Month: September 2014

Friday saw the largest demonstration in the history of Barcelona with 1.8 million people showing up, exceeding all previous records, calling for Catalan independence…

As Martin Armstrong notes, demonstrators were waving independence flags and wearing yellow-and-red shirts with the phrase “Now is the time” shouting “Independencia!” as they swarmed into the semiautonomous area in northeastern Spain that hails Barcelona as its capital.

What is clear, we are seeing the beginning stages of what we have warned about – the rise of civil unrest that leaded to nations dividing or being overthrown in revolutions. What has taken place in Scotland is by no means going unnoticed.

“Independence, independence”, has been the new cry of the people today in Spain in the center of the Catalan capital. Two main roads that converge at a place filled over a distance of seven miles with people. Here, a “V” for “Victoria” (Victory) was formed. The amount of protesters is very impressive and the police have been gearing up for this because they know what is coming.

Catalonia has 7.6 million inhabitants and this is a very important region for Spain. Despite the economic crisis and an unemployment rate of more than 22 percent, Catalonia is around one fifth of total gross domestic product of the Southern European country is generated.  

Proponents of secession from Spain think an independent Catalonia would achieve a higher standard of living.

*  *  *

Coming to another European country near you soon…

*  *  *

Of course, this doesn't help…

Unemployment in European Union http://t.co/DwAePpYyw6 http://ift.tt/1D5er9y

— Conrad Hackett (@conradhackett) September 13, 2014

*  *  *

Just as we warned previously…

The history of Europe over the last 100 years shows that austerity can have severe consequences and outcomes and perhaps most notably, the independent variable that did result in more unrest: higher levels of government debt in the first place.

 

*  *  *

And here is Deutsche Bank's take on how this might escalate…

From Edinburgh to Barcelona

The unexpected increase in the uncertainty about the outcome of next week’s Scottish independence referendum – see accompanying article in this issue of Focus Europe – re-focused press and clients’ attention on the possibility of a similar referendum in Catalonia on 9 November. The large demonstration in Barcelona on 11 September contributed to elevate media interest.

Catalonia matters

It will take years for Spain to work through the high public and private debt, but the country tends now to be described as a poster-child of the euro-area approach to the crisis along with Ireland, while France and above all Italy struggle to recover. Furthermore, contrary to France, the Spanish government is in a more solid position, and, contrary to Italy, it showed a greater determination in implementing structural reforms.

 

However, calls for a self-determination referendum in Catalonia add a significant element of uncertainty. Catalonia accounts for a larger proportion (18.8%) of the national economy than Scotland (8%). Indeed, Catalonia is the largest region in Spain (Figure 2).

Catalonia’s referendum would have less clear consequences than Scotland’s

The consequence of the Scottish referendum will be clear: a yes would imply that Scotland becomes independent and Great Britain would be a less united kingdom. The Catalan referendum would differ in at least two elements:

First, and most important, the Catalan referendum, if it takes place, would probably have a very different (lack of) legal basis. The Spanish Constitution opens the possibility of referenda, but specifically excludes from such a procedure the "basic principles" of the Spanish constitution, which include Spain's unity. Indeed, it appears highly likely that the Spanish Constitutional Court will reject Catalonia's request for a self-determination referendum to be held on 9 November.

 

Second, even if a non-binding referendum were to take place, it would probably ask two questions: (i) "Do you want Catalonia to become a state?" and (ii) "If yes, do you want this state to be independent?"

Will the Catalan referendum take place?

The referendum is promoted by the Catalan President Artus Mas, leader of Convergence and Union (CiU) and the junior regional government partner Republican Left of Catalonia (Esquerra Republicana per Catalunya – ERC). The latter is a more radical pro-independent party. The 2012 CiU-ERC government pact is based on the commitment that a self-determination referendum will take place by end-2014 unless socio-economic conditions require a postponement.

Assuming that as expected the constitutional court will declare the referendum illegal, we see four broad scenarios:

(I) Catalan President Mas and Spanish PM Rajoy’s reach a compromise and both referendum and early regional elections are avoided (positive for a macro-stability point of view). Rajoy could change approach and promise a constitutional reform after the end-2015 general election along with greater financial autonomy (for example in terms of tax treatment).

 

— Push-back: If Rajoy is seen as too lenient, his PP party could pay a political cost. But if Mas does not obtain major concessions, his position would weaken to the advantage of ERC. If a compromise was easy to reach we would not have come to the current situation. ERC could also react by triggering a fall of the Catalan government.

 

(II) Mas triggers early elections using the result as a de facto proindependence vote (potentially negative for a macro-stability point of view).

 

— Push-back: The risk for Mas would be to lose the presidency as his current junior coalition partner ERC is leading in opinion polls. The eventuality that Catalonia, contrary to Scotland, is not allowed to hold a referendum could further boost consensus for ERC.

 

(III) A variation of the second scenario is a crisis triggered by ERC (potentially negative for a macro-stability point of view). In this case CiU could try to form another government coalition (e.g. with the socialists) but the risk, however, would be that ERC would gain further consensus ahead of the next elections to the cost of the less radical CiU.

