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Gold, the Misery Index and Insanity

Posted with permission and written by Gary Christenson, The Deviant Investor (CLICK FOR ORIGINAL)

 

 

 

In 1980 Ronald Reagan spoke about the Misery Index. An economist had added the inflation rate to the unemployment rate, called it the Misery Index, and used it to indicate the social costs and economic difficulty for the middle class.

Today the Misery Index is much smaller than in 1980, thanks to … intelligent fiscal management, economically beneficial monetary policy from the Federal Reserve, and wise political policy from the White House. If you believe any of those, read no further.

Most people will agree that the Misery Index is much smaller today because the numbers have been gimmicked. Does anyone believe a few percent for inflation or around 5% unemployment? Massage(torture) the numbers and the Misery Index declines, incumbent politicians are re-elected, while far too many people remain out of work, earning practically nothing on their savings, and paying too much for food, clothing, drugs, medical care, college, transportation and so on.

What we need for this decade, instead of a Misery Index, is an Insanity Index based on measures than indicate how out of balance, crazy, unsustainable, and dangerous our current fiscal and monetary world has become. Consider a few examples:

• Wall Street bonuses (in excess of base pay) average around $150,000 per person per year. Obviously some receive significantly more than average. Finance, trading, and “paper pushing” have become incredibly profitable. Compare the average Wall Street bonus to the base annual wage for an E-5 U.S. military soldier. See graph below.

• The SNAP (food stamps) program has escalated from a cost of $15 billion in 1990 to about $74 billion in 2015. Measure the program costs in ounces of gold each year and then try to convince yourself that 60 million ounces of gold each year do not matter. See graph below. Gold is real and can’t be printed like most currencies. The program would “eat up” all the gold in Fort Knox about every three years. Insane!

• Student loan debt is approaching $1.4 trillion, climbing rapidly, and has increased about 11.5% per year, ever year, since 2006. The student loan debt, measured in gold, is over 1.1 billion ounces – about 8 times the gold supposedly stored in Fort Knox. See graph below of student loan debt measured in Fort Knox Gold Units – the 147,300,000 ounces of gold that supposedly are vaulted in Fort Knox.

• National Debt (official only – not including unfunded liabilities) currently exceeds $19 trillion, and that debt has increased, and increased, and … increased about 9% per year, ever year, since 1971. The official national debt of $19 trillion, measured in gold, is about 15 billion ounces – around 100 times the quantity of gold supposedly stored in Fort Knox. In 1937 the Fort Knox gold was an asset and a national treasure. Today the U.S. government OWES that national treasure about 100 times … and has what to show for those expenditures and $19 trillion in debt? Insane!

My thoughts:

• The average Wall Street bonus is about five times the annual wage of an E-5 soldier, and the ratio is increasing. Perhaps the economy overemphasizes the value of the Wall Street casino and paper money, and does not appreciate the soldier enough. Short term insanity!
• The Food Stamps program is expensive. How crazy is running a program that spends the equivalent of 60 million ounces of gold each year when the supposed total gold savings of the U.S. is about 260 million ounces, of which 147 million are supposedly stored in Fort Knox? Insane!
• Student loan debt is obviously out of control, increasing rapidly, and may not be repaid unless the Fed and politicians devalue the dollar to near worthlessness. How insane is a program that substantially increases the cost of a college education, creates increasingly unpayable debt, and saddles graduates with a crushing debt load before they are employed?
• National debt, over $19 Trillion, doubles every eight years on average. Given the “spend, spend, spend” mentality of our politicians, military, and entitlement programs, the national debt will probably double even more rapidly in the next two decades. In round numbers the debt will be $20 trillion by the end of 2016. Can you imagine $80 trillion in debt by the year 2032 (two doubles in 16 years)? Borrow and spend may buy votes and military conquests in the short term but in the longer term expect this insanity to bring dire consequences to the people, country, U.S. economy, and the world.

The Insanity Index:

An index could be created – but what is the point? The United States fiscal and monetary policies passed “crazy” long ago, and now are pushing deeper into insanity with negative interest rates, a war on cash, out of touch Federal Reserve policy, insane debt, QE, uncontrolled deficit spending, and a “what could go wrong” attitude. Clearly the “paper game” has a limited life expectancy, Wall Street is due for a reset, government spending programs and pension plans are on life support, food stamps and student loans are two of many programs aggressively pushing the U.S. government into insolvency – and the solution is … negative interest rates, more QE, and a war on cash! Desperate and delusional!

