervescent community that never existed historically”, but now openly inviting any young European, Muslim or otherwise, afflicted by an identity crisis.

  In parallel, on our way into a full 15 years of the endless neocon war against independent states in the Middle East, the Pentagon will be turbo-charging an unlimited expansion of some of its existing bases – from Djibouti in the Horn of Africa to Irbil in Iraqi Kurdistan – into “hubs”.

  From sub-Saharan Africa to Southwest Asia, expect a hub boom, all of them merrily hosting Special Forces; the operation was described by Pentagon supremo Ash “Empire of Whining” Carter as “essential”; “Because we cannot predict the future, these regional nodes – from Moron, Spain to Jalalabad, Afghanistan – will provide forward presence to respond to a range of crises, terrorist and other kinds. These will enable unilateral crisis response, counter-terror operations, or strikes on high-value targets.”

  It’s all here: unilateral Exceptionalistan in action against anyone who dares to defy imperial diktats.

  From Ukraine to Syria, and all across MENA (Middle East and North Africa), the proxy war between Washington and Moscow, with higher and higher stakes, won’t abate. Imperial despair over the irreversible Chinese ascent also won’t abate. As the New Great Game picks up speed, and Russia supplies Eurasian powers Iran, China and India with missile defense systems beyond anything the West has, get used to the new normal; Cold War 2.0 between Washington and Beijing-Moscow.

  I leave you with Joseph Conrad, writing in Heart of Darkness:

  "There is a taint of death, a flavor or mortality in lies….To tear treasure out of the bowels of the land was their desire, with no more moral purpose at the back of it than there is in burglars breaking into a safe….We could not understand because we were too far and could not remember, because we were traveling in the night of first ages, of those ages that are gone, leaving hardly a sign – and no memories…”

  

  

  

  

  

• In Honor Of "The Big Short", Here Is Michael Burry's Historic Commencement Speech

  On the day after one of America's greatest for over-consumption, a few moments of quiet reflection on the state of our world seemed appropriate. With the launch of "The Big Short" movie (assuredly infuriating many Americans with its "dangerous for the establishment" expose of the greed, stupidity, hubris, and arrogance of Wall Street bankers gone wild), Dr. Michael Burry's infamous UCLA commencement speech has much to offer .

  Infamous for his correct predictions of the great recession, Europe's demise, and the collapse of the US financial system (as well as profiting handsomely from being right), the painful 'truthiness' of this brief speech stunningly summarizes the ominous truth facing most of the developed (and much of the emerging) world today:

  "In this age of infinite distraction… when the entitled elect themselves, the party accelerates, and the brutal hangover is inevitable."

  A quarter-of-an-hour well spent from a self-described 'chicken-little' who was "just trying to figure it all out".

   

  

  

  

  

  

• The Year In Charts: Presenting The Latest "PunchLine" Chartporn

  The Punchline’s Abe Gulkowitz is the author of our favorite chart-only newsletter, and as 2015 draws to a close, it is obvious that he has been very busy.

  Here are his parting thoughts for a year that had a lot of volatility and day-to-day excitement, which saw bear markets strike a countless S&P500 stocks, which saw the geopolitical situation careen right into another global proxy war, a year in which Greece almost again Grexited the Eurozone, in which EMs tantrumed violently ahead of the Fed’s rate hike, in which the Swiss revalued and China devalued their currencies, a year which saw junk bonds and commodities plunge to unprecedented levels… and yet where the S&P500 is set to close literally where it started.

  What a way to end 2015. The Federal Reserve voted Wednesday to raise interest rates and begin pulling back its unprecedented support for the American economy and financial markets. The shift, ending an era of easy money that helped save the nation from another Great Depression, had been slow in coming , and the years of easing had created its own distortions and dependencies. The Fed also pledged to wean the nation off its stimulus slowly, an acknowledgement that further progress is not guaranteed and that the central bank is operating in uncharted territory. In addition, the shift amounts to a vote of confidence that the American economy finally stands somewhat more resilient. – – perhaps uniquely in the world.

   

  Yet we cannot ignore the reality of a poor global growth trajectory, dogged by crashing commodity prices, a slowdown in China and new traumas in the speculative high-yield and emerging markets. Indeed, even the U.S. economy has yet to produce a full-throttled expansion. We will continue to highlight the nuances, peculiarities of the regional and sectoral differences in business recovery and worlds of finance. Fasten your seatbelts for 2016.

  And with that said, here is the year that was in charts.

  

  

  

  

• 90% Of Americans Said 2015 Was Not Better Than 2014

  With 29% of young Americans having lost faith in 'The American Dream' (for good reason as we detailed here), it is hardly surprising that a new poll by The Associated Press finds that just 10% of people believe 2015 was a better year for the world than 2014. That is half the number from 2013 and appears to confirm what we already tongue-in-cheek noted  – that 2015 was perhaps the worst year ever.

   

  As we noted previously, if the American Dream depends on skyrocketing debt built on a weakening foundation of stagnant productivity and income, then it is indeed over. 

  So, as CBS asks, was 2015 worse for the world than last year?

  Americans are also much less likely than they were a year ago to believe that the current year was better for the United States – only 17 percent compared with 30 percent in 2014. Worse still, just 10% saw 2015 as better for the world than 2014… down from a hubristic 20% in 2013.

  

  The new Associated Press-Times Square Alliance poll mass shootings and terror attacks weighed heavily on the minds of Americans in 2015, revealing that most polled believe this year was worse than 2014. But, for the world, while its leaders potter around proclaiming the solution to climate change, it appears that is near the bottom of people's fears…

  

  According to the poll, the most important events to Americans in the past year were the shootings in San Bernardino, California, as well as shootings in South Carolina, Oregon and Tennessee. Close behind came the Paris attacks and atrocities perpetrated by the Islamic State extremist group.

  *  *  *

  As we commented earlier, we apologize, but 2015 had so many negatives that we’re having trouble seeing the positives. It’s like we’re on the Titanic, and it’s tilting at an 85-degree angle with its propellers way up in the air, and we’re dangling over the cold Atlantic trying to tell ourselves: “At least there’s no waiting for the shuffleboard courts!”

  Are we saying that 2015 was the worst year ever? Are we saying it was worse than, for example, 1347, the year when the Bubonic Plague killed a large part of humanity?

  Yes, we are saying that. Because at least the remainder of humanity was not exposed to a solid week in which the news media focused intensively on the question of whether a leading candidate for president of the United States had, or had not, made an explicit reference to a prominent female TV journalist’s biological lady cycle.

  That actually happened in 2015, and it was not the only bad thing.

  

  

  

  

  

• The Mystery Of Dubai's Vaporized Gold: The Plot Thickens

  Earlier this week, we told a fascinating story about an unprecedented, multi-year smuggling ring involving Turkey, Iran, and Dubai (as well as China, Russia and countless other nations) which saw corruption reaching to the very top of the political and financial establishment: from president Erdogan in Turkey, to one of Turkey’s richest people, Iran-born Riza Sarraf, to Sheikh Sultan Bin Khalifa Al Nahyan, the son of the ruler of Abu Dhabi and one of the world’s richest people. The smuggled object in question was gold, billions of dollars worth of gold.

  The focus of the story was the previously unknown Dubai gold trading house, Gold.AE, until recently managed by one Mohammed Abu-Alhaj, which as we showed was the primary conduit by which Turkish physical gold found its way “legally” in Dubai, from where it subsequently left for Iran but not before pocketing millions in “commissions.”

  As we reported, Gold.AE – a subsidiary of Gold Holding, the largest gold-focused investment holding company headquartered in Dubai – and the company perhaps best known for launching gold ATMs in the Emirates back in 2010…

  

  … announced a few days ago that it had suddenly and unexpectedly gone out of business, after an inquiry by minority shareholders announced that the entire old “management team abruptly resigned with no notice” and that “there had been substantial withdrawals from the company’s account to the personal accounts of some of the management and the majority shareholders.”

  In other words, the company which was used as a cover for billions in gold transactions over the last several years in the Turkey-Iran gold smuggling trade, was suddenly not only insolvent but had been thoroughly plundered of all its holdings, including a thorough plundering of client accounts.

  Think the Corzining of MF Global, only on steroids, goes to Dubai.

  To be sure the police was quickly involved:

  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.

  However, since as Gold.AE admitted a Swiss bank account had been uncovered, it is very unlikely that any of the funds involved will be recovered.

  And now that the gold-trading company at the nexus of what may have been the world’s biggest gold smuggling ring in history has imploded seemingly overnight, vaporizing countless tons of physical gold and unknown amounts of client cash, even more questions remain.

  One attempt to answer some of these comes from the website of Arabian Business, which has picked up on this trail and reports that it is understood that the previous management team were replaced in March, resulting in the appointment of Andres Gauthier as CEO and Mo Nico Consari as managing director.

  It is unclear why or what prompted the removal of the previous management team, or why it took nearly 9 months for an update to clients to be issued, in which it was made abundantly clear that there was no money left in the gold trading organization.

  The article continues:

  Gold AE suspended its services without warning in October, according to a handful of its customers who claim not to have been able to access their accounts for several weeks.

   

  The December 16 Gold AE email to customers states that, during an internal investigation, Gold AE’s acting management found that members of the previous management team “had used significant amounts of client and shareholders’ money and transferred [it] to multiple locations, including Switzerland, Jordan, Turkey and Saudi Arabia.”

   

  It is understood that Gold AE’s customers have been urged to initiate arbitration in Dubai’s courts on an individual basis in order to recoup their lost investments.

   

  However, customers claim they have been left in the dark about what has been going on at the company and have been unable to trade their product or access their accounts.

  How much money have clients lost?  “One customer, who asked not to be named, told Arabian Business they were in touch with around 60 of Gold AE’s estimated 2,000 clients and that that minority alone claims to have around AED12 million ($3.2 million) locked up in the company.”

  This is just a small portion of what was supposed to be client “segregated” accounts, which lately we have seen are nothing but a piggy bank for corrupt management to borrow from, or steal outright, at whim.

  According to Arabian Business, it is thought the total amount of missing funds reaches $25-30 million. The reality, however, is that nobody knows and a far more important question is how many hundreds of millions or billions were funneled through Gold.AE in the period starting in 2012 when the company’s now disgraced former manager, Abu-Alhaj, became the Dubai frontman for all Turkish gold laundering.

  

  As for Gold.AE’s clients, they are understandably furious:

  The source claimed Gold Holding “has failed to take responsibility and that DMCC and DIFC are playing ping-pong with us customers while we go to appeal to try to solve this matter.” The source added: “No one is taking responsibility to resolve this and we as customers are feeling very helpless.

   

  “Even the police are not taking this up and are directing us towards the court. So we are in the process of appointing lawyers to represent us in court.” Dubai Police and Dubai Courts did not immediately respond to requests for comment.

  Considering a major shareholder of Gold.AE’s holding company is none other than Abu Dhabi’s second most important person, this is not a surprise.

  Additionally, the regulators are also now involved. Too bad that, just like in the US, they arrived on the scene just a little bit too late:

  A spokesman for the DMCC said in an emailed statement to Arabian Business: “DMCC is aware of allegations relating to Gold AE, a wholly-owned subsidiary of Gold Holding Limited – a DIFC-licensed entity.

  “We have conducted an internal investigation into the allegations of fraudulent activity by Gold AE. As a result of this investigation, DMCC has terminated the trade licence for Gold AE and have notified Gold Holding Limited accordingly.

  “By terminating the trade licence of Gold AE, the company is mandated by law to cease all of its trade operations and not undertake any further commercial activities. We are closely monitoring the matter and have verified information that relevant authorities are taking necessary next steps.

  “In its capacity as licensing authority, DMCC is unable to provide specific financial or legal advice to any customer of Gold AE. We encourage strongly that all customers of Gold AE contact Gold Holding Limited for further information.

  “In order to assist customers of Gold AE who are experiencing difficulty in receiving information from Gold AE, DMCC is preparing further guidance for all clients of Gold AE, which will be issued shortly.

  “In the meantime, please send any enquiries to goldcomplaints@dmcc.ae. We will forward them on to Gold Holding Limited who, we understand, is collating customer information at this time.”

  And now the rush to make sure any link between the criminal Gold.AE and its parent, SBK Holdings-owned Gold Holdings is immediately severed. A spokesperson for the DIFC said: “We wish to make it clear that although Gold AE is a subsidiary of M/s Gold Holding, which is a DIFC-based holding company, Gold AE and M/s Gold Holding Ltd are two separate entities.”

  “We wish also to clarify that M/s Gold Holding Ltd is, to our knowledge, not involved in any trading operations, client-facing business affecting clients of Gold AE or the provision of any financial services. Accordingly, it is not regulated by the Dubai Financial Services Authority.“

  Why the scramble to exonerate Gold Holding Ltd? Because as we reported yesterday, it is owned by this man: 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 may just be most important young person in Dubai, which makes him among the top 20 most important, not to mention wealthiest, in the world.

  It would not be good for his reputation if it emerged that not only is his holding company involved in the biggest gold smuggling scandal in history, but that said company just vaporized after an unprecedented case of management embezzlement.

   Or is it?

  When Arabian Business emailed the public enquiries email address for Gold Holding, info@goldholding.com, it received a reply from Mohammad Abdel Khaleq Abu Al Haj, who is a member of Gold AE’s previous management team facing allegations of fraud.

  Al Haj insisted in his email that Gold AE’s existing management team were responsible for the alleged fraudulent activity. He also claimed that requests by him for meetings with shareholders to discuss management issues had been refused.

  So, is the former CEO of Gold.AE the criminal mastermind, the person who was responsible for the Turkish gold presence in Dubai, and the one who defrauded Gold.AE… or is he merely the fallguy: after all the new management team, according to Arabian Business, had been at the company since March: how could it take it 9 months to uncover that the company was nothing but a hollow shell, whose assets had been pilfered by the previous management.

  And if indeed this crazy story which has every possible James Bond element in it culminates with a case of scapegoating, does that immediately mean that Sheikh Sultan Bin Khalifa, a person at the top of the Gulf’s political and financial oligarchy, is involved. Because if he is, so is the US, as nothing happens in Abu Dhabi without the United States being aware of it. Finally, if that is the case, it means that not only did the US sanction what has been the world’s biggest gold smuggling ring, but that is implicitly gave Iran its blessing to use berterable Turkish gold in order to bypass sanctions imposed by… the United States!

  In the next installment of this action and mystery-packed series, we hope to uncover just what the role of the “developed” countries was in this massive smuggling operation, and perhaps even more importantly, where did Turkey end up buying hundreds of tons of gold which it subsequently sold to Iran and where did the Iranian gold ultimately end up?

  

  

  

  

  

• Tracking People Flows: Global Migration Summarized In 7 Charts

  With the topic of global (im)migration getting increasingly more
  prominence as we get ever closer to the presidential elections, not to
  mention Europe’s ongoing plight with the biggest refugee crisis since
  World War II, here is a
  handful of factual, and bias-free, charts summarizing the key aspects
  of global human mobility.

  First, here is a summary tracker of global people flows since the start of the century. The countries in gray are sources of net people outflows, while those in blue have seen cumulative immigration over the past 15 years.

  

  For some, actually make that many, nations the rise in the immigrant population is the only thing preventing the total population from shrinking.

  

   

  It’s not just Europe.

  

   

  But Germany definitely has a problem.

  

   

  The result is that, at least in Europe, the percentage of foreign-born residents is rising with every passing year.

  

   

  The US appears headed in the same direction.

  

   

  Even as the working foreigners do their best to share some of their newly-founded “wealth” with friend and family stuck back home and who have been less fortunate.

  

  

  

  

  

  

• The Downside Domino Effect Of The Auto "Recovery"'s Potemkin Village On Wheels

  Authored by Eric Peters (h/t The Burning Platform),

  When most people can’t afford to buy things outright, the cost of money – interest – becomes even more important than the cost of the things themselves.

   

  

   

  For the past eight years, interest rates have been held down to 3 or 4 percent (or even less, in some cases) such that it costs almost nothing to borrow money. The private banking cartel that controls interest rates – the (ahem) “Federal” Reserve – did this to “stimulate” the economy – which is built on debt and people’s ability and willingness to assume it – after the cratering of Wall Street (and with it, everything else) back in ’08.

  In particular, two areas of the economy: real estate and the car business. Both have “recovered” – somewhat – as a result of this. But it’s a shaky recovery, not based on underlying strength – which would be characterized by people’s increased ability to afford the things they’re buying. Instead, this is a “recovery” based on the fiction of affordability made possible via the Fed’s policy of effectively “free” loans.

