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Bigger doesn't imply better. Bigger often is a sign of obesity, of lost control, of overcomplexity, of cancerous cells
As we enter 2015, it is not useless to look backwards in order to try to guess the trends of the future. I would argue that the age that we are, to some extent exiting now, and which extended from the early 1980s, can be called the “second age of imperialism”--the first one, in the modern history, having been the age of high imperialism 1870-1914. I will focus here on some of its key manifestations in the ideological sphere, in the areas I know, history and economics.
But it should be obvious that ideology is but a manifestation of the underlying real forces, which were twofold:
- i) the failure of most developing countries by 1980 to become economically successful and self-sustaining after decolonization and the end of Communism as an alternative global ideology, and |
- (ii) the relatively solid economic record of Western countries (masked by the expansion of borrowing for the lower classes), and regained self-confidence of the elites in the wake of the Reagan-Thatcher (counter-) revolutions and the fall of Communism.
The violent manifestations of the second age of imperialism were invasions of Afghanistan and Iraq, brutal war in Libya...
Exports of goods and services of Ukrainian production in 2015 will fall by about a third. And this is not surprising: as a result of "reforms" in the country almost died the industry lost its main Russian market, where Ukraine has supplied products with high added value. The cumulative figure of industrial production YTD is approximately -15%. The main export product of Ukraine for the first time since the pre-industrial era were products of agriculture. In the first place - corn.
Dec 21, 2015 | OilPrice.comThere is a growing chorus in Europe against Germany's support to expand a major natural gas pipeline from Russia over fears that it will leave Europe more dependent on their eastern neighbor.
The Nord Stream 2 would build on the existing Nord Stream pipeline, a conduit that delivers Russian natural gas to Germany via the Baltic Sea. Crucially, the project cuts out Ukraine, a key strategic objective for Russia since the original project's inception.
The latest $11 billion expansion would double the pipeline's current capacity of 55 billion cubic meters of gas per year. From Russia's perspective, the project will increase market share and gas sales; from Germany's point of view, the project increases sources of supply. Nord Stream 2 was originally conceived of years ago, but in June 2015 Gazprom signed a memorandum with Royal Dutch Shell and OMV to move forward.
Nick Cunningham is a Vermont-based writer on energy and environmental issues. You can follow him on twitter at @nickcunningham1
The Washington Post
Plunging crude oil prices are diverting hundreds of billions of dollars away from the treasure chests of oil-exporting nations, putting some of the United States' adversaries under greater stress.
After two years of falling prices, the effects have reverberated across the globe, fueling economic discontent in Venezuela, changing Russia's economic and political calculations, and dampening Iranian leaders' hopes of a financial windfall when sanctions linked to its nuclear program will be lifted next year.
At a time of tension for U.S. international relations, cheap oil has dovetailed with some of the Obama administration's foreign policy goals: pressuring Russian President Vladimir Putin, undermining the popularity of Venezuelan President Nicolás Maduro and tempering the prospects for Iranian oil revenue. At the same time, it is pouring cash into the hands of consumers, boosting tepid economic recoveries in Europe, Japan and the United States.
"Cheap oil hurts revenues for some of our foes and helps some of our friends. The Europeans, South Koreans and Japanese - they're all winners," said Robert McNally, director for energy in President George W. Bush's National Security Council and now head of the Rapidan Group, a consulting firm. "It's not good for Russia, that's for sure, and it's not good for Iran."
... ... ...
In Iran, cheap oil is forcing the government to ratchet down expectations.
The much-anticipated lifting of sanctions as a result of the deal to limit Iran's nuclear program is expected to result in an additional half-million barrels a day of oil exports by the middle of 2016.
But at current prices, Iran's income from those sales will still fall short of revenue earned from constrained oil exports a year ago.
Moreover, low prices are making it difficult for Iran to persuade international oil companies to develop Iran's long-neglected oil and gas fields, which have been off limits since sanctions were broadened in 2012.
"Should Iran come out of sanctions, they will face a very different market than the one they had left in 2012," Amos Hochstein, the State Department's special envoy and coordinator for international energy affairs, said in an interview. "They were forced to recede in a world of over $100 oil, and sanctions will be lifted at $36 oil. They will have to work harder to convince companies to come in and take the risk for supporting their energy infrastructure and their energy production."
Meanwhile, in Russia, low oil prices have compounded damage done by U.S. and European sanctions that were designed to target Russia's energy and financial sectors. And when Iran increases output, its grade of crude oil will most likely go to Europe, where it will compete directly with Russia's Urals oil, McNally said.
Steven Mufson covers the White House. Since joining The Post, he has covered economics, China, foreign policy and energy.
Dec 14, 2015 | OilPrice.com
It was, in this latest incident, Turkey, working with the U.S. Government of President Barack Obama, which planned and executed the November 24, 2015, interception of the Russian Air Force Su-24. The event was not a spontaneous occurrence, and, apparently, two USAF F-15C Eagle air superiority fighters (which had been deployed to Incirlik Air Force Base, Turkey, in November 2015) were in the air as back-up to the Türk Hava Kuvvetleri (Turkish Air Force: THK) F-16s, one of which shot down the Su-24. USAF sources subsequently said that the U.S. was taken by surprise when the THK shot down the Sukhoi, but that hardly squares with the historical Turkish practice of coordinating such actions with Washington. Moreover, the Turkish narrative that it "warned" the Russian aircraft several times over a period of five minutes before the THK F-16 shot it down also does not square with reality.
And in this particular ground attack operation, the two Su-24s - including the one which was destroyed - were engaged on missions which did not require them to enter Turkish airspace, even though an acci-dental entry into it was conceivable. Their targets were in the area of northern Syria: pro-Ankara Turkmen militia engaged in supporting the massive cross-border operations of ISIS (asad- Dawlah al-Islamiyah fi al-'Iraq wash-Sham, or Islamic State) moving oil, fighters, and weapons across the Syria-Turkish border.
Dave Majumdar, Defense Editor at the U.S. blogsite, The National Interest, on December 7, 2015, noted: "The United States and Turkey are working on an agreement that would allow the US Air Force F-15Cs to defend Turkish airspace. However, the precise rules of engagement and procedures have yet to be ironed out." It is possible that Turkey wanted to illustrate to the US that its airspace was, in fact, threatened. But what has been clear is that no credible Russian military threat to Turkey existed.
At best, Russia may now move to cover its tactical operations in northern Syria more effectively by offering its own deterrence of top cover by advanced fighters while the ground attack aircraft, such as the Su-24s, do their job. It is also clear that any further Turkish incursions into Syrian airspace were now at-risk, but the Turks already knew that.
Recently-retired U.S. Defense Intelligence Agency Director Lt.-Gen. Michael Flynn publicly said in Moscow on December 10, 2015, that there was no possibility that the Turkish shootdown was undertaken without the express permission and direction of "the highest authority" in Turkey.
Indeed, Turkey has traditionally played the role of aggressor in terms of airspace violation. Not only did the THK lose an RF-4E Phantom II reconnaissance aircraft well into Syrian airspace on June 22, 2012, as a result of surface-to-air missile fire, it continues to consistently invade the airspace of fellow NATO member and neighbor Greece in a manner far more hostile than the penetration of Turkish airspace it alleged Russia undertook (for 17 seconds). THK F-16s entered Greek airspace some 2,200 times in 2014 alone. Moreover, Turkey consistently has violated Cypriot air-, sea, and land-space since its 1974 invasion and occupation of the northern 37 percent of Cyprus.1
So Turkey is hardly the victim. [Indeed, by deliberately starting the "civil war" to remove Pres. Bashar al-Assad from power in Syria, Turkey only incurred a "refugee problem" as a result of its own actions, and has subsequently sought to push those refugees onward into Europe as quickly as possible, seeking political rewards from Europe as the only power capable of stopping the refugee flows.]
In any event, Pres. Erdogan, three years ago said that "a short- term border violation can never be a pre-text for an attack". But that, of course, was when a THK aircraft was shot down by Syria when the THK F-4E deliberately and for some time penetrated Syrian airspace on a mission against Syria.
... .... ....
Turkey, too, will not remain inactive. It will resume its support for anti-Russian terrorism, including support for jihadist movements in the Caucasus. These have included such groups as Kvadrat (Quadrant), a Bos-nia-based Wahhabist unit, which had "laundered" its operations through Turkish-occupied Northern Cy-prus, thence into Turkey and on into the Russian Caucasus.4 But the reactivation of Turkish-backed terror-ism in the Russian Caucasus will be far wider than just Kvadrat: Turkey works extensively, even now, with Chechen and other Caucasus groups inside ISIS and in the jihadi operations in Syria.
Significantly, by early December 2015, President Erdogan assumed that the crisis had passed sufficiently for Turkey to expand its activities in the area. There was no indication that Turkey and ISIS had diminished their extensive and integrated operations in terms of oil transactions, the supply of weapons to ISIS via Turkey, and the use of Turkey as a medical support arena for ISIS wounded. But Turkey went further and deployed Turkish Army troops into northern Iraq near the ISIS-held city of Mosul in early December 2015. Iraqi Prime Minister Haider al-Abadi led calls for Turkish troops to be withdrawn immediately; they had not been withdrawn by the time this report went to press.
... ... ...
The path, however, is open for a great Russian cooperation with the Kurdish forces, as well as with other regional allies which are concerned about Turkey's strategic adventurism. The Kurds, particularly those led by the majority Kurdish force (under the PKK: Partiya Karkerên Kurdistan, the Kurdish Workers' Par-ty), are now well underway in responding to Ankara. The civil war is underway inside Turkey, and it re-mains literally out-of-bounds to the international media. What is significant is that the Kurds have thus far not agreed to cooperate with Russia, but are awaiting a nod from their principal ally, Israel, before trust-ing Russia.
Thus Israel's position becomes critical in this debate.
Much of the Israeli leadership still hopes that a rapprochement might be achievable with Turkey, but that hope is fading. On the other hand, Israeli planners have to consider whether a broken Turkey - perhaps replaced by a patchwork of states, and with no non-Arab player other than Iran to monitor the region - is worse than a troublesome Turkey. There is also the question of whether unqualified Israeli support for the Kurdish "big push" against Turkey would then jeopardize Israeli strategic relations with Saudi Arabia, which is apparently undecided on whether, or how much, it favors a continuation of the Turkish state.
Without Turkey, according to the Saudi rationale, who would be the counterweight to Iran?
Israel is also not immune to this argument, although for Israel the prospect exists for an eventual reunion with Tehran, after the clerical leadership goes, or modifies.
So Russia is left with three potential regional allies - apart from Syria, Iraq, and Iran - against Ankara: Greece, Egypt, and Jordan. And Cyprus and Armenia to the limited extent that they can assist.
... ... ...
Articles 10 to 18 are the articles which allow for various states, including Russia, to transit military ships through the straits. In short, if Turkey invoked either Article 20 or Article 21, Russia would be legally blocked from moving any naval vessel through the Straits.
Moscow has clearly long gamed out this scenario, which accounts for President Putin's commitment to a measured response to Ankara. Thus it must be a proxy response, for the most part, as well as an economic one. But while it demonstrates the delicacy needed by Moscow, it also demonstrates the reality that Russia cannot continue to be strategically constrained by an increasingly hostile and ambitious Turkey.
So where Turkey is vulnerable is in its economy.
The effects of Russian economic embargoes against Turkey are far more significant than would seem to be the case because the Turkish economy is more vulnerable than it has been portrayed. It is far more leveraged with borrowings than at any time in the recent past. It has a discreet outflow of domestic capital and is heavily reliant on discreet financial injections, probably coming from Qatar, and possible Saudi Arabia. But Saudi Arabia's ability to prop up Turkey is becoming limited.
...while Turkey may not be regarded as an entirely stable partner for the PRC in the region, Beijing would be wary of acting precipitously against it.
...Iran - like Russia - is constrained to act cautiously and indirectly against Turkey. Moreover, Iran cannot risk that its own Kurdish population could join with Syrian, Iraqi, and Turkish Kurds to form a new Kurdish state.
...And in the short-term, this all has hardened Ankara's position on remaining in control of the northern 37 percent of Cyprus, which it has occupied militarily since 1974.
...There is no doubt that Pres. Erdogan believes that continued brinkmanship will be possible, although he is not perhaps aware that he is losing the information war, or the psychological war.
Amvet on December 15 2015 said:
Thank you Mr. Copley for a well researched, honest, and very interesting article. Any chance of getting this published in any US mainstream
newspaper or magazine ?? .
Jim on December 15 2015 said:
...Nice information actually, most mainstream media doesn't even come close. Thanks. definitely a deliberate and pre-approved escalation of the conflict, pointing fingers back to Washington, D.C.
Chris on December 15 2015 said:
A great article that brings together much of what has been reported and provides a coherent framework for understanding it. This piece should be in a general interest publication such as the NY Times so that more Americans could understand what is really going on in the Middle East.
marknesop.wordpress.comCortes, December 18, 2015 at 3:38 amMichael Hudson on IMF manoeuvresTim Owen, December 18, 2015 at 6:24 am
http://www.counterpunch.org/2015/12/18/the-imf-changes-its-rules-to-isolate-china-and-russia/Hard to overstate the importance of this article. Thanks for spotting it.marknesop, December 18, 2015 at 10:36 am
There's a lot here but this passage is kind of free-standing in its value by simply condensing how the IMF has contorted itself:
"The IMF thus is breaking four rules:
- Not lending to a country that has no visible means to pay back the loan breaks the "No More Argentinas" rule adopted after the IMF's disastrous 2001 loan.
- Not lending to countries that refuse in good faith to negotiate with their official creditors goes against the IMF's role as the major tool of the global creditors' cartel.
- And the IMF is now lending to a borrower at war, indeed one that is destroying its export capacity and hence its balance-of-payments ability to pay back the loan.
- Finally, the IMF is lending to a country that has little likelihood of refuse carrying out the IMF's notorious austerity "conditionalities" on its population – without putting down democratic opposition in a totalitarian manner. Instead of being treated as an outcast from the international financial system, Ukraine is being welcomed and financed."
I'm still trying to think through the implications but they are certainly disquieting. Without trying to hard I'd summarize that "the masks are coming off."
The question then is, what happens after "the masks come off?"
(Sometimes it's best just to blurt out what's worrying you.)Short-sighted western pundits will still be penning deadline copy headlined "How Putin lost Ukraine" while those with real vision will be putting the finishing touches on "How America Lost the Rest of the World".
Oct 17, 2014 | consortiumnews.com
If you're nervously watching the stock market gyrations and worrying about your declining portfolio or pension fund, part of the blame should go to America's neocons who continue to be masters of chaos, endangering the world's economy by instigating geopolitical confrontations in the Middle East and Eastern Europe.
Of course, there are other factors pushing Europe's economy to the brink of a triple-dip recession and threatening to stop America's fragile recovery, too. But the neocons' "regime change" strategies, which have unleashed violence and confrontations across Iraq, Syria, Libya, Iran and most recently Ukraine, have added to the economic uncertainty.
This neocon destabilization of the world economy began with the U.S.-led invasion of Iraq in 2003 under President George W. Bush who squandered some $1 trillion on the bloody folly. But the neocons' strategies have continued through their still-pervasive influence in Official Washington during President Barack Obama's administration.
The neocons and their "liberal interventionist" junior partners have kept the "regime change" pot boiling with the Western-orchestrated overthrow and killing of Libya's Muammar Gaddafi in 2011, the proxy civil war in Syria to oust Bashar al-Assad, the costly economic embargoes against Iran, and the U.S.-backed coup that ousted Ukraine's elected President Viktor Yanukovych last February.
All these targeted governments were first ostracized by the neocons and the major U.S. news organizations, such as the Washington Post and the New York Times, which have become what amounts to neocon mouthpieces. Whenever the neocons decide that it's time for another "regime change," the mainstream U.S. media enlists in the propaganda wars.
The consequence of this cascading disorder has been damaging and cumulative. The costs of the Iraq War strapped the U.S. Treasury and left less government maneuvering room when Wall Street crashed in 2008. If Bush still had the surplus that he inherited from President Bill Clinton – rather than a yawning deficit – there might have been enough public money to stimulate a much-faster recovery.
President Obama also wouldn't have been left to cope with the living hell that the U.S. occupation brought to the people of Iraq, violent chaos that gave birth to what was then called "Al-Qaeda in Iraq" and has since rebranded itself "the Islamic State."
But Obama didn't do himself (or the world) any favors when he put much of his foreign policy in the hands of Democratic neocon-lites, such as Secretary of State Hillary Clinton, and Bush holdovers, including Defense Secretary Robert Gates and Gen. David Petraeus. At State, Clinton promoted the likes of neocon Victoria Nuland, the wife of arch-neocon Robert Kagan, and Obama brought in "liberal interventionists" like Samantha Power, now the U.S. ambassador to the United Nations.
In recent years, the neocons and "liberal interventionists" have become almost indistinguishable, so much so that Robert Kagan has opted to discard the discredited neocon label and call himself a "liberal interventionist." [See Consortiumnews.com's "Obama's True Foreign Policy 'Weakness.'"]
Obama, in his nearly six years as president, also has shied away from imposing his more "realistic" views about world affairs on the neocon/liberal-interventionist ideologues inside the U.S. pundit class and his own administration. He has been outmaneuvered by clever insiders (as happened in 2009 on the Afghan "surge") or overwhelmed by some Official Washington "group think" (as was the case in Libya, Syria, Iran and Ukraine).
Once all the "smart people" reach some collective decision that a foreign leader "must go," Obama usually joins the chorus and has shown only rare moments of toughness in standing up to misguided conventional wisdoms.
The one notable case was his decision in summer 2013 to resist pressure to destroy Syria's military after a Sarin gas attack outside Damascus sparked a dubious rush to judgment blaming Assad's regime. Since then, more evidence has pointed to a provocation by anti-Assad extremists who may have thought that the incident would draw in the U.S. military on their side. [See Consortiumnews.com's "Was Turkey Behind Syrian Sarin Attack?"]
It's now clear that if Obama had ordered a major bombing campaign against Assad's military in early September 2013, he might have opened the gates of Damascus to a hellish victory by al-Qaeda-affiliated extremists or the even more brutal Islamic State, since these terrorist groups have emerged as the only effective fighters against Assad.
But the neocons and the "liberal interventionists" seemed oblivious to that danger. They had their hearts set on Syrian "regime change," so were furious when their dreams were dashed by Obama's supposed "weakness," i.e. his failure to do what they wanted. They also blamed Russian President Vladimir Putin who brokered a compromise with Assad in which he agreed to surrender all of Syria's chemical weapons while still denying a role in the Sarin attack.
By late September 2013, the disappointed neocons were acting out their anger by taking aim at Putin. They recognized that a particular vulnerability for the Russian president was Ukraine and the possibility that it could be pulled out of Russia's sphere of influence and into the West's orbit.
So, Carl Gershman, the neocon president of the U.S.-funded National Endowment for Democracy, took to the op-ed page of the neocon-flagship Washington Post to sound the trumpet about Ukraine, which he called "the biggest prize."
But Gershman added that Ukraine was really only an interim step to an even bigger prize, the removal of the strong-willed and independent-minded Putin, who, Gershman added, "may find himself on the losing end not just in the near abroad [i.e. Ukraine] but within Russia itself." In other words, the new neocon hope was for "regime change" in Kiev and Moscow. [See Consortiumnews.com's "Neocons' Ukraine/Syria/Iran Gambit."]
Destabilizing the World
Beyond the recklessness of plotting to destabilize nuclear-armed Russia, the neocon strategy threatened to shake Europe's fragile economic recovery from a painful recession, six years of jobless stress that had strained the cohesion of the European Union and the euro zone.
Across the Continent, populist parties from the Right and Left have been challenging establishment politicians over their inability to reverse the widespread unemployment and the growing poverty. Important to Europe's economy was its relationship with Russia, a major market for agriculture and manufactured goods and a key source of natural gas to keep Europe's industries humming and its houses warm.
The last thing Europe needed was more chaos, but that's what the neocons do best and they were determined to punish Putin for disrupting their plans for Syrian "regime change," an item long near the top of their agenda along with their desire to "bomb, bomb, bomb Iran," which Israel has cited as an "existential threat."
Putin also had sidetracked that possible war with Iran by helping to forge an interim agreement constraining but not eliminating Iran's nuclear program. So, he became the latest target of neocon demonization, a process in which the New York Times and the Washington Post eagerly took the lead.
To get at Putin, however, the first step was Ukraine where Gershman's NED was funding scores of programs for political activists and media operatives. These efforts fed into mass protests against Ukrainian President Yanukovych for balking at an EU association agreement that included a harsh austerity plan designed by the International Monetary Fund. Yanukovych opted instead for a more generous $15 billion loan deal from Putin.
As the political violence in Kiev escalated – with the uprising's muscle supplied by neo-Nazi militias from western Ukraine – neocons within the Obama administration discussed how to "midwife" a coup against Yanukovych. Central to this planning was Victoria Nuland, who had been promoted to assistant secretary of state for European affairs and was urging on the protesters, even passing out cookies to protesters at Kiev's Maidan square.
According to an intercepted phone call with U.S. Ambassador to Ukraine Geoffrey Pyatt, Nuland didn't think EU officials were being aggressive enough. "Fuck the EU," she said as she brainstormed how "to help glue this thing." She literally handpicked who should be in the post-coup government – "Yats is the guy," a reference to Arseniy Yatsenyuk who would indeed become prime minister.
When the coup went down on Feb. 22 – spearheaded by neo-Nazi militias who seized government buildings and forced Yanukovych and his officials to flee for their lives – the U.S. State Department quickly deemed the new regime "legitimate" and the mainstream U.S. media dutifully stepped up the demonization of Yanukovych and Putin.
Although Putin's position had been in support of Ukraine's status quo – i.e., retaining the elected president and the country's constitutional process – the crisis was pitched to the American people as a case of "Russian aggression" with dire comparisons made between Putin and Hitler, especially after ethnic Russians in the east and south resisted the coup regime in Kiev and Crimea seceded to rejoin Russia.
Starting a Trade War
Pressured by the Obama administration, the EU agreed to sanction Russia for its "aggression," touching off a tit-for-tat trade war with Moscow which reduced Europe's sale of farming and manufacturing goods to Russia and threatened to disrupt Russia's natural gas supplies to Europe.
While the most serious consequences were to Ukraine's economy which went into freefall because of the civil war, some of Europe's most endangered economies in the south also were hit hard by the lost trade with Russia. Europe began to stagger toward the third dip in a triple-dip recession with European markets experiencing major stock sell-offs.
The dominoes soon toppled across the Atlantic as major U.S. stock indices dropped, creating anguish among many Americans just when it seemed the hangover from Bush's 2008 market crash was finally wearing off.
Obviously, there are other reasons for the recent stock market declines, including fears about the Islamic State's victories in Syria and Iraq, continued chaos in Libya, and exclusion of Iran from the global economic system – all partly the result of neocon ideology. There have been unrelated troubles, too, such as the Ebola epidemic in western Africa and various weather disasters.
But the world's economy usually can withstand some natural and manmade challenges. The real problem comes when a combination of catastrophes pushes the international financial system to a tipping point. Then, even a single event can dump the world into economic chaos, like what happened when Lehman Brothers collapsed in 2008.
It's not clear whether the world is at such a tipping point today, but the stock market volatility suggests that we may be on the verge of another worldwide recession. Meanwhile, the neocon masters of chaos seem determined to keep putting their ideological obsessions ahead of the risks to Americans and people everywhere.
Investigative reporter Robert Parry broke many of the Iran-Contra stories for The Associated Press and Newsweek in the 1980s. You can buy his new book, America's Stolen Narrative, either in print here or as an e-book (from Amazon and barnesandnoble.com). For a limited time, you also can order Robert Parry's trilogy on the Bush Family and its connections to various right-wing operatives for only $34. The trilogy includes America's Stolen Narrative. For details on this offer, click here.
marknesop, December 19, 2015 at 6:43 pmAccording to Madame Jaresko, their decision not to pay the $3 Billion bond to Russia has set Ukraine free, free as a bird, and allowed it to now be in full compliance with the financing requirements of the IMF program.
Start shovelin' in the money, IMF, because Ukraine has the magic formula – just refuse to pay what you owe, call it a 'temporary suspension of payments' instead of 'a default', and reap the reward for your display of responsibility.
I foresee the mileage Russia is going to get out of this will far exceed the value of the $3 Billion.
marknesop, December 19, 2015 at 8:47 pm
How could Ukraine's government deficit only be 4.1% when its currency has crashed, it has lost most of its sources of income and it has just defaulted on its debt? What the fuck are they talking about?
"The proposed budget would work to reduce the government's deficit from 4.1% to 3.7%, with measures including an increase in revenue by widening the tax base."
First, there is no way on God's green earth that there is a negative difference of only 4.1% between Ukraine's annual revenues and its annual expenditures, especially since it has almost no revenues except from taxation.
And now the IMF expects to realize more revenue from widening the tax base – yes, I can imagine what a popular initiative that is. Now you know how Yushchenko felt, Yatsie, when the IMF denied him a second big loan because he refused to eliminate the gas subsidies to residents.
Now the IMF has finally realized that triumph through a different leader, and it wants to see even more tax revenue. You are about to be as popular as a turd in the punch bowl; have fun with that.
kirill, December 20, 2015 at 12:58 pm
I would not trust any GDP numbers from the Kiev regime either. They lost 25% of the economy in the Donbas alone not counting Crimea. This has knock on effects to the rest of Banderastan. Yet they are yapping about some 12% contraction in 2015 after a 7% contraction in 2014. I see no clear indication that they are counting the GDP only for regime controlled Banderastan.
As for the budget, according to regime officials, Banderastan lost 30% of its hard currency revenues with the loss of the Donbass. I estimate the tax loss to Kiev to be about 30% as well.
The Donbass was the industrialized part of the country while western Banderastan is primarily agrarian. So talk about 4% shortfalls in revenue is utter rubbish. In most countries the money making parts of the economy subsidize the rest and sure as hell it was not western Banderastan that was subsidizing the Donbass. That was just virulent blood libel such as the claim that Russians settled eastern Ukraine only after the Holodomor.
marknesop, December 20, 2015 at 1:13 pm
Europe deserves Ukraine. Let them have it, the quicker the better. It's fine when Yats is selling that stinking mess to his simple-minded constituents, but European policymakers will see through it right away. Unfortunately, Brussels knows better than to bring Ukraine any closer into the fold, because if they get a visa-free regime, the place will empty out in a week as Ukrainians flee throughout Europe (which is already, everyone must know, full of refugees) looking for jobs.
Dec 22, 2015 | naked capitalismYves here. If you followed the TransPacific Partnership negotiations closely, you may recall that Japan looked like it was going along only to placate Washington, and then it signed up only because the US allowed it to drop its "defense only" posture (remember that Japan is a military protectorate of the US) and gave major concession on agriculture (Japan's farmers are a famously powerful voting block). But even then, Japan is not firmly in the US fold. It has made clear that the US needs to get a deal done pronto.
By contrast, this post describes the US foot-dragging and gamesmanship to protect US agricultural interests from competition from developing economies.
Yesterday, U.S. Trade Representative Michael Froman delivered his plenary statement to the trade ministers gathered in Nairobi for the World Trade Organization's tenth ministerial conference. His statement, which calls for the abandonment of the Doha Development Round in favor of negotiations on new issues of more strategic interest to the United States, deserve a response from a countryman.
Mr. Froman calls on trade representatives "to move beyond the cynical repetition of positions designed to produce deadlock." Yet this is precisely what Mr. Froman has come to Nairobi to repeat: U.S. positions designed to produce deadlock.
He decries the lack of progress in the last 15 years of Doha negotiations, yet he fails to acknowledge that the United States has been, and remains, the principal reason for that failure. Since 2008, when negotiations broke down, the U.S. has refused to continue negotiating on the key issues central to the development agenda – reducing agricultural subsidies, allowing developing countries special protection measures for agriculture, eliminating export subsidies and credits, and a host of other issues.
Those issues remain critical to developing countries, and U.S. intransigence in addressing those concerns is the main reason Doha has stagnated. In addition, the U.S. has introduced new issues to create further obstacles to progress, such as its objection to India's ambitious and laudable public stockholding program to provide food security to fully two-thirds of its people.
The draft declaration on agriculture in Nairobi offers no progress on resolving this issue, despite the explicit commitment in Bali and later in Geneva to find a permanent solution that can allow India and other countries to pursue such programs.
That is not the only developing country issue left unaddressed. The declaration offers nothing to developing countries to allow them to protect sensitive sectors from unfair or sudden import surges, the Special Safeguard Mechanism. It offers no meaningful cuts in U.S. export credits, which have favored U.S. exporters to Africa with some $1.25 billion in credits over the last six years.
Perhaps most notably, the declaration makes no mention of the key issue in the Doha Round: reductions in rich country agricultural subsidies and supports. With crop prices low and a new Farm Bill authorizing rising levels of support to U.S. farmers and exporters, this omission is a direct blow to those developing countries which see their farmers and export prospects harmed by underpriced U.S. exports.
Nor does Mr. Froman mention cotton subsidies, an issue which the United States and the WTO membership committed to address "expeditiously" ten long years ago in Hong Kong. The issue remains unresolved, and the draft agriculture text fails to offer anything to Africa's C-4 cotton producing countries, which have millions of poor farmers desperately in need of relief.
Instead, the U.S. Farm Bill promises further price suppression. According to a recent study, cotton subsidies could total $1.5 billion, increasing U.S. exports 29% and suppressing prices by 7%. All cotton producers in the rest of the world will suffer an estimated $3.3 billion in annual losses, with India projected to lose $800 million per year.
The C-4 countries as a group stand to lose $80 million a year in reduced income, a huge blow to struggling farmers in low-income countries.
Mr. Froman touts the ways U.S. policy has moved forward beyond Doha. He says the United States extended the African Growth and Opportunity Act by a decade, "the longest extension in that program's history." That limited extension of trade preferences to African countries last year provided a paltry $264,000 in benefits to the C-4 countries. The projected losses from U.S. cotton dumping are 300 times greater.
Mr. Froman concludes that with a new approach that abandons the development round while taking up issues of investment, procurement, and other matters of priority to the United States, "we can ensure that global trade will drive development and prosperity as strongly this century as it did in the last."
The U.S. Trade Representative seems to have conveniently forgotten that the Doha Development Round he wants to sweep aside was a direct response to the fact that global trade rules in the last century failed to drive development and prosperity, at least for many developing countries.
As a U.S. researcher long engaged with the issues of concern to developing countries, I find Mr. Froman's approach shameful. Multilateralism demands engagement and compromise, particularly in a "development round" designed to address past inequities. Mr. Froman is unfortunately offering nothing more than "the cynical repetition of positions designed to produce deadlock." The latest in a steady stream of U.S. hypocrisy.
By Timothy Wise, Director of the Research and Policy Program at the Global Development and Environment Institute, Tufts University. Originally published in The Standard (Nairobi, Kenya)
marknesop.wordpress.comJen, December 19, 2015 at 7:12 pmWooooh, this news is a doozy:marknesop, December 19, 2015 at 7:31 pm
First two paragraphs:
"The Australian Federal Police and Dutch police and prosecutors investigating the cause of the crash of Malaysian Airlines MH17 believe the Dutch Safety Board (DSB) has failed to provide "conclusive evidence" of what type of munition destroyed the aircraft, causing the deaths of 283 passengers and 15 crew on board.
Testifying for the first time in an international court, Detective Superintendent Andrew Donoghoe, the senior Australian policeman in the international MH17 investigation, said a "tougher standard than the DSB report" is required before the criminal investigation can identify the weapon which brought the aircraft down, or pinpoint the perpetrators.
Their criminal investigation will continue into 2016, Donoghoe told the Victorian Coroners Court (lead image) on Tuesday morning. He and other international investigators are unconvinced by reports from the US and Ukrainian governments, and by the DSB, of a Buk missile firing. "Dutch prosecutors require conclusive evidence on other types of missile," Donoghoe said, intimating that "initial information that the aircraft was shot down by a [Buk] surface to air missile" did not meet the Australian or international standard of evidence …."Great catch, Jen!! Wow, you're right – this is big, especially in view of the wavering by some EU members on sanctions. I wonder what Merkel has up her sleeve; she says Germany – while going ahead with Nord Stream II, which is "first and foremost a business proposition" – is "seeking ways to ensure that Ukraine is not completely excluded as a transit country".
Ummm…what role would that be? Because if, in exchange for pushing ahead on Nord Stream, Russia is maneuvered into still sending gas through Ukraine so that Ukraine can collect transit fees, the project would be self-defeating. I trust the business minds in Russia are sharp enough to stay ahead of that one. Ukraine will still receive gas from Russia, if it wants it and can pay in advance for it, but it will be for domestic supplies only and consequently not subject to transit fees. Russia must not weaken on this, because the EU still hopes to rebuild Ukraine using Russian money, and it cannot do it without Russian help and support. If that is withheld, Russia only needs to wait them out.
Needless to say, Tusk supports Renzi's position, not because he is an Italiophile but because he supports Ukraine and would like to see it remain a transit country, and pocketing $2 Billion a year in Russian cash.
What will happen to the resolve of the holdouts if the narrative on MH17 begins to veer away from rock-solid Russian ownership of the tragedy? Because that was the whole backbone of the sanctions – Crimea was not enough to get Germany and France on board, and they still needed the little push that MH17 provided. If that rationale vanished, or even if serious doubt was introduced, the whole EU position on sanctions could fall apart.
marknesop, December 19, 2015 at 8:37 pm
It's bigger than I thought – there is some sort of internal power struggle going on, and West refuses to change his findings – which still point to Russia for responsibility – in spite of Donoghoe's testimony. There were revelations in the original post such as that Australia had sought permission from the Novorossiyan authorities to collect evidence and artifacts, as well as Kiev – thereby implicitly recognizing Novorossiya – and that when it solicited witnesses to testify, some agreed only on the condition their names would not be revealed, that the Ukrainian authorities would not be involved and that the investigators would protect them. Sure sounds like they want to say something they know the Ukrainian government will punish them for saying, if it can identify them. This whole inquiry just got interesting again.
At the moment it looks like a faction of the Australian investigation disagrees with the pat finding of the Dutch, but the Victorian state coroner is totally on board with the "Russia did it" scenario and is determined to have his way no matter how foolish it makes him look. This one could go anywhere from here.
Moscow Exile, December 19, 2015 at 11:28 pm
Clearly that Aussie cop is in the pocket of the Evil One!
Isn't he the one who said earlier that the Russian-backed terrorists at the MH-17 crash site behaved like decent human beings and treated the crash victims' remains with dignity and did not loot their belongings?
I mean, what a ludicrous thing to say!
Everyone knows that these Russian beasts are ….blah, blah, blah ...
davidt, December 20, 2015 at 2:03 pm
Donoghue is not the only AFP cop speaking up for the crash site locals. Their sensitivity and humanity is a rather at odds with a disparaging comment about the AFP on these pages over a year ago (and which I objected to at the time). I noticed last week that Patrick Armstrong is now reconsidering the Sukhoi did it scenario because of an apparent lack of fragments from a Buk warhead.
This has always been a serious concern to the Russian investigators, see
December 18, 2015 | naked capitalism
By Michael Hudson, a research professor of Economics at University of Missouri, Kansas City, and a research associate at the Levy Economics Institute of Bard College. His latest book isKILLING THE HOST: How Financial Parasites and Debt Bondage Destroy the Global Economy
The nightmare scenario of U.S. geopolitical strategists seems to be coming true: foreign economic independence from U.S. control. Instead of privatizing and neoliberalizing the world under U.S.-centered financial planning and ownership, the Russian and Chinese governments are investing in neighboring economies on terms that cement Eurasian economic integration on the basis of Russian oil and tax exports and Chinese financing. The Asian Infrastructure Investment Bank (AIIB) threatens to replace the IMF and World Bank programs that favor U.S. suppliers, banks and bondholders (with the United States holding unique veto power).
Russia's 2013 loan to Ukraine, made at the request of Ukraine's elected pro-Russian government, demonstrated the benefits of mutual trade and investment relations between the two countries. As Russian finance minister Anton Siluanov points out, Ukraine's "international reserves were barely enough to cover three months' imports, and no other creditor was prepared to lend on terms acceptable to Kiev. Yet Russia provided $3 billion of much-needed funding at a 5 per cent interest rate, when Ukraine's bonds were yielding nearly 12 per cent."
What especially annoys U.S. financial strategists is that this loan by Russia's sovereign debt fund was protected by IMF lending practice, which at that time ensured collectability by withholding new credit from countries in default of foreign official debts (or at least, not bargaining in good faith to pay). To cap matters, the bonds are registered under London's creditor-oriented rules and courts.
On December 3 (one week before the IMF changed its rules so as to hurt Russia), Prime Minister Putin proposed that Russia "and other Eurasian Economic Union countries should kick-off consultations with members of the Shanghai Cooperation Organisation (SCO) and the Association of Southeast Asian Nations (ASEAN) on a possible economic partnership." Russia also is seeking to build pipelines to Europe through friendly instead of U.S.-backed countries.
Moving to denominate their trade and investment in their own currencies instead of dollars, China and Russia are creating a geopolitical system free from U.S. control. After U.S. officials threatened to derange Russia's banking linkages by cutting it off from the SWIFT interbank clearing system, China accelerated its creation of the alternative China International Payments System (CIPS), with its own credit card system to protect Eurasian economies from the shrill threats made by U.S. unilateralists.
Russia and China are simply doing what the United States has long done: using trade and credit linkages to cement their geopolitical diplomacy. This tectonic geopolitical shift is a Copernican threat to New Cold War ideology: Instead of the world economy revolving around the United States (the Ptolemaic idea of America as "the indispensible nation"), it may revolve around Eurasia. As long as the global financial papacy remains grounded in Washington at the offices of the IMF and World Bank, such a shift in the center of gravity will be fought with all the power of the American Century (indeed, American Millennium) inquisition.
Imagine the following scenario five years from now. China will have spent half a decade building high-speed railroads, ports power systems and other construction for Asian and African countries, enabling them to grow and export more. These exports will be coming on line to repay the infrastructure loans. Also, suppose that Russia has been supplying the oil and gas energy needed for these projects.
To U.S. neocons this specter of AIIB government-to-government lending and investment creates fear of a world independent of U.S. control. Nations would mint their own money and hold each other's debt in their international reserves instead of borrowing or holding dollars and subordinating their financial planning to the IMF and U.S. Treasury with their demands for monetary bloodletting and austerity for debtor countries. There would be less need for foreign government to finance budget shortfalls by selling off their key public infrastructure privatizing their economies. Instead of dismantling public spending, the AIIB and a broader Eurasian economic union would do what the United States itself practices, and seek self-sufficiency in basic needs such as food, technology, banking, credit creation and monetary policy.
With this prospect in mind, suppose an American diplomat meets with the leaders of debtors to China, Russia and the AIIB and makes the following proposal: "Now that you've got your increased production in place, why repay? We'll make you rich if you stiff our New Cold War adversaries and turn to the West. We and our European allies will help you assign the infrastructure to yourselves and your supporters, and give these assets market value by selling shares in New York and London. Then, you can spend your surpluses in the West."
How can China or Russia collect in such a situation? They can sue. But what court will recognize their claim – that is, what court that the West would pay attention to?
That is the kind of scenario U.S. State Department and Treasury officials have been discussing for more than a year. The looming conflict was made immediate by Ukraine's $3 billion debt to Russia falling due by December 20, 2015. Ukraine's U.S.-backed regime has announced its intention to default. U.S. lobbyists have just changed the IMF rules to remove a critical lever on which Russia and other governments have long relied to enforce payment of their loans.
The IMF's Role as Enforcer of Inter-Government Debts
When it comes down to enforcing nations to pay inter-government debts, the International Monetary Fund and Paris Club hold the main leverage. As coordinator of central bank "stabilization" loans (the neoliberal euphemism for imposing austerity and destabilizing debtor economies, Greece-style), the IMF is able to withhold not only its own credit but also that of governments and global banks participating when debtor countries need refinancing. Countries that do not agree to privatize their infrastructure and sell it to Western buyers are threatened with sanctions, backed by U.S.-sponsored "regime change" and "democracy promotion" Maidan-style.
This was the setting on December 8, when Chief IMF Spokesman Gerry Rice announced: "The IMF's Executive Board met today and agreed to change the current policy on non-toleration of arrears to official creditors." The creditor leverage that the IMF has used is that if a nation is in financial arrears to any government, it cannot qualify for an IMF loan – and hence, for packages involving other governments. This has been the system by which the dollarized global financial system has worked for half a century. The beneficiaries have been creditors in US dollars.
In this U.S.-centered worldview, China and Russia loom as the great potential adversaries – defined as independent power centers from the United States as they create the Shanghai Cooperation Organization as an alternative to NATO, and the AIIB as an alternative to the IMF and World Bank tandem. The very name, Asian Infrastructure Investment Bank, implies that transportation systems and other infrastructure will be financed by governments, not relinquished into private hands to become rent-extracting opportunities financed by U.S.-centered bank credit to turn the rent into a flow of interest payments.
The focus on a mixed public/private economy sets the AIIB at odds with the Trans-Pacific Partnership (TPP) and its aim of relinquishing government planning power to the financial and corporate sector for their own short-term gains, and above all the aim of blocking government's money-creating power and financial regulation. Chief Nomura economist Richard Koo, explained the logic of viewing the AIIB as a threat to the US-controlled IMF: "If the IMF's rival is heavily under China's influence, countries receiving its support will rebuild their economies under what is effectively Chinese guidance, increasing the likelihood they will fall directly or indirectly under that country's influence."
Russian Finance Minister Anton Siluanov accused the IMF decision of being "hasty and biased." But it had been discussed all year long, calculating a range of scenarios for a long-term sea change in international law. The aim of this change is to isolate not only Russia, but even more China in its role as creditor to African countries and prospective AIIB borrowers. U.S. officials walked into the IMF headquarters in Washington with the legal equivalent of financial suicide vests, having decided that the time had come to derail Russia's ability to collect on its sovereign loan to Ukraine, and of even larger import, China's plan for a New Silk Road integrating a Eurasian economy independent of U.S. financial and trade control. Anders Aslund, senior fellow at the NATO-oriented Atlantic Council, points out:
The IMF staff started contemplating a rule change in the spring of 2013 because nontraditional creditors, such as China, had started providing developing countries with large loans. One issue was that these loans were issued on conditions out of line with IMF practice. China wasn't a member of the Paris Club, where loan restructuring is usually discussed, so it was time to update the rules.
The IMF intended to adopt a new policy in the spring of 2016, but the dispute over Russia's $3 billion loan to Ukraine has accelerated an otherwise slow decision-making process.
The Wall Street Journal concurred that the underlying motivation for changing the IMF's rules was the threat that Chinese lending would provide an alternative to IMF loans and its demands for austerity. "IMF-watchers said the fund was originally thinking of ensuring China wouldn't be able to foil IMF lending to member countries seeking bailouts as Beijing ramped up loans to developing economies around the world." In short, U.S. strategists have designed a policy to block trade and financial agreements organized outside of U.S. control and that of the IMF and World Bank in which it holds unique veto power.
The plan is simple enough. Trade follows finance, and the creditor usually calls the tune. That is how the United States has used the Dollar Standard to steer Third World trade and investment since World War II along lines benefiting the U.S. economy.
The cement of trade credit and bank lending is the ability of creditors to collect on the international debts being negotiated. That is why the United States and other creditor nations have used the IMF as an intermediary to act as "honest broker" for loan consortia. ("Honest broker" means in practice being subject to U.S. veto power.) To enforce its financial leverage, the IMF has long followed the rule that it will not sponsor any loan agreement or refinancing for governments that are in default of debts owed to other governments. However, as the afore-mentioned Aslund explains, the IMF could easily
change its practice of not lending into [countries in official] arrears … because it is not incorporated into the IMF Articles of Agreement, that is, the IMF statutes. The IMF Executive Board can decide to change this policy with a simple board majority. The IMF has lent to Afghanistan, Georgia, and Iraq in the midst of war, and Russia has no veto right, holding only 2.39 percent of the votes in the IMF. When the IMF has lent to Georgia and Ukraine, the other members of its Executive Board have overruled Russia.
After the rules change, Aslund later noted, "the IMF can continue to give Ukraine loans regardless of what Ukraine does about its credit from Russia, which falls due on December 20.
Inasmuch as Ukraine's official debt to Russia's sovereign debt fund was not to the U.S. Government, the IMF announced its rules change as a "clarification." Its rule that no country can borrow if it is in default to (or not seriously negotiating with) a foreign government was created in the post-1945 world, and has governed the past seventy years in which the United States Government, Treasury officials and/or U.S. bank consortia have been party to nearly every international bailout or major loan agreement. What the IMF rule really meant was that it would not provide credit to countries in arrears specifically to the U.S. Government, not those of Russia or China.
Mikhail Delyagin, Director of the Institute of Globalization Problems, understood the IMF's double standard clearly enough: "The Fund will give Kiev a new loan tranche on one condition that Ukraine should not pay Russia a dollar under its $3 billion debt. Legally, everything will be formalized correctly but they will oblige Ukraine to pay only to western creditors for political reasons." It remains up to the IMF board – and in the end, its managing director – whether or not to deem a country creditworthy. The U.S. representative naturally has always blocked any leaders not beholden to the United States.
The post-2010 loan packages to Greece are a notorious case in point. The IMF staff calculated that Greece could not possibly pay the balance that was set to bail out foreign banks and bondholders. Many Board members agreed (and subsequently have gone public with their whistle-blowing). Their protests didn't matter. Dominique Strauss-Kahn backed the US-ECB position (after President Barack Obama and Treasury secretary Tim Geithner pointed out that U.S. banks had written credit default swaps betting that Greece could pay, and would lose money if there were a debt writedown). In 2015, Christine Lagarde also backed the U.S.-European Central Bank hard line, against staff protests.
IMF executive board member Otaviano Canuto, representing Brazil, noted that the logic that "conditions on IMF lending to a country that fell behind on payments [was to] make sure it kept negotiating in good faith to reach agreement with creditors." Dropping this condition, he said, would open the door for other countries to insist on a similar waiver and avoid making serious and sincere efforts to reach payment agreement with creditor governments.
