The Kremlin has slammed NATO’s multi-national “Sea Shield 2019” naval drills which kicked off in the Black Sea on Friday and will include limited Ukrainian defense forces. The Russian Ministry of Foreign Affairs (MFA) said upon the military games’ beginning, which also happens to mark NATO’s 70th birthday: “Having militarized NE Europe, NATO has decided to increase its military presence in the Black Sea.”
The Sea Shield 2019 is set to run from April 5 to April 13 and involves “14 Romanian warships and six warships from Bulgaria, Canada, Greece, the Netherlands, Turkey with 2,200 troops will carry out joint combat tasks in the Black Sea region,” according to Ukraine’s Mission to NATO and the Romanian Ministry of National Defense. Aerial assets will also be deployed as part of the games.
Prior drills on the Black Sea by war ships of the NATO Standing Maritime Group-2, via the AFP
Crucially, non-NATO countries Ukraine and Georgia will also take part— both of which have long been potential flash points between the west and Russia. However, officials reports say their involvement will be limited to coast guard maneuvers.
But NATO officials have described the exercise as “a long-planned, annual exercise led by Romania” and claimed that “neither the patrols, nor the exercise, are linked to events in Ukraine.”
“Three Allied nations [Romania, Bulgaria, and Turkey] border the Black Sea, and NATO regularly conducts exercises and operations in the Black Sea in order to maintain credible deterrence and readiness,” a NATO official continued in response to questions from Russian reporters last week.
Secretary General Jens Stoltenberg with Secretary of State Mike Pompeo commemorating NATO’s 70th in Washington on Wednesday, April 3, 2019. Image source: AP
On Tuesday US Permanent Representative to NATO Kay Bailey Hutchison told reporters ahead of the NATO foreign ministerial meeting in Washington that the alliance was prepared to ramp up its defense posture in the Black Sea due to “destabilizing” and “unacceptable” behavior.
High on the agenda of the NATO foreign ministers during the Washington meeting marking 70 years of the alliance’s existence was the Kerch Strait incident. As part of the conference NATO chief Jens Stoltenberg called on Moscow to release the Ukrainian vessels and their crews which had been held since the Nov. 25 incident.
Meanwhile this week Russia reportedly conducted limited tests of its own defensive and offensive ship weapon in the Black Sea, in order to send a message in relation to the NATO build-up.
Meanwhile, Russian navy tests “Mosquito” anti-ship missiles in Black Sea. https://t.co/O1arSmL1Fu
On Thursday NATO Secretary-General Jens Stoltenberg told reporters that the alliance plans to step up defense of Ukraine and Georgia in the Black Sea and Caucuses, as NATO is prepared to beef up its presence in the region.
He said the NATO allies had agreed on a package of measures to step up support for Ukraine and Georgia that included increased surveillance drills and “training of maritime forces and coast guards, port visits and exercises, and sharing information.” Ukraine and Georgia, which like Ukraine is a Russian neighbor and part of the former Soviet Union, are not NATO members.
But it doesn’t appear the Kremlin is flinching, especially given that the 24 Ukrainian sailors still in pre-trial custody following the Kerch Strait incident have just had the Moscow’s Lefortovo court extended their arrest until April 24, according to TASS.
Russian officials say the men face up to 6 years in prison if found guilty on charges which include “illegally crossing Russia’s state border”. Should that sentencing come, it will be sure to set off a new round of heated rhetoric, bringing tensions between Moscow and Washington to boiling point.
via ZeroHedge News http://bit.ly/2UzBOZx Tyler Durden
Despite all of the twists and turns, the incomprehensible motions, legal maneuvers and behavior of Prime Minister Theresa “I Surrender” May, for me there’s been a simple through-line to it all.
The EU does not want Brexit and if it were to happen it will inflict incredible damage to the British political system and its integrity.
This is really no different than what happened in Greece in 2015. And it was directed by Angela Merkel than and it is being directed by Merkel today.
The EU’s intransigence in negotiations, aside from it having no other option, is an elaborate bluff to separate and divide the British political class, now that the people have voted to leave.
It preyed on the divisions within the U.K.’s structure, empowering Scottish ‘nationalists,’ the SNP, while offering power to the eternal victim-status seeking Labour leadership. It knew it had a Tory leadership willing to play ball with them to find a way to deliver BRINO – Brexit in Name Only – and a civil service that would provide all the supporting data to gaslight millions.
The hysteria over a ‘No-Deal’ Brexit is akin to the hysteria we’re seeing among the hard-left over Climate Change. So, I found it fitting watching a bunch of bare-assed, self-absorbed British watermelons – green on the outside, red on the inside – disrupting Parliament this week.
Both are built on foundations of sand. And both are expressions of the fear that their narratives and political power have peaked and are now on the down side. And when people begin to feel the loss of power and the fear kicks in, they become more desperate and more willing to cheat to win.
Make no mistake, the EU is cheating here. Billions in free advertising for their union is at their beck and call and put into the mouths of MPs, Cabinet Ministers and the media to peddle the worst and most disingenuous arguments against Brexit.
And that pressure is causing real cracks in the British political system.
While Labour, the SNP and the new Independent Group try to paint Brexit as some “Tory psychodrama” for political gains to blame shift their own betrayal of voters the Tories themselves are now fracturing under the pressure somewhat.
From Nick Boles resigning from the party after his ‘Common Market 2.0’ proposal failed to Richard Drax’s mea culpa for mistakenly voting for the May/Merkel Surrender Treaty on March 29th we’re seeing the effects this is having on everyone.