Suppose the U.S. national debt in 2032 exceeds $80 trillion and the system has not yet imploded … what will be a fair price for an ounce of gold or an average house? What will that 30 year T-bond you bought in 2016 be worth in purchasing power in 2032? What will be the purchasing power of your saving account or retirement account or Social Security check? Debt, desperation and delusional thinking do not buy groceries, shelter, and health, or create a vibrant economy.

Bubbles always pop. Delusions can persist for years or decades, but they eventually crash on the rocky shores of reality. Gold and silver were valuable 3,000 years before the first central bank and I submit they will be valuable 3,000 after the world regains monetary sanity.

Given the insanity of endless borrow and spend programs, ever increasing debt, overpriced stocks and bonds, desperation and delusions, and … so much more … have you stacked physical gold in preparation for the inevitable consequences of all the above?

 

 

Please email with any questions about this article or precious metals HERE

 

 

 

Gold, the Misery Index and Insanity

Posted with permission and written by Gary Christenson, The Deviant Investor (CLICK FOR ORIGINAL)

 

 

GE Christenson is the owner and writer for the popular and contrarian investment site Deviant Investor and the author of the book, “Gold Value and Gold Prices 1971 – 2021.” He is a retired accountant and business manager with 30 years of experience studying markets, investing, and trading. He writes about investing, gold, silver, the economy, and central banking. His articles are published on Deviant Investor as well as other popular sites.

 

via Zero Hedge http://ift.tt/1RHmqO3 Sprott Money

With the increasing propaganda wars, we thought a reminder of just how naive many Westerners are when it comes to their news-feed. As Arjun Walia, of GlobalResearch.ca, notes,  Dr. Ulfakatte went on public television stating that he was forced to publish the works of intelligence agents under his own name, also adding that noncompliance with these orders would result in him losing his job.

He recently made an appearance on RT news to share these facts:

I’ve been a journalist for about 25 years, and I was educated to lie, to betray, and not to tell the truth to the public.

 

But seeing right now within the last months how the German and American media tries to bring war to the people in Europe, to bring war to Russia — this is a point of no return and I’m going to stand up and say it is not right what I have done in the past, to manipulate people, to make propaganda against Russia, and it is not right what my colleagues do and have done in the past because they are bribed to betray the people, not only in Germany, all over Europe.

It’s important to keep in mind that Dr. Ulfakatte is not the only person making these claims; multiple reporters have done the same and this kind of truthfulness is something the world needs more of.

One (out of many) great examples of a whistleblowing reporter is investigative journalist and former CBC News reporter Sharyl Attkisson.

She delivered a hard-hitting TEDx talk showing how fake grassroots movements funded by political, corporate, or other special interests very effectively manipulate and distort media messages.

Another great example is Amber Lyon, a three-time Emmy award winning journalist at CC, who said that they are routinely paid by the US government and foreign governments to selectively report and even distort information on certain events. She has also indicated that the government has editorial control over content.

Ever since Operation Mockingbird, a CIA-based initiative to control mainstream media, more and more people are expressing their concern that what we see in the media is nothing short of brainwashing.

This is also evident by blatant lies that continue to spam the TV screen, especially when it comes to topics such as health, food, war (‘terrorism‘), poverty, and more.

Things have not changed, in fact, when in comes to mainstream media distorting information and telling lies. They have gotten much worse in recent years, in fact, so it is highly encouraging that more people are starting to see through these lies, even without the help of whistleblowers like Dr. Ulfakatte.

One great example is the supposed ‘war on terror,’ or ‘false flag terrorism.’ There are evenWikileaks documents alluding to the fact that the United States government planned to “retaliate and cause pain” to countries refusing GMOs.

Mainstream media’s continual support of GMOs rages on, despite the fact that a number of countries are now banning these products.

The list of lies goes on and on. It’s time to turn off your T.V. and do your own research if you are curious about what is happening on our planet. It’s time to wake up.

via Zero Hedge http://ift.tt/1SiqK6X Tyler Durden

Over the course of his campaign, Bernie Sanders has made it clear that criminal justice reform is something he cares quite a lot about.