A more binding IMF rule is that it cannot lend to countries at war or use IMF credit to engage in warfare. Article I of its 1944-45 founding charter ban the fund from lending to a member state engaged in civil war or at war with another member state, or for military purposes in general. But when IMF head Lagarde made the last IMF loan to Ukraine, in spring 2015, she made a token gesture of stating that she hoped there would be peace. But President Porochenko immediately announced that he would step up the civil war with the Russian-speaking population in the eastern Donbass region.
The problem is that the Donbass is where most Ukrainian exports were made, mainly to Russia. That market is being lost by the junta's belligerence toward Russia. This should have blocked Ukraine from receiving IMF aid. Withholding IMF credit could have been a lever to force peace and adherence to the Minsk agreements, but U.S. diplomatic pressure led that opportunity to be rejected.
The most important IMF condition being violated is that continued warfare with the East prevents a realistic prospect of Ukraine paying back new loans. Aslund himself points to the internal contradictions at work: Ukraine has achieved budget balance because the inflation and steep currency depreciation has drastically eroded its pension costs. The resulting lower value of pension benefits has led to growing opposition to Ukraine's post-Maidan junta. "Leading representatives from President Petro Poroshenko's Bloc are insisting on massive tax cuts, but no more expenditure cuts; that would cause a vast budget deficit that the IMF assesses at 9-10 percent of GDP, that could not possibly be financed." So how can the IMF's austerity budget be followed without a political backlash?
The IMF thus is breaking four rules: Not lending to a country that has no visible means to pay back the loan breaks the "No More Argentinas" rule adopted after the IMF's disastrous 2001 loan. Not lending to countries that refuse in good faith to negotiate with their official creditors goes against the IMF's role as the major tool of the global creditors' cartel. And the IMF is now lending to a borrower at war, indeed one that is destroying its export capacity and hence its balance-of-payments ability to pay back the loan. Finally, the IMF is lending to a country that has little likelihood of refuse carrying out the IMF's notorious austerity "conditionalities" on its population – without putting down democratic opposition in a totalitarian manner. Instead of being treated as an outcast from the international financial system, Ukraine is being welcomed and financed.
The upshot – and new basic guideline for IMF lending – is to create a new Iron Curtain splitting the world into pro-U.S. economies going neoliberal, and all other economies, including those seeking to maintain public investment in infrastructure, progressive taxation and what used to be viewed as progressive capitalism. Russia and China may lend as much as they want to other governments, but there is no international vehicle to help secure their ability to be paid back under what until now has passed for international law. Having refused to roll back its own or ECB financial claims on Greece, the IMF is quite willing to see repudiation of official debts owed to Russia, China or other countries not on the list approved by the U.S. neocons who wield veto power in the IMF, World Bank and similar global economic institutions now drawn into the U.S. orbit. Changing its rules to clear the path for the IMF to make loans to Ukraine and other governments in default of debts owed to official lenders is rightly seen as an escalation of America's New Cold War against Russia and also its anti-China strategy.
Timing is everything in such ploys. Georgetown University Law professor and Treasury consultant Anna Gelpern warned that before the "IMF staff and executive board [had] enough time to change the policy on arrears to official creditors," Russia might use "its notorious debt/GDP clause to accelerate the bonds at any time before December, or simply gum up the process of reforming the IMF's arrears policy." According to this clause, if Ukraine's foreign debt rose above 60 percent of GDP, Russia's government would have the right to demand immediate payment. But no doubt anticipating the bitter fight to come over its attempts to collect on its loan, President Putin patiently refrained from exercising this option. He is playing the long game, bending over backward to accommodate Ukraine rather than behaving "odiously."
A more pressing reason deterring the United States from pressing earlier to change IMF rules was that a waiver for Ukraine would have opened the legal floodgates for Greece to ask for a similar waiver on having to pay the "troika" – the European Central Bank (ECB), EU commission and the IMF itself – for the post-2010 loans that have pushed it into a worse depression than the 1930s. "Imagine the Greek government had insisted that EU institutions accept the same haircut as the country's private creditors," Russian finance minister Anton Siluanov asked. "The reaction in European capitals would have been frosty. Yet this is the position now taken by Kiev with respect to Ukraine's $3 billion eurobond held by Russia."
Only after Greece capitulated to eurozone austerity was the path clear for U.S. officials to change the IMF rules in their fight to isolate Russia. But their tactical victory has come at the cost of changing the IMF's rules and those of the global financial system irreversibly. Other countries henceforth may reject conditionalities, as Ukraine has done, and ask for write-downs on foreign official debts.
That was the great fear of neoliberal U.S. and Eurozone strategists last summer, after all. The reason for smashing Greece's economy was to deter Podemos in Spain and similar movements in Italy and Portugal from pursuing national prosperity instead of eurozone austerity. Opening the door to such resistance by Ukraine is the blowback of America's tactic to make a short-term financial hit on Russia while its balance of payments is down as a result of collapsing oil and gas prices.
The consequences go far beyond just the IMF. The fabric of international law itself is being torn apart. Every action has a reaction in the Newtonian world of geopolitics. It may not be a bad thing, to be sure, for the post-1945 global order to be broken apart by U.S. tactics against Russia, if that is the catalyst driving other countries to defend their own economies in the legal and political spheres. It has been U.S. neoliberals themselves who have catalyzed the emerging independent Eurasian bloc.
Countering Russia's Ability to Collect in Britain's Law Courts
Over the past year the U.S. Treasury and State Departments have discussed ploys to block Russia from collecting under British law, where its loans to Ukraine are registered. Reviewing the repertory of legal excuses Ukraine might use to avoid paying Russia, Prof. Gelpern noted that it might declare the debt "odious," made under duress or corruptly. In a paper for the Peterson Institute of International Economics (the banking lobby in Washington) she suggested that Britain should deny Russia the use of its courts as an additional sanction reinforcing the financial, energy, and trade sanctions to those passed against Russia after Crimea voted to join it as protection against the ethnic cleansing from the Right Sector, Azov Battalion and other paramilitary groups descending on the region.
A kindred ploy might be for Ukraine to countersue Russia for reparations for "invading" it, for saving Crimea and the Donbass region from the Right Sector's attempt to take over the country. Such a ploy would seem to have little chance of success in international courts (without showing them to be simply arms of NATO New Cold War politics), but it might delay Russia' ability to collect by tying the loan up in a long nuisance lawsuit.
To claim that Ukraine's debt to Russia was "odious" or otherwise illegitimate, "President Petro Poroshenko said the money was intended to ensure Yanukovych's loyalty to Moscow, and called the payment a 'bribe,' according to an interview with Bloomberg in June this year." The legal and moral problem with such arguments is that they would apply equally to IMF and US loans. Claiming that Russia's loan is "odious" is that this would open the floodgates for other countries to repudiate debts taken on by dictatorships supported by IMF and U.S. lenders, headed by the many dictatorships supported by U.S. diplomacy.
The blowback from the U.S. multi-front attempt to nullify Ukraine's debt may be used to annul or at least write down the destructive IMF loans made on the condition that borrowers accept privatizations favoring U.S., German and other NATO-country investors, undertake austerity programs, and buy weapons systems such as the German submarines that Greece borrowed to pay for. As Foreign Minister Sergei Lavrov noted: "This reform, which they are now trying to implement, designed to suit Ukraine only, could plant a time bomb under all other IMF programs." It certainly showed the extent to which the IMF is subordinate to U.S. aggressive New Cold Warriors: "Essentially, this reform boils down to the following: since Ukraine is politically important – and it is only important because it is opposed to Russia – the IMF is ready to do for Ukraine everything it has not done for anyone else, and the situation that should 100 percent mean a default will be seen as a situation enabling the IMF to finance Ukraine."
Andrei Klimov, deputy chairman of the Committee for International Affairs at the Federation Council (the upper house of Russia's parliament) accused the United States of playing "the role of the main violin in the IMF while the role of the second violin is played by the European Union. These are two basic sponsors of the Maidan – the symbol of a coup d'état in Ukraine in 2014."
Putin's Counter-Strategy and the Blowback on U.S.-European and Global Relations
As noted above, having anticipated that Ukraine would seek reasons to not pay the Russian loan, President Putin carefully refrained from exercising Russia's right to demand immediate payment when Ukraine's foreign debt rose above 60 percent of GDP. In November he offered to defer payment if the United States, Europe and international banks underwrote the obligation. Indeed, he even "proposed better conditions for this restructuring than those the International Monetary Fund requested of us." He offered "to accept a deeper restructuring with no payment this year – a payment of $1 billion next year, $1 billion in 2017, and $1 billion in 2018." If the IMF, the United States and European Union "are sure that Ukraine's solvency will grow," then they should "see no risk in providing guarantees for this credit." Accordingly, he concluded "We have asked for such guarantees either from the United States government, the European Union, or one of the big international financial institutions." 
The implication, Putin pointed out, was that "If they cannot provide guarantees, this means that they do not believe in the Ukrainian economy's future." One professor pointed out that this proposal was in line with the fact that, "Ukraine has already received a sovereign loan guarantee from the United States for a previous bond issue." Why couldn't the United States, Eurozone or leading commercial banks provide a similar guarantee of Ukraine's debt to Russia – or better yet, simply lend it the money to turn it into a loan to the IMF or US lenders?
But the IMF, European Union and the United States refused to back up their happy (but nonsensical) forecasts of Ukrainian solvency with actual guarantees. Foreign Minister Lavrov made clear just what that rejection meant: "By having refused to guarantee Ukraine's debt as part of Russia's proposal to restructure it, the United States effectively admitted the absence of prospects of restoring its solvency. … By officially rejecting the proposed scheme, the United States thereby subscribed to not seeing any prospects of Ukraine restoring its solvency."
In an even more exasperated tone, Prime Minister Dmitri Medvedev explained to Russia's television audience: "I have a feeling that they won't give us the money back because they are crooks. They refuse to return our money and our Western partners not only refuse to help, but they also make it difficult for us." Adding that "the international financial system is unjustly structured," he promised to "go to court. We'll push for default on the loan and we'll push for default on all Ukrainian debts."
The basis for Russia's legal claim, he explained was that the loan
was a request from the Ukrainian Government to the Russian Government. If two governments reach an agreement this is obviously a sovereign loan…. Surprisingly, however, international financial organisations started saying that this is not exactly a sovereign loan. This is utter bull. Evidently, it's just an absolutely brazen, cynical lie. … This seriously erodes trust in IMF decisions. I believe that now there will be a lot of pleas from different borrower states to the IMF to grant them the same terms as Ukraine. How will the IMF possibly refuse them?
And there the matter stands. As President Putin remarked regarding America's support of Al Qaeda, Al Nusra and other ISIS allies in Syria, "Do you have any idea of what you have done?"
Few have calculated the degree to which America's New Cold War with Russia is creating a reaction that is tearing up the world's linkages put in place since World War II. Beyond pulling the IMF and World Bank tightly into U.S. unilateralist geopolitics, how long will Western Europe be willing to forego its trade and investment interest with Russia? Germany, Italy and France already are feeling the strains. If and when a break comes, it will not be marginal but a seismic geopolitical shift.
The oil and pipeline war designed to bypass Russian energy exports has engulfed the Near East in anarchy for over a decade. It is flooding Europe with refugees, and also spreading terrorism to America. In the Republican presidential debate on December 15, 2015, the leading issue was safety from Islamic jihadists. Yet no candidate thought to explain the source of this terrorism in America's alliance with Wahabist Saudi Arabia and Qatar, and hence with Al Qaeda and ISIS/Daish as a means of destabilizing secular regimes seeking independence from U.S. control.
As its allies in this New Cold War, the United States has chosen fundamentalist jihadist religion against secular regimes in Libya, Iraq, Syria, and earlier in Afghanistan and Turkey. Going back to the original sin of CIA hubris – overthrowing the secular Iranian Prime Minister leader Mohammad Mosaddegh in 1953 – American foreign policy has been based on the assumption that secular regimes tend to be nationalist and resist privatization and neoliberal austerity.
Based on this fatal long-term assumption, U.S. Cold Warriors have aligned themselves not only against secular regimes, but against democratic regimes where these seek to promote their own prosperity and economic independence, and to resist neoliberalism in favor of maintaining their traditional mixed public/private economy.
This is the back story of the U.S. fight to control the rest of the world. Tearing apart the IMF's rules is only the most recent chapter. The broad drive against Russia, China and their prospective Eurasian allies has deteriorated into tactics without a realistic understanding of how they are bringing about precisely the kind of world they are seeking to prevent – a multilateral world.
Arena by arena, the core values of what used to be American and European social democratic ideology are being uprooted. The Enlightenment's ideals of secular democracy and the rule of international law applied equally to all nations, classical free market theory (of markets free from unearned income and rent extraction by special vested interests), and public investment in infrastructure to hold down the cost of living and doing business are to be sacrificed to a militant U.S. unilateralism as "the indispensible nation." Standing above the rule of law and national interests, American neocons proclaim that their nation's destiny is to wage war to prevent foreign secular democracy from acting in ways other than submission to U.S. diplomacy. In practice, this means favoring special U.S. financial and corporate interests that control American foreign policy.
This is not how the Enlightenment was supposed to turn out. Classical industrial capitalism a century ago was expected to evolve into an economy of abundance. Instead, we have Pentagon capitalism, finance capitalism deteriorating into a polarized rentier economy, and old-fashioned imperialism.
The Dollar Bloc's Financial Iron Curtain
By treating Ukraine's nullification of its official debt to Russia's Sovereign Wealth Fund as the new norm, the IMF has blessed its default on its bond payment to Russia. President Putin and foreign minister Lavrov have said that they will sue in British courts. But does any court exist in the West not under the thumb of U.S. veto?
What are China and Russia to do, faced with the IMF serving as a kangaroo court whose judgments are subject to U.S. veto power? To protect their autonomy and self-determination, they have created alternatives to the IMF and World Bank, NATO and behind it, the dollar standard.
America's recent New Cold War maneuvering has shown that the two Bretton Woods institutions are unreformable. It is easier to create new institutions such as the A.I.I.B. than to retrofit old and ill-designed ones burdened with the legacy of their vested founding interests. It is easier to expand the Shanghai Cooperation Organization than to surrender to threats from NATO.
U.S. geostrategists seem to have imagined that if they exclude Russia, China and other SCO and Eurasian countries from the U.S.-based financial and trade system, these countries will find themselves in the same economic box as Cuba, Iran and other countries have been isolated by sanctions. The aim is to make countries choose between impoverishment from such exclusion, or acquiescing in U.S. neoliberal drives to financialize their economies and impose austerity on their government sector and labor.
What is lacking from such calculations is the idea of critical mass. The United States may use the IMF and World Bank as levers to exclude countries not in the U.S. orbit from participating in the global trade and financial system, and it may arm-twist Europe to impose trade and financial sanctions on Russia. But this action produces an equal and opposite reaction. That is the eternal Newtonian law of geopolitics. The indicated countermeasure is simply for other countries to create their own international financial organization as an alternative to the IMF, their own "aid" lending institution to juxtapose to the U.S.-centered World Bank.
All this requires an international court to handle disputes that is free from U.S. arm-twisting to turn international law into a kangaroo court following the dictates of Washington. The Eurasian Economic Union now has its own court to adjudicate disputes. It may provide an alternative Judge Griesa's New York federal court ruling in favor of vulture funds derailing Argentina's debt negotiations and excluding it from foreign financial markets. If the London Court of International Arbitration (under whose rules Russia's bonds issued to Ukraine are registered) permits frivolous legal claims (called barratry in English) such as President Poroshenko has threatened in Ukrainian Parliament, it too will become a victim of geopolitical obsolescence.
The more nakedly self-serving and geopolitical U.S. policy is – in backing radical Islamic fundamentalist outgrowths of Al Qaeda throughout the Near East, right-wing nationalist governments in Ukraine and the Baltics – the greater the catalytic pressure is growing for the Shanghai Cooperation Organization, AIIB and related Eurasian institutions to break free of the post-1945 Bretton Woods system run by the U.S. State, Defense and Treasury Departments and NATO superstructure.
The question now is whether Russia and China can hold onto the BRICS and India. So as Paul Craig Roberts recently summarized my ideas along these lines, we are back with George Orwell's 1984 global fracture between Oceanea (the United States, Britain and its northern European NATO allies) vs. Eurasia.
... .... ....RabidGandhi December 18, 2015 at 9:16 am
My issue with Hudson is that he tends to paint things in a "good guys/bad guys" dichotomy viz. the IMF vs. the AIIB. Personally, I think it's quite positive that the international sovereign finance institutions will now be more international and less unipolar, but his scenario where
Nations would mint their own money and hold each other's debt in their international reserves instead of borrowing or holding dollars and subordinating their financial planning to the IMF and U.S. Treasury with their demands for monetary bloodletting and austerity for debtor countries.
is rather pie-in-the sky. What reason do we have to believe that concentrated Chinese capital would somehow be more benevolent than our current overlords? Oh because AIIB has the word "infrastructure" in its title (just as the Interamerican Development Bank is all about development) /sarc.
Furthermore, if US planners had half a clue about economics, they would be jumping for joy that the AIIB and the CIPS will finally help release them (eventually) from the burden of having the USD as the global reserve currency, thus relieving the US of the albatross of having to ship its internal demand to China and other net exporters.
All in all, yes AIIB should be positive, but as Hudson himself points out, this is not so much about economics as it is geopolitics. The world should tread with the utmost caution.
Dino Reno December 18, 2015 at 9:48 am
I think his main point is not so much about economics or geopolitics, it's about the rule of law, specifically international law and how it applies to the debt collection brokered between counties.
China and Russia harbored the fantasy that would be allowed redress in the Western Courts where international law is metered out. They are now no longer under that delusion.
Even if they come up with a lending facility, the West will thwart their ability to collect on those debts at every turn by simply declaring those debts null and void and extending new funds using the infrastructure build by the bad (Russian/Chinese) debt as collateral. The thirst for power and profit will always be with us, but now it will not be tempered by any international order under the rule of law.
Nick December 18, 2015 at 10:15 am
China is learning the hard way how the game is played. For example, they're discovering that much of the tens of billions in no-strings attached loans given to Africa will not provide the returns initially thought (even accounting for massive corruption on all sides), which is why they have been reduced for the first time in a decade this past year.
Alejandro December 18, 2015 at 10:41 am
Don't see how "economics" and "social" can be de-linked from "politics"…understanding the limits of "local" may provide an awareness of the "quid pro quo" of extending, direction of extension, and what defines (in/inter) "dependency"…how sacrifice is "shared" or imposed, and how "prosperity" is concentrated or distributed…
OpenThePodBayDoorsHAL December 18, 2015 at 2:50 pm
It's not Hudson but the US that has simplified the entire world situation into "good guys vs. bad guys", a policy enshrined in Rumsfeld's statement "you're either with us or you're against us".
It's like a playground with one big bully and lots of kids running scared, now a second bully appears and they all have to ask themselves whether Bully #2 will be nicer to them, in this case it appears Bully #2 is saying he won't tell them how to run their lives or steal their lunch money.
Post-comet in 2000 when everything started going to hell the worst casualty has been the rule of law, from hanging chads through to the Patriot Act, death by a thousand cuts of the Constitution, unprosecuted war crimes, unprosecuted financial crimes, and now the very fabric of international law being rent apart. I'm reminded of the Hunter Thompson scene where he has an expired driver's license and a cop pulls him over, he has two choices, hand over the license and get busted, or drive away and get busted… so he comes up with a third choice: he blows his nose all over the license and hands it over to the cop. The equivalent of Bully #1 taking the only soccer ball on the playground and kicking it over the fence so the game is screwed up for everybody, Pepe's "Empire of Chaos" indeed.
global123 December 18, 2015 at 9:47 am
stellar article michael hudson
1)Western economies depend on ocean transport…if chinese or ruskies destroy it, USA-EU will be bankrupt in weeks..USA-EU are consumers and not producers..their exports to rest of world are tiny..So,their position is very weak at this point
2)The asian countries like china-india will be forced to join hands under joint attack by US financial system and islamic jihadists..Russia and china,former enemies,are now friends…who could have imagines it?
Russo-chinese-iranian alliance is huge failure of US foreign policies
3)Using islamic terrorists and islamic countries like turkey-saudi arabia-pakistan-indonesia-egypt is not going to work for USA because muslims think USA as enemy no.1…
4)A military superiority can not guarantee permanent -everlasting victory against too many opponents
What i see here is USA has made entire islamic world their enemy,alongwith china and russia
In case of real war,USA position will be very weak
camelotkidd December 18, 2015 at 9:49 am
This is an amazing article. Bravo!
Now it's becoming clear just what Margaret Thatcher meant when she told everyone that there was no alternative to neoliberalism.
Steve H. December 18, 2015 at 10:00 am
Thank you for continuing to mark the historical specifics of the finance/legal wing of geopolitical conflict, and the perverse failings of Full Spectrum Dominance.
The Oceana/Eurasia dichotomy is a dangerous frame of reference. It essentially contrasts the transport efficiencies of water to the solid defensive capacity of the frozen steppes. But when things get bloody, they usually crack along language lines. Not only as a proxy for migrations of the gene, but also world-views. How horse-people see things, what metaphors they use, are very different than how cow-people categorize the world.
This highlights that Russia is continuing to operate within the language and legal framework of the Indo-European languages. In other words (!), it is a fight between the U.S. and Russia for European alliances. If this is the case, then the alliance of NATO with Turkic and Arabic lines is of convenience, in that they are not partners but proxies. Europe is faced with the habit of the U.S. in saying, Let's you and him fight. But there's an oceans difference between the U.S. and European interests.
It also means that Russia and China are being pushed together by western exclusion, like drops of oil on the water. I maintain that Russia has doubled down on global warming, to open up northern sea routes and make the steppes arable. China is already a sea-power, but its massive population will need lebensraum as the fossil-fuel support for the energy needs of megapoli decay. The mountains are a formidable barrier for them to take the steppes by force.
The question for the rest of the world then becomes, who do you want to have as a friend in a hundred years. Do you bet on the Wizards of Wall Street, with their Magic Money Wand of Fiat? Or do you think Russia will ground-n-pound the fairy dust into the mud?
SocietalIllusions December 18, 2015 at 11:17 am
what is left unsaid is the choices Russia then faces once their legal options play out and the uneven playing field is fully exposed. Do they not then have a historically justifiable basis for declaring war?
The game of brinksmanship continues…
Jim Haygood December 18, 2015 at 11:18 am
'The Russian and Chinese governments are investing in neighboring economies on terms that cement Eurasian economic integration.'
Whereas the U.S. is 'investing' in new military bases to cement U.S. global domination.
Guess which model actually benefits local living standards, and 'wins hearts and minds'?
Global domination as a policy goal bankrupted the USSR. It's not working for the USSA either, as the U.S. middle class (once the envy of the world) visibly sinks into pauperization.
Thus the veracity of Michael Hudson's conclusion that 'when a break comes, it will not be marginal but a seismic geopolitical shift.'
Steven December 18, 2015 at 1:56 pm
I get the same thrill reading Hudson the religiously devout must experience reading their bibles or Korans – a glimpse of 'truth' as best it can be known. My first encounter was this interview in Counterpunch: An Interview with Michael Hudson, author of Super Imperialism That led directly to "Super Imperialism" (and just about every book since its publication). After reading it, I was left with the uneasy feeling that no good would come from an international monetary system that allowed any one nation to pay its way in the world by creating money 'out of thin air' i.e. as sovereign and private debt or, almost the same thing, Federal Reserve Notes.
The race to the bottom of off-shored jobs and industries freed from all environmental restrictions, AKA 'globalization', had started to really kick in but it was just before Operation Iraqi Liberation (get it?). Fundamentally, it wasn't war for oil, of course, but a war to preserve the Dollar Standard. Recycling petrodollars bought a little time after the 1971 collapse of Bretton Woods. But with the world's treasuries filling up with US dollars and debt, the product of the Congressional-military-industrial-complex running wild and more recently the U.S. 0.01% successfully evading almost all forms of taxation, some kind of control more basic than controlling the world's access to money (which basically means credit) was required.
When people like Alan Greenspan (pretend to) come clean, you really want to look twice:
THOUGH it was not understood a century ago, and though as yet the applications of the knowledge to the economics of life are not generally realized, life in its physical aspect is fundamentally a struggle for energy, in which discovery after discovery brings life into new relations with the original source.
Frederick Soddy, WEALTH, VIRTUAL WEALTH AND DEBT, 2nd edition, p. 49
The world can live without American dollars, especially these days when the U.S. no longer makes much the world needs or can afford but most obviously because it already possesses more of them than can ever be redeemed ('debt that can't be repaid and won't be') What it can't live without is ENERGY.
So long as most of that energy needs to be pumped out of the ground, the nation that ultimately controls access to the pumps – or to the distribution networks required to deliver it to the ultimate user – controls the world. This is most likely why Reagan promptly dismantled Jimmy Carter's White House solar panels. It is why the US and its European vassals have been dragging their feet for a half-century on the development of renewable energy sources and the electrification of transportation. It is why the banks and Wall Street will stand solidly behind the various electrical utilities efforts to discourage the development of any alternative energy sources from which their executives and shareholders can not extract the last pint of blood or has Hudson more politely calls it 'economic rent'.
P.S. Hudson seems to have a dangerous monopoly on economic truth these days. Is there anyone else who even comes close?
Mister 2 hours ago 0
[The air force commander said 14 countries had been invited to monitor the (Russian) investigation but only China and Britain had accepted the official offer]
Shelly Winters 1 day ago 5
Not sure what information this "black box" contains, but CVR's and FDR's in most all aircraft (especially commercial jetliners) records only what the flight crew says in the cockpit and what operational parameters the aircraft experienced i.e. throttle settings, aileron positions, pitch, etc. It's questionable if the downed fighter aircraft's actual flight path would be stored internally in any such device, especially a fighter aircraft operating in hostile airspace. This data the Russians claim to have, if it really exists, could be certainly manipulated. The only true data for flight path would be a ground radar tape pulled from two different locations in the area.
I said it before, I believe the radar map the Turks showed with the paths was correct. And here are the military, but also their Religious reasons.
"War of the maps: Turkey released a map showing where Russia violated its airspace, and Russia countered"
You can see there is a very narrow strip of Turkish territory, about a mile wide, protruding deep into the Syrian territory. I don't know exactly the frequency of the sweep of the Turkish radar, but still, looking at the distances between dots, you can figure out the speed. The time to cross the Turkish strip must have been no longer than 20seconds, my initial estimate was 8, the Turks later said 17, but that's not important. The Russian plane is seen to make a wide circle near the Syrian border, flying much below it's maximum speed, probably looking for terrorist bases and convoys, and which circles crossed that limb. It was flying slow and probably low, and in circles, to get a good look. During the next cycle, I do believe the Turks warned it while flying over Syria, 10 times during 5' not to cross that 1 mile strip again. The Russian Su-24 bomber is seen heading for the strip the second time. Notice the Su-24 is a bomber not a dog-fighter like the F-16 and it's older. And there were two F-16's. The Turkish map shows only one path though. But the Russian maps shows only one too! On the Turkish map though, the F-16 is seen lurking in the air, and at some point accelerated sharply, approaching very close and very fast, probably in full afterburner, which is specifically reserved for attack.
I believe it was not there on patrol, but specifically to shoot the Russian plane down and come back. At (probably) the same time, the Russian path is seen with a very sharp small quirk. A sort of a mini-loop. I am sure they were trying to avoid incoming missiles. Their plane got hit, and it is seen trying to accelerate, probably to flee, and then the record ends.
HOWEVER ----------------- Although I believe the Turkish map, I still think the Turks proved themselves on the side of the terrorists.
After all, if the Russian plane was trying to get rid of the terrorists at the Turkish border, and no HONEST state wants terrorists at it's border, and the Russians were trying to do the "dirty job" of getting rid of them, Turkey should have been glad the Russians are helping them. But the fact they shot the Russian plane down, proves Turkey is harboring and abetting terrorists, if not recruits and send them itself.
Crossing that strip of Turkish territory by a friendly plane should not have been reason for shooting it down, only a PRETEXT. That may be the reason why the plane was shot down, because the Russians were not expecting the Turks to shoot at them.
So the Turks are not technically lying, but they ARE! The Russians probably did go through that miserable strip, and that's the technical truth. But Turkey is defending terrorists, and claiming it is not, that's the lie!
There are very sharp Religious reasons why they should do that, and still show the correct map. INTERESTING.. Ever heard of Tawriyya? Let me explain it for you in short. The Koran forbids a Muslim to lie, under penalty of the white-hot fires of Hell. But.. We already know if he becomes a Martyr, all his sins including lies will be forgotten.
But.. for a lie, you will be forgotten, if it's technically, a truth. What does that mean? Say, a Muslim has a $100 bill in his pocket. Somebody comes and asks him for a nickel. He will say: I don't have a nickel in my pockets! That's Tawriya, and Allah will have no reason to send him to Hell, because indeed he does not have a nickel in his pockets! That's a technical truth.
Erdogan, if he were asked "Are the terrorists working for you"? He could answer "Not a single terrorist is working for me". Indeed. Not one, but thousands. Allah won't punish him for that.
He could be asked: "Why did you shoot the plane down"? and he could answer "It was flying over our territory". He will not mention the reason was to protect his terrorists and their oil convoys. That's "Kitman". Saying half the truth. Allah won't punish him for that either.
As for lying to the Infidels, Allah won't punish him if he does it out of fear of the Infidels. Yes, but Islam is at perpetual war with the Infidels, until they either convert or disappear from the face of the Earth by any means, so orders Allah. So being at war with ANY infidel, a Muslim can lie to an Infidel all day and all night long! BUT THEY ARE ALWAYS AT WAR WITH ALL INFIDELS, UNTIL THERE ARE NO MORE INFIDELS! SO ORDERS ALLAH! DO YOU REALIZE WHAT THAT MEANS?
BUT THE TOUGHEST OF ALL IS THE "MURUNA" DOCTRINE. That literally explains terrorism. If you get to understand, you will be very surprised, of how you didn't know it.
If you want to find what terrorism is, and why Erdogan himself, said "There is no moderate and extremist Islam. There is only Islam". And he knew what he was talking about, learn more. So find the MURUNA concept or doctrine. You can find a better explanation here:
You can look on Google for this: "Knowing Four Arabic Words May Save Our Civilization from Islamic Takeover"
And save it before it disappears.
Remember, you won't win any battle not knowing your enemy first.
BTW, did you know where the expression "the writing is on the wall" comes from? I's origin is also explained there.
"Ukraine remains committed ... to negotiating in good faith a consensual restructuring of the December 2015 Eurobonds," Nonsense, they are nothing but thieves in suits; Fascist politicians stealing from the taxpayers in the USA, EU, Russia and the Ukraine. You supporters of modern Fascism are disgusting little NeoCon trolls, yes you are!
This is the new Globalist Business Model.
- Overthrow a sovereign country by revolution or outright bombing campaign.
- Appoint oligarchs to run it and fascists to rule the streets.
- Rack the country with unpardonable debt.
- Bring in the IMF and other global banks to 'restructure' the economy.
- Loot the country's resources by selling off the infrastructure for pennies on the dollar.
- Impose huge austerity programs. ... Cuts pensions in half and double basic living costs.
- Finally, colonialize the citizens under multi-national corporate rule where the people have little or no say.
Under this IMF restructuring deal with the Ukraine, the oligarchs mandated that Monsanto GMO comes in. Now the once fertile farms will grow poisoned food. ... They also mandated hydraulic fracking rights to Exxon and BP. Now the aquifers will be poisoned. ... Moreover, the IMF social chapter destroys family values and requires that corrosive gay propaganda be thrust into the children's minds. ... Welcome to the new Globalist Business Model.
The Ukraine is like a dying carcass. ... The EU jackals are howling, the IMF vultures are circling, and the NATO hyenas are picking the flesh off of the bones.
Russia needs to take payment out of their proverbial hides. No one consider it unjustified except a few brainwashed Americans and of course the immoral and corrupt ruling class of the Empire!
Ukraine's Finance Minister, who promised in the above Reuters article today Dec 18, 2015, to talk in good faith with the Russian Federation about their $3 Billion Loan due and payable on Dec 15, as of today is in Default on that $3 Billion Loan , and therefore isn't eligible to receive any Loan from the IMF, headed by Chief Lagarde who must now stand trial for an improper loan of $434 Million .
Therefore, Gold did achieve an all-important triple bottom at $1,050 per ounce this week, and is now in a furious rally up $15 to $1,065 per ounce as DXY (U.S. Dollar Index) falls sharply today due to utter failure of U.S.- led IMF to rescue Ukraine from Financial Collapse today -- Thus Gold will now rally sharply through at least Feb 2016 when Gold will be at $1,500 per ounce, and ultimately going to new all-time highs above $2,000 per ounce -- Dec 18, 2015 at 11:53 a.m. PST.
Good faith? They actually mean bait and switch
The deadbeat American lackeys in Kiev have no intention of paying their debts to Russia because Washington DC is run by thieves and immoral people. You know this is true.
Meanwhile Ukraine has restricted air travel, cutoff Crimea, and fought efforts to grant autonomy to Russian-speaking regions. With unpaid debt, the country still stokes war with Russia after being warned by Mr. Kerry to stop.
Dec 19, 2015 | Zero HedgeFollowing June elections in which AKP lost its absolute parliamentary majority thanks in part to a stronger than expected showing at the polls by the pro-Kurdish HDP, Turkish President Recip Tayyip Erdogan began to lose his mind.
The vote put in jeopardy Erdogan's bid to effectively rewrite the country's constitution on the way to consolidating his power in an executive presidency. That decisively undesirable outcome could not stand and so Erdogan did what any respectable autocrat would do: he nullified the election. First, the President undermined the coalition building process so he could call for new elections. Next, he fanned the flames of civil war and reignited a long-simmering conflict with the PKK. The idea was to scare the electorate into believing that a "strong" AKP government was the only antidote to domestic and international terror. Finally, Erdogan cracked down on the press and anyone else critical of his rule. AKP was also suspected of covertly backing attacks on HDP offices and newspapers. Some (i.e. the PKK) went so far as to suggest that Erdogan secretly worked with Sunni extremists to orchestrate suicide bombings - in other words, there's speculation Erdogan terrorized his own people.
Sure enough, AKP had a better showing at re-do elections last month, but by that point, Erdogan was on the fast track to dictatorial delirium. On November 24, he shot down a Russian fighter jet near the border with Syria in the first such direct military confrontation between Russia and a NATO member in at least six decades. And the madness didn't stop there. After Putin and the Russian MoD laid out their case against Ankara's role in financing Islamic State via Turkey's complicity in the group's lucrative oil trafficking business, Turkey sent hundreds of troops and around two dozen tanks to Bashiqa in Iraq which is right on the crude smuggling route. The deployment infuriated Baghdad and after Turkey refused to pull the troops out, Iraq went to the UN Security Council. Subsequently, Turkish troops were "attacked" by Islamic State.
The Turks claim that Iraq invited them in the past, a contention Baghdad vehemently denies. Thanks to Barzani and the Kurds, Ankara gets to claim that at least someone welcomes the Turkish troop presence (remember, despite Erdogan's hatred of the PKK and the YPG, Turkey is friendly with Erbil, which relies on Turkey to get some 630,000 b/d of what is technically illegal crude to market).
Well, for anyone who thought Turkey might be set to bow to international pressure by moving its troops north and thus back towards the Turkey-Iraq border, think again because on Saturday, Turkish PM Ahmet Davutoglu was out with a series of declarations that seem to suggest Turkey is going full-belligerent-retard as Erdogan scrambles to preserve the "Assad must go" narrative on the way to securing whatever Ankara's interests are in both Iraq and Syria.
First, Davutoglu said that the provision of training to the Peshmerga and Mosul militiamen is "in line with a request from Iraq authorities and as such, the mission in Iraq will continue "until Mosul is freed" from ISIS.
Ok, so two things there. The deployment is not "in line with a request from Iraq." At this point, Turkey's position has moved from comically absurd to maddeningly obstinate. How many times does Baghdad have to say that Turkey isn't invited before NATO forces Turkey to drop the "they told us we could be here" line? Further, the idea that Turkey will stay until Mosul "is liberated" from ISIS, means Erdogan plans to remain in Iraq indefinitely. As we've documented on several occasions, an operation to retake Mosul is for all intents and purposes a pipe dream and if Turkey intends to wait it out, the troops and tanks could be there for years.
Next, Davutoglu claims that the Islamic State attacks on Turkish positions in Bashiqa prove Turkey "is right." "Right" about what, it's not clear, but what's interesting is that the attacks came just as ISIS launched its first major offensive in northern Iraq since July in a move that US officials say was likely designed to disrupt preparations for an assault on Mosul. The point: all of this is rather conveniently timed.
Davutoglu then slammed a UN Security Council resolution agreed in New York on Friday. The meeting of foreign ministers was tipped by John Kerry in Moscow on Tuesday and when discussions ended, diplomats adopted a resolution which purports to draw a road map for ending the war in Syria. As WSJ notes, the resolution "left unresolved divisions among world powers on key issues in the conflict."
Which "key issues", you ask? Well, the only ones that matter - namely, i) the fate of Bashar al-Assad and ii) which groups should be recognized as "terrorists" and which should be awarded the "moderate opposition" badge.
"Both issues were left out of the resolution after an hourslong meeting of foreign ministers in New York on Friday failed to reach a compromise and at one point verged on collapse," WSJ goes on the recount, adding that "Russian and Iranian diplomats said the question of Mr. Assad wasn't discussed on Friday because neither of their countries would accept a deal that calls for Mr. Assad's exit, even at the end of a political transition period."
As we've said on too many occasions to count, Syria is absolutely critical for Tehran when it comes to preserving Iranian influence and ensuring that the so-called "Shiite crescent" doesn't wane. For Russia, this is a chance to supplant the US as Mid-East superpower puppet master and Moscow isn't about to see it slip away by agreeing to a resolution that makes Assad's ouster a foregone conclusion.
For Turkey, the absence of a decision on Assad's future is maddening. The Security Council resolution "lacks realistic perspective," Davutoglu said on Saturday, before adding that the "Syria crisis can only be solved if Bashar al-Assad leaves power."
Consider that, and consider the fact that, as we reported yesterday, Ankara is now establishing a military base in Qatar in order that the two country's might work more closely on tackling "common enemies."
What we're beginning to see here is the formation of three alliances in the Mid-East: 1) Russia, Iran, Syria, and Iraq; 2) Turkey, Saudi Arabia, and Qatar; 3) Britain, France, and Germany. The first alliance is pro-Assad, anti-terror. The second is anti-Assad, pro-Sunni extremist. The third is anti-Assad (although less vehemently so), anti-terror (conspiracy theories aside). Note that we've left the US out. Why? Because Washington is now stuck. The US wants desperately to maintain coordination with Ankara, Riyadh, and Doha, but between stepped up media coverage of Saudi Arabia's role in underwriting extremism (via the promotion of Wahhabism) and hightened scrutiny on Erdogan's role in financing terrorists, the position is becoming increasingly untenable. But aligning solely with the UK, France, and Germany entails adopting a more conciliatory approach to Assad - just ask Berlin which, as we reported on Friday, is now working with Assad's intelligence police and may soon establish a base in Damascus.
With that in mind, we'll close with the following from Obama, which underscores the extent to which the US is now thoroughly confused as to what to do next:JustObserving
"Now, is there a way of us constructing a bridge, creating a political transition, that allows those who are allied with Assad right now, allows the Russians, allows the Iranians to ensure that their equities are respected, that minorities like the Alawites are not crushed or retribution is not the order of the day? I think that's going to be very important as well."WTFRLY
First try the sarin gas supplying war criminal, Erdogan
Turkey supplied the sarin that killed over 1300 Syrians in Ghouta to try to get the Nobel Prize Winner to bomb Assad into oblivion
Seymour Hersh Links Turkey to Benghazi, Syria and Sarin
The assessment of the Defense Intelligence Agency is that the sarin was supplied by Turkey to elements in Ghouta with the intent of "push[ing] Obama over the red line." Intercepted transmissions from Turkish operators in the aftermath of the attack are jubilant, and the success of their covert mission must have seemed well in hand. Obama's implicit call to war in the coming month was proof of that.
White House, Media Silent One Year After Murder of US Reporter Who Exposed Western Links to ISIS October 20, 2015
Turkey killed and American reporter to protect the lies. British reporter Jackie Sutton was found dead a year to the day in Istanbul airport...There aren't that many Turkish troops in Iraq, they can be removed with Iraqi Army and Shiite militia ground troops. The Russian can fly CAP but they shouldn't be involved beyond that. The purpose of Erdogan's insanities is to goad Putin into doing something that will bring NATO against him. He's been wise enough to avoid that so far. The Western economies are a gnats eyelash from collapse so all he needs to so is wait. Maybe selling a few shares of SPY at the right time would help or giving a few billion to some untracable players who call for delivery on their gold futures. I hope he's patient, the end-game is upon us but the fewer nukes that get used the better.two hoots
Israel, where are you in all of this? Oh, see below:
Forget Qatar/Russia pipelines.
Israel/Turkey/US/NATO connection found here: "That would allow Turkey to reduce its energy dependence on Russia and open up a new market for Israeli and U.S. developers of a new natural gas project off the Israeli coast." (WSJ)
Nat Gas in Israel waters: "Israel has proposed that EU countries invest in a multi-billion euro pipeline to carry its natural gas to the continent, noting that the supply from Israel would reduce Europe's current dependence on natural gas from Russia." (Start Up-Israel)
It could be a whole new NG game? And what thinks Russia/Qatar in all of this?
FireBranderNeil Patrick Harris
I expect the lies....but the level of lies when it comes to "fighting ISIS" is off-the-fucking-charts!...and no one calls him on it!
>The USA/NATO Created ISIS.
>The USA/NATO is using ISIS to oust ASSAD because he's too friendly with Russia/Iran.
>The USA/NATO FUNDS ISIS via Turkey.
Obama: "ISIS is a seriously threat, they are contained and we will destroy ISIS"
Bill Clintons' mouth has got to be gaping; and I'm sure thoroughly impressed that Obama could tell a whopper like that without question...NOT ONE REPUBLICAN at the debate even called Obama on ISIS!Peter Pan
You gotta wonder how much money they promised him when he leaves office.FireBrander
Unfortunately Obama is beyond being a threat. He ( and whoever is pulling on his strings) is an actual attack on America.FireBrander
"Our government has become incompetent, unresponsive, corrupt, and that incompetence, ineptitude, lack of accountability is now dangerous" Carly won the sound bite of the century award with that one!
..and the new budget bill will fully fund ALL OF IT's desires....
I voted for "this turd" because you Rightwingnut Fuckheads gave me the option of McCain the first time and Romney the second time.
You're welcome for my vote saving you from those fuckheads...McCain would have nuked the planet by now and Romney would have handed the country to his VC friends and you'd be living in a "dorm" putting together iPhones.
Romney criticised Obama in one of the debates because "The number of battleships in our fleet is the lowest since the 50's"...battleships? Romney, you stupid fuck, it's 20xx you moron...battleships are pretty irrelevent in today's "theater of war"...Obama held it together and replied, I give the Admirals EVERYTHING THEY ASK FOR...and Romney dropped it.
Great ZH piece on Romney; what a piece of shit:
Dec 19, 2015 | Beat the Press
... ... ...
But what is even more striking is the Post's ability to treat the Fed a neutral party when the evidence is so overwhelming in the opposite direction. The majority of the Fed's 12 district bank presidents have long been pushing for a rate hike. While there are some doves among this group, most notably Charles Evans, the Chicago bank president, and Narayana Kocherlakota, the departing president of the Minneapolis bank, most of this group has publicly pushed for higher rate hikes for some time. By contrast, the governors who are appointed through the democratic process, have been far more cautious about raising rates.
It should raise serious concerns that the bank presidents, who are appointed through a process dominated by the banking industry, has such a different perspective on the best path forward for monetary policy. With only five of the seven governor slots currently filled, there are as many presidents with voting seats on the Fed's Open Market Committee as governors. In total, the governors are outnumbered at meetings by a ratio of twelve to five.
Any serious discussion of Fed policy would note that the banking industry appears to have a grossly disproportionate say in the country's monetary policy. Furthermore, it seems determined to use that influence to push the Fed on a path that slows growth and reduces the rate of job creation. The Post somehow missed this story or at least would prefer that the rest of us not take notice.
-- Dean Baker
December 18, 2015 | cepr.netDean Baker:Working Paper: : In the years since 1980, there has been a well-documented upward redistribution of income. While there are some differences by methodology and the precise years chosen, the top one percent of households have seen their income share roughly double from 10 percent in 1980 to 20 percent in the second decade of the 21st century. As a result of this upward redistribution, most workers have seen little improvement in living standards from the productivity gains over this period.
This paper argues that the bulk of this upward redistribution comes from the growth of rents in the economy in four major areas: patent and copyright protection, the financial sector, the pay of CEOs and other top executives, and protectionist measures that have boosted the pay of doctors and other highly educated professionals. The argument on rents is important because, if correct, it means that there is nothing intrinsic to capitalism that led to this rapid rise in inequality, as for example argued by Thomas Piketty.Flash | PDF
RC AKA Darryl, Ron said in reply to Fair Economist, December 18, 2015 at 11:34 AMRC AKA Darryl, Ron said in reply to RC AKA Darryl, Ron, December 18, 2015 at 11:42 AM
"...the growth of finance capitalism was what would kill capitalism off..."
"Financialization" is a short-cut terminology that in full is term either "financialization of non-financial firms" or "financialization of the means of production." In either case it leads to consolidation of firms, outsourcing, downsizing, and offshoring to reduce work force and wages and increase rents.
Consolidation, the alpha and omega of financialization can only be executed with very liquid financial markets, big investment banks to back necessary leverage to make the proffers, and an acute capital gains tax preference relative to dividends and interest earnings, the grease to liquidity.
It takes big finance to do "financialization" and it takes "financialization" to extract big rents while maintaining low wages.[THANKS to djb just down thread who supplied this link:]pgl said in reply to RC AKA Darryl, Ron, December 18, 2015 at 03:25 PM
Finance sector as percent of US GDP, 1860-present: the growth of the rentier economy
Financialization is a term sometimes used in discussions of financial capitalism which developed over recent decades, in which financial leverage tended to override capital (equity) and financial markets tended to dominate over the traditional industrial economy and agricultural economics.