 

— Push-back: CiU will be perfectly aware of this risk – hence they will have to avoid providing a clear justification to ERC. This in turn complicates even further the relationship with Madrid.

 

(IV) Catalonia goes ahead with the referendum even if the Constitutional Court declares it illegal (potentially negative for a macro-stability point of view). According to the Financial Times (11 Sept.), the majority of analysts believes the vote will have to be called off after the Constitutional Court’s ruling. There are probably at least three reasons behind this view. First, going ahead with an illegal referendum could split Mas’ party. Second, a significant part of the Catalan population could boycott the referendum if it is declared illegal. Third, the referendum would have no legal validity and Madrid could argue that nothing has changed – it could also complicate the relationship of Catalonia with EU partners. However, we would not discard the possibility of a referendum taking place on 9 November:

 

— Push-back: ERC could push to hold an informal referendum anyway. Alternatively, Mas may want to avoid losing the initiative at the advantage of ERC and also use the result of the referendum to strengthen his bargaining position with Madrid.

Which scenario is more likely? Toward a muddle-through approach

In cases as complex as the one above the most likely scenario can sometimes be identified by finding the dominant strategy (in terms of game theory). However, it is extremely difficult to identify such a strategy given the above described constellations of incentives and constraints. For example, PM Rajoy could opt for a divide-and-rule strategy by trying to entice Mas’ CiU away from the alliance with ERC via material concessions. But that would cause the fall of the current government and more importantly could further boost ERC’s projected share of seats. On top of that, Rajoy will also have to take into account the repercussions of his concessions on other regions – for example on the Basque regions. The risk of ending up in a “prisoner’s-dilemma” conundrum, where the least optimal solution is selected, is material.

Alternatively, we could resort to economic arguments. The scenarios that lead to the greater economic benefit (i.e. probably scenario I above) should become the most likely. The central government may hope that the improving economic conditions will quell the demand for independence. Although it is true that the economic crisis shone a light on the financial transfers from Catalonia to the central government, our understanding is that the drivers of the independence movement in Catalonia are beyond economic considerations. They are rooted in a centuries-long history. This gives a strong emotional content to the debate beyond pure economic considerations like in Scotland.

The Scottish referendum and reactions to it will matter for Catalonia

Next week’s Scottish referendum could affect the likelihood of the above four scenarios via at least three elements.

The result: a yes vote would probably boost the independence movement.

 

The EU partner reactions: the pro-independent Catalans are in favour of Catalonia as an independent state within the European Union.3 If Scotland vote yes, joining the EU could become a complicated process. The European Union could be weary of being seen as supporting Scotland’s independence given the situation in Ukraine. Equally if not more relevant, a number of European countries will be also wary of the consequences for their own territorial unity, for example Belgium and to a lesser extent Italy. Overall, exiting the euro-crisis calls for further European integration. A break-up of the euro-area fourth largest country would be perpendicular to this trajectory.

 

Markets and business reaction: a negative reaction by the market and businesses potentially reallocating away from Scotland in case of a yes vote could weaken the pro-independence movement in Catalonia.

* * *

Opinion polls on Catalonia independence

No regular, independent opinion polls are available to assess support for the pro-independence vote. However, there appears to have been an increase in the support for pro-independence over the past 3 years.

According to the State pollster CIS this year around 45% of the Catalan supports full independence, 20% a federal state and 23% an autonomous region (Reuters).

The Center for Opinion Studies of the Catalan presidency reported a 54.7% support for independence in 2013. The 2014 survey provides a less clear reading.

via Zero Hedge http://ift.tt/1qBNV3t Tyler Durden

Friday saw the largest demonstration in the history of Barcelona with 1.8 million people showing up, exceeding all previous records, calling for Catalan independence…

As Martin Armstrong notes, demonstrators were waving independence flags and wearing yellow-and-red shirts with the phrase “Now is the time” shouting “Independencia!” as they swarmed into the semiautonomous area in northeastern Spain that hails Barcelona as its capital.

What is clear, we are seeing the beginning stages of what we have warned about – the rise of civil unrest that leaded to nations dividing or being overthrown in revolutions. What has taken place in Scotland is by no means going unnoticed.

“Independence, independence”, has been the new cry of the people today in Spain in the center of the Catalan capital. Two main roads that converge at a place filled over a distance of seven miles with people. Here, a “V” for “Victoria” (Victory) was formed. The amount of protesters is very impressive and the police have been gearing up for this because they know what is coming.

Catalonia has 7.6 million inhabitants and this is a very important region for Spain. Despite the economic crisis and an unemployment rate of more than 22 percent, Catalonia is around one fifth of total gross domestic product of the Southern European country is generated.  

Proponents of secession from Spain think an independent Catalonia would achieve a higher standard of living.

