British citizens seeking yet another reason to vote Brexit, have one in spades.
The roots of this reason go back to last year when European Commission president Jean Claude Juncker hatched a 3-year plan to leverage €20 billion in seed capital to produce a €300 billion gain in Eurozone investment.
As one might expected, the results are nonexistent even though Juncker has already used up the €20 billion in seed capital.
Juncker now wants to up the seed capital, make the plan permanent, and extend the plan outside the EU to immigration zones such as Syria and Africa!
Here’s the kicker. The UK ponied up the biggest share of this monstrous boondoggle so far.
UK Makes the Biggest Contribution to the Juncker Plan
The UK may be a Eurosceptic country, but it has made the biggest contribution to the flagship project of the Commission led by Jean-Claude Juncker – the €315 billion Investment Plan for Europe designed to stimulate the EU’s post-crisis economy.
The UK announced yesterday (16 July) it will contribute £6 billion (about €8.5 billion) to projects benefiting from finance by the European Fund for Strategic Investments (EFSI),better known as the Juncker Plan. This is in fact the biggest contribution so far.
The plan is based on a 15-fold leverage of a limited €21 billion of initial public money. As Juncker explained, the fund will be called European Fund for Strategic Investments (EFSI), guaranteed with public money from the EU budget and the European Investment Bank (EIB). The Fund will be able to mobilize €315 billion over the next three years.
The Commission has put up €8 billion from the EU budget. This backs up a €16 billion guarantee given to the Fund. Topped up by another €5 billion from the EIB, the sum totals €21 billion.
In addition, the European Investment Bank (EIB) can give out loans of €63 billion. But private investors will be pitching in the remaining €252 billion.
Juncker warned about national wish-lists, and said there was no guarantee how much they would profit from the fund, if they contribute to it.
Brussels Extends the “Juncker Plan” Beyond 2018 and Outside the EU
The European Commission wants to give new impetus to the Juncker Plan, which aims to mobilize investments of over €300 billion by mid-2018. Brussels announced today that the project will be extended by at least two additional years, and aims to make it permanent. The executive arm of the EU will also seek to finance investments outside Europe, in conflict areas and projects related to immigration.
Juncker does not stop there: the head of the Commission shall submit a legislative proposal in autumn to expand the plan beyond the timeframe foreseen (mid-2018). According to sources, the idea is to extend the plan at least two more years, with firepower equivalent. And look for something more ambitious, even permanent, once the next EU budgets are negotiated.
The scheme bears the name “Juncker Plan” to make it easy to point blame if the plan fails.
A leverage ratio of 1/15 is high but not unusual in some projects the EIB, and the environment of current liquidity abundance favors private funding plan. Fund management itself will be a major challenge, as it involves decisions in a short time on the economic viability of many projects with significant distributional consequences between countries and sectors.
A final positive aspect not mentioned so far is the possibility that countries make additional contributions to the fund without being included in the deficit posted by Brussels in the stability and growth pact. This can be an escape route for France to carry out its desired fiscal expansion by the back door (Italy it is more difficult, since by its high debt is also controlled by markets). However, it is not clear whether these additional contributions can be directed implicitly makes the country, so it is not known whether it will be sufficient to increase the fund’s ability incentive.
Plan Failed Already
“So far it has not failed” said Juncker.
Translation: The plan has failed and Juncker has his hands in every country’s pocket for more funding. The UK is already already the biggest contributor to this madness, having wasted €8.5 billion.
Juncker now wants more … for immigration projects!
Anyone on the Brexit fence reading this and not immediately knowing how to vote, likely has mad cow disease (or worse yet, mad Juncker disease).
More than 80 college students are facing criminal charges in Fairfield, Connecticut, and the police chief says they shouldn’t be. The students were cited by police officers for misrepresentation of age, an infraction which carries a $200 fine, after police raided a local bar and found them with fake ID cards. But the officers cited them under a law that was repealed four years ago. So when the citations got to the local court, a clerk there noticed that and changed all of the charges to misrepresenting age to procure liquor, a misdemeanor offense which carries a larger fine and the possibility of time in jail. “This is terrible,” said Police Chief Armando Perez. “I didn’t want to hit these kids. I just wanted to send them a message. A fine is one thing, but a misdemeanor can go on their record.”
For the first time in a decade, the US death rate increased in 2015. According to preliminary data from the Centers for Disease Control, the death rate in 2015 was 729.5 deaths per 100,000 people, which was up from 723.2 in 2014.
Federal researchers cautioned it was too early to tell what had pushed up the overall national death rate (preliminary data is not broken down by race, and final data will not be out until later this year), but they said the rise was real. While it is premature to ring an alarm now, if it continues, it could be a signal of distress in the health of the nation the NYT reports.
"It's an uptick in mortality and that doesn't usually happen, so it's significant. But the question is, what does it mean? We really need more data to know. If we start looking at 2016 and we see another rise, we'll be a lot more concerned" said Robert Anderson, the chief of mortality statistics at the National Center for Health Statistics.
Andrew Fenelon, a researcher at the C.D.C who did not work on the paper says that the current rise was surprising, and that the gap between the US and other countries is now growing.
"We are not accustomed to seeing death rates increase on a national scale. We've seen increases in mortality for some age groups, but it is quite rare to see it for the whole population. Many countries in Europe are witnessing declines in mortality, so the gap between the US and other countries is growing."
Last year, a paper by Anne Case and Angus Deaton documented the rising death rates among middle-age white Americans, particularly those with no more than a high school education, and other research has found rising rates among younger whites according to the NYT.
"This is probably heavily influenced by Whites. It does sort of fit together." said Sam Harper, an epidemiologist at McGill University in Montreal. More conclusive evidence on that theory will have to wait until the final data is released later this year which will provide more details of the research.
