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China Faces Interest Rate Dilemma With No Winning Options

China Faces Interest Rate Dilemma With No Winning Options

Authored by Mike Shedlock via MishTalk,

Michael Pettis at China Financial Markets has an interesting chain of Tweets on China’s unsolvable interest rate mess.

Preemptive Steps Needed to Contain CPI

China Daily reports Preemptive Steps Needed to Contain CPI

China’s consumer price index (CPI), the main gauge of inflation, grew 5.2 percent year-on-year in February, the National Bureau of Statistics said on Tuesday. The growth, in line with market expectations, was slightly lower than 5.4 percent in January. On a monthly basis, consumer prices edged up 0.8 percent.

Food prices, which account for nearly one-third of weighting in China’s CPI, went up 21.9 percent year-on-year in February, contributing 4.45 percentage points to the rise in the index as the novel coronavirus outbreak disrupted market supplies and demands.

That the CPI has been above 5 percent for two consecutive months has raised fears that China could face high inflation in the long run, which could have a negative impact on people’s livelihoods that have already been affected by the novel coronavirus epidemic.

Bank of China Faces a Real Dilemma with Interest Rates

Hiking rates in the midst of shocks like this are out of the question. There are no preemptive steps to take.

CPI Inflation is at 5% but bank interest rates are only 1.5%.

Food production has collapsed, but lower interest rates to stimulate will stimulate the wrong things while hurting consumer savings.

Lower spreads will hurt bank profits and the Chinese banking system is a basket of nonperforming SOE loans.

Pettis Tweet Thread on China’s Dilemma

  1. It seems to me that the PBoC faces a real dilemma with interest rates. Thanks to still-soaring food costs CPI inflation in February remained above 5%, well above the deposit rate, with 1-year deposits at 1.50% and average deposits much lower. This means…

  2. …that the value of household savings is being eroded by rising food costs, and this effectively represents a wealth transfer away from households, with poorer households being hit harder (both because of limited savings opportunities and because food is a larger share of…

  3. …their consumption basket). This is exactly the opposite of what Beijing needs if it is to reduce its over-reliance on spurious investment to generate growth. If households have to increase their savings rate in order to make up for the inflation tax, they must spend less…

  4. …on consumption, in which case China needs more investment to generate the same amount of growth. This is why the PBoC doesn’t want to lower the deposit rate. But it cannot raise rates either. Unlike in 2000-11, when banks and corporate/government borrowers were the huge…

  5. …beneficiaries from extremely negative real interest rates, they aren’t this time around. With negative PPI inflation, and a 1-year loan prime rate of 4.05%, manufacturers may in fact be borrowing at very high real rates, especially given that all the inflation is showing…

  6. …up in food prices, whereas the prices of the manufactured goods they produce are stable or even trending down. This probably just means that last year’s collapse in meat production – which is the main source of CPI inflation – is being paid for in part by households, in…

  7. …the form of an erosion in the value of their savings, in part by businesses, in the form of high real borrowing costs, and of course in part by farmers. This makes it very difficult for the PBoC either to raise lending rates or lower deposit rates, and of course it can’t…

  8. …narrow the spread because that would effectively force already-undercapitalized banks to absorb the cost. Once food prices drop we might see a very sharp reversal of wealth transfers from the household sector, but until then the PBoC doesn’t have much space for maneuver.

Here is the Lead Tweet if you want to see it all on Twitter.

Inflation or Deflation?

This was the subject of a debate on Twitter. Many see a round of inflation but I generally see it differently.

The collapse in demand will take care of shortages except for critical things like food.

China has a unique problem. Low food production and a soaring CPI in response.

Unless there is a food production problem in the US, the Fed will not face the same dilemma.

Exporters Hit Hardest

The global export powerhouses will get hit the hardest by this.

China and Germany are at the top of the list.

Deflationary US Outcome

I believe a Very Deflationary Outcome Has Begun.

Prepare for another round of debt deflation, possibly accompanied by a lower CPI especially if one accurately includes home prices instead of rents in the CPI calculation.