Financialization is a term that describes an economic system or process that attempts to reduce all value that is exchanged (whether tangible, intangible, future or present promises, etc.) either into a financial instrument or a derivative of a financial instrument. The original intent of financialization is to be able to reduce any work-product or service to an exchangeable financial instrument... Financialization also makes economic rents possible...financial leverage tended to override capital (equity) and financial markets tended to dominate over the traditional industrial economy and agricultural economics...
Companies are not able to invest in new physical capital equipment or buildings because they are obliged to use their operating revenue to pay their bankers and bondholders, as well as junk-bond holders. This is what I mean when I say that the economy is becoming financialized. Its aim is not to provide tangible capital formation or rising living standards, but to generate interest, financial fees for underwriting mergers and acquisitions, and capital gains that accrue mainly to insiders, headed by upper management and large financial institutions. The upshot is that the traditional business cycle has been overshadowed by a secular increase in debt.
Instead of labor earning more, hourly earnings have declined in real terms. There has been a drop in net disposable income after paying taxes and withholding "forced saving" for social Security and medical insurance, pension-fund contributions and–most serious of all–debt service on credit cards, bank loans, mortgage loans, student loans, auto loans, home insurance premiums, life insurance, private medical insurance and other FIRE-sector charges. ... This diverts spending away from goods and services.
In the United States, probably more money has been made through the appreciation of real estate than in any other way. What are the long-term consequences if an increasing percentage of savings and wealth, as it now seems, is used to inflate the prices of already existing assets - real estate and stocks - instead of to create new production and innovation?
http://en.wikipedia.org/wiki/FinancializationYour graph shows something I've been meaning to suggest for a while. Take a look at the last time that the financial sector share of GDP rose. The late 1920's. Which was followed by the Great Depression which has similar causes as our Great Recession. Here is my observation.Peter K. said in reply to RC AKA Darryl, Ron, December 18, 2015 at 11:50 AM
Give that Wall Street clowns a huge increase in our national income and we don't get more services from them. What we get is screwed on the grandest of scales.
BTW - there is a simple causal relationship that explains both the rise in the share of financial sector income/GDP and the massive collapses of the economy (1929 and 2007). It is called stupid financial deregulation. First we see the megabanks and Wall Street milking the system for all its worth and when their unhanded and often secretive risk taking falls apart - the rest of bear the brunt of the damage.
Which is why this election is crucial. Elect a Republican and we repeat this mistake again. Elect a real progressive and we can put in place the types of financial reforms FDR was known for.djb said...
" and it takes "financialization" to extract big rents while maintaining low wages."
It takes governmental macro policy to maintain loose labor markets and low wages. Perhaps the financialization of the economy and rising inequality leads to a corruption of the political process which leads to monetary, currency and fiscal policy such that labor markets are loose and inflation is low.RC AKA Darryl, Ron said in reply to djb, December 18, 2015 at 12:03 PM
I don't know about the last couple years but this chart indicates a large growth in financials as a share of gdp over the years since the 40's[Anne gave you FIRE sector profits as a share of GDP while this gives FIRE sector profits as a share of total corporate profits.]Puerto Barato said in reply to RC AKA Darryl, Ron,
[Smoking gun excerpt:]
"...The financial system has grown rapidly since the early 1980s. In the 1950s, the financial sector accounted for about 3 percent of U.S. gross domestic product. Today, that figure has more than doubled, to 6.5 percent. The sector's yearly rate of growth doubled after 1980, rising to a peak of 7.5 percent of GDP in 2006. As finance has grown in relative size it has also grown disproportionately more profitable. In 1950, financial-sector profits were about 8 percent of overall U.S. profits-meaning all the profit earned by any kind of business enterprise in the country. By the 2000s, they ranged between 20 and 40 percent...
[Now the whole enchilada:]
If you want to know what happened to economic equality in this country, one word will explain a lot of it: financialization. That term refers to an increase in the size, scope, and power of the financial sector-the people and firms that manage money and underwrite stocks, bonds, derivatives, and other securities-relative to the rest of the economy.
The financialization revolution over the past thirty-five years has moved us toward greater inequality in three distinct ways. The first involves moving a larger share of the total national wealth into the hands of the financial sector. The second involves concentrating on activities that are of questionable value, or even detrimental to the economy as a whole. And finally, finance has increased inequality by convincing corporate executives and asset managers that corporations must be judged not by the quality of their products and workforce but by one thing only: immediate income paid to shareholders.
The financial system has grown rapidly since the early 1980s. In the 1950s, the financial sector accounted for about 3 percent of U.S. gross domestic product. Today, that figure has more than doubled, to 6.5 percent. The sector's yearly rate of growth doubled after 1980, rising to a peak of 7.5 percent of GDP in 2006. As finance has grown in relative size it has also grown disproportionately more profitable. In 1950, financial-sector profits were about 8 percent of overall U.S. profits-meaning all the profit earned by any kind of business enterprise in the country. By the 2000s, they ranged between 20 and 40 percent. This isn't just the decline of profits in other industries, either. Between 1980 and 2006, while GDP increased five times, financial-sector profits increased sixteen times over. While financial and nonfinancial profits grew at roughly the same rate before 1980, between 1980 and 2006 nonfinancial profits grew seven times while financial profits grew sixteen times.
This trend has continued even after the financial crisis of 2008 and subsequent financial reforms, including the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act. Financial profits in 2012 were 24 percent of total profits, while the financial sector's share of GDP was 6.8 percent. These numbers are lower than the high points of the mid-2000s; but, compared to the years before 1980, they are remarkably high.
This explosion of finance has generated greater inequality. To begin with, the share of the total workforce employed in the financial sector has barely budged, much less grown at a rate equivalent to the size and profitability of the sector as a whole. That means that these swollen profits are flowing to a small sliver of the population: those employed in finance. And financiers, in turn, have become substantially more prominent among the top 1 percent. Recent work by the economists Jon Bakija, Adam Cole, and Bradley T. Heim found that the percentage of those in the top 1 percent of income working in finance nearly doubled between 1979 and 2005, from 7.7 percent to 13.9 percent.
If the economy had become far more productive as a result of these changes, they could have been worthwhile. But the evidence shows it did not. Economist Thomas Philippon found that financial services themselves have become less, not more, efficient over this time period. The unit cost of financial services, or the percentage of assets it costs to produce all financial issuances, was relatively high at the dawn of the twentieth century, but declined to below 2 percent between 1901 and 1960. However, it has increased since the 1960s, and is back to levels seen at the early twentieth century. Whatever finance is doing, it isn't doing it more cheaply.
In fact, the second damaging trend is that financial institutions began to concentrate more and more on activities that are worrisome at best and destructive at worst. Harvard Business School professors Robin Greenwood and David Scharfstein argue that between 1980 and 2007 the growth in financial-industry revenues came from two things: asset management and loan origination. Fees associated either with asset management or with household credit in particular were responsible for 74 percent of the growth in financial-sector output over that period.
The asset management portion reflects the explosion of mutual funds, which increased from $134 billion in assets in 1980 to $12 trillion in 2007. Much of it also comes from "alternative investment vehicles" like hedge funds and private equity. Over this time, the fee rate for mutual funds fell, but fees associated with alternative investment vehicles exploded. This is, in essence, money for nothing-there is little evidence that hedge funds actually perform better than the market over time. And, unlike mutual funds, alternative investment funds do not fully disclose their practices and fees publicly.
Beginning in 1980 and continuing today, banks generate less and less of their income from interest on loans. Instead, they rely on fees, from either consumers or borrowers. Fees associated with household credit grew from 1.1 percent of GDP in 1980 to 3.4 percent in 2007. As part of the unregulated shadow banking sector that took over the financial sector, banks are less and less in the business of holding loans and more and more concerned with packaging them and selling them off. Instead of holding loans on their books, banks originate loans to sell off and distribute into this new type of banking sector.
Again, if this "originate-to-distribute" model created value for society, it could be a worthwhile practice. But, in fact, this model introduced huge opportunities for fraud throughout the lending process. Loans-such as "securitized mortgages" made up of pledges of the income stream from subprime mortgage loans-were passed along a chain of buyers until someone far away held the ultimate risk. Bankers who originated the mortgages received significant commissions, with virtually no accountability or oversight. The incentive, in fact, was perverse: find the worst loans with the biggest fees instead of properly screening for whether the loans would be any good for investors.
The same model made it difficult, if not impossible, to renegotiate bad mortgages when the system collapsed. Those tasked with tackling bad mortgages on behalf of investors had their own conflicts of interests, and found themselves profiting while loans struggled. This process created bad debts that could never be paid, and blocked attempts to try and rework them after the fact. The resulting pool of bad debt has been a drag on the economy ever since, giving us the fall in median wages of the Great Recession and the sluggish recovery we still live with.
And of course it's been an epic disaster for the borrowers themselves. Many of them, we now know, were moderate- and lower-income families who were in no financial position to borrow as much as they did, especially under such predatory terms and with such high fees. Collapsing home prices and the inability to renegotiate their underwater mortgages stripped these folks of whatever savings they had and left them in deep debt, widening even further the gulf of inequality in this country.
Moreover, financialization isn't just confined to the financial sector itself. It's also ultimately about who controls, guides, and benefits from our economy as a whole. And here's the last big change: the "shareholder revolution," started in the 1980s and continuing to this very day, has fundamentally transformed the way our economy functions in favor of wealth owners.
To understand this change, compare two eras at General Electric. This is how business professor Gerald Davis describes the perspective of Owen Young, who was CEO of GE almost straight through from 1922 to 1945: "[S]tockholders are confined to a maximum return equivalent to a risk premium. The remaining profit stays in the enterprise, is paid out in higher wages, or is passed on to the customer." Davis contrasts that ethos with that of Jack Welch, CEO from 1981 to 2001; Welch, Davis says, believed in "the shareholder as king-the residual claimant, entitled to the [whole] pot of earnings."
This change had dramatic consequences. Economist J. W. Mason found that, before the 1980s, firms tended to borrow funds in order to fuel investment. Since 1980, that link has been broken. Now when firms borrow, they tend to use the money to fund dividends or buy back stocks. Indeed, even during the height of the housing boom, Mason notes, "corporations were paying out more than 100 percent of their cash flow to shareholders."
This lack of investment is obviously holding back our recovery. Productive investment remains low, and even extraordinary action by the Federal Reserve to make investments more profitable by keeping interest rates low has not been able to counteract the general corporate presumption that this money should go to shareholders. There is thus less innovation, less risk taking, and ultimately less growth. One of the reasons this revolution was engineered in the 1980s was to put a check on what kinds of investments CEOs could make, and one of those investments was wage growth. Finance has now won the battle against wage earners: corporations today are reluctant to raise wages even as the economy slowly starts to recover. This keeps the economy perpetually sluggish by retarding consumer demand, while also increasing inequality.
How can these changes be challenged? The first thing we must understand is the scope of the change. As Mason writes, the changes have been intellectual, legal, and institutional. At the intellectual level, academic research and conventional wisdom among economists and policymakers coalesced around the ideas that maximizing returns to shareholders is the only goal of a corporation, and that the financial markets were always right. At the legal level, laws regulating finance at the state level were overturned by the Supreme Court or preempted by federal regulators, and antitrust regulations were gutted by the Reagan administration and not taken up again.
At the institutional level, deregulation over several administrations led to a massive concentration of the financial sector into fewer, richer firms. As financial expertise became more prestigious than industry-specific knowledge, CEOs no longer came from within the firms they represented but instead from other firms or from Wall Street; their pay was aligned through stock options, which naturally turned their focus toward maximizing stock prices. The intellectual and institutional transformation was part of an overwhelming ideological change: the health and strength of the economy became identified solely with the profitability of the financial markets.
This was a bold revolution, and any program that seeks to change it has to be just as bold intellectually. Such a program will also require legal and institutional changes, ones that go beyond making sure that financial firms can fail without destroying the economy. Dodd-Frank can be thought of as a reaction against the worst excesses of the financial sector at the height of the housing bubble, and as a line of defense against future financial panics. Many parts of it are doing yeoman's work in curtailing the financial sector's abuses, especially in terms of protecting consumers from fraud and bringing some transparency to the Wild West of the derivatives markets. But the scope of the law is too limited to roll back these larger changes.
One provision of Dodd-Frank, however, suggests a way forward. At the urging of the AFL-CIO, Dodd-Frank empowered the Securities and Exchange Commission to examine the activities of private equity firms on behalf of their investors. At around $3.5 trillion, private equity is a massive market with serious consequences for the economy as a whole. On its first pass, the SEC found extensive abuses. Andrew Bowden, the director of the SEC's examinations office, stated that the agency found "what we believe are violations of law or material weaknesses in controls over 50 percent of the time."
Lawmakers could require private equity and hedge funds to standardize their disclosures of fees and holdings, as is currently the case for mutual funds. The decline in fees for mutual funds noted above didn't just happen by itself; it happened because the law structured the market for actual transparency and price competition. This will need to happen again for the broader financial sector.
But the most important change will be intellectual: we must come to understand our economy not as simply a vehicle for capital owners, but rather as the creation of all of us, a common endeavor that creates space for innovation, risk taking, and a stronger workforce. This change will be difficult, as we will have to alter how we approach the economy as a whole. Our wealth and companies can't just be strip-mined for a small sliver of capital holders; we'll need to bring the corporation back to the public realm. But without it, we will remain trapped inside an economy that only works for a select few.
[Whew!]"3 percent of U.S. gross domestic product. Today, that figure has more than doubled, to 6.5"
~~RC AKA Darryl, Ron ~
Growth of the non-financial-sector == growth in productivity
Growth of the financial-sector == growth in upward transfer of wealth
Ostensibly financial-sector is there to protect your money from being eaten up by inflation. Closer inspection shows that the prevention of *eaten up* is by the method of rent collection.
Accountants handle this analysis poorly, but you can see what is happening. Boiling it down to the bottom line you can easily see that wiping out the financial sector is the remedy to the Piketty.
Hell! Financial sector wiped itself out in 008. Problem was that the GSE and administration brought the zombie back to life then put the vampire back at our throats. What was the precipitating factor that snagged the financial sector without warning?
pgl said in reply to djb...Rock O Sock O Choco said in reply to djb... December 18, 2015 at 06:26 PM
People like Brad DeLong have noted this for a while. Twice as many people making twice as much money per person. And their true value to us - not a bit more than it was back in the 1940's.
JEC - MeanSquaredErrors said...tew said...
Piketty looks at centuries of data from all over the world and concludes that capitalism has a long-run bias towards income concentration. Baker looks at 35 years of data in one country and concludes that Piketty is wrong. Um...?
A little more generously, what Baker actually writes is:
"The argument on rents is important because, if correct, it means that there is nothing intrinsic to capitalism that led to **this** rapid rise in inequality, as for example argued by Thomas Piketty." (emphasis added)
But Piketty has always been very explicit that the recent rise in US income inequality is anomalous -- driven primarily by rising inequality in the distribution of labor income, and only secondarily by any shift from labor to capital income.
So perhaps Baker is "correctly" refuting Straw Thomas Piketty. Which I suppose is better than just being obviously wrong. Maybe.cm said in reply to tew...
Some simple math shows that this assertion is false "As a result of this upward redistribution, most workers have seen little improvement in living standards" unless you think an apprx. 60% in per-capita real income (expressed as GDP) among the 99% is "little improvement".
Real GDP 2015 / Real GDP 1980 = 2.57 (Source: FRED)
If the income share of the 1% shifted from 10% to 20% then The 1%' real GDP component went up 410% while that of The 99% went up 130%. Accounting for a population increase of about 41% brings those numbers to a 265% increase and a 62% increase.
Certainly a very unequal distribution of the productivity gains but hard to call "little".
I believe the truth of the statement is revealed when you look at the Top 5% vs. the other 95%.pgl said in reply to tew...
For most "working people", their raises are quickly eaten up by increases in housing/rental, food, local services, and other nondiscretionary costs. Sure, you can buy more and better imported consumer electronics per dollar, but you have to pay the rent/mortgage every months, how often do you buy a new flat screen TV? In a high-cost metro, a big ass TV will easily cost less than a single monthly rent (and probably less than your annual cable bill that you need to actually watch TV).
Are you trying to be the champion of the 1%? Sorry dude but Greg Mankiw beat you to this.
anne said...anne said in reply to anne...
In the years since 1980, there has been a well-documented upward redistribution of income. While there are some differences by methodology and the precise years chosen, the top one percent of households have seen their income share roughly double from 10 percent in 1980 to 20 percent in the second decade of the 21st century. As a result of this upward redistribution, most workers have seen little improvement in living standards from the productivity gains over this period....
-- Dean Bakeranne said in reply to don...
September 16, 2015
Real Median Household Income, 1980 & 2014
1980 ( 48,462)
2014 ( 53,657)
53,657 - 48,462 = 5,195
5,195 / 48,462 = 10.7%
Between 1980 and 2014 real median household income increased by a mere 10.7%.anne said in reply to anne...
I would be curious to know what has happened to the number of members per household....
September 16, 2015
2014 ( 2.54)
1980 ( 2.73)
[ The difference in household size to real median household incomes is not statistically significant. ]cm said...
September 16, 2015
Real Median Family Income, 1948-1980-2014
1948 ( 27,369)
1980 ( 57,528)
2014 ( 66,632)
57,528 - 27,369 = 30,159
30,159 / 27,369 = 110.2%
66,632 - 57,528 = 9,104
9,104 / 57,528 = 15.8%
Between 1948 and 1980, real median family income increased by 110.2%, while between 1980 and 2014 real median family income increased by a mere 15.8%.
"protectionist measures that have boosted the pay of doctors and other highly educated professionals"
Protectionist measures (largely of the variety that foreign credentials are not recognized) apply to doctors and similar accredited occupations considered to be of some importance, but certainly much less so to "highly educated professionals" in tech, where the protectionism is limited to annual quotas for some categories of new workers imported into the country and requiring companies to pay above a certain wage rate for work visa holders in jobs claimed to have high skills requirements.
A little mentioned but significant factor for growing wages in "highly skilled" jobs is that the level of foundational and generic domain skills is a necessity, but is not all the value the individual brings to the company. In complex subject matters, even the most competent person joining a company has to become familiar with the details of the products, the industry niche, the processes and professional/personal relationships in the company or industry, etc. All these are not really teachable and require between months and years in the job. This represents a significant sunk cost. Sometimes (actually rather often) experience within the niche/industry is in a degree portable between companies, but some company still had to employ enough people to build this experience, and it cannot be readily bought by bringing in however competent freshers.
This applies less so e.g. in medicine. There are of course many heavily specialized disciplines, but a top flight brain or internal organ surgeon can essentially work on any person. The variation in the subject matter is large and complex, but much more static than in technology.
That's not to knock down the skill of medical staff in any way (or anybody else who does a job that is not trivial, and that's true for many jobs). But specialization vs. genericity follow a different pattern than in tech.
Another example, the legal profession. There are similar principles that carry across, with a lot of the specialization happening along different legislation, case law, etc., specific to the jurisdiction and/or domain being litigated.
Dec 16, 2015 | The Guardian
Fernando Leza -> jah5446 15 Dec 2015 06:12
Iran won't flood the market in 2016. Right now Iran is losing production. It takes time to reverse decline and make a difference.
Those who predict very low prices don't understand the industry (I do). The low price environment reduces capital investment, which has to be there just to keep production flat (the decline is 3 to 5 million barrels of oil per day per year). At this time capacity is dropping everywhere except for a few select countries. The USA is losing capacity, and will never again reach this year's peak unless prices double. Other countries are hopeless. From Norway to Indonesia to Colombia to Nigeria and Azerbaijan, peak oil has already taken place.
Fernando Leza -> SonOfFredTheBadman 15 Dec 2015 06:05
If oil prices remain very low until 2025 it'll either be because you are right or because the world went to hell. I prefer your vision, of course. But I'm afraid most of your talk is wishful thinking. Those of us who do know how to put watts on the table can't figure out any viable solutions. Hopefully something like cheap fusion power will rise. Otherwise you may be eating human flesh in 2060.
Fernando Leza -> p26677 15 Dec 2015 06:00
Keep assuming. I'll keep buying Shell stock.
MatCendana -> UnevenSurface 14 Dec 2015 03:36
Regardless of the breakeven price, producers with the wells already running or about to will keep pumping. Better to have some income, even if the operation is at a loss, than no income. This will go on and on right until the end, which is either prices eventually go up or they run out of oil and can't drill new wells.
But I'm with Carambaman - prices will go up again. Demand is and will still be there. The excess output will eventually end, and the prices stabilises. And then move up again.
Billy Carnes 13 Dec 2015 19:52
Also this hurts the states...Louisiana is now in the hole over 1.5 Billion or more
TomRoche 13 Dec 2015 12:31
@Guardian: Time to examine the real question: how long can the Saudis maintain their current production rates? They're currently producing more than 10 Mbarrels/day, but let's take the latter figure as a lower bound. They apparently have (per US consulate via WikiLeaks--time for a followup?) at least 260 Gbarrels (though it seems no one outside Saudi really knows). You do the math: 260 Gbarrels / (10 Mbarrels/day) = 26 kdays ~= 70 years. @ 15 Mbarrels/day -> 47.5 years. @ 20 Mbarrels/day -> 35 years.
That's just Saudi (allegedly) proven reserves. But it's plenty long enough to push atmospheric GHG levels, and associated radiative forcing, to ridiculously destructive excess.
The obvious follow-up question is, how long will the sane people of the world continue to allow so much fossil-fuel combustion to continue? An exercise for readers.
TomRoche -> GueroElEnfermero 13 Dec 2015 12:14
@GueroElEnfermero: 'Saudi Arabia, a US ally, using oil production and pricing to crush US oil shale industry? Did I read that correctly?'
Yeah, but I suspect it was *written* incorrectly. I'm betting the Saudis' real target is the Russians.
Sieggy 13 Dec 2015 11:49
In 1975 dollars, that's $8.31 / bbl (with a cumulative inflation factor of 342% over 40 years), or $.45 / gal for gas (assuming a current price of $2.00 / gal).
Carambaman 13 Dec 2015 10:25
I spent 30 years in the oil industry and experienced many cycles. When it is up people cannot believe it will go down and when it is down people cannot believe it will go up. It is all a matter of time
The New Yorker
Still, two interesting-and vexing-issues for the technology industry, and for the politicians who regulate it, emerged in the debate. The first came up in John Kasich's response to Trump's proposal. "Wolf, there is a big problem-it's called encryption," he said. "We need to be able to penetrate these people when they are involved in these plots and these plans. And we have to give the local authorities the ability to penetrate, to disrupt. That's what we need to do. Encryption is a major problem, and Congress has got to deal with this, and so does the President, to keep us safe."
The central question is whether American technology companies should offer the U.S. government, whether the N.S.A. or the F.B.I., backdoor access to their devices or servers. The most important companies here are Apple and Google, which, in the fall of 2014, began offering strong encryption on the newer versions of Android and iOS phones. If you keep your passcode secret, the government will be unable to, for instance, scroll through your contacts list, even if it has a warrant. This has, naturally, made the government angry. The most thorough report on the subject is a position paper put out last month by Cyrus Vance, Jr., Manhattan's district attorney. In the previous year, Vance wrote, his office had been "unable to execute approximately 111 search warrants for smartphones because those devices were running iOS 8. The cases to which those devices related include homicide, attempted murder, sexual abuse of a child, sex trafficking, assault, and robbery."
The solution isn't easy. Apple and Google implemented their new encryption standards after Edward Snowden revealed how the government had compromised their systems. They want to protect their customers-a government back door could become a hacker's back door, too-and they also want to protect their business models. If the N.S.A. can comb through iPhones, how many do you think Apple will be able to sell in China? In the debate, Carly Fiorina bragged about how, when she ran Hewlett-Packard, she stopped a truckload of equipment and had it "escorted into N.S.A. headquarters." Does that make you more or less eager to buy an OfficeJet Pro?
The second hard issue that came up indirectly in the debate-and, more specifically, in recent comments by Hillary Clinton-is how aggressive American companies such as Facebook, Twitter, and Google (with YouTube) should be in combatting the use of their platforms by ISIS. Again, there's no simple answer. You can't ban, say, everyone who tweets the hashtag #ISIS, because then you'd have to ban this guy. The algorithms are difficult to write, and the issues are difficult to balance. Companies have to consider their business interests, their legal obligations to and cultural affinities for free speech, and their moral obligations to oppose an organization that seeks to destroy the country in which they were built-and also kill their C.E.O.s.
economistsview.typepad.comFred C. Dobbs said... December 17, 2015 at 11:26 AMPutin hails Donald Trump as 'bright and talented'
http://www.bostonglobe.com/news/politics/2015/12/17/putin-hails-donald-trump-bright-and-talented/CCIktxBPs0ax3bGNMz7yqO/story.html?event=event25 via @BostonGlobe
Vladimir Isachenkov - Associated Press - December 17, 2015
MOSCOW - Russia and the US agree on a general approach to settling the Syrian crisis, President Vladimir Putin said Thursday, saying that Moscow stands ready to improve ties with Washington.
Putin also said that Russia will continue its air campaign in Syria until a political process starts, and lashed out at Turkey for trying to ''lick the Americans in some of their private parts'' by downing a Russian warplane. ...
Commenting on relations with Washington, Putin said that Russia supports a US-drafted U.N. Security Council resolution on settling the Syrian crisis, presented by US Secretary of State John Kerry during his visit to Moscow earlier this week.
''In general, we like it,'' Putin said. ''I believe that the Syrian authorities should be OK with it too, although they may not like something in it.''
He added that ''concessions must be made by both sides'' to end the conflict that has killed more than 250,000 and turned millions into refugees since 2011.
He said the Russian approach, ''strangely as it may seem, coincides with the US vision: joint work on a constitution, creation of instruments of control over future early elections, holding the vote and recognizing its results on the basis of that political process.''
''We will help settle this crisis in every possible way,'' Putin said. At the same time, he reaffirmed Russia's stance on the key issue that divided Russia and the West, the fate of Syrian President Bashar Assad, saying the Syrians themselves must determine who rules them. ...
Already on his way out of the hall, he was asked about US presidential candidate Donald Trump and praised him as a ''very bright and talented man,'' adding that he welcomes the Republican's pledges to establish closer ties with Russia. ...
[Dec 17, 2015] US militarism is Alice in Wonderland
economistsview.typepad.comanne, December 17, 2015 at 11:50 AMhttp://www.nytimes.com/2015/12/17/world/asia/navy-seal-team-2-afghanistan-beating-death.htmlilsm said in reply to anne...
December 16, 2015
Navy SEALs, a Beating Death and Complaints of a Cover-Up
By NICHOLAS KULISH, CHRISTOPHER DREW and MATTHEW ROSENBERG
U.S. soldiers accused Afghan police and Navy SEALs of abusing detainees. But the SEAL command opted against a court-martial and cleared its men of wrongdoing.
Too much training to send to jail.
While E-4 Bergdahl does in captivity what several hundred officers did in Hanoi and gets life!
US militarism is Alice's Wonderland!
[Dec 17, 2015] The Putin-Did-It Conspiracy Theory
"... It was German Chancellor Angela Merkel, not Vladimir Putin, who pushed the EU agreement and miscalculated the consequences, as the German newsmagazine Der Spiegel has reported . Putin's only role in that time frame was to offer a more generous $15 billion aid package to Ukraine, not exactly a war-like act. ..."
February 15, 2015 | readersupportednews.org
The actually "incontrovertible" facts about the Ukraine crisis are these: The destabilization of President Viktor Yanukovych's elected government began in November 2013 when Yanukovych balked at a proposed association agreement promoted by the European Union. He sought more time after the sticker shock of learning from Kiev economic experts that the deal would cost Ukraine $160 billion in lost revenue by cutting trade with Russia.
It was German Chancellor Angela Merkel, not Vladimir Putin, who pushed the EU agreement and miscalculated the consequences, as the German newsmagazine Der Spiegel has reported. Putin's only role in that time frame was to offer a more generous $15 billion aid package to Ukraine, not exactly a war-like act.
Yanukovych's decision to postpone action on the EU association prompted angry demonstrations in Kiev's Maidan square, largely from western Ukrainians who were hoping for visa-free travel to the EU and other benefits from closer ties. Putin had no role in those protests – and it's insane to think that he did.
In February 2014, the protests grew more and more violent as neo-Nazi and other militias organized in the western city of Lviv and these 100-man units known as "sotins" were dispatched daily to provide the muscle for the anti-Yanukovych uprising that was taking shape. It is frankly nutty to suggest that Putin was organizing these militias. [See Consortiumnews.com's "When Is a Putsch a Putsch."]
Evidence of Coup Plotting
By contrast, there is substantial evidence that senior U.S. officials were pushing for a "regime change" in Kiev, including an intercepted phone call and various public statements.
In December 2013, Assistant Secretary of State Victoria Nuland, a neocon holdover, reminded Ukrainian business leaders that the United States had invested $5 billion in their "European aspirations." In early February, she discussed with U.S. Ambassador Geoffrey Pyatt who the new leaders of Ukraine should be. "Yats is the guy," she declared, referring to Arseniy Yatsenyuk. [See Consortiumnews.com's "Who's Telling the Big Lie on Ukraine?"]
The Maidan uprising gained momentum on Feb. 20, 2014, when snipers around the square opened fire on police and protesters touching off a violent clash that left scores of people dead, both police and protesters. After the sniper fire and a police retreat - carrying their wounded - the demonstrators surged forward and some police apparently reacted with return fire of their own.
But the growing evidence indicates that the initial sniper fire originated from locations controlled by the Right Sektor, extremists associated with the Maidan's neo-Nazi "self-defense" commandant Andriy Parubiy. Though the current Ukrainian government has dragged its feet on an investigation, independent field reports, including a new one from BBC, indicate that the snipers were associated with the protesters, not the Yanukovych government as was widely reported in the U.S. media a year ago.
The worsening violence led Yanukovych to agree on Feb. 21 to a deal guaranteed by three European countries. He accepted reduced powers and agreed to early elections so he could be voted out of office. Yet, rather than permit that political settlement to go forward, neo-Nazis and other Maidan forces overran government buildings on Feb. 22, forcing Yanukovych and his officials to flee for their lives.
The U.S. State Department quickly deemed this coup regime "legitimate" and Nuland's choice, Yatsenyuk, emerged as Prime Minister, with Parubiy put in charge of national security.
In other words, there is plenty of evidence that the Ukraine crisis was started by the EU through its mishandling of the association agreement, then was heated up by the U.S. government through the work of Nuland, Pyatt and other officials, and then was brought to a boil by neo-Nazis and other extremists who executed the coup.
[Dec 17, 2015] Neocon Influence on Angela Merkel
February 21, 2007 | Dialog InternationalIs Angela Merkel getting bad advice from Washington neocons through their representative in Berlin? Now we read that Jeff Gedmin - the head of the Aspen Institute in Berlin - is meeting on a regular basis with the Chancellor to instruct her on the Bush administration's line:
Angela Merkel relies on the advice of Jeffrey Gedmin, specially dispatched to Berlin to assist her by the Bush clan. This lobbyist first worked at the American Enterprise Institute (AEI)  under Richard Perle and Mrs. Dick Cheney. He enthusiastically encouraged the creation of a Euro with Dollar parity exchange rate. Within the AEI, he led the New Atlantic Initiative (NAI), which brought together all the America-friendly generals and politicians in Europe. He was then involved in the Project for a New American Century (PNAC) and wrote the chapter on Europe in the neocon programme. He argued that the European Union should remain under NATO authority and that this would only be possible by "discouraging European calls for emancipation."  Finally he became the administrator of the Council of the Community of Democracies (CCD), which argues in favour of a two-speed UN, and became director of the Aspen Institute in Berlin . Subsequently he turned down the offer from his friend John Bolton  of the post of deputy US ambassador to the UN so as to be able to devote himself exclusively to Angela Merkel.
Elsewhere we read that Chancellor Merkel receives daily briefings from the neocon stalwart Gedmin:
Gedmin "brieft" die Kanzlerin täglich: Er hat damit die Rolle inne, die bei der Stasi die Führungsoffiziere hatten. Wenn wir uns noch Demokratie nennen wollen, dann muss Merkel gezwungen werden, die Inhalte dieser täglichen "Briefings" dem Land offenzulegen. In anderen Ländern gibt es dafür Gesetze, die "Freedom of Information Act" heissen.
Could this be true? I hope not. Gedmin is known for his columns in the conservative daily Die Welt where he reports on the marvelous successes the Iraq War. And who can forget Gedmin's column during last summer' s Israel/Lebanon War where he wrote about how Hezbollah fighters drank the blood of their victims in Lebanon? If Angela Merkel is looking for good advice, there are much more honest and intelligent resources than Jeff Gedmin.
[Dec 17, 2015] Why Merkel betrays Europe and Germany
Note that the quality of translation from German of this article is low.
"... Frankfurter Allgemeine Zeitung ..."
"... Bild and Die Welt ..."
"... In 2003, Chancellor Gerhard Schröder opposed the Anglo-American intervention in Ira q. Angela Merkel then published a courageous article in the Washington Post ..."
"... As Stanley Payne, the famous American historian said about Spain (or any western democracy) that now politicians are not elected but chosen by apparatus, agencies and visible hands of the markets ..."
"... Merkel is publicly supported by Friede Springer , widow of West German press baron, Axel Springer , whos publishing conglomerate, the Springer Group secretly received around $7 million from the CIA in the early 1950s. ..."
"... She is counseled by Jeffrey Gedmin. Gedmin is a regular columnist in Die Welt , a publication of the Springer Group. After becoming administrator of the Council of the Community of Democracies and director of the Aspen Institute in Berlin in 2001, Gedmin devoted himself exclusively to Merkel . Gedmin was too involved in the infamous Project for a New American Century (PNAC) and wrote the chapter on Europe in the neocon programme. He argued that the European Union should remain under NATO authority and that this would only be possible by discouraging European calls for emancipation . ..."
"... In a few years, Merkel has destroyed European solidarity, annihilated the German nuclear power plants (an old American obsession too), impoverished Germans and their once efficient Rheinisch and solitary economy, backed the mad dog American diplomacy and created along with an irresponsible American administration (irresponsible because America will never win this kind of conflict) a dangerous crisis against Russia than can end on a war or a scandalous European partition. ..."
Mar 06, 2015 | PravdaReport
One must understand the reasons of Angela Merkel's behaviour. She obeys America and her Israeli mentor ('Israel is Germany's raison d'être'???), she threatens and mistreats Europe; she attacks Russia and now she builds a new sanitary cordon (like in 1919) in order to deconstruct Eurasia and reinforce American agenda in our unlucky continent. Now Merkel advocates for the rapid adoption on the most infamous and perilous treaty of commerce in history, the TPP (Trans-Pacific Partnership). Dr Roberts has recently explained the meaning of 'Fast Track' expression and a courageous Guardian, last 27th may, has exposed the corruption of American Congress on this incredible yet terrible matter.
Why is Merkel so pro-American and anti-European?
Let us explain with the data we know the reasons of such nihilist and erratic behaviour.
- Angela Merkel is not from East Germany (east-Germans are pro-Russian indeed, see lately the declaration of generals). She was born in Hamburg in 1954 (Federal Republic of Germany). Shortly after her birth, her family made the unusual choice of moving to the East. Her father, a pastor in the Lutheran church, founded a seminary in the German Democratic Republic and became director of a home for handicapped persons. He enjoyed a privileged social status, making frequent trips to the West.
- She became politically involved in the Freie Deutsche Jugend (Free German Youth), the state organisation for young people. She rose within the organisation to the post of Secretary of the Agitprop department, becoming one of the main experts in political communication in the communist system. She enjoys selling her convictions.
- In November 1989 The CIA attempted to take over by recruiting senior individuals. One month later, Merkel changed sides and joined the Demokratischer Aufbruch (Democratic Revival), a movement inspired by the West German Christian Democrat party. As we know from history, these political parties in Europe are neither Christian nor democratic. They just serve American and business agendas. In order to avoid a mass exodus from the East to the West, Merkel argued strongly in favour of getting the GDR to join the market economy and the Deutschmark zone. Ultraliberal but never popular in Germany, her thesis finally imposed itself in Germany, like that of Sarkozy, her fellow neocon in France who definitely ousted any rest of Gaullism in this country.
- Her second husband, Joachim Sauer, was recruited by the US Company Biosym Technology, spending a year at San Diego at the laboratory of this Pentagon contractor. He then joined Accelrys, another San Diego company carrying out contracts for the Pentagon. Of course Accelrys is traded on NASDAQ...
- Helmut Kohl and his closest associates had apparently accepted money from obscure sources for the CDU. Angela Merkel then published a heroic-comical article in the Foreign Frankfurter Allgemeine Zeitung in which she distanced herself from her mentor. One can check that she repeatedly betrays her protectors... and electors (whose median age is of sixty).
Angela Merkel was then publicly supported by two press groups. Firstly, she was able to count on the support of Friede Springer, who had inherited the Axel Springer group (180 newspapers and magazines, including Bild and Die Welt). The group's journalists are required to sign an editorial agreement which lies down that they must work towards developing transatlantic links and defending the state of Israel. The other group is Bertelsmann.
Angela Merkel radically rejects European independence
In 2003, Chancellor Gerhard Schröder opposed the Anglo-American intervention in Iraq. Angela Merkel then published a 'courageous' article in the Washington Post in which she rejected the Chirac-Schröder doctrine of European independence, affirmed her gratitude and friendship for "America" and supported this scandalous and ridiculous war. I quote some lines of this interesting act of submission to her American lords:
Because of decisive events, Europe and the United States now must redefine the nucleus of their domestic, foreign and security policy principles.
Aid to Turkey, our partner in the alliance, is blocked for days in the NATO Council by France, Belgium and Germany, a situation that undermines the very basis of NATO's legitimacy.
The Eastern European candidate countries for membership in the European Union were attacked by the French government because they have declared their commitment to the transatlantic partnership between Europe and the United States. She then threatens France, then a free country run by Chirac and Villepin, and advocates for what Gore Vidal quoted 'the perpetual war'... involving a 'perpetual peace':
Anyone who rejects military action as a last resort weakens the pressure that needs to be maintained on dictators and consequently makes a war not less but more likely.
Germany needs its friendship with France, but the benefits of that friendship can be realized only in close association with our old and new European partners, and within the transatlantic alliance with the United States.
Yet Merkel won the elections in 2007. She announced the abolition of graduated income tax, proposing that the rate should be the same for those who only just have what is necessary and those who live in luxury: maybe this is the a result of her Christian education?
The outgoing Chancellor, Gerhard Schröder, severely criticized this proposal in a televised debate. The CDU's lead was decimated, and in the actual election, the CDU polled 35% of the votes and the SPD 34%, the remainder being spread amongst a number of small parties. The Germans didn't want Schröder any longer, but nor did they want Merkel. I repeat that she was imposed more than elected. As Stanley Payne, the famous American historian said about Spain (or any western democracy) that now politicians are 'not elected but chosen' by apparatus, agencies and 'visible hands' of the markets
These last weeks, "Mother" Merkel tries to re-launch the proposed merger of the North American Free Trade Area and the European Free Trade Area, thereby creating a "great transatlantic market" to use the words once pronounced by Sir Leon Brittan, a famous paedophile involved in scandals and bribes since, and mysteriously found dead a couple of months ago.
Let us se now some of their connections:
- Merkel is publicly supported by Friede Springer, widow of West German press baron, Axel Springer, who's publishing conglomerate, the Springer Group secretly received around $7 million from the CIA in the early 1950's.
- She is counseled by Jeffrey Gedmin. Gedmin is a regular columnist in Die Welt, a publication of the Springer Group. After becoming administrator of the Council of the Community of Democracies and director of the Aspen Institute in Berlin in 2001, Gedmin devoted himself exclusively to Merkel. Gedmin was too involved in the infamous Project for a New American Century (PNAC) and wrote the chapter on Europe in the neocon programme. He argued that the European Union should remain under NATO authority and that this would only be possible by "discouraging European calls for emancipation".
We have never been so far from 'emancipation' now in Europe, and never been so near to a war with Russia and maybe (in order to satisfy American gruesome appetite) with Central Asia and China. In France, 61% of the people who had witnessed the war asserted in 1945 that we were saved by the Russian Army. Now, thanks to American propaganda backed by European collaborators, we are hardly 10% to know that fact. The rest is misled by propaganda, media, TV and films. Daniel Estulin speaks of a remade, of a re-fabricated past by US television and media agencies.
In a few years, Merkel has destroyed European solidarity, annihilated the German nuclear power plants (an old American obsession too), impoverished Germans and their once efficient Rheinisch and solitary economy, backed the 'mad dog' American diplomacy and created along with an irresponsible American administration (irresponsible because America will never win this kind of conflict) a dangerous crisis against Russia than can end on a war or a scandalous European partition.
See also: Germany Americanizes Europe
[Dec 17, 2015] A Blind Eye Toward Turkey's Crimes
"... The Official Story of the sarin attack – as presented by Secretary of State John Kerry, Human Rights Watch and other "respectable" sources – firmly laid the blame for the Aug. 21, 2013 atrocity killing hundreds of civilians outside Damascus on Assad. That became a powerful "group think" across Official Washington. ..."
December 16, 2015 | consortiumnews.com
A Blind Eye Toward Turkey's Crimes
To make the story even more compelling, an opposition leader braves the wrath of the autocrat by seeking to expose these intelligence schemes, including the cover-up of key evidence. The autocrat's government then seeks to prosecute the critic for "treason."
But the problem with this story, as far as the American government and press are concerned, is that the autocratic leader, President Recep Tayyip Erdogan, is in charge of Turkey, a NATO ally and his hated neighbor is the much demonized Syrian President Bashar al-Assad. Major U.S. news outlets and political leaders also bought into the sarin deception and simply can't afford to admit that they once again misled the American people on a matter of war.
The Official Story of the sarin attack – as presented by Secretary of State John Kerry, Human Rights Watch and other "respectable" sources – firmly laid the blame for the Aug. 21, 2013 atrocity killing hundreds of civilians outside Damascus on Assad. That became a powerful "group think" across Official Washington.
Though a few independent media outlets, including Consortiumnews.com, challenged the rush to judgment and noted the lack of evidence regarding Assad's guilt, those doubts were brushed aside. (In an article on Aug. 30, 2013, I described the administration's "Government Assessment" blaming Assad as a "dodgy dossier," which offered not a single piece of verifiable proof.)
However, as with the "certainty" about Iraq's WMD a decade earlier, Every Important Person shared the Assad-did-it "group think." That meant - as far as Official Washington was concerned - that Assad had crossed President Barack Obama's "red line" against using chemical weapons. A massive U.S. retaliatory bombing strike was considered just days away.
... ... ...
But the "group think" was resistant to all empirical evidence. It was so powerful that even when the Turkish plot was uncovered by legendary investigative reporter Seymour M. Hersh, his usual publication, The New Yorker, refused to print it. Rebuffed in the United States – the land of freedom of the press – Hersh had to take the story to the London Review of Books to get it out in April 2014. [See Consortiumnews.com's "Was Turkey Behind Syria Sarin Attack?"]... ... ...
In statements before parliament and to journalists, Erdem cited a derailed indictment that was begun by the General Prosecutor's Office in the southern Turkish city of Adana, with the criminal case number 2013/120.
Erdem said the prosecutor's office, using technical surveillance, discovered that an Al Qaeda jihadist named Hayyam Kasap acquired the sarin.
At the press conference, Erdem said, "Wiretapped phone conversations reveal the process of procuring the gas at specific addresses as well as the process of procuring the rockets that would fire the capsules containing the toxic gas. However, despite such solid evidence there has been no arrest in the case. Thirteen individuals were arrested during the first stage of the investigation but were later released, refuting government claims that it is fighting terrorism."
Erdem said the released operatives were allowed to cross the border into Syria and the criminal investigation was halted.
Another CHP deputy, Ali Şeker, added that the Turkish government misled the public by claiming Russia provided the sarin and that "Assad killed his people with sarin and that requires a U.S. military intervention in Syria."
Erdem's disclosures, which he repeated in a recent interview with RT, the Russian network, prompted the Ankara Prosecutor's Office to open an investigation into Erdem for treason. Erdem defended himself, saying the government's actions regarding the sarin case besmirched Turkey's international reputation. He added that he also has been receiving death threats.
"The paramilitary organization Ottoman Hearths is sharing my address [on Twitter] and plans a raid [on my house]. I am being targeted with death threats because I am patriotically opposed to something that tramples on my country's prestige," Erdem said.
[Dec 16, 2015] Cornering Russia, Risking World War III
"... "The chance for a durable Washington-Moscow strategic partnership was lost in the 1990 after the Soviet Union ended. Actually it began to be lost earlier, because it was [President Ronald] Reagan and [Soviet leader Mikhail] Gorbachev who gave us the opportunity for a strategic partnership between 1985-89. ..."
"... "And it certainly ended under the Clinton Administration, and it didn't end in Moscow. It ended in Washington - it was squandered and lost in Washington. And it was lost so badly that today, and for at least the last several years (and I would argue since the Georgian war in 2008), we have literally been in a new Cold War with Russia. ..."
"... "TODAY THERE ARE NO RED LINES. One of the things that Putin and his predecessor President Medvedev keep saying to Washington is: You are crossing our Red Lines! And Washington said, and continues to say, 'You don't have any red lines. We have red lines and we can have all the bases we want around your borders, but you can't have bases in Canada or Mexico. Your red lines don't exist.' This clearly illustrates that today there are no mutual rules of conduct. ..."
"... "Another important point: Today there is absolutely no organized anti-Cold War or Pro-Detente political force or movement in the United States at all –– not in our political parties, not in the White House, not in the State Department, not in the mainstream media, not in the universities or the think tanks. … None of this exists today. … ..."
"... In practice, President Assad's imposed ouster precisely will empower ISIS, rather than implode it, and the consequences will ripple across the Middle East – and beyond. ..."
"... Indeed, ISIS and the other Caliphate forces have very clear human motivations and clearly articulated political objectives, and none of these is in any way consistent with the type of Syrian State that America says it wants for Syria. This precisely reflects the danger of becoming hostage to a certain narrative, rather than being willing to examine the prevailing conceptual framework more critically. ..."
"... unfortunately, today's reports seem to indicate that the White House and State Department are thinking primarily how to counter Russia's actions in Syria. They are worried, it was reported, that Russia is diminishing America's leadership in the world. ..."