“I consider reforming our criminal justice system one of the most important things that a president of the United States can do,” the Vermont senator told a Chicago crowd in December. Sanders has called the incarceration rate in America “an international embarrassment,” and earlier this month, he said the following during a debate with Hillary Clinton:

“Where we are right now, is having more than 2.2 million people in jail — more than any other country on Earth. This is a campaign promise: At the end of my first term, we will not have more people in jail than any other country.”

Given the high rate of incarceration in the US, it’s important that Americans don’t take their freedom for granted because, well, because the government won’t hesitate to throw you in jail. Once there, UN guidelines only require that you get to breathe fresh air for one hour a day – the standard minimum guidelines call for “at least one hour of suitable exercise in open air daily.”

You can believe that inmates cherish that hour and you can imagine how shocked the residents of Indiana’s Wabash maximum security prison were to find out from researchers that one third of all children aged 5 to 12 in the UK play outdoors for less than 30 minutes each day, while a fifth of parents surveyed said their children don’t go outside at all.

“Outdoor play isn’t happening,” the “Dirt Is Good” initiative found in a survey of 12,000 parents. “Almost a third of children play outside for 30 minutes or less a day and one in five don’t plan outside at all on an average day.” Watch below as inmates react to the study.  

So what are kids in the UK doing instead? Why, staring at screens of course. “Children spend twice as much time on screens inside as they do playing outside,” the same study found. 

But it’s not all bad news. Children in the UK are far more likely to be able to make up for lost time outdoors later in life than are kids in the US. The incarceration rate in the UK is around five times lower than it is in America.

via Zero Hedge http://ift.tt/1qcCu4d Tyler Durden

In late September, during the peak of fall borrowing base redetermination , many oil and gas companies got their first glimpse of just how bad their liquidity would get when as a result of collapsing commodity prices, the value of their collateral crashed when PV-10s plunged by up to 80% Y/Y as of December 2015…

 

… and resulted in plunging access to secured liquidity as borrowings bases were eviscerated as much as 38% (for those unfamiliar with the basics of the semiannual redetermination process, the WSJ has a handy and brief 101).

 

Incidentally, it would have been far worse if the Dallas Fed and OCC had not stepped in and told lender banks to take it as easy on the debtors as possible, and in some cases, even suspend market-based calculations for price decks. The reason for this kid glove treatment was that many banks were unprepared to reserve and write down the value of their energy loans down to fair values as of the fall. 

Now, six months later, neither the OCC nor the (Dallas) Fed will be quite as generous and demand that banks act as a benevolent cartel. In fact, from what we have heard, it will be quite the opposite which explains the urgent scramble by many banks to force their debtor clients to issue equity and use the proceeds to repay secured loans.

As such, the imminent spring redetermination may prove to be just the catalyst to push the recently latent energy crisis to the next level.

So which companies are most at risk of a suddenly air pocket in liquidity? For the answer we go to a recent Bloomberg Intelligence slide deck prepared precisely for the purpose of showcasing the companies with maxed out credit lines. These are as follows:

 

However, while these companies certainly have pulled the short stick, ironically they may not be the first to go: after all, at least they had the foresight of using up their entire available revolvers (and in the odd case of PostRock, more than 100% of it) – it doesn’t matter if now the banks decide to collapse their borrowing base – the funds have already been wired and good luck getting a refund.

No, the companies most at risk may actually be those with that currently have some of the most highly utilized borrowing bases, ranging anywhere from 62% for Contango to 94% for Vanguard. It is these companies that will suddenly find themselves with zero incremental sources of liquidity as the banks proceed to whack anywhere from 30 to 50% of their borrowing base, leaving them scrambling to preserve liquidity and ultimately leading to bankruptcy court, in no small part under the pressure of secured and soon to be DIP lenders (and in most cases, the post reorg equity) who will demand the least amount of Enterprise Value be wiped out in the months before bankruptcy. Here are the names.

 

We would be most worried about the near-term viability of the companies shown above: in our humble opinion these are the companies most at risk from the upcoming spring redetermination period.

As for the companies shown below, we would not be quite as worried about them, although we are confident that in a few weeks time these “largest borrowing bases” will be substantially smaller.