*  *  *

Coming to another European country near you soon…

*  *  *

Of course, this doesn't help…

Unemployment in European Union http://t.co/DwAePpYyw6 http://ift.tt/1D5er9y

— Conrad Hackett (@conradhackett) September 13, 2014

*  *  *

Just as we warned previously…

The history of Europe over the last 100 years shows that austerity can have severe consequences and outcomes and perhaps most notably, the independent variable that did result in more unrest: higher levels of government debt in the first place.

 

*  *  *

And here is Deutsche Bank's take on how this might escalate…

From Edinburgh to Barcelona

The unexpected increase in the uncertainty about the outcome of next week’s Scottish independence referendum – see accompanying article in this issue of Focus Europe – re-focused press and clients’ attention on the possibility of a similar referendum in Catalonia on 9 November. The large demonstration in Barcelona on 11 September contributed to elevate media interest.

Catalonia matters

It will take years for Spain to work through the high public and private debt, but the country tends now to be described as a poster-child of the euro-area approach to the crisis along with Ireland, while France and above all Italy struggle to recover. Furthermore, contrary to France, the Spanish government is in a more solid position, and, contrary to Italy, it showed a greater determination in implementing structural reforms.

 

However, calls for a self-determination referendum in Catalonia add a significant element of uncertainty. Catalonia accounts for a larger proportion (18.8%) of the national economy than Scotland (8%). Indeed, Catalonia is the largest region in Spain (Figure 2).

Catalonia’s referendum would have less clear consequences than Scotland’s

The consequence of the Scottish referendum will be clear: a yes would imply that Scotland becomes independent and Great Britain would be a less united kingdom. The Catalan referendum would differ in at least two elements:

First, and most important, the Catalan referendum, if it takes place, would probably have a very different (lack of) legal basis. The Spanish Constitution opens the possibility of referenda, but specifically excludes from such a procedure the "basic principles" of the Spanish constitution, which include Spain's unity. Indeed, it appears highly likely that the Spanish Constitutional Court will reject Catalonia's request for a self-determination referendum to be held on 9 November.

 

Second, even if a non-binding referendum were to take place, it would probably ask two questions: (i) "Do you want Catalonia to become a state?" and (ii) "If yes, do you want this state to be independent?"

Will the Catalan referendum take place?

The referendum is promoted by the Catalan President Artus Mas, leader of Convergence and Union (CiU) and the junior regional government partner Republican Left of Catalonia (Esquerra Republicana per Catalunya – ERC). The latter is a more radical pro-independent party. The 2012 CiU-ERC government pact is based on the commitment that a self-determination referendum will take place by end-2014 unless socio-economic conditions require a postponement.

Assuming that as expected the constitutional court will declare the referendum illegal, we see four broad scenarios:

(I) Catalan President Mas and Spanish PM Rajoy’s reach a compromise and both referendum and early regional elections are avoided (positive for a macro-stability point of view). Rajoy could change approach and promise a constitutional reform after the end-2015 general election along with greater financial autonomy (for example in terms of tax treatment).

 

— Push-back: If Rajoy is seen as too lenient, his PP party could pay a political cost. But if Mas does not obtain major concessions, his position would weaken to the advantage of ERC. If a compromise was easy to reach we would not have come to the current situation. ERC could also react by triggering a fall of the Catalan government.

 

(II) Mas triggers early elections using the result as a de facto proindependence vote (potentially negative for a macro-stability point of view).

 

— Push-back: The risk for Mas would be to lose the presidency as his current junior coalition partner ERC is leading in opinion polls. The eventuality that Catalonia, contrary to Scotland, is not allowed to hold a referendum could further boost consensus for ERC.

 

(III) A variation of the second scenario is a crisis triggered by ERC (potent
ially negative for a macro-stability point of view). In this case CiU could try to form another government coalition (e.g. with the socialists) but the risk, however, would be that ERC would gain further consensus ahead of the next elections to the cost of the less radical CiU.

 

— Push-back: CiU will be perfectly aware of this risk – hence they will have to avoid providing a clear justification to ERC. This in turn complicates even further the relationship with Madrid.

 

(IV) Catalonia goes ahead with the referendum even if the Constitutional Court declares it illegal (potentially negative for a macro-stability point of view). According to the Financial Times (11 Sept.), the majority of analysts believes the vote will have to be called off after the Constitutional Court’s ruling. There are probably at least three reasons behind this view. First, going ahead with an illegal referendum could split Mas’ party. Second, a significant part of the Catalan population could boycott the referendum if it is declared illegal. Third, the referendum would have no legal validity and Madrid could argue that nothing has changed – it could also complicate the relationship of Catalonia with EU partners. However, we would not discard the possibility of a referendum taking place on 9 November:

 

— Push-back: ERC could push to hold an informal referendum anyway. Alternatively, Mas may want to avoid losing the initiative at the advantage of ERC and also use the result of the referendum to strengthen his bargaining position with Madrid.