"... Washington's disinclination to permit Russia any enhancement to its standing in Europe, or in the non-West, through its initiative strategically to defeat Wahhabist jihadism in Syria, is not only to play with fire in the Middle East. It is playing with a fire of even greater danger: to do both at the same time seems extraordinarily reckless. ..."
"... As Europe becomes accomplice in raising the various pressures on Russia in Syria – economically through sanctions and other financial measures , in Ukraine and Crimea, and in beckoning Montenegro, Georgia and the Baltic towards NATO – we should perhaps contemplate the paradox that Russia's determination to try to avoid war is leading to war. ..."
"... Russia's call to co-operate with Western states against the scourge of ISIS; its low-key and carefully crafted responses to such provocations as the ambush of its SU-24 bomber in Syria; and President Putin's calm rhetoric, are all being used by Washington and London to paint Russia as a "paper tiger," whom no one needs fear. ..."
"... In short, Russia is being offered only the binary choice: to acquiesce to the "benevolent" hegemon, or to prepare for war. ..."
ConsortiumnewsOfficial Washington is awash with tough talk about Russia and the need to punish President Putin for his role in Ukraine and Syria. But this bravado ignores Russia's genuine national interests, its "red lines," and the risk that "tough-guy-ism" can lead to nuclear war, as Alastair Crooke explains.
We all know the narrative in which we (the West) are seized. It is the narrative of the Cold War: America versus the "Evil Empire." And, as Professor Ira Chernus has written, since we are "human" and somehow they (the USSR or, now, ISIS) plainly are not, we must be their polar opposite in every way.
"If they are absolute evil, we must be the absolute opposite. It's the old apocalyptic tale: God's people versus Satan's. It ensures that we never have to admit to any meaningful connection with the enemy." It is the basis to America's and Europe's claim to exceptionalism and leadership.
And "buried in the assumption that the enemy is not in any sense human like us, is [an] absolution for whatever hand we may have had in sparking or contributing to evil's rise and spread. How could we have fertilized the soil of absolute evil or bear any responsibility for its successes? It's a basic postulate of wars against evil: God's people must be innocent," (and that the evil cannot be mediated, for how can one mediate with evil).
Westerners may generally think ourselves to be rationalist and (mostly) secular, but Christian modes of conceptualizing the world still permeate contemporary foreign policy.
It is this Cold War narrative of the Reagan era, with its correlates that America simply stared down the Soviet Empire through military and – as importantly – financial "pressures," whilst making no concessions to the enemy.
What is sometimes forgotten, is how the Bush neo-cons gave their "spin" to this narrative for the Middle East by casting Arab national secularists and Ba'athists as the offspring of "Satan": David Wurmser was advocating in 1996, "expediting the chaotic collapse" of secular-Arab nationalism in general, and Baathism in particular. He concurred with King Hussein of Jordan that "the phenomenon of Baathism" was, from the very beginning, "an agent of foreign, namely Soviet policy."
Moreover, apart from being agents of socialism, these states opposed Israel, too. So, on the principle that if these were the enemy, then my enemy's enemy (the kings, Emirs and monarchs of the Middle East) became the Bush neo-cons friends. And they remain such today – however much their interests now diverge from those of the U.S.
The problem, as Professor Steve Cohen, the foremost Russia scholar in the U.S., laments, is that it is this narrative which has precluded America from ever concluding any real ability to find a mutually acceptable modus vivendi with Russia – which it sorely needs, if it is ever seriously to tackle the phenomenon of Wahhabist jihadism (or resolve the Syrian conflict).
What is more, the "Cold War narrative" simply does not reflect history, but rather the narrative effaces history: It looses for us the ability to really understand the demonized "calous tyrant" – be it (Russian) President Vladimir Putin or (Ba'athist) President Bashar al-Assad – because we simply ignore the actual history of how that state came to be what it is, and, our part in it becoming what it is.
Indeed the state, or its leaders, often are not what we think they are – at all. Cohen explains: "The chance for a durable Washington-Moscow strategic partnership was lost in the 1990 after the Soviet Union ended. Actually it began to be lost earlier, because it was [President Ronald] Reagan and [Soviet leader Mikhail] Gorbachev who gave us the opportunity for a strategic partnership between 1985-89.
"And it certainly ended under the Clinton Administration, and it didn't end in Moscow. It ended in Washington - it was squandered and lost in Washington. And it was lost so badly that today, and for at least the last several years (and I would argue since the Georgian war in 2008), we have literally been in a new Cold War with Russia.
"Many people in politics and in the media don't want to call it this, because if they admit, 'Yes, we are in a Cold War,' they would have to explain what they were doing during the past 20 years. So they instead say, 'No, it is not a Cold War.'
"Here is my next point. This new Cold War has all of the potential to be even more dangerous than the preceding 40-year Cold War, for several reasons. First of all, think about it. The epicentre of the earlier Cold War was in Berlin, not close to Russia. There was a vast buffer zone between Russia and the West in Eastern Europe.
"Today, the epicentre is in Ukraine, literally on Russia's borders. It was the Ukrainian conflict that set this off, and politically Ukraine remains a ticking time bomb. Today's confrontation is not only on Russia's borders, but it's in the heart of Russian-Ukrainian 'Slavic civilization.' This is a civil war as profound in some ways as was America's Civil War."
Cohen continued: "My next point: and still worse – You will remember that after the Cuban Missile Crisis, Washington and Moscow developed certain rules-of-mutual conduct. They saw how dangerously close they had come to a nuclear war, so they adopted "No-Nos,' whether they were encoded in treaties or in unofficial understandings. Each side knew where the other's red line was. Both sides tripped over them on occasion but immediately pulled back because there was a mutual understanding that there were red lines.
"TODAY THERE ARE NO RED LINES. One of the things that Putin and his predecessor President Medvedev keep saying to Washington is: You are crossing our Red Lines! And Washington said, and continues to say, 'You don't have any red lines. We have red lines and we can have all the bases we want around your borders, but you can't have bases in Canada or Mexico. Your red lines don't exist.' This clearly illustrates that today there are no mutual rules of conduct.
"Another important point: Today there is absolutely no organized anti-Cold War or Pro-Detente political force or movement in the United States at all –– not in our political parties, not in the White House, not in the State Department, not in the mainstream media, not in the universities or the think tanks. … None of this exists today. …
"My next point is a question: Who is responsible for this new Cold War? I don't ask this question because I want to point a finger at anyone. The position of the current American political media establishment is that this new Cold War is all Putin's fault – all of it, everything. We in America didn't do anything wrong. At every stage, we were virtuous and wise and Putin was aggressive and a bad man. And therefore, what's to rethink? Putin has to do all of the rethinking, not us."
These two narratives, the Cold War narrative, and the neocons' subsequent "spin" on it: i.e. Bill Kristol's formulation (in 2002) that precisely because of its Cold War "victory," America could, and must, become the "benevolent global hegemon," guaranteeing and sustaining the new American-authored global order – an "omelette that cannot be made without breaking eggs" – converge and conflate in Syria, in the persons of President Assad and President Putin.
President Obama is no neocon, but he is constrained by the global hegemon legacy, which he must either sustain, or be labeled as the arch facilitator of America's decline. And the President is also surrounded by R2P ("responsibility-to-protect") proselytizers, such as Samantha Power, who seem to have convinced the President that "the tyrant" Assad's ouster would puncture and collapse the Wahhabist jihadist balloon, allowing "moderate" jihadists such as Ahrar al-Sham to finish off the deflated fragments of the punctured ISIS balloon.
In practice, President Assad's imposed ouster precisely will empower ISIS, rather than implode it, and the consequences will ripple across the Middle East – and beyond. President Obama privately may understand the nature and dangers of the Wahhabist cultural revolution, but seems to adhere to the conviction that everything will change if only President Assad steps down. The Gulf States said the same about Prime Minister Nouri al-Maliki in Iraq. He has gone (for now), but what changed? ISIS got stronger.
Of course if we think of ISIS as evil, for evil's sake, bent on mindless, whimsical slaughter, "what a foolish task it obviously [would be] to think about the enemy's actual motives. After all, to do so would be to treat them as humans, with human purposes arising out of history. It would smack of sympathy for the devil. Of course," Professor Chernus continues, "this means that, whatever we might think of their actions, we generally ignore a wealth of evidence that the Islamic State's fighters couldn't be more human or have more comprehensible motivations."
Indeed, ISIS and the other Caliphate forces have very clear human motivations and clearly articulated political objectives, and none of these is in any way consistent with the type of Syrian State that America says it wants for Syria. This precisely reflects the danger of becoming hostage to a certain narrative, rather than being willing to examine the prevailing conceptual framework more critically.
America lies far away from Syria and the Middle East, and as Professor Stephen Cohen notes, "unfortunately, today's reports seem to indicate that the White House and State Department are thinking primarily how to counter Russia's actions in Syria. They are worried, it was reported, that Russia is diminishing America's leadership in the world."
It is a meme of perpetual national insecurity, of perpetual fears about America's standing and of challenges to its standing, Professor Chernus suggests.
But Europe is not "far away"; it lies on Syria's doorstep. It is also neighbor to Russia. And in this connection, it is worth pondering Professor Cohen's last point: Washington's disinclination to permit Russia any enhancement to its standing in Europe, or in the non-West, through its initiative strategically to defeat Wahhabist jihadism in Syria, is not only to play with fire in the Middle East. It is playing with a fire of even greater danger: to do both at the same time seems extraordinarily reckless.
"The false idea [has taken root] that the nuclear threat ended with the Soviet Union: In fact, the threat became more diverse and difficult. This is something the political elite forgot. It was another disservice of the Clinton Administration (and to a certain extent the first President Bush in his re-election campaign) saying that the nuclear dangers of the preceding Cold War era no longer existed after 1991. The reality is that the threat grew, whether by inattention or accident, and is now more dangerous than ever."
As Europe becomes accomplice in raising the various pressures on Russia in Syria – economically through sanctions and other financial measures, in Ukraine and Crimea, and in beckoning Montenegro, Georgia and the Baltic towards NATO – we should perhaps contemplate the paradox that Russia's determination to try to avoid war is leading to war.
Russia's call to co-operate with Western states against the scourge of ISIS; its low-key and carefully crafted responses to such provocations as the ambush of its SU-24 bomber in Syria; and President Putin's calm rhetoric, are all being used by Washington and London to paint Russia as a "paper tiger," whom no one needs fear.
In short, Russia is being offered only the binary choice: to acquiesce to the "benevolent" hegemon, or to prepare for war.
Alastair Crooke is a British diplomat who was a senior figure in British intelligence and in European Union diplomacy. He is the founder and director of the Conflicts Forum, which advocates for engagement between political Islam and the West. [This article also appeared at the Conflicts Forum's Web site and is republished with permission.]
[Dec 16, 2015] Big Banks Caught Using Credit Default Swaps To Destroy Nations
"... when the Big Banks were caught and convicted of conspiring to manipulate the $500 trillion, LIBOR debt market ..."
"... when the Big Banks were caught and convicted of conspiring to launder trillions for the global drug cartels and "terrorist" entities, despite the supposed "wars" the U.S. claims to be fighting against drugs and terrorism ..."
"... The Vampire Squid Firmly Attached To The Face Of Humanity ..."
"... As far as I can gather, the World Bank and the IMF are apart of the very same Cartel that own/control the Central Banks. ..."
Dec 16, 2015 | Zero Hedge
Then we have the confessions of the criminals. A full one-quarter of Wall Street's and London's senior banking executives freely admit that crime is a way of life in their industry -- organized crime. Even in our justice system (or what remains of it), once armed with confessions, the principle of "innocent until proven guilty" no longer applies – the guilt is conceded.
The Big Banks manipulate credit default swaps to perpetrate economic terrorism against other nations in the world, where they literally destroy the economies of those victim-nations. It used to be a theory, but now the proof is finally emerging. You heard it here first.
So what? Has any of the bank management/leaders gone to prison and lost all their wealth?
"when the Big Banks were caught and convicted of conspiring to manipulate the $500 trillion, LIBOR debt market"
(Citicorp, JPMorgan Chase & Co., Barclays Plc and Royal Bank of Scotland Plc agreed to plead guilty to felony charges of conspiring to manipulate the price of U.S. dollars and euros)
"when the Big Banks were caught and convicted of conspiring to launder trillions for the global drug cartels and "terrorist" entities, despite the supposed "wars" the U.S. claims to be fighting against drugs and terrorism"
(Wells Fargo and JPMorgan)
and of course, The Vampire Squid Firmly Attached To The Face Of Humanity, Goldman Sachs, The Great Destroyer
Fancy-free please will you explain further.
As far as I can gather, the World Bank and the IMF are apart of the very same Cartel that own/control the Central Banks. All are controlled by the BIS who is run/controlled by pretty much all the same criminals on a merry-go-round. Throw in the Vatican, The Crown (BAR) Temple - The City of London, Washington DC, the Rothschild's et al, puppet Governments (and their military) on the same payroll and the world is pretty much screwed.
Who are the Board of Governors you are talking about?
Who is this coalition?
Please name names.
Can you vouch for their credibility or are they part of the corrupt cartel?
There is far TOO MUCH SECRECY going on.
If everything was more transparent, out of the shadows and open the world would not be in the state is in today.
Closed dealings, complexity and behind the curtain negotiations promote corruption.
How can justice be served when most public jurors would not be able to understand the fraudulent accounting practices being utilised?
What is the TRUTH?
A big load of bullshit. The US has its own currency and that currency is backed by military power. Greece is a subordinate vassal state of the EU. There is no comparison between the two.
[Dec 14, 2015] The long-cherished neocon dream of "regime change" in Syria is blocking a possible route out of the crisisilsm -> anne...
December 12, 2015
Blocking Democracy as Syria's Solution By Robert Parry
The long-cherished neocon dream of "regime change" in Syria is blocking a possible route out of the crisis – a ceasefire followed by elections in which President Assad could compete. The problem is there's no guarantee that Assad would lose and thus the dream might go unfulfilled.
By Robert Parry
The solution to the crisis in Syria could be democracy – letting the people of Syria decide who they want as their leaders – but it is the Obama administration and its regional Sunni "allies," including U.S.-armed militants and jihadists, that don't want to risk a democratic solution because it might not achieve the long-held goal of "regime change."
Some Syrian opposition forces, which were brought together under the auspices of the Saudi monarchy in Riyadh this past week, didn't even want the word "democracy" included in their joint statement. The New York Times reported on Friday, "Islamist delegates objected to using the word 'democracy' in the final statement, so the term 'democratic mechanism' was used instead, according to a member of one such group who attended the meeting."
Even that was too much for Ahrar al-Sham, one of the principal jihadist groups fighting side-by-side with Al Qaeda's Nusra Front, the two key elements inside the Saudi-created Army of Conquest, which uses sophisticated U.S.-supplied TOW missiles to kill Syrian government troops.
Ahrar al-Sham announced its withdrawal from the Riyadh conference because the meeting didn't "confirm the Muslim identity of our people." Syrian President Bashar al-Assad has sought to maintain a secular government that protects the rights of Christians, Alawites, Shiites and other religious minorities, but Sunni militants have been fighting to overthrow him since 2011.
Despite Ahrar al-Sham's rejection of the Saudi-organized conference, all the opposition participants, including one from Ahrar al-Sham who apparently wasn't aware of his group's announcement, signed the agreement, the Times reported.
"All parties signed a final statement that called for maintaining the unity of Syria and building a civil, representative government that would take charge after a transitional period, at the start of which Mr. Assad and his associates would step down," wrote Times' correspondent Ben Hubbard.
But the prospects of Assad and his government just agreeing to cede power to the opposition remains highly unlikely. An obvious alternative – favored by Assad and Russian President Vladimir Putin – is to achieve a ceasefire and then have internationally supervised elections in which the Syrian people could choose their own leaders.
Although President Barack Obama insists Assad is hated by most Syrians – and if that's true, he would presumably lose any fair election – the U.S. position is to bar Assad from the ballot, thus ensuring "regime change" in Syria, a long-held goal of Official Washington's neoconservatives.
In other words, to fulfill the neocons' dream of Syrian "regime change," the Obama administration is continuing the bloody Syrian conflict which has killed a quarter million people, has created an opening for Islamic State and Al Qaeda terrorists, and has driven millions of refugees into and through nearby countries, now destabilizing Europe and feeding xenophobia in the United States.
For his part, Assad called participants in the Saudi conference "terrorists" and rejected the idea of negotiating with them. "They want the Syrian government to negotiate with the terrorists, something I don't think anyone would accept in any country," Assad told Spanish journalists, as he repeated his position that many of the terrorists were backed by foreign governments and that he would only "deal with the real, patriotic national opposition."
Kinks in the Process
Secretary of State John Kerry told reporters on Friday that he was in contact with senior Saudi officials and noted, "there are some questions and obviously a couple of – in our judgment – kinks to be worked out" though expressing confidence that the problems could be resolved.
A key problem appears to be that the Obama administration has so demonized Assad and so bought into the neocon goal of "regime change" that Obama doesn't feel that he can back down on his "Assad must go!" mantra. Yet, to force Assad out and bar him from running in an election means escalating the war by either further arming the Sunni jihadists or mounting a larger-scale invasion of Syria with the U.S. military confronting Syrian and now Russian forces to establish what is euphemistically called "a safe zone" inside Syria. A related "no-fly zone" would require destroying Syrian air defenses, now supplied by the Russians.
Obama has largely followed the first course of action, allowing Saudi Arabia, Qatar, Turkey and other Sunni "allies" to funnel U.S. weapons to jihadists, including Ahrar al-Sham which fights alongside Al Qaeda's Nusra Front as the two seek to transform Syria into a Islamic fundamentalist state, a goal shared by Al Qaeda's spinoff (and now rival), the Islamic State.
Retired U.S. Army Lieutenant General Michael Flynn, the former head of the Defense Intelligence Agency, has termed Obama's choice of aiding the jihadists a "willful decision," even in the face of DIA warnings about the likely rise of the Islamic State and other extremists.
In August 2012, DIA described the danger in a classified report, which noted that "The salafist, the Muslim Brotherhood, and AQI [Al Qaeda in Iraq, later ISI or ISIS and then the Islamic State] are the major forces driving the insurgency in Syria." The report also said that "If the situation unravels there is the possibility of establishing a declared or undeclared salafist principality in eastern Syria" and that "ISI could also declare an Islamic State through its union with other terrorist organizations in Iraq and Syria."
Despite these risks, Obama continued to insist that "Assad must go!" and let his administration whip up a propaganda campaign around claims that Assad's forces launched a sarin gas attack outside Damascus on Aug. 21, 2013. Though many of the U.S. claims about that attack have since been discredited – and later evidence implicated radical jihadists (possibly collaborating with Turkish intelligence) trying to trick the U.S. military into intervening on their side – the Obama administration did not retract or clarify its initial claims.
By demonizing Assad – much like the demonization of Russian President Putin – Obama may feel that he is deploying "soft power" propaganda to put foreign adversaries on the defensive while also solidifying his political support inside hawkish U.S. opinion circles, but false narratives can take on a life of their own and make rational settlements difficult if not impossible....The Syria terror consortium was in Riyadh checking in with their bankers. To the Sunni democracy is apostate anathema.anne -> ilsm...I understand the frustration and beyond, after all I read about Yemen being bombed with American bombs and target sightings and I cannot imagine the policy incentives driving us.anne -> ilsm...
Nonetheless, the Yemen bombings go on day on day on day.Iraq, Libya, Syria, Yemen? Who could possibly ever understand, but our policy makers act as though they do.
The consultancy Capital Economics said: "Brent's [short-lived] dip today below $40 per barrel is a further damning verdict on Opec's bungled communications after its meeting last Friday. However, it was never likely that the group would agree to cut output to boost prices. Instead, any recovery next year will depend on reductions in non-Opec supply and on stronger demand. On this basis, while we are lowering our end-2016 forecast for Brent from $60 to $55, we continue to expect oil prices to stage a partial recovery next year."
Hugh Easton -> woldsgardener 11 Dec 2015 13:57TheinfamousmrFox -> sportinlifesport 11 Dec 2015 08:44
There's nothing new in shale gas that the oil industry itself hasn't done before. Hydrofracturing as a technique for enhancing oil recovery was developed over 50 years ago, and most of the North Sea was fracked (as are oil wells all over the world). The big technological breakthrough that allowed exploitation of shale gas was horizontal drilling, which allowed long pipes to be installed in the (usually narrow) shale gas strata.
So why do environmentalists make a big deal of hydrofracking at all? As with so much else green, there's no science behind it. They've just seized on a scarysounding something and are using it to bamboozle the public into thinking that a technology they oppose is dangerous.
Actually, they're losing money. Even those with the lowest production costs (Saudi A) are burning through their currency reserves at a fantastic rate.
Essentially, OPEC are betting they can crush the US and Russian oil industries before they go broke themselves. However they didn't count on the growing green momentum starting to replace a lot of fossil fuel technology;- and that's not going to get slower.
Boutros Gladius ID6232853 11 Dec 2015 03:56
Check your numbers before you call nonsense. Demand was up 1.4m barrels/day in 2014, and is projected to be up by over a million for 2015 and 2016. In fact, it's up a similar amount every year for the last decade, with the single exception of the year of the financial crash. Demand increases will inexorably eat up any oversupply -- this price reduction is a mere blip.
ncaplan88 9 Dec 2015 18:40
It's great for us in America. Almost all retail is pegging to the price of shipping. Shipping is deisel fueled. Better to let OPEC run down their stocks than pump out the last of our reserves. King Salman is a good ally to help weaken our traditional enemies.
zacmcd -> zoggo 9 Dec 2015 17:43
Conspiracy theory rubbish. The low interest rate environment has led money to chase bad high yield investments, while the oil price was high this included shale. China's economic slow down has meant oil consumption growth hasn't risen as expected so supply now exceeds demand.
Russia along with Norway, Brazil, Canada etc are being punished for not having diversified economies not because Uncle Sam does or doesn't like them.
BlueMazda 9 Dec 2015 12:24
Forget the two big players, Russian and Saudis. What is the impact on the smaller producers in the ME, UAE, Kuwait, Bahrain, Qatar, Jordan et. al.? Are they selling at below extraction costs per barrel? Will we see a ME recession? Social turmoil?
Timothy Underwood -> Chris Johnson 9 Dec 2015 10:52
Its not sad at all. The reason low oil prices is bad for 'the markets' is because the oil price drop basically means that consumers spend less on gas, and then instead buy more TVs, cars and eat out more often.
The margins on hundred dollar oil are really, really good for companies. The majority of that money isn't spent pumping and refining the oil. Most of the money when Exxon sells a barrel at $100 goes to Exxon shareholders (and whatever country the oil is pumped in).
TVs and cars are very competitive markets. When you buy a car or TV generally 90-95% of the money goes to making the car, which leaves only a little left over for the shareholders of Ford or Samsung. So low oil prices are hurt the share price of oil companies far more than they help the share prices of non oil companies.
In other words low oil prices move money from rich people to ordinary people. Non oil things are just less profitable to sell on average.
The value of the market is a rough proxy for how much money rich people expect to get for owning companies over the next 15 years. Oil being low means rich people get less money for owning companies, money which gas buyers instead have to spend on whatever they want.
AdamMps -> creekwhore 9 Dec 2015 06:41
this move may well drive the global economy off a cliff
Cheap oil is both good and bad for the global economy. Bad for oil investment, good because consumers and business will save money on fuel and presumably spend it elsewhere instead.
There's been a few articles which suggest that it's bad outweighs the good this time around, but it certainly doesn't drive the global economy off a cliff.
ID6232853 -> gottliebvera 9 Dec 2015 06:06
Saudi Arabia trying to kill the shale oil industry in USA, limit Iran rise and as a bonus undermine Russian military activities.
psygone 9 Dec 2015 05:22SenseCir -> mrolius 9 Dec 2015 04:35
This is all good news.
The falling price of oil has initiated a historic wealth transfer effect of about $1 trillion a year between net oil importers and oil exporters reversing decades of historical trend. The US consumer alone gets $200 billion, and Europe and Asia (especially India and China) are even bigger beneficiaries of this massive wealth transfer of wealth by cheap oil.
This is what's called an economic stimulus - but from cheaper oil prices. As Bloomberg noted recently: OPEC Provides Economic Stimulus Central Bankers Can't or Won't
The Middle East and Russia with diminishing and constrained sovereign funds are the ones getting stuck with the bill. Oil producers with diversified economies like Canada and Norway will do well.
Thank you cheap oil and carry on ......... "drill baby drill"bjamesr 9 Dec 2015 04:31
Did you miss the bit where Russia will need to make cuts all the way through its services in line with the money they are losing via weak experts?
Yes countries that foolishly turned their blessing with a natural resource into a dependency of exporting it suffer, and their suffering propagates to an extent. That doesn't drive the global economy of a cliff, nor even is the net effect negative. Once again, when those blessed with oil decide to charge less for it, surplus is shifted.
Macroeconomics is a very interesting subject, and Creekwhore seems to have a good grasp on it.
I doubt it. A non-economists understanding of macro is almost always politics masquerading as science.mrolius -> SenseCir 9 Dec 2015 04:09
The theory that Saudi has engineered this oil price drop is nonsense. If they wanted to do this they would have increased production. The price fall is mostly due to the vast amount of speculation in US shale oil that completely ignored the effect of a massive increase in supply on price. These speculators are now paying for this mistake by leading the world in corporate defaults. Shale oil production will eventually slow down due to lack of finance and the price will start to increase. I don't think anyone can predict future price due to the complexity.
Did you miss the bit where Russia will need to make cuts all the way through its services in line with the money they are losing via weak experts? Do you understand the knock-on effect this has through the rest of her economy - the recession it generates? Macroeconomics is a very interesting subject, and Creekwhore seems to have a good grasp on it.
JemWallis -> SenseCir 9 Dec 2015 04:04
But given the oversupply of oil, you will be forced to pay a substantial premium for the storage of your commodity since you will be competing for long term storage space. That factor alone will add to your costs and therefore the price you will accept to make the 'huge profit' will get ever larger. What if prices rise more slowly than your on-going costs?
TheHighRoad -> WaldorfTBeagle 9 Dec 2015 03:57
Hard to know which makes them happier, really. I was doing some work in Saudi in 2012 and there was a lot of concern there that not only were they losing the supply monopoly, but that as the US was becoming not just self-sufficient but an exporter it would make KSA less strategically relevant to the US and others in the west and therefore lose them influence on world events. They know they need the realpolitik power of the being the swing-producer in the oil cartel as without it no-one in the west is queuing up to be the "natural ally" of a quasi-medieval despotism with a lousy human rights record and a deal with some very suspect religious extremists.
SenseCir -> creekwhore 9 Dec 2015 03:51
The fact this move may well drive the global economy off a cliff
How so, because a fundamental good everyone needs is cheap? Because, assuming Opec cannot defeat the frackers, their price schedule does not maximise their profit, shifting some of the surplus to consumers and non-oil producing countries? What the fuck are you talking about?
SenseCir rjb04tony 9 Dec 2015 03:48
What is the point of all this market manipulation?
Why do you call it 'market manipulation' when they lower prices through shipping a lot, and not when they raise prices through restricting output? The latter is what they would ideally like to do, because it maximises profit. Opec are a cartel. The consumers, and countries that don't export oil, lose when they exercise their monopoly power.
SA clearly think that a Standard Oilish strategy will work. If they deem to have damaged other oil producers sufficiently, you can rest assured that the price of oil will go up again, ensuring billions of economic profit going to SA and others, extracted from everyone else.
zoggo -> rjb04tony 9 Dec 2015 03:46WaldorfTBeagle 9 Dec 2015 03:07
My take on this is that the Russian economy is also a target - even perhaps the real target.rjb04tony 9 Dec 2015 02:53
I doubt Saudi's strategy has much to do with US frackers personally and lots to do with hurting Iran.
The Saudi's tactics are supposedly designed to hit the US shale producers, but, from what I understand, if these do go under they can quite easily start up again when the oil price recovers, then we're back to where we started. What is the point of all this market manipulation?
graz 9 Dec 2015 02:36
US shale producers are much better placed than anyone expected them to be. Saudi Arabia has maybe another 18 months to play at this before they start to really rack up the debts. You've got a young, angry, largely unemployed population there that's basically pacified by the largesse of public spending.
The problem with the House of Saud. They've got some of the best economists money can buy but you've got the egos of some 'limited' princes overruling them.
Never mind the oil price, if these fools miscalculate on this, on their Yemeni adventures, it could spell chaos for the Middle East and the wider world. >
anne said...http://cepr.net/blogs/beat-the-press/in-paris-talks-rich-countries-pledged-0-25-percent-of-gdp-to-help-poor-countriesanne said in reply to anne...
December 13, 2015
In Paris Talks, Rich Countries Pledged 0.25 Percent of GDP to Help Poor Countries
In case you were wondering about the importance of a $100 billion a year, * non-binding commitment, it's roughly 0.25 percent of rich country's $40 trillion annual GDP (about 6 percent of what the U.S. spends on the military). This counts the U.S., European Union, Japan, Canada, and Australia as rich countries. If China is included in that list, the commitment would be less than 0.2 percent of GDP.
-- Dean Baker"...about 6 percent of what the U.S. spends on the military...."
I do not understand this figure since currently defense spending is running at $738.3 billion yearly or which 6% would be $44.3 billion:
http://www.bea.gov/iTable/iTableHtml.cfm?reqid=9&step=3&isuri=1&904=2014&903=5&906=q&905=2015&910=x&911=0anne said in reply to anne...Correcting Dean Baker:
December 13, 2015
In Paris Talks, Rich Countries Pledged 0.25 Percent of GDP to Help Poor Countries
In case you were wondering about the importance of a $100 billion a year, * non-binding commitment, it's roughly 0.25 percent of rich country's $40 trillion annual GDP (about 7.4 percent ** of what the U.S. spends on the military). This counts the U.S., European Union, Japan, Canada, and Australia as rich countries. If China is included in that list, the commitment would be less than 0.2 percent of GDP.
-- Dean Bakeranne said in reply to anne...Dean Baker clarifies:
December 13, 2015
In Paris Talks, Rich Countries Pledged 0.25 Percent of GDP to Help Poor Countries
In case you were wondering about the importance of a $100 billion a year, * non-binding commitment, it's roughly 0.25 percent of rich country's $40 trillion annual GDP (about 6 percent of what the U.S. spends on the military). This counts the U.S., European Union, Japan, Canada, and Australia as rich countries. If China is included in that list, the commitment would be less than 0.2 percent of GDP.
(I see my comment on military spending here created a bit of confusion. I was looking at the U.S. share of the commitment, 0.25 percent of its GDP and comparing it to the roughly 4.0 percent of GDP it spends on the military. That comes to 6 percent. I was not referring to the whole $100 billion.)
-- Dean Bakerdjb said in reply to anne...100,000,000,000/0.06 = 1.67 trillionanne said in reply to djb...$100 billion a year, ........about 6 percent of what the U.S. spends on the military
100,000,000,000/0.06 = 1.67 trillion
[ This is incorrect, military spending is currently $738.3 billion. ]anne said in reply to djb...http://www.bea.gov/iTable/iTableHtml.cfm?reqid=9&step=3&isuri=1&904=2014&903=5&906=q&905=2015&910=x&911=0
January 15, 2015
Defense spending was 60.3% of federal government consumption and investment in July through September 2015.
(Billions of dollars)
$738.3 / $1,224.4 = 60.3%
Defense spending was 23.1% of all government consumption and investment in July through September 2015.
$738.3 / $3,200.4 = 23.1%
Defense spending was 4.1% of Gross Domestic Product in July through September 2015.
$738.3 / $18,064.7 = 4.1%djb said in reply to djb...oh never mind I get it
.25 % is 6 percent of the percent us spends on military
the 40 trillion is the gdp of all the countries
got itanne said in reply to djb..."I get it:
.25 % is 6 percent of the percent US spends on military."
So .25 percent of United States GDP for climate change assistance to poor countries is 6 percent of the amount the US spends on the military.
.0025 x $18,064.7 billion GDP = $45.16 billion on climate change
$45.16 billion on climate change / $738.3 billion on the military = 0.61 or 6.1 percent of military spendinganne said in reply to anne...United States climate change assistance to poor countries will be .25 percent of GDP or 6% of US military spending.anne said in reply to anne...What the United States commitment to climate change assistance for poor countries means is spending about $45.2 billion yearly or .25 percent of GDP. Whether the President can convince Congress to spend the $45 billion yearly will now have to be answered.anne said in reply to djb..."I get it:anne said in reply to djb...
.25 % is 6 percent of the [amount] US spends on military."
[ This is correct. ]http://cepr.net/blogs/beat-the-press/in-paris-talks-rich-countries-pledged-0-25-percent-of-gdp-to-help-poor-countries
December 13, 2015
In Paris Talks, Rich Countries Pledged 0.25 Percent of GDP to Help Poor Countries
In case you were wondering about the importance of a $100 billion a year, * non-binding commitment, it's roughly 0.25 percent of rich country's $40 trillion annual GDP (about 6 percent of what the U.S. spends on the military). This counts the U.S., European Union, Japan, Canada, and Australia as rich countries. If China is included in that list, the commitment would be less than 0.2 percent of GDP.
(I see my comment on military spending here created a bit of confusion. I was looking at the U.S. share of the commitment, 0.25 percent of its GDP and comparing it to the roughly 4.0 percent of GDP it spends on the military. ** That comes to 6 percent. I was not referring to the whole $100 billion.)
-- Dean Bakeranne said in reply to djb...http://www.bea.gov/iTable/iTableHtml.cfm?reqid=9&step=3&isuri=1&904=2007&903=5&906=q&905=2015&910=x&911=0
January 15, 2015
Defense spending was 4.1% of Gross Domestic Product in July through September 2015.
$738.3 / $18,064.7 = 4.1%ilsm said in reply to anne...UK is the only NATO nation beside the US that spend the suggested 2% of GDP. The rest run about 1.2%.
Small wonder they need US to run their wars of convenience.
More telling US pentagon spending is around 50% of world military spending and has not won anything in 60 years.
RGC said...EMichael -> RGC...
Hillary Clinton Is Whitewashing the Financial Catastrophe
She has a plan that she claims will reform Wall Street-but she's deflecting responsibility from old friends and donors in the industry.
By William Greider
Yesterday 3:11 pm
Hillary Clinton's recent op-ed in The New York Times, "How I'd Rein In Wall Street," was intended to reassure nervous Democrats who fear she is still in thrall to those mega-bankers of New York who crashed the American economy. Clinton's brisk recital of plausible reform ideas might convince wishful thinkers who are not familiar with the complexities of banking. But informed skeptics, myself included, see a disturbing message in her argument that ought to alarm innocent supporters.
Candidate Clinton is essentially whitewashing the financial catastrophe. She has produced a clumsy rewrite of what caused the 2008 collapse, one that conveniently leaves her husband out of the story. He was the president who legislated the predicate for Wall Street's meltdown. Hillary Clinton's redefinition of the reform problem deflects the blame from Wall Street's most powerful institutions, like JPMorgan Chase and Goldman Sachs, and instead fingers less celebrated players that failed. In roundabout fashion, Hillary Clinton sounds like she is assuring old friends and donors in the financial sector that, if she becomes president, she will not come after them.
The seminal event that sowed financial disaster was the repeal of the New Deal's Glass-Steagall Act of 1933, which had separated banking into different realms: investment banks, which organize capital investors for risk-taking ventures; and deposit-holding banks, which serve people as borrowers and lenders. That law's repeal, a great victory for Wall Street, was delivered by Bill Clinton in 1999, assisted by the Federal Reserve and the financial sector's armies of lobbyists. The "universal banking model" was saluted as a modernizing reform that liberated traditional banks to participate directly and indirectly in long-prohibited and vastly more profitable risk-taking.
Exotic financial instruments like derivatives and credit-default swaps flourished, enabling old-line bankers to share in the fun and profit on an awesome scale. The banks invented "guarantees" against loss and sold them to both companies and market players. The fast-expanding financial sector claimed a larger and larger share of the economy (and still does) at the expense of the real economy of producers and consumers. The interconnectedness across market sectors created the illusion of safety. When illusions failed, these connected guarantees became the dragnet that drove panic in every direction. Ultimately, the federal government had to rescue everyone, foreign and domestic, to stop the bleeding.
Yet Hillary Clinton asserts in her Times op-ed that repeal of Glass-Steagall had nothing to do with it. She claims that Glass-Steagall would not have limited the reckless behavior of institutions like Lehman Brothers or insurance giant AIG, which were not traditional banks. Her argument amounts to facile evasion that ignores the interconnected exposures. The Federal Reserve spent $180 billion bailing out AIG so AIG could pay back Goldman Sachs and other banks. If the Fed hadn't acted and had allowed AIG to fail, the banks would have gone down too.
These sound like esoteric questions of bank regulation (and they are), but the consequences of pretending they do not matter are enormous. The federal government and Federal Reserve would remain on the hook for rescuing losers in a future crisis. The largest and most adventurous banks would remain free to experiment, inventing fictitious guarantees and selling them to eager suckers. If things go wrong, Uncle Sam cleans up the mess.
Senator Elizabeth Warren and other reformers are pushing a simpler remedy-restore the Glass-Steagall principles and give citizens a safe, government-insured place to store their money. "Banking should be boring," Warren explains (her co-sponsor is GOP Senator John McCain).
That's a hard sell in politics, given the banking sector's bear hug of Congress and the White House, its callous manipulation of both political parties. Of course, it is more complicated than that. But recreating a safe, stable banking system-a place where ordinary people can keep their money-ought to be the first benchmark for Democrats who claim to be reformers.
Actually, the most compelling witnesses for Senator Warren's argument are the two bankers who introduced this adventure in "universal banking" back in the 1990s. They used their political savvy and relentless muscle to seduce Bill Clinton and his so-called New Democrats. John Reed was CEO of Citicorp and led the charge. He has since apologized to the nation. Sandy Weill was chairman of the board and a brilliant financier who envisioned the possibilities of a single, all-purpose financial house, freed of government's narrow-minded regulations. They won politically, but at staggering cost to the country.
Weill confessed error back in 2012: "What we should probably do is go and split up investment banking from banking. Have banks do something that's not going to risk the taxpayer dollars, that's not going to be too big to fail."
John Reed's confession explained explicitly why their modernizing crusade failed for two fundamental business reasons. "One was the belief that combining all types of finance into one institution would drive costs down-and the larger institution the more efficient it would be," Reed wrote in the Financial Times in November. Reed said, "We now know that there are very few cost efficiencies that come from the merger of functions-indeed, there may be none at all. It is possible that combining so much in a single bank makes services more expensive than if they were instead offered by smaller, specialised players."
The second grave error, Reed said, was trying to mix the two conflicting cultures in banking-bankers who are pulling in opposite directions. That tension helps explain the competitive greed displayed by the modernized banking system. This disorder speaks to the current political crisis in ways that neither Dems nor Republicans wish to confront. It would require the politicians to critique the bankers (often their funders) in terms of human failure.
"Mixing incompatible cultures is a problem all by itself," Reed wrote. "It makes the entire finance industry more fragile…. As is now clear, traditional banking attracts one kind of talent, which is entirely different from the kinds drawn towards investment banking and trading. Traditional bankers tend to be extroverts, sociable people who are focused on longer term relationships. They are, in many important respects, risk averse. Investment bankers and their traders are more short termist. They are comfortable with, and many even seek out, risk and are more focused on immediate reward."
Reed concludes, "As I have reflected about the years since 1999, I think the lessons of Glass-Steagall and its repeal suggest that the universal banking model is inherently unstable and unworkable. No amount of restructuring, management change or regulation is ever likely to change that."
This might sound hopelessly naive, but the Democratic Party might do better in politics if it told more of the truth more often: what they tried do and why it failed, and what they think they may have gotten wrong. People already know they haven't gotten a straight story from politicians. They might be favorably impressed by a little more candor in the plain-spoken manner of John Reed.
Of course it's unfair to pick on the Dems. Republicans have been lying about their big stuff for so long and so relentlessly that their voters are now staging a wrathful rebellion. Who knows, maybe a little honest talk might lead to honest debate. Think about it. Do the people want to hear the truth about our national condition? Could they stand it?
http://www.thenation.com/article/hillary-clinton-is-whitewashing-the-financial-catastrophe/Peter K. -> EMichael..."She claims that Glass-Steagall would not have limited the reckless behavior of institutions like Lehman Brothers or insurance giant AIG, which were not traditional banks."
Of course this claim is absolutely true. Just like GS would not have affected the other investment banks, whatever their name was. And just like we would have had to bail out those other banks whatever their name was.Can you list all of the pro- or anti- Wall Street "reforms" and actions Bill Clinton performed as President including nominating Alan Greenspan as head regulator? Cutting the capital gains tax? Are you aware of Greenspan's record?sanjait -> Peter K....
Yes Hillary isn't Bill but she hasn't criticized her husband specifically about his record and seems to want to have her cake and eat it too.
Of course Hillary is much better than the Republicans, pace Rustbucket and the Green Lantern Lefty club. Still, critics have a point.
I won't be surprised if she doesn't do much to rein in Wall Street besides some window dressing."Can you list all of the pro- or anti- Wall Street "reforms" and actions Bill Clinton performed..."
That, right there, is what's wrong with Bernie and his fans. They measure everything by whether it is "pro- or anti- Wall Street". Glass Steagall is anti-Wall Street. A financial transactions tax is anti-Wall Street. But neither has any hope of controlling systemic financial risk in this country. None.
You guys want to punish Wall Street but not even bother trying to think of how to achieve useful policy goals. Some people, like Paine here, are actually open about this vacuity, as if the only thing that were important were winning a power struggle.
Hillary's plan is flat out better. It's more comprehensive and more effective at reining in the financial system to limit systemic risk. Period.
You guys want to make this a character melodrama rather than a policy debate, and I fear the result of that will be that the candidate who actually has the best plan won't get to enact it.
likbez -> sanjait...RGC -> EMichael...
"You guys want to make this a character melodrama rather than a policy debate, and I fear the result of that will be that the candidate who actually has the best plan won't get to enact it."
You are misrepresenting the positions. It's actually pro-neoliberalism crowd vs anti-neoliberalism crowd. In no way anti-neoliberalism commenters here view this is a character melodrama, although psychologically Hillary probably does has certain problems as her reaction to the death of Gadhafi attests. The key problem with anti-neoliberalism crowd is the question "What is a realistic alternative?" That's where differences and policy debate starts."Her argument amounts to facile evasion"
Fred C. Dobbs -> RGC...
'The majority favors policies to the left of Hillary.'
Nah. I don't think so.
No, Liberals Don't Control the Democratic Party http://www.theatlantic.com/politics/archive/2014/02/no-liberals-dont-control-the-democratic-party/283653/
The Atlantic - Feb 7, 2014
... The Democrats' liberal faction has been greatly overestimated by pundits who mistake noisiness for clout or assume that the left functions like the right. In fact, liberals hold nowhere near the power in the Democratic Party that conservatives hold in the Republican Party. And while they may well be gaining, they're still far from being in charge. ...
Paine -> RGC...
What's not confronted ? Suggest what a System like the pre repeal system would have done in the 00's. My guess we'd have ended in a crisis anyway. Yes we can segregate the depository system. But credit is elastic enough to build bubbles without the depository system involved
EMichael -> Paine ...
Most people think of lending like the Bailey Brothers Savings and Loan still exists.
RC AKA Darryl, Ron -> EMichael...
Don't be such a whistle dick. Just because you cannot figure out why GLBA made such an impact that in no way means that people that do understand are stupid. See my posted comment to RGC on GLBA just down thread for an more detailed explanation including a linked web article. No, GS alone would not have prevented the mortgage bubble, but it would have lessened TBTF and GS stood as icon, a symbol of financial regulation. Hell, if we don't need GS then why don't we just allow unregulated derivatives trading? Who cares, right? Senators Byron Dorgan, Barbara Boxer, Barbara Mikulski, Richard Shelby, Tom Harkin, Richard Bryan, Russ Feingold and Bernie Sanders all voted against GLBA to repeal GS for some strange reason and Dorgan made a really big deal out of it at the time. I doubt everyone on that list of Senators was just stupid because they did not see it your way.
RC AKA Darryl, Ron -> EMichael...I ran all out of ceteris paribus quite some time ago. Events do not occur in isolation. GLBA increased TBTF in AIG and Citi. TBTF forced TARP. GLBA greased the skids for CFMA. Democrats gained majority, but not filibuster proof, caught between Iraq and a hard place following their votes for TARP and a broader understanding of their participation in the unanimous consent passage of the CFMA, over "objection" by Senators James Inhofe (R-OK) and Paul Wellstone (D-MN). We have had a Republican majority in the House since the 2010 election and now they have the Senate as well. If you are that sure that voters just choose divided government, then aren't we better off to have a Republican POTUS and Democratic Congress?
sanjait -> RC AKA Darryl, Ron..."I ran all out of ceteris paribus quite some time ago. Events do not occur in isolation. GLBA increased TBTF in AIG and Citi. TBTF forced TARP. GLBA greased the skids for CFMA. "
I know you think this is a really meaningful string that evidences causation, but it just looks like you are reaching, reaching, reaching ...
RC AKA Darryl, Ron -> sanjait...Maybe. No way to say for sure. It certainly fits the kind of herd mentality that I always saw in corporate Amerika until I retired. The William Greider article posted by RGC was very consistent in its account by John Reed with the details of one or two books written about AIG back in 2009 or so. I don't have time to hunt them up now. Besides, no one would read them anyway.
I am voting for whoever wins the Democratic nomination for POTUS. Bernie without a like-minded Congress would not do much good. But when we shoot each other down here at EV without offering any agreement or consideration that we might not be 100% correct, then that goes against Doc Thoma's idea of an open forum. Granted, with my great big pair then I am willing to state my opinion with no consideration for validation or acceptance, but not everyone has that degree of a comfort zone. Besides, I am so old an cynical that shooting down the overdogs that go after the underdogs is one of the few things that I still care about.
RGC -> Paine ...GS was one of several actions taken by the New Deal. That it wasn't sufficient by itself doesn't equate to it wasn't beneficial.
RC AKA Darryl, Ron -> RGC...[Lock and load.]
