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Authored by Cynthia McKinney, Op-Ed via RT.com,

Today, we could amend the words of that Biblical reference with the US presidential race underway:

“It is easier for a camel to go through the eye of a needle than for a voter in the US to know and understand the rules regulating the administration of all elections, including elections for President of the United States.”

Let’s start with the phenomenon of what is called a “minority president.” No, that is not a president who identifies as an ethnic or racial minority in the US. A minority president is one who has failed to win a plurality of the votes cast in the race for president, and yet is still able to become President of the United States. This is the exact opposite of what a true democracy would require; perhaps not even a pure democracy would entertain such a position such as the 'Office of the Presidency'. But that is an entirely different matter.

The United States has actually had several minority presidents in its history, while the 21st century began ominously enough with yet another minority President: George W. Bush, the Republican who failed to secure the most votes cast by the people [in the 2000 election, the Supreme Court, in a 5-4 ruling, decided the victor of the race after moving to halt the recount process in the state of Florida].

Both the US House and the US Senate are charged with counting the Electoral College votes, and this is a process in which I have participated. The constitutionally mandated process was circumvented by the precedent-setting Bush v. Gore Supreme Court ruling that instructed future Courts not to use the decision as a precedent!

As this case aptly proved, it’s not the people who have the last word in US elections. It’s a non-democratic construct called the Electoral College that does, except in those rare instances when it doesn’t.

The Electoral College was created by the framers of the US Constitution to ensure that the votes of the plebes did not supersede the interests of the landed gentry. That’s not just my opinion. For example, according to FairVote, an organization with which I have worked in the 2000 Presidential election, a whopping 78 percent of the votes cast were rendered unimportant due to the arcane rules of the Electoral College. They estimate that in 2008, the figure still topped 70 percent.

In order to be declared the winner of the presidency, 270 Electoral College votes are required. But the process is not what could be called transparent. For example, veteran Pro Se litigator Asa Gordon has demonstrated how the Black vote in the US is rendered less relevant by the arcane apportionment rules of the Electoral College. And when the Electoral College is deadlocked, which has happened before, then the matter falls to the United States House of Representatives to decide who will be allowed to serve in the White House.

Hacking Democracy

Add to the above debacles, the US Congress and the election authorities in the 50 states have authorized and encouraged the use of hackable electronic voting machines that are used for vote casting and vote tabulation. Bev Harris and her company, Black Box Voting, has accumulated horror stories surrounding the non-transparency of US elections. I have worked closely with Harris because the danger of these machines is self-evident to everyone except the officials who continue to purchase them for millions of dollars, putting millions of voters’ most precious political asset at risk.

Bernie beat Hillary by 22% but she'll break even in New Hampshire because of SuperDelegates. That is not democracy. The system is rigged.

— John Dardenne (@johndardenne) February 10, 2016

Such a scenario is what led former President Jimmy Carter to comment he “absolutely” could not be elected today under such conditions, going so far as to characterize the United States as an oligarchy, not a democracy.

‘Hacking Democracy’ is only one of the many documentaries to expose the fallibility of the actual voting process in the US. Other documentaries focus on how private money has corrupted its election process.

In addition to the insecure hardware, I am sorry to write that the voter list is kept on an electronic device and if the voter’s name fails to appear on the list, the voter has little recourse.

In the US, votes and vote tabulation processes are done without any traceable back-up procedures. In other words, there is no paper trail – no receipt of a vote, as it were – whatsoever. In one of my Congressional elections in which the electronic voting machines “failed,” not only was I unable to obtain the election data despite a lawsuit having been filed, an expert witness for the state of Georgia testified that voters have to simply “trust” that the announced winner is the actual winner. Meanwhile, candidates have no access to the raw election data because that information is “owned” by Diebold—the company that produced the electronic voting machines and the software used by them (The documentary ‘American Blackout’ tells my own personal story with US elections). It is difficult to place trust in the US election system when we learn about the number of votes cast that go uncounted. In the 2000 Presidential election between Bush and Gore, between two million and five million Americans went to the polls and voted, yet their votes were thrown out, disqualified for any number of reasons. Half of those uncounted votes were cast by Black Americans.