Which scenario is more likely? Toward a muddle-through approach

In cases as complex as the one above the most likely scenario can sometimes be identified by finding the dominant strategy (in terms of game theory). However, it is extremely difficult to identify such a strategy given the above described constellations of incentives and constraints. For example, PM Rajoy could opt for a divide-and-rule strategy by trying to entice Mas’ CiU away from the alliance with ERC via material concessions. But that would cause the fall of the current government and more importantly could further boost ERC’s projected share of seats. On top of that, Rajoy will also have to take into account the repercussions of his concessions on other regions – for example on the Basque regions. The risk of ending up in a “prisoner’s-dilemma” conundrum, where the least optimal solution is selected, is material.

Alternatively, we could resort to economic arguments. The scenarios that lead to the greater economic benefit (i.e. probably scenario I above) should become the most likely. The central government may hope that the improving economic conditions will quell the demand for independence. Although it is true that the economic crisis shone a light on the financial transfers from Catalonia to the central government, our understanding is that the drivers of the independence movement in Catalonia are beyond economic considerations. They are rooted in a centuries-long history. This gives a strong emotional content to the debate beyond pure economic considerations like in Scotland.

The Scottish referendum and reactions to it will matter for Catalonia

Next week’s Scottish referendum could affect the likelihood of the above four scenarios via at least three elements.

The result: a yes vote would probably boost the independence movement.

 

The EU partner reactions: the pro-independent Catalans are in favour of Catalonia as an independent state within the European Union.3 If Scotland vote yes, joining the EU could become a complicated process. The European Union could be weary of being seen as supporting Scotland’s independence given the situation in Ukraine. Equally if not more relevant, a number of European countries will be also wary of the consequences for their own territorial unity, for example Belgium and to a lesser extent Italy. Overall, exiting the euro-crisis calls for further European integration. A break-up of the euro-area fourth largest country would be perpendicular to this trajectory.

 

Markets and business reaction: a negative reaction by the market and businesses potentially reallocating away from Scotland in case of a yes vote could weaken the pro-independence movement in Catalonia.

* * *

Opinion polls on Catalonia independence

No regular, independent opinion polls are available to assess support for the pro-independence vote. However, there appears to have been an increase in the support for pro-independence over the past 3 years.

According to the State pollster CIS this year around 45% of the Catalan supports full independence, 20% a federal state and 23% an autonomous region (Reuters).

The Center for Opinion Studies of the Catalan presidency reported a 54.7% support for independence in 2013. The 2014 survey provides a less clear reading.

via Zero Hedge http://ift.tt/1qBNV3t Tyler Durden

Submitted by Adam Taggart via Peak Prosperity,

The fundamental failing of today’s global economy can be summarized simply: Too Much Debt.

We have taken too much of it on, too fast, in too many markets around the world, to have any hope of making good on it. Not only does the math not work out, but also on a moral level, we are placing a tremendous obligation on future generations that will unfairly limit the prosperity they can enjoy tomorrow in order to finance our consumption today.

In the US alone, total credit market debt stands at over $57 trillion and is doing its damnedest to continue expanding exponentially. Since simple math shows us that this debt level cannot be supported, the key questions to ask at this stage are:

Will the unsupportable debt disappear via default, or inflation?

And very important:

When these debts do disappear, who will take the losses?

*  *  *

For those who simply don’t want to wait until the end of the year to view the entire new series, you can indulge your binge-watching craving by enrolling to PeakProsperity.com. The entire full new series, all 27 chapters of it, is available — now– to our enrolled users.

The full suite of chapters in this new Crash Course series can be found at http://ift.tt/VLldvm

And for those who have yet to view it, be sure to watch the ‘Accelerated’ Crash Course — the under-1-hour condensation of the new 4.5-hour series. It’s a great vehicle for introducing new eyes to this material.

via Zero Hedge http://ift.tt/1tUy4yt Tyler Durden

Submitted by Adam Taggart via Peak Prosperity,

The fundamental failing of today’s global economy can be summarized simply: Too Much Debt.

We have taken too much of it on, too fast, in too many markets around the world, to have any hope of making good on it. Not only does the math not work out, but also on a moral level, we are placing a tremendous obligation on future generations that will unfairly limit the prosperity they can enjoy tomorrow in order to finance our consumption today.

In the US alone, total credit market debt stands at over $57 trillion and is doing its damnedest to continue expanding exponentially. Since simple math shows us that this debt level cannot be supported, the key questions to ask at this stage are:

Will the unsupportable debt disappear via default, or inflation?

And very important:

When these debts do disappear, who will take the losses?

*  *  *

For those who simply don’t want to wait until the end of the year to view the entire new series, you can indulge your binge-watching craving by enrolling to PeakProsperity.com. The entire full new series, all 27 chapters of it, is available — now– to our enrolled users.