Glass-Steagall: Warren and Sanders bring it back into focus
Madonna Gauding / May 13, 2015
Senators Bernie Sanders and Elizabeth Warren are putting a new focus on the Glass-Steagall Act, which was, unfortunately, repealed in 1999 and led directly to the financial crises we have faced ever since. Here's a bit of history of this legislative debacle from an older post on Occasional Planet published several years ago :
On November 4, 1999, Senator Byron Dorgan (D-ND) took to the floor of the senate to make an impassioned speech against the repeal of the Glass-Steagall Act, (alternately known as Gramm Leach Biley, or the "Financial Modernization Act") Repeal of Glass-Steagall would allow banks to merge with insurance companies and investments houses. He said "I want to sound a warning call today about this legislation, I think this legislation is just fundamentally terrible."
According to Sam Stein, writing in 2009 in the Huffington Post, only eight senators voted against the repeal. Senior staff in the Clinton administration and many now in the Obama administration praised the repeal as the "most important breakthrough in the world of finance and politics in decades"
According to Stein, Dorgan warned that banks would become "too big to fail" and claimed that Congress would "look back in a decade and say we should not have done this." The repeal of Glass Steagall, of course, was one of several bad policies that helped lead to the current economic crisis we are in now.
Dorgan wasn't entirely alone. Sens. Barbara Boxer, Barbara Mikulski, Richard Shelby, Tom Harkin, Richard Bryan, Russ Feingold and Bernie Sanders also cast nay votes. The late Sen. Paul Wellstone opposed the bill, and warned at the time that Congress was "about to repeal the economic stabilizer without putting any comparable safeguard in its place."
Democratic Senators had sufficient knowledge about the dangers of the repeal of Glass Steagall, but chose to ignore it. Plenty of experts warned that it would be impossible to "discipline" banks once the legislation was passed, and that they would get too big and complex to regulate. Editorials against repeal appeared in the New York Times and other mainstream venues, suggesting that if the new megabanks were to falter, they could take down the entire global economy, which is exactly what happened. Stein quotes Ralph Nader who said at the time, "We will look back at this and wonder how the country was so asleep. It's just a nightmare."
According to Stein:
"The Senate voted to pass Gramm-Leach-Bliley by a vote of 90-8 and reversed what was, for more than six decades, a framework that had governed the functions and reach of the nation's largest banks. No longer limited by laws and regulations commercial and investment banks could now merge. Many had already begun the process, including, among others, J.P. Morgan and Citicorp. The new law allowed it to be permanent. The updated ground rules were low on oversight and heavy on risky ventures. Historically in the business of mortgages and credit cards, banks now would sell insurance and stock.
Nevertheless, the bill did not lack champions, many of whom declared that the original legislation - forged during the Great Depression - was both antiquated and cumbersome for the banking industry. Congress had tried 11 times to repeal Glass-Steagall. The twelfth was the charm.
"Today Congress voted to update the rules that have governed financial services since the Great Depression and replace them with a system for the 21st century," said then-Treasury Secretary Lawrence Summers. "This historic legislation will better enable American companies to compete in the new economy."
"I welcome this day as a day of success and triumph," said Sen. Christopher Dodd, (D-Conn.).
"The concerns that we will have a meltdown like 1929 are dramatically overblown," said Sen. Bob Kerrey, (D-Neb.).
"If we don't pass this bill, we could find London or Frankfurt or years down the road Shanghai becoming the financial capital of the world," said Sen. Chuck Schumer, D-N.Y. "There are many reasons for this bill, but first and foremost is to ensure that U.S. financial firms remain competitive."
Unfortunately, the statement by Chuck Schumer sounds very much like it was prepared by a lobbyist. This vote underscores the way in which our elected officials are so heavily swayed by corporate and banking money that our voices and needs become irrelevant. It is why we need publicly funded elections. Democratic senators, the so-called representatives of the people, fell over themselves to please their Wall Street donors knowing full well there were dangers for the country at large, for ordinary Americans, in repealing Glass-Steagall.
It is important to hold Democratic senators (along with current members of the Obama administration) accountable for the significant role they have played in the current economic crisis that has caused so much suffering for ordinary Americans. In case you were wondering, the current Democratic Senators who voted yes to repeal the Glass-Steagall act are the following:
Daniel Akaka – Max Baucus – Evan Bayh – Jeff Bingaman – Kent Conrad – Chris Dodd – Dick Durbin – Dianne Feinstein – Daniel Inouye – Tim Johnson – John Kerry – Herb Kohl – Mary Landrieu – Frank Lautenberg – Patrick Leahy – Carl Levin – Joseph Lieberman – Blanche Lincoln – Patty Murray – Jack Reed – Harry Reid – Jay Rockefeller – Chuck Schumer – Ron Wyden
Former House members who voted for repeal who are current Senators.
Mark Udall [as of 2010] – Debbie Stabenow – Bob Menendez – Tom Udall -Sherrod Brown
No longer in the Senate, or passed away, but who voted for repeal:
Joe Biden -Ted Kennedy -Robert Byrd
These Democratic senators would like to forget or make excuses for their enthusiastic vote on the repeal of Glass Steagall, but it is important to hold them accountable for helping their bank donors realize obscene profits while their constituents lost jobs, savings and homes. And it is important to demand that they serve the interests of the American people.
[The repeal of Glass Steagal was a landmark victory in deregulation that greased the skids for the passage of CFMA once Democrats had been further demoralized by the SCOTUS decision on Bush-v-Gore. The first vote on GLBA was split along party lines, but passed because Republicans had majority and Clinton was willing to sign which was clear from the waiver that had been granted to illegal Citi merger with Travelers. Both Citi and AIG mergers contributed to too big to fail. The CFMA was the nail in the coffin that probably would have never gotten off the ground if Democrats had held the line on the GLBA. Glass-Steagal was insufficient as a regulatory system to prevent the 2008 mortgage crisis, but it was giant as an icon of New Deal financial system reform. Its loss institutionalized too big to fail.]
pgl -> RC AKA Darryl, Ron...Gramm Leach Biley was a mistake. But it was not the only failure of US regulatory policies towards financial institutions nor the most important. I think that is what Hillary Clinton is saying.
RC AKA Darryl, Ron -> pgl...It was more symbolic caving in on financial regulation than a specific technical failure except for making too big to fail worse at Citi and AIG. It marked a sea change of thinking about financial regulation. Nothing mattered any more, including the CFMA just a little over one year later. Deregulation of derivatives trading mandated by the CFMA was a colossal failure and it is not bizarre to believe that GLBA precipitated the consensus on financial deregulation enough that after the demoralizing defeat of Democrats in Bush-v-Gore then there was no New Deal spirit of financial regulation left. Social development is not just a series of unconnected events. It is carried on a tide of change. A falling tide grounds all boats.
pgl -> RC AKA Darryl, Ron...We had a financial dereg craze back in the late 1970's and early 1980's which led to the S&L disaster. One would have thought we would have learned from that. But then came the dereg craziness 20 years later. And this disaster was much worse.
I don't care whether Hillary says 1999 was a mistake or not. I do care what the regulations of financial institutions will be like going forward.
RC AKA Darryl, Ron -> pgl...I cannot disagree with any of that.
sanjait -> RC AKA Darryl, Ron...RC AKA Darryl, Ron -> sanjait..."Deregulation of derivatives trading mandated by the CFMA was a colossal failure and it is not bizarre to believe that GLBA precipitated the consensus"
Yeah, it is kind of bizarre to blame one bill for a crisis that occurred largely because another bill was passed, based on some some vague assertion about how the first bill made everyone think crazy.Democrats did not vote for GLBA until after reconciliation between the House and Senate bills. Democrats were tossed a bone in the Community Reinvestment Act financing provisions and given that Bill Clinton was going to sign anyway and that Republicans were able to pass the bill without a single vote from Democrats then all but a few Democrats bought in. They could not stop it, so they just bought into it. I thought there was supposed to be an understanding of behaviorism devoted to understanding the political economy. For that matter Republicans did not need Democrats to vote for the CFMA either, but they did. That gave Republicans political cover for whatever went wrong later on. No one with a clue believed things would go well from the passage of either of these bills. It was pure Wall Street driven kleptocracy.likbez -> sanjait...It was not one bill or another. It was a government policy to get traders what they want.
Bruce E. Woych | August 6, 2013 at 5:45 pm |
The Untold Story: Brooksley Born, Larry Summers & the Truth …
Oct 5, 2012 … Larry Summers is attempting to re-write history at the expense of … and they might just find one critical point revealed in Mr. Cohan's article.
[PERTINENT EXCERPT]: Oct 5, 2012
"As the western world wakes to the fact it is in the middle of a debt crisis spiral, intelligent voices are wondering how this manifested itself? As we speak, those close to the situation could be engaging in historical revisionism to obfuscate their role in the design of faulty leverage structures that were identified in the derivatives markets in 1998 and 2008. These same design flaws, first identified in 1998, are persistent today and could become graphically evident in the very near future under the weight of a European debt crisis.
Author and Bloomberg columnist William Cohan chronicles the fascinating start of this historic leverage implosion in his recent article Rethinking Robert Rubin. Readers may recall it was Mr. Cohan who, in 2004, noted leverage issues that ultimately imploded in 2007-08.
At some point, market watchers will realize the debt crisis story will literally change the world. They will look to the root cause of the problem, and they might just find one critical point revealed in Mr. Cohan's article.
This point occurs in 1998 when then Commodity Futures Trading Commission (CFTC) ChairwomanBrooksley Born identified what now might be recognized as core design flaws in leverage structure used in Over the Counter (OTC) transactions. Ms. Born brought her concerns public, by first asking just to study the issue, as appropriate action was not being taken. She issued a concept release paper that simply asked for more information. "The Commission is not entering into this process with preconceived results in mind," the document reads.
Ms. Born later noted in, the PBS Frontline documentary on the topic speculation at the CFTC was the unregulated OTC derivatives were opaque, the risk to the global economy could not be determined and the risk was potentially catastrophic. As a result of this inquiry, Ms. Born was ultimately forced from office.
This brings us to Lawrence Summers, the former Treasury Secretary of the United States and at the time right hand man to then Treasury Security Robert Rubin. Mr. Summers was widely credited with implementation of the aggressive tactics used to remove Ms. Born from her office, tactics that multiple sources describe as showing an old world bias against women piercing the glass ceiling.
According to numerous published reports, Mr. Summers was involved in. silencing those who questioned the opaque derivative product's design. "
RC AKA Darryl, Ron -> Paine ...TBTF on steroids, might as well CFMA - why not?
Bubbles with less TBTF and a lot less credit default swaps would have been a lot less messy going in. Without TARP, then Congress might have still had the guts for making a lesser New Deal.
EMichael -> RC AKA Darryl, Ron...TARP was window dressing. The curtain that covered up the FED's actions.
pgl -> RGC...Where have I heard about William Greider? Oh yea - this critique of something stupid he wrote about a Supreme Court decision:
pgl -> RGC..."Exotic financial instruments like derivatives and credit-default swaps flourished, enabling old-line bankers to share in the fun and profit on an awesome scale."
These would have flourished even if Glass-Steagall remained on the books. Leave it to RGC to find some critic of HRC who knows nothing about financial markets.
RGC -> pgl...Derivatives flourished because of the other deregulation under Clinton, the CFMA. The repeal of GS helped commercial banks participate.
RGC -> pgl...The repeal of GS helped commercial banks participate.
Fred C. Dobbs -> pgl...Warren Buffet used to rail about how risky derivative investing is, until he realized they are *extremely* important in the re-insurance biz, which is a
big part of Berkshire Hathaway.
Peter K. said...http://cepr.net/blogs/beat-the-press/hillary-clinton-bernie-sanders-and-cracking-down-on-wall-street
Hillary Clinton, Bernie Sanders, and Cracking Down on Wall Street
by Dean Baker
Published: 12 December 2015
The New Yorker ran a rather confused piece on Gary Sernovitz, a managing director at the investment firm Lime Rock Partners, on whether Bernie Sanders or Hillary Clinton would be more effective in reining in Wall Street. The piece assures us that Secretary Clinton has a better understanding of Wall Street and that her plan would be more effective in cracking down on the industry. The piece is bizarre both because it essentially dismisses the concern with too big to fail banks and completely ignores Sanders' proposal for a financial transactions tax which is by far the most important mechanism for reining in the financial industry.
The piece assures us that too big to fail banks are no longer a problem, noting their drop in profitability from bubble peaks and telling readers:
"not only are Sanders's bogeybanks just one part of Wall Street but they are getting less powerful and less problematic by the year."
This argument is strange for a couple of reasons. First, the peak of the subprime bubble frenzy is hardly a good base of comparison. The real question is should we anticipate declining profits going forward. That hardly seems clear. For example, Citigroup recently reported surging profits, while Wells Fargo's third quarter profits were up 8 percent from 2014 levels.
If Sernovitz is predicting that the big banks are about to shrivel up to nothingness, the market does not agree with him. Citigroup has a market capitalization of $152 billion, JPMorgan has a market cap of $236 billion, and Bank of America has a market cap of $174 billion. Clearly investors agree with Sanders in thinking that these huge banks will have sizable profits for some time to come.
The real question on too big to fail is whether the government would sit by and let a Goldman Sachs or Citigroup go bankrupt. Perhaps some people think that it is now the case, but I've never met anyone in that group.
Sernovitz is also dismissive on Sanders call for bringing back the Glass-Steagall separation between commercial banking and investment banking. He makes the comparison to the battle over the Keystone XL pipeline, which is actually quite appropriate. The Keystone battle did take on exaggerated importance in the climate debate. There was never a zero/one proposition in which no tar sands oil would be pumped without the pipeline, while all of it would be pumped if the pipeline was constructed. Nonetheless, if the Obama administration was committed to restricting greenhouse gas emissions, it is difficult to see why it would support the building of a pipeline that would facilitate bringing some of the world's dirtiest oil to market.
In the same vein, Sernovitz is right that it is difficult to see how anything about the growth of the housing bubble and its subsequent collapse would have been very different if Glass-Steagall were still in place. And, it is possible in principle to regulate bank's risky practices without Glass-Steagall, as the Volcker rule is doing. However, enforcement tends to weaken over time under industry pressure, which is a reason why the clear lines of Glass-Steagall can be beneficial. Furthermore, as with Keystone, if we want to restrict banks' power, what is the advantage of letting them get bigger and more complex?
The repeal of Glass-Steagall was sold in large part by boasting of the potential synergies from combining investment and commercial banking under one roof. But if the operations are kept completely separate, as is supposed to be the case, where are the synergies?
But the strangest part of Sernovitz's story is that he leaves out Sanders' financial transactions tax (FTT) altogether. This is bizarre, because the FTT is essentially a hatchet blow to the waste and exorbitant salaries in the industry.
Most research shows that trading volume is very responsive to the cost of trading, with most estimates putting the elasticity close to one. This means that if trading costs rise by 50 percent, then trading volume declines by 50 percent. (In its recent analysis of FTTs, the Tax Policy Center assumed that the elasticity was 1.5, meaning that trading volume decline by 150 percent of the increase in trading costs.) The implication of this finding is that the financial industry would pay the full cost of a financial transactions tax in the form of reduced trading revenue.
The Tax Policy Center estimated that a 0.1 percent tax on stock trades, scaled with lower taxes on other assets, would raise $50 billion a year in tax revenue. The implied reduction in trading revenue was even larger. Senator Sanders has proposed a tax of 0.5 percent on equities (also with a scaled tax on other assets). This would lead to an even larger reduction in revenue for the financial industry.
It is incredible that Sernovitz would ignore a policy with such enormous consequences for the financial sector in his assessment of which candidate would be tougher on Wall Street. Sanders FTT would almost certainly do more to change behavior on Wall Street then everything that Clinton has proposed taken together by a rather large margin. It's sort of like evaluating the New England Patriots' Super Bowl prospects without discussing their quarterback.
Syaloch -> Peter K....Great to see Baker's acknowledgement that an updated Glass-Steagall is just one component of the progressive wing's plan to rein in Wall Street, not the sum total of it. Besides, if Wall Street types don't think restoring Glass-Steagall will have any meaningful effects, why do they expend so much energy to disparage it? Methinks they doth protest too much.
Peter K. -> Syaloch...Yes that's a good way to look it. Wall Street gave the Democrats and Clinton a lot of campaign cash so that they would dismantle Glass-Steagall. If they want it done, it's probably not a good idea.
EMichael -> Syaloch...Slippery slope. Ya' gotta find me a business of any type that does not protest any kind of regulation on their business.
Syaloch -> EMichael...Yeah, but usually because of all the bad things they say will happen because of the regulation. The question is, what do they think of Clinton's plan? I've heard surprisingly little about that, and what I have heard is along these lines: http://money.cnn.com/2015/10/08/investing/hillary-clinton-wall-street-plan/
"Hillary Clinton unveiled her big plan to curb the worst of Wall Street's excesses on Thursday. The reaction from the banking community was a shrug, if not relief."
pgl -> Syaloch...Two excellent points!!!
sanjait -> Syaloch..."Besides, if Wall Street types don't think restoring Glass-Steagall will have any meaningful effects, why do they expend so much energy to disparage it? Methinks they doth protest too much."
It has an effect of shrinking the size of a few firms, and that has a detrimental effect on the top managers of those firms, who get paid more money if they have larger firms to manage. But it has little to no meaningful effect on systemic risk.
So if your main policy goal is to shrink the compensation for a small number of powerful Wall Street managers, G-S is great. But if you actually want to accomplish something useful to the American people, like limiting systemic risk in the financial sector, then a plan like Hillary's is much much better. She explained this fairly well in her recent NYT piece.
Paine -> Peter K....There is absolutely NO question Bernie is for real. Wall Street does not want Bernie. So they'll let Hillary talk as big as she needs to . Why should we believe her when an honest guy like Barry caved once in power
Paine -> Paine ...Bernie has been anti Wall Street his whole career . He's on a crusade. Hillary is pulling a sham bola
Paine -> Paine ...Perhaps too often we look at Wall Street as monolithic whether consciously or not. Obviously we know it's no monolithic: there are serious differences
When the street is riding high especially. Right now the street is probably not united but too cautious to display profound differences in public. They're sitting on their hands waiting to see how high the anti Wall Street tide runs this election cycle. Trump gives them cover and I really fear secretly Hillary gives them comfort
This all coiled change if Bernie surges. How that happens depends crucially on New Hampshire. Not Iowa
EMichael -> Paine ...If Bernie surges and wins the nomination, we will all get to watch the death of the Progressive movement for a decade or two. Congress will become more GOP dominated, and we will have a President in office who will make Hoover look like a Socialist.
Syaloch -> EMichael...Of course. In politics, as they say in the service, one must always choose the lesser of two evils. https://www.youtube.com/watch?v=e4PzpxOj5Cc
pgl -> EMichael...You should like the moderate Democrats after George McGovern ran in 1972. I'm hoping we have another 1964 with Bernie leading a united Democratic Congress.
EMichael -> pgl...Not a chance in the world. And I like Sanders much more than anyone else. It just simply cannot, and will not, happen. He is a communist. Not to me, not to you, but to the vast majority of American voters.
pgl -> EMichael...He is not a communist. But I agree - Hillary is winning the Democratic nomination. I have only one vote and in New York, I'm badly outnumbered.
ilsm -> Paine ...I believe Hillary will be to liberal causes after she is elected as LBJ was to peace in Vietnam. Like Bill and Obomber.
pgl -> ilsm...By 1968, LBJ finally realized it was time to end that stupid war. But it seems certain members in the State Department undermined his efforts in a cynical ploy to get Nixon to be President. The Republican Party has had more slime than substance of most of my life time.
pgl -> Peter K....Gary Sernovitz, a managing director at the investment firm Lime Rock Partners? Why are we listening to this guy too. It's like letting the fox guard the hen house.
sanjait -> Peter K...."The piece is bizarre both because it essentially dismisses the concern with too big to fail banks and completely ignores Sanders' proposal for a financial transactions tax which is by far the most important mechanism for reining in the financial industry."
This is just wrong. Is financial system risk in any way correlated with the frequency of transactions? Except for market volatility from HFT ... no. The financial crisis wasn't caused by a high volume of trades. It was caused by bad investments into highly illiquid assets. Again, great example of wanting to punish Wall Street but not bothering to think about what actually works.
Peter K. said...Robert Reich to the Fed: this is not the time to raise rates.
RGC said...Iceland's Radical Money Plan
Iceland, too, is looking at a radical transformation of its money system, after suffering the crushing boom/bust cycle of the private banking model that bankrupted its largest banks in 2008. According to a March 2015 article in the UK Telegraph:
Iceland's government is considering a revolutionary monetary proposal – removing the power of commercial banks to create money and handing it to the central bank. The proposal, which would be a turnaround in the history of modern finance, was part of a report written by a lawmaker from the ruling centrist Progress Party, Frosti Sigurjonsson, entitled "A better monetary system for Iceland".
"The findings will be an important contribution to the upcoming discussion, here and elsewhere, on money creation and monetary policy," Prime Minister Sigmundur David Gunnlaugsson said. The report, commissioned by the premier, is aimed at putting an end to a monetary system in place through a slew of financial crises, including the latest one in 2008.
Under this "Sovereign Money" proposal, the country's central bank would become the only creator of money. Banks would continue to manage accounts and payments and would serve as intermediaries between savers and lenders. The proposal is a variant of the Chicago Plan promoted by Kumhof and Benes of the IMF and the Positive Money group in the UK.
Public Banking Initiatives in Iceland, Ireland and the UK
A major concern with stripping private banks of the power to create money as deposits when they make loans is that it will seriously reduce the availability of credit in an already sluggish economy. One solution is to make the banks, or some of them, public institutions. They would still be creating money when they made loans, but it would be as agents of the government; and the profits would be available for public use, on the model of the US Bank of North Dakota and the German Sparkassen (public savings banks).
In Ireland, three political parties – Sinn Fein, the Green Party and Renua Ireland (a new party) - are now supporting initiatives for a network of local publicly-owned banks on the Sparkassen model. In the UK, the New Economy Foundation (NEF) is proposing that the failed Royal Bank of Scotland be transformed into a network of public interest banks on that model. And in Iceland, public banking is part of the platform of a new political party called the Dawn Party.
December 11, 2015
Reinventing Banking: From Russia to Iceland to Ecuador
by Ellen Brown
pgl -> RGC..."Banks would continue to manage accounts and payments and would serve as intermediaries between savers and lenders."
OK but that means they issue bank accounts which of course we call deposits. So is this just semantics? People want checking accounts. People want savings accounts. Otherwise they would not exist. Iceland plans to do what to stop the private sector from getting what it wants?
I like the idea of public banks. Let's nationalize JPMorganChase so we don't have to listen to Jamie Dimon anymore!
sanjait -> pgl...I don't know for sure (not bothering to search and read the referenced proposals), but I assumed the described proposal was for an end to fractional reserve banking. Banks would have to have full reserves to make loans. Or something. I could be wrong about that.
Syaloch said...Sorry, but Your Favorite Company Can't Be Your Friend
To think that an artificial person, whether corporeal or corporate, can ever be your friend requires a remarkable level of self-delusion.
A commenter on the Times site aptly quotes Marx in response:
"The bourgeoisie, wherever it has got the upper hand, has put an end to all feudal, patriarchal, idyllic relations. It has pitilessly torn asunder the motley feudal ties that bound man to his "natural superiors", and has left remaining no other nexus between man and man than naked self-interest, than callous "cash payment". It has drowned the most heavenly ecstasies of religious fervour, of chivalrous enthusiasm, of philistine sentimentalism, in the icy water of egotistical calculation. It has resolved personal worth into exchange value, and in place of the numberless indefeasible chartered freedoms, has set up that single, unconscionable freedom - Free Trade. In one word, for exploitation, veiled by religious and political illusions, it has substituted naked, shameless, direct, brutal exploitation.
"The bourgeoisie has stripped of its halo every occupation hitherto honoured and looked up to with reverent awe. It has converted the physician, the lawyer, the priest, the poet, the man of science, into its paid wage labourers."
Mememonkey pointed my to a 2013 essay by Laurent Guyenot, a French historian and writer on the deep state, that addresses the question of "Who Are The Neoconservatives." If you would like to know about that group that sends the US military into battle and tortures prisoners of war in out name, you need to know about these guys.
First, if you are Jewish, or are a GREEN Meme, please stop and take a deep breath. Please put on your thinking cap and don't react. We are NOT disrespecting a religion, spiritual practice or a culture. We are talking about a radical and very destructive group hidden within a culture and using that culture. Christianity has similar groups and movements--the Crusades, the KKK, the Spanish Inquisition, the Salem witch trials, etc.
My personal investment: This question has been a subject of intense interest for me since I became convinced that 9/11 was an inside job, that the Iraq war was waged for reasons entirely different from those publically stated. I have been horrified to see such a shadowy, powerful group operating from a profoundly "pre-moral" developmental level-i.e., not based in even the most rudimentary principles of morality foundational to civilization.
Who the hell are these people?!
Goyenot's main points (with a touch of personal editorializing):
1. The American Neocons are Zionists (Their goal is expanding political / military power. Initially this is focused on the state of Israel.)
Neoconservativism is essentially a modern right wing Jewish version of Machiavelli's political strategy. What characterizes the neoconservative movement is therefore not as much Judaism as a religious tradition, but rather Judiasm as a political project, i.e. Zionism, by Machiavellian means.
This is not a religious movement though it may use religions words and vocabulary. It is a political and military movement. They are not concerned with being close to God. This is a movement to expand political and military power. Some are Christian and Mormon, culturally.
Obviously , if Zionism is synonymous with patriotism in Israel, it cannot be an acceptable label in American politics, where it would mean loyalty to a foreign power. This is why the neoconservatives do not represent themselves as Zionists on the American scene. Yet they do not hide it all together either.
He points out dual-citizen (Israel / USA) members and self proclaimed Zionists throughout cabinet level positions in the US government, international banking and controlling the US military. In private writings and occasionally in public, Neocons admit that America's war policies are actually Israel's war goals. (Examples provided.)
2. Most American Jews are overwhelmingly liberal and do NOT share the perspective of the radical Zionists.
The neoconservative movement, which is generally perceived as a radical (rather than "conservative") Republican right, is, in reality, an intellectual movement born in the late 1960s in the pages of the monthly magazine Commentary, a media arm of the American Jewish Committee, which had replaced the Contemporary Jewish Record in 1945. The Forward, the oldest American Jewish weekly, wrote in a January 6th, 2006 article signed Gal Beckerman: "If there is an intellectual movement in America to whose invention Jews can lay sole claim, neoconservatism is it. It's a thought one imagines most American Jews, overwhelmingly liberal, will find horrifying. And yet it is a fact that as a political philosophy, neoconservatism was born among the children of Jewish immigrants and is now largely the intellectual domain of those immigrants' grandchildren".
3. Intellectual Basis and Moral developmental level
Goyenot traces the Neocon's origins through its influential writers and thinkers. Highest on the list is Leo Strauss. (Neocons are sometimes called "the Straussians.") Leo Strauss is a great admirer of Machiavelli with his utter contempt for restraining moral principles making him "uniquely effective," and, "the ideal patriot." He gushes over Machiavelli praising the intrepidity of his thought, the grandeur of his vision, and the graceful subtlety of his speech.
Other major points:
- believes that Truth is harmful to the common man and the social order and should be reserved for superior minds.
- nations derive their strength from their myths, which are necessary for government and governance.
- national myths have no necessary relationship with historical reality: they are socio-cultural constructions that the State has a duty to disseminate.
- to be effective, any national myth must be based on a clear distinction between good and evil; it derives its cohesive strength from the hatred of an enemy nation.
- As recognized by Abram Shulsky and Gary Schmitt in an article "Leo Strauss and the World of Intelligence" (1999), for Strauss, "deception is the norm in political life" – the rule they [the Neocons] applied to fabricating the lie of weapons of mass destruction by Saddam Hussein when working inside the Office of Special Plans.
- George Bushes speech from the national cathedral after 9/11 exemplifies myth-making at its finest: "Our responsibility to history is already clear: to answer these attacks and rid the world of Evil. War has been waged against us by stealth and deceit and murder. This nation is peaceful, but fierce when stirred to anger. . . .[W]e ask almighty God to watch over our nation, and grant us patience and resolve in all that is to come. . . . And may He always guide our country. God bless America.
4. The Zionist/Neocons are piggy-backing onto, or utilizing, the religious myths of both the Jewish and Christian world to consolidate power. This is brilliant Machiavellian strategy.
- the "chosen people" myth (God likes us best, we are better than you)
- the Holy Land myth (one area of real estate is more holy than another)
- the second coming of Christ myth
- the establishment of God's Kingdom on Earth through global destruction/war (nuclear war for the Glory of God)
[The]Pax Judaica will come only when "all the nations shall flow" to the Jerusalem temple, from where "shall go forth the law" (Isaiah 2:1-3). This vision of a new world order with Jerusalem at its center resonates within the Likudnik and neoconservative circles. At the Jerusalem Summit, held from October 12th to 14th, 2003 in the symbolically significant King David Hotel, an alliance was forged between Zionist Jews and Evangelical Christians around a "theopolitical" project, one that would consider Israel… "the key to the harmony of civilizations", replacing the United Nations that's become a "a tribalized confederation hijacked by Third World dictatorships": "Jerusalem's spiritual and historical importance endows it with a special authority to become a center of world's unity. [...] We believe that one of the objectives of Israel's divinely-inspired rebirth is to make it the center of the new unity of the nations, which will lead to an era of peace and prosperity, foretold by the Prophets". Three acting Israeli ministers spoke at the summit, including Benjamin Netanyahu, and Richard Perle.
Jerusalem's dream empire is expected to come through the nightmare of world war. The prophet Zechariah, often cited on Zionist forums, predicted that the Lord will fight "all nations" allied against Israel. In a single day, the whole earth will become a desert, with the exception of Jerusalem, who "shall remain aloft upon its site" (14:10).
With more than 50 millions members, Christians United for Israel is a major political force in the U.S.. Its Chairman, pastor John Haggee, declared: "The United States must join Israel in a pre-emptive military strike against Iran to fulfill God's plan for both Israel and the West, [...] a biblically prophesied end-time confrontation with Iran, which will lead to the Rapture, Tribulation, and Second Coming of Christ".
And Guyenot concludes:
Is it possible that this biblical dream, mixed with the neo-Machiavellianism of Leo Strauss and the militarism of Likud, is what is quietly animating an exceptionally determined and organized ultra-Zionist clan? General Wesley Clark testified on numerous occasions before the cameras, that one month after September 11th, 2001 a general from the Pentagon showed him a memo from neoconservative strategists "that describes how we're gonna take out seven countries in five years, starting with Iraq, and then Syria, Lebanon, Libya, Somalia and Sudan and finishing off with Iran".
Is it just a coincidence that the "seven nations" doomed to be destroyed by Israel form part of the biblical myths? …[W]hen Yahweh will deliver Israel "seven nations greater and mightier than yourself […] you must utterly destroy them; you shall make no covenant with them, and show no mercy to them."
- We have a group that wishes greatly expanded power (to rule the world??)
- Among them are brilliant strategists
- They operate unrestrained by the most basic moral principles upon which civilization is founded. They are undisturbed by compassion for the suffering of others.
- They use consciously and skillfully use deception and "myth-making" to shape policy
- This is not a spiritual movement in any sense
- They are utilizing religious myths and language to influence public thinking
- They envision "winning" in the aftermath world war.
- They have infiltrated the highest levels of banking, US military, NATO and US government.
Every year, roughly $1 trillion flows illegally out of developing and emerging economies due to crime, corruption, and tax evasion. This amount is more than these countries receive in foreign direct investment and foreign aid combined.
This week, a new report was released that highlights the latest data available on this "hot" money. Assembled by Global Financial Integrity, a research and advisory organization based in Washington, DC, the report details illicit financial flows of money from developing countries using the latest information available, which is up until the end of 2013.
Chart The World's Hot MoneyThe cumulative amount of this "hot money" coming out of developing countries totaled just over $7.8 trillion between 2004 and 2013. On an annual basis, it breached the $1 trillion mark each of the last three years of data available, which is good for a growth rate of 6.5% rate annually.
In Asia, illicit financial outflows are growing even quicker at an 8.6% clip. It's also on the continent that five of the ten largest source economies for these flows can be found, including the largest offender, which is Mainland China.
How does this "hot" money leave these countries? Global Financial Integrity has calculated that 83% of illicit financial flows are due to what it calls "trade misinvoicing".
It's defined as the following:
The misinvoicing of trade is accomplished by misstating the value or volume of an export or import on a customs invoice. Trade misinvoicing is a form of trade-based money laundering made possible by the fact that trading partners write their own trade documents, or arrange to have the documents prepared in a third country (typically a tax haven), a method known as re-invoicing. Fraudulent manipulation of the price, quantity, or quality of a good or service on an invoice allows criminals, corrupt government officials, and commercial tax evaders to shift vast amounts of money across international borders quickly, easily, and nearly always undetected.
Trade misinvoicing accounted for an average of $654.7 billion per year of lost trade in developing markets over the data set covered by the report.
Source: Visual Capitalist
Goldman Sachs buzz-acronym "BRICS" are five of the largest exporters of "hot money". It amuses me to no end how so many buy the idea that the BRICS are gonna take over the world...
6 signals for an impending bear market:
What the fuck is "illicit" money? Savings that weren't looted away?
Better definitions would have "black" money correspond to any government/public spending, declared capital and proceeds from violent crime (i.e. money that is acquired through or enables violence) and honest money to all the undeclared savings, underground economy/trade proceeds and non-institutional drug money.
the most of China money leaves through HK do you think HK is a dump ?
did you ever leave your small town ?
I found Hong Kong rather nice some 20 years ago, Beijing not so much.
We just came back from India.
So, yes, I have been to four of those BRICS, and am not impressed. Sorry.
Feel free to tell me more though. Especially about your travels. ;)
As a (retired) tax-haven professional in three countries, and a former Manager of the Cayman Islands Chamber of Commerce, I must caution against the term "mis-invoicing" - with or without the hyphen...More properly, it's re-invoicing, and no more illicit than the procedure by which any trader buys goods at one price and sells them at another.
When a corporate buyer is owned by the same people as own the seller, their transaction may raise an eyebrow or two, but usually it would be permitted by the published taxation laws of all the relevant companies, as those laws are interpreted by both private-sector lawyers and the tax authorities. With transactions of that kind, it is beneficial for the owners if the tax-rates are different in the two jurisdictions. Well, of course; but that situation is always - always - allowed by the laws of those jurisdictions, whether they are developed or developing.
Over the years I have written several brief explanations of how "offshore" havens work. The one at the link below covers the basic-basics reasonably well. http://barlowscayman.blogspot.com/2013/01/offshore-tax-havens-what-they-do.html
"Every year, roughly $1 trillion flows illegally out of developing and emerging economies due to crime, corruption, and tax evasion"
Yea, that would be banksterz, CIA and their drug running, NGO's and their child trafficking....... etc... Might want to throw a few more zero's in there too.
Bob who runs the deli down the street and pockets $500 "illicit" dollars a week is not your worry or concern you stupid fuckkkerz.
The Russian central bank every year publishes a report of how many billions of dollars have stolen from our economy, and... does nothing, nothing at all to stop this.
There are good arguments to say that what people do with their own money is nothing to do with .gov.
But once again, we see banksters and corrupt corporate sector players colluding with corrupt individuals and assorted criminals - many inside .gov itself - to move ill-gotten gains to safer places out of reach of law enforcement in their own countries.
Banksters facilitate virtually every financial crime.
Dec 11, 2015 | Economist's Viewanne said...Fine column, with which I agree. Federal Reserve policy as such is difficult and contentious enough to avoid wandering to social-economic analysis or philosophy from aspects of the Fed mandate.anne -> RW (the other)...
As for the use of the word "hack" in referring to Janet Yellen, that needlessly insulting use was by a Washington Post editor and not by columnist Michael Strain.likbez -> anne...
As Brad notes, many Fed Chairs before Yellen have opined on matters outside monetary policy so why is Yellen subject to a different standard?
[ Fine, I have reconsidered and agree. No matter how the headline was written, the headline was meant to be intimidating and was willfully mean and that could and should have been made clear immediately by the writer of the column. ]
"Federal Reserve policy as such is difficult and contentious enough to avoid wandering to social-economic analysis or philosophy from aspects of the Fed mandate."
I think FED chairman is the second most powerful political position in the USA after the POTUS. Or may be in some respects it is even the first ;-) So it is quintessentially high-power political position masked with the smokescreen of "purely economic" (like many other things are camouflaged under neoliberalism.)
That's why Greenspan got it, while being despised by his Wall-Street colleagues...
He got it because he was perfect for promoting deregulation political agenda from the position of FED chair.
pgl -> likbez...
Greenspan was despised on Wall Street? Wow as he tried so hard to serve their interests. I guess the Wall Street crowd is never happy no matter how much income we feed these blow hards.
anne -> likbez...Peter K. said...
So it is quintessentially high-power political position masked with the smokescreen of "purely economic" (like many other things are camouflaged under neoliberalism.)
[ I understand, and am convinced. ]Peter K. -> Peter K....
I respectfully disagree. Republicans are always working the refs and despite what the writer from AEI said, they're okay with conservative Fed chairs talking politics. They have double standards.
Greenspan testified to Congress on behalf of Bush's tax cuts for the rich. Something about how since Clinton balanced the budget, the financial markets had too little safe debt to work with. (maybe that's why they dove into mortgaged-backed securities). But tax cuts versus more government spending? He and Rubin advised Clinton to drop his middle class spending bill and trade deficit reduction for lower interest rates. That's economics which have political outcomes.
So if the rightwing is going to work the the refs, so should the left. We shouldn't unilaterally disarm over fears Congress will gun for the Fed. There should be more groups like Fed Up protesting.
The good thing about Yellen's speech is that it's a signal to progressives that inequality is problem for her even as she is raising rates in a political dance with hawks and Congress.
The Fed is constantly accused of increasing inequality so it's good Yellen is saying she thinks it's a bad thing and not American.
Bernie Sanders is right that for change to happen we'll need more political involvement from regular citizens. We'll need a popular movement with many leaders.
The Fed should be square in the sights of a progressive movement. A high-pressured economy with full employment should be a top priority.
Instead I saw Nancy Pelosi being interviewed by Al Hunt on Charlie Rose the other night. Hunt asked her about Yellen raising rates.
Pelosi said no comment as she wasn't looking at the data Yellen was and didn't want to interfere. The Fed should be independent, etc. Perhaps like Thoma she has the best of motives and doesn't want to motivate the Republicans to go after the Fed and oppose what she wants.
Still I felt the Democratic leadership should be committed to a high-pressure economy. Her staff should know what Krugman, Summers etc are saying. What the IMF and World Bank are sayings.
She should have said "they shouldn't raise rates until they see the whites of inflation's eyes" as Krugman memorably put it. She should have said that emphatically.
We need a Democratic Party like that.
Instead Peter Diamond is blocked from becoming a Fed governor by Republicans and Pelosi is afraid to comment on monetary policy.
A longer reply from DeLong:
Must-Read: I would beg the highly-esteemed Mark Thoma to draw a distinction here between "inappropriate" and unwise. In my view, it is not at all inappropriate for Fed Chair Janet Yellen to express her concern about excessive inequality. Previous Fed Chairs, after all, have expressed their liking for inequality as an essential engine of economic growth over and over again over the past half century--with exactly zero critical snarking from the American Enterprise Institute for trespassing beyond the boundaries of their role.
But that it is not inappropriate for Janet Yellen to do so does not mean that it is wise. Mark's argument is, I think, that given the current political situation it is unwise for Janet to further incite the ire of the nutboys in the way that even the mildest expression of concern about rising inequality will do.
That may or may not be true. I think it is not.
But I do not think that bears on my point that Michael R. Strain's arguments that Janet Yellen's speech on inequality was inappropriate are void, wrong, erroneous, inattentive to precedent, shoddy, expired, expired, gone to meet their maker, bereft of life, resting in peace, pushing up the daisies, kicked the bucket, shuffled off their mortal coil, run down the curtain, and joined the bleeding choir invisible:
Mark Thoma: Why It's Tricky for Fed Officials to Talk Politically: "I think I disagree with Brad DeLong...
pgl -> Peter K....
"my point that Michael R. Strain's arguments that Janet Yellen's speech on inequality was inappropriate are void, wrong, erroneous..."
DeLong is exactly right here. Strain's argument has its own share of partisan lies whereas Yellen is telling the truth. Brad will not be intimidated by this AEI weasel.
Why would Yellen not talk about inequality? It's an important macroeconomic topic and one that is relevant for her job. It's both an input and an output variable that is related to monetary policy.
And, arguably I think, median wage growth should be regarded as a policy goal for the Fed, related to its explicit mandate of "maximum employment."
But even if you think inequality is unrelated to the Fed's policy goals, that doesn't stop them from talking about other topics. Do people accuse the Fed of playing politics when they talk about desiring reduced financial market volatility? That has little to do with growth, employment and general price stability.
likbez -> sanjait...
I think that is a hidden principle behind attacks on FED chair. A neoliberal principle that the state should not intrude into economics and limit itself to the police, security, defense, law enforcement and few other related to this functions. So their point that she overextended her mandate is an objection based on principle. Which can be violated only if it is used to uphold neoliberalism, as Greenspan did during his career many times.
I think I disagree with Mark Thoma's disagreement with Brad DeLong. Actually, ALL economic discourse is political and efforts to restrain the politics are inevitably efforts to keep the politics one-sided
Dan Kervick said...
This kind of debate seems to be a by-product of the contemporary obsession with having an "independent" central bank, run according to the fantasy that there is such a thing as a neutral or apolitical way to conduct monetary policy.
But there really isn't. Different kinds of social, economic and political values and policy agendas are going to call for different kinds monetary and credit policies. It might be better for our political health if the Fed were administratively re-located as an executive branch agency that is in turn part of a broader Department of Money and Banking - no different from the Departments of Agriculture, Labor, Education, etc. In that case everybody would then view Fed governors as ordinary executive branch appointees who report to the President, and whose policies are naturally an extension of the administration's broader agenda. Then if people don't like the monetary policies that are carried out, that would be one factor in their decision about whom to vote for.
There is no reason for central banks to have the kind of independence that judicial institutions have. Justice may be blind and above politics, but money and banking are not. Decisions in that latter area should be no more politics-free than decisions about taxing and spending. If we fold the central bank more completely into the regular processes of representative government, then if a candidate wants to run on a platform of keeping interest rates low, small business credit easy, bank profits small, etc., they could do so without all of the doubletalk about the protecting the independence of the sacrosanct bankers' temple.
We could also then avoid unproductive wheel-spinning about that impossibly vague and hedged Fed mandate that can be stretched to mean almost anything people want it to mean. The Fed's mandate under the political solution would just be whatever monetary policy the President ran on.
likbez -> Dan Kervick...
"The Fed's mandate under the political solution would just be whatever monetary policy the President ran on"
Actually sanjait in his post made a good point why this illusive goal is desirable (providing "electoral advantage") although Greenspan probably violated this rule. A couple of hikes of interest rates from now till election probably will doom Democrats.
Also the idea of FEB independence went into overdrive since 80th not accidentally. It has its value in enhancing the level of deregulation.
Among other things it helps to protect large financial institutions from outright nationalization in cases like 2008.
Does somebody in this forum really think that Bernanke has an option of putting a couple of Wall-Street most violent and destructive behemoths into receivership (in other words nationalize them) in 2008 without Congress approval ?
Dan Kervick -> Sanjait ...
Sanjait, with due respect, you are not really responding to the reform proposal, but only affirming the differences between that proposal and the current system.
Yes, of course fiscal policy is "constrained" by Congress. Indeed, it is not just constrained by Congress but actually made by Congress, subject only to an overridable executive branch veto. The executive branch is responsible primarily for carrying out the legislature's fiscal directives. That's the point. In a democratic system decisions about all forms of taxation and government spending are supposed to be made by the elected legislative branch, and then executed by agencies of the executive branch. My proposal is that monetary policy should be handled in the same way: by the elected political branches of the government.
You point out that under current arrangements, central banks can, if they choose, effect large monetary offsets to fiscal policy (or at least to some of the aggregate macroeconomic effects of those policies). I don't understand why any non-elected and politically unaccountable branch of our government should have the power to offset the policies of the elected branches in this way. Fiscal and monetary policy need to be yoked together to achieve policy ends effectively. Those policy ends should be the ones people vote for, not the ones a handful of men and women happen to think are appropriate.
JF -> Dan Kervick...
"In a democratic system" is what you wrote.
It is more proper to refer to it as republicanism. The separation of powers doctrine, underlying the US constitution, is a reflection of James Madison's characterization in the 51st The Federalist Paper, and it is a US-defined republicanism that is almost unique:
"the republican form, wherein the legislative authority necessarily predominates."
- or something like that is the quote.
In the US framers' view, at least those who constructed the re-write in 1787 and were the leaders - I'd say the most important word in Madison's explanation is the word "necessarily" - this philosophy has all law and policy stemming from the public, it presumes that you can't have stability and dynamic change of benefit to society without this.
Arguably, aristocracies, fascists, totalitarians, and all the other isms, just don't see it that way, they see things as top-down ordering of society.
The mythology of the monetary theorizing and the notions about a central bank being independently delphic has some of this top-down ordering view to it (austerianism, comes to mind). Well, I don't believe in a religious sense that this is how it should be, nor do you it seems.
It will be an interesting Congress in 2017 when new legislative authorities are enacted to establish clearer framing of the ministerial duties now held by the FRB.
Are FED officials scared that this will happen, and as a result they circle the wagons with their associates in the financial community now to fend off the public????
I hope this is not true. They can allay their own fears by leading not back toward 1907, in my opinion.
Of course, I could say where I'd like economic policies to go, and do here often, but this thread is about Yellin and other FED officials.
I recognize that FRB officials can say things too, and should, as leaders of this nation (with a whole lot of research power and evidence available to them their commentary on political economics should have merit and be influential).
Thanks for continuing to remind people that we govern ourselves in the US in a US-defined republican-form. But I think the people still respect and listen to leadership - so speak out FED officials.
JF -> Dan Kervick...
But Dan K, then you'd de-mythologize an entire wing of macroeconomics in a wing referred to as monetary theory based on a separate Central Bank, or some non-political theory of money.
Don't mind the theory as it is an analytic framework that questions and sometimes informs - but it is good to step back and realize some of the religious-like framing.
It is political-economy.
Peter K. -> pgl...
Yellen really lays it out in her speech.