  In the case of the car business, longer loans have been the key to maintaining the facade of this Potemkin village on wheels.

  By spreading out the payment over six or seven years as opposed to four or five (which was the usual not so very long ago) the cost of buying a new car has been made to seem more manageable. You pay less each month – even though you pay for more months.

  But this dodge only works when the cost of the loan – interest – is low.

  If it’s high, then the payment is going to be, too.

  

  And with cars – unlike houses – there is a built-in limit to how far out the loan can be stretched as way to tamp down the month-to-month costs down. Eight or nine years is probably the absolute maximum, because cars – unlike houses – always decrease in value over time and because unlike houses, cars are fundamentally throw-aways. Probably 95 percent of all cars made during the 1980s are in junkyards now.

  Axiom: The longer you own a car, the less it is worth  The mileage goes up – the value goes down. A car’s value lies chiefly in its newness, which inevitably wanes no matter how little it’s driven or how well cared-for it may be (there are some exceptions, such as exotic and collectible cars; but these are just that – exceptions.)

  Let’s run some numbers.

  A car you purchased for $30,000 (the average priced paid last year for a new car) will cost you about $416 each month on a 72 month loan, assuming zero percent financing.

  But what happens when you’re paying 6 percent interest on the $30k loan? Your payment swells to almost $500 a month. In addition to the $30,000 principle, you’re also paying another $5,797 in interest (see here for actual calculator).

  Put another way, the $30,000 car is now a $35,797 car … plus taxes and tags.

  

   

  In the past, the payments could be made more manageable by adding another year to the loan. Why can’t it be be done again? See that point above about the built-in time limit for car loans.

  You can push a house loan out to 40 years (from the formerly usual 30) because the house stands a decent chance of at least maintaining most of its original value – and a good chance, despite the crappy economy, of appreciating in value. Because it is a durable asset, not a throw-away.

  It is extremely rare for any car to retain even half its original value after as little as six or seven years from new. And cars almost never appreciate in value unless they are very rare, exotics or otherwise collectible. Your Camry is not going to be worth more than what you paid for it for ten years from now. You’ll be lucky if it’s still worth a third what you paid for it a decade from now.

  And that’s why no lender’s going to push the payment schedule out much farther than the current outer limit of seven years (84 months). Because there is the risk – the probability – that the borrower will find himself owing more on the car than it’s worth long before it’s paid off. That he will be under water.

  The temptation – an act of financial self-preservation – will be to cut bait and walk away. Just as so many people did from their homes during the real estate crash.

  

   

  This is why – I believe – we are going to see a car industry crash as a result of the Fed’s decision to begin raising interest rates. Like one of those domino chain-reaction things you see sometimes at the shopping mall, once the first domino (the cost of money) is set in motion, the rest of them falling is just a matter of time.

  Car prices are not going to go down.

  As a guy who writes reviews about new cars – and so keeps track of what they cost – I will affirm to you that even when a new car is what they call in the business a carryover (i.e., exactly the same car as last year, just a new model year) the price is almost always at least a couple hundred bucks higher, due to inflation mostly. But even if the price of the car remained exactly the same – even if it went down a little – if interest rates go up significantly, the car is going to cost more.

  Since no one has yet figured out a way to keeps cars from losing value the moment they are driven off the dealer’s lot, lenders aren’t going to go stupid and write loans for eight or nine years that put them in certain danger of being left holding the bag when the person decides to let them repo the damned thing rather than keep making payments on it.

  You can perhaps see where this is going… .

  When new car sales slow, the pressure to make more profit off each sale will increase. Which will drive costs higher.

  Or, the car companies could do what Mitsubishi did (zero down, zero percent financing and no payments for a year!) and sell cars at a loss, just to keep the production lines moving. You remember what happened to Mitsubishi…?

  It will be like the physical jerks of a corpse subjected to electrical shocks.

  It moves, but it’s not really alive.

  

  

  

  

  

• Confessions Of An ISIS Soldier: "The Training Took Place In Turkey"

  Over the past five weeks, Turkey’s role in facilitating the trafficking of illicit Islamic State crude has been exposed for the world to see. Ankara’s move to shoot down a Russian Su-24 near the Syrian border prompted a media blitz from Moscow, which has variously accused the Erdogan government of being complicit in a business that nets Bakr al-Baghdadi between $500 million and $1 billion per year in revenue.

  To be sure, those who have followed Islamic State’s meteoric rise are well aware of the fact that Turkey has played a rather decisive role in the group’s recruiting efforts by looking the other way as a steady stream of foreign fighters – emboldened by the ISIS propaganda machine – have streamed into Syria. 

  Ankara, like Riyadh and Doha, is keen on seeing the Assad government fall and has been instrumental in the effort (supported by the West) to funnel money and weapons to the various Sunni extremist groups fighting for control of the country. As Nafeez Ahmed put it in a recent piece posted first on Medium, “NATO is harbouring the Islamic State and France’s brave new war on ISIS is a sick joke, and an insult to the victims of the Paris attacks.” Here are some key excerpts from the article:

  A senior Western official familiar with a large cache of intelligence obtained this summer from a major raid on an ISIS safehouse told the Guardian that “direct dealings between Turkish officials and ranking ISIS members was now ‘undeniable.’”

   

  The same official confirmed that Turkey, a longstanding member of NATO, is not just supporting ISIS, but also other jihadist groups, including Ahrar al-Sham and Jabhat al-Nusra, al-Qaeda’s affiliate in Syria. “The distinctions they draw [with other opposition groups] are thin indeed,” said the official. “There is no doubt at all that they militarily cooperate with both.”

   

  In a rare insight into this brazen state-sponsorship of ISIS, a year ago Newsweek reported the testimony of a former ISIS communications technician, who had travelled to Syria to fight the regime of Bashir al-Assad.

   

  The former ISIS fighter told Newsweek that Turkey was allowing ISIS trucks from Raqqa to cross the “border, through Turkey and then back across the border to attack Syrian Kurds in the city of Serekaniye in northern Syria in February.” ISIS militants would freely travel “through Turkey in a convoy of trucks,” and stop “at safehouses along the way.”

   

  The former ISIS communication technician also admitted that he would routinely “connect ISIS field captains and commanders from Syria with people in Turkey on innumerable occasions,” adding that “the people they talked to were Turkish officials… ISIS commanders told us to fear nothing at all because there was full cooperation with the Turks.”

  As if all of that wasn’t enough, German media now contend that ISIS has an office in Turkey through which it sells slaves obtained fron conquered territory.

  Given all of the above, it comes as no surprise that according to an Islamic State soldier captured by the YPG (which Ankara regards with quite a bit of suspicion for the group’s ties with the PKK), Turkey serves as the training ground for new ISIS recruits. The following excerpts are from Sputnik Turkey, who spoke to the fighter:

  “There were 60 of us, and we trained in a village not far from the airport. We got up in the morning and played sport. Once a week we had target practice, they taught us how to use Kalashnikovs, machine guns and other kinds of weaponry.”

   

  “The training took place in Turkey because the Daesh command thought that it was safer there than in Syria. It wasn’t possible to carry out training in Syria because of airstrikes.”

   

  “In the media they wrote that we were training in an FSA military camp, but in fact, all 60 of us were members of Daesh. We were Syrian nationals, many of whom in the beginning moved to Turkey to earn some money, and then joined Daesh.”

   

  “I made contacts with Syrians on the internet, helped them to get to Turkey and begin training. After I undertook the training, for five months I lived together with a relative who was a Daesh commander in Adana. My task was to meet the new recruits arriving from Syria. After training we sent them to Urfa, and from there – to Raqqa. From Raqqa they distributed themselves across different regions of Syria.”

   

  “Heavy weapons were delivered from Ash-Shaddadi (a town in southern Al-Hasakah Governorate).”

   

  “I spent one night there, and the next night December 11 2015 YPG forces attacked our positions, and took both of us captive. In al-Hol the commander was a Frenchman called Abu Yahya.”

   

  “What I read about Daesh, and what I was faced with in reality were absolutely different things.”

  Note that this isn’t the first time we’ve heard Adana mentioned in the same breath as ISIS. As University of Greenwich’s George Kiourktsoglou and Dr Alec D Coutroubis wrote in “ISIS Gateway To Global Crude Oil Markets,” the militants’ supply chain comprises the following localities: Sanliura, Urfa, Hakkari, Siirt, Batman, Osmaniya, Gaziantep, Sirnak, Adana, Kahramarmaras, Adiyaman and Mardin. The string of trading hubs ends up in Adana, home to the major tanker shipping port of Ceyhan.” 

  Apparently then, ISIS commanders are living in and recruiting from the very same place where Islamic State oil is shipped to global markets. So we now have still more evidence of Erdogan’s role in harboring “the terrorists” (as the Russian MoD calls them) but once again we seriously doubt anyone in NATO cares. After all, it’s not like this is a secret and we’re quite sure Washington is well aware of what the West’s favorite autocrat is up to in Ankara. The question, of course, is why no one seems interested in putting a stop to it.

  

  

  

  

  

• Afghanistan's Billion Dollar Drug War – A Battle Authorities Are Losing

  Amid ISIS' spread, with NATO troops pulling out, and local law enforcement agencies ill-equipped and underfunded, Afghanistan has once again become the frontline in the so-called "War On Drugs." As Al-Jazeera reports, Afghanistan's poppy fields, which feed the habits of drug addicts worldwide, are thriving, with cultivation of the crop hitting record highs last year. The number of Afghan addicts is soaring, and with the Taliban funded by the drug trade, security fears are paramount; but Afghan authorities are struggling to control the resurgence in poppy farming.

   

  The following disturbing documentary investigates the escalating situation in Afghanistant, the implications for the global war on drugs, and what the future holds for this fragile nation.

  

  

  

  

  

• 12 Reasons Why One Advisor Is Betting Treasurys, Not Stocks, Is The Investment Of 2016

  While the traditional Barrons’ flock of sellside penguins advisors is out and about, for the second year in a row predicting that, after being wrong on its consensus forecast for 2015 of double digit growth in the S&P500, the broader market will rise 200 points to 2220 by December 31, 2016…

  

   

  … we are more inclined to go with the contrarian call by Prerequisite Capital Management which believes that Treasurys (deflation), not stocks (inflation) are the way to go in 2016.

  Here are their arguments why.

  1. Deleveraging has hardly started: Both in the developed world and Emerging Markets.
  2. Capital Misallocation & Oversupply: Caused by (a) the cost of capital being held too low for too long, (b) policies that have caused saving & investment (global current account) imbalances to persist much longer than they naturally would have persisted
  3. Demographic headwinds: Aging populations etc
  4. CAPEX peak and credit conditions tightening: Escalating credit spreads, lending officer surveys show tightening standards for Commercial loans
  5. Turn in the Earnings Cycle: Profits and margins starting to compress globally and in USA.
  6. Tide going out on Buybacks: Growing recognition of corporate irresponsibility
  7. Global Capital Flows shift: Material regime change in pattern of capital flows last 12 months potentially representing an unwind of the last 7-15 years, engendering instability especially in Emerging Markets (highly elevated risks of banking crises & other shocks in the seasons ahead). Global trade also weakening strongly.
  8. Prevailing expectations towards higher yields: ZEW survey related inflation and interest rate expectations at peak optimism, ‘late-stage’ bear market psychology towards key commodity markets still absent(with vicious supply dynamics still reinforcing to the downside particularly in energy and industrial metals)
  9. Velocity still falling (both structurally and tactically): broader liquidity still tightening globally (overwhelming liquidity supply)
  10. Speculative’ Positioning remains substantially negative towards Bonds: stronger ‘commercials’ persistent in multi-year accumulation of Treasuries. ‘Late-stage’ bull market psychology towards multi-decade rise in Bonds still absent(& under-owned)
  11. Geopolitical Escalation and increasing trade barriers growing at the margin.
  12. Fed & Central Banks backed into a corner: trapped by excessive reliance on low interest rate policies (last couple of decades) and QE (over the last 7 years), unable to unwind such programs due to the extreme fiscal constraints of both the public and private sectors.

  And some charts why it is TSYs that Barron’s “pundits” should – but won’t – be pitching.

  First, Tightening Lending Conditions, which according to Prerequisite means “we may possibly be about to see bond prices go much higher.”

  

   

  Then a rollover in margin, both profit and debt “increases the probability that the US Stock Market cycle is indeed turning down, and that NYSE Margin Debt will likewise fall from here. (Which is all usually bullish for Treasury Bonds)”

  

   

  PCM notes that capital flows – namely global FX reserve growth vs global economic growth – have decoupled. They say that “the contraction in Global FX Reserves is more indicative of a ‘regime change’ in global capital flows, which increase the near-term risks of growing instability in world markets & economies.”

  

   

  Next, there is spec positioning in commodities. A simple correlation shows that specs are still positioned far too bullishly, which also explains the stratospheric forward energy P/E mulitples.

  

   

  Then there is the observation of capital flows becoming more concentrated: “When conditions improve, capital tends to ‘disperse’ more within the economy and the capital markets (rising grey and green lines). However, when times get more challenging or participants are starting to get worried, capital will tend not to disperse, but concentrate into a few key areas (falling grey and green lines).”

  

   

  PCM’s Key Takeaways:

  • We do not yet believe we have seen a top in Bonds, and submit further an excerpt from Sidney Homer that captures the sentiments of the previous multi-decade top in Bonds (hat tip: Lewis M. Johnson, whose work we would recommend to anyone’s reading list).

    

  • Such sentiment extremes are more consistent with market tops, such psychology being noticeably absent at present.
  • The key risk is that the Bond markets collectively start to punish Government Policies, however, we believe there is still some way to go before such issues begin to gain traction. In fact, in order for Governments to take the more extreme policy actions required to cause Bond markets to revolt, it is highly likely that we would need to see a significant move higher in bond prices (amidst an environment of deflationary shock(s)) before policy-makers would have the tacit approval to escalate their policy experiments beyond the thresholds necessary to upset Bond markets and overwhelm the generally deflationary/low-or-no-growth conditions.
  • Due to regime change dynamics that are starting to force an unwind of the last 7-15 years worth of conditions, and some of the issues touched upon in this presentation, we believe that investors around the world are likely to experience an increasing amount of ‘disorientation’ in the seasons to come. Such will require, almost demand, a slightly more ‘active’ approach to portfolio management as the changes in capital flows are likely to be quite paradoxical (& sustained) at times, and we would anticipate some larger swings in Velocity and increasing volatilities as well. In fact, it is primarily with regards to global velocity measures that we would submit will be one of the key metrics to monitor in order to confirm (or pre-empt) any possible turn down in the Treasury Bond markets.

  Full presentation below

  

  

  

  

  

• Death Of Top Syrian Rebel Commander May Derail "Peace" Process, Evacuation Efforts

  “For sure it will cause a big delay and it may kill the whole process. Whoever committed this crime is pushing for a military solution, not a political process solution.” 

  That’s a quote from Hadi al-Bahra, a Syrian opposition leader. The comments come a day after an apparent Russian airstrike killed Zahran Alloush. Alloush, the son of Saudi-based cleric Abdallah Alloush, is (or, more appropriately “was”) the leader of Jaysh al Islam, a powerful Syrian opposition group whose forces number some 10,000. 

  The group controls Ghouta, the site of an infamous sarin gas attack that nearly served as the excuse for a US air campaign against the Assad regime in 2013. Alloush was violently anti-Shiite and anti-Alawite but was seen as “moderate” when compared to ISIS and al-Nusra. Jaysh al Islam has fought against Islamic State in various parts of Syria.

  In the wake of the commander’s death, some say UN “efforts” to negotiate a truce will now be all but impossible. As we noted on Friday, Jaysh al Islam was among the rebel groups invited to a summit in Riyadh earlier this month.”Two Army of Islam officials were among those who attended a meeting this month bringing together both the political and armed opposition,” WSJ writes, adding that “they signed a final declaration that envisioned a secular, democratically elected government in the future without Mr. Assad.”