The full suite of chapters in this new Crash Course series can be found at http://ift.tt/VLldvm

And for those who have yet to view it, be sure to watch the ‘Accelerated’ Crash Course — the under-1-hour condensation of the new 4.5-hour series. It’s a great vehicle for introducing new eyes to this material.

via Zero Hedge http://ift.tt/1tUy4yt Tyler Durden

Following ISIS blitzkrieg in which it took over nearly half of Iraq and a third of Syria in the blink of an eye, at which point it created its own Islamic State Caliphate resulting in Obama’s own personal war against the jihadists, some have wondered what is ISIS’ next step: surely its leadership will not merely stagnatte as one after another US predator drone bomb away the capital Reqqa until ISIS figurehead leader al-Baghdadi is killed or gravely wounded. To be sure, the one thing ISIS, which stunned the world with the speed of its ascent, can not afford is to stand still.

So what is next on the strategic timeline for the Islamic State?

According to one source, Al Arabiya, which cites Egyptian experts, the answer is none other than the Suez Canal, and the country it is located in: Egypt.

“There is definitely a threat from ISIS to Egypt,” Mohammed Badr, a professor of political science at the University of Germany told Al Arabiya News, adding that the group has the country in its “line of sight.”

“All extremist groups represent a danger for Egypt,” Badr said, adding that “ISIS, the Muslim Brotherhood, Ansar Bayt al-Maqdis [an Islamist militant group] are all dangerous for Egypt but the level of their threat is different.”

More details from Al-Arabiya:

One alleged ISIS militant took to social media to warn Egypt that it should be expecting a “surprise” soon. “Except a surprise in Egypt within days,” alleged ISIS member Abu Siyaf al-Masry wrote on his personal Twitter account, according to the Cairo-based daily al-Masry al-Youm.

 

These online threats are seen by some analysts as a means to mark their presence in Egypt, despite their absence on the ground. “They don’t have any presence in Egypt until now, which is why they use the internet and social media platforms to interact with Egyptians and spread their influence,” Mohssen al-Faham, a political analyst and commentator for Cairo-based daily al-Gomhuria, told Al Arabiya News.

 

In recent weeks, the Islamist group started showing notable signs that it might be interested in expanding its influence in Egypt.

ISIS’ strategy on how to infiltrate Egypt, if indeed that is the case, is simple: ISIS has started to communicate with and coach Ansar Bayt al-Maqdis, Egypt’s deadliest militant group, and share advice with it on how to create secret cells.

“ISIS and Ansar Bayt al-Maqdis are linked on an ideological level even though the group is not believed to be officially linked to ISIS insurgents,” Badr said.

“Their exchange is another sign that shows a clear threat to Egypt from ISIS,” he added.

While the west is traumatized by three beheadings of western journalists in the past month, in Egypt this is almost a daily occurrence, especially if the word “Israel” is uttered. Last week, Ansar Bayt al-Maqdis, which is based in the Sinai Peninsula claimed to have beheaded four men accused of being Israeli Mossad spies in a video that seemed to have been inspired by the methods of ISIS.

Meanwhile Egypt, already deep in political turmoil with the military regime doing its best to cleanse all representatives of the US-backed Muslim Brotherhood (remember them?), appears to not be too concerned about the ISIS threat. Specifically, the possibility of an ISIS offensive was downplayed by an Egyptian Interior Ministry spokesman, who told Al Arabiya News that al-Qaeda and the Muslim Brotherhood were “the two main terrorist organizations” that threatened Egypt.

“ISIS cannot reach a country like Egypt given the cohesion between people and the unity of the nation,” Interior Ministry spokesman Hany Abdellatif told Al Arabiya News, adding that the group targets weak, failed states.

 

“But we [the Interior Ministry] are still getting threats of terrorism and must remain vigilant as the region is ablaze,” Abdellatif said.

And while Egypt may or may not be the next territorial expansion for ISIS, a new threat is emerging in the Middle East/North Africa region.

According to Reuters, a new armed group calling itself the Caliphate Soldiers in Algeria has split from al Qaeda’s North African branch and sworn loyalty to the radical breakaway group Islamic State fighting in Syria and Iraq. A breakaway of key Algerian commanders from Al Qaeda in the Islamic Maghreb, known as AQIM, would show deepening rivalry between al Qaeda’s core command and the Islamic State over leadership of the transnational Islamist militancy. As we expected several months ago, as Al Qaeda’s reputation in the terrorist world plummets and is replaced by the “bloodthirsty” ISISites, more and more splinter terrorist groups will gravitate to the “cool, new” clique.

In a communique, AQIM central region commander Khaled Abu Suleimane, whose real name is Gouri Abdelmalek, claimed leadership of the new group, joined by an AQIM commander of an eastern region in Algeria, where the al Qaeda wing has its base. “You have in the Islamic Maghreb men if you order them they will obey you,” Suleimane said in reference to Abu Bakr al-Baghdadi, the leader of the Islamic State. “The Maghreb has deviated from the true path.”

 

The communique was posted on jihadi websites. Algerian officials did not immediately comment on the statement.

 

The Algeria splinter group is the latest to side with Baghdadi over al Qaeda’s aging chieftain Ayman al-Zawahri, as the Islamic State appeals to younger militants with successes in gaining territory in Iraq and Syria.