Chronic diseases like cancer and heart disease take by far the most American lives, so any change in other causes can have a big effect on the final numbers. Also, the fact that the rate of death from heart disease increased in 2015 no longer offset the rise in drug deaths, bringing that category more to the forefront.
The death rate from heart disease stood at 167.1 in 2015, up from 166.7 in 2014, though the rise was not statistically significant. It was the first time since 1993 that the rate did not decline, Dr. Anderson said.
The death rate from suicides rose to 13.1 in the third quarter of 2015, from 12.7 in the same quarter of 2014. (The last quarter of 2015 data was not yet available for suicides.)
The same was true for drug overdoses, whose data the report had for only the first two quarters of 2015. The death rate for overdoses rose to 15.2 in the second quarter of 2015, compared with 14.1 in the same quarter of 2014. The rate for so-called unintentional injuries, which include drug overdoses and car accidents, rose to 42 in the third quarter of 2015, up from 39.9 in the same quarter of 2014.
The rate for Alzheimer’s disease was also up, rising to 29.2 in 2015, compared with 25.4 in 2014, the continuation of some years of increases. Dr. Anderson said that part of the rise was more precise reporting of Alzheimer’s on death certificates, but that overall dementia-related deaths had increased over time.
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While this is quite a stunning development for a first world country, what also sadly stands out is such an increase in the death rate for overdoses. We can't help but wonder if things are so great out there in this economy, why are more and more turning to drugs to escape reality.
Overdose deaths 2003-2014 per the NYT (click the picture to enlarge)
Nearly 46 million human beings are subject to slavery, a new report released this week concluded. According to the third annual Global Slavery Index, which gathers and analyzes surveys conducted by Gallup, the number of people forced into “modern slavery,” or “human trafficking, forced labour, debt bondage, forced or servile marriage or commercial sexual exploitation,” rose from 35.8 million to 45.8 million since 2014 — a 28 percent increase.
The Global Slavery Index is a project of Walk Free, an Australian human rights organization dedicated to ending modern slavery, which researchers caution does not mean traditional slavery, in which “people were held in bondage as legal property.”
This year, the researchers for the index analyzed survey responses from 42,000 respondents in 53 languages and 167 countries, though they noted gathering such information is “a difficult undertaking due to the hidden nature of this crime and low levels of victim identification.”
Even so, Andrew Forrest, the founder of Walk Free, suspected the 28 percent increase from 2014 to 2016 was “due to better data collection, although he feared the situation was getting worse with global displacement and migration increasing vulnerability to all forms of slavery,”Reutersreported.
The new analysis highlights the persistence of slavery in modern society, cataloguing the worst-offending nations and noting that instances of modern slavery occurred in all 167 countries included in the study.
According to the report, 58 percent of individuals forced into modern slavery were located in five countries: India, China, Pakistan, Bangladesh, and Uzbekistan. Those nations had the highest “absolute” number of slaves — India was found to have over 18 million slaves, and China, which took second place, had over 3 million.
The report also listed nations with the highest proportions of slaves relative to their total populations: North Korea, Uzbekistan, Cambodia, India, and Qatar.
With over 1.1 million slaves in a nation of just over 25 million, North Korea had the highest proportion of victims, with 4.373 percent of the population subject to servitude. That amounts to roughly 1 in 20 North Korean citizens forced into slavery. As the report explains, in North Korea, “there is pervasive evidence that government-sanctioned forced labour occurs in an extensive system of prison labour camps while North Korean women are subjected to forced marriage and commercial sexual exploitation in China and other neighbouring states.”
The 2016 index further noted other instances of state-sponsored slavery, naming Uzbekistan, Turkmenistan, Tajikistan, Belarus, China, Eritrea, Russia, Swaziland, and Vietnam — as well as North Korea — as the worst offenders.
It also criticized North Korea, Iran, Eritrea, Equatorial Guinea, Hong Kong, Central African Republic, Papua New Guinea, Guinea, the Democratic Republic of the Congo, and South Sudan for their lack of effort in combating slavery.
Interestingly, Iraq, Afghanistan, Yemen, Syria, Somalia, and Libya, all nations subject to U.S. military intervention, tied for sixth place in the list of oppressive countries by proportion to population — totaling several million designated modern slaves among them. But the researchers did not include these nations’ governments when they analyzed efforts to curb slavery, perhaps unintentionally highlighting yet another oppressive force in the contemporary human experience:
“Due to the ongoing conflict and extreme disruption to government function,” they note, “we have not included ratings for Afghanistan, Iraq, Libya, Somalia, Syria or Yemen.”
Critics of the report challenged the statistical methods, arguing the analysts used “flawed methodology by extrapolating on-the-ground surveys in some countries to estimate numbers for other nations.” However, as Reuters reported, “Forrest said a lack of hard data on slavery in the past had held back efforts to tackle this hidden crime and it was important to draw a ‘sand in the line’ measurement to drive action.” He challenged critics to produce an alternative.
“Without measurement you don’t have effective management and there’s no way to lead the world away from slavery,” he said.
Discussing options for eradicating modern slavery, Forrest, an Australian mining billionaire and philanthropist, singled out businesses that fail to scrutinize slavery in the production of their products. “Businesses that don’t actively look for forced labour within their supply chains are standing on a burning platform. Business leaders who refuse to look into the realities of their own supply chains are misguided and irresponsible,” he said. As Reuters noted, the “2016 index again found Asia, which provides low-skilled labor in global supply chains producing clothing, food and technology, accounted for two-thirds of the people in slavery.”