  The Syrian government has said it’s willing to meet with opposition leaders in Geneva next month. According to Hezbollah (which functions as Putin’s ground force in Syria), “the strike also killed Abdul-Nasser Shmeir, an officer who defected from the Syrian army and headed another leading Damascus-area rebel group [as well as] Mr. Alloush’s brother Mahmoud and at least 16 other rebel commanders.” Here’s more: 

  Despite its name, the Army of Islam is considered one of the more moderate Islamist rebel groups in Syria. Mr. Alloush considered himself a bitter enemy of both Mr. Assad and the head of Islamic State Abu Bakr al-Baghdadi—often calling them both “gang leaders.” His group fought pitched battles to chase Islamic State out of the eastern suburbs of the capital.

   

  But the Syrian regime and its allies Iran and Russia consider the Army of Islam a “terrorist group” that like many other rebel factions should be precluded from any role in a future settlement. Some in the opposition also had misgivings about any prominent role for Mr. Alloush and his group, which has been accused of human rights abuses and extrajudicial killings.

  Mr. Alloush’s killing coincided with preparations on Friday by the Syrian regime to facilitate the transfer of up to 4,000 people, including many fighters linked to Islamic State and other extremist groups as well as their families, from rebel-held areas on the southern outskirts of Damascus as part of U.N.-mediated efforts to expand a local cease-fire.

  There are a couple of things worth noting there. First, there wasn’t anything “moderate” about “Mr.” Alloush. He essentially called for a genocide of Syrian Shiites in 2013. You can watch the video in the piece excerpted above. 

  The fact that anyone considers him a “moderate” undercores The Kremlin’s point that differentiating between terrorists is an exercise in futility and it’s also worth noting that there’s no coincidence inherent in Riyadh allowing someone who has pushed for the eradiction of Shiites a place at the negotiating table.

  Second, the plan to evacuate injured fighters as well as women and children from Damascus will likely now be placed on hold. “Jaish al-Islam was supposed to provide safe passage through areas east of Damascus for the buses heading to Raqa,” a source told AFP on Saturday. “About 1,200 people were supposed to leave today (Saturday), but the death of Zahran Alloush means we are back to square one.” Here’s a bit more color:

  The deal came after two months of intense talks between government and district leaders, according to the Britain-based monitor.

   

  Backed by Saudi Arabia, Army of Islam recently took part in a landmark opposition meeting in Riyadh aimed at forming a united front for eventual talks with Assad’s regime.

   

  It has remained firmly opposed to both Assad and IS.

   

  Analyst Karim Bitar said Alloush’s death is “a severe blow to the Riyadh negotiations process”.

   

  “Given Alloush’s authoritarian temper and strong rule, it will take time for Jaish al-Islam to recover from this blow and for the alternative leadership to emerge,” he said.

   

  Aron Lund, editor of the Carnegie Endowment’s Syria in Crisis website, said: “In a way, Zahran Alloush has been the rare successful centraliser in the Syrian rebel movement.”

   

  But with him gone, that cohesion could “unravel”, Lund added.

  And make no mistake, all of this is just fine with Assad, whose army took credit for the strike despite widespread speculation that is was in fact a Russian warplane that carried out the attack. A Saudi-backed coalition of Sunni rebels is just about the last thing the Syrian government (not to mention Tehran) wants to see coalesce in Syria and the death of Alloush will certainly help to create choas among one of the country’s most prominent opposition forces. 

  As for the Western media, the death of an extremist is being pitched as a blow the peach process. Here’s The New York Times: 

  Mr. Alloush and his faction had not been universally accepted in the Syrian opposition — they are widely blamed for the disappearance of four secular opposition activists from the Damascus suburb of Douma. But unlike harder-line armed groups, the Army of Islam has shown a recent interest in taking part in politics, said Ibrahim Hamidi, a Syrian correspondent for Al Hayat, a pan-Arab newspaper.

   

  Mr. Hamidi, who opposes the Syrian government, said that by having successfully targeted Mr. Alloush, Mr. Assad and his Russian allies had demonstrated their desire to pursue a military solution. “This is a rejection of the Riyadh talks,” he said.

  No, it’s not.

  It’s a rejection of the idea that someone who has variously called for the systematic extermination of a particular religious sect can somehow be part of a “political” solution to the crisis. Anyone who says otherwise is either living in a fantasy world constructed by the powers that be in Washington and Riyadh, or else has a vested interest in toppling the Assad government and undermining Iranian influence in the Arabian Peninsula.

  

  

  

  

  

• Guns, Gas, & "Selling Kidneys" – 'Off The Grid' Indicators Signal Slowing Economy

  Via ConvergEx's Nick Colas,

  Our quarterly survey of “Off the Grid” economic indicators finds that the U.S. economy is still growing, but the pace seems to be slowing from Q3 2015.

   

  On the plus side, used car prices remain robust and dealer inventories of new cars are in good shape.  Americans are driving more, with the growth rate for miles driven (and gas consumed) running at levels not seen in +10 years.  Lastly, workers are still quitting their jobs at a healthy clip.

   

  As for the indicators that give us pause: food stamp program participation rates are within 6% of their peaks, and the population here still runs +45 million people (15% of the entire U.S. population), money is flowing out of mutual funds but into gold coins at equally furious rates, and FBI background checks for gun sales look set to reach a new record in 2015 at 21.6 million. Before the Financial Crisis, that count never even reached 9 million.

   

  On a lighter note, our Bacon Cheeseburger Inflation index is still negative for the year. Good for lactose-tolerant carnivores, but perhaps bad news for the Fed.

  A few of us were sitting around the Convergex trading desk this morning, thinking about what surprise events had defined the capital markets and the world as a whole in 2015. In no particular order, a few common responses:

  • The dramatic drop in oil prices globally, and the relatively muted effect these declines had on consumer spending.
  • The migrant crisis in Europe and growing fears across much of the developed world about the threat of both home-grown and imported terrorism.
  • The thematic dominance of technology companies as the epicenter of investing, in everything from S&P 500 stocks to the unicorns roaming Sand Hill Road.
  • The challenges faced by China in keeping its capital markets from a wholesale meltdown in August/September.
  • The rise of ISIS in the Middle East, Africa and south Asia. 
  • The increasing presence of Russia on the world’s political stage despite both a weak economy and increasing isolation from its actions in the Crimea.
  • Donald Trump’s persistent popularity in the face of almost universal scorn from the mass media and “Very smart people”.

  We could go on, but the point is that all these “Surprises” were not hard to see 1-2 years ago but they certainly required some imagination to embrace as potential realities.  What comes along to bite markets and investors rarely saunters out of left field with no warning, but getting the timing right matters too. It is all well and good to have “Predicted” the fall of the Chinese market in early 2014; the problem is that your short from that time is only now back at breakeven.  The same hold true for calling tech stocks overvalued at the beginning of the year.  While many individual names have underperformed, the S&P Large Cap Tech Index is still up close to 4% on the year while the S&P 500 is down 1.0%.

  “Think differently”, to put the old IBM slogan into proper English, is easier said than done and requires a differentiated process to gather and process information.  It’s not enough to the early bird to get the worm; it also helps to be pecking on an uninhabited bit of earth right after it rains. In the spirit of that sentiment we’ve spent several years collecting various underfollowed datasets that we think help shape a more complete picture of the U.S. economy.  I doubt any of them will ever end up in a Federal Reserve briefing book or Fortune 500 board presentation.  But if they help you think about the economic world around you in a slightly different light, I think they serve their purpose. 

  Here’s what this quarter’s “Off the Grid” economic indicators have to say about the U.S. economy. 

  On the plus side:

  Pricing for used cars is holding very steady according to the Manheim (a large auto auction company) Used Vehicle Index.  Many auto analysts were looking for this to drop in 2015, hurting trade-in values and potentially limiting new car and truck sales.  No worries, though – the index is right where it was in 2011 and looks to start 2016 on a strong note.

   

  New car and truck dealer inventories are in great shape heading into 2016, at 65 days sales.  Americans don’t order new cars and trucks from the factory and wait for delivery; they buy them off dealer lots. Sixty days supply is optimal, giving consumers enough choice while not so heavy as to demand incremental discounting from the auto companies to clear aging inventory.

   

  

   

  Google autofills for “I want to buy” now feature an entry we haven’t seen in 5 years (the entire time we’ve been tracking this): “Timeshares”.  We noted in another recent report that Americans were finally Googling the term “Vacation” more, the first uptick since the Financial Crisis.  Now, interest in timeshares is so great that the search engine’s predictive software assumes you may just want a nice 2 bedroom condo in Boca to call your own 2 weeks a year.  

   

  Americans are driving more – a lot more. The DOT data of miles driven shows an average of close to 4% more in the back half of 2015 versus 2014. That growth rate hasn’t been this high since the Asia Crisis in the late 1990s cut the cost of filling up a Chevy Suburban to $20.

   

  Workers are still quitting their jobs at near-record rates according to the BLS’ JOLTS data.  Some 57% of all workforce “Separations” are the employee’s idea, not the employer.  That shows some confidence in the economy and presumably a decent labor market.  This statistic has only been higher during the tail end of the last expansion, and only for a short period of time.

  On the downside:

  Food stamp (now called the Supplemental Nutrition Assistance Program, or SNAP) participation totals are still +45 million Americans.  This means-tested assistance program peaked in terms of total enrollment at 48 million in late 2012/early 2013, but at current levels is still within 6% of that high water mark. This is 15% of all Americans, and 20% of all households.

   

  

   

  Mutual Fund money flows are negative, but gold sales in dollar terms are back to levels more commonly associated with the Financial Crisis and its aftermath.  In fairness, mutual fund flows are likely as much demographic as sentiment-based.  After all, the original cohort of retail mutual fund investors started saving money in the 1980s, during the industry’s first boom phase.  They are beginning to retire and shifting their risk preferences.  The U.S. Mint gold coin sale data is, however, more surprising.  Falling prices haven’t dented demand for the yellow metal – as a matter of fact the Mint is averaging over $100 million in monthly sales, on average, at the moment.  That level is more consistent with demand in 2009 – 2012 and early 2013, both volatile periods in the global economy.

   

  Large pickup truck sales have stalled out.  Despite the drop in gasoline prices, sales of Chevy Silverados, Ford F-Series, Dodge Rams, Toyota Tundras and Nissan Titans are now unchanged year over year.  These vehicles are the workhorses of the small business economy.  If demand is stagnating, that’s not a good sign.

   

  

   

  Our Bacon Cheeseburger Index is still down year over year, signaling deflation fears.  Based on the notion that consumer inflation expectations are grounded in real-world experiences, we look at the cost of ground beef, bacon and cheese.  Mostly because we like bacon cheeseburgers, but also because these are commonly and frequently purchased consumer food items.  Turns out that this mini-basket of food products is down 1.9% year over year, and the negative month comps go back to May 2015. That is 7 months of negative comps, and the last time we had that much “Greasy spoon deflation” was 2009.

  Head scratchers, or data points that make me go “Hmmmm”.

  Firearm sales, as measured by the FBI’s record of instant background checks, are set to make a new record in 2015. At current rates, the U.S. government will process 21.6 million background checks this year, more than the 21.0 million in 2014 or the 21.1 million in 2013. Since the Financial Crisis in 2008, the FBI has processed 139 million firearm background checks, and if each one resulted in a sale that would amount to a similar number of completed transactions.  Perhaps 10% are related to the renewal of carry permits, but there’s also the point that you can buy two firearms by completing one background check.

   

  

   

  Now, on the one hand firearms are expensive so this demand is a sign that consumers have money to spend.  On the other, 139 million firearms sold is a lot of guns. Take the populations of California, New York, Florida, and Texas and you only get to 105 million. Moreover, Google search volumes for the term “Buy a gun” are once again near record levels.

   

  Gallup surveys of personal out of pocket spending have been flat for 2 years at an average of $92/day. They were as high as $100/day in early 2008.

   

  For reasons we’ve never been able to figure out, people insist on Googling how to sell their kidneys.  Go type “I want to sell my” into Google and it will suggest autofills of “Car”, “house” and “kidney”.  Further down the list is “Eggs” (legal) and “hair” (also legal).  Just to be clear: selling your kidney is not legal in the U.S.

   

  

  To sum up this disparate data set, consider three conclusions.

  • First, the economic growth seen in the U.S. over the last several years has not reached the nation’s less fortunate citizens (Food stamp participation).
  • Second, the broad middle has seen some improvement (car sales, used car prices, willingness to make large purchases, quit their jobs) but remains worried about their personal safety (firearm sales) and economic security (gold coin sales).
  • Lastly, deflation is more prevalent (Bacon Cheeseburger Index) on Main Street than Constitution Avenue (where the Fed is based). 

  Somewhere in our list of Off The Grid indicators sits at least one “Surprise” for 2016. Will it be the resilience of the U.S. consumer? Or will inherent social brittleness and angst – a legacy of the Financial Crisis – play the lead roles?   We hope for the former.

  

  

  

  

  

• Everything Central Banks Have Tried Has Failed: According To Citi's Buiter Just One Thing Remains

  Seven years after ZIRP (then NIRP) was launched and central banks grew their balance sheets by $13 trillion, in the process inflating the biggest bubble the world has ever seen, sending risk prices to record highs and trillions in government debt to record negative yields, first the Fed admitted QE was a mistake, and now the investment banks – especially those who were bailed out and were the biggest beneficiaries of QE such as Citigroup – admit central bank quantitative easing failed.

  The reason for this failure? What we said from day one dooms all unconventional monetary policy – too much debt.

  Here is Citi’s Willem Buiter, finally catching up to what we said in early 2009.

  We believe that a common factor in the relatively low response of real economic activity to changes in asset prices and yields is probably the fact that the euro area remains highly leveraged. The total debt of households, non-financial enterprises and the general government sector as a share of GDP is higher now than it was at the beginning of the GFC. There has been some shift from the private sector to the public sector, but the overall debt burden remains unprecedentedly high for an economy in peacetime (and for which the debt incurred during the last major war (1939-1945) has long since been worked off).

   

  The wealth effect of higher stock prices appears to do little to boost private consumer expenditure and the lift given by higher stock prices to ‘Tobin’s q’ does not appear to have stimulated private capital expenditure much. The weaker external value of the euro has clearly increased profit margins in exporting and import-competing industries and may have boosted the stock market valuations of internationally active Eurozone-listed companies, but its effect on the volumes of exports and imports appears to be moderate (in part because a number of other countries are pinning their hopes on generating a bounce in inflation and activity through weaker exchange rates, too). Extremely low interest rates have boosted residential mortgage borrowing in Germany and caused German house prices to rise at a, by German standards, alarming year-on-year rate of six percent during several months in 2015.

   

  Excessive indebtedness means households save much of any increase in disposable income in an attempt to pay down the debt. Highly indebted governments, prompted by necessity (limited market access) and/or by the constraints of the Stability and Growth Pact, are less likely to cut taxes or to boost public spending on real goods and services when lower debt service costs raise their disposable incomes. Corporations, even if they are not debt-constrained, are unlikely to boost investment when interest rates go down and the cost of capital falls because of persistent excess capacity amid an uncertain outlook for top-line growth and profits. Profits generated by favorable movements in asset prices (including the exchange rate) are distributed to shareholders (who save a large share of this) and used for share buybacks or debt repayment.

   

  To the extent that monetary policy has had an effect on real activity, and will have some incremental effect on activity, it may not be entirely sustainable. This is because part of the effect has been by bringing forward demand from the future, such as major purchases, including for cars or construction. That suggests that monetary policy, even if and when it has been effective in stimulating activity, will run into diminishing returns even in sustaining the levels of activity it helped to boost.

   

  So while the Eurozone’s IS curve may not be exactly vertical, it may well be disconcertingly close to being vertical in the future.

  In short: the ECB’s attempts at reflating the economy, while admirable, have failed.

  The combination of a near-horizontal LM curve and a near-vertical IS curve suggests that expansionary monetary policy is by no  means guaranteed to boost demand sufficiently to achieve the ECB’s inflation target, regardless of the scale on which this is pursued. What is to be done?

  Well, since admission of failure means the end of the neo-Keynesian, and monetarist system, and according to some, the end of the fiat, fractional reserve system itself, one must – according to Citigroup’s chief economist – pursue the only option left.

  “Helicopter money drops (what else?)”

   

  Our conclusion is that, in a financially-challenged economy like the Eurozone, with policy rates close to the ELB, and with excessive leverage in both the public and private sectors, balance sheet expansion by the central bank alone may not be sufficient to boost aggregate demand by enough to achieve the inflation target in a sustained manner.

   

  This is more than an academic curiosity. Japan has failed to achieve a sustained positive rate of inflation since its great financial crash in 1990. The balance sheet expansion of the Bank of Japan since the crisis has been remarkable but ineffective as regards the achievement of sustained positive inflation and, since 2000, the inflation target. The balance sheet of the Swiss National Bank has expanded even more impressively, again with no discernable impact on the inflation rate.