Money, money, money

Add to these procedural vagaries, the influence of private money in US elections and even the pretense of holding transparent, free, and fair elections is stood completely on its head. As I wrote in a previous post, the rules have given rise to super-wealthy individuals who lurk in the shadows while becoming the power behind the public faces of candidates: Marco Rubio has Norman Braman as his closest and most important backer. Hillary Clinton has Haim Saban as one of her top donors; Sheldon Adelson is a “player” at the Presidential level in US politics. Billionaire Donald Trump self-finances his Presidential bid and former New York Mayor Michael Bloomberg is rumored to be willing to spend one billion dollars in his still-to-be-announced independent presidential run.

The situation is so dire that one wealthy individual could legally bankroll an entire Congressional campaign and a roundtable of them could do the same with the US Presidency. So-called campaign finance reform blew the existing loopholes wide open instead of closing them. The Citizens United Supreme Court ruling stood the revered Freedom of Speech First Amendment to the US Constitution on its head by allowing a few wealthy donors to have more 'free speech' than 300 million other Americans.

The sad truth is that much of what takes place resembles a horse race, or some kind of political theater designed specifically for public consumption. Each step of the process, whether it’s the hunt for delegates in the political party primary or the hunt for Electoral College votes after nominations have taken place, the real action takes place in the darkest recesses of the system, out of view. One could go so far as to say that the real action of US “democracy” takes place in the shadows.

So, what we are witnessing for public consumption is the hunt for delegates among the presidential contenders in the Republican Party and between Hillary Clinton and Bernie Sanders in the Democratic Party. Until February 1, everything was basically kabuki theatre, advertising in order to lure an ample audience to enhance the profits of the major television, radio broadcasters and newspaper publishers. Donald Trump made this point repeatedly just before he decided to not participate any longer in the pre-February Republican Party Primary debates. He challenged CNN to donate some of its profits from debate ad sales to veterans’ charities—which, of course, CNN refused to do.

On February 1, the first popular voting actually took place. The Iowa Caucuses kicked off the delegate hunt. The Democratic candidates are trying to garner 2,382 delegates to win the nomination; Republican candidates need 1,144. Across the state of Iowa, registered voters gathered to cast their vote for their preferred party primary candidate. Yet the rules for the caucuses are far from straightforward, as are the rules for counting of votes and assignment of delegates.

Thus, several results in the Iowa Democratic caucuses were actually decided by a coin toss; one Clinton precinct captain didn’t even live in the precinct to whose caucus he had been assigned to manage. As a result of the massive confusion as to who actually won the Iowa Caucuses, the Sanders campaign has launched a quest to get the raw vote totals—as yet unavailable from the Iowa or national Democratic Party that declared Clinton the winner.

The next vote took place in the New Hampshire primary, which is different than a caucus. And there, too, the rules change by state for which primary voters are eligible to vote.

The next round of voting will take place on what is called ‘Super Tuesday’ when a number of states allow their voters to express their presidential preferences in primaries. But, that’s only if your preferred presidential candidate has been able to secure ballot access. Not all of the candidates are able to run in all states because each state has its own requirements for gaining ballot access. This is not a problem for either the Democratic or Republican parties, but is a huge issue for other parties. Therefore, most American voters don’t even get to see the full range of candidates and political parties on their ballots!

All of this popular voting is to assign delegates to each candidate. Those delegates will represent their candidate at the political party’s nominating convention. Or at least that’s the way it’s supposed to work. And so, the candidate with the most delegates will win the party’s nomination, right? Well, not necessarily, due to something called “super delegates” who are not bound by the popular vote. So, theoretically, unless Bernie Sanders wins the popular vote by a commanding margin in the Democratic Party primary, Hillary Clinton could actually walk away with the party’s nomination, due to the power of superdelegates whose role is similar to that of the Electoral College—to make sure that the plebes don’t ever really think they are in control. However, if something like that were to occur, the credibility of the Party might take a beating.

So, there you have it. When there is no challenge to the shadow players, everything rolls just fine and the flaws in the system are not clearly evident. But, for candidates who do not have shadow blessing, the election process can become a nightmare. Imagine then, America's increasingly alienated voters trying to overcome all of the information and process hurdles.