Central banks’ seriously misguided attempts to defeat routine consumer price deflation is what fuels the destructive asset bubbles that eventually collapse

I am not blaming the Fed for the coronavirus and these shocks.

However, I am blaming the Fed for its erroneous inflationary tactics that blew three of the biggest economic bubble in succession: 2000, 2007, 2020.

Bubbles are inherently deflationary. It’s asset asset bubble deflation that is damaging, not routine price deflation

“Deflation may actually boost output. Lower prices increase real incomes and wealth. And they may also make export goods more competitive,” stated a BIS study.

For a discussion of the BIS deflation study, please see Historical Perspective on CPI Deflations: How Damaging are They?

Supply Shock and a Demand Shock Coming Up

A Supply Shock and a Demand Shock are Coming Up.

Worth Repeating

Deflation is not really about prices. It’s about the value of debt on the books of banks that cannot be paid back by zombie corporations and individuals.

75% of Companies Suffer From Coronavirus Supply Chain Disruptions

The ISM says 75% of Companies Suffer From Coronavirus Supply Chain Disruptions

Don’t expect inflation out of this except in medical supplies and related items.

Q. Why?

A: The demand shock over stock market decline and lost wages has not been felt yet. It soon will.


Tyler Durden

Thu, 03/12/2020 – 20:25

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Massive Monkey Gangs Are Fighting For Food On Thailand Streets As Tourist Food Disappears

Massive Monkey Gangs Are Fighting For Food On Thailand Streets As Tourist Food Disappears

Coronavirus isn’t just causing humans to fight in the aisles of Target over toilet paper. Today in “signs of the apocalypse”, hungry monkey gangs are also swarming and fighting – for food – on the streets of Thailand. 

Monkeys in the country are usually well fed by tourists who visit Central Thailand, but visitors have plummeted as a result of the coronavirus outbreak, which has hit the Asian region hard. 

The animals shown in a video are reported to be two separate “rival gangs” that dwell in the city, according to the Daily Mail. 

Half of the monkeys are said to live in the temple areas, while the others live in the city. The two groups don’t usually meet but ended up doing so this past week.

The animals are shown wandering separately looking for food, but once one monkey finds a banana, the chase is on. 

The ferocity of the animals shocked even locals, who are used to seeing the monkeys on a daily basis. One onlooker, who captured video, said: “They looked more like wild dogs than monkeys. They went crazy for the single piece of food. I’ve never seen them this aggressive.”

The onlooker explained: “I think the monkeys were very, very hungry. There’s normally a lot of tourists here to feed the monkeys but now there are not as many, because of the coronavirus.”

Hundreds of monkeys are shown in this Daily Mail video fighting over a single banana:


Tyler Durden

Thu, 03/12/2020 – 20:05

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Federal Reserve Promises a Trillion-Plus in Short Term Loans to Banks.

In an attempt to quell market and banking fears about coronavirus-related downturns, the New York branch of the Federal Reserve announced new plans today:

For the monthly period beginning March 13, 2020 and continuing through April 13, 2020, the Desk will conduct purchases across a range of maturities….

Today, March 12, 2020, the Desk will offer $500 billion in a three-month repo operation at 1:30 pm ET that will settle on March 13, 2020.  Tomorrow, the Desk will further offer $500 billion in a three-month repo operation and $500 billion in a one-month repo operation for same day settlement. Three-month and one-month repo operations for $500 billion will be offered on a weekly basis for the remainder of the monthly schedule.  The Desk will continue to offer at least $175 billion in daily overnight repo operations and at least $45 billion in two-week term repo operations twice per week over this period.

These “repo operations” mean that the Federal Reserve will be providing liquidity in the form of cash in exchange for securities, which the entities getting the money are supposed to purchase back later.

For the past few months, the Fed has been on a $60 billion plan of securities purchases, but that was mostly just short-term Treasury bills. It is expanding those schemes, per its statement today, “to distribute reserve management purchases across eleven sectors, including nominal coupons, bills, Treasury Inflation-Protected Securities, and Floating Rate Notes.”