   

  

   

  * * *

   

  We do expect the ECB’s asset purchase program will expand considerably further, with the Eurosystem’s balance sheet reaching €4,000-4,500bn over the next year or two. But we doubt that even this will be enough to achieve the inflation target of close to but below 2% on a lasting basis. It might take even greater ECB balance sheet expansion to achieve the target.

   

  But the larger central banks’ balance sheets get, the louder will become the voices of those that criticize the power vested in unelected and mostly unaccountable central banks. In addition, it is worth remembering that the laws and regulations that underwrite and circumscribe central bank actions were written at a time when their current range of actions, let alone the potentially even larger future ones, seemed exceedingly unlikely and maybe even (in the case of the ECB) inconceivable. Political concerns likely played a role in the SNB’s decision to rely less on its balance sheet and more on negative rates when managing its currency (and indeed allowing a sharp appreciation of the Swiss franc and greater exchange rate volatility). The ‘Audit the Fed’ movement is likely to be followed by ‘Audit the ECB’ movements and eventually by explicit limits on central bank actions as their balance sheets grow to politically unacceptable levels. We do not say that moment is near, but to dismiss the idea that political limits to the size of the central bank balance sheet exist seems naïve.

   

  Moreover, even if the ECB were to expand its balance sheet sufficiently to achieve the inflation target in the next few years (say, to €5tn or €6tn), the monetary policy toolkit would then seem to be rather empty, with little option for stimulus if and when the next downturn hits (as it inevitably will). Experience teaches that downturns do happen – either for internal or external reasons – and sometimes happen when output gaps have not been closed. What happens then? Draghi’s answer seems to be: perhaps a balance sheet expansion to €10tn or €15tn. We are doubtful that such a course of action would be both perceived to be politically legitimate and economically effective.

  Why thank you for telling us 7 years later that the entire path on which global central banks set off in 2009 had been a dead end. We could say we warned you but… well, we did. Every single day.

  So now what? Well, this.

  

  Buiter concludes:

  The case for helicopter money is therefore partly to ensure the euro area (and some other advanced economies) reflate powerfully enough to escape the liquidity trap, rather than settle in a lasting rut of low-flation and low growth, with “emergency” levels of asset purchases and interest rates becoming the norm.

   

  * * *

   

  In orderly markets and with the policy rate at the ELB, the central bank can talk loudly, but on its own – without the fiscal support required to turn its monetized balance sheet expansions into helicopter money drops – it carries but a small stick.

   

  * * *

   

  If, as seems possible, the ECB will increase, in H1 2016, the scale of its monthly asset purchases from €60bn to, say, €75bn, and if these additional purchases are concentrated on public debt, the euro area will benefit from a ‘backdoor’ helicopter money drop –something long overdue.

  He is right.

  So let’s stop pretending that the Fed has a chance in hell of reflating the economy by hiking rates just as the recession begins, and fast forward to the inevitable next step: the beginning of the end for fiat, starting with its widespread paradop above populated urban centers, much to the delight of millions of people everywhere, and a few very big and very underwater debtors, for whom runaway inflation is just what the Doctor (of economics) ordered.

  

  

  

  

  

• Dave Barry Answers – Was 2015 The Worst Year Ever? (Spoiler Alert: Yes)

  Authored by Dave Barry, originally posted at The Miami Herald,

  

  Sometimes we are accused – believe it or not – of being overly negative in our annual Year in Review. Critics say we ignore the many positive events in a given year and focus instead on the stupid, the tragic, the evil, the disgusting, the Kardashians.

  OK, critics: We have heard you. This year, instead of dwelling on the negatives, we’re going to start our annual review with a List of the Top 10 Good Things That Happened in 2015. Ready? Here we go:

  1. We didn’t hear that much about Honey Boo Boo.

   

  2.

  OK, we’ll have to get back to you on Good Things 2 through 10. We apologize, but 2015 had so many negatives that we’re having trouble seeing the positives. It’s like we’re on the Titanic, and it’s tilting at an 85-degree angle with its propellers way up in the air, and we’re dangling over the cold Atlantic trying to tell ourselves: “At least there’s no waiting for the shuffleboard courts!”

  Are we saying that 2015 was the worst year ever? Are we saying it was worse than, for example, 1347, the year when the Bubonic Plague killed a large part of humanity?

  Yes, we are saying that. Because at least the remainder of humanity was not exposed to a solid week in which the news media focused intensively on the question of whether a leading candidate for president of the United States had, or had not, made an explicit reference to a prominent female TV journalist’s biological lady cycle.

  That actually happened in 2015, and it was not the only bad thing. This was the year when American sports fans became more excited about their fantasy sports teams — which, for the record, are imaginary — than about sports teams that actually exist. This was the year when the “selfie” epidemic, which was already horrendous, somehow got even worse. Of the 105 billion photographs taken by Americans this year, 104.9 billion consist of a grinning face looming, blimplike, in the foreground, with a tiny image of something — the Grand Canyon, the pope, a 747 crashing — peeking out in the distance behind the person’s left ear.

  This was the year of the “man bun.”

  And if all that isn’t bad enough, this was the year they tricked us into thinking Glenn got killed on The Walking Dead. (By the way: spoiler alert.)

  At this point you are saying: “Wait a minute! Surely there were some positive developments in 2015! How about the fact that, after so many years of sneering judgmentalism and divisive, overheated rhetoric, we were able to have rational, open-minded conversations about such issues as gun ownership, gay marriage, race relations and abortion, so that, as a nation, we finally began to come together and … Whoa! Sorry! Evidently I am high on narcotics.”

  Yes, you are. And we intend to join you soon. But first we need to take one last look back at the hideous reality of 2015, which began, as so many ill-fated years have in the past, with …

  JANUARY

  … which finds the Midwest gripped by unusually frigid weather, raising fears that the bitter cold could threaten the vast herd — estimated in the thousands — of Republican presidential hopefuls roaming around Iowa expressing a newly discovered passion for corn. As temperatures plummet, some candidates are forced to survive by setting fire to lower-ranking consultants.

  For most Americans, however, the cold wave is not the pressing issue. The pressing issue — which will be debated for years to come — is how, exactly, did the New England Patriots’ footballs get deflated for the AFC championship game. The most fascinating theory is put forth by Patriot Head Coach Bill Belichick, a man who, at his happiest, looks like irate ferrets are gnawing their way out of his colon. He opines — these are actual quotes — that “atmospheric conditions” could be responsible, and also declares that “I’ve handled dozens of balls over the past week.” This will turn out to be the sports highlight of the year.

  
  JACK OHMAN / Tribune News Service

  In Paris, two million people march in a solidarity rally following the horrific terrorist attack on the French satirical magazine Charlie Hebdo.

  Eyebrows are raised when not a single top U.S. official attends, but several days later, Secretary of State John Kerry arrives in France with James Taylor, who — this really happened — performs the song You’ve Got a Friend. This bold action strikes fear into the hearts of terrorists, who realize that Secretary Kerry is fully capable, if necessary, of unleashing Barry Manilow.

  Meanwhile in Washington, a drone crashes on the White House lawn and immediately becomes a leading contender for the Republican presidential nomination.

  In sports, the first-ever NCAA Division I college football playoffs reach a surprising climax when the Oregon Ducks are defeated in the championship game 42-20 by the New England Patriots. Asked how this is possible, given that the Patriots play in the NFL, Coach Belichick opines that it could be a result of “global climate change.”

  Speaking of surprises, in …

  FEBRUARY

  … NBC suspends Nightly News anchor Brian Williams after an investigation reveals inaccuracies in his account of being in a military helicopter under fire in Iraq. “Mr. Williams did not actually come under fire,” states the network. “Also technically he wasn’t in a helicopter in Iraq; it was a Volvo station wagon on the New Jersey Turnpike. But there was a lot of traffic.” A contrite Williams blames the lapse on post-traumatic stress disorder resulting from killing Osama bin Laden.

  Abroad, Greece, under intense pressure to meet its debt obligations, gives Germany two of its three remaining goats.

  In the War on Terror, the White House, having struck a powerful blow with the James Taylor Tactical Assault Ballad, boldly follows up by — again, this really happened — hosting a three-day “Summit on Countering Violent Extremism,” featuring both workshops AND symposiums.

  In weather news, Boston’s public schools are closed because of glaciers.

  In the year’s biggest literary story, representatives of 88-year-old Harper Lee, denying allegations that they’re seeking to cash in on the beloved author’s literary fame, announce plans to publish what they claim is her recently discovered second book, Fifty Shades of a Mockingbird.

  In the Academy Awards, the Oscar for Best Picture goes to Birdman. Accepting the coveted statuette, director Alejandro G. Iñárritu tells the audience that “like you, I never actually saw this movie.”

  Leonard Nimoy is beamed up for the last time.

  In business news, troubled retailer RadioShack files for bankruptcy, citing the fact that in the past six years, the chain’s 4,000 stores had made a nationwide total of one sale, that being a home email server purchased by Hillary Clinton.

  In sports, the New England Patriots defeat the Seattle Seahawks 28-24 to win a Super Bowl marked by surprises, including one play in which the Patriots — undetected by game officials — had a grenade launcher on the field, an infraction that Coach Belichick later blames on “wind shear.”

  The most surprising play comes at the end of the game, when the Seahawks, on second and goal with 26 seconds left and Marshawn Lynch, who is basically a UPS truck only harder to tackle, in the backfield, elect to throw a pass, which is intercepted. After the game Seattle Coach Pete Carroll defends his decision to pass. He is immediately hired as a strategic consultant by the Jeb Bush campaign.

  As February draws to a close, 5,000 ISIS troops land in Mexico and march north. They are able to reach Cleveland unnoticed because the entire U.S. population is heatedly arguing over the color of a picture of a dress on the Internet.

  Speaking of heated, in …

  MARCH

  … over the strong objections of the Obama administration, Israeli Prime Minister Benjamin Netanyahu addresses a joint meeting of Congress. He immediately becomes a leading contender for the Republican presidential nomination, four points ahead of the drone.

  Abroad, Russian President Vladimir Putin mysteriously vanishes from public view for 10 days. It is later revealed that he was training customer-service representatives for Comcast.
   

  
  JACK OHMAN / Tribune News Service

  In finance news, shares on European financial markets plummet when German authorities announce that one of the Greek goats is actually a highly modified squirrel.

  Speaking of unnatural: The U.S. Food and Drug Administration approves the sale of genetically modified potatoes and apples, noting that they “offer many nutritional benefits” and are “completely safe” provided that consumers “do not anger them.”

  In a harsh reminder that the winter is not over, Boston Mayor Martin Walsh is eaten by a polar bear.

  Abroad, tensions mount on the Korean peninsula when North Korea, in an unprecedented cyberattack, posts an estimated 23 million negative Yelp reviews of South Korea, including several million containing the phrase “we ordered the dog, which arrived so undercooked that the tail was still wagging.”

  Speaking of tension, in …

  APRIL

  … there is troubling news from Baltimore, where the death of an African-American man in police custody touches off a conversation on race that lasts several days, resulting in 250 arrests and extensive property damage. The Rev. Al Sharpton rushes to the scene but is unable to prevent things from eventually calming down.

  In another alarming development, Washington, D.C., is hit by a power outage, meaning that for several harrowing hours the rest of the nation is forced to form its own policies. A week later Washington is again shaken when a Florida mailman, making a powerful statement for or against something, lands a gyrocopter on the lawn of the Capitol building. He immediately becomes a front-runner for the Republican presidential nomination.

  Elsewhere on the political front, Hillary Clinton declares her candidacy for president and sets out to demonstrate that she is a regular human by riding to Iowa in a custom van driven by Secret Service agents.

  In Maumee, Ohio, she stops at a Chipotle for takeout, a news event that produces a spasm of political journalism. The New York Times (we are not making this journalism up) breaks the story, reporting that Clinton wore sunglasses and ordered a chicken burrito bowl. Bloomberg gets a follow-up scoop, reporting that the Clinton party’s bill was “$20 and some change” but Clinton “did not leave a tip.” Politico runs a 1,200-word story headlined (we are still not making this up) “The ‘everyday people’ who made Hillary Clinton’s burrito bowl.” Incredibly, nobody thinks to do a profile of the chicken.

  In other journalism news, Rolling Stone apologizes for a discredited story about an alleged rape at a college fraternity and announces that it has disciplined its lead fact-checker, Brian Williams.

  Responding with drastic measures to California’s worsening drought, Gov. Jerry Brown announces the creation of a state Saliva Conservation Board.

  Abroad, Djoomart Otorbaev resigns as the prime minister of Kyrgyzstan, citing an inability to get business cards with everything spelled correctly.

  In sports, the NCAA men’s basketball tournament is won by the New England Patriots, who defeat the University of Wisconsin 2-0 in a game featuring a basketball inflated to basically the same pressure as a roadkill squirrel.

  Speaking of sports scandals, in …

  MAY

  … international soccer is rocked by allegations that bribery was involved in awarding the 2022 World Cup to Qatar, a nation with little soccer tradition, as evidenced by the fact that the 12 stadiums it has built for the tournament all feature large decorative fountains in the middle of the playing field.

  But the big sports story is the long-awaited — we’re talking decades — boxing match between Floyd Mayweather Jr. and Manny Pacquiao for the undisputed world title in the Older Guys Basically Standing Around division.

  Mayweather wins the fight and takes home $220 million, which works out to a little over $70 million per punch actually landed, then celebrates by attempting to wake up his entourage.

  Elsewhere in sports, the Kentucky Derby is won by New England Patriots quarterback Tom Brady, riding tight end Rob Gronkowski. All the actual horses in the race mysteriously collapse at the starting line from what Coach Bill Belichick speculates could be “allergies.” Brady also wins the Indianapolis 500 driving a U.S. Army M1 Abrams battle tank that averages only 30 miles per hour but proves to be extremely difficult for the other vehicles to pass.

  Abroad, there is big excitement in England, where Prince William and Catherine, Duchess of Cambridge, produce another royal baby, who, in a sign of the changing times, is christened Princess Brooklyn Dakota. She joins the line of royals destined to spend their lives gamely trying to appear interested in an endless series of building dedications.

  In Garland, Texas, two armed men are gunned down by police after they open fire on a security guard outside an exhibit of Muhammed cartoons, highlighting the need for a national conversation on the problem of cartoonists drawing things that leave religious fanatics with no choice but to try to kill them. James Taylor is unavailable, so federal authorities dispatch The Captain and Tennille to the scene, where they perform a powerful version of Muskrat Love.

  As California’s drought continues to worsen, Gov. Brown announces a controversial relief plan involving Lake Superior and a 17-million-foot hose.

  In a disturbing development, a Seattle convenience store is robbed at gunpoint by what police identify from the surveillance video as a genetically modified potato.

  Speaking of disturbing, in …

  JUNE

  … the federal Office of Personnel Management announces that hackers have gained access to the personal records of millions of current and former government employees. An OPM statement downplays the seriousness of the data breach, stressing that “if anybody publishes any photos allegedly depicting an alleged cabinet secretary with an alleged goat, those are fake,” further noting that “it was totally a consenting goat.”

  In another disturbing federal story, a report on an undercover investigation into airport security reveals that Transportation Security Administration screeners failed to detect banned items, including weapons and explosives, 67 out of 70 times. Responding to the report, TSA officials state: “What report? We don’t see any report.”

  In a historic decision on gay rights, the nation’s highest legal authority — Kim Davis, clerk of Rowan County, Kentucky — overturns the U.S. Supreme Court’s ruling that state laws banning same-sex marriage are unconstitutional.

  Meanwhile, in what is widely hailed as a brave and courageous display of bravery and courage, a 65-year-old woman allows herself to be pictured on the cover of Vanity Fair wearing only a corset.

  In other gender news, the Treasury Department asks for input from the public on which woman will be depicted on the redesigned $10 bill. The immediate front-runners are Mary Ann, Ginger, Taylor Swift and the two sisters from Frozen.
   

  
  JACK OHMAN / Tribune News Service

  On the political front, the big story is Donald Trump, who declares his candidacy for president and lays out a bold, far-reaching vision for America consisting of whatever thought is flitting through his mind at that particular moment. Trump is deemed to have no chance by veteran Washington-based political experts with vast knowledge of what all the other veteran Washington-based political experts think. Also declaring his candidacy, and predicted by the experts to do far better, is Jeb Bush, whose official campaign slogan is: “Jeb! — The Exclamation Mark Denotes Enthusiasm.”