Finally, to cement the fact that Al Qaeda is no longer even remotely relevant to anyone, and certainly not the CIA, Site Intelligence reported earlier that Al-Qaeda released its annual video for the anniversary of the 9/11 attacks, and in this installment, placed group official Hossam Abdul Raouf in the prominent role of lead speaker, and denied reports of its waning influence and strength. Translated: Al Qaeda is dead, replaced by its even more ferocious, if mostly for populist purposes, spin offs, ISIS and now, the Caliphate Soldiers.

And if and when the Islamic State and its Caliphate Soldiers take over the Suez Canal, watch as all those Brent shorts, many of which are rumored to be originating at Liberty 33 itself, suddenly get a margin call.

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

Following ISIS blitzkrieg in which it took over nearly half of Iraq and a third of Syria in the blink of an eye, at which point it created its own Islamic State Caliphate resulting in Obama’s own personal war against the jihadists, some have wondered what is ISIS’ next step: surely its leadership will not merely stagnatte as one after another US predator drone bomb away the capital Reqqa until ISIS figurehead leader al-Baghdadi is killed or gravely wounded. To be sure, the one thing ISIS, which stunned the world with the speed of its ascent, can not afford is to stand still.

So what is next on the strategic timeline for the Islamic State?

According to one source, Al Arabiya, which cites Egyptian experts, the answer is none other than the Suez Canal, and the country it is located in: Egypt.

“There is definitely a threat from ISIS to Egypt,” Mohammed Badr, a professor of political science at the University of Germany told Al Arabiya News, adding that the group has the country in its “line of sight.”

“All extremist groups represent a danger for Egypt,” Badr said, adding that “ISIS, the Muslim Brotherhood, Ansar Bayt al-Maqdis [an Islamist militant group] are all dangerous for Egypt but the level of their threat is different.”

More details from Al-Arabiya:

One alleged ISIS militant took to social media to warn Egypt that it should be expecting a “surprise” soon. “Except a surprise in Egypt within days,” alleged ISIS member Abu Siyaf al-Masry wrote on his personal Twitter account, according to the Cairo-based daily al-Masry al-Youm.

 

These online threats are seen by some analysts as a means to mark their presence in Egypt, despite their absence on the ground. “They don’t have any presence in Egypt until now, which is why they use the internet and social media platforms to interact with Egyptians and spread their influence,” Mohssen al-Faham, a political analyst and commentator for Cairo-based daily al-Gomhuria, told Al Arabiya News.

 

In recent weeks, the Islamist group started showing notable signs that it might be interested in expanding its influence in Egypt.

ISIS’ strategy on how to infiltrate Egypt, if indeed that is the case, is simple: ISIS has started to communicate with and coach Ansar Bayt al-Maqdis, Egypt’s deadliest militant group, and share advice with it on how to create secret cells.

“ISIS and Ansar Bayt al-Maqdis are linked on an ideological level even though the group is not believed to be officially linked to ISIS insurgents,” Badr said.

“Their exchange is another sign that shows a clear threat to Egypt from ISIS,” he added.

While the west is traumatized by three beheadings of western journalists in the past month, in Egypt this is almost a daily occurrence, especially if the word “Israel” is uttered. Last week, Ansar Bayt al-Maqdis, which is based in the Sinai Peninsula claimed to have beheaded four men accused of being Israeli Mossad spies in a video that seemed to have been inspired by the methods of ISIS.

Meanwhile Egypt, already deep in political turmoil with the military regime doing its best to cleanse all representatives of the US-backed Muslim Brotherhood (remember them?), appears to not be too concerned about the ISIS threat. Specifically, the possibility of an ISIS offensive was downplayed by an Egyptian Interior Ministry spokesman, who told Al Arabiya News that al-Qaeda and the Muslim Brotherhood were “the two main terrorist organizations” that threatened Egypt.

“ISIS cannot reach a country like Egypt given the cohesion between people and the unity of the nation,” Interior Ministry spokesman Hany Abdellatif told Al Arabiya News, adding that the group targets weak, failed states.

 

“But we [the Interior Ministry] are still getting threats of terrorism and must remain vigilant as the region is ablaze,” Abdellatif said.

And while Egypt may or may not be the next territorial expansion for ISIS, a new threat is emerging in the Middle East/North Africa region.

According to Reuters, a new armed group calling itself the Caliphate Soldiers in Algeria has split from al Qaeda’s North African branch and sworn loyalty to the radical breakaway group Islamic State fighting in Syria and Iraq. A breakaway of key Algerian commanders from Al Qaeda in the Islamic Maghreb, known as AQIM, would show deepening rivalry between al Qaeda’s core command and the Islamic State over leadership of the transnational Islamist militancy. As we expected several months ago, as Al Qaeda’s reputation in the terrorist world plummets and is replaced by the “bloodthirsty” ISISites, more and more splinter terrorist groups will gravitate to the “cool, new” clique.