 

Finally, courtesy of Haynes and Boone, here is a less impartial perspective thanks to a poll of banks, PE firms, and oil service companies who were asked to share their thoughts on the upcoming spring redetermination. Among the key findings:

• Overall respondents expect 79% of the borrowers to see a decrease in their borrowing base in spring 2016
• Overall respondents, on average, expect to see borrowing bases to decrease by 38% compared to what they were in fall 2015
• As to the most likely path to be taken by lenders and borrowers who face a borrowing base deficiency this spring: 36% of respondents said the would negotiate an amendment or extension with the lender; 31% said they would sell non-core assets; 15% said they would seek capital from a hedge fund or private equity fund; 4% said sell the company; 13% said restructure or declare bankruptcy

Haynes and Boone slideshow:

 

via Zero Hedge http://ift.tt/22J346p Tyler Durden

Submitted by Justin Raimondo via AntiWar.com,

The vicious attack on the Brussels airport and metro underscores the futility of focusing on the Syrian “Caliphate” as the epicenter of terrorism: as I’ve been saying in this space since 2001, the snake has no head. Both al-Qaeda and now ISIS are protean entities with a vast geographical spread, and what the Brussels attack – and, before it, the Paris attack – show is that they have successfully colonized Europe.

If the “Islamic State” proclaimed by ISIS was defeated and eliminated tomorrow, the terrorist and criminal networks that pulled off the Brussels attacks would still exist.

The population of Brussels is nearly 25 percent immigrants from Muslim countries, primarily Morocco and Algeria. And as it turns out the two brothers who were the core of the ISIS cell were habitués of the now notorious Molenbeek neighborhood, which consists primarily of the descendants of immigrants who settled there decades ago. Poor, and beset by petty crime, it is a pool in which terrorist recruiters fish with much success. The Syrian civil war has become a cause that attracts young toughs with no prospects, who are looking for some sense of meaning – and a way to express their alienation from the larger society in which they live. Molenbeek was also the base for those who planned and carried out the Paris attacks – it is, in effect, a general headquarters for ISIS to carry out its European operations. Salah Abdeslam, the chief planner of the Paris attacks, fled there and found sanctuary for four months before being caught.

In short, the problem of terrorism in Europe is an internal phenomenon, not something that comes from the outside. The Europeans imported it – and, as Germany’s welcoming of hundreds of thousands of refugees from the war-torn Middle East dramatizes, they are continuing to import it. Now they are living with the consequences.

In response, various right-wing populist parties have emerged in Europe that focus on stopping immigration from Muslim countries: in France, Britain, and Germany the rise of the anti-immigration movement has liberal elites in a panic. And yet these movements are for the most part exercises in futility, because that horse is already out of the barn. France, for example, is not going to deport the millions of North African Muslims who have lived in the country for a generation and more: they are French citizens. The same goes for Britain, and all the former empires of Europe whose colonial adventures brought in large numbers of the colonized. Now they are learning – too late – that colonialism is a two-way street.

What Brussels also showed is that the universal surveillance championed by the War Party as a necessary corollary of the “war on terrorism” would not have stopped the attacks: the ISIS cell consisted of two brothers, which not only ensured against infiltration but also made it next to impossible for any but the most intrusive surveillance to have had any effect. Indeed, the key to stopping the attacks was intelligence – which the Belgian authorities ignored. It turns out that Brahim el-Bakraoui had been deported from Turkey and the Belgians had been warned he was dangerous. They ignored the warning.

The Israeli newspaper Ha’aretz claims that the Belgian authorities had “advance and precise intelligence warnings” about the attack on the airport and the subway but failed to take sufficient action to prevent them. This highlights another lesson of the Brussels attacks: the European authorities are utterly incompetent and unprepared for the challenge they face.

Beyond that, however, is a larger problem: the ISIS phenomenon is largely a creation of the Western powers and its allies in the Gulf. The Saudis, the Qataris, and the Kuwaitis have long been funding Wahabist extremism, and they are the real progenitors of the ideology that inspired the creation of al-Qaeda and ISIS. Furthermore, regime change in Syria has long been on the American-European agenda, with funding for ‘moderate” Islamist head-choppers flowing from the US Treasury directly into the pockets of extremist gangs in the region. The same enabling action took place in Libya, where – led by Hillary Clinton – the Obama administration sided with “pro-democracy” rebels who turned out to be terrorists.