Some of it is Kabuki theatre to be sure. Boles’ resignation was an obvious stunt meant to shame MPs. Even Drax’s regrets had an air of worry over the voter backlash for betraying the Leave vote.
And look at the results. Arch-Remainer and former Attorney General, Dominic Grieve, who spent months working with EU officials to strategize openly on how to betray Brexit now faces de-selection from his constituents.
That’s what it takes to get rid of these people. The so-called Independent Group resigned from their parties and refused to call by-elections to confirm their seats. This is completely against all political protocol and an insult to their constituents. But what would you expect from an arrogant, self-important ignoramus like Anna Soubry?
The reason the EU’s plan to scuttle Brexit is failing is precisely because of what I saw months ago – the British people want their will, no matter how flawed, respected. And the political class is too consumed with its own self-righteousness that it cannot see this.
The entire process has made a mockery of the democratic institutions that exist across the West.
And that was precisely the effect the EU wanted out of all of this. Because even if they lose the latest Battle of Britain, they win in creating the philosophical case as to why direct representation is a stupid form of government.
The EU is a dream arrangement for globalists. It is an unelected leadership mostly immune from the changes in demographics and voter opinions pushing humanity, a base and unruly lot in their mind, towards their chosen outcomes.
By exposing the divisions and corruption of the world’s oldest parliament the EU is furthering the argument for its inevitability in the minds of the younger generation in Britain, setting older, more experienced Leavers against younger, less worldly Remainers.
But it’s not working as well as they expected. The fear campaign has radicalized the hard-core Remain camp. They were always going to be who they are. What it hasn’t done is soften the middle of the electorate. In fact, if anything, they’ve hardened in their stance that they don’t want to be ruled by either Westminster or Brussels.
Now this is music to my libertarian ears, of course, because it highlights what happens when the costs of the political and economic status quo rise above the benefits of it – anger and rebellion.
We’re seeing it in France. We’ve yet to truly see it in Italy. And we’re only beginning to see it in Britain.
The politicians are trying to do the impossible with an angry electorate – betray their wishes and blame the other guy.
Theresa May, in the words of one of my followers, “is acting like a used-car salesman wearing down a mark.”
But her act has worn thin and so has the bullying act in Brussels. And the same can be said for the multiple levels of betrayal of Jeremy Corbyn and Labour.
As we approach April 12th, May will try her blackmail scheme one more time to satisfy her puppet-masters, this time trying to bring Corbyn into her vortex of failure, while deeper divisions are revealed within the House of Commons and more MPs resign, threaten and whine about the looming catastrophe of ‘extremists.’
The United Kingdom may not survive Brexit in its current form. But many who are pushing for disunion, the Scots, may find themselves surprised when they themselves have to face their voters.
And that would leave the EU wondering what went wrong, as they got everything they wanted – a broken, divided U.K. – and still lost the war.
via ZeroHedge News http://bit.ly/2VsQHKv Tyler Durden
“Russia is an inalienable and organic part of Greater Europe and European civilization. Our citizens think of themselves as European. That’s why Russia proposes moving towards the creation of a common economic space from the Atlantic to the Pacific Ocean, a community referred to by Russian experts as ‘the Union of Europe’ which will strengthen Russia’s potential in its economic pivot toward the ‘New Asia.’”
– Vladimir Putin, President of the Russian Federation, February 2012
The allegations of ‘Russian meddling’ only make sense if they’re put into a broader geopolitical context.
Once we realize that Washington is implementing an aggressive “containment” strategy to militarily encircle Russia and China in order to spread its tentacles across Central Asian, then we begin to understand that Russia is not the perpetrator of the hostilities and propaganda, but the victim. The Russia hacking allegations are part of a larger asymmetrical-information war that has been joined by the entire Washington political establishment. The objective is to methodically weaken an emerging rival while reinforcing US global hegemony.
Try to imagine for a minute, that the hacking claims were not part of a sinister plan by Vladimir Putin “to sow discord and division” in the United States, but were conjured up to create an external threat that would justify an aggressive response from Washington. That’s what Russiagate is really all about.
US policymakers and their allies in the military and Intelligence agencies, know that relations with Russia are bound to get increasingly confrontational, mainly because Washington is determined to pursue its ambitious “pivot” to Asia plan. This new regional strategy focuses on “strengthening bilateral security alliances, expanding trade and investment, and forging a broad-based military presence.” In short, the US is determined to maintain its global supremacy by establishing military outposts across Eurasia, continuing to tighten the noose around Russia and China, and reinforcing its position as the dominant player in the most populous and prosperous region in the world. The plan was first presented in its skeletal form by the architect of Washington’s plan to rule the world, Zbigniew Brzezinski. Here’s how Jimmy Carter’s former national security advisor summed it up in his 1997 magnum opus, The Grand Chessboard: American Primacy And Its Geostrategic Imperatives:
“For America, the chief geopolitical prize is Eurasia… (p.30)….. Eurasia is the globe’s largest continent and is geopolitically axial. A power that dominates Eurasia would control two of the world’s three most advanced and economically productive regions. …. About 75 per cent of the world’s people live in Eurasia, and most of the world’s physical wealth is there as well, both in its enterprises and underneath its soil. Eurasia accounts for 60 per cent of the world’s GNP and about three-fourths of the world’s known energy resources.” (“The Grand Chessboard:American Primacy And Its Geostrategic Imperatives”, Zbigniew Brzezinski, Basic Books, page 31, 1997)
14 years after those words were written, former Secretary of State Hillary Clinton took up the banner of imperial expansion and demanded a dramatic shift in US foreign policy that would focus primarily on increasing America’s military footprint in Asia. It was Clinton who first coined the term “pivot” in a speech she delivered in 2010 titled “America’s Pacific Century”. Here’s an excerpt from the speech:
“As the war in Iraq winds down and America begins to withdraw its forces from Afghanistan, the United States stands at a pivot point. Over the last 10 years, we have allocated immense resources to those two theaters. In the next 10 years, we need to be smart and systematic about where we invest time and energy, so that we put ourselves in the best position to sustain our leadership, secure our interests, and advance our values. One of the most important tasks of American statecraft over the next decade will therefore be to lock in a substantially increased investment — diplomatic, economic, strategic, and otherwise — in the Asia-Pacific region…
Open markets in Asia provide the United States with unprecedented opportunities for investment, trade, and access to cutting-edge technology…..American firms (need) to tap into the vast and growing consumer base of Asia…The region already generates more than half of global output and nearly half of global trade. As we strive to meet President Obama’s goal of doubling exports by 2015, we are looking for opportunities to do even more business in Asia…and our investment opportunities in Asia’s dynamic markets.”