As the Wall Street Journal tallies, today’s “interventions lifted the overall amount of Fed temporary liquidity $119.1 billion to $361.5 billion, the most outstanding since the Fed began doing repos again in September after a decade-long break.” This is all in reaction to, as the New York Times reports, “reports from trading desks that many assets that are normally liquid—easy to buy and sell—were freezing up, with securities not trading widely. This was true of the bonds issued by municipalities and major corporations but, more curiously, also of Treasury bonds, normally the bedrock of the global financial system.”

In general this week, in everything from stocks to bonds, gold to crypto, the Times notes, “major financial players are experiencing a cash crunch, and are selling whatever they can as a result. That would help explain the seeming contradiction of assets that should go up in value in a time of economic peril instead falling in value.” That both stocks and bonds were falling this week put a big scare into the system.

Cynical populists might note that here, as so often, government’s quick big-money interventions seemed aimed more at comforting the wealthy and high-powered as opposed to easing the problems of the mass of low-income wage-earners, renters, or others who might be devastated by the shutdown in economic activity commensurate with the shutting down of most public gatherings that’s picking up speed this week.

That said, these repurchases function not as cash giveaways, but as loans that should be paid back. As CNBC explains, “Repos are short-term operations in which financial institutions provide high-quality collateral [in this case the wide variety of Treasuries and other securities] in exchange for cash reserves they use to operate.”

As Politico puts it, these new repos are meant to be “a crucial source of overnight funding for brokerage firms, hedge funds and other financial institutions.” The Fed hopes this new repo expansion will “ensure the proper functioning of the market for Treasuries, which influences all other credit markets.”

Scott Sumner of the Mercatus Center, who writes from a “market monetarist” perspective that roughly believes the Fed has been too tight in overall monetary policy since the 2008 crisis, says via email that today’s actions are “reactive, not proactive. Taken in isolation, they are probably beneficial. But the Fed needs to further ease monetary policy to assure that it achieves its policy goals, as set by Congress.”

At his blog, Sumner suggests bold moves for the Fed such as an instant end to paying interest on bank reserves, as that policy is contractionary at a time we don’t want contractionary monetary policy, and to straight-up purchase “as many Treasuries (and MBSs [morgage-backed securities]) right NOW as required to raised the expected price level two years from today to a level 4% higher than today. Not gradually; buy them NOW.” (Emphasis his.)

As Cato Institute monetary policy maven George Selgin says in an email today, despite the total amounts of money involved in the repos, it is properly seen as a series of “temporary short-term loan allotments [that] aren’t cumulative. It’s like me offering you $5 to be repaid next Thursday, and then offering to lend you the same amount then, and again the following week. At no point am I lending more than $5, and always for a short term.”

That said, Selgin also writes: “The question that remains to be answered is whether the Fed will also find it necessary to increase either the size or the duration of its ongoing, outright security purchases, which it so far plans to continue only through April. I should not be at all surprised to see an announcement sometime soon concerning such a decision.” Selgin’s larger-scale critique of the Fed’s ways of managing monetary policy over the past few years can be found here.

This means that any possible wind-down of assets the Fed owns since the quantitative easing days post-2008 crisis seems over. That failure to wind-down is criticized today from a Misesian perspective for “constantly favoring and bailing out bankers and other parts of the financial sector, [which means] the Fed has put all other sectors and industries at a disadvantage. As a nonfinancial enterprise, it’s hard to compete for investors and capital when the Fed has guaranteed that the financial sector will be bailed out no matter what.”

The Fed’s announcement had no immediate positive effects on stock market price plunges, with the Dow Jones Industrial Average down nearly 10 percent today.

For more background on the Fed’s asset holdings, see this 2014 Reason feature by Jeffrey Hummel, “How the Fed Got Huge,” assessing the economic dangers of the Federal Reserve being such a huge holder of financial assets.