Calling on leaders in government and civil society (as well as business), to work harder in eradicating modern slavery, Forrest ultimately waxed optimistic.
“Through our responsible use of power, strength of conviction, determination and collective will, we all can lead the world to end slavery,” he said.
A day before the OPEC summit kicks off, top officials from the oil cartel say that the markets are moving in the right direction, a sign of confidence that suggests little could emerge from this week’s meeting.
Few expected the June 2 meeting to result in some sort of agreement on supply cuts or even a production freeze, given the enmity between several of the group’s top members. The collapse of the Doha summit in April, a meeting that only sought to implement a very modest freeze deal, suggests that any cooperation is almost certainly off the table.
However, even since April the chances of a deal have narrowed. That is because oil prices have continued to climb, trading just below $50 per barrel on the eve of the semi-annual OPEC meeting in Vienna.
“From the beginning of the year until now, the market has been correcting itself upward,” U.A.E. oil minister Suhail Al Mazrouei told reporters from Vienna on May 31. “The market will fix itself to a price that is fair to the consumers and to the producers.” Oil prices have moved up nearly 90 percent since the February lows of $27 per barrel. This extraordinary rally has taken the pressure off of OPEC to take coordinated action on cutting or freezing output.
Nevertheless, it might still be a bit early for OPEC to claim victory. The major supply outages in Canada and Nigeria helped to push up crude oil prices over the past month. Canadian oil producers, led by Suncor Energy, are getting back to work. The prospect of a return in large sources of supply has halted the price rally just short of $50 per barrel.
"I think the market trends are better now” Emmanuel Ibe Kachikwu, Nigeria’s oil minister said in Vienna. Oil prices are moving “in the right direction” but he said that he thinks “it needs more acceleration of the pace.” While he may want prices to rise faster, OPEC members appears unwilling to cooperate in order to make that happen.
Instead, the goals for the OPEC meeting are much more modest: to patch up broken relationships and cobble together some sort of foundation for cooperation. All eyes will be on Saudi Arabia’s new oil minister Khalid al-Falih, who replaced the well respected and long-time former minister Ali al-Naimi. Mr. Naimi worked well with the group, even though Saudi Arabia has competing and sometimes hostile relations with other members (namely, Iran). Bloomberg reports that al-Falih comes to the meeting with the goal of mending fences with its fellow OPEC members, hoping to restore trust after Saudi Arabia killed off the Doha deal. Saudi Arabia wants to reassure OPEC that it will not flood the market, and may even be open to reinstating production targets.
It is hard to see how OPEC could agree on such an outcome, unless the production targets were substantially higher than the previous ones. Several OPEC members, including Saudi Arabia, are producing in excess of those former targets, and Riyadh has shown no willingness to cut back on production unless Iran does as well. Iran, of course, has refused to limit its output until it brings production back to pre-sanctions levels. The IEA said in its May Oil Market Report that Iran succeeded in boosting oil production to 3.6 million barrels per day, a level not seen since before the harsh 2012 sanctions. Iran insists it still has some lost ground to recover and has not expressed an interest in production limits.
In short, not much has changed since the April Doha summit collapsed in acrimony. If anything, the rise in oil prices has erased the urgency to make collective sacrifice. Bloomberg surveyed 27 oil analysts, polling them on what they expect to happen in Vienna. All but one of them project that the group will fail to set a production target. Perhaps the best the group can hope for is a restoration of some trust that could lay the groundwork for cooperation at some point in the future.
On the other hand, the past few OPEC meetings have defied expectations, ending with surprise announcements. One should not entirely rule out another unexpected result.
I rarely share letters we write to IMA’s clients, but I decided to share this “Value Investor’s Manifesto” I wrote for our clients in July. It should be a helpful tool to frame recent volatility in an appropriate perspective. It’s just eight pages long, but it’s probably one of the most important pieces of writing I have done in a long, long time. Here is the first part, the introduction.
Manifesto
By Vitaliy Katsenelson, CFA
Part One: Introduction
The relationship between a client and a money manager is like a marriage: even if you’re married to the right person, it’s just a matter of time before your relationship will hit hard times that test the strength of your marriage. After all, life is not linear, it’s full of ups and downs. The downs will ultimately test a couple’s commitment to one another.
Just like life, stock returns are anything but linear. Over the last one hundred-plus years, stocks returned about 11% a year on average. But if you were to look at stock market returns on an annual basis, they were usually anything but 11%. This 11% average is the culmination of a very combustible mixture of numbers that individually bear very little resemblance to the average they result in.
Side effects of nonlinearity of stock behavior clearly show up in investor returns. The financial services market research firm DALBAR studied historical returns of mutual funds and actual (realized) returns of investors who invested in those mutual funds. DALBAR’s findings were stunning. For decades fund investors had significantly underperformed the mutual funds they invested in, not by a percent or two but by a mile, capturing only a small fraction of the returns of those mutual funds.
For a civilian (nonprofessional) investor, understanding the investment process of a fund manager is usually difficult. Often, performance is the only thing investors can judge objectively, so recent performance overshadows all other metrics. Investors compare the most recent returns of their favorite new mutual fund versus the returns of the one they’re holding. If the new mutual fund has done better recently, they’ll sell the old one and buy the new one. This often results in buying high and selling low.
Any money manager, whether he is managing separate accounts or a mutual fund, will go through stretches where he looks smarter or dumber than he really is, though his IQ hasn’t actually changed.
When we look smarter than we are, we’re not worried about what clients think of us (though we try to temper their expectations of our future brilliance). At that point our biggest concern is our own self-perception: we don’t want success to go to our heads and result in overconfidence.