In a communique, AQIM central region commander Khaled Abu Suleimane, whose real name is Gouri Abdelmalek, claimed leadership of the new group, joined by an AQIM commander of an eastern region in Algeria, where the al Qaeda wing has its base. “You have in the Islamic Maghreb men if you order them they will obey you,” Suleimane said in reference to Abu Bakr al-Baghdadi, the leader of the Islamic State. “The Maghreb has deviated from the true path.”

 

The communique was posted on jihadi websites. Algerian officials did not immediately comment on the statement.

 

The Algeria splinter group is the latest to side with Baghdadi over al Qaeda’s aging chieftain Ayman al-Zawahri, as the Islamic State appeals to younger militants with successes in gaining territory in Iraq and Syria.

Finally, to cement the fact that Al Qaeda is no longer even remotely relevant to anyone, and certainly not the CIA, Site Intelligence reported earlier that Al-Qaeda released its annual video for the anniversary of the 9/11 attacks, and in this installment, placed group official Hossam Abdul Raouf in the prominent role of lead speaker, and denied reports of its waning influence and strength. Translated: Al Qaeda is dead, replaced by its even more ferocious, if mostly for populist purposes, spin offs, ISIS and now, the Caliphate Soldiers.

And if and when the Islamic State and its Caliphate Soldiers take over the Suez Canal, watch as all those Brent shorts, many of which are rumored to be originating at Liberty 33 itself, suddenly get a margin call.

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

Authored by Robert Shiller, originally posted Op-Ed at The Guardian,

The depression that followed the stock-market crash of 1929 took a turn for the worse eight years later, and recovery came only with the enormous economic stimulus provided by the second world war, a conflict that cost more than 60 million lives. By the time recovery finally arrived, much of Europe and Asia lay in ruins.

The current world situation is not nearly so dire, but there are parallels, particularly to 1937. Now, as then, people have been disappointed for a long time, and many are despairing.

They are becoming more fearful for their long-term economic future. And such fears can have severe consequences.

For example, the impact of the 2008 financial crisis on the Ukrainian and Russian economies might ultimately be behind the recent war there.

According to the International Monetary Fund, both Ukraine and Russia experienced spectacular growth from 2002 to 2007: over those five years, real per capita GDP rose 52% in Ukraine and 46% in Russia.

That is history now: real per capita GDP growth was only 0.2% last year in Ukraine, and only 1.3% in Russia. The discontent generated by such disappointment may help to explain Ukrainian separatists’ anger, Russians’ discontent, and the Russian president Vladimir Putin’s decision to annex Crimea and to support the separatists.

There is a name for the despair that has been driving discontent – and not only in Russia and Ukraine – since the financial crisis.

That name is the “new normal,” referring to long-term diminished prospects for economic growth, a term popularized by Bill Gross, a founder of bond giant PIMCO.

The despair felt after 1937 led to the emergence of similar new terms then, too. “Secular stagnation”, referring to long-term economic malaise, is one example. The word secular comes from the Latin saeculum, meaning a generation or a century.

The word stagnation suggests a swamp, implying a breeding ground for virulent dangers. In the late 1930s, people were also worrying about discontent in Europe, which had already powered the rise of Adolf Hitler and Benito Mussolini.

The other term that suddenly became prominent around 1937 was “underconsumptionism” – the theory that fearful people may want to save too much for difficult times ahead.

Moreover, the amount of saving that people desire exceeds the available investment opportunities. As a result, the desire to save will not add to aggregate saving to start new businesses, construct and sell new buildings, and so forth.

Though investors may bid up prices of existing capital assets, their attempts to save only slow down the economy.

Secular stagnation and underconsumptionism are terms that betray an underlying pessimism, which, by discouraging spending, not only reinforces a weak economy, but also generates anger, intolerance, and a potential for violence.

In his magnum opus The Moral Consequences of Economic Growth, Benjamin M Friedman showed many examples of declining economic growth giving rise – with variable and sometimes long lags – to intolerance, aggressive nationalism, and war.

He concluded:

“The value of a rising standard of living lies not just in the concrete improvements it brings to how individuals live but in how it shapes the social, political, and ultimately the moral character of a people.”

Some will doubt the importance of economic growth. Maybe, many say, we are too ambitious and ought to enjoy a higher quality of life with more leisure. Maybe they are right.

But the real issue is self-esteem and the social-comparison processes that the psychologist Leon Festinger observed as a universal human trait.

Though many will deny it, we are always comparing ourselves with others, and hoping to climb the social ladder. People will never be happy with newfound opportunities for leisure if it seems to signal their failure relative to others.

The hope that economic growth promotes peace and tolerance is based on people’s tendency to compare themselves not just to others in the present, but also to the what they remember of people – including themselves – in the past.

According to Friedman:

“Obviously nothing can enable the majority of the population to be better off than everyone else. But not only is it possible for most people to be better off than they used to be, that is precisely what economic growth means.”

The downside of the sanctions imposed against Russia for its behaviour in eastern Ukraine is that they may produce a recession throughout Europe and beyond.

That will leave the world with unhappy Russians, unhappy Ukrainians, and unhappy Europeans whose sense of confidence and support for peaceful democratic institutions will weaken.