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The Sad Lesson of Million-Gate

As Snopes (and lots of others) have reported:

On March 3, 2020, a Twitter user posted a message that claimed former New York City Mayor Michael Bloomberg could have given each American $1 million for the amount he spent on advertisements during his failed 2020 U.S. presidential candidacy:

The tweet reached a much larger audience a few days later when it was uncritically presented by MSNBC anchor Brian Williams and Mara Gay, a member of the The New York Times editorial board:

The problem, it seems to me, isn’t just that Williams and Gay made an arithmetical mistake; mistakes happen.

It’s that they didn’t have the basic math sense to realize that something was off. Agreeing with an assertion that $500 million split among 327 million Americans would be, say, $3 per person would be an arithmetical mistake; it shouldn’t be that hard to quickly realize that 500/327 is about 1.5 rather than about 3, but one can easily flub that.

But $1 million for each American should obviously be vastly more than $500 million. Likewise, $500 million split among 327 million should obviously be vastly less than $1 million. More broadly, just as a matter of common sense, given that the average American’s yearly income is somewhere under $100,000 (all of us should have a sense of that from ordinary life, even if we don’t know the exact number off the top of our heads), no one American is going to spend ten times the national GNP on a political campaign.

The point of basic numeracy, I think, isn’t that people should know their multiplication table or be able to do long division. It’s that people should have a rough understanding of numbers that they can drawn on in situations like this, to know what makes sense and what doesn’t. Sad to see that lacking here.

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Judge Orders Chelsea Manning Released From Jail Following Suicide Attempt

Judge Orders Chelsea Manning Released From Jail Following Suicide Attempt

Chelsea Manning was ordered on Thursday to be released from jail, after a federal judge ruled that her testimony against WikiLeaks founder Julian Assange was no longer necessary. The decision comes one day after Manning reportedly attempted to commit suicide while in federal custody in Alexandria, VA. 

Judge Anthony Trenga of the Eastern District of Virginia said that because the grand jury was finished deliberating, Manning’s testimony was no longer necessary – ending the former Army analyst’s incarceration which began last May after refusing to appear before the panel and testify against Assange.

Manning was convicted in 2013 of leaking US military secrets and sentenced to 35 years in military prison at Fort Leavenworth before her sentence was commuted in 2017. Assange, meanwhile, was indicted in 2018 on a federal charge of conspiring with Manning to assist in the transmission of U.S. state secrets to WikiLeaks.

For refusing to comply with the order to testify, Manning was hit with a $256,000 fine according to The Hill.

Manning’s publicist, Andy Stepanian, said on Wednesday that his client was recovering in a hospital after the suicide attempt.

Last month, Manning’s lawyers argued for her release on the grounds that detention was unlawfully punitive and served no purpose.


Tyler Durden

Thu, 03/12/2020 – 19:45

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As Iran Nuclear Inspections Disrupted By Pandemic, Hawks Fear The Worst 

As Iran Nuclear Inspections Disrupted By Pandemic, Hawks Fear The Worst 

US and Israeli hawks are worried Iran could use coronavirus pandemic fears and Western governments’ preoccupation with staving off the accompanying economic disaster to evade nuclear monitors and quickly ramp up weapons-grade uranium development. 

International Atomic Energy Agency (IAEA) officials are already talking about dramatically increasing the UN nuclear watchdog’s remote monitoring capabilities, such as cameras and data monitors placed at key sites connected with Iranian nuclear power. Crucially the IAEA has online enrichment monitoring installed at some key nuclear locations throughout the country, such as at Natanz.

IAEA inspection team, file image via Asia News.

Some of these remote monitoring powers were established under the 2015 nuclear deal, but as coronavirus inside the Islamic Republic has begun impacting inspection teams directly, and also in many cases thwarting ability to inspect sites, officials want to see remote monitoring hugely increased. 

Bloomberg reports on Thursday, “There’s concern that contact with carriers of the virus in Iran, where senior officials have been infected, could deplete the International Atomic Energy Agency’s roster of inspectors by forcing some into quarantine, according to two diplomats briefed on the matter who asked not to be identified.”