With the Syrian civil war as their training ground, the ISIS recruits of Molenbeek and other similar ghettos underwent the transformation from petty criminals to battle-hardened jihadists. And now they are swarming all over Europe, with reportedly thousands of them traveling back to Belgium, France, Britain, and elsewhere to wreak havoc in the name of their newfound cause.

For us here in America, the lessons of the European tragedy are there to be learned. There is only one solution to the problem of terrorism and it doesn’t involve going abroad in search of monsters to destroy. The point is to make sure those monsters never reach our shores.

Furthermore, we must withdraw from the Middle East – a possibility that doesn’t bear the economic consequences it once did, given the creation of new technologies that make domestic oil production far easier.

We are spending billions defending and sustaining the Saudi monarchy and the Gulf states – some of the most repressive regimes in the world. And for what? The interventionists declare that America’s role as a “global leader” represents the defense of our values. But does a regime that beheads “infidels” represent American values? Indeed, there is no operative difference between the internal rule of the ISIS “caliphate” and the Saudi Kingdom. Yet we are obsessed with destroying the former and cuddling up to the latter.

It’s too late for the Europeans, who are now forced to sleep in the bed they so assiduously made. It isn’t too late for America: we can learn the lesson of Brussels if only we have the will to do so.

via Zero Hedge http://ift.tt/22W3i6Z Tyler Durden

For the first time since January 2009, 12-month Saudi interbank rates have breached 2.00% – double the 1% lows of August.

 

This 'stress' is also evident in the record pace of collapse of Saudi money-supply.

 

 While Riyal forwards have rallied back from extreme bets on devaluation, they remain concerning for Saudi officials who to undertake some deep and fundamental changes to their economy, reforms that no amount of browbeating from organizations like the IMF could induce.

As OilPrice.com's Nick Cunningham details, a new report from The Atlantic Council finds that the extensive decline in oil revenues is focusing minds in Riyadh. The fiscal pressure is forcing “the kingdom’s leadership to modernize the economy,” the report concludes.

Saudi Arabia ran a fiscal deficit of about $98 billion in 2015, a figure that will decline only slightly to $87 billion this year. That deficit total is also probably closer to $120 billion in reality though, given that the costs from the war in Yemen were not included.

The fiscal squeeze is forcing some changes. First, the Saudi government is looking at new taxes, including a 5 percent value added tax (VAT). That may seem like a run-of-the-mill austerity measure, but for Saudi Arabia it is a novel proposal: it will be the first tax imposed in the country.

More to the point, the VAT is illustrative of where Saudi Arabia is heading. The Atlantic Council argues that the kingdom is starting to reform its economy in fundamentally positive ways. Low oil prices are forcing it to rely more upon taxes and less on oil revenues. That would start to make Saudi Arabia less of a “rentier state,” a country that has no need to build much of an economy because resource extraction is so lucrative. Rentier states often suffer from greater corruption and a deeper lack of responsiveness to the needs of the public, since abundant oil revenues mean that the government does not need revenue from its populace.

Another major shift in Saudi Arabia could be the partial privatization of Saudi Aramco. Prince Mohammed bin Salman made news in early January when he told The Economist that the government was mulling over such a step. There has been a lot of speculation about why an IPO would be staged. Transparency appears to be a top concern. While Aramco routinely publishes operational data, detailing production figures, shipments, and downstream activity, the company reveals very little about its finances. “The most likely explanation for Saudi Aramco’s lack of financial transparency is that it wants to hide how much money is siphoned off to the royal family,” The Atlantic Council report suggests.

By privatizing some Aramco assets (likely downstream) and cleaning up and publishing data from the company’s books, the Saudi government apparently is showing some recognition that its relationship with the public must change. “Naturally, the royal family is unlikely to find itself cut off from any of the oil benefits to which it is accustomed. However, what is likely to change is that the family will no longer see itself as able to access funds without being held responsible by the Saudi public.”

Obviously, the downturn in oil prices is not exactly something that the Saudi government is happy about. Although it has about $616 billion in cash reserves, enough to finance its large fiscal deficits for years, Saudi Arabia is burning through those reserves at a rapid clip. In 2014, Saudi Arabia had $746 billion in reserves at its highest point.