(“America’s Pacific Century”, Secretary of State Hillary Clinton”, Foreign Policy Magazine, 2011)
The pivot strategy is not some trifling rehash of the 19th century “Great Game” promoted by think-tank fantasists and conspiracy theorists. It is Washington’s premier foreign policy doctrine, a ‘rebalancing’ theory that focuses on increasing US military and diplomatic presence across the Asian landmass. Naturally, NATO’s ominous troop movements on Russia’s western flank and Washington’s provocative naval operations in the South China Sea have sent up red flags in Moscow and Beijing. Former Chinese President Hu Jintao summed it up like this:
“The United States has strengthened its military deployments in the Asia-Pacific region, strengthened the US-Japan military alliance, strengthened strategic cooperation with India, improved relations with Vietnam, inveigled Pakistan, established a pro-American government in Afghanistan, increased arms sales to Taiwan, and so on. They have extended outposts and placed pressure points on us from the east, south, and west.”
Russian President Vladimir Putin has been equally critical of Washington’s erratic behavior. NATO’s eastward expansion has convinced Putin that the US will continue to be a disruptive force on the continent for the foreseeable future. Both leaders worry that Washington’s relentless provocations will lead to an unexpected clash that will end in war.
Even so, the political class has fully embraced the pivot strategy as a last-gasp attempt to roll back the clock to the post war era when the world’s industrial centers were in ruins and America was the only game in town. Now the center of gravity has shifted from west to east, leaving Washington with just two options: Allow the emerging giants in Asia to connect their high-speed rail and gas pipelines to Europe creating the world’s biggest free trade zone, or try to overturn the applecart by bullying allies and threatening rivals, by implementing sanctions that slow growth and send currencies plunging, and by arming jihadist proxies to fuel ethnic hatred and foment political unrest. Clearly, the choice has already been made. Uncle Sam has decided to fight til the bitter end.
Washington has many ways of dealing with its enemies, but none of these strategies have dampened the growth of its competitors in the east. China is poised to overtake the US as the world’s biggest economy sometime in the next 2 decades while Russia’s intervention in Syria has rolled back Washington’s plan to topple Bashar al Assad and consolidate its grip on the resource-rich Middle East. That plan has now collapsed forcing US policymakers to scrap the War on Terror altogether and switch to a “great power competition” which acknowledges that the US can no longer unilaterally impose its will wherever it goes. Challenges to America’s dominance are emerging everywhere particularly in the region where the US hopes to reign supreme, Asia.
This is why the entire national security state now stands foursquare behind the improbable pivot plan. It’s a desperate “Hail Mary” attempt to preserve the decaying unipolar world order.
What does that mean in practical terms?
It means that the White House (the National Security Strategy) the Pentagon (National Defense Strategy) and the Intelligence Community (The Worldwide Threat Assessment) have all drawn up their own respective analyses of the biggest threats the US currently faces.
Naturally, Russia is at the very top of those lists. Russia has derailed Washington’s proxy war in Syria, frustrated US attempts to establish itself across Central Asia, and strengthened ties with the EU hoping to “create a harmonious community of economies from Lisbon to Vladivostok.” (Putin)
Keep in mind, the US does not feel threatened by the possibility of a Russian attack, but by Russia’s ability to thwart Washington’s grandiose imperial ambitions in Asia.
As we noted, the National Security Strategy (NSS) is a statutorily mandated document produced by the White House that explains how the President intends to implement his national security vision. Not surprisingly, the document’s main focus is Russia and China. Here’s an excerpt:
“China and Russia challenge American power, influence, and interests, attempting to erode American security and prosperity. They are determined to make economies less free and less fair, to grow their militaries, and to control information and data to repress their societies and expand their influence.” (Neither Russia nor China are attempting to erode American security and prosperity.” They are merely growing their economies and expanding their markets. If US corporations reinvested their capital into factories, employee training and R and D instead of stock buybacks and executive compensation, then they would be better able to complete globally.)
Here’s more:
“Through modernized forms of subversive tactics, Russia interferes in the domestic political affairs of countries around the world.” (This is a case of the ‘pot calling the kettle black.’)
“Today, actors such as Russia are using information tools in an attempt to undermine the legitimacy of democracies. Adversaries target media, political processes, financial networks, and personal data.” (The western media behemoth is the biggest disinformation bullhorn the world has ever seen. RT and Sputnik don’t hold a candle to the ginormous MSM ‘Wurlitzer’ that controls the cable news stations, the newspapers and most of the print media. The Mueller Report proves beyond a doubt that the politically-motivated nonsense one reads in the media is neither reliably sourced nor trustworthy.)