And, by the way, not all adult citizens in the US are eligible to vote. In some states, people in the criminal justice system with felonies may forfeit their right to vote altogether. At the same time, some states require state-issued identification cards in order to vote. Even voting machines are positioned by precinct history, not by need. Thus, Blacks voting in Ohio and other places around the country waited for hours to vote while White majority precincts had no wait at all to vote.

It is little wonder, then, that so few citizens of voting age actually participate in the process. According to one study, only approximately 55 percent of the voting age population actually voted in 2012. For citizens tying to unravel all of the rules and regulations, how a candidate moves through the process to become a nominee and then incumbent is “a riddle wrapped in a mystery inside an enigma.”

So the next time the victor of a US presidential race system says that he or she will destabilize a foreign government or wage a war against a foreign country in order to 'fight for democracy', the entire world, led most of all by the voters of the United States, should greet the news with a hearty laugh.

via Zero Hedge http://ift.tt/20Xf4QX Tyler Durden

Yes, you read that right. Amid a tumbling stock market, plunging trade data, weakening Yuan, and soaring volatility, China's aggregate debt (so-called total social financing) rose a stunning CNY3.42 trillion (or an even more insane-sounding $520 billion) in January alone.

In fact, since October, China has added over 1 trillion dollars of credit… and has nothing but margin calls, ghost-er cities, and over-supplied commodity-warehouses to show for it… oh and even-record-er debt-to-GDP ratio.

This is what the unprecedented addition of half-a-trillion dollars in one month looks like – Hyman Minsky called, he wants his chart back.

For context, consider this…

China did half a QE3 in one month

— zerohedge (@zerohedge) February 16, 2016

In the process of this gargantuan debt creation, China has smashed its recently record debt/GDP of 346% pushing it to even more ridiculous levels.

Why is China doing this? Because as we showed three years ago, China needs ever greater stimuli to achieve the same effect:

This is what else we said back in April 2013 which by now seems painfully (and plainfully) obvious:

What should become obvious is that in order to maintain its unprecedented (if declining) growth rate, China has to inject ever greater amounts of credit into its economy, amounts which will push its total credit pile ever higher into the stratosphere, until one day it pulls a Europe and finds itself in a situation where there are no further encumberable assets (for secured loans), and where ever-deteriorating cash flows are no longer sufficient to satisfy the interest payments on unsecured debt, leading to what the Chinese government has been desperate to avoid: mass corporate defaults.

This could be the end as the last bubble standing (in China corporate debt) has begun to burst amid the over-supply of credit.

What happens next?

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

Once upon a time, the CIA and Washington’s Mid-East Sunni allies had an idea.

The American forces occupying Iraq were handed a bit of a lemon in 2004 when Abu-Mus’ab al-Zarqawi pledged allegiance to Osama Bin Laden and took command of the al-Qaeda cell in Iraq, which grew by recruiting from the ranks of Saddam’s scattered security apparatus.

But you know what they say, “when absurd Mid-East foreign policy decisions end up handing you lemons, make sectarian lemonade,” and so Washington, Riyadh, and Doha eventually decided that AQI might just have a part to play in toppling the Alawite government in neighboring Syria.

And then, somewhere along the way, things went horribly awry. AQI became Islamic State and the “oust Assad” narrative took a backseat to the group’s new goal: establishing a medieval caliphate. Now, a decade after al-Zarqawi’s death, ISIS has metamorphosed into a black flag-waving, sword-wielding, white basketball shoe-wearing, slave-taking, flesh-eating band of marauding desert bandits in what is easily the worst case of blowback in the history of US foreign policy.

Of course Islamic State aren’t the only “bandits” running amok in Syria. The Pentagon as well as the Saudis and the Turks are backing all manner of Sunni extremists in the country and rather than try to identify who’s who, Russia’s strategy is simple: if you are firing assault rifles at government forces, you’re a terrorist and that means you are the target of the Russian air force.

Over the weekend, Russian Prime Minister Dmitri Medvedev made it clear that even if there’s some manner of agreement with the “moderate opposition” in Geneva, any ceasefire will not apply to “terrorists.” But again, they’re all terrorists in Russia’s eyes so there will be no cessation of strikes until either the opposition surrenders or until they’re all killed.