Also, the government’s perennial top concern is social stability. Having to introduce new austerity measures, reduce subsidies, raise some taxes, and generally acknowledge that the country’s luxurious days could be coming to an end, the fall in oil prices presents some new risks. As The Atlantic Council notes in its report, any instability in a country that accounts for 10 percent of the world’s oil production would be felt across the globe.

Still, the reforms underway are long overdue, and in that sense, there is a silver lining in the crude price crash. In recent years, Saudi Arabia has succeeded in starting to build a more diversified industrial economy, with new facilities producing chemicals, fertilizers, aluminum, cement, and other industrial products. Up until now, however, economic diversification has not gone as far as it could. Part of the reason is that Saudi Arabia, as a “rentier state,” does not tax manufacturing, and thus, has had little incentive to promote its growth. For that matter, it has had little incentive to promote the growth of any non-oil sector of its economy.

Now, the reforms underway – new taxes, subsidy cuts, and the partial privatization of Saudi Aramco – are making Saudi Arabia “increasingly resemble most modern economic states.”

However, it is still early days and the reforms are far from assured. “Admittedly, complete change will not come overnight, but it is nonetheless being prodded on by the decline in income,” the report concludes.

via Zero Hedge http://ift.tt/1PC4BOP Tyler Durden

It appears George R.R. Martin’s best-selling book series has a lot of similarities to the ‘ice’ and ‘fire’ of the current election campaign. Two powerful families (the establishment vs Bernie and Trump) of liars and honest men (and women) playing a deadly game for control of the ‘kingdom’…

 

h/t @g_mastropavlos

via Zero Hedge http://ift.tt/1Mx9rT0 Tyler Durden

Submitted by Ron Paul via The Ron Paul Institute for Peace & Prosperity,

It was not long after last week’s horrifying bombings in Brussels that the so-called security experts were out warning that Europeans must give up more of their liberty so government can keep them secure from terrorism. I guess people are not supposed to notice that every terrorist attack represents a major government failure and that rewarding failure with more of the same policies only invites more failure.

I am sure a frightened population will find government promises of perfect security attractive and may be willing to allow more surveillance of their personal lives. They should pause a little beforehand and consider what their governments have done so far to keep them “safe.”

The government of France, for example, has been particularly aggressive in its Middle East policy. Then-French President Sarkozy was among the most determined proponents of “regime change” in Libya. That operation has left the country in chaos, with much of the territory controlled by an ISIS and al-Qaeda that were not there before the “liberation.” As we learned last week from Hillary Clinton’s emails, Sarkozy and British Prime Minister David Cameron were much more concerned with getting their hands on Libya’s oil after the overthrow of Gaddafi. The creation of a hotbed of terrorism that could easily make its way to Europe was not important. They wanted to secure enormously profitable deals for well-connected French and English energy companies.

Likewise, European governments have been very active in the five-year, US-led effort to overthrow the Assad government in Syria. This foolish move has boosted both ISIS and al-Qaeda in Syria to the point where they nearly over-ran the country late last year. It has also led millions to flee their war-torn country for a Europe that has opened its doors with the promise of generous benefits to anyone who can make it there. Is it any surprise that so many hundreds of thousands took them up on the offer? Is it any surprise that in this incredible flood of people there may be more than a few who are interested in more than just free housing and a welfare check?

Europeans should be demanding to know why their governments provoke people in the Middle East with aggressive foreign policies, and then open the door to millions of them. Do their leaders just lack basic common sense?

Usually the so-called security experts who advise more government surveillance after a terrorist attack have a conflict of interest. They often benefit when the security state is given a bigger budget. Insecurity is the bread-and-butter of the security “experts.” But why is it that after a terrorist attack, governments are rewarded with bigger budgets and more power over people? Shouldn’t failure be punished instead of rewarded?