  Speaking of excitement, in …

  JULY

  … the New Horizons interplanetary probe, having traveled more than three billion miles over nearly 10 years, finally reaches Pluto and transmits back data proving conclusively — in a discovery that sends shock waves of bladder malfunction throughout the astronomy community — that Pluto consists of both ice AND rocks.

  The nation reacts with horror to the news that a Minnesota dentist has killed Cecil the World’s Suddenly Most Beloved Lion. The dentist instantly becomes a less-popular version of Hitler and goes into hiding to escape animal-rights activists threatening to give him a root canal with a chainsaw. This story totally dominates the news for the better part of a week, which we will eventually look back upon as an innocent time.

  Hackers announce that they have broken into the Ashley Madison website and obtained personal data on millions of clients allegedly seeking to have affairs. A statistical analysis will later reveal that, of the 37 million accounts hacked, only 23 belonged to actual women, 21 of whom were Ashley Madison employees posing as clients. The remaining two belonged to Miley Cyrus.

  Elsewhere on the tech front, Microsoft releases Windows 10, which, in a widely hailed breakthrough, turns Windows 8 back into Windows 7.

  In political news, the crowded field of Republican presidential hopefuls is joined by a person named “John Kasich,” who claims to have at one time been governor of Ohio, although nobody can verify this. On the Democratic side, enthusiasm builds for the candidacy of 147-year-old socialist Bernie Sanders and his populist plan for reining in Wall Street via a combination of stricter financial controls and strategic beheadings.

  In other finance news, the International Monetary Fund sends a collection agent to Athens, only to discover that the Greek government has moved out of Greece without leaving a forwarding address. Also, the Acropolis is missing.

  Speaking of missing: In Mexico, infamous drug lord “El Chapo” (literally, “The Chap”) escapes from a “maximum-security” prison via an elaborate tunnel that somehow was dug to his cell without anybody noticing. Equally alarming is the fact that the other end of the tunnel turns out to be in Miami.

  But the big international news comes from Vienna, where Iran signs a deal with the United States and five other nations under which Iran, in exchange for a lot of money, promises to stop trying to build a nuclear bomb. President Obama says the deal “makes our country, and the world, safer and more secure.” For his part, Iran’s Supreme Leader Ayatollah Ali Khamenei says, quote, “Death to America,” but he says it in what U.S. negotiators describe as “a softer tone.”

  In sports, the U.S. wins the Women’s World Cup, defeating Japan 5-2, with three of the goals being scored by Tom Brady wearing a Brandi Chastain model sports bra.

  Speaking of hot, in …

  AUGUST

  … The U.S. National Oceanic and Atmospheric Administration reports that July was the hottest month globally ever recorded. With a renewed sense of urgency, the world’s industrialized nations vow to continue sending large delegations via jumbo jets to distant conferences on climate change until this darned thing has been licked.

  In politics, the Republicans hold their first presidential debate, featuring approximately 75 candidates ranging outward in popularity from Donald Trump at center stage to John Kasich and the late Warren G. Harding out at the far edges. Jeb Bush has an off night, falling asleep several times during his own answers. Ben Carson does better, except for when he identifies Pyongyang as “a kind of lobster.” Trump dominates the evening, at one point ordering everybody to shut up while he takes a call onstage from Beyoncé. Savvy Washington-based political insiders agree, after conferring with other savvy Washington-based political insiders, that Trump’s unorthodox behavior will alienate voters and he will be out of the race by fall.

  On the Democratic side, Hillary Clinton continues to have no choice but to roll her eyes over all these pesky scandals that her enemies keep dreaming up to prevent her from serving the American people, especially women. The current scandal involves the email server she used as secretary of state, which, in a deviation from government-security standards, was located in her home and had Mrs. Clinton’s personal secret password (“PASSWORD”) written on a sticky note stuck to the front. A Clinton spokesperson, speaking through another Clinton spokesperson who was briefed by a third Clinton spokesperson on condition of anonymity, denies that the server ever held classified emails and promises that it will be turned over to the FBI “as soon as it has been melted down to a softball-sized blob.”

  In financial news, the stock market unexpectedly plunges more than 1,000 points. Small investors are urged not to panic by financial experts who (a) did not predict the plunge, (b) cannot explain why it happened, (c) have no earthly idea what will happen next, and (d) have their own money invested in collectible refrigerator magnets.

  Abroad, the German parliament votes to give yet another financial bailout to Greece, in return for which Greece agrees not to publish photographs of Angela Merkel naked.

  In geography news, President Obama signs an executive order officially changing the name of North America’s tallest mountain, Mount McKinley, back to its traditional Native American name, Elvis.

  Speaking of rock stars, in …

  SEPTEMBER

  … the popular Pope Francis becomes the first pope ever to address a joint meeting of Congress, issuing a powerful challenge to the lawmakers to work together toward solving pressing world problems including hatred, poverty and pollution. Congress, inspired to take rare bipartisan action but apparently confused by Francis’ thick accent, votes unanimously to declare war on Greenland.

  In political news, The New York Times runs the following actual headline: “Hillary Clinton to Show More Humor and Heart, Aides Say.” Mrs. Clinton reportedly will display 17 percent more humor and 23 percent more heart, according to anonymous Clinton aides who were briefed by anonymous Clinton strategists who had direct access to what one source, who asked not to be named, described as “a high-level Clinton confidante.” The source said the Clinton team is also considering having Mrs. Clinton “directly engage selected voters in banter.”
   

  
  JACK OHMAN / Tribune News Service

  On the Republican side, Rick Perry and Scott Walker drop out of the presidential race after polls show them both trailing the late Warren G. Harding. Meanwhile Donald Trump continues to present his vision for America’s future in the form of a steady stream of hastily composed tweets insulting people who have offended him. This strategy has Trump easily leading the GOP field, to the consternation of knowledgeable Washington-based insiders with vast knowledge pertaining to the inside of Washington.

  Excited Apple fans line up to purchase the new iPhone 6s, which is identical to the iPhone 6 except it has a special alarm that will alert Apple fans exactly when to line up to purchase the next new iPhone, due out in approximately three months.

  In business news, the Environmental Protection Agency accuses Volkswagen of cheating on emissions testing, precipitating an international scandal that ultimately forces VW’s Martin Winterkorn to resign and take a job as equipment manager for the New England Patriots.

  Speaking of scandals, in …

  OCTOBER

  … Hillary Clinton testifies for 127 straight hours before the House Committee On Investigating Benghazi Until The Earth Crashes Into The Sun. There are many testy exchanges between Clinton and Republican congressmen, but in the end the American public has a much clearer picture of the extremely high level of mutual loathing that makes our government work the way it does.

  In other political news, a person calling himself “Lincoln Chafee” manages to get onto the stage of the Democratic presidential candidates’ debate on CNN and make several policy statements before he is noticed by security and escorted out. This might have been embarrassing for the Democrats, but fortunately nobody is watching CNN, including moderator Anderson Cooper, who is openly playing Candy Crush.

  After much agonizing, Vice President Joe Biden announces that he will not run for president, stressing that the decision had nothing to do with the severed horse head wearing a HILLARY! button he found in his bed, which Biden says he believes “was meant in a supportive way.”

  Meanwhile the Republican candidates’ debate on CNBC takes a lively turn when Ted Cruz, responding to a question about the federal budget agreement, throws a chair at moderator Carl Quintanilla, setting off a round of applause so loud that it awakens Jeb Bush, who notes that as governor of Florida he had a strong record of promoting furniture safety.

  Knowledgeable Washington insiders declare that the clear debate winners are Cruz, Marco Rubio and Chris Christie, so it is no surprise that Donald Trump and Ben Carson surge still farther ahead in the polls.

  In sports, FIFA, the scandal-plagued governing body of international soccer, suspends its president, Sepp “Sepp” Blatter. Among those seeking to replace him is a South African businessman named — we are not making this name up — Tokyo Sexwale.
   

  
  JACK OHMAN / Tribune News Service

  A huge military blimp breaks loose from its moorings and rampages across Pennsylvania, wreaking havoc and knocking out power for thousands before being lured back into captivity by a Hello Kitty blimp hastily borrowed from the Macy’s Thanksgiving parade and positioned in what a Pentagon source describes as “a provocative pose.”

  Speaking of havoc, in …

  NOVEMBER

  … the world reels in shock after horrific terrorist attacks in Paris and Mali. With rumors of new threats coming daily, the U.S. State Department briefly considers unleashing Neil Diamond and Barbra Streisand (code name “Doomsday Duet”) to sing You Don’t Bring Me Flowers but elects instead to issue a Worldwide Travel Alert, warning American citizens to avoid potentially dangerous areas, “especially the Northern and Southern Hemispheres.” The department assures Americans that “there is no need to panic,” stressing that they should “remain in bed paralyzed by butt-puckering fear.”

  But November is not just a time for fear: It is also a time, as Thanksgiving ushers in the holiday season, for all Americans, regardless of ethnicity, religion or political views, to be deeply offended. Nobody is more offended than college students, who stage a series of protests over the racism, sexism, fascism, heteronormism and — trigger warning — insensitive Halloween costumes that constitute the festering hellhole of hurtful things that is the modern American college campus and THERE IS NOTHING FUNNY ABOUT IT.

  Also deeply offended in November are people who have taken time out of their busy lives to notice that the 2015 Starbucks holiday cup is just plain red and — trigger warning — does not have snowflakes or reindeer on it. This is yet another salvo in the War On Christmas, which has completely eliminated Christmas from our lives except for Christmas carols playing on loudspeakers everywhere and huge Christmas displays in every store and Christmas movies on TV constantly and numerous Christmas-related news stories and an endless stream of Christmas-themed commercials running 24/7 since approximately Labor Day.

  In presidential politics, Ben Carson reacts angrily to CNN reports suggesting that he never tried to stab anybody or hit his mother with a hammer. Really. Donald Trump continues his two-pronged campaign of saying reprehensible things and then clarifying his statements by saying he didn’t really say them so STOP HATING YOU PATHETIC LOSERS, a strategy that continues to cost him vital support among knowledgeable Washington insiders. Jeb Bush seeks to revive his flagging campaign by unleashing an awesome new slogan —“Jeb Can Fix It!” — and immediately surges ahead in the coveted 3-year-old-boy voter demographic.

  On the Democratic side, Hillary Clinton continues to execute spontaneous acts such as smiling while campaigning on the theme that she is both a human being and a woman who cares about other humans in the middle class and women specifically.

  In a major sports upset, the seemingly invincible Ronda Rousey is defeated in a UFC title fight by Tom Brady, who uses a maneuver he calls the “crowbar,” although Coach Bill Belichick is quick to point out that in fact it is “just a regular claw hammer.”

  In the World Series, the Kansas City Royals defeat the New York Mets. The payrolls of these two teams combined are less than the payroll of the New York Yankees, who were eliminated immediately from the playoffs in the Wild Card game by the Houston Astros, whose payroll is less than a third of the Yankees’.

  As the month draws to a close, tensions in the Middle East run high amid rumors that the Obama administration, in what would be a major escalation of American presence, is considering staging a Black Friday sale in Syria. Fortunately these rumors prove to be false and the worst retail violence is confined within U.S. borders. But the world situation remains troubling in …

  DECEMBER

  … when, with the menacing specter of global climate change looming like some kind of spectral menace or something, 150 world leaders, finally getting serious about this urgent threat to the planet’s future, decide to stay home and confer via Skype.

  Ha ha! Seriously, the leaders all fly to Paris, where they and their security details and their vast minion entourages travel around in high-speed motorcades to attend dinners and make speeches about the importance of figuring out how to reduce these pesky carbon emissions. In the end they sign a Historic Agreement under which all parties commit to a concrete, legally binding and unbreakable schedule of potentially attending additional conferences at some point in the future, although skeptics note that Chinese President Xi Jinping signs his name on the official document as “Phil McCracken.”

  In another feel-good story, Facebook founder Mark Zuckerberg announces that he will give back the 45 billion hours that the average American has wasted on Facebook.

  On a more disturbing note, the Food and Drug Administration confirms reports that genetically modified fruits and vegetables have been escaping from supermarkets and mating in the wild with other species. The FDA stresses that this is “a manageable problem” and downplays sightings in Florida of a so-called “potator,” half potato and half alligator, which according to terrified locals lurks underground, has huge jaws and dozens of eyes and can be stopped only by bullets tipped with sour cream.

  

   

  Speaking of potatoes: Tensions rise in Europe when the Russian government announces that it is launching a new business startup called “Tuber,” described as “like Uber, except with tanks.”

  In entertainment news, 20th Century Fox denies rumors that in the movie The Revenant, the character played by Leonardo DiCaprio is raped by a bear. “The bear in the film is a female,” states a Fox spokesperson, referring to a computer-generated bear nicknamed “Judy,” who on the same day is nominated for a film industry animation award in the same category as the Hulk. This actually happened.

  In presidential politics, Trump Trump Trump Trump Trump Trump Trump Trump Trump Trump Trump Trump Trump Trump Trump Trump Trump Trump Trump Trump Trump Trump Trump Trump Trump Trump Trump Trump Trump Trump Trump Trump Trump Trump Trump Trump Trump Trump Trump.

  But with the Iowa caucuses and New Hampshire primary just around the corner, analysts struggle to make sense of new polls showing that, suddenly, the clear leader in both states, for both parties, is Tom Brady.

  The scary part is: That wouldn’t be so bad.

  As the year finally staggers to a close, Americans set aside their differences, if only briefly, and join together in the cherished, time-honored tradition of pretending that New Year’s Eve is fun. So let’s raise a glass to toast the demise of 2015. Then let’s set the glass down untasted, in case God forbid it contains gluten. Then let’s go to bed.

  Happy New Year.

  

  

  

  

  

• "Christmas Is Dead" Hyperinflated Venezuelans Face Holiday Without Lights, Food, & Hope

  In 2013, Maduro’s first year in office, the government released a Christmas carol praising the Socialist utopia's dictator. Last year, Maduro debuted a “socialist Barbie” that almost bankrupted stores forced to sell it after the government forced the price down to a tenth of its value. And this year, as AFP reports, "Christmas is dead, there is not enough money," according to one resident, noting there is no Christmas decor anywhere and people do not have enough money to buy presents. Some cannot even afford the basic goods needed to put together a traditional feast of roast pork and assorted sides.

   The government’s take on Christmas celebrations has been significantly more muted this year than in 2014. As Breitbart reports,

  Last year, Maduro debuted a “socialist Barbie” that almost bankrupted stores forced to sell it after the government forced the price down to a tenth of its value.

   

  Barbie was the latest in a series of goods – eggs, milk, flour, vegetable oil – to suffer a similar fate. Fixed price controls forced the government to issue ration cards for basic goods in 2014. That year, Maduro also used his time on television to condemn the anti-socialist opposition for being “grinches” trying to “steal Christmas” from the people by condemning said price controls and demanding an end to the violent oppression of dissidents.

   

  In 2013, Maduro’s first year in office, the government released a Christmas carol praising Maduro titled “Knock Knock– Who Is It? People Of Peace, Lower Those Prices, Nicolás Is Here.”

  Maduro has been significantly less prominent in holiday celebrations this year following the overwhelming defeat of the Venezuelan United Socialist Party (PSUV) in the December 6 legislative elections.

  “This year, Christmas is dead, there is not enough money,” Elise Belisario, a resident of the Caracas suburb Petare, tells Agence France-Presse (AFP). She notes there is no Christmas decor anywhere and people do not have enough money to buy presents. Some cannot even afford the basic goods needed to put together a traditional feast of roast pork and assorted sides.

   

  The website El Colombiano estimates that a full Christmas dinner costs between 2,000 and 3,000 bolívares, which is the equivalent of about one third of a monthly minimum wage. Individual basic food items can rack that price up significantly if especially scarce in any particularly neighborhood. For example, a woman selling eggs on the black market in Caracas tells AFP a box of 30 eggs costs 1,300 bolívars alone.

   

  It is difficult to estimate how much these prices would translate to in dollars because the government insists on setting the value of its currency at a fixed rate most believe is intended to mask the nation’s hyperinflation problem, and is significantly higher than the real value of the bolívar on the black market. The Venezuelan website Dolar Today, which tracks the price of the bolívar on the black market, claims one American dollar is worth 841 bolívars today. This would make Venezuela’s minimum wage about $11 a month.