Medvedev, who racked up a string of headline-worthy quotes at the 52nd Munich Security Conference over the weekend (see here), granted an exclusive interview with TIME and it contains a number of quotable moments including a particularly amusing passage wherein the PM says the following about the Syrian opposition:

“People who run around with automatic weapons should be fair game — not only the terrorists of the Islamic State of Iraq and Greater Syria. They are all bandits and terrorists. They move around amongst themselves for various reasons: They get paid more somewhere else, or somebody has a falling out with somebody else. So it is very difficult for us to tell the difference between the very moderate ones and the not-so-moderate ones, the good from the bad.”

*  *  *

From TIME’s writeup:

Medvedev left little room to hope that the peace deal would actually take hold. Its hard-won provisions, he said, “at least give us grounds for some cautious optimism in the hope that we will be able to reach an agreement about the future, about the way the resolution process in Syria will go, about intra-Syrian dialogue, its principles, its participants.” He paused before adding, “And about a cease-fire.”

The conditions he listed for such a peace indicate how far out of reach it remains. First, Syrian President Bashar Assad would have to sit down at the negotiating table with the rebel forces “who are capable of reaching an agreement,” Medvedev said. “That circle of people still has to be determined.” After that, the negotiating parties would have to agree on Syria’s political structure and the process of democratic reforms. They would also have to figure out Assad’s role in a future Syria, “because otherwise it would be strange,” Medvedev said. “At that moment,” he added, the fighting “should come to an end.”

Medvedev would not directly answer TIME’s question about whether Russia shares this goal with Assad. “He is not the one who will determine the extent of Russia’s military presence over there,” Medvedev said. The Prime Minister did, however, suggest that Moscow would resist any division of Syria between Assad and the opposition.

“We would like Syria to stay within its historic borders as a unified country,” he said, adding: “None of us need another Libya, which broke up into several pieces, nor do we need the kind of chaos in which various territories are under the control of field commanders or, to put it plainly, bandits, regardless what religious rhetoric they use as cover.”

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

While both sellside analysts and buyside investors are panicking over the collapse in bank stock prices and the evaporation of market liquidity as virtually nobody trades any more, perhaps it is time someone looked further east, specifically in China where in January the results reported by local brokerages have confirmed what we have been warning about, namely the local investors – disgusted with China’s stock “market” which is not only a burst bubble now but also rigged beyond any measure – have pulled their money en masse, and left China’s brokerage to disintergated into a revenueless, profitless mess.

Red Pulse has more:

Twenty-three listed securities companies had reported January financial results through February 5, showing steep declines in earnings. The brokers collected a combined RMB6bn in revenue and RMB200m in net profits in January, decreasing 83% and 98% MoM, respectively. Overall the industry recorded a loss in January.

Brokers’ key securities trading business has been impacted by low trading inactivity as markets got off to a rocky start in 2016, falling 22% in January. Daily January trading volume was RMBS38.7bn, down 32% MoM. Margin lending balance at the 23 listed securities companies dropped to RMB915.4bn at the end of January, down 22% MoM and the lowest level in 14 months. Net assets of the 23 securities companies increased by RMB9.1bn at the end of January. However, net assets of these companies actually fell RM1311bn if the additional RMB20bn in share issuance from Industrial Securities, Pacific Securities and Soochow Securities were excluded.

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Having rallied all the way back to unchanged for the year thanks to yesterday's China re-opening "adjustment," the Yuan selling has resumed with onshore down by the most in a month and offshore fading also. 

With Crude and USDJPY holding gains (for now)…

US and Asian equities are in the green as hope springs eternal that tomorrow's oh-so-secret Russia-OPEC meeting solves the world's energy problems.

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Submitted by Raul Ilargi Meijer via The Automatic Earth blog,

Financial bubbles blown on the back of massive amounts of debt, of necessity lead to debt deflation (it’s just entropy, really). Fighting this is futile, and grossly costly to boot. The only sensible thing to do is to guide the process as best you can and try to minimize the damage, especially at the bottom rungs of society, because that’s where the deflation first takes hold, and where it spreads out from.

Attempting to boost inflation, or boost demand, before letting the debt deflation run its course through restructuring and defaults (perhaps even a -partial- jubilee) leads only to -further- distortion, and -further- impoverishes society’s poorer (at some point to a large extent the former middle classes) whose lower spending, as nary a soul seems to comprehend, is the origin of the deflation to begin with.