Andreas Persbo, a nuclear-verification specialist at the think tank European Leadership Network told Bloomberg: “At a time when the prevalence of coronavirus in Iran potentially makes life for inspectors more difficult, the redundancies built into the JCPOA become more valuable.” He added, “That’s particularly the case for online enrichment monitoring.”

The IAEA in conjunction with the US’ Oak Ridge National Laboratory previously developed unique online enrichment monitoring technology specifically for Iran as part of the JCPOA.

Patrick Air Force Base laboratory, which helps monitor and ensure international nuclear treaty compliance, via Florida Today.

However, it’s still in somewhat early usage and development, given that, “The gear was tested in July at Iran’s biggest uranium-enrichment facility in Natanz, after Iran raised uranium enrichment levels to 4.5% in response to renewed U.S. sanctions,” according to the Bloomberg report.

Officials confirmed the system worked exactly as expected and detected the breach. And now it’s seen as more urgent inside the country as ever, also given anti-Iran hawks in the West are growing increasingly anxious over further violations as the globe is distracted by the more immediately pressing pandemic. 


Tyler Durden

Thu, 03/12/2020 – 19:25

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Federal Reserve Promises a Trillion-Plus in Short Term Loans to Banks.

In an attempt to quell market and banking fears about coronavirus-related downturns, the New York branch of the Federal Reserve announced new plans today:

For the monthly period beginning March 13, 2020 and continuing through April 13, 2020, the Desk will conduct purchases across a range of maturities….

Today, March 12, 2020, the Desk will offer $500 billion in a three-month repo operation at 1:30 pm ET that will settle on March 13, 2020.  Tomorrow, the Desk will further offer $500 billion in a three-month repo operation and $500 billion in a one-month repo operation for same day settlement. Three-month and one-month repo operations for $500 billion will be offered on a weekly basis for the remainder of the monthly schedule.  The Desk will continue to offer at least $175 billion in daily overnight repo operations and at least $45 billion in two-week term repo operations twice per week over this period.

These “repo operations” mean that the Federal Reserve will be providing liquidity in the form of cash in exchange for securities, which the entities getting the money are supposed to purchase back later.

For the past few months, the Fed has been on a $60 billion plan of securities purchases, but that was mostly just short-term Treasury bills. It is expanding those schemes, per its statement today, “to distribute reserve management purchases across eleven sectors, including nominal coupons, bills, Treasury Inflation-Protected Securities, and Floating Rate Notes.”

As the Wall Street Journal tallies, today’s “interventions lifted the overall amount of Fed temporary liquidity $119.1 billion to $361.5 billion, the most outstanding since the Fed began doing repos again in September after a decade-long break.” This is all in reaction to, as the New York Times reports, “reports from trading desks that many assets that are normally liquid—easy to buy and sell—were freezing up, with securities not trading widely. This was true of the bonds issued by municipalities and major corporations but, more curiously, also of Treasury bonds, normally the bedrock of the global financial system.”

In general this week, in everything from stocks to bonds, gold to crypto, the Times notes, “major financial players are experiencing a cash crunch, and are selling whatever they can as a result. That would help explain the seeming contradiction of assets that should go up in value in a time of economic peril instead falling in value.” That both stocks and bonds were falling this week put a big scare into the system.

Cynical populists might note that here, as so often, government’s quick big-money interventions seemed aimed more at comforting the wealthy and high-powered as opposed to easing the problems of the mass of low-income wage-earners, renters, or others who might be devastated by the shutdown in economic activity commensurate with the shutting down of most public gatherings that’s picking up speed this week.

That said, these repurchases function not as cash giveaways, but as loans that should be paid back. As CNBC explains, “Repos are short-term operations in which financial institutions provide high-quality collateral [in this case the wide variety of Treasuries and other securities] in exchange for cash reserves they use to operate.”

As Politico puts it, these new repos are meant to be “a crucial source of overnight funding for brokerage firms, hedge funds and other financial institutions.” The Fed hopes this new repo expansion will “ensure the proper functioning of the market for Treasuries, which influences all other credit markets.”