On the flip side, it’s just a matter of time before we look dumber than we are, and that’s when our relationship with a client gets tested. Especially if it’s a very new relationship and the client hasn’t had a chance to experience our brilliance.
Historically, value investing (owning undervalued companies) has done significantly better than other strategies. Paradoxically, the reason it has done well in the long run is because it did not work consistently in the short run. If something works consistently (key word), everybody piles into it and it stops working.
These aforementioned cycles of temporary brilliance and dumbness are not just common to us mere mortals. Even Warren Buffett’s Berkshire Hathaway goes through them. As just one example, in 1999, when the stock market went up 21% Berkshire Hathawaystock declined 19%. In 1999 the financial press was writing obituaries for Buffett’s investment prowess.
Suddenly, in 1999 Buffett’s IQ was lagging the market by 40%. At the time investors were infatuated with internet stocks that were not making money but that were supposed to have a bright future. Investors were selling unsexy “old economy” stocks that Buffett owned to buy the “new economy” ones.
If at the end of 1999, you were to sell Berkshire Hathaway and buy the S&P 500 instead, you would have done the easy thing, but it would have been a large (though very common) mistake. Over the next three years Berkshire Hathaway gained over 30% while the S&P declined over 40%. During the year 1999 Buffett’s IQ did not change much; in fact the (book) value of businesses Berkshire Hathaway owned went up by 0.5% that year. But in 1999 the market’s attention was somewhere else and it chose to price Berkshire Hathaway 19% lower.
Where are we going with this? We look at the relationship with our clients as a partnership. For this partnership to work we need to communicate on the same wavelength. In this letter we would like to establish this common wavelength.
As we touched upon earlier, central banks have created an unprecedented disaster for investors and savers alike.
One critical point in what has happened since central banks have intervened in the markets and distorted prices, is that savers have been destroyed and investors are now exposed to significantly more risk. For example, in order to make a 7.5% return in 1995, research from Callan Associates Inc found that an investor could own a portfolio consisting entirely of bonds with a standard deviation of about 6%. However, to make a 7.5% return in 2015, an investor would have to shrink the allocation to bonds down to just 12%, and allocate funds into other riskier assets, increasing the portfolio’s standard deviation (risk) to 17.2%. In other words, we’re at the point where it takes nearly 3x the risk in order to generate the same return as twenty years ago!
This presents the ultimate dilemma for large investors such as the California Public Employee’s Retirement System (CalPERS), the nation’s largest pension fund. In order to hit a target return of 7.5% the fund would would have to lower its
allocation to bonds and take on significantly more risk – the trade off is, of course, not introducing so much risk of loss and living with lower levels of returns. CalPERS is already significantly underfunded as it is, but so far it has not been willing to expose its members to even more risk of loss so it has kept its bond allocation to 20%. The result is that the fund is down 1.3% since July 1 according to the WSJ.
Then again, there are other institutional investors such as New York Life Insurance Co. who are bound to hold a certain percentage of fixed income due to regulatory guidelines. Low rates essentially eliminate the ability for these types of investors to generate returns.
The insurer has “looked under rocks, far and wide” to find suitable fixed-income investments said Tom Girard, who leads New York Life’s fixed-income team. “I can’t just reach out and grab a high-quality bond that’s yielding 6% or 7%. They don’t exist.” Girard added.
BlackRock’s Larry Fink said “Not nearly enough attention has been paid to the toll these low rates and now negative rates are taking on the ability of investors to save and plan for the future.” However, we would suggest that plenty of attention has been paid to the toll low rates are taking on savers and risk averse investors, and the reality is that central banks don’t care about that. All central planners do care about is pushing rates to artificially record low levels, keeping markets and asset prices record high, and hoping that one day they’ll be proven right – everyone else, most certainly savers, be damned.
Video From UCLA Shows How Vulnerable Students Are In A Gun Free Zone Lockdown
A campus shooting on Wednesday at the University of California left two men dead in a murder-suicided that sent thousands of students looking for safety and locking themselves down in classrooms.
UCLA is a gun free zone that prohibits students from carrying a gun within 1,000 feet of school grounds under Penal Code 626.9 PC, also known as California’s Gun-Free School Zone Act.
UCLA’s campus policyalso, “Prohibits the transportation and possession of firearms and other dangerous weapons on the grounds of UCLA campus, off-campus buildings owned or operated by the University, areas adjacent to University Property or to activities of or programs conducted by the University, whether on or off University Property.”
What this means is that students have little way of defending themselves from a gunman who is seeking to do harm.
In this footage obtained by RT, you can see how students have nothing else to do for their safety but to lock themselves into a classroom and wait for the situation to be defused.
If a determined gunman wanted to barge into the classroom where the students in the video above were hiding, it’s very possible that he could have done so if he had enough time.
As you can see, all the students can do is to sit still and wait, in hopes they do not become targets.
UCLA’s gun policy and the state of California’s penal code establishing gun free zones did absolutely nothing to prevent the man who committed the horrific act on Wednesday from bringing his gun on campus.
Last October the state of California passed a bill that bans concealed handguns on campus.
What this video shows is that the states regulations are putting students in a terribly vulnerable position that could allow a determined gunman to do more damage then he otherwise would be able to do if students and faculty had sufficient means of self-defense.
First, let's look at where we stand in each of Obama's current 'missions'…
LIBYA
On May 19th, the Washington Post headlined «Agreement that could lead to US troops in Libya could be reached ‘any day’», and reported that Joseph F Dunford, Chairman of the US Joint Chiefs of Staff, said that US troops will be sent to Libya to fight against ISIS, and that, «there will be a long-term mission in Libya», in order to deal with the mushrooming presence of ISIS fighters who have come to Libya after the secularist leader of Libya, Muammar Gaddafi, was overthrown there by US bombing backed up by other NATO forces, and some Libyans on the ground.