All the attempts by central bankers to boost inflation that we’ve seen so far squarely ignore this, and operate on the false assumption that if only prices for financial assets and real estate can be raised even higher -artificially-, deflation can be warded off.

Thing is, deflation starts not at the top, it starts at the bottom. It’s not the banks or the bankers or the well-off who are maxed out and stop spending, but the people in the street.

They are responsible for most of the spending in an economy, and therefore for the velocity with which money moves in a society. And if the velocity of money falls below a critical point, no increase in the other side of the inflation/deflation equation -the money/credit supply- can make up for the difference. There is a point where all of the King’s horses and all of the King’s central bankers can’t put Humpty Dumpty together again.

The people in the street are not just maxed out in the sense that they have no money, they have less than no money, since they’re deep in debt. An increasing part of whatever they do still have, and what they make in their ever lower paying jobs, goes toward debt payments. Yeah, that’s the giant sucking sound.

QE and other ‘plans’ like it don’t address this even in the slightest, and are necessarily failures before they even start.

Central bank stimulus measures are all exclusively targeted at the upper rungs, and therefore miss their aim entirely. Or perhaps we should say ‘alleged’ aim, since it takes quite a leap of faith to presume that all the world’s central bankers fail to understand their own field so thoroughly that all they can all come up with is failures.

However, given that they all studied the same faulty economics textbooks, we can’t rule out this possibility. It is certainly strongly suggested -once again- by Steve Keen in Our Dysfunctional Monetary System.

Rather than effective remedies, we’ve had inane policies like QE, which purport to solve the crisis by inflating asset prices when inflated asset prices were one of the symptoms of the bubble that caused the crisis. We’ve seen Central Banks pump up private bank reserves in the belief that this will encourage more bank lending when (a) there’s too much bank debt already and (b) banks physically can’t lend out reserves.

What may also play a role is that the upper rungs tend to be blind to anything outside of their own circles, that because they 1) have their hands on a nation’s wallets and 2) they see themselves as the most important segment of any given society, they elect to try and solve the problem inside their own circles -and truly believe this is feasible-.

This can of course not possibly work. Because they’re hugely outnumbered. They don’t have nearly enough influence on money flows in their societies. If they can’t sell the bottom, let’s take a number, 80%, of society sufficient produce or gasoline or homes or trinkets, the entire society seizes up the way an engine does that runs out of oil.

The top makes its fortune for a while getting the bottom ever deeper into debt, only to inevitably find that this kills off the entire economy. Then they do some more of the same, and find ever more of their own kind becoming part of the bottom.

The problem for the rich is simple: there’s not enough of them. Well, that and they don’t understand how societies function. Let alone economies. Scraps off the table won’t do the trick. Next stop pitchforks.

Any deflationary period would have been hard no matter what. Still, none would have had to lead to what we’re facing now.

But look out there at what’s happening in politics, at who’s popular in various places. It’s all geared towards more inequality, not less, like some tooth and claw Darwin version were the world’s economics teacher, wherever you look it’s all the well-off making ever surer they will remain well-off or better.

And even if you look for instance at Bernie Sanders in the US, he wants more for the bottom of society, but that seems more for sentimental or ideological reasons than a sign he actually understands why it would raise the odds of the States being a going concern going forward.

The actual Darwin could have taught us all a lesson or two three about the role of balances in ecosystems, and in human societies. But then he actually studied them. Economists, politicians and central bankers have not.

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

Submitted by Keith Dicker of IceCap Asset Management

What goes up can also come down

Whether unknowingly or not, the media and the investment industry has created an information gap wedging the 2008 debt crisis with today’s debt crisis. Chart 4 shows the difference in debt outstanding from 2008 compared to today. The Public Sector consists of government and tax payers, while the Private Sector is made up of individuals and companies.

Notice the enormous gap that has developed between the two groups over the last 6 years. This is the part that isn’t talked about by the big banks, fund companies and advisors with their clients. The debt crisis was never really resolved. Instead, governments decided to simply transfer the debt problem from the private sector to the public sector.

This is important as it is one of the key reasons for the current crisis.