"The extent of and continuing increase in inequality in the United States greatly concern me. The past several decades have seen the most sustained rise in inequality since the 19th century after more than 40 years of narrowing inequality following the Great Depression. By some estimates, income and wealth inequality are near their highest levels in the past hundred years, much higher than the average during that time span and probably higher than for much of American history before then.2 It is no secret that the past few decades of widening inequality can be summed up as significant income and wealth gains for those at the very top and stagnant living standards for the majority. I think it is appropriate to ask whether this trend is compatible with values rooted in our nation's history, among them the high value Americans have traditionally placed on equality of opportunity."
And even links to Piketty in footnote 42.
"Along with other economic advantages, it is likely that large inheritances play a role in the fairly limited intergenerational mobility that I described earlier.42"
42. This topic is discussed extensively in Thomas Piketty (2014), Capital in the 21st Century, trans. Arthur Goldhammer (Cambridge, Mass.: Belknap Press). Return to text
A number of commenters and authors have recently pointed out that inequality may not just be an unrelated phenomenon to monetary policy, but actually, in part at least, a byproduct of it.
The theory is that the Fed in the Great Moderation age has been so keen to stave off even the possibility of inflation that it chokes down the vigor of recoveries before they get to the part where median wages start rising quickly. The result is that wages get ratcheted down with the economic cycle, falling during recessions and never fully recovering during the recoveries.
Do I believe this theory? Increasingly, yes I do. And seeing the Fed right now decide to raise rates, citing accelerating wage growth as one of the main reasons, has reinforced my belief.
A Boy Named Sue said...
Two Things: (i) The Fed should be open and honest about monetary policy. No one wants to return to the Greenspan days. (ii) Brad Delong is a neoliberal hack.
A Boy Named Sue -> A Boy Named Sue...
I do admit, Delong is my favorite conservative economist. He is witty and educational, unlike most RW hacks.
As to "why risk a political backlash" in the piece, the short answer is: to invoke the debate on whether politics or fact (science) is going to dominate. Because they can't both. See: Romer. Let's have this out once and for all.
By James Stafford, Editor in Chief of OilPrice. Originally published at OilPrice
...No one can fight a war without oil, according to Robert Bensh, partner and managing director of Pelicourt LLC oil and gas company. But while the politically unhinged are coming out the woodwork, the more important aspects of this story remain elusive to the public. Is the dangerously unspoken theory that ISIS is a bulwark against Iran what's keeping the West from tackling the Islamic State wholeheartedly on its territory?
... ... ...In an exclusive interview with James Stafford of Oilprice.com, Bensh discusses:
• How far the Russia-Turkey spat can go economically
• The fallout effects for countries caught in between
• What Russia wants
• What Turkey wants
• What other geopolitical purposes ISIS serves
• Why ISIS can't be controlled
• How Shi'ite radical groups differ
• Why we're looking at a possible remapping of a significant part of the energy arena
• Why we shouldn't listen to billionaire buffoons
... ... ...Robert Bensh: Russia and Turkey have a great deal of economic interdependence, and nowhere more than in the energy sector. There has been no talk of cutting Russian gas to Turkey, and I don't see how Russia can afford this right now. Turkey is not only a significant customer for Russia, but it's also a key gas-transit point.
James Stafford: So what does Turkey want?
Robert Bensh: The better question is: "What does Erdogan want?" You know, Putin's probably not too far off in his statement referring to Erdogan's loss of "mind and reason". Erdogan has been going down this path little by little for some time and it's no secret that he has some megalomaniacal tendencies that grow more and more out of control every year. It would seem that he has dreams of a return of the Ottoman Empire-and that ISIS could be a logical ally to that end. Of course, ISIS is not likely looking to be beholden to another Ottoman Empire controlling a greater Sunni-Arab dominion. Many, many Turks fail to share this dream with their leader, and his ambitions will also be his eventual downfall unfortunately.
For the Turkish regime, there is also the idea that ISIS will ostensibly give them more power against the rise of the Kurds, both in southeastern Turkey and in northern Syria. It will even raise the Turks' status in the face of the Saudis whose oil wealth has make them more powerful than the Turks in many ways.
Yves: I think your "quibble" is… indeed minor.
Larger picture of what's really going on with Turkey's intentions driven by Ergodan, Bensh's correct description of Ergo's character and flaws, and less explicitly stated US (he says "west") 1/2 ass efforts to defeat IS despite US leaders (from WH to Congress) emphatic claims otherwise…
These are realities. Whatever small portion of US electorate reads here, at least a few are being introduced to this. We are heading into another election with… in my view, more deeply entrenched public opinions on this based on lies, then maybe any time I recall my entire life. It's just, the game is bigger now with more potential for longer lasting catastrophe if we don't find a way to right our ship.
I appreciate this article… it's on the right track. Only other thing I'd mention: amidst all this, we've had recent international climate meetings with little progress. Clearly, this is bigger problem for entire planet that nobody will escape. I'm stuck by Bensh's comments on protecting their investments (oil) and how the various players he mentions all make decisions based on… oil. It over rides, it seems…everything else that matters.
The planet needs to get behind renewables, and develop them… fast. It's not so hard to see how doing so would change these other geo-political games forever.
I think taking the 'businessman' look at this is not a bad way to look at it. As Adam Hanieh has pointed out
"Coupled with unparalleled levels of socioeconomic insecurity, Sunni marginalization produced a real social base whose attraction to ISIS goes beyond religious or ideological factors."
"ISIS may project a utopic promise of stability and prosperity, but this is far from the reality on the ground. We can be absolutely certain that it will experience its own internal revolts, as similarly declarative examples of Islamic "states" have faced in the past.
Despite all the setbacks of the last few years, the potential growth of a genuinely left alternative has not been extinguished and, most importantly, has never been more necessary."
William Polk echoes this idea of the importance of a non-military and non-police response.
"–The results of insurgency are described in my book Violent Politics. There I have shown that in a variety of societies over the last two centuries in various parts of Africa, Asia and Europe, guerrillas have nearly always accomplished their objectives despite even the most draconian counterinsurgency tactics."
His point being that dealing with the fundamental socioeconomic imbalances/repression can be more effective.
Interesting to me as much for what is not considered by oil businessmen.
A few quick points:
- No mention of human suffering, not even in cost/opportunity terms.
- No mention of rule of law.
- No mention of what happens to the earths climate/ecosystem if all the oil and gas at stake is unleashed.
- No mention of who many of the business players are, certainly not in detail. No mention of Erdogans family, Tony Hayward, trafficking / selling this stolen oil…
- Nor mention of Israel being the major end buyer.
- When mentioning Assad buys oil from IS (U.S Turk Israel Saudi Qatari Qaeda Nusra) no mention of the point Assad is buying his countries own oil at the point of a gun from the thieves who stole it.
- No mention that this uncertainty/chaos is both deliberate and a constant feature of big oil and MIC's business model.
- No concern that more tyrants of the head chopping variety are bound to achieve or maintain power.
- No mention of strategic significance of naval base at Tartus
- No mention of "legal" Saudi arms purchasing and trafficking, and extremist support in Syria, Yemen and about the globe.
This is a good interview. Along with other posts on the subject, this is bringing a little clarity to why there is no clarity.
Hmmm. No mention of Saudi and others in the dynamic…
for more details, read above with Escobar's Pipelineistan,
here c/o Tom Dispatch.
Thanks for that link. Escobar always has some good insights. I also suggest Juan Cole. He recently had a good piece on President Erdogan.
Pepe Escobar has been all over the back story of what he calls pipelineistan– http://counterpunch.org/2015/12/08/syria-ultimate-pipelineistan-war /
"Yet, from the point of view of Washington, a geostrategic problem lingered: how to break the Tehran-Damascus alliance. And ultimately, how to break the Tehran-Moscow alliance.
The "Assad must go" obsession in Washington is a multi-headed hydra. It includes breaking a Russia-Iran-Iraq-Syria alliance (now very much in effect as the "4+1" alliance, including Hezbollah, actively fighting all strands of Salafi Jihadism in Syria). But it also includes isolating energy coordination among them, to the benefit of the Gulf petrodollar clients/vassals linked to US energy giants.
Thus Washington's strategy so far of injecting the proverbial Empire of Chaos logic into Syria; feeding the flames of internal chaos, a pre-planed op by the CIA, Saudi Arabia and Qatar, with the endgame being regime change in Damascus."
Yes, thanks for that most recent Escobar piece at Counterpunch; the one i linked above is already old but still interesting.
The regime change recipe of DC has already been tried and has failed in Iraq, Libya, etc., no one can fathom any improvements replacing Assad + Isis with Isis alone, aka rag tag coalitions of jihadis! Even Saudis can hardly wish for it.
Based on reported facts on the ground (well, reported by non-US media that is) the SAA is making slow but steady progress in retaking key towns and the highway between Aleppo and Damascus. No doubt Russian air and logistical support has made a difference.
If things keep going this way, Assad will likely regain the upper hand and the Saudi/US sponsored jihadis will be confined to the eastern part of the country. It's looking like Washington will have to make a choice – accept Assad as the legitimate ruler (for now) or continue to provoke the situation with guerrilla tactics. We know from history that there is precedent for long wars against legitimate governments that displease Washington (see Daniel Ortega, Sandanistas.) My guess is they go this route and hope to eventually install a stooge.
Of course Turkey is the wild card – Erdogan is increasingly looking like he might be the spark that sets off a much larger conflict. To answer the question, I think there are a lot of really bad scenarios that could happen here, and they are a lot closer than people think (Turkey shutting down the Bosphorus, for starters.)
It is way past time for the arrogant stupidity of Washington's neoconservatives to be exposed and for them to at a minimum be removed from the levers of power – if not tried for crimes against humanity. And that includes Obama if he is really one of them, i.e. if he believes in anything but the politics of power.
This 'Arrogance of Power' has characterized US foreign policy making since the end of WWII. The U.N. was sold to the public as an arrangement for collective security so the U.S. would not have to 'make the world safe for democracy' (sic) a third time. It has been in reality nothing more than a tool for the pursuit of (perceived) US interests, promptly discarded when the principles in its charter became inconvenient.
Short of initiating the world's Mutually Assured Destruction, the U.S. is running out of options – in Syria and around the world. It may be too late for the U.S. to get serious about collective security, to tell the world 'this time we really mean it'. Having squandered economic and "too good to waste" military power in a successive string of needless wars, it may no longer be possible to convince especially those who hold the levers of power in Russia and China that we are serious about collective security and willing to accept a multi-polar world.
Specifically with respect to Syria, it looks like about the best the 'West' (i.e. the US and its vassals) can hope for is some pipeline arrangement providing Europe with an alternative, a competing supplier for its energy needs. In exchange, the 'West' can agree to end its economic war against Russia, Iran et.al and get back to the business of business, i.e. exporting something other than debt and bombs.
I remember reading years ago that the rise of the AKP, and the rising standard of living with it, was fueled directly by a large stream of cash that was funneled from the House of Saud.
The interest must be paid…
susan the other
This was really to the point, without actually making it. One thing is becoming clear – the oil wars are distilling down to natural advantage. It currently belongs to SA – but the future looks like it prefers to use Levant & east Mediterranean oil because it will be easier to pipe to southern Europe. And maybe cleaner? So everybody and their dog is fighting for access to it.
It explains Netanyahu's trip to Moscow & the French clearly in league with Russia for achieving access to this resource (why else?). And it is partly being driven by decisions to leave current oil reserves in the ground. As Palast said it is a "war for no oil."
Which in turn makes sense of Kerry's admonishing the Senate about the Iran deal – that if they want to continue to be oil brokers (petrodollar brokers) they have to come to terms with Iran because there are plenty of other nations who can step up; and of course we want our EU cousins to get a cut of Levant oil, and etc. And Russia is clearly protecting its oil interests. I wonder how long this feeding frenzy will continue.
I think the waffling on ISIS is due to their location among Sunnis. The US would like to win Sunnis over, so they're cautious about bombing, which of course is to ISIS' advantage.
From where I sit, the Syria conflict is an important part of a much larger one – between the 'West' and Russia. Things have been heating up again in the Ukraine. Biden gave a speech there just a couple of days ago in which he insisted that 'NATO would not rest until Crimea was returned to the Ukraine.' That's not going to happen without a war.
Zero Hedge& Fighting broke out in parliament among members of Ukraine's ruling coalition on Friday after a member of President Petro Poroshenko's bloc physically picked up Prime Minister Arseny Yatseniuk and pulled him from the podium.
Yatseniuk was defending his embattled government's record when lawmaker Oleh Barna walked over to him with a bunch of red roses and then grabbed him around the waist and groin, lifting him off his feet and dragging him from the rostrum.
Members of Yatseniuk's People Front party waded in, pushing Barna and throwing punches, sparking a brawl in the assembly.
You just can't make this up...https://www.youtube.com/embed/2zgTl6-KWqg
The PM later said there were "a lot of morons," so he would not comment on the incident.
* * *
As The FT reports,
Ukraine's parliament has indefinitely postponed a vote of no-confidence in the government of Arseniy Yatseniuk, but not without highlighting the fragility of the country's pro-western coalition.
Citing a flurry of corruption scandals and the lacklustre pace of reforms, an increasing number of MPs - even within the ruling majority - have in recent weeks called for the ousting of Mr Yatseniuk via a no-confidence vote on Friday.
Ukraine's western backers, namely the US and EU, feared such a move could plunge the war-torn and recession-ravaged country into a deep political crisis as it continues to battle Russian-backed separatists in eastern regions - and jeopardise a $40bn international bailout led by the International Monetary Fund.
Such concerns are believed to have been expressed by US vice president Joe Biden in closed door discussions during a visit to Kiev early this week in which he publicly called for political unity, swifter reforms and deeper anti-corruption efforts.
And this is the nation's government who US-taxpayer-backed IMF just forgave their debt, implicitly backing them, and entering The Cold War...
Instead, the IMF is backing Ukrainian policy, its kleptocracy and its Right Sector leading the attacks that recently cut off Crimea's electricity. The only condition on which the IMF insists is continued austerity. Ukraine's currency, the hryvnia, has fallen by a third this years, pensions have been slashed (largely as a result of being inflated away), while corruption continues unabated.
Despite this the IMF announced its intention to extend new loans to finance Ukraine's dependency and payoffs to the oligarchs who are in control of its parliament and justice departments to block any real cleanup of corruption.
For over half a year there was a semi-public discussion with U.S. Treasury advisors and Cold Warriors about how to stiff Russia on the $3 billion owed by Ukraine to Russia's Sovereign Wealth Fund. There was some talk of declaring this an "odious debt," but it was decided that this ploy might backfire against U.S. supported dictatorships.
In the end, the IMF simply lent Ukraine the money.
By doing so, it announced its new policy: "We only enforce debts owed in US dollars to US allies." This means that what was simmering as a Cold War against Russia has now turned into a full-blown division of the world into the Dollar Bloc (with its satellite Euro and other pro-U.S. currencies) and the BRICS or other countries not in the U.S. financial and military orbit.
NEW YORK(Reuters) - When health insurer Humana Inc reported worse-than-expected quarterly earnings in late 2014 – including a 21 percent drop in net income – it softened the blow by immediately telling investors it would make a $500 million share repurchase.
In addition to soothing shareholders, the surprise buyback benefited the company's senior executives. It added around two cents to the company's annual earnings per share, allowing Humana to surpass its $7.50 EPS target by a single cent and unlocking higher pay for top managers under terms of the company's compensation agreement.
Thanks to Humana hitting that target, Chief Executive Officer Bruce Broussard earned a $1.68 million bonus for 2014.
Most publicly traded U.S. companies reward top managers for hitting performance targets, meant to tie the interests of managers and shareholders together. At many big companies, those interests are deemed to be best aligned by linking executive performance to earnings per share, along with measures derived from the company's stock price.
But these metrics may not be solely a reflection of a company's operating performance. They can be, and often are, influenced through stock repurchases. In addition to cutting the number of a company's shares outstanding, and thus lifting EPS, buybacks also increase demand for the shares, usually providing a lift to the share price, which affects other performance markers.
As corporate America engages in an unprecedented buyback binge, soaring CEO pay tied to short-term performance measures like EPS is prompting criticism that executives are using stock repurchases to enrich themselves at the expense of long-term corporate health, capital investment and employment.
"We've accepted a definition of performance that is narrow and quite possibly inappropriate," said Rosanna Landis Weaver, program manager of the executive compensation initiative at As You Sow, a Washington, D.C., nonprofit that promotes corporate responsibility. Pay for performance as it is often structured creates "very troublesome, problematic incentives that can potentially drive very short-term thinking."
A Reuters analysis of the companies in the Standard & Poor's 500 Index found that 255 of those companies reward executives in part by using EPS, while another 28 use other per-share metrics that can be influenced by share buybacks.
In addition, 303 also use total shareholder return, essentially a company's share price appreciation plus dividends, and 169 companies use both EPS and total shareholder return to help determine pay.
EPS and share-price metrics underpin much of the compensation of some of the highest-paid CEOs, including those at Walt Disney Co, Viacom Inc, 21st Century Fox Inc, Target Corp and Cisco Systems Inc.
... ... ...
As reported in the first article in this series, share buybacks by U.S. non-financial companies reached a record $520 billion in the most recent reporting year. A Reuters analysis of 3,300 non-financial companies found that together, buybacks and dividends have surpassed total capital expenditures and are more than double research and development spending.
Companies buy back their shares for various reasons. They do it when they believe their shares are undervalued, or to make use of cash or cheap debt financing when business conditions don't justify capital or R&D spending. They also do it to meet the expectations of increasingly demanding investors.
Lately, the sheer volume of buybacks has prompted complaints among academics, politicians and investors that massive stock repurchases are stifling innovation and hurting U.S. competitiveness - and contributing to widening income inequality by rewarding executives with ever higher pay, often divorced from a company's underlying performance.
"There's been an over-focus on buybacks and raising EPS to hit share option targets, and we know that those are concentrated in the hands of the few, and that the few is in the top 1 percent," said James Montier, a member of the asset allocation team at global investment firm GMO in London, which manages more than $100 billion in assets.
The introduction of performance targets has been a driver of surging executive pay, helping to widen the gap between the richest in America and the rest of the country. Median CEO pay among companies in the S&P 500 increased to a record $10.3 million last year, up from $8.6 million in 2010, according to data firm Equilar.
At those levels, CEOs last year were paid 303 times what workers in their industries earned, compared with a ratio of 59 times in 1989, according to the Economic Policy Institute, a Washington-based nonprofit.
SALARY AND A LOT MORE
Today, the bulk of CEO compensation comes from cash and stock awards, much of it tied to performance metrics. Last year, base salary accounted for just 8 percent of CEO pay for S&P 500 companies, while cash and stock incentives made up more than 45 percent, according to proxy advisory firm Institutional Shareholder Services.
...In 1992, Congress changed the tax code to curb rising executive pay and encourage performance-based compensation. It didn't work. Instead, the shift is widely blamed for soaring executive pay and a heavier emphasis on short-term results.
Companies started tying performance pay to "short-term metrics, and suddenly all the things we don't want to happen start happening," said Lynn Stout, a professor of corporate and business law at Cornell Law School in Ithaca, New York. "Despite 20 years of trying, we have still failed to come up with an objective performance metric that can't be gamed."
Shareholder expectations have changed, too. The individuals and other smaller, mostly passive investors who dominated equity markets during the postwar decades have given way to large institutional investors. These institutions tend to want higher returns, sooner, than their predecessors. Consider that the average time investors held a particular share has fallen from around eight years in 1960 to a year and a half now, according to New York Stock Exchange data.
"TOO EASY TO MANIPULATE"
Companies like to use EPS as a performance metric because it is the primary focus of financial analysts when assessing the value of a stock and of investors when evaluating their return on investment.
But "it is not an appropriate target, it's too easy to manipulate," said Almeida, the University of Illinois finance professor.
...By providing a lift to a stock's price, buybacks can increase total shareholder return to target levels, resulting in more stock awards for executives. And of course, the higher stock price lifts the value of company stock they already own.
"It can goose the price at time when the high price means they earn performance shares … even if the stock price later goes back down, they got their shares," said Michael Dorff, a law professor at the Southwestern Law School in Los Angeles.
Exxon Corp, the largest repurchaser of shares over the past decade, has rejected shareholder proposals that it add three-year targets based on shareholder return to its compensation program. In its most recent proxy, the energy company said doing so could increase risk-taking and encourage underinvestment to achieve short-term results.
The energy giant makes half of its annual executive bonus payments contingent on meeting longer-term EPS thresholds. Since 2005, the company has spent more than $200 billion on buybacks.
While performance targets are specific, they aren't necessarily fixed. Corporate boards often adjust them or how they are calculated in ways that lift executive pay.
May 26, 2015 | ITworldAre Windows and OS X malware?
Richard Stallman has never been...er...shy about sharing his opinions, particularly when it comes to software that doesn't adhere to his vision. This time around he has written an opinion column for The Guardian that takes on Microsoft Windows, Apple's OS X and even Amazon's Kindle e-reader.
Richard Stallman on malware for The Guardian:As you might imagine, Stallman's commentary drew a lot of responses from readers of The Guardian:
Malware is the name for a program designed to mistreat its users. Viruses typically are malicious, but software products and software preinstalled in products can also be malicious – and often are, when not free/libre.
Developers today shamelessly mistreat users; when caught, they claim that fine print in EULAs (end user licence agreements) makes it ethical. (That might, at most, make it lawful, which is different.) So many cases of proprietary malware have been reported, that we must consider any proprietary program suspect and dangerous. In the 21st century, proprietary software is computing for suckers.
Windows snoops on users, shackles users and, on mobiles, censors apps; it also has a universal back door that allows Microsoft to remotely impose software changes. Microsoft sabotages Windows users by showing security holes to the NSA before fixing them.
Apple systems are malware too: MacOS snoops and shackles; iOS snoops, shackles, censors apps and has a back door. Even Android contains malware in a nonfree component: a back door for remote forcible installation or deinstallation of any app.
Amazon's Kindle e-reader reports what page of what book is being read, plus all notes and underlining the user enters; it shackles the user against sharing or even freely giving away or lending the book, and has an Orwellian back door for erasing books.
More at The Guardian
JohnnyHooper: "The Android operating system is basically spyware, mining your personal information, contacts, whereabouts, search activity, media preferences, photos, email, texts, chat, shopping, calls, etc so Google can onsell it to advertisers. Nice one, Google, you creep."
Ece301: "What the free software movement needs is more than just the scare stories about 'capability' - without reliable examples of this stuff causing real-world problems for real people such detail-free articles as this are going to affect nothing.
I'm quite willing to make the sacrifice of google, apple, the NSA etc. knowing exactly where I am if it means my phone can give me directions to my hotel in this strange city. Likewise if I want the capability to erase my phone should I lose it, I understand that that means apple etc. can probably get at that function too.
Limiting_Factor: "Or for people who don't want to mess about with command lines and like to have commercially supported software that works. Which is about 99% of the home computer using population. You lost, Richard. Get over it."
CosmicTrigger: "Selling customers the illusion of security and then leaving a great gaping hole in it for the government to snoop in return for a bit of a tax break is absolutely reprehensible."
Liam01: "This guy is as extreme as the director of the NSA , just at the other end of the spectrum. I'd be more inclined to listen if he showed a hint of nuance, or didn't open with an egoistic claim of "invented free software"."
AlanWatson: "My Kindle doesn't report anything, because I never turn the WiFi on. Just sideload content from wherever I want to buy it (or download if there is no copyright), format conversion is trivial, and for the minor inconvenience of having to use a USB cable I'm free of Amazon's lock-in, snooping and remote wipes. Simple."
Rod: "Here's my crazy prediction: Stallman's diatribes will continue to have zero measurable impact on adoption rates of Free software. Time to try a different approach, Richey."
Quicknstraight: "Not all snooping is bad for you. If it enhances your experience, say, by providing you with a better playlist or recommendations for things you like doing, what's the big deal?
Consumers don't have it every which way. You either accept a degree of data collection in return for a more enjoyable user experience, or accept that no data collection means you'll have to search out everything for yourself.
The average user prefers the easier option and has no interest in having to dig away through loads of crap to find what they want.
They key question should be what happens to data that is mined about users, not whether mining such data is bad per se."
Bob Rich: "As an author, I LIKE the idea that if a person buys a copy of my book, that copy cannot be freely distributed to others. With a paper book, that means that the original owner no longer has access to it. With an electronic book, "giving" or "lending" means duplicating, and that's stealing my work. The same is true for other creators: musicians, artists, photographers."
Mouse: "Stallman's a hero and we wouldn't have the level of (low-cost) technology all we enjoy today without him. I remember reading an article by him years ago and he said that the only laptop he'd use was the Lemote Yeeloong because it was the only system that was 100% open, even down to the BIOS - he was specifically paranoid about how government agencies might modify proprietary code for their own ends - and at the time I thought "Jeez, he's a bit of a paranoid fruitcake", but post-Snowden he's been proven to be right about what the security services get up."
More at The Guardian
www.zerohedge.comSubmitted by Jake Anderson via TheAntiMedia.org,
When most people think of CIA sabotage, they think of coups, assassinations, proxy wars, armed rebel groups, and even false flags - not strategic stupidity and purposeful bureaucratic ineptitude. However, according to a declassified document from 1944, the Office of Strategic Services (OSS), which later became the CIA, used and trained a curious breed of "citizen-saboteurs" in occupied nations like Norway and France.
The World War II-era document, called Simple Sabotage Field Manual, outlines ways in which operatives can disrupt and demoralize enemy administrators and police forces. The first section of the document, which can be read in its entirety here, addresses "Organizations and Conferences" - and how to turn them into a "dysfunctional mess":
- Insist on doing everything through "channels." Never permit short-cuts to be taken in order to expedite decisions.
- Make "speeches." Talk as frequently as possible and at great length. Illustrate your "points" by long anecdotes and accounts of personal experiences.
- When possible, refer all matters to committees, for "further study and consideration." Attempt to make the committee as large as possible - never less than five.
- Bring up irrelevant issues as frequently as possible.
- Haggle over precise wordings of communications, minutes, resolutions.
- Refer back to matters decided upon at the last meeting and attempt to re-open the question of the advisability of that decision.
- Advocate "caution." Be "reasonable" and urge your fellow-conferees to be "reasonable" and avoid haste which might result in embarrassments or difficulties later on.
On its official webpage, the CIA boasts about finding innovative ways to bring about sabotage, calling their tactics for destabilization "surprisingly relevant." While they admit that some of the ideas may seem a bit outdated, they claim that "Together they are a reminder of how easily productivity and order can be undermined."
In a second section targeted at manager-saboteurs, the guide lists the following tactical moves:
- In making work assignments, always sign out the unimportant jobs first. See that important jobs are assigned to inefficient workers.
- Insist on perfect work in relatively unimportant products; send back for refinishing those which have the least flaw.
- To lower morale and with it, production, be pleasant to inefficient workers; give them undeserved promotions.
- Hold conferences when there is more critical work to be done.
- Multiply the procedures and clearances involved in issuing instructions, paychecks, and so on. See that three people have to approve everything where one would do.
Finally, the guide presents protocol for how saboteur-employees can disrupt enemy operations, too:
- Work slowly.
- Contrive as many interruptions to your work as you can.
- Do your work poorly and blame it on bad tools, machinery, or equipment. Complain that these things are preventing you from doing your job right.
- Never pass on your skill and experience to a new or less skillful worker.
The CIA is proud of its Kafkaesque field manual and evidently still views it as an unorthodox but effective form of destabilizing enemy operations around the world. Of course, so too might an anarchist or revolutionary look at such tactics and view them in the context of disrupting certain domestic power structures, many of which are already built like a bureaucratic house of cards.
It seems if any country should refrain from showcasing how easy it is to disrupt inefficient federal agencies, however, it would be the United States.
Syaloch -> sanjait..., December 08, 2015 at 08:31 AMMeta-criticism of reports in this case is neither here nor there, since it's possible to track down the original sources.
The Times summary of Ms. Rey's Jackson Hole paper is accurate; in it she does discuss the importance of the global financial cycle in creating boom and bust cycles in emerging markets. (This isn't news to anyone who's followed Krugman's writings on global financial crises over the years.)
When Yellen announced that the Fed would not raise rates in September, she did cite "heightened uncertainties abroad" as a factor. While I cannot find her mentioning China specifically, a lot of the discussion in financial sources prior to the announcement cite the Chinese devaluation as an important factor leading to Yellen's decision.
As for economists warning that a rate increase combined with uncertain exchange rates in China and other countries would weaken global growth, that was most likely a reference to the IMF's World Economic Outlook report, which does indeed make this argument.
likbez said...When capital became unable of reaping large and fairly secure profits from manufacturing it like water tries to find other ways. It starts with semi-criminalizing finance -- that's the origin of the term "casino capitalism" (aka neoliberalism). I see casino capitalism as a set of semi-criminal ways of maintaining the rate of profits.
The key prerequisite here is corruption of regulators. So laws on the book does not matter much if regulators do not enforce them.
As Joseph Schumpeter noted, capitalism is not a steady-state system. It is unstable system in which population constantly experience and then try to overcome one crisis after another. Joseph Schumpeter naively assumed that the net result is reimaging itself via so called "creative destruction". But what we observe now it "uncreative destruction". In other words casino capitalism is devouring the host, the US society.
So all those Hillary statements are for plebs consumption only (another attempt to play "change we can believe in" trick). Just a hot air designed to get elected. Both Clintons are in the pocket of financial oligarchy and will never be able to get out of it alive.
I believe I'm the only one on this blog that has actually traded bonds, done swaps and hedged bank portfolios with futures contracts. Sooo I kinda know something about this topic.
Hilary is a fraud; her daughter worked at a Hedge fund where she met her husband Marc Mezvinsky, who is now a money manager at the Eaglevale fund. Oddly many of the Eaglevale investors are investors in the Clinton Foundation and have also given money to Hilary's campaign. The Clinton Foundation gets boat loads of money from Hedge funds and will not raise taxes on such a rich source of funding.
The grooms mother is Marjory Margolies (ex)Mezvinsky, she cast the final vote giving Clinton the winning vote to raise taxes. She subsequently lost her run for reelection to congress, then her husband was convicted of fraud and they divorced.
This speech is an attempt to pry people away from Bernie, it won't work with primary voters but might with what's left of rational Republicans in the general election.
likbez said...When capital became unable of reaping large and fairly secure profits from manufacturing it like water tries to find other ways. It starts with semi-criminalizing finance -- that's the origin of the term "casino capitalism" (aka neoliberalism). I see casino capitalism as a set of semi-criminal ways of maintaining the rate of profits.
The key prerequisite here is corruption of regulators. So laws on the book does not matter much if regulators do not enforce them.
As Joseph Schumpeter noted, capitalism is not a steady-state system. It is unstable system in which population constantly experience and then try to overcome one crisis after another. Joseph Schumpeter naively assumed that the net result is reimaging itself via so called "creative destruction". But what we observe now it "uncreative destruction". In other words casino capitalism is devouring the host, the US society.
So all those Hillary statements are for plebs consumption only (another attempt to play "change we can believe in" trick). Just a hot air designed to get elected. Both Clintons are in the pocket of financial oligarchy and will never be able to get out of it alive.
I believe I'm the only one on this blog that has actually traded bonds, done swaps and hedged bank portfolios with futures contracts. Sooo I kinda know something about this topic.
Hilary is a fraud; her daughter worked at a Hedge fund where she met her husband Marc Mezvinsky, who is now a money manager at the Eaglevale fund. Oddly many of the Eaglevale investors are investors in the Clinton Foundation and have also given money to Hilary's campaign. The Clinton Foundation gets boat loads of money from Hedge funds and will not raise taxes on such a rich source of funding.
The grooms mother is Marjory Margolies (ex)Mezvinsky, she cast the final vote giving Clinton the winning vote to raise taxes. She subsequently lost her run for reelection to congress, then her husband was convicted of fraud and they divorced.
This speech is an attempt to pry people away from Bernie, it won't work with primary voters but might with what's left of rational Republicans in the general election.
www.huffingtonpost.comErdogan, desperate and angry over his losing battle to oust Syrian president Bashar al-Assad, ordered the shooting down of a Russian fighter jet. Erdogan has been actively pursuing the ouster of Assad since 2012, but Russia's recent intervention in Syria, in alliance with Iran and its highly ideologically and politically motivated proxies, has resulted in a serious setback for Erdogan's plans.
Putin's determination to destroy Turkey's proxies at the Syrian borders and to thwart Erdogan's plan to create a no-fly/buffer zone in the area has derailed Erdogan's plans for Syria. Erdogan hoped to use the buffer zone as an operational hub aimed at bringing down President Assad.
Russian attacks on Turkmen-dominated areas in Bayirbucak, where the Russian plane was downed, would also inflict serious collateral damage to Turkey. The Turkish government regards the area in north-west Syria, presently under the control of the Bayirbucak Turkmens, as an important buffer zone preventing the territorial expansion of Syria's Kurdish-minority militias, whom it regards as terrorists linked to the Kurdistan Workers' Party (PKK).
Erdogan's objective in shooting down the plane was to provoke Russia into a harsh response. He hoped the response would bring Russia into conflict with the whole of NATO, which would help reverse Turkey's declining fortunes in the Syrian war.
Erdogan's calculations went terribly wrong. Following the incident, Turkey requested an emergency meeting with NATO members. Contrary to Erdogan's expectations, although, members did not support Russia, neither did they wholeheartedly support Turkey. Many members questioned Turkey's action and, according to Reuters, "expressed concern that Turkey did not escort the Russian warplane out of its airspace." In a clear indication of the suspicion among NATO members regarding Turkey's real intention behind its adventurism, some diplomats told Reuters, "There are other ways of dealing with these kinds of incidents."
Not only didn't Cold War II happen, French President Francois Hollande, who promised "merciless" revenge in the aftermath of Paris attacks, met with Putin and they agreed to form an alliance against Daesh (also known as ISIS/ISIL) in Syria. The outcome of such an alliance is that the "Assad must go" mantra will be overshadowed by the war against Daesh--something that Erdogan hated to occur. Erdogan's plan to bring the West and Russia into conflict became even more unattainable when France's move was followed by Britain and then Germany.
Turkey also lost significant room to maneuver in the post-shootdown of the Russian fighter jet. Russia, by deploying the powerful S-400 surface-to-air missile system in Hmeymim airbase near Latakia, sent a strong signal to Turkey--a de facto no-fly zone already in effect south of the Turkish-Syrian border.
Russia also sent Turkey and NATO a clear message by arming its fighter jets with air-to-air missiles. On November 30, the Russian Air Force announced that "today, for the first time Su34 fighter-bombers departed for combat sorties with air-to-air short- and medium-range missiles.... The usage of such weaponry is necessary for providing security of the aircraft of the Russian" air force, the announcement read.
Moscow also authorized numerous economic sanctions against Ankara ranging from tourism to agricultural products as well as sanctions on energy and construction projects.
Erdogan took a conciliatory stance after the incident. In a speech in Ankara, he said, "We are strategic partners ... 'Joint projects may be halted, ties could be cut'? Are such approaches fitting for politicians?" Erdogan even requested a meeting with Putin while both leaders were in Paris for the COP21 climate change conference on November 30, but Putin rejected the request.
Russians launched a heavy campaign to damage Erdogan's credibility and reputation. Vladimir Putin and numerous other Russian politicians leveled accusations regarding Turkey's sponsorship and cooperation with ISIS as well as allegations of buying oil smuggled by ISIS.
On November 30, on the sidelines of the climate change summit in Paris, Putin stated, "At the moment we have received additional information confirming that that oil from the deposits controlled by Islamic State militants enters Turkish territory on industrial scale." He even went further to say, "We have every reason to believe that the decision to down our plane was guided by a desire to ensure security of this oil's delivery routes to ports where they are shipped in tankers."
In response, Erdogan said he will resign as the country's president if Russia provides evidence that implicates Turkey in any oil trade with ISIS.
Later, Sergei Lavrov, the Russian Foreign Minister, said, "We have repeatedly publicly stated that oil from the IS-controlled territories is transported abroad, particularly to Turkey. The facts that substantiate these claims will be formally presented in the UN in particular, and to all parties concerned."
Then on December 2, the Russian Defense Ministry held a briefing concerning ISIS funding. During the briefing, which included a PowerPoint presentation, satellite images, and videos, Deputy Defense Minister Anatoly Antonov said, "According to our data, the top political leadership of the country - President Erdogan and his family - is involved in this criminal business."
Antonov added, "In the West, no one has asked questions about the fact that the Turkish president's son heads one of the biggest energy companies, or that his son-in-law has been appointed energy minister. What a marvelous family business."
On December 3, without mentioning specifics, Putin declared there was more evidence to come. "We are not planning to engage in military saber-rattling," he said. "But if anyone thinks that having committed this awful war crime ... are going to get away with some measures concerning their tomatoes or some limits on construction and other sectors, they are sorely mistaken."
At this point, it is apparent that Putin's ultimate objective is to take advantage of the opportunity presented to him to severely damage Erdogan's name and trustworthiness, both domestically and internationally, or, even better, bring him and his regime down as a perceived power behind the extremists and the anti-Assad forces in Syria. This is in line with Russia's plan for realizing its strategic objectives in Syria.
Turkey has sent 2,000 troops into Iraq without getting permission from Baghdad.
The Iraqi government has demanded they withdraw, calling it a "hostile act", but Ankara has decided to ignore Baghdad's wishes.
This is only the latest act that undermines the wisdom of having Turkey as a military ally.
Turkey and the U.S. State Department scoffed when Russia accused the Turkish government of being involved with smuggling ISIS oil. However, after Moscow presented convincing proof of Turkey's involvement, the Obama Administration changed its story.While the US has long hyped the problem of ISIS oil smuggling, the recent Russian Defense Ministry presentation, showing significant evidence of Turkey being involved in buying ISIS oil and taking it to refineries run by the Turkish government, has changed their tune.
After a previous denial of the allegation against Turkey, the US is now admitting that the oil is ending up smuggled into Turkey, but insists it is "of no significance" because so much of the oil produced in ISIS-controlled parts of Syria is consumed inside Syria.
"The amount of oil being smuggled is extremely low and has decreased over time," claimed US special envoy Amos Hochstein, a stunning admission which suggests the US was well aware of oil smuggling into Turkey even before the Russian evidence.
Just in case we don't want to believe the Russian videos, Moscow has a solution.
"If the American colleagues are not satisfied with those ones, they should watch videos gained by their own UAVs," the Russian Defense Ministry said on Facebook.
The ever-changing political spin in Washington to avoid admitting the obvious looks increasingly dishonest.
With the U.S. government knowing about Turkey's government involvement (Russia's photos show ISIS oil smuggling trucks passing through border crossings without stopping), it begs the question of what our objectives actually are?
Erdogan Moves To Annex Mosul
Should Mosul be cleared of the Islamic State the Turkish heavy weapons will make it possible for Turkey to claim the city unless the Iraqi government will use all its power to fight that claim. Should the city stay in the hands of the Islamic State Turkey will make a deal with it and act as its protector. It will benefit from the oil around Mosul which will be transferred through north Iraq to Turkey and from there sold on the world markets. In short: This is an effort to seize Iraq's northern oil fields.
That is the plan but it is a risky one. Turkey did not ask for permission to invade Iraq and did not inform the Iraqi government.
The Turks claim that they were invited by the Kurds:
Turkey will have a permanent military base in the Bashiqa region of Mosul as the Turkish forces in the region training the Peshmerga forces have been reinforced, Hürriyet reported.
The deal regarding the base was signed between Kurdistan Regional Government (KRG) President Massoud Barzani and Turkish Foreign Minister Feridun Sinirlioğlu, during the latter's visit to northern Iraq on Nov. 4.
There are two problems with this. First: Massoud Barzani is no longer president of the KRG. His mandate ran out and the parliament refused to prolong it. Second: Mosul and its Bashiqa area are not part of the KRG. Barzani making a deal about it is like him making a deal about Paris.
Al-masdar news-feed-thing had guncam footage of a night attack, by frogfoots with their cannons, on an ISIS truck park. Magnified view at first so you could see they were full-sized like semi's; and no casual agglomeration, these were parked efficiently in a herringbone pattern, at least 400 and I think closer to a thousand. At the film's end the whole thing is just large, neat rectangles of brightness.
So little did ISIS have to fear from an American-coalition airstrike that they had it set up like this. And now these White House statements that it was no big deal.
And Europe sees all this on the news, the ISIS we didn't fight, the flood of refugees that resulted, and sees Russia and Iran being the good guys.
I read where Putin was worried, called Merkel and Hollande to see if they were still on board with 'Minsk 2', the current ceasefire agreement in Ukraine, and they said yes they were. He was worried because Ukraine's President had said he rejected it and the U.S. had said we support that, we reject it too.
We've lost Europe. World getting better fast.
MrWebster, Dec 06 · 04:28:32 PM
Your observations are right on, but only if you assume that thee enemy is IS and Al Queda in Syria. At this point, I don't believe it is. Assad/Russians are perceived as the bigger and more important enemy for the Obama administration and the neocons to focus on. In this case, what Turkey is doing is acceptable-they are enabling opposition forces to Assad/Russians. Heck, when the Russians started bombing, the Al Nusrat Front (Al Queda in Syria) was magically transformed by the administration and the mass media into "rebels", "moderate rebels", "insurgents", "opposition".
native -> MrWebster
I wonder who gets to claim Mosel, after all the dust settles? Abadi seems to have lost all control over his nominal countrymen in the north. But will the Iraqi Kurds side with Turkey, and against their brethren just across the border?
merchantsofmenaceYoringeTBE -> merchantsofmenace
The relationship between Russia and Western Europe's far right may be a marriage of convenience...
Closer ties with rising political parties in the EU will give Putin more leverage against NATO. For its part, the European right sees the Russian leader as a staunch defender of national sovereignty and conservative values who has challenged US influence...
Stratfor Chairman Straight-Talking: US Policy Is Driven by Imperative to Stop Coalition between Germany and Russia
George Friedman, Founder and Chairman of Stratfor, or what is called by many "private/shadow CIA" for its well known connections and close cooperation with the CIA, gave a very interesting speech to the Chicago Council of Foreign Affairs on subject Europe: Destined for Conflict? in February of this year.
www.counterpunch.orgEven if Britain's role is symbolic at this stage, it has joined a very real war against an enemy of great ferocity and experience, not least of air attacks. The highly informed Turkish military analystMetin Gurcan, writing on Al-Monitor website, says that air strikes may have been effective against Isis communications and training facilities, but adds that "it is extraordinary that there is not a single [Isis] control facility that has been hit by allied air strikes".
This is not for lack of trying and shows that talk of destroying Isis command and control centres in Raqqa is wishful thinking, given that 2,934 American air strikes in Syria have failed to do so over the last 14 months.
Air strikes have had an impact on Isis's tactics and casualty rate, above all when they are used in close co-operation with a well-organised ground force like the Syrian Kurdish People's Protection Units (YPG). Isis may have lost as many as 2,200 fighters at Kobani which is a small and closely packed city. On the other hand, the length of time it took to drive Isis out of it with 700 air strikes demonstrated their fighters' willingness to die.
Many Isis commanders reportedly regard their tactics at Kobani as a mistake which cost the group too many casualties and which it should not repeat. To do so it sacrificed two of its most important military assets which are mobility and surprise. This does not mean that it will not fight to the last bullet for cities like Raqqa and Mosul, but it did not do so for Tikrit and Sinjar where it used snipers, booby traps and IEDs, but did not commit large detachments of troops.
Isis has modified its tactics to take account of the continuing risk of air strikes. It now has a decentralised command structure, with tactical decisions being taken by leaders of small units of eight to 10 men, whose overall mission is determined from the centre – but not how it should be accomplished. This limits the ability of its opponents to monitor its communications.
Its forces assemble swiftly and attack soon afterwards with multiple diversionary operations, as was seen when Mosul was captured in June 2014 and again when they took Ramadi, the capital of Anbar province, this May.
They had been fighting their way into Baiji refinery, but this turned out to be a diversion and Isis units pulled back from there as soon as Ramadi fell.
Isis's approach is to use a mixture of conventional, guerrilla and terrorist tactics, none unique in themselves, but they have never been used before in combination. Air strikes mean that it is less able to use captured tanks or big concentrations of vehicles packed with fighters. Instead it uses IEDs, booby traps, snipers and mortar teams in even greater numbers.
Public martyrdom as an expression of religious faith is such a central part of its ideology that it can deploy suicide bombers on foot or in vehicles in great numbers to destroy fortifications and demoralize the enemy. Some 28 suicide bombers were reportedly used in the final stages of the battle for Ramadi. Psychological warfare has always been an important element of Isis's tactical armory. It has sought to terrify opposition forces by showing videos in which captured Iraqi or Syrian soldiers are filmed being ritually decapitated or shot in the head.
Sometimes, the families of Syrian soldiers get a phone call from their son's mobile with a picture of his body with his severed head on his chest. Mass killings of prisoners have taken place after all Isis's victories (the al-Qaeda affiliate, al-Nusra Front, does the same thing).
Heavy air attack will increase Isis's losses and it will be more difficult to bring in foreign volunteers through Turkey because most of the border is now closed. But Isis rules an area with a population of at least six million and conscripts all young men, who often want to become fighters because there is no other employment. Isis may have a fighting force of 100,000 men, as is strongly suggested by the very long front lines it holds and its ability to make multiple attacks simultaneously. Whatever Britain's role, we will be fighting a formidable military machine.
JKF? I didn't know that the historian John King Fairbank was assassinated.skk
Then I guess you have solid evidence to account for the actions of Allen Dulles, David Atlee Phillips, William Harvey, David Morales, E. Howard Hunt, Richard Helms, James Angleton and other CIA personnel and assets who had
1) perhaps the strongest motives to murder Kennedy
2) the means to carry out the crime, namely, their executive action (assassination) capability and blackmail the government into aiding their cover up and
3) the opportunity to carry out such a plan given their complete lack of accountability to the rest of the government and their unmatched expertise in lying, deceit, secrecy, fraud.