«There is interest among some NATO nations in participating in the mission, Dunford said, but the specifics of who and what would be involved remain unclear. The operation will likely focus on training and equipping militias that pledge loyalty to Prime Minister Fayez Sarraj, the leader of the new Libyan Government of National Accord (GNA)», which «has not yet been accepted by either existing rival government in Libya». In other words: the US and its allies had produced a failed state and a festering jihadist breeding-ground where US troops now will be sent in order to re-establish the peace and prosperity that it had destroyed there. They’ll do this by participating in Libya’s civil war – trying to dictate whom Libya’s leader will be.
So, on the Libyan matter, America’s Secretary of State, Hillary Clinton’s, famous victory statement, «We came, we saw, he died. Ha, ha!!» turns out to have been more the start of a US defeat in an unprovoked invasion, than the start of a US victory against any authentic provocation by ‘the enemy’.
Obama’s current plan to turn his defeat into victory there has no more reason to succeed than his predecessor, George W Bush’s plan to do likewise in Iraq did after he had, on 1 May 2003, declared victory there, aboard the warship USS Abraham Lincoln. Then, his famous 2007 «troop surge in Iraq» utterly failed to produce peace and to end the sectarian war the US and its allies had generated by their thoroughly counter-productive and shameful invasion against a nation that (like Libya) hadn’t invaded nor threatened to invade the United States – nor its allies.
There, as in Syria, too, America’s aggression produced only mass death and misery – and trillions of dollars in US federal debt, which hasn’t yet resulted from America’s invasions of Libya and Syria, but might. And, of course, millions of refugees.
SYRIA
Two days prior, on May 17th, US Secretary of State John Kerry and Russian Foreign Minister Sergey Lavrov held a joint press conference, in which the Obama Administration’s longstanding bottom-line demand, that «Assad must go» before any peace negotiations can start in Syria, was finally and totally abandoned by Kerry, when he said that «all of the parties» (including now the United States, which formerly had refused to join with Russia and Iran on this) «have agreed on a basic framework, which is a united Syria, nonsectarian, that is able to choose its future through a transitional governing body which is, in effect, the implementation of the Geneva process». Previously, the Obama regime had demanded that Assad step down before there can be any negotiations, and UN Secretary General Ban Ki-moon had repeatedly condemned that stand against democracy in Syria, by asserting that «the future of Assad must be determined by the Syrian people,» and «it is up to the Syrian people who have to decide the future of President Assad». As I previously reported, the reason why Obama had been standing firm on removal of Assad prior to any political process was that even Western polling firms have been finding that Assad’s remaining as Syria’s leader is supported by 55% of Syrians, and that the US is blamed by 82% of Syrians as being the source of Syria’s civil war: «82% agree ‘IS [Islamic State] is US and foreign made group’». In other words: Syrians, the most secular, the most anti-theocratic, people in the entire Middle East, blame people such as John Brennan as the source of their miseries. This same poll found that «79% agree ‘Foreign fighters made war worse’». It also found «70% agree ‘Oppose division of country’».
In other words, it was Obama who had been standing in the way of a democratic solution to the question of whom the leader of Syria would be – Obama knows that any democratic national election of Syria’s leader will produce the same leader that now heads Syria’s government: the only non-sectarian head-of-state still remaining anywhere in the Arab world. (Assad is a non-sectarian Shiite, and the few Syrians who want him overthrown are the most-fundamentalistic of Syria’s Sunnis.) And, as Robert F Kennedy Jr and other honest historians also have noted, the US CIA has been trying ever since 1949 to overthrow Syria’s non-sectarian governments in order to become allowed by a fundamentalist-Sunni regime to build through Syria «the Trans-Arabian Pipeline, an American project intended to connect the oil fields of Saudi Arabia to the ports of Lebanon via Syria».
The ultimate intended destination of that oil and gas has been Europe, the world’s largest oil-and-gas market, so as to choke off Russia’s main export market, and transfer that business from the USSR and now from just Russia, to the American aristocracy and its allied aristocracies in Saudi Arabia, Qatar, and UAE. (Those Arabic oil royal families, especially the Sauds, are the main funders of jihadist groups such as al-Qaeda and ISIS, but now with the added help of their fellow fundamentalist Sunni Tayyip Erdogan of Turkey, ISIS’s main funding comes from selling the stolen oil from Syria and Iraq.) As RFK Jr described the proposed pipeline, it «would have linked Qatar directly to European energy markets via distribution terminals in Turkey which would pocket rich transit fees. The Qatar/Turkey pipeline would have given the Sunni Kingdoms of the Persian Gulf decisive domination of world natural gas markets and strengthen Qatar, America’s closest ally in the Arab world. Qatar hosts two massive American military bases and the US Central Command’s Mid-East headquarters».
Furthermore, as Seymour Hersh and others have reported, the Obama regime has been strongly backing and arming al-Qaeda in Syria, which is called al-Nusra there, and Obama thus had long insisted that Russia not be allowed to include al-Nusra along with ISIS as targets to be bombed by Russia in Syria while the peace talks go on, but Russia refused to allow the US to protect al-Nusra, as if that group were anything other than jihadist, and so the only way that Obama could allow these talks to take place was by accepting Russia’s condition, that al-Qaeda was beyond the pale, just like ISIS. Otherwise, Russia would not negotiate terms for a cessation of hostilities there.
So, when Kerry in that press conference on May 17th said, «we call on all parties to the cessation of hostilities to disassociate themselves physically and politically from Daesh and al-Nusrah», this inclusion of al-Nusra along with Daesh constituted a major concession to Russia.