As a result, capital markets were never allowed to reset. Instead, our governments and central banks have created a financial  environment where traditional savers receive little to no interest on their cash deposits, and an economic environment whereby sophisticated investors are slowly withdrawing investment.

This combination is creating deflationary trends around the world, and it is causing the Velocity of Money to plummet. Ironically, this central-bank induced economic combination, is causing central banks and governments to do even more of the same. Insanity at its best.

At some point very soon, this financial-spin-top will lose a few riders and the key one to watch is the government bond sector. Chart 5 illustrates the size and difference between the bubbles in our all too recent past.

And as they say in California – the next one will be a big one. As the bubble in government bonds blows higher and higher, the following investment groups will become considerably risky:

– Government bonds
– Bank & insurance stocks
– Pension funds
– Target Date Mutual Funds

Practically every investor in the world has exposure to the bond market, as well as bank and insurance stocks. Some investors have little exposure while others have a lot of their eggs in this seemingly low-risk basket.

We’ll next explain why we are nervous about these, 4 investment groups (page 9) and then go into greater detail about each one in future Global Market Outlooks.

First, note the following amount of global debt outstanding.

Next, note that over $58 TRILLION is owed by governments, and over $45 TRILLION is owed by banks and insurance companies.

Also, understand that banks and insurance companies are required by regulators to hold safe investments as their capital.

And finally, understand that regulators say government bonds are recognised as risk-free investments and therefore should make up the majority of a bank’s capital.

So, if you accept our view that government bonds are in a bubble phase and that eventually this bubble will burst, governments as well as anyone holding government bonds will be affected the most.

And because banks and insurance companies invest their required capital in government bonds, they are extremely vulnerable to a popping of the government bond market. To summarise, the groups who hold a whole bunch of government bonds include:

– Bank & insurance companies
– Pension funds
– Target Dated Mutual Funds

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Continue reading below

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“What is going on?”, Deutsche Bank asks, in the bank’s latest European equity strategy snapshot.

Investors, Deutsche says, can’t seem to figure out why it is that European equities have plunged by some 20% since peaking in November. The usual suspects are trotted out (China, renewed concerns about NPLs, and the shocking realization that central bankers’ are more impotent than they are omnipotent) but the real problem, the bank says, is threefold: 1) there’s a very real risk that China finally throws in the towel on the whole “controlled,” “orderly” devaluation thing in the face of worsening capital flight and simply moves to a float to relieve the pressure, 2) global growth is stuck in the doldrums, and 3) the US is about to enter a default cycle thanks to the fact that the country’s uneconomic energy producers are all about to go bankrupt in the face of shrinking borrowing bases and a HY primary market that is suddenly slammed shut.

Remember, this is a collection of companies who are and pretty much always have been insolvent. The whole damn space is cash flow negative, which means if someone doesn’t step in to plug the funding gap, the music stops. No more drilling. No more pumping. No more coupon payments. Game over.

Until now, Wall Street has stepped up to the plate with cheap cash and by providing access to what until recently were wide open capital markets. Now, all that’s changed. There’s not enough yield in the world to entice investors to buy new issuance from US HY energy producers and the revolver raids that started in October will likely continue in April.

Barring some sort of dramatic turnaround in oil prices, the defaults are coming, and as Deutsche goes on to note, once the speculative default rate hits 4%, it’s almost guaranteed to shoot up to 10%. Although we’re only at 3% now, spreads are already at levels consistent with a speculative default rate of 5%.

Have a look at the following two charts which suggest that the US is indeed entering a default cycle and if history is any guide, it’s about to get very messy, very quickly.

*  *  *

From Deutsche Bank

Over the past 100 years, when defaults have risen above 4%, they have typically continued to rise close to 10% (i.e. a full default cycle). This is because of the tendency for credit stress to become self-fuelling: a rise in expected defaults pushes up financing costs, which tips some marginal borrowers over the edge, further increasing defaults and so on. With non-energy spreads rising in line with overall spreads and issuance down sharply, this process seems to be under way (and explains the sharp underperformance by banks).

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Originally posted at The Saker,

The situation in Syria has reached a watershed moment and a dramatic escalation of the war appears imminent. Let’s look again at how we reached this point.