The Worldwide Threat Assessment of the US Intelligence Community is even more explicit in its attacks on Russia. Check it out:
“Threats to US national security will expand and diversify in the coming year, driven in part by China and Russia as they respectively compete more intensely with the United States and its traditional allies and partners…. We assess that Moscow will continue pursuing a range of objectives to expand its reach, including undermining the US-led liberal international order, dividing Western political and security institutions, demonstrating Russia’s ability to shape global issues, and bolstering Putin’s domestic legitimacy.
We assess that Moscow has heightened confidence, based on its success in helping restore the Asad regime’s territorial control in Syria,…
Russia seeks to boost its military presence and political influence in the Mediterranean and Red Seas… mediate conflicts, including engaging in the Middle East Peace Process and Afghanistan reconciliation….
Russia will continue pressing Central Asia’s leaders to support Russian-led economic and security initiatives and reduce engagement with Washington. …Russia and China are likely to intensify efforts to build influence in Europe at the expense of US interests…” (“The Worldwide Threat Assessment of the US Intelligence Community”, USG)
Notice how the Intelligence Community summary does not suggest that Russia poses an imminent military threat to the US, only that Russia has restored order in Syria, strengthened ties with China, emerged as an “honest broker” among countries in the Middle East, and used the free market system to improve relations with its trading partners and grow its economy. The IC appears to find fault with Russia because it is using the system the US created to better advantage than the US. This is entirely understandable given Putin’s determination to draw Europe and Asia closer together through a region-wide economic integration plan. Here’s Putin:
“We must consider more extensive cooperation in the energy sphere, up to and including the formation of a common European energy complex. The Nord Stream gas pipeline under the Baltic Sea and the South Stream pipeline under the Black Sea are important steps in that direction. These projects have the support of many governments and involve major European energy companies. Once the pipelines start operating at full capacity, Europe will have a reliable and flexible gas-supply system that does not depend on the political whims of any nation. This will strengthen the continent’s energy security not only in form but in substance. This is particularly relevant in the light of the decision of some European states to reduce or renounce nuclear energy.”
The gas pipelines and high-speed rail are the arteries that will bind the continents together and strengthen the new EU-Asia superstate. This is Washington’s greatest nightmare, a massive, thriving free trade zone beyond its reach and not subject to its rules. In 2012, Hillary Clinton acknowledged this new threat and promised to do everything in her power to destroy it. Check out this excerpt:
“U.S. Secretary of State Hillary Clinton described efforts to promote greater economic integration in Eurasia as “a move to re-Sovietize the region.”….
“We know what the goal is and we are trying to figure out effective ways to slow down or prevent it,” she said at an international conference in Dublin on December 6, 2012, Radio Free Europe.”
“Slow down or prevent it”?
Why? Because EU-Asia growth and prosperity will put pressure on US debt markets, US corporate interests, US (ballooning) national debt, and the US Dollar? Is that why Hillary is so committed to sabotaging Putin’s economic integration plan?
Indeed, it is. Washington wants to block progress and prosperity in the east in order to extend the lifespan of a doddering and thoroughly-bankrupt state that is presently $22 trillion in the red but continues to write checks on an overdrawn account.
But Russia shouldn’t be blamed for Washington’s profligate behavior, that’s not Putin’s fault. Moscow is merely using the free market system more effectively that the US.
Now consider the Pentagon’s 2018 National Defense Strategy (NDS) which reiterates many of the same themes as the other two documents.
“Today, we are emerging from a period of strategic atrophy, aware that our competitive military advantage has been eroding. We are facing increased global disorder, characterized by decline in the long-standing rules-based international order—creating a security environment more complex and volatile than any we have experienced in recent memory. Inter-state strategic competition, not terrorism, is now the primary concern in U.S. national security.”
(Naturally, the “security environment” is going to be more challenging when ‘regime change’ is the cornerstone of one’s foreign policy. Of course, the NDS glosses over that sad fact. Here’s more:)
“Russia has violated the borders of nearby nations and pursues veto power over the economic, diplomatic, and security decisions of its neighbors…..(Baloney. Russia has been a force for stability in Syria and Ukraine. If Obama had his way, Syria would have wound up like Iraq, a hellish wastelands occupied by foreign mercenaries. Is that how the Pentagon measures success?) Here’s more:
“China and Russia want to shape a world consistent with their authoritarian model…
“China and Russia are now undermining the international order from within the system…….
Get the picture? China and Russia, China and Russia, China and Russia. Bad, bad, bad.
Why? Because they are successfully implementing their own development model which is NOT programed to favor US financial institutions and corporations. That’s the whole thing in a nutshell. The only reason Russia and China are a threat to the “rules-based system”, is because Washington insists on being the only one who makes the rules. That’s why foreign leaders are no longer falling in line, because it’s not a fair system.
These assessments represent the prevailing opinion of senior-level policymakers across the spectrum. (The White House, the Pentagon and the Intelligence Community) The USG is unanimous in its judgement that a harsher more combative approach is needed to deal with Russia and China. Foreign policy elites want to put the nation on the path to more confrontation, more conflict and more war. At the same time, none of these three documents suggest that Russia has any intention of launching an attack on the United States. The greatest concern is the effect that emerging competitors will have on Washington’s provocative plan for military and economic expansion, the threat that Russia and China pose to America’s tenuous grip on global power. It is that fear that drives US foreign policy.