Finally, Kerry made another major concession to Russia there by saying that «we pledged our support for transforming the cessation of hostilities into a comprehensive ceasefire». This is actually the last shoe to drop, because it means that the Obama regime is now fully committed to ending the invasion of Syria by means of a political process, instead of by means of a conquest. The US aristocracy now accept that the dream of transporting the oil and gas from the Saud family’s Saudi Arabia, and from the Thani family’s Qatar, through Syria, into the EU, cannot be achieved, at least in the short term.
Only one American reporter, from the New York Times, was given the opportunity to ask a question at the end of this joint press conference, and he seemed quite hostile toward Kerry. He said: «It appears you have less leverage over President Assad now than you did when the Vienna agreement was reached at the end of October. If anything, thanks to the intervention of Mr Lavrov’s government, Mr Assad seems to feel now more secure than he did eight months ago». Kerry gave a defensive, anti-Russian, answer, to satisfy the reporter. They just don’t let up, but Obama now is no longer going along with the effort; he now accepts that the Syrian people, democracy, will decide Syria’s leader.
SAUDI ARABIA
On Tuesday May 17th The Hill bannered «Senate passes bill allowing 9/11 victims to sue Saudi Arabia», and reported that, «The Senate on Tuesday approved legislation that would allow victims of the 9/11 terror attacks to sue Saudi Arabia, defying vocal opposition from the White House. The upper chamber approved the Justice Against Sponsors of Terrorism Act by unanimous consent».
Obama demanded that the bill to lift the immunity of the Saud family not be passed and he said he’d veto it if it comes to his desk. But, as it turns out, the Sauds might not even have the capability any longer to retaliate in the way they’re threatening to.
On May 18th, Mish Shedlock headlined «Saudi Arabia Delays Payment to Contractors, Considers IOUs: Liquidity Crunch at Best», and he reported that, «Saudi Arabia burnt through its reserves faster than anyone thought. In signs of a huge liquidity crunch, at best, the country has delayed paying contractors and now considers paying them in IOUs and tradable bonds. In retrospect, the Saudi threat to dump US assets looks more ridiculous than ever».
The US Congress is about to call the bluff of the Saud family and of President Obama. That would throw another huge monkey-wrench into the effort to overthrow Assad, whom the Sauds hate, and whose overthrow they’ve spent huge sums to finance. From yet another standpoint, the Sauds and Obama are losing.
TURKEY
On May 20th, the Syrian Free Press bannered «Erdogan seems to be out of control: is Turkey on the brink of military coup? ~ Turkey shelling Nusaybin, using bulldozers inside Syrian territory». Since Turkey is now a dictatorship, in which no independent journalists are any longer permitted and the best of them are in prison and being charged with ‘treason’, the most reliable reporting about Turkey is coming from outside. According to this Syrian report, «the situation in Turkey keeps getting worse. Private debt is out of control, the tourism sector is in free-fall and the decline in the currency has impacted every citizen’s buying power. Because of increasing pressures on the central bank and political storms, Turkey’s annual growth rate has already slowed.
President Recep Tayyip Erdogan seems to be out of control. He is cracking down on opposition, imprisoning opponents and seizing media outlets. Not [only] once the Turkish leader has threatened to dissolve the constitutional court. It is taking place at the time the security problems have deteriorated amidst a wave of terrorism.
Turkish people have a very simple choice: either to replace insanity with intelligence and wisdom on the way to peace and prosperity, or continue on the present downward course under the smoldering ashes of civil war and destruction».
Without Erdogan in power for Turkey to serve as the transit route into Syria for jihadists and American weapons for those ‘rebels’ (financed largely by the Sauds and the Thanis,) as well as by Turkey’s sale of Syrian oil stolen by ISIS), there’s little hope to oust Assad. Under Erdogan, Turkey has largely led the efforts to overthrow Assad.
The former CIA officer, now turncoat against the US regime, Philip Giraldi, headlined in The American Conservative magazine, back on 19 December 2011, «NATO vs. Syria», reporting that «NATO is already clandestinely engaged in the Syrian conflict, with Turkey taking the lead as US proxy. Ankara’s foreign minister, Ahmet Davitoglu, has openly admitted that his country is prepared to invade as soon as there is agreement among the Western allies to do so. The intervention would be based on humanitarian principles, to defend the civilian population based on the «responsibility to protect» doctrine that was invoked to justify Libya. … Unmarked NATO warplanes are arriving at Turkish military bases close to Iskenderum on the Syrian border, delivering weapons from the late Muammar Gaddafi’s arsenals as well as volunteers from the Libyan Transitional National Council… CIA analysts are skeptical regarding the march to war. The frequently cited United Nations report that more than 3,500 civilians have been killed by Assad’s soldiers is based largely on rebel sources and is uncorroborated».
On 20 April 2013, Reuters reported that, «The EU said this week it wants to allow Syria's opposition to sell crude in an effort to tilt the balance of power towards the rebels». That oil is sold via Turkey (by Erdogan’s son and his friends); so, fellow NATO-member Turkey is essential to the US-EU-Saud-Thani effort (and some very-inside people are already getting very rich from it).
Two days later, the AP headlined «EU lifts Syria oil embargo to bolster rebels» and reported «Being able to take advantage of the country's oil resources will help the Syrian uprising ‘big time,’ said Osama Kadi, a senior member of the Syrian opposition». No qualms were expressed at this being oil which was stolen from Syria, marketed by Turkey. «The sector was a pillar of Syria's economy until the uprising, with the country producing about 380,000 barrels a day and exports – almost exclusively to Europe – bringing in more than $3 billion in 2010. Oil revenues provided around a quarter of the funds for the national budget». The Syrian people weren’t just being slaughtered; they were being robbed, by the Western alliance. Participants in this effort included the Erdogan regime, the Obama regime, the aristocracies of the EU, Saudi Arabia (the al-Sauds), Qatar (the al-Thanis), UAE, and Kuwait (the al-Sabahs, whose daughter had lied the US into the first US invasion against Saddam Hussein). All of them were allies together, to overthrow Assad, an ally of Russia.