   

  In addition to food items, non-necessary goods have seen a massive spike in prices. El Colombiano estimates the price of a Christmas tree to be up to 33,000 bolívars. A toy doll costs around 15,000 bolívars. “You either eat or you dress your children,” Lucía González, a vendor in Caracas, tells the publication.

  *  *  *

  Socialist utopia… where everyone is equally pissed off…

  

   

  

  

  

  

  

• The After-Christmas Hangover: Why There Is No Peace On Earth

  Submitted by David Stockman via Contra Corner blog,

  After the Berlin Wall fell in November 1989 and the death of the Soviet Union was confirmed two years later when Boris Yeltsin courageously stood down the red army tanks in front of Moscow’s White House, a dark era in human history came to an end.

  The world had descended into what had been a 77-year global war, incepting with the mobilization of the armies of old Europe in August 1914. If you want to count bodies, 150 million were killed by all the depredations which germinated in the Great War, its foolish aftermath at Versailles, and the march of history into the world war and cold war which followed inexorably thereupon.

  To wit, upwards of 8% of the human race was wiped-out during that span. The toll encompassed the madness of trench warfare during 1914-1918; the murderous regimes of Soviet and Nazi totalitarianism that rose from the ashes of the Great War and Versailles; and then the carnage of WWII and all the lesser (unnecessary) wars and invasions of the Cold War including Korea and Vietnam.

  I have elaborated more fully on this proposition in “The Epochal Consequences Of Woodrow Wilson’s War“, but the seminal point cannot be gainsaid. The end of the cold war meant world peace was finally at hand, yet 25 years later there is still no peace because Imperial Washington confounds it.

  In fact, the War Party entrenched in the nation’s capital is dedicated to economic interests and ideological perversions that guarantee perpetual war; they ensure endless waste on armaments and the inestimable death and human suffering that stems from 21st century high tech warfare and the terrorist blowback it inherently generates among those upon which the War Party inflicts its violent hegemony.

  So there was a virulent threat to peace still lurking on the Potomac after the 77-year war ended. The great general and president, Dwight Eisenhower, had called it the “military-industrial complex” in his farewell address, but that memorable phrase had been abbreviated by his speechwriters, who deleted the word “congressional” in a gesture of comity to the legislative branch.

  So restore Ike’s deleted reference to the pork barrels and Sunday afternoon warriors of Capitol Hill and toss in the legions of beltway busybodies that constituted the civilian branches of the cold war armada (CIA, State, AID etc.) and the circle would have been complete. It constituted the most awesome machine of warfare and imperial hegemony since the Roman legions bestrode most of the civilized world.

  In a word, the real threat to peace circa 1990 was that Pax Americana would not go away quietly in the night.

  In fact, during the past 25 years Imperial Washington has lost all memory that peace was ever possible at the end of the cold war. Today it is as feckless, misguided and bloodthirsty as were Berlin, Paris, St. Petersburg, Vienna and London in August 1914.

  Back then a few months after the slaughter had been unleashed, soldiers along the western front broke into spontaneous truces of Christmas celebration, singing and even exchange of gifts. For a brief moment they wondered why they were juxtaposed in lethal combat along the jaws of hell.

  The truthful answer is that there was no good reason. The world had stumbled into war based on false narratives and the institutional imperatives of military mobilization plans, alliances and treaties arrayed into a doomsday machine and petty short-term diplomatic maneuvers and political calculus. Yet it took more than three-quarters of a century for all the consequential impacts and evils to be purged from the life of the planet.

  The peace that was lost last time has not been regained this time for the same reasons. Historians can readily name the culprits from 100 years ago, such as the German general staff’s plan for a lightening mobilization and strike on the western front called the Schlieffen Plan or Britain’s secret commitments to France to guard the North Sea while the latter covered the Mediterranean.

  Since these casus belli of 1914 were criminally trivial in light of all that metastisized thereafter, it might do well to name the institutions and false narratives that block the return of peace today. The fact is, these impediments are even more contemptible than the forces that crushed the Christmas truces one century ago.

  Imperial Washington – Global Menace

  There is no peace on earth today for reasons mainly rooted in Imperial Washington—— not Moscow, Beijing, Tehran, Damascus, Mosul or Raqqah. The former has become a global menace owing to what didn’t happen in 1991.

  What should have happened is that Bush the elder should have declared “mission accomplished” and slashed the Pentagon budget from $600 billion to $200 billion; demobilized the military-industrial complex by putting a moratorium on all new weapons development, procurement and export sales; dissolved NATO and dismantled the far-flung network of US military bases; slashed the US standing armed forces from 1.5 million to a few hundred thousand; and organized and led a world disarmement and peace campaign, as did his Republican predecessors during the 1920s.

  Unfortunately, George H.W. Bush was not a man of peace, vision or even mediocre intelligence. He was the malleable tool of the War Party, and it was he who single-handedly blew the peace when he plunged America into a petty arguement between the impetuous dictator of Iraq and the gluttonous Emir of Kuwait that was none of our business.

  By contrast, even though liberal historians have reviled Warren G. Harding as some kind of dumbkopf politician, he well understood that the Great War had been for naught, and that to insure it never happened again the nations of the world needed to rid themselves of their huge navies and standing armies.

  To that end, he achieved the largest global disarmament agreement ever during the Washington Naval conference of 1921, which halted the construction of new battleships for more than a decade.

  

  And while he was at it, President Harding also pardoned Eugene Debs. So doing, he gave witness to the truth that the intrepid socialist candidate for president and vehement anti-war protestor, who Wilson had thrown in prison for exercising his first amendment right to speak against US entry into a pointless European war, had been right all along.

  In short, Warren G. Harding knew the war was over, and the folly of Wilson’s 1917 plunge into Europe’s bloodbath should not be repeated at all hazards.

  Not George H.W. Bush. The man should never be forgiven for enabling the likes of Dick Cheney, Paul Wolfowitz, Robert Gates and their neocon pack of jackals to come to power—-even if he has denounced them in his bumbling old age.

  Even more to the point, by opting not for peace but for war and oil in the Persian Gulf in 1991 he opened the gates to an unnecessary confrontation with Islam and nurtured the rise of jihadist terrorism that would not haunt the world today save for forces unleashed by George Bush’s petulant quarrel with Saddam Hussein.

  We will momentarily get to the 45-year old error that holds the Persian Gulf is an American Lake and that the answer to high old prices and energy security is the Fifth Fleet. Actually, the answer to high oil prices everywhere and always is high oil prices—–a truth driven home in spades again this week when the Brent oil price plunged below $35 per barrel.

  But first it is well to remember that there was no plausible threat anywhere on the planet to the safety and security of the citizens of Springfield MA, Lincoln NE or Spokane WA when the cold war ended.

  The Warsaw Pact had dissolved into more than a dozen woebegone sovereign statelets; the Soviet Union was now unscrambled into 15 independent and far-flung Republics from Belarus to Tajikistan; and the Russian motherland would soon plunge into an economic depression that would leave it with a GDP about the size of the Philadelphia SMSA.

  Likewise, China’s GDP was even smaller and more primitive than Russia’s. Even as Mr. Deng was discovering the PBOC printing press that would enable it to become a great mercantilist exporter, an incipient threat to national security was never in the cards. After all, it was 4,000 Wal-Marts in America upon which the prosperity of the new red capitalism inextricably depended and upon which the rule of the communist oligarchs in Beijing was ultimately anchored.

  No Islamic Or Jihadi Terrorist Threat Circa 1990

  In 1990 there was no global Islamic threat or jihadi terrorist menace at all. What existed under those headings were sundry fragments and deposits of middle eastern religious, ethnic and tribal history that were of moment in their immediate region, but no threat to America whatsoever.

  The Shiite/Sunni divide had co-existed since 671AD, but its episodic eruptions into battles and wars over the centuries had rarely extended beyond the region, and certainly had no reason to fester into open conflict in 1990.

  Inside the artificial state of Iraq, which had been drawn on a map by  historically ignorant European diplomats in 1916, for instance, the Shiite and Sunni got along tolerably well. That’s because the nation was ruled by Saddam Hussein’s Baathist brand of secular Arab nationalism.

  The latter championed law and order, state driven economic development and politically apportioned distribution from the spoils of the extensive government controlled oil sector. To be sure, Baathist socialism didn’t bring much prosperity to the well-endowed lands of Mesopotamia, but Hussein did have a Christian foreign minister and no sympathy for religious extremism or violent pursuit of sectarian causes.

  As it happened, the bloody Shiite/Sunni strife that plagues Iraq today and functions as a hatchery for angry young jihadi terrorists in their thousands was unleashed only after Hussein had been driven from Kuwait and the CIA had instigated an armed uprising in the Shiite heartland around Basra. That revolt was brutally suppressed by Hussein’s republican guards, but it left an undertow of resentment and revenge boiling below the surface.

  Needless to say, the younger Bush and his cabal of neocon warmongers could not leave well enough alone. When they foolishly destroyed Saddam Hussein and his entire regime in the pursuit of nonexistent WMDs and ties with al-Qaeda, they literally opened the gates of hell, leaving Iraq as a lawless failed state where both recent and ancient religious and tribal animosities are given unlimited violent vent.

  Likewise, the Shiite theocracy ensconced in Tehran was an unfortunate albatross on the Persian people, but it was no threat to America’s safety and security. The very idea that Tehran is an expansionist power bent on exporting terrorism to the rest of the world is a giant fiction and tissue of lies invented by the Washington War Party and its Bibi Netanyahu branch in order to win political support for their confrontationist policies.

  Indeed, the three decade long demonization of Iran has served one over-arching purpose. Namely, it enabled both branches of the War Party to conjure up a fearsome enemy, thereby justifying aggressive policies that call for a constant state of war and military mobilization.

  When the cold-war officially ended in 1991, the Cheney/neocon cabal feared the kind of drastic demobilization of the US military-industrial complex that was warranted by the suddenly more pacific strategic environment. In response, they developed an anti-Iranian doctrine that was explicitly described as a way of keeping defense spending at high cold war levels.

  And the narrative they developed to this end is one of the more egregious Big Lies ever to come out of the beltway. It puts you in mind of the young boy who killed his parents, and then threw himself on the mercy of the courts on the grounds that he was an orphan!

  To wit, during the 1980s the neocons in the Reagan Administration issued their own fatwa again the Islamic Republic based on its rhetorical hostility to America. Yet that enmity was grounded in Washington’s 25-year support for the tyrannical and illegitimate regime of the Shah, and constituted a founding narrative of the Islamic Republic that was not much different than America’s revolutionary castigation of King George.

  That the Iranians had a case is beyond doubt. The open US archives now prove that the CIA overthrew Iran’s democratically elected government in 1953 and put the utterly unsuited and megalomaniacal Mohammad Reza Shah on the peacock throne to rule as a puppet in behalf of US security and oil interests.

  During the subsequent decades the Shah not only massively and baldly plundered the wealth of the Persian nation; with the help of the CIA and US military, he also created a brutal secret police force known as the Savak. The latter made the East German Stasi look civilized by comparison.

  All elements of Iranian society including universities, labor unions, businesses, civic organizations, peasant farmers and many more were subjected to intense surveillance by the Savak agents and paid informants. As one critic described it:

  Over the years, Savak became a law unto itself, having legal authority to arrest, detain, brutally interrogate and torture suspected people indefinitely. Savak operated its own prisons in Tehran, such as Qezel-Qalaeh and Evin facilities and many suspected places throughout the country as well. Many of those activities were carried out without any institutional checks.

  Ironically, among his many grandiose follies, the Shah embarked on a massive civilian nuclear power campaign in the 1970s, which envisioned literally paving the Iranian landscape with dozens of nuclear power plants.

  He would use Iran’s surging oil revenues after 1973 to buy all the equipment required from Western companies—– and also fuel cycle support services such as uranium enrichment——in order to provide his kingdom with cheap power for centuries.

  At the time of the Revolution, the first of these plants at Bushehr was nearly complete, but the whole grandiose project was put on hold amidst the turmoil of the new regime and the onset of Saddam Hussein’s war against Iran in September 1980. As a consequence, a $2 billion deposit languished at the French nuclear agency that had originally obtained it from the Shah to fund a ramp-up of its enrichment capacity to supply his planned battery of reactors.

  Indeed, in this very context the new Iranian regime proved quite dramatically that it was not hell bent on obtaining nuclear bombs or any other weapons of mass destruction. In the midst of Iraq’s unprovoked invasion of Iran in the early 1980s the Ayatollah Khomeini issued a fatwa against biological and chemical weapons.

  Yet at that very time, Saddam was dropping these horrific weapons on Iranian battle forces—-some of them barely armed teenage boys—- with the spotting help of CIA tracking satellites and the concurrence of Washington. So from the very beginning, the Iranian posture was wholly contrary to the War Party’s endless blizzard of false charges about its quest for nukes.

  However benighted and medieval its religious views, the theocracy which rules Iran does not consist of demented war mongers. In the heat of battle they were willing to sacrifice their own forces rather than violate their religious scruples to counter Saddam’s WMDs.

  Then in 1983 the new Iranian regime decided to complete the Bushehr power plant and some additional elements of the Shah’s grand plan. But when they attempted to reactivate the French enrichment services contract and buy necessary power plant equipment from the original German suppliers they were stopped cold by Washington. And when the tried to get their $2 billion deposit back, they were curtly denied that, too.

  To make a long story short, the entire subsequent history of off again/on again efforts by the Iranians to purchase dual use equipment and components on the international market, often from black market sources like Pakistan, was in response to Washington’s relentless efforts to block its legitimate rights as a signatory to the Nuclear Nonproliferation Treaty (NPT) to complete some parts of the Shah’s civilian nuclear project.

  Needless to say, it did not take much effort by the neocon “regime change” fanatics which inhabited the national security machinery, especially after the 2000 election, to spin every attempt by Iran to purchase even a lowly pump or pipe fitting as evidence of a secret campaign to get the bomb.

  The exaggerations, lies, distortions and fear-mongering which came out of this neocon campaign are truly disgusting. Yet they incepted way back in the early 1990s when George H.W. Bush actually did reach out to the newly elected government of Hashemi Rafsanjani to bury the hatchet after it had cooperated in obtaining the release of American prisoners being held in Lebanon in 1989.

  The latter was self-evidently a pragmatist who did not want conflict with the United States and the West; and after the devastation of the eight year war with Iraq was wholly focused on economic reconstruction and even free market reforms of Iran’s faltering economy.

  It is one of the great tragedies of history that the neocons managed to squelch even George Bush’s better instincts with respect to rapprochement with Tehran.

  So the prisoner release opening was short-lived—especially after the top post at the CIA was assumed in 1991 by Robert Gates. He was one of the very worst of the unreconstructed cold war apparatchiks who looked peace in the eye, and elected, instead, to pervert John Quincy Adams’ wise maxim by searching the globe for monsters to fabricate.

  In this case the motivation was especially loathsome. Gates had been Bill Casey’s right hand man during the latter’s rogue tenure at the CIA in the Reagan administration. Among the many untoward projects that Gates shepherded was the Iran-Contra affair that nearly destroyed his career when it blew-up, and for which he blamed the Iranian’s for its public disclosure.

  From his post as deputy national security director in 1989 and then as CIA head Gates pulled out all the stops to get even. Almost single-handedly he killed-off the White House goodwill from the prisoner release, and launched the blatant myth that Iran was both sponsoring terrorism and seeking to obtain nuclear weapons.

  Indeed, it was Gates who was the architect of the demonization of Iran that became a staple of War Party propaganda after the 1991. In time that morphed into the utterly false claim that Iran is an aggressive would be hegemon that is a fount of terrorism and is dedicated to the destruction of the state of Israel, among other treacherous purposes.

  That giant lie was almost single-handedly fashioned by the neocons and Bibi Netanyahu’s coterie of power-hungry henchman after the mid-1990s. Indeed, the false claim that Iran posses an “existential threat” to Israel is a product of the pure red meat domestic Israeli politics that have kept Bibi in power for much of the last two decades.

  But the truth is Iran has only a tiny fraction of Israel’s conventional military capability. And compared to the latter’s 200 odd nukes, Iran has never had a nuclear weaponization program after a small scale research program was ended in 2003.