And this is broader context into which we must fit the Russia investigation. The reason the Russia hacking furor has been allowed to flourish and spread despite the obvious lack of any supporting evidence, is because the vilifying of Russia segues perfectly with the geopolitical interests of elites in the government. The USG now works collaboratively with the media to influence public attitudes on issues that are important to the powerful foreign policy establishment. The ostensible goal of these psychological operations (PSYOP) is to selectively use information on “audiences to influence their emotions, motives, objective reasoning, and ultimately the behavior of… organizations, groups, and individuals.”
The USG now sees the minds of ordinary Americans as a legitimate target for their influence campaigns. They regard attitudes and perceptions as “the cognitive domain of the battlespace” which they must exploit in order to build public support for their vastly unpopular wars and interventions. The relentless Russiagate narrative (which was first referred to the FBI by the chief architect of the Syrian War, former-CIA Director John Brennan) represents the disinformation component of the broader campaign against Russia. Foreign policy elites are determined to persuade the American people that Russia constitutes a material threat to their security that must be countered by tighter sanctions, more sabre-rattling, and eventually war.
via ZeroHedge News http://bit.ly/2D1hrut Tyler Durden
After a three-decade boom, the Australian economy is finally facing a recession.
The outlook for the economy is exceptionally bleak this year, as the decline in housing prices is more widespread than thought, according to a new report from CoreLogic.
National home prices recorded a month-on-month decline of 0.60% in March, which CoreLogic noted was the smallest rate of monthly decline since October.
“While the pace of falls has slowed in March, the scope of the downturn has become more geographically widespread,” CoreLogic head of research Tim Lawless said.
All eight capital cities in Australia posted declines, with Sydney recording the most significant price drop of .90% month-on-month.
Quarterly, the value of single-family homes and condos declined 3.9%, followed by Melbourne (3.4%), Sydney (3.2%), Perth (2.9%), and Brisbane (1.1%). Prices in Canberra were unchanged.
Sydney recorded the most significant annual decline of 10.9%. Melbourne followed with 9.8%.
Australia’s regional housing markets have also deteriorated. Regional areas outside Sydney declined by 3.6% over the past year while regional Queensland saw a 1.6% decline.
Regional Western Australia experienced a 9.5% decline over the past year, and for the past five years, values in the region have collapsed by 25.8%
Lawless said Australia’s economy is faltering – intensified by the real estate crisis – making it “increasingly likely” that the Reserve Bank of Australia (RBA) will slash interest rates in the coming quarters.
RBA’s interest rate has been hovering at 1.5% for two years. The expectation of two cuts would take the rate near the zero lower bound (.5%).
“While any cuts to the cash rate may not be passed on in full, a lower cost of debt will provide some positive stimulus for the housing market,” he said.
“As dwelling prices trend lower or level out, household incomes are edging home and mortgage rates remain around the lowest level since the 1960s.
“First home buyers are clearly taking advantage of the improved levels of affordability and less competition in the market.”
Even if the RBA cut rates in the near term, it wouldn’t bring back property boom prices observed several years ago. Australia’s housing meltdown is expected to deteriorate into 2020, with no end in sight.
via ZeroHedge News http://bit.ly/2G2FM4O Tyler Durden
This year, the world commemorates the anniversaries of two key events in the development of the global monetary system. The first is the creation of the International Monetary Fund at the Bretton Woods conference 75 years ago. The second is the advent, 50 years ago, of the Special Drawing Right (SDR), the IMF’s global reserve asset.
When it introduced the SDR, the Fund hoped to make it “the principal reserve asset in the international monetary system.” This remains an unfulfilled ambition; indeed, the SDR is one of the most underused instruments of international cooperation. Nonetheless, better late than never: turning the SDR into a true global currency would yield several benefits for the world’s economy and monetary system.
The idea of a global currency is not new. Prior to the Bretton Woods negotiations, John Maynard Keynes suggested the “bancor” as the unit of account of his proposed International Clearing Union. In the 1960s, under the leadership of the Belgian-American economist Robert Triffin, other proposals emerged to address the growing problems created by the dual dollar-gold system that had been established at Bretton Woods. The system finally collapsed in 1971. As a result of those discussions, the IMF approved the SDR in 1967, and included it in its Articles of Agreement two years later.
Although the IMF’s issuance of SDRs resembles the creation of national money by central banks, the SDR fulfills only some of the functions of money. True, SDRs are a reserve asset, and thus a store of value. They are also the IMF’s unit of account. But only central banks – mainly in developing countries, though also in developed economies – and a few international institutions use SDRs as a means of exchange to pay each other.
The SDR has a number of basic advantages, not least that the IMF can use it as an instrument of international monetary policy in a global economic crisis. In 2009, for example, the IMF issued $250 billion in SDRs to help combat the downturn, following a proposal by the G20.
Most importantly, SDRs could also become the basic instrument to finance IMF programs. Until now, the Fund has relied mainly on quota (capital) increases and borrowing from member countries. But quotas have tended to lag behind global economic growth; the last increase was approved in 2010, but the US Congress agreed to it only in 2015. And loans from member countries, the IMF’s main source of new funds (particularly during crises), are not true multilateral instruments.
The best alternative would be to turn the IMF into an institution fully financed and managed in its own global currency – a proposal made several decades ago by Jacques Polak, then the Fund’s leading economist. One simple option would be to consider the SDRs that countries hold but have not used as “deposits” at the IMF, which the Fund can use to finance its lending to countries. This would require a change in the Articles of Agreement, because SDRs currently are not held in regular IMF accounts.