Scott Sumner of the Mercatus Center, who writes from a “market monetarist” perspective that roughly believes the Fed has been too tight in overall monetary policy since the 2008 crisis, says via email that today’s actions are “reactive, not proactive. Taken in isolation, they are probably beneficial. But the Fed needs to further ease monetary policy to assure that it achieves its policy goals, as set by Congress.”

At his blog, Sumner suggests bold moves for the Fed such as an instant end to paying interest on bank reserves, as that policy is contractionary at a time we don’t want contractionary monetary policy, and to straight-up purchase “as many Treasuries (and MBSs [morgage-backed securities]) right NOW as required to raised the expected price level two years from today to a level 4% higher than today. Not gradually; buy them NOW.” (Emphasis his.)

As Cato Institute monetary policy maven George Selgin says in an email today, despite the total amounts of money involved in the repos, it is properly seen as a series of “temporary short-term loan allotments [that] aren’t cumulative. It’s like me offering you $5 to be repaid next Thursday, and then offering to lend you the same amount then, and again the following week. At no point am I lending more than $5, and always for a short term.”

That said, Selgin also writes: “The question that remains to be answered is whether the Fed will also find it necessary to increase either the size or the duration of its ongoing, outright security purchases, which it so far plans to continue only through April. I should not be at all surprised to see an announcement sometime soon concerning such a decision.” Selgin’s larger-scale critique of the Fed’s ways of managing monetary policy over the past few years can be found here.

This means that any possible wind-down of assets the Fed owns since the quantitative easing days post-2008 crisis seems over. That failure to wind-down is criticized today from a Misesian perspective for “constantly favoring and bailing out bankers and other parts of the financial sector, [which means] the Fed has put all other sectors and industries at a disadvantage. As a nonfinancial enterprise, it’s hard to compete for investors and capital when the Fed has guaranteed that the financial sector will be bailed out no matter what.”

The Fed’s announcement had no immediate positive effects on stock market price plunges, with the Dow Jones Industrial Average down nearly 10 percent today.

For more background on the Fed’s asset holdings, see this 2014 Reason feature by Jeffrey Hummel, “How the Fed Got Huge,” assessing the economic dangers of the Federal Reserve being such a huge holder of financial assets.

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The Sad Lesson of Million-Gate

As Snopes (and lots of others) have reported:

On March 3, 2020, a Twitter user posted a message that claimed former New York City Mayor Michael Bloomberg could have given each American $1 million for the amount he spent on advertisements during his failed 2020 U.S. presidential candidacy:

The tweet reached a much larger audience a few days later when it was uncritically presented by MSNBC anchor Brian Williams and Mara Gay, a member of the The New York Times editorial board:

The problem, it seems to me, isn’t just that Williams and Gay made an arithmetical mistake; mistakes happen.

It’s that they didn’t have the basic math sense to realize that something was off. Agreeing with an assertion that $500 million split among 327 million Americans would be, say, $3 per person would be an arithmetical mistake; it shouldn’t be that hard to quickly realize that 500/327 is about 1.5 rather than about 3, but one can easily flub that.

But $1 million for each American should obviously be vastly more than $500 million. Likewise, $500 million split among 327 million should obviously be vastly less than $1 million. More broadly, just as a matter of common sense, given that the average American’s yearly income is somewhere under $100,000 (all of us should have a sense of that from ordinary life, even if we don’t know the exact number off the top of our heads), no one American is going to spend ten times the national GNP on a political campaign.

The point of basic numeracy, I think, isn’t that people should know their multiplication table or be able to do long division. It’s that people should have a rough understanding of numbers that they can drawn on in situations like this, to know what makes sense and what doesn’t. Sad to see that lacking here.

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Italy Bans Short Sales, Blames Christine Lagarde For Stock Market Plunge

Italy Bans Short Sales, Blames Christine Lagarde For Stock Market Plunge

Four days after Italy’s former (and most likely future) prime minister, Matteo Salvini called for a short selling ban (referencing none other than George Soros who “built his fortune betting against Italy”) on Italian stocks, Italy’s market regulator, Consob, announced that short-selling would indeed be banned on Friday, March 13, with the temporary ban applying to 85 companies listed on Milan stock exchange.