  That is not my opinion. It’s been the sober assessment of the nation’s top 16 intelligence agencies in the official National Intelligence Estimates ever since 2007. And now in conjunction with a further study in conjunction with the nuclear accord that will straight-jacket even Iran’s civilian program and eliminate most of its enriched uranium stock piles and spinning capacity,  the IAEA has concluded the Iran had no secret program after 2003, neither.

  On the political and foreign policy front, Iran is no better or worse than any of the other major powers in the Middle East. In many ways it is far less of a threat to regional peace and stability than the military butchers who now run Egypt on $1.5 billion per year of US aid.

  And it is surely no worse than the corpulent tyrants who squander the massive oil resources of Saudi Arabia in pursuit of unspeakable opulence and decadence to the detriment of the 30 million citizens which are not part of the regime, and who one day may well reach the point of revolt.

  When it comes to the support of terrorism, the Saudis have funded more jihadists and terrorists throughout the region than Iran ever even imagined.

  Myth Of The Shiite Crescent

  In this context, the War Party’s bloviation about Iran’s leadership of the so-called Shiite Crescent is another component of Imperial Washington’s 25-year long roadblock to peace. Iran wasn’t a threat to American security in 1991, and it has never since then organized a hostile coalition of terrorists that require Washington’s intervention.

  Start with Iran’s long-standing support of Bashir Assad’s government in Syria. That alliance that goes back to his father’s era and is rooted in the historic confessional politics of the Islamic world.

  The Assad regime is Alawite, a branch of the Shiite, and despite the regime’s brutality, it has been a bulwark of protection for all of Syria’s minority sects, including Christians, against a majority-Sunni ethnic cleansing. The latter would surely occur if the Saudi supported rebels, led by the Nusra Front and ISIS, were ever to take power.

  Likewise, the fact that the Bagdhad government of the broken state of Iraq——that is, the artificial 1916 concoction of two stripped pants European diplomats (Messrs. Sykes and Picot of the British and French foreign offices, respectively)——–is now aligned with Iran is also a result of confessional politics and geo-economic propinquity.

  For all practical purposes, the Kurds of the northeast have declared their independence and the western Sunni lands of the upper Euphrates have been conquered by ISIS with American weapons dropped in place by the hapless $25 billion Iraqi army minted by Washington’s departing proconsuls.

  Accordingly, what is left of Iraq is a population that is overwhelmingly Shiite, and which nurses bitter resentments after two decades of violent conflict with the Sunni forces. Why in the world, therefore, wouldn’t they ally with their Shiite neighbor?

  Likewise, the claim that Iran is now trying to annex Yemen is pure claptrap. The ancient territory of Yemen has been racked by civil war off and on since the early 1970s.  And a major driving force of that conflict has been confessional differences between the Sunni south and the Shiite north.

  In more recent times, Washington’s blatant drone war inside Yemen against alleged terrorists and its domination and financing of Yemen’s governments eventually produced the same old outcome. That is, another failed state and an illegitimate government which fled at the 11th hour, leaving another vast cache of American arms and equipment behind.

  Accordingly, the Houthis forces now in control of substantial parts of the country are not some kind of advanced guard sent in by Tehran. They are indigenous partisans who share a confessional tie with Iran, but which have actually been armed by the US.

  And the real invaders in this destructive civil war are the Saudis, whose vicious bombing campaign against civilian populations controlled by the Houthis are outright war crimes if the word has any meaning at all.

  Finally, there is the fourth element of the purported Iranian axis—–the Hezbollah controlled Shiite communities of southern Lebanon and the Bekaa Valley.  Like everything else in the Middle East, Hezbollah is a product of historical European imperialism, Islamic confessional politics and the frequently misguided and counterproductive security policies of Israel.

  In the first place, Lebanon was not any more a real country than Iraq was when Sykes and Picot laid their straight-edged rulers on a map. The result was a stew of religious and ethnic divisions—-Maronite Catholics, Greek Orthodox, Copts, Druse, Sunnis, Shiites, Alawites, Kurds, Armenians, Jews and countless more—– that made the fashioning of a viable state virtually impossible.

  At length, an alliance of Christians and Sunnis gained control of the country, leaving the 40% Shiite population disenfranchised and economically disadvantaged, as well. But it was the inflow of Palestinian refugees in the 1960s and 1970s that eventually upset the balance of sectarian forces and triggered a civil war that essentially lasted from 1975 until the turn of the century.

  It also triggered a catastrophically wrong-headed Israeli invasion of southern Lebanon in 1982, and a subsequent repressive occupation of mostly Shiite territories for the next eighteen years. The alleged purpose of this invasion was to chase the PLO and Yassir Arafat out of the enclave in southern Lebanon that they had established after being driven out of Jordan in 1970.

  Eventually Israel succeeded in sending Arafat packing to north Africa, but in the process created a militant, Shiite-based resistance movement that did not even exist in 1982, and which in due course became the strongest single force in Lebanon’s fractured domestic political arrangements.

  After Israel withdrew in 2000, the then Christian President of the county made abundantly clear that Hezbollah had become a legitimate and respected force within the Lebanese polity, not merely some subversive agent of Tehran:

  “For us Lebanese, and I can tell you the majority of Lebanese, Hezbollah is a national resistance movement. If it wasn’t for them, we couldn’t have liberated our land. And because of that, we have big esteem for the Hezbollah movement.”^[

  So, yes, Hezbollah is an integral component of the so-called Shiite Crescent and its confessional and political alignment with Tehran is entirely plausible. But that arrangement—-however uncomfortable for Israel—–does not represent unprovoked Iranian aggression on Israel’s northern border.

  Instead, it’s actually the blowback from the stubborn refusal of Israeli governments—–especially the rightwing Likud governments of modern times—–to deal constructively with the Palestinian question.

  In lieu of a two-state solution in the territory of Palestine, therefore, Israeli policy has produced a chronic state of war with nearly half the Lebanese population represented by Hezbollah.

  The latter is surely no agency of peaceful governance and has committed its share of atrocities. But the point at hand is that given the last 35 years of history and Israeli policy, Hezbollah would exist as a menacing force on its northern border even if the theocracy didn’t exist and the Shah or his heir was still on the Peacock Throne.

  In short, there is no alliance of terrorism in the Shiite Crescent that threatens American security. That proposition is simply one of the Big Lies that was promulgated by the War Party after 1991; and which has been happily embraced by Imperial Washington since then in order to keep the military/industrial/security complex alive, and justify its self-appointed role as policeman of the world.

  Washington’s Erroneous View That The Persian Gulf Should Be An American Lake – The Root Of Sunni Jihaddism

  Likewise, the terrorist threat that has arisen from the Sunni side of the Islamic divide is largely of Washington’s own making; and it is being nurtured by  endless US meddling in the region’s politics and by the bombing and droning campaigns against Washington’s self-created enemies.

  At the root of Sunni based terrorism is the long-standing Washington error that America’s security and economic well-being depends upon keeping an armada in the Persian Gulf in order to protect the surrounding oilfields and the flow of tankers through the straits of Hormuz.

  That doctrine has been wrong from the day it was officially enunciated by one of America’s great economic ignoramuses, Henry Kissinger, at the time of the original oil crisis in 1973. The 42 years since then have proven in spades that its doesn’t matter who controls the oilfields, and that the only effective cure for high oil prices is the free market.

  Every tin pot dictatorship from Libya’s Muammar Gaddafi to Hugo Chavez in Venezuela to Saddam Hussein, to the bloody-minded chieftains of Nigeria, to the purportedly medieval Mullahs and fanatical Revolutionary Guards of Iran has produced oil—-and all they could because they desperately needed the revenue.

  For crying out loud, even the barbaric thugs of ISIS milk every possible drop of petroleum from the tiny, wheezing oilfields scattered around their backwater domain. So there is no economic case whatsoever for Imperial Washington’s massive military presence in the middle east, and most especially for its long-time alliance with the despicable regime of Saudi Arabia.

  The truth is, there is no such thing as an OPEC cartel——virtually every member produces all they can and cheats whenever possible. The only thing that resembles production control in the global oil market is the fact that the Saudi princes treat their oil reserves not much differently than Exxon.

  That is, they attempt to maximize the present value of their 270 billion barrels of reserves, but ultimately are no more clairvoyant at calibrating the best oil price to accomplish that than are the economists at Exxon or the IEA.

  The Saudis over-estimated the staying power of China’s temporarily surging call on global supply; and under-estimated how rapidly and extensively the $100 per barrel marker reached in early 2008 would trigger a flow of investment, technology and cheap debt into the US shale patch, the Canadian tar sands, the tired petroleum provinces of Russia, the deep offshore of Brazil etc. And that’s to say nothing of solar, wind and all the other government subsidized alternative source of BTUs.

  Way back when Jimmy Carter was telling us to turn down the thermostats and put on our cardigan sweaters, those of us on the free market side of the so-called energy shortage debate said the best cure for high oil prices is high prices. Now we know.

  So the Fifth Fleet and its overt and covert auxiliaries should never have been there—–going all the way back to the CIA’s coup against Iranian democracy in 1953.

  But having turned Iran into an enemy, Imperial Washington was just getting started when 1990 rolled around. Once again in the name of “oil security” it plunged the American war machine into the politics and religious fissures of the Persian Gulf; and did so on account of a local small potatoes conflict that had no bearing whatsoever on the safety and security of American citizens.

  As US ambassador Glaspie rightly told Saddam Hussein on the eve of his Kuwait invasion, America had no dog in that hunt.

  Kuwait wasn’t even a country; it was a bank account sitting on a swath of oilfields surrounding an ancient trading city that had been abandoned by Ibn Saud in the early 20th century.

  That’s because he didn’t know what oil was or that it was there; and, in any event, it had been made a separate protectorate by the British in 1913 for reasons that are lost in the fog of diplomatic history.

  Likewise, Iraq’s contentious dispute with Kuwait had been over its claim that the Emir of Kuwait was “slant drilling” across his border into Iraq’s Rumaila field. Yet it was a wholly elastic boundary of no significance whatsoever.

  In fact, the dispute over the Rumaila field started in 1960 when an Arab League declaration arbitrarily marked the Iraq–Kuwait border two miles north of the southernmost tip of the Rumaila field.

  And that newly defined boundary, in turn, had come only 44 years after a pair of English and French diplomats had carved up their winnings from the Ottoman Empire’s demise by laying a straight edged ruler on the map. So doing, they thereby confected the artificial country of Iraq from the historically independent and hostile Mesopotamian provinces of the Shiite in the south, the Sunni in the west and the Kurds in the north.

  In short, it did not matter who controlled the southern tip of the Rumaila field—–the brutal dictator of Baghdad or the opulent Emir of Kuwait. Not the price of oil, nor the peace of America nor the security of Europe nor the future of Asia depended upon it.

  The First Gulf War – A Catastrophic Error

  But once again Bush the Elder got persuaded to take the path of war. This time it was by Henry Kissinger’s  economically illiterate protégés at the national security council and his Texas oilman Secretary of State. They falsely claimed that the will-o-wisp of “oil security” was at stake, and that 500,000 American troops needed to be planted in the sands of Arabia.

  That was a catastrophic error, and not only because the presence of crusader boots on the purportedly sacred soil of Arabia offended the CIA-trained Mujahedeen of Afghanistan, who had become unemployed when the Soviet Union collapsed.

  The 1991 CNN glorified war games in the Gulf also further empowered another group of unemployed crusaders. Namely, the neocon national security fanatics who had mislead Ronald Reagan into a massive military build-up to thwart what they claimed to be an ascendant Soviet Union bent on nuclear war winning capabilities and global conquest.

  All things being equal, the sight of Boris Yeltsin, Vodka flask in hand, facing down the Red Army a few months later should have sent them into the permanent repudiation and obscurity they so richly deserved. But Dick Cheney and Paul Wolfowitz managed to extract from Washington’s pyric victory in Kuwait a whole new lease on life for Imperial Washington.

  Right then and there came the second erroneous predicate. To wit, that “regime change” among the assorted tyrannies of the middle east was in America’s national interest.

  More fatally, the neocons now insisted that the Gulf War proved it could be achieved through a sweeping interventionist menu of coalition diplomacy, security assistance, arms shipments, covert action and open military attack and occupation.

  What the neocon doctrine of regime change actually did, of course, was to foster the Frankenstein that utlimately became ISIS. In fact, the only real terrorists in the world which threaten normal civilian life in the West are the rogue offspring of Imperial Washington’s post-1990 machinations in the middle east.

  The CIA trained and armed Mujahedeen mutated into al-Qaeda not because Bin Laden suddenly had a religious epiphany that his Washington benefactors were actually the Great Satan owing to America’s freedom and liberty.

  His murderous crusade was inspired by the Wahhabi fundamentalism loose in Saudi Arabia. This benighted religious fanaticism became agitated to a fever pitch by Imperial Washington’s violent plunge into Persian Gulf political and religious quarrels, the stationing of troops in Saudi Arabia, and the decade long barrage of sanctions, embargoes, no fly zones, covert actions and open hostility against the Sunni regime in Bagdad after 1991.

  Yes, Bin Laden would have amputated Saddam’s secularist head if Washington hadn’t done it first, but that’s just the point. The attempt at regime change in March 2003 was one of the most foolish acts of state in American history.

  The younger Bush’s neocon advisers had no clue about the sectarian animosities and historical grievances that Hussein had bottled-up by parsing the oil loot and wielding the sword under the banner of Baathist nationalism. But Shock and Awe blew the lid and the de-baathification campaign unleashed the furies.

  Indeed, no sooner had George Bush pranced around on the deck of the Abraham Lincoln declaring “mission accomplished” than Abu Musab al-Zarqawi, a CIA recruit to the Afghan war a decade earlier and small-time specialist in hostage-taking and poisons, fled his no count redoubt in Kurdistan to emerge as a flamboyant agitator in the now disposed Sunni heartland.

  The founder of ISIS succeeded in Fallujah and Anbar province just like the long list of other terrorist leaders Washington claims to have exterminated. That is, Zarqawi gained his following and notoriety among the region’s population of deprived, brutalized and humiliated young men by dint of being more brutal than their occupiers.

  Indeed, even as Washington was crowing about the demise of Zarqawi, the remnants of the Baathist regime and the hundreds of thousands of demobilized Republican Guards were coalescing into al-Qaeda in Iraq, and their future leaders were being incubated in a monstrous nearby detention center called Camp Bucca that contained more than 26,000 prisoners.

  

  As one former US Army officer, Mitchell Gray, later described it,

  You never see hatred like you saw on the faces of these detainees,” Gray remembers of his 2008 tour. “When I say they hated us, I mean they looked like they would have killed us in a heartbeat if given the chance. I turned to the warrant officer I was with and I said, ‘If they could, they would rip our heads off and drink our blood.’ ”

   

  What Gray didn’t know — but might have expected — was that he was not merely looking at the United States’ former enemies, but its future ones as well. According to intelligence experts and Department of Defense records, the vast majority of the leadership of what is today known as ISIS, including its leader, Abu Bakr al-Baghdadi, did time at Camp Bucca.

   

  And not only did the US feed, clothe and house these jihadists, it also played a vital, if unwitting, role in facilitating their transformation into the most formidable terrorist force in modern history.

   

  Early in Bucca’s existence, the most extreme inmates were congregated in Compound 6. There were not enough Americans guards to safely enter the compound — and, in any event, the guards didn’t speak Arabic. So the detainees were left alone to preach to one another and share deadly vocational advice.

   

  …Bucca also housed Haji Bakr, a former colonel in Saddam Hussein’s air-defense force. Bakr was no religious zealot. He was just a guy who lost his job when the Coalition Provisional Authority disbanded the Iraqi military and instituted de-Baathification, a policy of banning Saddam’s past supporters from government work.

   

  According to documents recently obtained by German newspaper Der Spiegel, Bakr was the real mastermind behind ISIS’s organizational structure and also mapped out the strategies that fueled its early successes. Bakr, who died in fighting in 2014, was incarcerated at Bucca from 2006-’08, along with a dozen or more of ISIS’s top lieutenants.

  The point is, regime change and nation building can never be accomplished by the lethal violence of 21st century armed forces; and they were an especially preposterous assignment in the context of a land rent with 13 century-old religious fissures and animosities.

  In fact, the wobbly, synthetic state of Iraq was doomed the minute Cheney and his bloody gang decided to liberate it from the brutal, but serviceable and secular tyranny of Saddam’s Baathist regime. That’s because the process of elections and majority rule necessarily imposed by Washington was guaranteed to elect a government beholden to the Shiite majority.