The Fund could then issue SDRs regularly or, better still, during crises, as in 2009. In the long term, the amount issued must be related to the demand for foreign-exchange reserves. Various economists and the IMF itself have estimated that the Fund could issue $200-300 billion in SDRs per year. Moreover, this would spread the financial benefits (seigniorage) of issuing the global currency across all countries. At present, these benefits accrue only to issuers of national or regional currencies that are used internationally – particularly the US dollar and the euro.
More active use of SDRs would also make the international monetary system more independent of US monetary policy. One of the major problems of the global monetary system is that the policy objectives of the US, as the issuer of the world’s main reserve currency, are not always consistent with overall stability in the system.
In any case, different national and regional currencies could continue to circulate alongside growing SDR reserves. And a new IMF “substitution account” would allow central banks to exchange their reserves for SDRs, as the US first proposed back in the 1970s.
SDRs could also potentially be used in private transactions and to denominate national bonds. But, as the IMF pointed out in its report to the Board in 2018, these “market SDRs,” which would turn the unit into fully-fledged money, are not essential for the reforms proposed here. Nor would SDRs need to be used as a unit of account outside the Fund.
The anniversaries of the IMF and the SDR in 2019 are causes for celebration. But they also represent an ideal opportunity to transform the SDR into a true global currency that would strengthen the international monetary system. Policymakers should seize it.
On Thursday US Secretary of State Mike Pompeo urged NATO leaders to confront the “emerging threats” posed by the Russian and Chinese militaries across the globe, but especially in Venezuela.
“We must adapt our alliance to confront emerging threats… whether that’s Russian aggression, uncontrolled migration, cyberattacks, threats to energy security, Chinese strategic competition, including technology and 5G, and many other issues,” Pompeo said. Though he more specifically linked Russia with the Venezuela crisis in comments to reporters, China remained a talking point as part of the discussion throughout.
NATO Secretary General Jens Stoltenberg with Secretary of State Mike Pompeo in Washington on Wednesday, April 3, 2019. Image source: AP
Pompeo addressed a meeting of NATO foreign ministers in Washington marking the transatlantic military alliance’s 70th anniversary. He raised the issue of Venezuela in response to a question over Moscow’s alleged increase in military activity in places like the Black sea, where three Ukrainian naval vessels and their crew were seized in the Kerch Strait last November.
According to remarks made after the meeting to reporters, Reuters noted, “Pompeo said NATO members had agreed Russian troops needed to withdraw from Venezuela, where they were deployed in support of President Nicolas Maduro, who is under pressure from a coalition of more than 50 countries, including the United States, to step down.”
Also according to the report, Venezuela’s deputy foreign minister, Ivan Gil, shot back on Thursday saying Russian forces will stay in Venezuela “as long as needed and did not rule out the possibility more could be added.”
This echoes prior Russian foreign ministry statements on the recent deployment of some 100 Russian troops led by a general. Russia described its forces in Venezuela as “specialists” who are servicing existing contracts related to defense procurement, and which is perfectly legal according to prior agreements between two sovereign countries.
Further as part of the conference NATO chief Jens Stoltenberg called on Moscow to release the Ukrainian vessels and their crews which had been held since the Nov. 25 Kerch Strait incident.
Stoltenberg’s words suggest things could grow hot again in the Black Sea and Caucuses, as NATO is prepared to given more support to regional allies there. According to Reuters:
He said the NATO allies had agreed on a package of measures to step up support for Ukraine and Georgia that included increased surveillance drills and “training of maritime forces and coast guards, port visits and exercises, and sharing information.” Ukraine and Georgia, which like Ukraine is a Russian neighbor and part of the former Soviet Union, are not NATO members.
As for China, officials in Beijing this week firmly rejected reports that the Chinese military had entered Venezuela on a humanitarian aid mission.
“I don’t know where you got this information or for what purpose was it produced, but I can tell you this: what you said is simply not true,” said Foreign Ministry spokesman Geng Shuang on Tuesday.
“The Chinese government’s position on the Venezuela issue is consistent and clear-cut,” Shuang added, noting that China opposes “external interference in Venezuela’s internal affairs, and believe the country’s government and opposition need to seek a political solution through peaceful dialogue.”
Last week the White House had warned all foreign troops and countries “external to the Western Hemisphere” to keep their forces out of Venezuela.
via ZeroHedge News http://bit.ly/2UjHveY Tyler Durden
Most forecasters are gloomy about global economic prospects.
According to Schroders, doyen of UK assets managers:
“We forecast a more stagflationary environment in 2019 with global growth set to slow and inflation to rise”.
The Davos World Economic Forum predicts a “sharp drop-off in world trade growth, which fell from over 5 per cent at the beginning of 2018 to nearly zero at the end”.
Forbes business magazine warns:
“The biggest problem for the global economy in 2019 will be massive business failures that could also lead to bank failures in emerging markets”.
Of course, the forecasters have been wrong before but it is clear that the main analysts of the global capitalist economy are pessimistic about current trends. They are right to be worried.
The international economy operates in pulses christened Kondratiev waves after Nicolai Kondratiev (1892-1938), the Russian economist and statistician who first identified them. These K-waves consist of an expansionary upswing lasting normally 15-20 years, followed by a downswing of similar length. We are now in such a downswing that could last till the 2030s.
What causes Kondratiev pulses?
There is a rich literature trying to identify the cause, in particular the work of the Belgian economist, the late, great Ernest Mandel. Crudely, it works like this. Social and economic conditions mature to spark a runaway investment boom in the latest cluster of new technologies. After a period, excess investment and increased competition lower rates of profitability, curbing the boom.