Because if you actually took the time to research or at least read about their actions in this matter instead of just spouting bald assertions that you decline to back up with any facts you would find their behavior nearly impossible to explain other than having at, the very least, guilty knowledge of the crime.skk
Ruby claimed he was injected with cancer in jail, which ultimately rendered his second trial (after winning appeal overturning his death sentence) moot. It sounded crazy, but so did the motive proffered at his first trial-- that he wanted to save Mrs. Kennedy the anguish...
that is such an amazing story.. i've yet to watch the video of Lyndon Johnson's swearing in - where Marr states he's seen to be winking and smiling etc -Jim Marrs - Kennedy Assassination Lecture
those who wish - Pick it up at around 12 minutes. actually in that lecture he may well be showing videos of it - I wdn't know cos just listen to the audio.
JFK is the one 'safe' conspiracy to talk about without getting the extreme whacko label.
fascinating "lectures" - British Humanist Society and all - still you gotta listen to everything especially the other side:https://www.youtube.com/embed/V6s_Jw3RU9g?feature=oembed&wmode=opaque&list=PL44BEE83ED9D841A8
Make a note of the names - rising stars in the I'm "left" but I'm not a conspiracist gaggle - ist a standard gaggle - Chomsky, Monbiot are in it ( to win it of course - their fabled "socialist" kingdom" ) - yeah yeah its BritLand so yeah why I care I suppose.
peakoilbarrel.comGlenn Stehle, 12/05/2015 at 2:54 pmVes,
There was an article in one of the Mexico City dailies today, written in response to the shootings in San Bernardino, that cited some numbers that were news to me:
1) The United States is the #1 small arms manufacturer in the world
2) 83% of small arms manufactured in the world are manufactured in the United States
3) The US's closest competitor is Russia, which manufactures 11% of the world's small arms
4) Small arms are the US's third largest export product, surpassed only by aircraft and agricultural products
5) The US market itself consumes 15 million small arms per year, and there are 300 million small arms currently in the posession of US private citizens
6) Saudi Arabia, however, is by far and away the largest small arms consumer in the world, and purchases 33.1% of all small arms produced in the world
7) Saudi Arabia then re-distributes these small arms to its allies in Syria, Lybia, etc.
8) So far in 2015, there have been 351 "mass shootings" in the United States in which 447 persons have been killed and another 290 wounded
9) The world's leading human rights organizations never speak of the bloodbath ocurring around the world due to the proliferation of small arms, much less the United Nations Security Council.
10) Both the United States and Russia seem quite content to keep any talk of small arms proliferation off the agenda.
naked capitalismMany studies of the Eurozone crisis focus on peripheral European states' current account deficits, or German neo-mercantilist policies that promoted export surpluses. However, German financialization and input on the eurozone's financial architecture promoted deficits, increased systemic risk, and facilitated the onset of Europe's subsequent crises.
Increasing German financial sector competition encouraged German banks' increasing securitization and participation in global capital markets. Regional liberalization created new marketplaces for German finance and increased crisis risk as current accounts diverged between Europe's core and periphery. After the global financial crisis of 2008, German losses on international securitized assets prompted retrenchment of lending, paving the way for the eurozone's sovereign debt crisis. Rethinking how financial liberalization facilitated German and European financial crises may prevent the eurozone from repeating these performances in the future.
After the 1970s, German banks' trading activity came to surpass lending as the largest share of assets, while German firms increasingly borrowed in international capital markets rather than from domestic banks. Private banks alleged that political subsidies and higher credit ratings for Landesbanks, public banks that insured household, small enterprise, and local banks' access to capital, were unfair, and, in response, German lawmakers eliminated state guarantees for public banks. Landesbanks, despite their historic role as stable, non-profit, providers of credit, consequently had to compete with Germany's largest private banks for business. Changes in competition restructured the German financial system. Mergers and takeovers occurred, especially in commercial banks and Landesbanks. German financial intermediation ratios-total financial assets of financial corporations divided by the total financial assets of the economy-increased. Greater securitization and shadow banking relative to long-term lending increased German propensity for financial crisis, as securities, shares, and securitized debt constituted increasing percentages of German banks' assets and liabilities.
Throughout this period, Germany lacked a centralized financial regulatory apparatus. Only in 2002 did the country's central bank, the Bundesbank, establish the Bundenstalt für Finanzdienstleistungsaufsicht (Federal Financial Supervisory Authority, known as BaFin), which consolidated the responsibilities of three agencies to oversee the whole financial sector. However, neither institution could keep pace with new sources of financial and economic instability. German banking changes continued apace and destabilizing trends in banking grew.
German desire for financial liberalization at the European level, meanwhile, helped increase potential systemic risk of European finance. Despite some European opposition to removing barriers to capital and trade flows, Germany prevailed in setting these preconditions for membership in the European economic union. Germany's negotiating power stemmed from its strong currency, as well as French, Italian, and smaller European economies' desire for currency stability. Germany demanded an independent central bank for the union, removal of capital controls, and an expansion of the tasks banks could perform within the Economic and Monetary Union (EMU). The Second Banking Coordination Directive (SBCD) mandated that banks perform commercial and investment intermediation to be certified within the EMU; the Single Market Passport (SMP) required free trade and capital flows throughout the EMU. The SMP and SBCD increased the scope of activity that financial institutions throughout the union were expected to provide, and opened banks up to markets, instruments, and activities they could neither monitor nor regulate, and hence to destabilizing shocks.
Intra-EMU lending and borrowing subsequently increased, and total lending and borrowing grew relative to European countries' GDP from the early 1990s onward. Asymmetries emerged in capital flows between Europe's core, particularly the UK, Germany, and the Netherlands, to Europe's newly liberalized periphery. German banks lent increasing volumes to EMU member states, especially peripheral states. Though this lending on a country-by-country basis was a small percentage of Germany's GDP, it constituted larger percentages of borrowers' GDPs. In 2007, Germany lent 1.23% of its GDP to Portugal; this represented 17.68% of Portugal's GDP; in 2008, Germany lent 6% of its GDP to Ireland; this was 84% of Irish GDP. Germany, the largest European economy, lent larger percentages of its GDP to peripheral EMU nations relative to its lending to richer European economies. These flows, more potentially disruptive for borrowers than for the lender, reflected lack of oversight in asset management. German lending helped destabilize European financial systems more vulnerable to rapid capital inflows, and created conditions for large-scale capital flight in a crisis.
Financial competition increased in Europe over this period. Financial merger activity first accelerated within national borders, and later grew at supra-national levels. These movements increased eurozone access to capital, but increased pressure for banks to widen the scope of the services and lending that they provided. Rising European securitization in this period increased systemic risk for the EMU financial system. European holdings of U.S.-originated asset-backed securities increased by billions of dollars from the early 2000s until shortly before 2008. German banks were among the EMU's top issuers and acquirers of such assets. As banks' holdings of these assets increased, European systemic risk increased as well.
European total debt as a percentage of GDP rose in this period. Financial debt relative to GDP grew particularly sharply in core economies; Ireland was the only peripheral EMU economy with comparable levels of financial debt. Though government debt relative to GDP fell or held constant for most EMU nations, cross-border acquisition of sovereign debt increased until 2007. German banks acquired substantially larger portfolios of sovereign debt issued by other European states, which would not decrease until 2010. Only in 2009 did government debt relative to GDP increase throughout the eurozone, as governments guaranteed their financial systems to minimize the costs of the ensuing financial crisis.
The newly liberalized financial architecture of the eurozone increased both the market for German financial services and overall systemic risk of the European financial system; these dynamics helped destabilize the German financial system and economy at large. Rising German exports of goods, services, and capital to the rest of Europe grew the German economy, but divergence of current account balances within the EMU exposed it to sovereign debt risk in peripheral states. Potential systemic risk changed into systemic risk after the subprime mortgage crisis began. EMU economies would not have subsequently experienced such pressure to backstop national financial systems or to repay sovereign loans had German banks not lent so much or purchased so many sovereign bonds within the union. Narratives that fail to acknowledge Germany's role in promoting the circumstances that underlay the eurozone crisis ignore the destabilizing power of financial liberalization, even for a global financial center like Germany.
susan the other, December 3, 2015 at 1:06 pm
This is very interesting. It describes just how the EU mess unfolded beginning in 1970 with deregulation of the financial industry in the core. Big fish eat little fish. It is as if for 4 decades the banks in Germany compensated their losses to the bigger international lenders by taking on the riskier borrowers and were able to do so because of German mercantilism and financial deregulation. Like the German domestic banks loaned the periphery money with abandon, and effectively borrowed their own profits by speculating on bad customers. As German corporations did business with big international banksters, who lent at lower rates, other German banks resorted to buying the sovereign bonds of the periphery and selling CDOs, etc. The German banks were as over-extended looking for profit as consumers living on their credit cards. Deregulation enriched only the biggest international banks. We could call this behavior a form of digging your own grave. In 2009 the periphery saw their borrowing costs threatened and guaranteed their own financial institutions creating the "sovereign debt" that the core then refused to touch. Hypocrisy ruled. Generosity was in short supply. The whole thing fell apart. Deregulation was just another form of looting.
washunate, December 3, 2015 at 1:28 pm
German losses on international securitized assets prompted retrenchment of lending, paving the way for the eurozone's sovereign debt crisis.
I agree with the general conclusion at the end that German financialization is part of the overall narrative of EMU, but I don't follow this specific link in the chain of events as described. The eurozone has a sovereign debt crisis because those sovereign governments privatized the profits and socialized the losses of a global system of fraud. And if we're assigning national blame, it's a system run out of DC, NY, and London a lot more than Berlin, Frankfurt, and Brussels.
Current and capital account imbalances cancel each other out in the overall balance of payments. As bank lending decreases (capital account surplus shrinks) then the current account deficit shrinks as well (the 'trade deficit'). The problem is when governments step in and haphazardly backstop some of the losses – at least, when they do so without imposing taxes on the wealthy to a sufficient degree to pay for these bailouts.
The OECD's Base Erosion and Profit Shifting (BEPS) initiative is an effort by the G20 to curb the abuse of transfer pricing by multinationals. Senator Hatch is not a fan:Throughout this process we have heard concerns from large sectors of the business community that the BEPS project could be used to further undermine our nation's competitiveness and to unfairly subject U.S. companies to greater tax liabilities abroad. Companies have also been concerned about various reporting requirements that could impose significant compliance costs on American businesses and force them to share highly sensitive proprietary information with foreign governments. I expect that we'll hear about these concerns from the business community and others during today's hearing.Indeed we heard from some lawyer representing The Software Coalition who was there to mansplain to us how BEPS is evil. I learned two startling things. First – Bermuda must be part of the US tax base. Secondly, if Google is expected to pay taxes in the UK, it will take all those 53,600 jobs which are mainly in California and move them to Bermuda:in particular how the changes to the international tax rules as developed under BEPS will significantly reduce the U.S. tax base and create disincentives for U.S. multinational corporations (MNCs) to create R&D jobs in the United StatesYes – I find his testimony absurd at so many levels. Let's take Google as an example. When they say foreign subsidiaries – think Bermuda. Over the past three year, Google's income has average $15.876 billion per year but its income taxes have only average $2.933 billion for an effective tax rate of only 18.5%. How did that happen? Well – 55% of its income is sourced to these foreign subsidiaries and the average tax rate on this income is only 6.5%. Nice deal! Google's tax model is not only easy to explain but is also a very common one for those in the Software Coalition. While all of the R&D is done in the U.S. and 45% of its sales are in the U.S. – U.S. source income is only 45% of worldwide income. Very little of the foreign sourced income ends up in places like the UK even 11% of Google's sales are to UK customers. Only problem is that income ends up on Ireland's books with the UK getting a very modest amount of the profits. Now you might be wondering how Google got to the foreign taxes to be only 6.5% of foreign sourced income since Ireland's tax rate is 12.5%. But think Double Irish Dutch Sandwich and you'll get how the profits ended up in Bermuda as well as perhaps a good lunch! But what about that repatriation tax you ask. Google's most recent 10-K proudly notes:"We have not provided U.S. income taxes and foreign withholding taxes on the undistributed earnings of foreign subsidiaries".In other words, they are not paying that repatriation tax. Besides the Republicans want to eliminate. Let's be honest – Congress has hamstringed the IRS efforts to enforce transfer pricing. The BEPS initiative arose out of this failure. And now the Republicans in Congress are objecting to even these efforts. And if Europe has the temerity of expecting its fair share of taxes, U.S. multinationals will leave California and relocate in Bermuda? Who is this lawyer kidding? Myrtle BlackwoodThe development model in nation after nation is dependent upon global corporations. What is happening is simply a byproduct of this.JackWould the problem of transfer mythical corporate location and the resulting lost taxes be resolved if taxes were based on point of revenue? Tax gross income where it is earned instead of taxing profits where they are not earned.
January 22, 2013 | Veterans Today
Kristol argues in his book The Neoconservative Persuasion that those Jewish intellectuals did not forsake their heritage (revolutionary ideology) when they gave up Communism and other revolutionary movements, but had to make some changes in their thinking. America is filled with such former Trotskyists who unleashed an unprecedented foreign policy that led to the collapse of the American economy.
We have to keep in mind that America and much of the Western world were scared to death of Bolshevism and Trotskyism in the 1920s and early 30s because of its subversive activity.
Noted Australian economist John Quiggin declares in his recent work Zombie Economics that "Ideas are long lived, often outliving their originators and taking new and different forms. Some ideas live on because they are useful. Others die and are forgotten. But even when they have proved themselves wrong and dangerous, ideas are very hard to kill. Even after the evidence seems to have killed them, they keep on coming back.
These ideas are neither alive nor dead; rather…they are undead, or zombie, ideas." Bolshevism or Trotskyism is one of those zombie ideas that keeps coming back in different forms. It has ideologically reincarnated in the political disputations of the neoconservative movement.
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As it turns out, neoconservative think tanks such as the American Enterprise Institute are largely extensions of Trotskyism with respect to foreign policy. Other think tanks such as the Bradley Foundation were overtaken by the neoconservative machine back in 1984.
Some of those double agents have been known to have worked with Likud-supporting Jewish groups such as the Jewish Institute for National Security Affairs, an organization which has been known to have "co-opted" several "non-Jewish defense experts by sending them on trips to Israel. It flew out the retired general Jay Garner, now slated by Bush to be proconsul of occupied Iraq."
Philo-Semitic scholars Stephen Halper of Cambridge University and Jonathan Clarke of the CATO Institute agree that the neoconservative agendas "have taken American international relations on an unfortunate detour," which is another way of saying that this revolutionary movement is not what the Founding Fathers signed up for, who all maintained that the United States would serve the American people best by not entangling herself in alliances with foreign entities.
As soon as the Israel Lobby came along, as soon as the neoconservative movement began to shape U.S. foreign policy, as soon as Israel began to dictate to the U.S. what ought to be done in the Middle East, America was universally hated by the Muslim world.
Moreover, former secretary of defense Robert Gates made it clear to the United States that the Israelis do not and should not have a monopoly on the American interests in the Middle East. For that, he was chastised by neoconservative Elliott Abrams.
In that sense, the neoconservative movement as a political and intellectual movement represents a fifth column in the United States in that it subtly and deceptively seeks to undermine what the Founding Fathers have stood for and replace it with what the Founding Fathers would have considered horrible foreign policies-policies which have contributed to the demise of the respect America once had.
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Israel has been spying on the United States for years using various Israeli or Jewish individuals, including key Jewish neoconservative figures such as Paul Wolfowitz and Douglas Feith, who were under investigation for passing classified documents to Israel.
The FBI has numerous documents tracing Israel's espionage in the U.S., but no one has come forward and declared it explicitly in the media because most political pundits value mammon over truth.
For example, when two top AIPAC officials-Steven Rosen and Keith Weissman-were caught passing classified documents from the Pentagon to Israel, Gabriel Schoenfeld defended them.
In the annual FBI report called "Foreign Economic Collection and Industrial Espionage," Israel is a major country that pops up quite often. This is widely known among CIA and FBI agents and U.S. officials for years.
One former U.S. intelligence official declared, "There is a huge, aggressive, ongoing set of Israeli activities directed against the United States. Anybody who worked in counterintelligence in a professional capacity will tell you the Israelis are among the most aggressive and active countries targeting the United States.
They undertake a wide range of technical operations and human operations. People here as liaisons… aggressively pursue classified intelligence from people. The denials are laughable."
KarlBC g_reader_1, 4 Dec 2015 09:43
Corruption happen everywhere, just look at US. They merely make it legal to bribe the politician, it is call lobbying. Look at all those who cheated their clients by selling them CDOs and betting against them. It became a financial worst crisis for the world, yet none of them was jailed and they all get to keep the billions.
Estimate the cost to win 2016 president election = USD 1bn. Even Bush, not a front runner, had already spend USD30millions. Contribution of fund in return for IOU favors, look like corruption to me too.
NigelJ, 4 Dec 2015 10:53
some of this anti-corruption campaign would certainly not go amiss in the UK.
TheHighRoad isabey, 4 Dec 2015 09:29
Perhaps the difference is that many academics in the UK are contracted to do a certain number of hours teaching and must support the university's reputation with research but are also permitted - contractually - to work in industry and with NGOs to supplement their income and to expand their knowledge of current practice to make their teaching and research more relevant. It isn't illegal or even unusual or suspect and if you are envious of it I suggest you spend 8 years working your way through an ordinary degree, a master's and a doctorate so that you too can participate in it - though don't get your hopes up for "raking it in".
Oh, and they don't work in a system where corruption investigations are used as a pretext to weed out "unreliable elements" who talk about dangerous things that might lead impressionable young people to ask difficult questions about the government in a one-party state.
marknesop.wordpress.comkarl1haushofer, December 3, 2015 at 9:42 amTurkish Stream is now officially cancelled. All the eggs are now in the same basket: Nord Stream II. Hopefully the US/UK/Baltics/Poland front will not be able to stop it. Because otherwise Russia is stuck with Ukraine as a transit country.marknesop, December 3, 2015 at 10:45 amWell, I don't think they want to stop it. They want the gas the same as before – they just want it on their own terms. Brussels wants to exercise control over whose gas goes through the pipeline, so that if they are have a "spat" with Russia, they can stop orders of Russian gas and bring some at-this-moment-unknown supplier's gas through the same pipeline, probably Azerbaijan.kirill , December 3, 2015 at 2:17 pm
Read this 2011 press conference with Gazprom; I found it while looking for a layman's explanation of what the Third Energy Package actually entails. Because it appears what is most unappealing to it from Gazprom's point of view is that it limits vital investment in gas futures, considering it would substantially restrict long-term contracts. They could be happy with you today, buying off your competitors tomorrow. According to Brussels, that's healthy competition which ensures the customer gets the best price, while Gazprom naturally prefers to deal in long-term contracts which lock the customer in, although they are usually willing to talk out a deal if it looks like the customer is really unhappy because unhappy customers are bad for business, even in the gas industry.
Right away, you notice that Europe accepts long-term contracts, but nonetheless takes the position that long-term capacity supply orders upset the market. As Gazprom correctly points out, these two views cannot reasonably coexist.
In 2011, Gazprom was still considering a joint venture with NaftoGaz Ukraine, and intended to actually increase gas transit through Ukraine while simultaneously building South Stream. They were also considering a merger, and Miller said if that came about, Ukrainian gas consumers would pay the same prices as Russia. Look how far they are away from that now – funny old world, innit? Here was Miller's vision, at the time, for a Gazprom-NaftoGaz merger:
"Firstly, Ukraine is an energy-deficient country and the tendency we observe today will continue and develop: gas production in Ukraine will decline and consumption will grow. We proceed from the assumption that the Ukrainian economy will develop successfully. The present-day level of gas consumption clearly shows that Ukraine has not solved all of its economic problems. In this regard, gas supplies to Ukraine will increase in the medium and long term.
Secondly, if a merger takes place, we will load Ukraine's gas transmission system to the extent possible and it surely means additional income that is significant for the Ukrainian budget. At the same time, if the Ukrainian gas transmission system is loaded with some 95 billion cubic meters of gas per year, we know well that it may deliver 120 and even 125 billion cubic meters with a particular level of investments in modernization and reconstruction, of course. And if small investments are made in new compressor stations and pipeline loops, we may probably speak of 140 billion cubic meters of gas. However, we realize that European gas consumption will grow. According to our estimates, gas demand in Europe may grow up to 130-140 billion cubic meters of gas by the turn of 2020."
You can see, I'm sure, why Brussels didn't like it. Under the Third Energy Package, the operator of the gas transit system will be elected by the European Union on a tender basis. You can see, I'm sure, why Gazprom didn't like that. If the merger between Gazprom and NaftoGaz Ukraine had come about, Ukrainians would have paid Russian domestic prices, in a word, forever.
What Europe's position boils down to is it wants a system whereby its suppliers do not own anything of the transit system, and the operator could be anyone depending on who sucks up to Europe the most, so that it can make its suppliers fight with one another and be assured of the cheapest prices. Until that magical sugar-daddy supplier appears that can provide steady and sustained competition to Russia, Europe is not in a very good bargaining position. But you bet that would change fast if the western alliance could get rid of Assad, partition Syria and get a Qatari gas pipeline laid across it.
Here's a poignant reminder of what might have been, which serves to point up who are the real troublemakers:
"Remember the story with biogas, wonderful – 20 per cent by 2020, and mass media start writing that it will enable escaping from dependence on Russia. Then we find out that biogas is there, together with food supply problems, etc. Then we observed the European Union's wonderful program – "20-20-20". I think, there's no need of deciphering it – everyone knows about it. And again mass media say that it will enable reducing dependence on Gazprom and Russia. The same thing is with shale gas. First, no one will cope with shale gas transportation, because it is too expensive, add transport – and it is already a business with no prospects. I have a plea for mass media – would you please stop frightening Europe, stop frightening everyone around with Russia and Gazprom. For Europe it is a real blessing that it has such a powerful neighbor with such conventional gas reserves. Exploration of non-conventionals [N.B.: Non-conventional energy resources] may end with no results, as experience of certain countries shows. So let's live in peace and friendship and contribute to strengthening Russia's contacts and ties with the European Union and Ukraine."See above. It is time for Russia to lay down the law. Russia can go without the $25 billion per year of lost revenues. But whole EU economies will crash into epic depressions without this energy supply. In other words, the EU is looking at TRILLIONS of DOLLARS in economic damage. The Brussels Uncle Scam cocksuckers will have to justify their actions. Russia does not have to since it is the vendor. If you are not happy, then shop the fuck elsewhere, idiots.
Moscow Exile, December 3, 2015 at 4:39 am
Too Late for Apologies: Russia Halts Turk Stream Gas Pipeline
Earlier, during his address to the nation, the Evil One questioned the sanity of the Turkish political leadership, stressing that Russia is nor criticising the Turkish nation for the recent downturn in Russo-Turksh relationships.
marknesop, December 3, 2015 at 7:37 am
Washington will be delighted, as it was one of the hoped-for consequences of the major downturn in relations. Hoped for by Washington and Brussels, I mean. Brussels will now ramp up its rhetoric against Nord Stream II, and if the coalition building it have not got all their ducks in a row the EC will be all too ready to put a stop to it. The objective will be leaving Russia no option but to continue transit through Ukraine, because the transit fees are vital to its solvency. The EU can't afford to give it $2 Billion a year for nothing for as far as the eye can see.
kirill, December 3, 2015 at 2:13 pm
As I posted elsewhere, Russia needs to make a formal announcement that the transit of gas via Ukraine will stop at the end of 2016 regardless of the state of alternative routes. Brussels can then go and eat shit.
likbez, December 3, 2015 at 8:21 pm
It's a pretty tough situation for Putin. No friends anywhere. Everybody want a peace of Russia economically or otherwise. The situation reminds me a Russian cruiser Varyag at the Battle of Chemulpo Bay with the Japanese squadron of Admiral Uriu.
Fledging political alliance of Turkey and Ukraine is not a very good development. Also while economic sanctions are not that damaging to Russia per se as they are for Turkey, they still increase isolation of Russia. Exactly what the USA wanted from the very beginning.
So this whole incident with shooting down Russian Su-24 looks like another victory of the US diplomacy in its efforts to isolate Russia. And it might well be a plot similar to MH17 plot, if you wish. It does not matter if Erdogan acted on his own initiative or with gentle encouragement. The net result is the same.
Also a new Saudi leadership is a pretty impulsive and aggressive folk. And the are definitely adamantly anti-Russian.
marknesop.wordpress.comyalensis, December 3, 2015 at 4:48 pmmarknesop , December 3, 2015 at 6:15 pm
You are burying the lede, which is Congressman Ed Royce's not-so veiled threat against Russia:
"I think what Vladimir Putin should think on, for a minute, is the fact that Moscow itself IS a target. The attack on the Metro-Liner from Russia over Egypt clearly is another message from ISIS. So, at this point what we would like to see is a recalibration on the part of the Russian military. So that instead of attacking the Free Syrian Army and the more secular Syrian forces, they should begin to attack ISIS. So far we haven't seen that."
Translation from American B.S. into plain talk:
"Putin: Stop attacking our guys, we know they are ISIS but we have to pretend they're not. If you keep attacking them, we'll have them commit ever more terror attacks against the Russian people."
The USA is perhaps the worst choice on the planet to ask who is a "moderate rebel" and who is ISIS, as witnessed by their sad-sack training plan for moderate rebels which produced 5 or so whom they say are reliable after spending $500 Million. Obviously they trained many more than 5, but they have no idea where those people or their equipment are now. The real hot button in that article is the mention of General Steven Groves and his operation to "oversee the suppression of assessments showing the war on a perilous trajectory." That's what the American intelligence organs do now – blow smoke up people's asses so they can't see reality.
The New York Times
The intelligence agency's memo risked playing havoc with Berlin's efforts to show solidarity with France in its military campaign against the Islamic State and to push forward the tentative talks on how to end the Syrian civil war. The Bundestag, the lower house of the German Parliament, is due to vote on Friday on whether to send reconnaissance planes, midair fueling capacity and a frigate to the Middle East to support the French.
The memo was sent to selected German journalists on Wednesday. In it, the foreign intelligence agency, known as the BND, offered an unusually frank assessment of recent Saudi policy.
"The cautious diplomatic stance of the older leading members of the royal family is being replaced by an impulsive policy of intervention," said the memo, which was titled "Saudi Arabia - Sunni regional power torn between foreign policy paradigm change and domestic policy consolidation" and was one and a half pages long.
The memo said that King Salman and his son Prince Mohammed bin Salman were trying to build reputations as leaders of the Arab world.
Since taking the throne early this year, King Salman has invested great power in Prince Mohammed, making him defense minister and deputy crown prince and giving him oversight of oil and economic policy. The sudden prominence of such a young and untested prince - he is believed to be about 30, and had little public profile before his father became king - has worried some Saudis and foreign diplomats.
Prince Mohammed is seen as a driving force behind the Saudi military campaign against the Iranian-backed Houthi rebels in Yemen, which human rights groups say has caused thousands of civilian deaths.
... ... ...
In its memo, the BND said that Saudi rivalry with Iran for supremacy in the Middle East, as well as Saudi dependency on the United States, were the main drivers of Saudi foreign policy.
The Saudi-Iranian rivalry plays out throughout the region, the memo said, most recently and strikingly in the Saudi military intervention in Yemen. There, it said, "Saudi Arabia wants to prove that it is ready to take unprecedented military, financial and political risks in order not to fall into a disadvantageous position in the region."
In Syria, Saudi Arabia's aim was always to oust President Bashar al-Assad, and that has not changed, the memo said.
But it suggested that the recent shift in Saudi leadership has added new factors in the Middle East. "The concentration of economic and foreign policy power on Mohammed bin Salman contains the latent danger that, in an attempt to establish himself in the royal succession while his father is still alive, he could overreach with expensive measures or reforms that would unsettle other members of the royal family and the population," the memo observed, adding, "That could overstrain the relations to friendly and above all to allied states in the region."
Dec 1, 2015 | Safehaven.com
Why it matters to those living in the West
To understand what's happening in Syria right now, you have to understand the tactics and motivations of the US and NATO -- parties sharing interwoven aims and goals in the Middle East/North African (MENA) region.
While the populations of Europe and the US are fed raw propaganda about the regional aims involved, the reality is far different.
Where the propaganda claims that various bad dictators have to be taken out, or that democracy is the goal, neither have anything at all to do with what's actually happening or has happened in the region.
For starters, we all know that if oil fields were not at stake then the West would care much much less about MENA affairs.
But a lot of outside interests do care. And their aims certainly and largely include controlling the region's critical energy resources. There's a lot of concern over whether Russia or China will instead come to dominate these last, best oil reserves on the planet.
Further, we can dispense with the idea that the US and NATO have any interest at all in human rights in this story. If they did, then they'd at least have to admit that their strategies and tactics have unleashed immeasurable suffering, as well as created the conditions for lots more. But it would be silly to try and argue about or understand regional motivations through the lenses of human rights or civilian freedoms -- as neither applies here.Divide And Conquer
Instead, the policies in the MENA region are rooted in fracturing the region so that it will be easier to control.
That's a very old tactic; first utilized to a great extent by Britain starting back in the 1700s.
Divide and conquer. There's a reason that's a well-worn catch phrase: it's hundreds of years old.
But to get a handle on the level of depravity involved, I think it useful to examine what happened in Libya in 2011 when NATO took out Muamar Gaddafi and left the country a broken shell -- as was intended.
I cannot really give you a good reason for NATO involving itself in taking out Gaddafi. I only have bad ones.
The official reason was that after the Arab Spring uprising in Libya in early 2011 (with plenty of evidence of Western influences in fanning those flames) things got ugly and protesters were shot. This allowed the UN to declare that it needed to protect civilians, and the ICC to charge Gaddafi with crimes against humanity, declaring that he needed to stand trial.
Here's how it went down:
On 27 June, the ICC issued arrest warrants for Gaddafi, his son Saif al-Islam, and his brother-in-law Abdullah Senussi, head of state security, for charges concerning crimes against humanity. Libyan officials rejected the ICC, claiming that it had "no legitimacy whatsoever" and highlighting that "all of its activities are directed at African leaders".
That month, Amnesty International published their findings, in which they asserted that many of the accusations of mass human rights abuses made against Gaddafist forces lacked credible evidence, and were instead fabrications of the rebel forces which had been readily adopted by the western media.
After the ICC's indictment, it was a hop, skip and a jump to declaring a NATO-enforced 'no fly zone' over Libya to protect civilians.
From there it was just a straight jump to NATO actively shooting anything related to the Gaddafi government. NATO had thereby chosen sides and was directly supporting the rebellion.
The pattern in play here is always the same: cherry-picked events are used as a pretext to support the side seeking to topple the existing government and thereby leave a sectarian wasteland to flourish in the inevitable power vacuum.
If you are like most people in the West, you know almost nothing of any of this context. It's not well reported. And Libya is rarely in the news even though it's going through increasingly desperate times.
I found a speech given by Gaddafi a few months before he was killed to be especially compelling and revealing. I will reproduce it in its entirety here:
For 40 years, or was it longer, I can't remember, I did all I could to give people houses, hospitals, schools, and when they were hungry, I gave them food. I even made Benghazi into farmland from the desert, I stood up to attacks from that cowboy Reagan, when he killed my adopted orphaned daughter, he was trying to kill me, instead he killed that poor innocent child. Then I helped my brothers and sisters from Africa with money for the African Union.
I did all I could to help people understand the concept of real democracy, where people's committees ran our country. But that was never enough, as some told me, even people who had 10 room homes, new suits and furniture, were never satisfied, as selfish as they were they wanted more. They told Americans and other visitors, that they needed "democracy" and "freedom" never realizing it was a cut throat system, where the biggest dog eats the rest, but they were enchanted with those words, never realizing that in America, there was no free medicine, no free hospitals, no free housing, no free education and no free food, except when people had to beg or go to long lines to get soup.
No, no matter what I did, it was never enough for some, but for others, they knew I was the son of Gamal Abdel Nasser, the only true Arab and Muslim leader we've had since Salah-al-Deen, when he claimed the Suez Canal for his people, as I claimed Libya, for my people, it was his footsteps I tried to follow, to keep my people free from colonial domination - from thieves who would steal from us.
Now, I am under attack by the biggest force in military history, my little African son, Obama wants to kill me, to take away the freedom of our country, to take away our free housing, our free medicine, our free education, our free food, and replace it with American style thievery, called "capitalism," but all of us in the Third World know what that means, it means corporations run the countries, run the world, and the people suffer. So, there is no alternative for me, I must make my stand, and if Allah wishes, I shall die by following His path, the path that has made our country rich with farmland, with food and health, and even allowed us to help our African and Arab brothers and sisters to work here with us, in the Libyan Jamahiriya.
I do not wish to die, but if it comes to that, to save this land, my people, all the thousands who are all my children, then so be it.
Let this testament be my voice to the world, that I stood up to crusader attacks of NATO, stood up to cruelty, stood up to betrayal, stood up to the West and its colonialist ambitions, and that I stood with my African brothers, my true Arab and Muslim brothers, as a beacon of light. When others were building castles, I lived in a modest house, and in a tent. I never forgot my youth in Sirte, I did not spend our national treasury foolishly, and like Salah-al-Deen, our great Muslim leader, who rescued Jerusalem for Islam, I took little for myself...
In the West, some have called me "mad", "crazy", but they know the truth yet continue to lie, they know that our land is independent and free, not in the colonial grip, that my vision, my path, is, and has been clear and for my people and that I will fight to my last breath to keep us free, may Allah almighty help us to remain faithful and free.
Gaddafi's great crime seems to be giving away too much oil wealth to his people. Was he a strongman? Yes, but you have to be to rule in that region right now. Was he the worst strong man? No, not by a long shot.
As bad as he was, at least he didn't kill a million Iraqis on trumped up charges of non-existent weapons of mass destruction. Nor was he chopping off 50 heads per week and stoning females for adultery as is the case with Saudi Arabia right now.
But again, whether he killed protestors or not, or committed war crimes or not, is irrelevant to the power structure. What mattered was that he had locked out Western interests, and instead used his country's oil wealth to provide free or extremely cheap health care, education and housing to a wide swath of Libyans.
So let's cut to the murder scene. Here's how it went down:
At around 08:30 local time on 20 October, Gaddafi, his army chief Abu-Bakr Yunis Jabr, his security chief Mansour Dhao, and a group of loyalists attempted to escape in a convoy of 75 vehicles. A Royal Air Force reconnaissance aircraft spotted the convoy moving at high speed, after NATO forces intercepted a satellite phone call made by Gaddafi.
NATO aircraft then fired on 11 of the vehicles, destroying one. A U.S. Predator drone operated from a base near Las Vegas fired the first missiles at the convoy, hitting its target about 3 kilometres (2 mi) west of Sirte. Moments later, French Air Force Rafale fighter jets continued the bombing.
The NATO bombing immobilized much of the convoy and killed dozens of loyalist fighters. Following the first strike, some 20 vehicles broke away from the main group and continued moving south. A second NATO airstrike damaged or destroyed 10 of these vehicles. According to the Financial Times, Free Libya units on the ground also struck the convoy.
According to their statement, NATO was not aware at the time of the strike that Gaddafi was in the convoy. NATO stated that in accordance with Security Council Resolution 1973, it does not target individuals but only military assets that pose a threat. NATO later learned, "from open sources and Allied intelligence," that Gaddafi was in the convoy and that the strike likely contributed to his capture.
To believe NATO, it had no idea Gaddafi was in that convoy (honest!), but just managed to have a Predator drone handy as well as a large number of jets armed for ground targets (not anti-aircraft missiles, as a no-fly zone might imply). It merely struck all of these vehicles over and over again in their quest to kill everyone on board because they were "military assets that posed a threat."
Because you live in the real world, you know that NATO knew exactly where Gaddafi was at all times and that he was in that convoy attempting to escape NATO's bombing raid. Further, you won't be surprised to learn that many of these vehicles were pickup trucks that really posed no military threat to NATO. The point was to kill Gaddafi, and numerous resources were brought to bear on that mission.
Gaddafi's killing was the assassination of a foreign leader by Western interests. In this case, Gaddafi was just yet another target in a long line of leaders that attempted to keep those same interests at bay.
After NATO was finished making a mess of Libya by taking out Gaddafi and leaving a right proper mess of a power vacuum, it simply departed -- leaving the country to fend for itself. Libya descended, of course, into an outright civil war and has remained ever since a hotbed of sectarian violence and increasing ISIS control and presence.
If NATO/US had to follow the Pier I rule of "you break it, you buy it" they would still be in Libya offering money and assistance as the country settles down and begins the long process of rebuilding.
But no such luck. That's absolutely not how they operate. It's disaster capitalism in action. The idea is to break things apart and then make money off of the pieces. It's not to help people.
Otherwise, how do we explain these images?
While imperfect by many standards, all of these countries were stable and increasingly prosperous before outside interests came in and turned them into a living nightmare.
It is this context that explains why such reactionary and violent groups as ISIS arose. They are the natural response of violated people seeking to assert some control over lives that otherwise have no hope and even less meaning.
I'm not justifying ISIS; only explaining the context that led to its rise.
Speaking of which, let's turn back to Libya:
ISIS is tightening its grip in Libya
Nov 15, 2015
GENEVA (Reuters) - Islamic State militants have consolidated control over central Libya, carrying out summary executions, beheadings and amputations, the United Nations said on Monday in a further illustration of the North African state's descent into anarchy.
All sides in Libya's multiple armed conflicts are committing breaches of international law that may amount to war crimes, including abductions, torture and the killing of civilians, according to a U.N. report.
Islamic State (IS) has gained control over swathes of territory, "committing gross abuses including public summary executions of individuals based on their religion or political allegiance", the joint report by the U.N. High Commissioner for Human Rights and the U.N. Support Mission in Libya said.
The U.N. had documented IS executions in their stronghold city of Sirte, in central Libya along the Mediterranean coast, and in Derna to the east, from which they were later ousted by local militias. Victims included Egyptian Copts, Ethiopians, Eritreans and a South Sudanese, the report said.
Some were accused of "treason", others of same-sex relations, but none were given due legal process, according to the report, which covered the year through October.
Four years after the overthrow of Muammar Gaddafi, Libya is locked in a conflict between two rival governments - an official one in the east and a self-declared one controlling the capital Tripoli - and the many armed factions that back them.
After that atrocious summary, how bad does life under Gaddafi sound now? Again, he was targeted for execution by Western interests and the resulting mess is of little surprise to anybody with even modest curiosity about how violent overthrows tend to work out in the MENA region.
But where is the UN security council denouncing the war crimes? And where is the ICC leveling crimes against humanity charges? Nowhere. There's no more Western political interest in Libya now that it has been broken apart.
As they say in the military: once is bad luck, twice is a coincidence, but three times is enemy action. This pattern of eliminating "a very bad man" and leaving the country in a complete mess has happened three times of late, with Syria targeted to be the fourth. So enemy action it is.
ISIS and other extreme jihadist groups arose because of brutal conditions that made such harsh interpretations of ancient religious texts make sense by comparison. When you have nothing left to believe in, one's belief system can compensate by becoming rather inflexible.
I know I have greatly simplified a terribly complex dynamic, but -- speaking of beliefs -- I don't believe that terrorists are born, I believe they are raised. When one has nothing left to lose, then anything becomes possible, including strapping on a suicide belt and flicking the switch.
What I am saying is that this is not a battle between Christians and Muslims, nor is it a battle between good and evil, both characterizations that I've read recently in great abundance. That's all nonsense for the masses.
This is about resources and true wealth that is being siphoned from the people who have had the misfortune to be born on top of it, and towards other regions with greater power and reach.
There's nothing different in what I am reading today from what the British redcoats did in India from the late 1700's throughout the 1800's. Their military might assured that the East India Tea Company could continue to extract resources from the locals.
At the time the locals were called heathens, implying they were subhuman and therefore could be safely dispatched. Now they are called terrorists -- same thing. Dehumanize your foe to help rationalize one's behaviors. It's a tried and true practice of war propaganda.
How This Affects You
While we might be tempted to sit in our Western environs, secure in the idea that at least we aren't 'over there' where all the bad things are happening, it would be a mistake to think that this turmoil will not impact you.
I'm not talking about the ultra-remote chance of being a victim of blow-back terrorism either. I am referring to the idea that it would be a mistake to think that any government(s) that think nothing of ruining entire MENA countries will hesitate to throw anybody else under the bus that gets in their way.
Ben Bernanke gave no thought to throwing granny under the bus in order to help the big banks get even bigger. He willingly and knowing transferred over a trillion dollars away from savers and handed it to the big banks.
Similarly, we shouldn't expect enlightened behavior to emerge from the shadows of leadership once things get even dicer on the world stage. In fact, we should expect the opposite.
It would be a mistake to think that powers in charge would not turn their malign intent inwards toward their own populace if/when necessary. Today it's Syria, yesterday it was Libya, but tomorrow it might be us.
The people of France recently got a small taste of the horror that has been visited upon the people of Iraq, Syria, Yemen and Libya. And while I have no interest in seeing any more violence anywhere, perhaps the people of France will finally begin to ask what happened and why. I don't mean the fine details of the night of the massacre, but how it came to be considered a 'thing to do' at all by the people who did it. (For those unaware, France has been particularly involved for years in fomenting revolt within Syria)
My intention in stringing these dots together is so that we can have an informed discussion about what's happening in Syria and the Middle East at large. I am not at all interested in trying to understand events through the framing lenses of religion and/or 'terrorism', both of which are tools of distraction in my experience.
Instead, I want to understand the power dynamics at play. And to try to peel back the layers, to understand why the powers that be consider this region so important at this moment in history.
I think they know as well as we do that the shale oil revolution is not a revolution at all but a retirement party for an oil industry that has given us everything we hold economically dear but is on its last legs.
I think that the power structures of the next twenty years are going to be utterly shaped by energy - who has it, who needs it and who's controlling it.
Saudi Arabia is acting increasingly desperate here and I think we know why. They have a saying there: "My father rode a camel, I drove a car, my son flies a jet and his son will ride a camel."
They know as well as anyone that their oil wealth will run out someday; and so, too, will the West's interest in them. With no giant military to protect them, the royalty in Saudi Arabia should have some serious concerns about the future.
Heck, it's even worse than that:
Saudi Wells Running Dry -- of Water -- Spell End of Desert Wheat
Nov 3, 2015
Saudi Arabia became a net exporter of wheat in 1984 from producing almost none in the 1970s. The self-sufficiency program became a victim of its own success, however, as it quickly depleted aquifers that haven't been filled since the last Ice Age.
In an unexpected U-turn, the government said in 2008 it was phasing out the policy, reducing purchases of domestic wheat each year by 12.5 percent and bridging the gap progressively with imports.
The last official local harvest occurred in May, although the United Nations Food and Agriculture Organization projects that a small crop of about metric 30,000 tons for traditional specialty bakery products will "prevail" in 2016. At its peak in 1992, Saudi Arabia produced 4.1 million tons of wheat and was one of the world's top 10 wheat exporters.
The Saudis did something very unwise - they pumped an aquifer filled over 10,000 years ago and used it to grow wheat in the desert. Now their wells are running dry and they have no more water.
And yet their population is expanding rapidly even as their oil fields deplete. There's a very bad intersection for Saudi Arabia, and the rulers know it.
It helps to explain their recent actions of lashing out against long-standing regional foes and helps to explain the increasing desperation of their moves to help destabilize (and even bomb) their neighbors.
My point here is that as resources become tight, the ruling powers can be expected to act in increasingly desperate ways. This is a tenet of the Long Emergency of which James Kunstler wrote.
The only response that makes any sense to me, at the individual level, is to reduce your needs and increase your resilience.
This is something we cover in great detail in our new book, Prosper!: How To Prepare for the Future and Create a World Worth Inheriting, so I won't go into all the details here. Instead, my goal is to help cast a clarifying light on recent events and add some necessary detail that can help us more fully appreciate what's happening around the world and why taking prudent preparations today is becoming increasingly urgent.
Zero Hedge... ... ...
Underscoring that contention is CHP lawmaker Eren Erdem who says he, like Moscow, will soon provide proof of Erdogan's role in the smuggling of Islamic State oil. "I have been able to establish that there is a very high probability that Berat Albayrak is linked to the supply of oil by the Daesh terrorists," Erdem said at a press conference on Thursday (see more from Sputnik).
Berat Albayrak is Erodan's son-in-law and is Turkey's Minister of Energy and Natural Resources.
Erdem isn't the only person to mention Albayrak this week. Recall that in his opening remarks at the dramatic Russian MoD presentation on Wednesday Deputy Minister of Defence Anatoly Antonov said the following:
"No one in the West, I wonder, does not cause the issue that the son of the President of Turkey is the leader of one of the largest energy companies, and son-in-appointed Minister of Energy? What a brilliant family business!"
"There is one company, headquartered in Erbil, which in 2012 acquired oil tankers, and which is currently being bombarded by Russian aircraft," Erdem said. "I am now studying this company's records. It has partners in Turkey, and I am checking them for links to Albayrak."
Note that this is entirely consistent with what we said last week, namely that in some cases, ISIS takes advantage of the Kurdish oil transport routes, connections, and infrastructure in Turkey. It will certainly be interesting to see if there's a connection between Albayrak, the energy ministry, and Bilal Erdogan's BMZ Group.
If you know anything about Erdogan, you know that he doesn't take kindly to this kind of thing and as Erdem goes on to account, he's already been the subject of a smear campaign:
"Today, the Takvim newspaper called me an American puppet, an Israeli agent, a supporter of the [Kurdish] PKK, and the instigator of a coup…all in the same sentence. I am inclined to view this attack on me as an attempt to belittle my significance, to attack my reputation in the eyes in the public, given that my investigation is a real threat to the government. Such a sharply negative reaction suggests that my assumptions are fair, and I am moving in the right direction to find the truth."
The lawmaker says that type of attack has "only convinced [him] further on the need to carry this investigation through to the end."
In the meantime, we can only hope that, for the sake of exposing the truth, "the end" doesn't end up being a Turkish jail cell, or worse for Erdem.
Do they make nail guns in Turkey?
Yep, with top brands for JPM, Goldman, RBS, WF, CITI and Deutche. They even self point at you too.
Many loose ends now for Erdogan popping up. How long he can play whack-a-mole until one illuminates paper trail implication between ISIS and Erdogan's masters like McCain, Graham, Nuland?
o r c k
Maybe Erdogan will come up with a "massive" distraction that makes oil-thievery insignificant. Hope not.
The shit is hitting the fan for the turks
Go figure huh?