As in the United States, the security crisis in Europe is directly tied to bad policy. Until bad policy is changed, no amount of surveillance, racial profiling, and police harassment can make the population safer. Europeans already seem to understand this, and as we have seen in recent German elections they are abandoning the parties that promise that the same old bad policies will this time produce different results. Hopefully Americans will also stand up and demand a change in our foreign policy before bad policy leads to more terrorist violence on our shores.

via Zero Hedge http://ift.tt/1UycGMX Tyler Durden

Just one more cut in rates more negative and just a little more ETF buying and bond purchases and we are sure the Japanese will start spending as wages rise…

 

4th monthly decline in a row and absent the tsunami and tax-hike reaction, this is the worst drop since Dec 2010…

 

At what point do you just admit failure?

via Zero Hedge http://ift.tt/21Q5Hha Tyler Durden

It would be difficult to find a program that better exemplifies the word “failure” than the Pentagon’s “train and equip” effort in Syria.

Last May, US Central Command issued a hilariously absurd press release outlining what was quite obviously going to be a disastrous effort to arm rebel fighters. “The US military and partner forces have begun training the initial class of appropriately vetted Syrian opposition recruits this week to support the effort to degrade and ultimately defeat ISIL in Syria,” the PR read.

The idea was to field a contingent of more than 5,000 fearsome warriors by the end of the year.

(File photo: Dec. 17, 2012 Syrian rebels attend a training session in Maaret Ikhwan near Idlib, Syria)

Long story short, the effort was a fiasco – a complete debacle – a hilarious screwup. First, Colonel Nadim al-Hassan and an unknown number of other fighters from “Division 30” were kidnapped in the Aleppo countryside in July. “A senior U.S. defense official confirmed the snatched fighters had gone through the initial vetting process to receive training in Turkey,” The Daily Beast wrote at the time. “But then, for reasons that remain unclear, they traveled to Syria before they were ready to do battle with ISIS.” Subsequently, al-Nusra simply arrested them at a checkpoint near Zahart al-Malkia.

“We warn soldiers of (Division 30) against proceeding in the American project,” the al-Qaeda affiliate said in a statement distributed online. “We, and the Sunni people in Syria, will not allow their sacrifices to be offered on a golden platter to the American side.

As humiliating as that most certainly was, it got far, far worse. In late September, rumors circulated that Division 30 commander Anas Ibrahim Obaid had defected to al-Nusra after he disappeared in Aleppo.

Reports since yesterday claim US-backed leader Anas Obaid has betrayed US & handed weapons to Jabhat al-Nusra #Syria http://pic.twitter.com/yTZqVT3CI0

— Charles Lister (@Charles_Lister) September 22, 2015

Apparently, Obaid entered Syria from Turkey the day before with some 70 new graduates of the US program and a dozen or so four-wheel vehicles equipped with machine guns and ammunition. Although there are competing accounts as to what exactly happened next, Division 30 ultimately handed over all of the ammunition and the pickup trucks to al-Nusra in exchange for “safe passage.”

“They handed over a very large amount of ammunition and medium weaponry and a number of pick-ups,” one Abu Fahd al-Tunisi, an al-Nusra member, said on Twitter. “A strong slap for America… the new group from Division 30 that entered yesterday hands over all of its weapons to Jabhat al-Nusra after being granted safe passage,” he added.

Yes, “a strong slap for America” that came just days after “a strong slap” for taxpayers who on September 16 learned that only “four or five” graduates of the $500 million program were still fighting in Syria.

The program was understandably mothballed a few weeks later, but that doesn’t mean US-trained forces didn’t continue to rack up embarrassing battlefield losses to al-Nusra. In fact, it was exactly two weeks ago that al-Nusra took over Maarat Numan from Division 13 (one of the first rebel groups to receive US-made TOWs), confiscating anti-tank missiles, armored vehicles, a tank, and other arms in the process. “We congratulate [al-Nusra chief Mohammad] al-Jolani on this conquest!” Division 13’s leadership exclaimed, sarcastically on Twitter.  

????? #????_?????? ???? ??????? ????? ?????? ???????
????? ?? ???????? ??? ?????? ?? ????? ??? ???? ???
?????? ???????? ??? ????? !

— ?????? 13 (@13alferqa13) March 13, 2016

Throw in the fact that the FSA – not to mention all the other “moderate” rebels fighting in and around Aleppo – just got finished having their proverbial asses handed to them by Russia and Hezbollah and you’d think things couldn’t get much sillier for the Pentagon.

But you’d be wrong. 