While some kinds of sanctions against international aggression appear to be necessary, we must remain mindful of the risks associated with extreme or punishing measures. It would be highly desirable to come to an agreement to end the sanctions; to integrate Russia (and Ukraine) more fully into the world economy; and to couple these steps with expansionary economic policies.

A satisfactory resolution of the current conflict requires nothing less.

via Zero Hedge http://ift.tt/1pfPTA9 Tyler Durden

Authored by Robert Shiller, originally posted Op-Ed at The Guardian,

The depression that followed the stock-market crash of 1929 took a turn for the worse eight years later, and recovery came only with the enormous economic stimulus provided by the second world war, a conflict that cost more than 60 million lives. By the time recovery finally arrived, much of Europe and Asia lay in ruins.

The current world situation is not nearly so dire, but there are parallels, particularly to 1937. Now, as then, people have been disappointed for a long time, and many are despairing.

They are becoming more fearful for their long-term economic future. And such fears can have severe consequences.

For example, the impact of the 2008 financial crisis on the Ukrainian and Russian economies might ultimately be behind the recent war there.

According to the International Monetary Fund, both Ukraine and Russia experienced spectacular growth from 2002 to 2007: over those five years, real per capita GDP rose 52% in Ukraine and 46% in Russia.

That is history now: real per capita GDP growth was only 0.2% last year in Ukraine, and only 1.3% in Russia. The discontent generated by such disappointment may help to explain Ukrainian separatists’ anger, Russians’ discontent, and the Russian president Vladimir Putin’s decision to annex Crimea and to support the separatists.

There is a name for the despair that has been driving discontent – and not only in Russia and Ukraine – since the financial crisis.

That name is the “new normal,” referring to long-term diminished prospects for economic growth, a term popularized by Bill Gross, a founder of bond giant PIMCO.

The despair felt after 1937 led to the emergence of similar new terms then, too. “Secular stagnation”, referring to long-term economic malaise, is one example. The word secular comes from the Latin saeculum, meaning a generation or a century.

The word stagnation suggests a swamp, implying a breeding ground for virulent dangers. In the late 1930s, people were also worrying about discontent in Europe, which had already powered the rise of Adolf Hitler and Benito Mussolini.

The other term that suddenly became prominent around 1937 was “underconsumptionism” – the theory that fearful people may want to save too much for difficult times ahead.

Moreover, the amount of saving that people desire exceeds the available investment opportunities. As a result, the desire to save will not add to aggregate saving to start new businesses, construct and sell new buildings, and so forth.

Though investors may bid up prices of existing capital assets, their attempts to save only slow down the economy.

Secular stagnation and underconsumptionism are terms that betray an underlying pessimism, which, by discouraging spending, not only reinforces a weak economy, but also generates anger, intolerance, and a potential for violence.

In his magnum opus The Moral Consequences of Economic Growth, Benjamin M Friedman showed many examples of declining economic growth giving rise – with variable and sometimes long lags – to intolerance, aggressive nationalism, and war.

He concluded:

“The value of a rising standard of living lies not just in the concrete improvements it brings to how individuals live but in how it shapes the social, political, and ultimately the moral character of a people.”

Some will doubt the importance of economic growth. Maybe, many say, we are too ambitious and ought to enjoy a higher quality of life with more leisure. Maybe they are right.

But the real issue is self-esteem and the social-comparison processes that the psychologist Leon Festinger observed as a universal human trait.

Though many will deny it, we are always comparing ourselves with others, and hoping to climb the social ladder. People will never be happy with newfound opportunities for leisure if it seems to signal their failure relative to others.

The hope that economic growth promotes peace and tolerance is based on people’s tendency to compare themselves not just to others in the present, but also to the what they remember of people – including themselves – in the past.

According to Friedman:

“Obviously nothing can enable the majority of the population to be better off than everyone else. But not only is it possible for most people to be better off than they used to be, that is precisely what economic growth means.”

The downside of the sanctions imposed against Russia for its behaviour in eastern Ukraine is that they may produce a recession throughout Europe and beyond.

That will leave the world with unhappy Russians, unhappy Ukrainians, and unhappy Europeans whose sense of confidence and support for peaceful democratic institutions will weaken.

While some kinds of sanctions against international aggression appear to be necessary, we must remain mindful of the risks associated with extreme or punishing measures. It would be highly desirable to come to an agreement to end the sanctions; to integrate Russia (and Ukraine) more fully into the world economy; and to couple these steps with expansionary economic policies.

A satisfactory resolution of the current conflict requires nothing less.

via Zero Hedge http://ift.tt/1pfPTA9 Tyler Durden

Strategy – check. Coalition – check. Blowback – check.

 

 

Source: Cagle via Sunday Funnies

via Zero Hedge http://ift.tt/1tSM3kk Tyler Durden

Strategy – check. Coalition – check. Blowback – check.

 

 

Source: Cagle via Sunday Funnies

via Zero Hedge http://ift.tt/1tSM3kk Tyler Durden