And because of Turkey’s crucial location, overthrow of the Turkish regime would end, for now, the scheme to overthrow Assad.
As RFK Jr put the matter, in retrospect: «Thanks in large part to Allan Dulles and the CIA, whose foreign policy intrigues were often directly at odds with the stated policies of our nation, the idealistic path outlined in the Atlantic Charter was the road not taken. In 1957, my grandfather, Ambassador Joseph P. Kennedy, sat on a secret committee charged with investigating CIA’s clandestine mischief in the Mid-East. The so called ‘Bruce Lovett Report’, to which he was a signatory, described CIA coup plots in Jordan, Syria, Iran, Iraq and Egypt, all common knowledge on the Arab street, but virtually unknown to the American people who believed, at face value, their government’s denials.
The report blamed the CIA for the rampant anti-Americanism that was then mysteriously taking root «in the many countries in the world today».
And perhaps it all will remain «virtually unknown to the American people».
RFK Jr. went on:
«Despite the prevailing media portrait of a moderate Arab uprising against the tyrant Assad, US Intelligence planners knew from the outset that their pipeline proxies were radical jihadists who would probably carve themselves a brand new Islamic caliphate from the Sunni regions of Syria and Iraq. Two years before ISIS throat cutters stepped on the world stage, a seven-page Aug. 12, 2012 study by the US Defense Intelligence Agency (DIA), obtained by the right wing group Judicial Watch, warned that thanks to the ongoing support by US/Sunni Coalition for radical Sunni Jihadists, ‘the Salafist, the Muslim Brotherhood and AQI [now ISIS], are the major forces driving the insurgency in Syria.’
Using US and Gulf State funding, these groups had turned the peaceful protests against Bashar Assad toward ‘a clear sectarian [Shiite vs Sunni] direction.’ The paper notes that the conflict had become a sectarian civil war supported by Sunni ‘religious and political powers.’ The report paints the Syrian conflict as a global war for control of the region’s resources with ‘the west, Gulf countries and Turkey supporting [Assad’s] opposition, while Russia, China and Iran support the regime’».
UKRAINE
The most important of all parts of Obama’s foreign-policy plan was the one that enabled him to slap economic sanctions against Russia and that enables NATO to treat Russia as an ‘aggressive’ enemy: this is the matter regarding Ukraine and its former peninsula, Crimea, which Russia accepted back into the Russian Federation after Obama’s coup seizing Ukraine had terrified the Crimean people.
Certainly, Obama’s extremely bloody coup in Ukraine isn’t known to Americans: the official line, promoted both by the US aristocracy’s government, and by the US aristocracy’s media, is that a ‘democratic revolution’ overthrew the democratically elected President of that country, Viktor Yanukovych, in February 2014. The official line is that this ‘revolution’ arose spontaneously after Yanukovych, on 20 November 2013, had rejected the EU’s offer for Ukraine to join the EU. Not part of the official line is that the US Embassy was already starting by no later than 1 March 2013 to organize the overthrow that occurred in February 2014. Also not part of the official line is that the EU’s membership offer to Ukraine came with a $160 billion price tag, and so was entirely unaffordable. Yanukovych had no real choice but to turn it down. After all, the West needed an excuse to explain the ‘Maidan democracy demonstrations’ that provided a pretext for the overthrow. If one is starting on 1 March 2013 to organize a fascist coup that’s to occur a year later, then one won’t want to provide the victim (Yanukovych and the Ukrainian people) an offer that will be accepted by him. One will need the offer to be rejected, in order to have a ‘justification’ to overthrow the victim. One ‘justification’ was that he was corrupt, but they didn’t mention that all post-Soviet Ukrainian leaders have been corrupt. The other was that Yanukovych had turned down the proposal from ‘the democratic West’.
Ukraine is the key in Obama’s plan for four reasons:it’s the main transit-route pipelining Russia’s gas into Europe; it’s also a large country bordering Russia, and thus ideal for placement of American nuclear missiles against Russia; it has (at that time it was on a lease expiring in 2042) Russia’s premier naval base in Sevastopol in Crimea, which, for the US to take, would directly weaken Russia’s defenses; and, most importantly of all, the entire case for sanctions against Russia, and for NATO to be massing troops and weapons on and near Russia’s borders to ‘defend’ NATO against Russia consists of Russia’s ‘aggression’ exhibited in its ‘seizing’ Crimea, and in its helping the residents in the breakaway Donbass far eastern region of Ukraine (where the residents had voted 90% for Yanukovych) to defend themselves against the repeated invasions and bombings coming from the Ukrainian government.
Crimea is especially important here, because, though Russia refused to accept Donbass into the Russian Federation, Russia did accept Crimea. However, the people in Crimea had voted 75% for Yanukovych and had also wanted to become again a part of Russia, ever since the Soviet dictator Nikita Khrushchev in 1954 arbitrarily transferred Crimea from Russia to Ukraine. And therefore Russia – not finding acceptable Obama’s soon-to-be seizure of their naval base – supplied protection for Crimeans to be able to hold a plebiscite on 16 March 2014 in order to exercise their right of self-determination on whether to accept rule by the bloody new Ukrainian coup-regime, or to regain membership (and protection) in the Russian Federation. 97% chose the latter, and Western-sponsored polls in Crimea both before and after the plebiscite showed similarly astronomically high support for rejoining with Russia. But that made no difference in Western countries, because their media never reported these realities but only the official line – as Obama put it: «The days in which conquest of land somehow was a formula for great nation status are [sic] over». Although he was there describing actually himself, he was pretending that it described instead Russia’s President, Vladimir Putin, who was merely protecting Crimeans, and, in the process, protecting all Russians (by retaining its key naval base), from an enemy (Obama) whose gift for deceiving the public might have no equal in all of human history.