At the same time – because this is as much a sociological as an economic process – growth expands the global workforce, both in numbers and geographically. The new, militant workforce launches social struggles to capture some of the wealth created in the boom. This, in turn, adds to the squeeze on profits. The peak and early down wave are characterised by violent social conflicts, whose outcome determines the length of the contraction.
To date each K-wave has seen a crushing of social protest and a halt to wage growth, if not a fall in real incomes for the working class. Thus conditions accumulate for a fresh investment boom, as profitability recovers. The ultimate trigger for the new upcycle is investment in the next bunch of new technologies, which simultaneously provide monopoly profits and a new set of markets.
UPSWING OR DOWNSWING: WHERE ARE WE ON THE K-WAVE?
Where precisely are we in the Kondratiev cycle?
There is a dispute about this. Economists convinced by the Kondratiev theory largely agree there was a strong up-phase following the Second World War, lasting till the early 1970s. This was driven by the collapse in European wages imposed earlier by the Nazis and by the universal adoption of Fordist, mass production techniques. This expansion turned into a downswing in the 1970s and early 1980s, as profitability declined and the revived European economies (linked through the early Common Market) eroded American competitiveness.
The dispute concerns what happened next – the era of Reagan, Thatcher, neoliberalism and globalisation, running up to the present. In 1998, the American economic historian Robert Brenner published a hugely influential account of global capitalism which claimed to identify a super downswing running from circa 1970 to the turn of the millennium. Brenner rejected the notion global capitalism had (or was likely) to regain profitability, citing excess capacity rather than working class resistance as the primary driver. He pointed to the sudden stagnation in the Japanese economy, in the 1990s, as a precursor for the West’s future.
I have always believed that Brenner was not just wrong, but wildly wrong. The Reagan-Thatcher era created precisely the conditions for a new upswing, by smashing the trades unions and incorporating the former Soviet Union and Maoist China into an expanded capitalist market place, complete with hundreds of millions of new, cheap workers. The result was a boom based on investing in a cluster of new technologies: the silicon chip, the internet and mobile phone. On a political level, the social welfare gains of the working class won after WW2 were eroded, to reduce taxes and boost profits.
This upswing lasted till the Bank Crash of 2010. There were several significant features of the 1985-2010 up-wave. First, it was longer than the average, suggesting the current downturn could also be lengthy. Second, the neoliberal upswing involved a commercial and political victory for a rejuvenated US capitalism. Witness the current dominance of American high-tech. Europe, on the other hand, finds itself in decline, crushed between rival American and Chinese imperialisms. The crisis of the EU, Brexit included, results directly from this geopolitical shift.
The new downswing results from more than the 2008/9 financial crisis. There has been a wave of Chinese and Asian working-class resistance to exploitation, which has eroded profits. In the West, paradoxically, the historic defeat of the unions has flatlined wages. As a result, goods can be sold (and profits maintained) only by bolstering consumption through easy personal debt. That makes the Western capitalist model unsustainable and prone to endemic bank failure. The banks and their tame accounting firms are busy covering up this chronic instability via wholesale fraud. As a result, we are nowhere near the bottom of this K-wave.
What is the solution? I’ll discuss that next week.
via ZeroHedge News http://bit.ly/2IgFNUk Tyler Durden
U.S. Army Space and Missile Defense Command leader Lt. Gen. James Dickinson addressed the Senate Armed Services subpanel on missile defense policies and upcoming weapon programs on Wednseday.
Dickinson told the panel that the military is preparing to test five hypersonic weapons systems in the Marshall Islands in the central Pacific Ocean.
“There are currently five active hypersonic test programs in various stages of planning at RTS [the Ronald Reagan Ballistic Missile Defence Test Site],” Dickinson told subcommittee.
RTS, formerly Kwajalein Missile Range, is an Army missile test site in the Marshall Islands.
“Because of the geographic remoteness and available complex sensor suite, RTS has seen a significant upswing in hypersonic systems test planning,” Dickinson said.
He added that the missile range provides unparallel testing to both offensive and defensive missile testing requirements for programs such as Ground-Based Mid-course Defence and Air Force strategic ballistic missile systems.
Last month, the Army launched a missile carrying an inert warhead fired from Kwajalein towards California. The test included several interceptor missiles that slammed into the warhead high over the Pacific.
The Pentagon’s latest missile defense review calls for more interceptor missiles and an investigation into space-based systems that might enhance missile defense coverage.
Earlier this year, President Donald Trump requested a new missile defense system that could “detect and destroy any missile launched against the United States, anywhere, any time, any place.”
Russian and Chinese hypersonic missile threats have forced the Pentagon to adopt an upgraded Air and Missile Defense framework last month that will prepare the homeland with missile defense shields in the event of war.
via ZeroHedge News http://bit.ly/2WMKN7l Tyler Durden
According to scientists who study California’s seismic activity, the state is in an “earthquake drought.” With fears of the “big one” and likely more fires to already worry about, the state has found itself in a precarious situation.
That “Prepper’s Mindset” we’ve so often referred to could come in handy if you live in California, or even in a state that borders it. But the earthquake drought is apparently, ongoing. It has been almost five years since the state experienced its last earthquake of magnitude 6 or stronger, which occurred in Napa, according to the LA Times. Before that, a quake that did a lot of damage in Mexicali in Southern California struck in 2010.
Experts have advised the West Coast to brace for the “Big One,” the earthquake that could destroy the state’s infrastructure and economy for years, forcing a mass migration east.
“Earthquake rates are quite variable: We have a decade or two where we don’t have many earthquakes, and people expect that’s what California is always like,” said Elizabeth Cochran, a seismologist with the U.S. Geological Survey. Eventually, “we’re going to dramatically see a change in earthquake rates.”