An old and close, but very conservative and increasingly out of touch with reality friend of mine posted a video some days ago on Facebook. He indicated that he thought it was both funny and also insightful. It seemed highly suspicious to me, so I googled it and found that the person who uploaded it onto you tube stated in the comments on it that it is a spoof. Here is a link that discusses why it is known it is a spoof as well as linking to the video itself and its comments. It has reportedly been widely distributed on the internet by many conservatives who think it is for real, and when I pointed out it is a spoof, my friend defriended me from Facebook. I am frustrated.
So, for those who do not view it, it purports to show a talk show in Egypt where a brief clip of Obama speaking last May to graduating military officers about how climate change is and will be a serious national security issue, something the Pentagon has claimed. He did not say it was the most serious such issue, and at least in the clip he said nothing about Daesh/ISIS/ISIL, although of course he has said a lot about it and not only has US drones attacking it but reportedly we have "boots on the ground" now against them in the form of some Special Ops.
So, the video then goes back to the supposed talk show where they are speaking in Arabic with English subtitles. According to these subtitels, which are partly accurate translations but also wildly inaccurate in many places (my Arabic is good enough that I have parsed out what is what there) the host asks, "Is he insane?" A guest suggests he is on drugs. Another claims he just does what Michelle says and that his biceps are small. Finally a supposed retired general pounds the table and denounces him over Libya policy (that part is for real, although his name is never mentioned) and suggests that Americans should act to remove him from office. Again, conservative commentators have found hilarious and very insightful, with this even holding among commenters to the video aware that it is a mistranslated spoof. Bring these guys on more. Obviously they would be big hits on Fox News.
So, I would like to simply comment further on why Egyptians would be especially upset about Libya, but that them being so against the US is somewhat hypocritical (I also note that there is reason to believe that the supposed general is not a general). Of course Libya is just to the west of Egypt with its eastern portion (Cyrenaica under Rome) often ruled by whomever was ruling Egypt at various times in the past. So there is a strong cultural-historical connection. It is understandable that they would take Libyan matters seriously, and indeed things in Libya have turned into a big mess.
However, the move to bring in outside powers to intervene against Qaddafi in 2011 was instigated by an Egyptian, Abu Moussa. This was right after Mubarak had fallen in the face of massive demonstrations in Egypt. Moussa was both leader of the Arab League and wanting to run for President of Egypt. He got nowhere with the latter, but he did get somewhere with getting
the rest of the world to intervene in Libya. He got the Arab League to support such an intervention, with that move going to the UN Security Council and convincing Russia and China to abstain on the anti-Qaddafi measure. Putin has since complained that those who intervened, UK and France most vigorously with US "leading from behind" on the effort.went beyond the UN mandate. But in any case, Qaddafi was overthrown, not to be replaced by any stable or central power, with Libya an ongoing mess that has remained fragmented since, especially between its historically separate eastern and western parts, something I have posted on here previously.
So, that went badly, but Egyptians blaming the US for this seems to me to be a bit much, pretty hypocritical. It happens to be a fact that the US and Obama are now very unpopular in Egypt. I looked at a poll from a few months ago, and the only nations where the US and Obama were viewed less favorably (although a few not polled such as North Korea) were in order: Russia, Palestinian Territories, Belarus, Lebanon, Iran, and Pakistan, with me suspecting there is now a more favorable view in Iran since the culmination of the nuclear deal. I can appreciate that many Egyptians are frustrated that the US supported an election process that did not give them Moussa or El-Baradei, but the Muslim Brotherhood, who proceeded to behave badly, leading to them being overthrown by an new military dictatorship with a democratic veneer, basically a new improved version of the Mubarak regime, with the US supporting it, if somewhat reluctantly.
Yes, this is all pretty depressing, but I must say that ultimately the Egyptians are responsible for what has gone down in their own nation. And even if those Egyptian commentators, whoever they actually are, are as angry about Obama as they are depicted as being, the fact is that Obama is still more popular there than was George W. Bush at the same time in his presidency, something all these US conservatives so enamored of this bizarre video seem to conveniently forget.
Addenda, 5:10 PM:
1) The people on that video come across almost like The Three Stooges, which highlights the comedic aspect that even fans of Obama are supposed to appreciate, although it does not add to the credibility of the remarks of those so carrying on like a bunch of clowns.
2) Another reason Egyptians may be especially upset about the situation in Libya is that indeed Daesh has a foothold in a port city not too far from the Egyptian border in Surt, as reported as the top story today in the NY Times.
3) Arguably once the rest of the world got in, the big problem was a failure to follow through with aiding establishing a central unified government, although that was always going to be a problem, something not recognized by all too many involved, including Abu Moussa. As it was once his proposal got going, it was then Sec. of State Hillary Clinton who was the main person leading the charge for the US to get in over the reluctance of Obama. This was probably her biggest mistake in all this, even though most Republicans think the irrelevant sideshow of the unfortunate incident in Benghazi is the big deal.
4) Needless to say, Republican views at the time of the intervention were just completely incoherent, as symbolized at one point by Senator Lindsey Graham, who within the space of a single sentence simultaneously argued for the US to do nothing and also to go in full force with the proverbial "boots on the ground."
Further Addendum, 7:10 PM:
One of the pieces of evidence given that supposedly shows that the video is a spoof is that the supposed retired Brigadier General Mahmoud Mansour cannot be found if one googles his name, except in connection with this video. There are some other Egyptians named Mansour who show up, but this guy does not. However, it occurs to me that he might be for real, but simply obscure. After all, Brigadier is the lowest rank of General, one star, with Majors being two star, Lieutenants being three star (even though Majors are above Lieutenants), and with four and five star not having any other rank assigned to them. Furthermore, Egypt has a large military that has run the country for decades, so there may well be a lot of these Brigadier Generals, with many of them amounting to nothing. So, if he is for real, his claim to fame will be from jumping up and down, pounding on a table and calling for the overthrow of the POTUS.
economistsview.typepad.comSyaloch said in reply to anne...,
Yep. I sometimes think that the history of the Arab conquest of East Roman (Byzantine) provinces is purposefully ignored because it doesn't fit into a Western narrative of what Arab Muslim peoples are like.
The modern Islamic fundamentalist movements we see today are actually a fairly recent invention -- Wahhabism for example originated in the 18th century. And their rise to dominance is largely due to meddling by Western governments, which backed these groups to prevent Soviet expansion into the Middle East and southern Asia and to undermine nationalist movements that might oppose Western interests.
marknesop.wordpress.commarknesop, December 2, 2015 at 2:10 pmHere's the evidence that the USA rejects. I particularly enjoyed the satellite imagery of the "ISIS oil hub", at which were parked 3,000 oil trucks. Apparently it escaped detection by the USA and its eagle-eyed coalition. Does it seem realistic that a country which was offered a major and legitimate pipeline deal would rather move its oil around in thousands of tanker trucks? If the oil trucking business were benefiting Assad's regime, don't you think ISIS would have blown it sky-high by now? It's in a region they control and apparently in the middle of open ground, completely unguarded.marknesop, December 2, 2015 at 1:10 pm
The battle lines have been drawn in yet another field of conflict – Russia aims to take down Erdogan, and Washington aims to keep him in his position. It remains to be seen just how embarrassing that will become.Moscow is not backing away at all from accusations that Erdogan's family is personally involved in receiving and trafficking in ISIS oil. In a phenomenon pointed out by others of late, Yahoo comments are now overwhelmingly supportive of Russia on these issues. Not only that, mainstream news are picking up the accusation rapidly. The USA may reject Russia's evidence, but we knew they would do that anyway – the USA would reject a signed confession by Erdogan if they got it from Russia. I don't know why Moscow even bothers to show evidence to the Americans, it would do far better to approach Europeans – especially Germany and France – with its proof. If it could convince Germany, the USA would look a lot more foolish if it said it was all more Russian propaganda and lies.Patient Observer, December 2, 2015 at 2:11 pm
The USA will shield Erdogan for so long as it can, because his country is in a tremendous strategic position and is studded with NATO military installations. Washington certainly does not want to be confronted with a leadership transition it cannot micromanage. It might throw Erdogan under the bus, but not until it has identified and groomed a successor.
It is also significant that rather than groveling for mercy, Russia continues to attack the alliance's credibility, and it is scoring hits.The comment with the most "likes" on a yahoo article on Russian claiming that Turkey is buying ISIS oil (lost the link):marknesop, December 2, 2015 at 2:21 pm
" 542 – likes
First it does not require a high school education to understand in order for ISIS to sell any oil from captured oil fields and or refineries it must have buyers of said oil. Our govt claims to watch everyone and know everything yet with all their tax payer space observations, massive fleet of drones to track ants in the sand they cannot figure out where all the oil goes to fund ISIS?
Our govt is intentionally not stopping this oil from being sold and our leaders aware of this need to be exposed then put on trial then executed. In fact political figures in our country need to be facing firing squads monthly until they tell the truth and serve just our citizens. This in turn makes for a huge employment opportunity both in firing squads and new politicians."The European Union voted to give itself permission to buy oil from "Syrian rebels" to help them overthrow Assad. The only stipulations of who could not benefit from it were "regime-associated" individuals and companies. The agency that must be consulted – the Syrian National Coalition – is based in Turkey and its president is chummy with Erdogan. Come on. Washington is ready to indict and convict Moscow on a hell of a lot less evidence than this on any day you care to name.et Al, December 2, 2015 at 2:43 pmNeuters: Russia says it has proof Turkey involved in Islamic State oil trade
…U.S. officials say coalition air strikes have destroyed hundreds of IS oil trucks while the Russian campaign has mainly targeted opponents of the Syrian government who are not from Islamic State, which is also known as ISIL.
"The irony of the Russians raising this concern is that there's plenty of evidence to indicate that the largest consumer of ISIL oil is actually Bashar al-Assad and his regime, a regime that only remains in place because it is being propped up by the Russians," White House spokesman Josh Earnest said.
The State Department's Toner said U.S. information was that Islamic State was selling oil at the wellheads to middlemen who were involved in smuggling it across the frontier into Turkey…
…The ministry said the Western route took oil produced at fields near the Syrian city of Raqqa to the settlement of Azaz on the border with Turkey.
From there the columns of tanker trucks pass through the Turkish town of Reyhanli, the ministry said, citing what it said were satellite pictures of hundreds of such trucks moving through the border crossing without obstruction.
"There is no inspection of the vehicles carried out … on the Turkish side," said Rudskoy.
Some of the smuggled cargoes go to the Turkish domestic market, while some is exported via the Turkish Mediterranean ports of Iskenderun and Dortyol, the ministry said.
Another main route for smuggled oil, according to the ministry, runs from Deir Ez-zour in Syria to the Syrian border crossing at Al-Qamishli. It said the trucks then took the crude for refining at the Turkish city of Batman….
…The defence ministry officials said the information they released on Wednesday was only part of the evidence they have in their possession, and that they would be releasing further intelligence in the next days and weeks.
I can't wait for that twitter evidence from the State Department and the Pentagon. It should be devastating.
At the end of the Turkish civil war, Turkey threatened to invade Syria with the help of NATO if it continued to offer asylum to the leader of the PKK, Abdullah Öcallan. President Hafez el-Assad thus asked Öcallan to find another refuge, and was obliged to conclude an oral agreement with Turkey. It was agreed that the Turkish army would be allowed to penetrate Syrian territory, within a limit of 8 kilometres, in order to ensure that the PKK could not fire mortars from Syria.
Since the beginning of the current aggression against Syria, the Turkish army has used and abused this privilege - no longer to prevent attacks by the PKK, but to set up training camps for jihadists.
In October 2015, when the Russian military campaign was just starting, and Salih Muslim was beginning the operation of forced Kurdisation of Northern Syria, the famous Turkish whistle-blower, Fuat Avni, announced via Twitter that Turkey was preparing the destruction of a Russian aircraft. This occurred on the 24th November.
From the perspective of the Third Syrian War , the attack was designed to send a message to Russia in order to scare it into defending only Damascus and Lattakia, leaving the rest of the country in the hands of Turkey and its allies.
Technically, the aerial defence of Turkey, like that of all NATO members, is co-ordinated by the CAOC in Torrejón (Spain). The chief of the Turkish air force, General Abidin Ünal, should therefore have given advance warning of his decision to CAOC commander General Rubén García Servert. We do not know if he did so . In any case, President Recep Tayyip Erdoğan confirmed that he himself had validated the order to destroy the Russian plane.
The Russian chief of staff had provided NATO with the flight plans of their aircraft in advance, so that neither the Alliance nor Turkey could ignore the fact that the plane was Russian, despite Turkish allegations to the contrary. Besides this, a NATO AWACS had taken off beforehand from the Greek base in Aktion (close to Preveza) in order to survey the area .
The Russian army bombarded the Sultan Abdülhamid Brigade – from the name of the last Ottoman sultan, infamous for organising the massacre of Oriental Christians. Since the beginning of the war against Syria, the Turkish secret services have never stopped supplying weapons to the Turkmen militias in Northern Syria, and overseeing their operations. The Turkish Press has documented the transfer of at least 2,000 truck-loads of weapons and ammunition - which President Erdoğan has admitted  – the majority of which was immediately distributed to Al-Qaïda by the Turkmen militias. In particular, in 2011, these militias dismantled the 80,000 factories in Aleppo, the Syrian economic capital, and sent the machine tools to Turkey . So, contrary to Turkish allegations, the Russian bombing was not intended to target the Turkmen, but effectively to destroy a terrorist group guilty of organised pillage, according to the definition in international conventions . The Russian bombardment had provoked the flight of 1,500 civilians and caused vigourous protests by Turkey , which addressed a letter to the Security Council .
The Turkish – not Syrian – jihadist, member of the Grey Woves, Alparslan Çelik, is commander of the Turkmen militias in Syria.
The main leader of the Turkmen militias in Syria is Alparslan Çelik, a member of the Grey Wolves, the Turkish neo-fascist party, which is historically linked to the NATO secret services . He claims to have given the order to kill the Russian pilots as they parachuted down .
The Russian plane which was shot down only entered Turkish air-space for 17 seconds, and was hit after it was already in Syrian air-space. However, since Turkey considered that it had annexed the 8-kilometre corridor which it was authorised to enter according to the agreement with ex-President Hafez el-Assad, it may have believed that the intrusion lasted longer. In any case, in order to shoot down the Sukhoï 24, the Turkish fighter had to enter Syrian air-space for 40 seconds .
The Russians had taken no particular measures to protect their bombers, considering that Turkey is an official participant in the fight against terrorist organisations. And an intrusion lasting only a few seconds has never been considered as a " threat to national security " " particularly since Turkey had been informed of the flight plan, and also that it regularly violates the air-space of other states, such as Cyprus.
Immediately solicited by Turkey, NATO called a meeting of the North Atlantic Council, which was unable to issue a resolution, but did its best by asking for a reading of a brief declaration by their General Secretary which called for ... de-escalation -- . Various sources reported profound disagreement within the Council .
The official Saudi Press published an audio recording of an appeal by Turkish military air controllers to the Russian plane warning it against an entry into Turkish air-space . Several AKP politicians commented on this recording and denounced the risks taken by the Russian army. However, the Russian military has denied the authenticity of the recording, and has proved that it is a fake. The Turkish government then denied any implication in the publishing of the recording.
President Putin qualified the destruction of the Soukhoï 24 as a " knife in the back ". He publicly questioned the rôle of Ankara in the financing of Daesh, particularly because of the free transit of stolen petrol across Turkey. The Russian Minister for Foreign Affairs has asked the 4.5 million Russians who had planned to travel to Turkey to cancel their trip, and has restored entry visas for Turkish nationals. By decree, the Kremlin has forbidden all new contracts between Russian persons or organisations and Turkish persons or organisations, including the employment of personnel, the import/export of merchandise, and tourism .
Turkey will regret "more than once" about its shooting down of a Russian bomber jet near the Syrian-Turkish border, Russian President Vladimir Putin said on Dec. 3.
President Vladimir Putin said Turkey's shooting down of a Russian military jet was a "war crime" and that the Kremlin would punish Ankara with additional sanctions, signaling fallout from the incident would be long-lasting and serious.
Putin, who made the comments during his annual state of the nation speech to his country's political elite on Dec. 3, said Russia would not forget the Nov. 24 incident and that he continued to regard it as a terrible betrayal.
"We are not planning to engage in military saber-rattling [with Turkey]," said Putin, after asking for a moment's silence for the two Russian servicemen killed in the immediate aftermath of the incident, and for Russian victims of terrorism.
"But if anyone thinks that having committed this awful war crime, the murder of our people, that they are going to get away with some measures concerning their tomatoes or some limits on construction and other sectors, they are sorely mistaken."
Turkey would have cause to regret its actions "more than once," he said, promising Russia's retaliatory actions would be neither hysterical nor dangerous.
In his aggressive remarks unusual in diplomatic tongue, Putin said "it appears that Allah decided to punish the ruling clique of Turkey by depriving them of wisdom and judgment."
Putin said Moscow's anger over the incident was directed "at particular individuals" and not at the Turkish people.
Dec 03, 2015 | TomDispatch
Let's consider the two parties in Washington. I'm not referring to the Republican and Democratic ones, but our capital's war parties (there being no peace party, of course). They might be labeled the More War Party and the Much (or Much, Much) More War Party. Headed by President Obama, the first is distinctly a minority grouping. In a capital city in which, post-Paris, war seems to be the order of the day, it's the party of relative restraint, as the president has clearly grasped the obvious: for the last 14 years, the more wholeheartedly the U.S. has gone into any situation in the Greater Middle East, militarily speaking, the worse it has turned out.
Having promised to get us out of two wars and being essentially assured of leaving us in at least three (and various other conflicts on the side), he insists that a new invasion or even a large-scale infusion of American troops, aka "boots on the ground," in Syria or Iraq is a no-go for him. The code word he uses for his version of more war -- since less war is simply not an option on that "table" in Washington where all options are evidently kept -- is "intensification." Once upon a time, it might have been called "escalation" or "mission creep." The president has pledged to merely "intensify" the war he's launched, however reluctantly, in Syria and the one he's re-launched in Iraq. This seems to mean more of exactly what he's already ordered into the fray: more air power, more special forces boots more or less on the ground in Syria, more special ops raiders sent into Iraq, and perhaps more military advisers ever nearer to the action in that country as well. This is as close as you're likely to get in present-day America, at least in official circles, to an antiwar position.
In the Much (or Much, Much) More War party, Republicans and Democrats alike are explicitly or implicitly criticizing the president for his "weak" policies and for "leading from behind" against the Islamic State. They propose solutions ranging from instituting "no-fly zones" in northern Syria to truly intensifying U.S. air strikes, to sending in local forces backed and led by American special operators (à la Afghanistan 2001), to sending in far more American troops, to simply putting masses of American boots on the ground and storming the Islamic State's capital, Raqqa. After fourteen years in which so many similar "solutions" have been tried and in the end failed miserably in the Greater Middle East or North Africa, all of it, as if brand new, is once again on that table in Washington.
Aside from long-shots Bernie Sanders and Rand Paul, any candidate likely to enter the Oval Office in January 2017 will be committed to some version of much-more war, including obviously Donald Trump, Marco ("clash of civilizations") Rubio, and Hillary Clinton, who recently gave a hawkish speech at the Council on Foreign Relations on her version of war policy against the Islamic State. Given that stark reality, this is a perfect moment to explore what much-more war (call it, in fact, "World War IV") might actually mean and how it might play out in our world -- and TomDispatch regular Andrew Bacevich is the perfect person to do it. Tom
Beyond ISIS: The Folly of World War IV
By Andrew J. Bacevich
Assume that the hawks get their way -- that the United States does whatever it takes militarily to confront and destroy ISIS. Then what?
Answering that question requires taking seriously the outcomes of other recent U.S. interventions in the Greater Middle East. In 1991, when the first President Bush ejected Saddam Hussein's army from Kuwait, Americans rejoiced, believing that they had won a decisive victory. A decade later, the younger Bush seemingly outdid his father by toppling the Taliban in Afghanistan and then making short work of Saddam himself -- a liberation twofer achieved in less time than it takes Americans to choose a president. After the passage of another decade, Barack Obama got into the liberation act, overthrowing the Libyan dictator Muammar Gaddafi in what appeared to be a tidy air intervention with a clean outcome. As Secretary of State Hillary Clinton memorably put it, "We came, we saw, he died." End of story.
In fact, subsequent events in each case mocked early claims of success or outright victory. Unanticipated consequences and complications abounded. "Liberation" turned out to be a prelude to chronic violence and upheaval.
Indeed, the very existence of the Islamic State (ISIS) today renders a definitive verdict on the Iraq wars over which the Presidents Bush presided, each abetted by a Democratic successor. A de facto collaboration of four successive administrations succeeded in reducing Iraq to what it is today: a dysfunctional quasi-state unable to control its borders or territory while serving as a magnet and inspiration for terrorists.
The United States bears a profound moral responsibility for having made such a hash of things there. Were it not for the reckless American decision to invade and occupy a nation that, whatever its crimes, had nothing to do with 9/11, the Islamic State would not exist. Per the famous Pottery Barn Rule attributed to former Secretary of State Colin Powell, having smashed Iraq to bits a decade ago, we can now hardly deny owning ISIS.
That the United States possesses sufficient military power to make short work of that "caliphate" is also the case. True, in both Syria and Iraq the Islamic State has demonstrated a disturbing ability to capture and hold large stretches of desert, along with several population centers. It has, however, achieved these successes against poorly motivated local forces of, at best, indifferent quality.
In that regard, the glibly bellicose editor of the Weekly Standard, William Kristol, is surely correct in suggesting that a well-armed contingent of 50,000 U.S. troops, supported by ample quantities of air power, would make mincemeat of ISIS in a toe-to-toe contest. Liberation of the various ISIS strongholds like Fallujah and Mosul in Iraq and Palmyra and Raqqa, its "capital," in Syria would undoubtedly follow in short order.
In the wake of the recent attacks in Paris, the American mood is strongly trending in favor of this sort of escalation. Just about anyone who is anyone -- the current occupant of the Oval Office partially excepted -- favors intensifying the U.S. military campaign against ISIS. And why not? What could possibly go wrong? As Kristol puts it, "I don't think there's much in the way of unanticipated side effects that are going to be bad there."
It's an alluring prospect. In the face of a sustained assault by the greatest military the world has ever seen, ISIS foolishly (and therefore improbably) chooses to make an Alamo-like stand. Whammo! We win. They lose. Mission accomplished.
Of course, that phrase recalls the euphoric early reactions to Operations Desert Storm in 1991, Enduring Freedom in 2001, Iraqi Freedom in 2003, and Odyssey Dawn, the Libyan intervention of 2011. Time and again the unanticipated side effects of U.S. military action turned out to be very bad indeed. In Kabul, Baghdad, or Tripoli, the Alamo fell, but the enemy dispersed or reinvented itself and the conflict continued. Assurances offered by Kristol that this time things will surely be different deserve to be taken with more than a grain of salt. Pass the whole shaker.
Embracing Generational War
Why this repeated disparity between perceived and actual outcomes? Why have apparent battlefield successes led so regularly to more violence and disorder? Before following Kristol's counsel, Americans would do well to reflect on these questions.
Cue Professor Eliot A. Cohen. Shortly after 9/11, Cohen, one of this country's preeminent military thinkers, characterized the conflict on which the United States was then embarking as "World War IV." (In this formulation, the Cold War becomes World War III.) Other than in certain neoconservative quarters, the depiction did not catch on. Yet nearly a decade-and-a-half later, the Johns Hopkins professor and former State Department official is sticking to his guns. In an essay penned for the American Interest following the recent Paris attacks, he returns to his theme. "It was World War IV in 2001," Cohen insists. "It is World War IV today." And to our considerable benefit he spells out at least some of the implications of casting the conflict in such expansive and evocative terms.
Now I happen to think that equating our present predicament in the Islamic world with the immensely destructive conflicts of the prior century is dead wrong. Yet it's a proposition that Americans at this juncture should contemplate with the utmost seriousness.
In the United States today, confusion about what war itself signifies is widespread. Through misuse, misapplication, and above all misremembering, we have distorted the term almost beyond recognition. As one consequence, talk of war comes too easily off the tongues of the unknowing.
Not so with Cohen. When it comes to war, he has no illusions. Addressing that subject, he illuminates it, enabling us to see what war entails. So in advocating World War IV, he performs a great service, even if perhaps not the one he intends.
What will distinguish the war that Cohen deems essential? "Begin with endurance," he writes. "This war will probably go on for the rest of my life, and well into my children's." Although American political leaders seem reluctant "to explain just how high the stakes are," Cohen lays them out in direct, unvarnished language. At issue, he insists, is the American way of life itself, not simply "in the sense of rock concerts and alcohol in restaurants, but the more fundamental rights of freedom of speech and religion, the equality of women, and, most essentially, the freedom from fear and freedom to think."
With so much on the line, Cohen derides the Obama administration's tendency to rely on "therapeutic bombing, which will temporarily relieve the itch, but leave the wounds suppurating." The time for such half-measures has long since passed. Defeating the Islamic State and "kindred movements" will require the U.S. to "kill a great many people." To that end Washington needs "a long-range plan not to 'contain' but to crush" the enemy. Even with such a plan, victory will be a long way off and will require "a long, bloody, and costly process."
Cohen's candor and specificity, as bracing as they are rare, should command our respect. If World War IV describes what we are in for, then eliminating ISIS might figure as a near-term imperative, but it can hardly define the endgame. Beyond ISIS loom all those continually evolving "kindred movements" to which the United States will have to attend before it can declare the war itself well and truly won.
To send just tens of thousands of U.S. troops to clean up Syria and Iraq, as William Kristol and others propose, offers at best a recipe for winning a single campaign. Winning the larger war would involve far more arduous exertions. This Cohen understands, accepts, and urges others to acknowledge.
And here we come to the heart of the matter. For at least the past 35 years -- that is, since well before 9/11 -- the United States has been "at war" in various quarters of the Islamic world. At no point has it demonstrated the will or the ability to finish the job. Washington's approach has been akin to treating cancer with a little bit of chemo one year and a one-shot course of radiation the next. Such gross malpractice aptly describes U.S. military policy throughout the Greater Middle East across several decades.
While there may be many reasons why the Iraq War of 2003 to 2011 and the still longer Afghanistan War yielded such disappointing results, Washington's timidity in conducting those campaigns deserves pride of place. That most Americans might bridle at the term "timidity" reflects the extent to which they have deluded themselves regarding the reality of war.
In comparison to Vietnam, for example, Washington's approach to waging its two principal post-9/11 campaigns was positively half-hearted. With the nation as a whole adhering to peacetime routines, Washington neither sent enough troops nor stayed anywhere near long enough to finish the job. Yes, we killed many tens of thousands of Iraqis and Afghans, but if winning World War IV requires, as Cohen writes, that we "break the back" of the enemy, then we obviously didn't kill nearly enough.
Nor were Americans sufficiently willing to die for the cause. In South Vietnam, 58,000 G.I.s died in a futile effort to enable that country to survive. In Iraq and Afghanistan, where the stakes were presumably much higher, we pulled the plug after fewer than 7,000 deaths.
Americans would be foolish to listen to those like William Kristol who, even today, peddle illusions about war being neat and easy. They would do well instead to heed Cohen, who knows that war is hard and ugly.
What Would World War IV Look Like?
Yet when specifying the practical implications of generational war, Cohen is less forthcoming. From his perspective, this fourth iteration of existential armed conflict in a single century is not going well. But apart from greater resolve and bloody-mindedness, what will it take to get things on the right track?
As a thought experiment, let's answer that question by treating it with the urgency that Cohen believes it deserves. After 9/11, certain U.S. officials thundered about "taking the gloves off." In practice, however, with the notable exception of policies permitting torture and imprisonment without due process, the gloves stayed on. Take Cohen's conception of World War IV at face value and that will have to change.
For starters, the country would have to move to something like a war footing, enabling Washington to raise a lot more troops and spend a lot more money over a very long period of time. Although long since banished from the nation's political lexicon, the M-word -- mobilization -- would make a comeback. Prosecuting a generational war, after all, is going to require the commitment of generations.
Furthermore, if winning World War IV means crushing the enemy, as Cohen emphasizes, then ensuring that the enemy, once crushed, cannot recover would be hardly less important. And that requirement would prohibit U.S. forces from simply walking away from a particular fight even -- or especially -- when it might appear won.
At the present moment, defeating the Islamic State ranks as Washington's number one priority. With the Pentagon already claiming a body count of 20,000 ISIS fighters without notable effect, this campaign won't end anytime soon. But even assuming an eventually positive outcome, the task of maintaining order and stability in areas that ISIS now controls will remain. Indeed, that task will persist until the conditions giving rise to entities like ISIS are eliminated. Don't expect French President François Hollande or British Prime Minister David Cameron to sign up for that thankless job. U.S. forces will own it. Packing up and leaving the scene won't be an option.
How long would those forces have to stay? Extrapolating from recent U.S. occupations in Iraq and Afghanistan, something on the order of a quarter-century seems like a plausible approximation. So should our 45th president opt for a boots-on-the-ground solution to ISIS, as might well be the case, the privilege of welcoming the troops home could belong to the 48th or 49th occupant of the White House.
In the meantime, U.S. forces would have to deal with the various and sundry "kindred movements" that are already cropping up like crabgrass in country after country. Afghanistan -- still? again? -- would head the list of places requiring U.S. military attention. But other prospective locales would include such hotbeds of Islamist activity as Lebanon, Libya, Palestine, Somalia, and Yemen, along with several West African countries increasingly beset with insurgencies. Unless Egyptian, Pakistani, and Saudi security forces demonstrate the ability (not to mention the will) to suppress the violent radicals in their midst, one or more of those countries could also become the scene of significant U.S. military action.
Effective prosecution of World War IV, in other words, would require the Pentagon to plan for each of these contingencies, while mustering the assets needed for implementation. Allies might kick in token assistance -- tokenism is all they have to offer -- but the United States will necessarily carry most of the load.
What Would World War IV Cost?
During World War III (aka the Cold War), the Pentagon maintained a force structure ostensibly adequate to the simultaneous prosecution of two and a half wars. This meant having the wherewithal to defend Europe and the Pacific from communist aggression while still leaving something for the unexpected. World War IV campaigns are unlikely to entail anything on the scale of the Warsaw Pact attacking Western Europe or North Korea invading the South. Still, the range of plausible scenarios will require that U.S. forces be able to take on militant organizations C and D even while guarding against the resurgence of organizations A and B in altogether different geographic locations.
Even though Washington may try whenever possible to avoid large-scale ground combat, relying on air power (including drones) and elite Special Operations forces to do the actual killing, post-conflict pacification promises to be a manpower intensive activity. Certainly, this ranks as one of the most obvious lessons to emerge from World War IV's preliminary phases: when the initial fight ends, the real work begins.
U.S. forces committed to asserting control over Iraq after the invasion of 2003 topped out at roughly 180,000. In Afghanistan, during the Obama presidency, the presence peaked at 110,000. In a historical context, these are not especially large numbers. At the height of the Vietnam War, for example, U.S. troop strength in Southeast Asia exceeded 500,000.
In hindsight, the Army general who, before the invasion of 2003, publicly suggested that pacifying postwar Iraq would require "several hundred thousand troops" had it right. A similar estimate applies to Afghanistan. In other words, those two occupations together could easily have absorbed 600,000 to 800,000 troops on an ongoing basis. Given the Pentagon's standard three-to-one rotation policy, which assumes that for every unit in-country, a second is just back, and a third is preparing to deploy, you're talking about a minimum requirement of between 1.8 and 2.4 million troops to sustain just two medium-sized campaigns -- a figure that wouldn't include some number of additional troops kept in reserve for the unexpected.
In other words, waging World War IV would require at least a five-fold increase in the current size of the U.S. Army -- and not as an emergency measure but a permanent one. Such numbers may appear large, but as Cohen would be the first to point out, they are actually modest when compared to previous world wars. In 1968, in the middle of World War III, the Army had more than 1.5 million active duty soldiers on its rolls -- this at a time when the total American population was less than two-thirds what it is today and when gender discrimination largely excluded women from military service. If it chose to do so, the United States today could easily field an army of two million or more soldiers.
Whether it could also retain the current model of an all-volunteer force is another matter. Recruiters would certainly face considerable challenges, even if Congress enhanced the material inducements for service, which since 9/11 have already included a succession of generous increases in military pay. A loosening of immigration policy, granting a few hundred thousand foreigners citizenship in return for successfully completing a term of enlistment might help. In all likelihood, however, as with all three previous world wars, waging World War IV would oblige the United States to revive the draft, a prospect as likely to be well-received as a flood of brown and black immigrant enlistees. In short, going all out to create the forces needed to win World War IV would confront Americans with uncomfortable choices.
The budgetary implications of expanding U.S. forces while conducting a perpetual round of what the Pentagon calls "overseas contingency operations" would also loom large. Precisely how much money an essentially global conflict projected to extend well into the latter half of the century would require is difficult to gauge. As a starting point, given the increased number of active duty forces, tripling the present Defense Department budget of more than $600 billion might serve as a reasonable guess.
At first glance, $1.8 trillion annually is a stupefyingly large figure. To make it somewhat more palatable, a proponent of World War IV might put that number in historical perspective. During the first phases of World War III, for example, the United States routinely allocated 10% or more of total gross domestic product (GDP) for national security. With that GDP today exceeding $17 trillion, apportioning 10% to the Pentagon would give those charged with managing World War IV a nice sum to work with and no doubt to build upon.
Of course, that money would have to come from somewhere. For several years during the last decade, sustaining wars in Iraq and Afghanistan pushed the federal deficit above a trillion dollars. As one consequence, the total national debt now exceeds annual GDP, having tripled since 9/11. How much additional debt the United States can accrue without doing permanent damage to the economy is a question of more than academic interest.
To avoid having World War IV produce an endless string of unacceptably large deficits, ratcheting up military spending would undoubtedly require either substantial tax increases or significant cuts in non-military spending, including big-ticket programs like Medicare and social security -- precisely those, that is, which members of the middle class hold most dear.
In other words, funding World War IV while maintaining a semblance of fiscal responsibility would entail the kind of trade-offs that political leaders are loathe to make. Today, neither party appears up to taking on such challenges. That the demands of waging protracted war will persuade them to rise above their partisan differences seems unlikely. It sure hasn't so far.
The Folly of World War IV
In his essay, Cohen writes, "we need to stop the circumlocutions." Of those who would bear the direct burden of his world war, he says, "we must start telling them the truth." He's right, even if he himself is largely silent about what the conduct of World War IV is likely to exact from the average citizen.
As the United States enters a presidential election year, plain talk about the prospects of our ongoing military engagement in the Islamic world should be the order of the day. The pretense that either dropping a few more bombs or invading one or two more countries will yield a conclusive outcome amounts to more than an evasion. It is an outright lie.
As Cohen knows, winning World War IV would require dropping many, many more bombs and invading, and then occupying for years to come, many more countries. After all, it's not just ISIS that Washington will have to deal with, but also its affiliates, offshoots, wannabes, and the successors almost surely waiting in the wings. And don't forget al-Qaeda.
Cohen believes that we have no alternative. Either we get serious about fighting World War IV the way it needs to be fought or darkness will envelop the land. He is undeterred by the evidence that the more deeply we insert our soldiers into the Greater Middle East the more concerted the resistance they face; that the more militants we kill the more we seem to create; that the inevitable, if unintended, killing of innocents only serves to strengthen the hand of the extremists. As he sees it, with everything we believe in riding on the outcome, we have no choice but to press on.
While listening carefully to Cohen's call to arms, Americans should reflect on its implications. Wars change countries and people. Embracing his prescription for World War IV would change the United States in fundamental ways. It would radically expand the scope and reach of the national security state, which, of course, includes agencies beyond the military itself. It would divert vast quantities of wealth to nonproductive purposes. It would make the militarization of the American way of life, a legacy of prior world wars, irreversible. By sowing fear and fostering impossible expectations of perfect security, it would also compromise American freedom in the name of protecting it. The nation that decades from now might celebrate VT Day -- victory over terrorism -- will have become a different place, materially, politically, culturally, and morally.
In my view, Cohen's World War IV is an invitation to collective suicide. Arguing that no alternative exists to open-ended war represents not hard-nosed realism, but the abdication of statecraft. Yet here's the ultimate irony: even without the name, the United States has already embarked upon something akin to a world war, which now extends into the far reaches of the Islamic world and spreads further year by year.
Incrementally, bit by bit, this nameless war has already expanded the scope and reach of the national security apparatus. It is diverting vast quantities of wealth to nonproductive purposes even as it normalizes the continuing militarization of the American way of life. By sowing fear and fostering impossible expectations of perfect security, it is undermining American freedom in the name of protecting it, and doing so right before our eyes.
Cohen rightly decries the rudderless character of the policies that have guided the (mis)conduct of that war thus far. For that critique we owe him a considerable debt. But the real problem is the war itself and the conviction that only through war can America remain America.
For a rich and powerful nation to conclude that it has no choice but to engage in quasi-permanent armed conflict in the far reaches of the planet represents the height of folly. Power confers choice. As citizens, we must resist with all our might arguments that deny the existence of choice. Whether advanced forthrightly by Cohen or fecklessly by the militarily ignorant, such claims will only perpetuate the folly that has already lasted far too long.
Andrew J. Bacevich, a TomDispatch regular, is professor emeritus of history and international relations at Boston University. He is the author of Breach of Trust: How Americans Failed Their Soldiers and Their Country, among other works. His new book, America's War for the Greater Middle East (Random House), is due out in April 2016.
Follow TomDispatch on Twitter and join us on Facebook. Check out the newest Dispatch Book, Nick Turse's Tomorrow's Battlefield: U.S. Proxy Wars and Secret Ops in Africa, and Tom Engelhardt's latest book, Shadow Government: Surveillance, Secret Wars, and a Global Security State in a Single-Superpower World.
Copyright 2015 Andrew J. Bacevich
A Russian military expert and columnist of the journal Arsenal of the Fatherland explains the details of the downing of the bomber and why not all went smoothly in an interview to the news agency Regnum
How did it all happen?
A U.S. Air Force Boeing E-3 Sentry AWACS plane took off on 24 November from the Preveza airbase in Greece. A second E-3A of the Saudi Arabian air force took off from the Riyadh airbase. Both planes were executing a common task-determining the precise location of Russian aircraft. It is they that picked the "victim."
The American E-3A was supposed to determine the activity of the Su-24M2's onboard targeting radar, to determine if it was in search mode or if it had already locked on to a target and was processing launch data. It is known that the AWACS can direct the activity of aircraft in battle, conveying information to their avionics and flight computers.
That is, to determine how defenseless was our plane?
As it turns out, yes. As we know, the Su-24M2 was returning from its mission, and its flight computer was operating in "navigation" mode in tandem with the GLONASS [Russian GPS system.] It was returning to base and was not preparing for action. The whole time, the E-3s were transferring detailed information about the Su-24M2 to a pair of Turkish F-16CJ's. This plane [the F-16CJ] had been specifically built for Turkey. Its distinctive feature is a computer that controls a new, AN/APG-68 radar system, and which fulfills the role of a copilot-navigator.
But this information is obviously not enough to precision-strike a small target. Was something else used?
Indeed, the interception accuracy of the F-16CJ fighters was augmented by ground-based U.S. Patriot air defense systems, which are deployed in Turkey, or more precisely, their multirole AN/MPQ-53 radars. The Patriot can work with an E-3 or with MENTOR spy satellites, and it can't be ruled out that the satellite assets involved the Geosat space system as well.
The flight trajectory of the F-16CJ indicates a precision interception of its target by means of triangulation: A pair of E-3s plus the Patriot's air defense radar plus the geostationary MENTOR spy satellites plus, possibly, the Geosat space system.
Besides which, the E-3s provided guidance as to the location of our plane in the air; they determined its route, speed, and the status of its weapons control systems; and the Patriot's air defense radar together with the MENTOR spy satellite provided telemetry on the SU-24M2's movement relative to the ground surface-that is, it provided a precise prediction as to where our plane would be visible relative to the mountainous terrain.
So it turns out that the Turkish fighters knew with absolutely certainty where to wait in ambush for our plane?
Of course. A pair of F-16CJ's flew to the [missile] launch zone and, at a distance of 4-6 kilometers, practically point blank!, launched an AIM-9X Sidewinder air-to-air missile into the rear hemisphere of our Russian bomber. Besides which, the AN/APG-68 onboard radar of the fighter which launched the missile, was working in "target illumination" mode. That is, it turned on at the moment of launch, and turned off as soon as the missile definitively locked on to its target.
Did our pilots have a chance to save their plane?
No. The Su-24M2 crew's probability of escaping destruction was equal to zero…
…Turkey does not have its own capabilities for such a detailed and very precise operation. And don't forget about the second E-3, from the Kingdom of Saudi Arabia. The whole scenario was very fast-moving, lasting just seconds.
Did it really happen that smoothly?
The Turks nonetheless committed one mistake, which led to their provocation not quite working out. The F-16CJ went out on its interception two minutes late, when the Su-24M2 had already left the disputed 68-kilometer zone in the north of Syria [this may be referring to the Turk's self-styled no-fly-zone against Assad]; to leave it required at most 1.5 minutes. But the "kill" command to the F-16CJ had not been revoked; thus the missile launch was carried out a bit further than the intended point. This is confirmed by the fact that the [Turkish TV] footage of the Su-24M2's fall was planned to be filmed from both Syrian territory and Turkish territory; however, the "Syrian footage" is more detailed. It appears that this saved our navigator. He was able to go into the woods and wait for a rescue team.
November 21, 2015 | naked capitalism
By Wolf Richter, a San Francisco based executive, entrepreneur, start up specialist, and author, with extensive international work experience. Originally published at Wolf Street.
Magic trick turns into toxic mix.
Stocks have been on a tear to nowhere this year. Now investors are praying for a Santa rally to pull them out of the mire. They're counting on desperate amounts of share buybacks that companies fund by loading up on debt. But the magic trick that had performed miracles over the past few years is backfiring.
And there's a reason.
IBM has blown $125 billion on buybacks since 2005, more than the $111 billion it invested in capital expenditures and R&D. It's staggering under its debt, while revenues have been declining for 14 quarters in a row. It cut its workforce by 55,000 people since 2012. And its stock is down 38% since March 2013.
Big-pharma icon Pfizer plowed $139 billion into buybacks and dividends in the past decade, compared to $82 billion in R&D and $18 billion in capital spending. 3M spent $48 billion on buybacks and dividends, and $30 billion on R&D and capital expenditures. They're all doing it.
"Activist investors" – hedge funds – have been clamoring for it. An investigative report by Reuters, titled The Cannibalized Company, lined some of them up:
In March, General Motors Co acceded to a $5 billion share buyback to satisfy investor Harry Wilson. He had threatened a proxy fight if the auto maker didn't distribute some of the $25 billion cash hoard it had built up after emerging from bankruptcy just a few years earlier.
DuPont early this year announced a $4 billion buyback program – on top of a $5 billion program announced a year earlier – to beat back activist investor Nelson Peltz's Trian Fund Management, which was seeking four board seats to get its way.
In March, Qualcomm Inc., under pressure from hedge fund Jana Partners, agreed to boost its program to purchase $10 billion of its shares over the next 12 months; the company already had an existing $7.8 billion buyback program and a commitment to return three quarters of its free cash flow to shareholders.
And in July, Qualcomm announced 5,000 layoffs. It's hard to innovate when you're trying to please a hedge fund.
CEOs with a long-term outlook and a focus on innovation and investment, rather than financial engineering, come under intense pressure.
"None of it is optional; if you ignore them, you go away," Russ Daniels, a tech executive with 15 years at Apple and 13 years at HP, told Reuters. "It's all just resource allocation," he said. "The situation right now is there are a lot of investors who believe that they can make a better decision about how to apply that resource than the management of the business can."
Nearly 60% of the 3,297 publicly traded non-financial US companies Reuters analyzed have engaged in share buybacks since 2010. Last year, the money spent on buybacks and dividends exceeded net income for the first time in a non-recession period.
This year, for the 613 companies that have reported earnings for fiscal 2015, share buybacks hit a record $520 billion. They also paid $365 billion in dividends, for a total of $885 billion, against their combined net income of $847 billion.
Buybacks and dividends amount to 113% of capital spending among companies that have repurchased shares since 2010, up from 60% in 2000 and from 38% in 1990. Corporate investment is normally a big driver in a recovery. Not this time! Hence the lousy recovery.
Financial engineering takes precedence over actual engineering in the minds of CEOs and CFOs. A company buying its own shares creates additional demand for those shares. It's supposed to drive up the share price. The hoopla surrounding buyback announcements drives up prices too. Buybacks also reduce the number of outstanding shares, thus increase the earnings per share, even when net income is declining.
"Serving customers, creating innovative new products, employing workers, taking care of the environment … are NOT the objectives of firms," sais Itzhak Ben-David, a finance professor of Ohio State University, a buyback proponent, according to Reuters. "These are components in the process that have the goal of maximizing shareholders' value."
But when companies load up on debt to fund buybacks while slashing investment in productive activities and innovation, it has consequences for revenues down the road. And now that magic trick to increase shareholder value has become a toxic mix. Shares of buyback queens are getting hammered.
Citigroup credit analysts looked into the extent to which this is happening – and why. Christine Hughes, Chief Investment Strategist at OtterWood Capital, summarized the Citi report this way: "This dynamic of borrowing from bondholders to pay shareholders may be coming to an end…."
Their chart (via OtterWood Capital) shows that about half of the cumulative outperformance of these buyback queens from 2012 through 2014 has been frittered away this year, as their shares, IBM-like, have swooned:
Mbuna, November 21, 2015 at 7:31 am
Me thinks Wolf is slightly barking up the wrong tree here. What needs to be looked at is how buy backs affect executive pay. "Shareholder value" is more often than not a ruse?
ng, November 21, 2015 at 8:58 am
probably, in some or most cases, but the effect on the stock is the same.
Alejandro, November 21, 2015 at 9:19 am
Interesting that you mention ruse, relating to "buy-backs"…from my POV, it seems like they've legalized insider trading or engineered (a) loophole(s).
On a somewhat related perspective on subterfuge. The language of "affordability" has proven to be insidiously clever. Not only does it reinforce and perpetuate the myth of "deserts", but camouflages the means of embezzling the means of distribution. Isn't distribution, really, the only rational purpose of finance, i.e., as a means of distribution as opposed to a means of embezzlement?
Jim, November 21, 2015 at 10:42 am