Ironically, just two days ago, the head of Italy’s bourse, Raffaele Jerusalmi, said that a ban on short selling to deal with market reactions to the coronavirus outbreak would be useful only if applied at a European or broader level and for specific sectors.

“If there were sectors particularly at risk, an intervention by the regulatory authorities could be useful,” Raffaele Jerusalmi said in a streamed interview with Il Sole 24 Ore.

And to think all it took to change his mind was a 20% drop in the Italian stock market in the next two days.

And with Italy getting increasingly sensitive about its crashing market, there was an amusing development earlier, when the country’s Economic Development Minister Stefano Patuanelli said in an interview that ECB President Christine Lagarde caused the biggest stock market drop in Italy with her comments at the ECB press conference.

The minister added that he hopes her words were an accident referring to Lagarde’s comment that the ECB is “not here to close spreads”, because apparently so used are the Italians to central banks that do close spreads (especially when they are headed by other Italians-cum-former Goldmanites), that if anyone refuses to explicitly backstop Italy’s risk assets, they are an enemy of the state. 

And it’s not just Italy: late on Thursday, Spain’s Regulator also set a one-day short-sale ban on 69 stocks that fell more than certain amounts Thursday.

Finally, what none of the regulators appear to know is that banning short sales in a time of crisis does two things: i) it makes the liquidation period more painful and more drawn out, and ii) it results in an even greater drawdown when all is said and done, something the US learned in the depths of the financial crisis when the SEC did exactly the same thing, only to unleash another 30% of selling before the market stabilized around a “generational” low of 666. And come to think of it, it is now another generation’s turn to retest said low.

 

 

 


Tyler Durden

Thu, 03/12/2020 – 19:10

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Large Scale US Airstrikes Underway Against Iran-Backed Militias In Iraq

Large Scale US Airstrikes Underway Against Iran-Backed Militias In Iraq

After earlier in the day President Trump authorized the Pentagon to “do what we need to do” in terms of a military response against Iran-backed militias believed responsible for Wednesday’s rocket attacks on Camp Taji, which killed one British and two American soldiers, and wounded at least a dozen more, there are widespread reports the US has initiated massive airstrikes over southern Iraq late Thursday night. 

A BBC correspondent in the region is describing “multiple strikes across Iran-backed groups’ facilities” which include “logistics and drone warehouses.”

Early reports suggest the attack includes “large amounts of munitions” on multiple Iraqi Shia militia targets. Moments after initial reports on social media US defense offcials confirmed that “airstrikes are underway against Iran-backed militia group that hit Iraq base,” according to the Associated Press. 

As if the Mideast region and the world for that matter needs another crisis to worry about, this could be the start of the kind of tit-for-tat between the US and Iran which paved the way for the US killing by drone of IRGC Quds Force chief Qassem Soleimani on January 3rd. Since then, the two have been on a war footing. 

Defense Secretary Mark Esper hours ago warned the US would hold the groups behind Wednesday’s attack on Taji base accountable. “You don’t get to shoot at our bases and kill and wound Americans and get away with it,” he said earlier.

According to Fox News security correspondent Jennifer Griffin:

The US response will be “proportional” targeting multiple locations used by Iranian backed Shia militias across Iraq and along Syrian border.

Will be limited to airstrikes: source. Will degrade Shia militia/ Kata’eb Hezbollah ability to strike: US military source.

The US has said Kata’eb Hezbollah is responsible, given it’s “the only group known to have previously conducted an indirect fire attack of this scale against U.S. and coalition forces in Iraq.” The major attack had utilized at least 15 Soviet-era rocket artillery and further left a dozen wounded.

A top Pentagon general also said earlier the Iran-backed militias were to blame and that the US can identify the culprit with a “high degree of certainty”. 


Tyler Durden

Thu, 03/12/2020 – 18:59

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