  After decades of mistreatment and Saddam’s brutal suppression of their 1991 uprising, did the latter have revenge on their minds and in their communal DNA?  Did the Kurds have dreams of an independent Kurdistan that had been denied their 30 million strong tribe way back at Versailles and ever since?

  Yes, they did. So the $25 billion spent on training and equipping the putative armed forces of post-liberation Iraq was bound to end up in the hands of sectarian militias, not a national army.

  In fact, when the Shiite commanders fled Sunni-dominated Mosul in June 2014 they transformed the ISIS uprising against the government in Baghdad into a vicious fledgling state in one fell swoop. It wasn’t by beheadings and fiery jihadist sermons that it quickly enslaved dozens of towns and several million people in western Iraq and the Euphrates Valley of Syria.

  ISIS Is Washington’s Frankenstein

  Its instruments of terror and occupation were the best weapons that the American taxpayers could buy. That included 2,300 Humvees and tens of thousands of automatic weapons, as well as vast stores of ammunition, trucks, rockets, artillery pieces and even tanks and helicopters.

  And that wasn’t the half of it. The newly proclaimed Islamic State also filled the power vacuum in Syria created by its so-called civil war. But in truth that was another exercise in Washington inspired and financed regime change undertaken in connivance with Qatar and Saudi Arabia.

  The latter were surely not interested in expelling the tyranny next door; they are the living embodiment of it. Instead, the rebellion was about removing Iran’s Alawite/Shiite ally from power in Damascus and laying gas pipelines to Europe across the upper Euphrates Valley.

  In any event, ISIS soon had troves of additional American weapons. Some of them were supplied to Sunni radicals by way of Qatar and Saudi Arabia. More came up the so-called “ratline” from Gaddafi’s former arsenals in Benghazi through Turkey. And still more came through Jordan from the “moderate” opposition trained there by the CIA, which more often than not sold them or defected to the other side.

  So that the Islamic State was Washington’s Frankenstein monster became evident from the moment it rushed upon the scene 18 months ago. But even then the Washington war party could not resist adding fuel to the fire, whooping up another round of Islamophobia among the American public and forcing the Obama White House into a futile bombing campaign for the third time in a quarter century.

  But if bombing really worked, the Islamic State would be sand and gravel by now. Indeed, as shown by the map below, it is really not much more than that anyway.

  The dusty, broken, impoverished towns and villages along the margins of the Euphrates River and in the bombed out precincts of Anbar province do not attract thousands of wannabe jihadists from the failed states of the middle east and the alienated Muslim townships of Europe because the caliphate offers prosperity, salvation or any future at all.

  What recruits them is outrage at the bombs and drones being dropped on Sunni communities by the US air force; and by the cruise missiles launched from the bowels of the Mediterranean which rip apart homes, shops, offices and mosques containing as many innocent civilians as ISIS terrorists.

  

  The truth is, the Islamic State was destined for a short half-life anyway. It was contained by the Kurds in the north and east and by Turkey with NATO’s second largest army and air force in the northwest. And it was surrounded by the Shiite crescent in the populated, economically viable regions of lower Syria and Iraq.

  So absent Washington’s misbegotten campaign to unseat Assad in Damascus and demonize his confession-based Iranian ally, there would have been nowhere for the murderous fanatics who pitched a makeshift capital in Raqqa to go. They would have run out of money, recruits, momentum and public acquiesce in their horrific rule in due course.

  But with the US Air Force functioning as their recruiting arm and France’s anti-Assad foreign policy helping to foment a final spasm of anarchy in Syria, the gates of hell have been opened wide. What has been puked out is not an organized war on Western civilization as Hollande so hysterically proclaimed in response to the mayhem in Paris.

  It was just blowback carried out by that infinitesimally small salient of mentally deformed young men who can be persuaded to strap on a suicide belt.

  Needless to say, bombing wont stop them; it will just make more of them.

  Ironically, what can stop them is the Assad government and the ground forces of its Hezbollah and the Iranian Revolutionary Guard allies. Its time to let them settle an ancient quarrel that has never been any of America’s business anyway.

  But Imperial Washington is so caught up in its myths, lies and hegemonic stupidity that it can not see the obvious.

  And that is why a quarter century after the cold war ended peace still hasn’t been given a chance and the reason that horrific events like November’s barbarism in Paris still keep happening.

  Even the so-called “inspired” terrorists like the pair who attacked San Bernardino emerge episodically because the terror that the American military visits upon Muslim lands is actually what inspires them. After all, whatever the Koran has to say about purging the infidel, it inspired no attacks on American soil until Imperial Washington went into the regime change and military intervention business in the middle east.

  Another False Demon – Putin’s Russia

  At the end of the day there now exists a huge irony. The only force that can effectively contain and eventually eliminate the Islamic State is the so-called Shiite Crescent———–the alliance of Iran, Baghdad, Assad and Hezbollah. But since they are allied with Putin’s Russia, still another unnecessary barrier to peace on earth comes into play.

  The fact is, there is no basis whatsoever for Imperial Washington’s relentless campaign against Putin, and Washington-NATO’s blatant intervention in Ukraine.

  Contrary to the bombast, jingoism, and shrill moralizing flowing from Washington and the mainstream media, America has no interest in the current spat between Putin and the coup that unconstitutionally took over Kiev in February 2014.

  For several centuries the Crimea has been Russian; for even longer, the Ukraine has been a cauldron of ethnic and tribal conflict, rarely an organized, independent state, and always a meandering set of borders looking for a redrawn map.

  Like everything reviewed above, the source of the current calamity-howling about Russia is the Warfare State–that is, the existence of vast machinery of military, diplomatic and economic maneuver that is ever on the prowl for missions and mandates and that can mobilize a massive propaganda campaign on the slightest excitement.

  The post-1991 absurdity of bolstering NATO and extending it into eastern Europe, rather than liquidating it after attaining “mission accomplished”, is just another manifestation of its baleful impact. In truth, the expansion of NATO is one of the underlying causes of America’s needless tension with Russia and Putin’s paranoia about his borders and neighbors. Indeed, what juvenile minds actually determined that America needs a military alliance with Slovenia, Slovakia, Bulgaria and Romania, and now Montenegro!

  So the resounding clatter for action against Russia emanating from Washington and its house-trained media is not even a semi-rational response to the facts at hand; its just another destructive spasm of the nation’s Warfare State and its beltway machinery of diplomatic meddling, economic warfare and military intervention.

  Memo To Obama: It’s Their Red Line

  Not only does Washington’s relentless meddling in the current Russian- Ukrainian food fight have nothing to do with the safety and security of the American people, it also betrays woeful disregard for the elementary facts of that region’s turbulent and often bloody history.

  In fact, the allegedly “occupied” territory of Crimea was actually annexed by Catherine the Great in 1783, thereby satisfying the longstanding quest of the Russian Czars for a warm-water port. Over the ages Sevastopol then emerged as a great naval base at the strategic tip of the Crimean peninsula, where it became home to the mighty Black Sea Fleet of the Czars and then the commissars.

  For the next 171 years Crimea was an integral part of Russia—a span that exceeds the 166 years that have elapsed since California was annexed by a similar thrust of “Manifest Destiny” on this continent, thereby providing, incidentally, the United States Navy with its own warm-water port in San Diego.

  While no foreign forces subsequently invaded the California coasts, it was most definitely not Ukrainian and Polish rifles, artillery and blood which famously annihilated The Charge Of The Light Brigade at the Crimean city of Balaclava in 1854; they were Russians defending the homeland from Turks, Europeans and Brits.

  And the portrait of the Russian “hero” hanging in Putin’s office is that of Czar Nicholas I—whose brutal 30-year reign brought the Russian Empire to its historical zenith, and who was revered in Russian hagiography as the defender of Crimea, even as he lost the 1850s war to the Ottomans and Europeans.

  At the end of the day, it’s their Red Line. When the enfeebled Franklin Roosevelt made port in the Crimean city of Yalta in February 1945 he did at least know that he was in Soviet Russia.

  Maneuvering to cement his control of the Kremlin in the intrigue-ridden struggle for succession after Stalin’s death a few years later, Nikita Khrushchev allegedly spent 15 minutes reviewing his “gift” of Crimea to his subalterns in Kiev in honor of the decision by their ancestors 300 years earlier to accept the inevitable and become a vassal of Russia.

  Self-evidently, during the long decades of the Cold War, the West did nothing to liberate the “captive nation” of the Ukraine—with or without the Crimean appendage bestowed upon it in 1954. Nor did it draw any red lines in the mid-1990’s when a financially desperate Ukraine rented back Sevastopol and the strategic redoubts of the Crimea to an equally pauperized Russia.

  In short, in the era before we got our Pacific port in 1848 and in the 166-year interval since then, our national security has depended not one wit on the status of the Russian-speaking Crimea.

  That the local population has now chosen fealty to the Grand Thief in Moscow over the ruffians and rabble who have seized Kiev is their business, not ours.

  The real threat to peace is not Putin, but the screeching sanctimony and mindless meddling of Susan Rice and Samantha Power. Obama should have sent them back to geography class long  ago – and before they could draw anymore new Red Lines.

  The one in the Ukraine has been morphing for centuries among the quarreling tribes, peoples, potentates, Patriarchs and pretenders of a small region that is none of our damn business.

  The current Ukrainian policy farce emanating from Washington is not only a reminder that the military-industrial-beltway complex is still alive and well, but also demonstrates why the forces of crony capitalism and money politics which sustain it are so lamentable. The fact is, the modern Warfare State has been the incubator of American imperialism since the Cold War, and is now proving itself utterly invulnerable to fiscal containment, even in the face of a $19 trillion national debt.

  So 101 years after the Christmas truces along the Western Front there is still no peace on earth. And the long suffering American taxpayers, who foot the massive bills generated by the War Party’s demented and destructive policies, have no clue that Imperial Washington is the principal reason.

  

  

  

  

  

• Europe Enters New Year With Nearly $2 Trillion In Sub-Zero Interest Debt

  Earlier this month, Mario Draghi disappointed markets by failing to deliver an outsized depo rate cut and an expansion of monthly PSPP purchases. 

  It’s not that the ECB didn’t ease. They did. It’s just that they didn’t ease enough, because when every DM central banker has gone Keynesian crazy (or, “full Krugman” as it were), a 10 bps cut doesn’t “cut” it (so to speak), and a six month extension of QE had been priced in at least since September. 

  With EU inflation still stuck in Japan mode and with GDP bumping along at the “new normal” pace of what might as well be 0%, the market expects more from Draghi going forward. Need proof? Just look at yields. “As the European Central Bank wound down its asset purchases for the year, the amount of euro-region government bonds that yield less than zero was at about $1.68 trillion, indicating investors see the potential for further easing of monetary policy in 2016,” Bloomberg writes, adding that “a slump in oil prices is supporting economists’ view that the ECB is unlikely to veer from its accommodative policy stance as it struggles to achieve its inflation goal of just under 2 percent.”

  

  “So many sub-zero-yielding securities indicate that there is a belief that there is no real inflationary pressures evident yet, and the ECB will remain ready to do more if required,” Cantor’s Owen Callan says. 

  Perhaps. But remember that at this point, each incremental purchase of EU govies (especially bunds) brings the ECB closer to the endgame wherein there are simply no more core EGBs to buy at which point it’s either purchase more from the periphery or move into riskier assets and with political turmoil playing out in Spain and Portugal, it’s not entirely clear what’s riskier: sub-sovereigns or PIIG debt. For those who need a reminder of just how scarce purchase-eligible core debt is becoming, here’s a helpful graphic from Citi:

  

  Of course everytime the ECB eases it effectively boxes itself in. That is, Draghi is “chasing his own tail”, as we documented here. So what’s a “New Normal” central planner to do? Buy corporates? Buy stocks? Or simply drop the depo rate floor altogether thus guaranteeing the central bank will lose even more money on its multi-trillion sovereign debt book?

  

  

  

  

  

• In New Audio Clip, ISIS Leader Baghdadi Threatens Israel, Says Group Not Phased By Russian Airstrikes

  Although ISIS releases nearly 40 pieces of propaganda each and every day via the group’s sprawling network of production units located in at least a dozen countries, one person you don’t hear from very often is TIME magazine’s runner-up for “person of the year”, Bakr al-Baghdadi. 

  The ISIS chief – who was once held in a US jail in Iraq – is notoriously reclusive and hasn’t been seen in public since last year’s speech in Mosul in which he declared himself caliph. On Saturday, Baghdadi has released a new audio clip in which he assures the world that neither the US nor Russia has weakened the group. He also threatens attacks on Israel.

  #BreakingNews Purported audio recording by ISIS leader Baghdadi says group has not been weakened by U.S. or Russia strikes

  — Al Arabiya English (@AlArabiya_Eng) December 26, 2015

  From Haaretz:

  ISIS commander Abu Bakr al-Baghdadi published a voice recording Saturday in which he threatened that Islamic State militants would attack Israel.

   

  “With the help of Allah, We are getting closer to you every day,” al-Baghdadi told his Israeli listeners. “The Israelis will soon see us in Palestine. This is no longer a war of the crusaders against us. The entire world is fighting us right now.” 

   

  The ISIS leader continued, “The Israelis thought that we forgot Palestine and that they had distracted us from it. That is not the case. We have not forgotten Palestine for one moment.”

  Part of ISIS leader Baghdadi words on Jews (Israel) and Palestine in newly released audio statement. pic.twitter.com/Cnu9RMC27Q

  — Israel Breaking (@IsraelBreaking) December 26, 2015

  And from The Jerusalem Post: 

  The audio message said air strikes by Russia and by a US-led coalition had failed to weaken the group.

   

  “Be confident that God will grant victory to those who worship him, and hear the good news that our state is doing well. The more intense the war against it, the purer it becomes and the tougher it gets,” Baghdadi added.  

   

  The tape was posted on Saturday on Twitter accounts that usually publish Islamic State statements.

   

  In May, ISIS issued an audio recording that it said was by Baghdadi, calling on supporters around the world to join the fight in Syria and Iraq or to take up arms wherever they live.

   

  In the May recording, issued by the group’s al-Furqan media outlet and posted on several websites, a voice sounding like Baghdadi’s says: “There is no excuse for any Muslim not to migrate to the Islamic State …”

   

  Joining (its fight) is a duty on every Muslim. We are calling on you either join or carry weapons (to fight) wherever you are.”

   

  Reuters and The Jerusalem Post could not independently verify the authenticity of the audio of the May or the Saturday recordings.

   

  In the May message, Baghdadi tells the rulers of Saudi Arabia that “their end is near”, adding that Gulf rulers felt threatened by the growing popularity of his group among Sunni Muslims.

  A bit of humor:

  It’s nice to be remembered.
  https://t.co/Ko15fyCFU6

  — Daniel Gordis (@DanielGordis) December 26, 2015

  And so, as Baghdadi’s soldiers are set to lose control of Ramadi, a key city in Iraq, the ISIS leader appears keen on reassuring the caliphate that all is indeed well. As The Telegraph notes, “he also called on Saudi citizens – the biggest contributor to Isil ranks – to “rise up” against their government as he dimissed the kingdom’s newly formed Muslim coalition against the caliphate.” He needn’t worry, Riyadh’s “coalition” is farcical given the kingdom’s penchant for promoting the exact same ideology as that espoused by Baghdadi. 

  But with Russia systematically dismantling the group’s oil trafficking network, and with the Iraqis on the move first in Ramadi, and perhaps soon in Mosul, Baghdadi’s declarations may well be a sign that the end draws nigh for a pet project that, until recently, was nutured by the US and its regional allies in Riyadh, Ankara, and Doha. 

  

  

  

  

  

• 140 Year Old Stock Streak In Jeopardy

  Via Dana Lyons' Tumblr,

  The U.S. stock market has not been lower for any year ending in a “5″ since 1875…that streak is in jeopardy.

  Just a fun one today: A year ago, we posted a chart showing the returns of the S&P 500 (S&P Composite before 1950) for years ending in “5″. As it turns out, the index has been positive the last 13 times during such years. The last negative year was 1875. Well, that streak is in jeopardy. Through yesterday, December 23, the S&P 500 was up 0.25%.

   

  

   

  So with a week to go in 2015, the pressure is on for this 140 year old streak. For those curious, the number to watch is 2058.90, i.e., last year’s closing price on the S&P 500.

  What is the takeaway? Nothing.

  *  *  *

  More from Dana Lyons, JLFMI and My401kPro.

  

  

  

  

  

Digest powered by RSS Digest