And that ‘seizure of Crimea’ is actually the pretext upon the basis of which Obama’s NATO alliance is now mobilizing to invade Russia.
CONCLUSION
All of the examples cited here are national leaders who have been friendly to, or even allied with, Russia: Saddam Hussein, Muammar Gaddafi, Bashar al-Assad, Viktor Yanukovych – and, of course, the central target, Vladimir Putin himself – and all of these targets have been demonized in the West, regardless of whether they’re actually more evil than, say, George W Bush and Barack Obama.
In the Middle East, things haven’t been going well for Obama’s plans, but, he still retains the example of Crimea as symbolizing a thus-far-successful excuse for economic sanctions against Russia, and, perhaps (and maybe by the next US President), ultimately for an invasion of Russia.
So: Is Obama’s entire foreign policy going down in flames? Or will the entire world?(However, the US aristocracy now think that nuclear weapons are no longer for balance-of-power «Mutually Assured Destruction» MAD, but instead for victory. According to that scenario, only ‘the enemy’ will be annihilated, not the entire world, not themselves as well, because they expect to emerge victorious.)
The NATO summit on July 8-9 this year will probably provide the best advance indication of which of those two will be the outcome from all this. To a large extent, the answer will depend upon which of those two outcomes will be preferred by Barack Obama. Much of the world has been following his lead for nearly eight years now. Perhaps he’ll reverse direction at that Summit; but, perhaps not; and, if the latter turns out to be the case, then the question will be whether or not the Western world will abandon his leadership at that time. It’s already clear that the top leadership of NATO intends to stay with the plan.
The last time China set up an air defense identification zone, or ADIZ, was in late 2013, when tensions with Japan had escalated so far, many were speculating if the two nations would not engage in limited warfare. Back then, China set up its first ADIZ in the East China Sea in November 2013 to cover the Diaoyu Islands, which Japan calls the Senkakus. Both countries claim the uninhabited outcrops but Tokyo controls them. The ADIZ triggered a backlash from Japan, South Korea and the US.
While the confrontation between Japan and China subsided, it was promptly replaced by another geopolitical tension, this time a few thousand kilometers to the Southwest, in the South China Sea, where tensions between China and neighbours Vietnam, Malaysia, Brunei and the Philippines have risen since Beijing embarked on major land reclamation work on disputed islands and reefs in the area. In recent months, the US has also gotten involved by sailing ships through contested wates, much to China’s anger; most recently a US spy plane was intercepted by two Chinese fighter jets over the area.
Which is probably why, as the SCMP reported yesterday, China is preparing another air defence identification zone, this time in the South China Sea, two years after it announced a similar one in the East China Sea. According to the SCMP, one source said the timing of any declaration would depend on security conditions in the region, particularly the United States’ military presence and diplomatic ties with neighbouring countries.
However, should the US continue engaging in what Beijing views as provocations, China will have no choice but to escalate: “If the US military keeps making provocative moves to challenge China’s sovereignty in the region, it will give Beijing a good opportunity to declare an ADIZ in the South China Sea,” the source said.
The revelation came ahead of the Shangri-La Dialogue in Singapore, a security forum attended by defense officials from various nations, including Admiral Sun Jianguo and US Secretary of Defence Ash Carter. Disputes in the South China Sea are expected to head the agenda of the three-day event, which starts on Friday. Top Chinese and US officials will also meet next week for their annual strategic and economic dialogue in Beijing.
As the SCMP adds, in a written response to the South China Morning Post on the zone, the defense ministry said it was “the right of a sovereign state” to designate an ADIZ.
“Regarding when to declare such a zone, it will depend on whether China is facing security threats from the air, and what the level of the air safety threat is,” the statement said. What the statement was envisioning was more incidents such as this one profiled two weeks ago when as we reported “Chinese Fighter Jets Fly Within 50 Feet Of US Spy Plane Near China.”
A report in Canada-based Kanwa Defence Review said Beijing had defined the area of the ADIZ in the South China Sea, and the timing of the announcement would be a political decision. The report said the new ADIZ would be based on the exclusive economic zone (EEZ) of Woody Island and China’s seven new artificial islands in Spratly chain, or 200 nautical miles stretches from the islands’ baseline. In other words, in addition to a naval zone, China will claim that the airspace above it belongs to China as well; and should any aircraft – namely belonging to the US – fly above it, China would have a right to take measures.
“China’s new ADIZ will overlap with the EEZs of Vietnam, the Philippines and Malaysia, which are also planning their own ADIZs – with US backing – if China announced it,” Kanwa editor-in-chief Andrei Chang said.
Ni Lexiong, a Shanghai-based military commentator, said the seven artificial islands in the Spratly chain had laid the foundations for China to establish its ADIZ in the South China Sea. But Beijing-based naval expert Li Jie said there were signs that regional tension would ease after Rodrigo Duterte became president of the Philippines.
And as a reminder, Duterte, who as we noted yesterday endorses the murder of “corrupt journalists” will likely be heavily supported by the US.
President Xi Jinping sent a congratulatory message to Duterte on Monday, saying China hoped “the two sides can work together to bring bilateral relations back on a healthy track.” They won’t.