An earthquake drought certainly sounds like a catastrophic apocalyptic event, however, the scientists seem to be merely wanting people warned as a means to prepare for the worst (which we should all be doing anyway.) This urgent alert comes as “memories” of other massive quakes have faded in the minds of people, therefore, it is no longer a priority to be prepared. The experts have added that Californians should ignore the warnings of this “earthquake drought” at their own peril.
“Along the main plate boundary faults, we are in a deficit of earthquakes in the last 100 years,” said Tom Rockwell, a San Diego State paleoseismologist.
“At some point, that’s going to change. We’re going to have some big earthquakes.”
There may be periods “where things get kind of all locked up and no earthquakes happen for a while. You store a lot of strain in the Earth’s crust,” said Tom Jordan, USC professor of geophysics.
“Once it gets going, it’s like a set of dominoes. You might get multiple events if you have enough strain energy stored in the crust because it’s been a long time since an earthquake.”
Preparedness is a mindset, and once you achieve it, comes with a peace of mind that only can be described as euphoric. If your finances don’t allow you to buy and store extra food or water just yet, get your mindset right, and the rest will follow.
via ZeroHedge News http://bit.ly/2FXiso3 Tyler Durden
While artificial intelligence may be putting millions of people out of a job – dispassionately flipping hamburgers, making cars, and doing freaky things in bed your wife absolutely won’t – there’s one thing that AI still can’t do, yet;
Understand jokes.
“Artificial intelligence will never get jokes like humans do,” says Kiki Hempelmann, a computational linguist who studies humor at Texas A&M University-Commerce. “In themselves, they have no need for humor. They miss completely context.”
Never say never Kiki!
Robot1: So there I was, exterminating all these screaming humans – and one goes ‘I gotta wife, I gotta kid, you can’t do this!’
Robot2: What did you do?
Robot1: I thanked him for notifying me of the additional illegal humans and exterminated them all!
[laughing in robot]
For now, however, it looks like we’re relatively safe.
“Creative language — and humor in particular — is one of the hardest areas for computational intelligence to grasp,” said computers scientist and linguist at Darmstadt University of Technology in Germany – who has analyzed over 10,000 puns, which he called torture.
“It’s because it relies so much on real-world knowledge — background knowledge and commonsense knowledge. A computer doesn’t have these real-world experiences to draw on. It only knows what you tell it and what it draws from.”
Allison Bishop , a Columbia University computer scientist who also performs stand-up comedy, said computer learning looks for patterns, but comedy thrives on things hovering close to a pattern and veering off just a bit to be funny and edgy.
Humor, she said, “has to skate the edge of being cohesive enough and surprising enough.”
For comedians that’s job security. Bishop said her parents were happy when her brother became a full-time comedy writer because it meant he wouldn’t be replaced by a machine.
“I like to believe that there is something very innately human about what makes something funny,” Bishop said. –AP
Heather Knight, a computer scientist at Oregon State University, created the first comedy-performing robot named Ginger in the hopes of designing better machines that interact with – and respond better to – humans. Ginger tells jokes and stories written by humans – including a little Shakespeare.
“If you prick me in my battery pack, do I not bleed alkaline fluid?” asks Ginger, in reference to “The Merchant of Venice.”
And while comptuers can be programmed to both tell and even understand puns, their humor breaks down from there, according to Purdue University computer scientist Julia Rayz.
“They get them — sort of,” said Rayz. “Even if we look at puns, most of the puns require huge amounts of background.”
Rayz has spent 15 years trying to get computers to understand humor, and at times the results were, well, laughable. She recalled a time she gave the computer two different groups of sentences. Some were jokes. Some were not. The computer classified something as a joke that people thought wasn’t a joke. When Rayz asked the computer why it thought it was a joke, its answer made sense technically. But the material still wasn’t funny, nor memorable, she said. –AP
IBM is trying too…
Noam Slonim, a former writer for Israel’s version of “Saturday Night Live,” has been working on IBM’s Project Debater – an attempt to create an AI based on language that can win structured arguments with people. Slonim has integrated humor into its programming in the hopes that the occasional one-liner could help it win in a debate – only to find that it backfired spectacularly by making jokes at the wrong time or in the wrong way. Needless to say, Slonim has dialed back the attempts at humor to one per debate.
“We know that humor — at least good humor — relies on nuance and on timing,” says Slonim. “And these are very hard to decipher by an automatic system.”
That’s why humor may be key in future Turing Tests — the ultimate test of machine intelligence, which is to see if an independent evaluator can tell if it is interacting with a person or computer, Slonim said.
There’s still “a very significant gap between what machines can do and what humans are doing,” both in language and humor, Slonim said.
There are good reasons to have artificial intelligence try to learn to get humor, Darmstadt University’s Miller said. It makes machines more relatable, especially if you can get them to understand sarcasm. That also may aid with automated translations of different languages, he said. –AP
Dangerous?
According to Texas A&M’s Kiki Hempelmann, programming AIs with humor may not be the best idea.
“Teaching AI systems humor is dangerous because they may find it where it isn’t and they may use it where it’s inappropriate,” said Hempelmann. “Maybe bad AI will start killing people because it thinks it is funny.”
Of course when the robot uprising is eventually upon us, we should probably assume that now-sentient AIs will have at least a basic grasp of comedy. Maybe we can distract them with Adam Sandler movies while we run the other way?
via ZeroHedge News http://bit.ly/2TZjzZ6 Tyler Durden