As The LA Times reports, Pentagon-armed Kurdish units (so these are different fighters from those involved in “train and equip”) are now engaging in firefights with CIA-armed forces in what is surely the most ridiculous example of US strategy gone horriby (and hilariously) awry to date. 

“Syrian militias armed by different parts of the U.S. war machine have begun to fight each other on the plains between the besieged city of Aleppo and the Turkish border, highlighting how little control U.S. intelligence officers and military planners have over the groups they have financed and trained in the bitter five-year-old civil war,” the Times writes. “The fighting has intensified over the last two months, as CIA-armed units and Pentagon-armed ones have repeatedly shot at each other while maneuvering through contested territory on the northern outskirts of Aleppo, U.S. officials and rebel leaders have confirmed.” Here’s more: 

In mid-February, a CIA-armed militia called Fursan al Haq, or Knights of Righteousness, was run out of the town of Marea, about 20 miles north of Aleppo, by Pentagon-backed Syrian Democratic Forces moving in from Kurdish-controlled areas to the east.

 

“Any faction that attacks us, regardless from where it gets its support, we will fight it,” Maj. Fares Bayoush, a leader of Fursan al Haq, said in an interview.

 

Rebel fighters described similar clashes in the town of Azaz, a key transit point for fighters and supplies between Aleppo and the Turkish border, and on March 3 in the Aleppo neighborhood of Sheikh Maqsud.

 

The attacks by one U.S.-backed group against another come amid continued heavy fighting in Syria and illustrate the difficulty facing U.S. efforts to coordinate among dozens of armed groups that are trying to overthrow the government of President Bashar Assad, fight the Islamic State militant group and battle one another all at the same time.

 

At first, the two different sets of fighters were primarily operating in widely separated areas of Syria — the Pentagon-backed Syrian Democratic Forces in the northeastern part of the country and the CIA-backed groups farther west. But over the last several months, Russian airstrikes against anti-Assad fighters in northwestern Syria have weakened them. That created an opening which allowed the Kurdish-led groups to expand their zone of control to the outskirts of Aleppo, bringing them into more frequent conflict with the CIA-backed outfits.

The reference to “Kurdish-led” groups is a nod to the Syrian Democratic Forces (SDF), a make-believe alliance between the YPG and “Syrian Arabs.” As we noted last autumn in our classic post “Full Metal Retard: US Launches ‘Performance-Based’ Ammo Paradrop Program For Make-Believe ‘Syrian Arabs’“, there is no such thing as the SDF. The US was looking for a way to arm the YPG without enraging Erdogan, and so Washington tried to say that the Kurds had in fact joined forces with moderate Arabs in an ad hoc anti-Assad coalition. The Pentagon then promptly dropped 50 tons of ammo into the middle of the desert on pallets for the Kurds to retrieve (Erdogan saw right through the ruse, but that’s another story). “The group is dominated by Kurdish outfits known as People’s Protection Units or YPG,” the Times goes on to note. “A few Arab units have joined the force in order to prevent it from looking like an invading Kurdish army, and it has received air-drops of weapons and supplies and assistance from U.S. Special Forces.”

Of course none of this should surprise anyone. The Kurds are looking to bridge the territory they control east of the Euphrates along the Syrian-Turkish border with that which they control in Aleppo and that means moving into the Azaz corridor (i.e. the grey area between the purple areas on the map below).

The Kurd’s recent move to declare federalism will only make the push to unite their territory in northern Syria more urgent. 

What makes this especially absurd is that Erdogan is firing on the YPG in and around Azaz. And by “YPG” we mean the Pentagon-backed “SDF.” So summing up, you have the Pentagon-backed Kurds fighting CIA-backed Islamists in an area where US-ally Erdogan is firing on the same Pentagon-backed Kurds.

And believe it or not, that’s not the punchline. The punchline is that Obama is considering restarting the train and equip program which would mean that in addition to the Pentagon-backed Kurds fighting in close proximity to and sometimes against CIA-backed rebels, you’d have a separate group of Pentagon-backed fighters operating in the very same area and everyone would be dodging artillery fire from the Turkish army. 

Perhaps an unnamed US official who spoke to the LA Times summed it up best: “This is complicated.”

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via Zero Hedge http://ift.tt/1SiaN0l Tyler Durden