During the first phase of the operation, the Syrian armed forces were unable to achieve an immediate strategic success. This is rather unsurprising. It is important to remember here that during the first weeks of the operation the Russian did not provide close air support to the Syrians. Instead, they chose to systematically degrade the entire Daesh (Note: I refer to *all* terrorist in Syria as “Daesh”) infrastructure including command posts, communication nodes, oil dumps, ammo dumps, supply routes, etc. This was important work, but it did not have an immediate impact upon the Syrian military. Then the Russians turned to two important tasks: to push back Daesh in the Latakia province and to hit the illegal oil trade between Daesh and Turkey. The first goal was needed for the protection of the Russian task force and the second one hit the Daesh finances. Then the Russians seriously turned to providing close air support. Not only that, but the Russians got directly involved with the ground operation.

 

The second phase was introduced gradually, without much fanfare, but it made a big difference on the ground: the Russians and Syrians began to closely work together and they soon honed their collaboration to a quantitatively new level which allowed the Syrian commanders to use Russian firepower with great effectiveness. Furthermore, the Russians began providing modern equipment to the Syrians, including T-90 tanks, modern artillery systems, counter-battery radars, night vision gear, etc. Finally, according to various Russian reports, Russian special operations teams (mostly Chechens) were also engage in key locations, including deep in the rear of Daesh. As a result, the Syrian military for the first time went from achieving tactical successes to operational victories: for the first time the Syrian began to liberate key towns of strategic importance.

 

Finally, the Russians unleashed a fantastically intense firepower on Daesh along crucial sectors of the front. In northern Homs, the Russians bombed a sector for 36 hours in a row. According to the latest briefing of the Russian Defense Ministry, just between February 4^th and February 11^th, the Russian aviation group in the Syrian Arab Republic performed 510 combat sorties and engaged 1’888 terrorists targets. That kind of ferocious pounding did produce the expected effect and the Syrian military began slowly moving along the Turkish-Syrian border while, at the same time, threatening the Daesh forces still deployed inside the northern part of Aleppo. In doing so, the Russians and Syrian threatened to cut off the vital resupply route linking Daesh to Turkey. According to Russian sources, Daesh forces were so demoralized that they forced the local people to flee towards the Turkish border and attempted to hide inside this movement of internally displaced civilians.

This strategic Russian and Syrian victory meant that all the nations supporting Daesh, including Turkey, Saudi Arabia and the USA were facing a complete collapse of their efforts to overthrow Assad and to break-up Syria and turn part of it into a “Jihadistan”. The Americans could not admit this, of course, as for the Saudis, their threats to invade Syria were rather laughable. Which left the main role to Erdogan who was more than happy to provide the West with yet another maniacal ally willing to act in a completely irresponsible way just to deny the “other side” anything looking like a victory.

Erdogan seems to be contemplating two options. The first one is a ground operation into Syria aimed at restoring the supply lines of Daesh and at preventing the Syrian military from controlling the border. Here is a good illustration (taken from a SouthFront video) of what this would look like:

According to various reports, Erdogan has 18’000  soldiers supported by aircraft, armor and artillery poised along the border to execute such an invasion.

The second plan is even simpler, at least in theory: to create a no-fly zone over all of Syria. Erdogan personally mentioned this option several times, the latest one on Thursday the 11^th.

Needless to say, both plans are absolutely illegal under international law and would constitute an act of aggression, the “supreme international crime” according to the Nuremberg Tribunal, because “it contains within itself the accumulated evil of the whole.” Not that this would deter a megalomaniac like Erdogan.

Erdogan, and his backers in the West, will, of course, claim that a humanitarian disaster, or even a genocide, is taking place in Aleppo, that there is a “responsibility to protect” (R2P) and that no UNSC is needed to take such clearly “humanitarian” action. It would be “Sarajevo v2” or “Kosovo v2” all over again. The western media is now actively busy demonizing Putin, and just recently has offered the following topics to ponder to those poor souls who still listen to it:

1. Putin ‘probably’ ordered the murder of Litvinenko.
2. Putin ordered the murder of Litvinenko because Litvinenko was about to reveal that Putin was a pedophile (seriously, I kid you not – check for yourself!).
3. WWIII could start by Russia invading Latvia.
4. According to the US Treasury, Putin is a corrupt man.
5. According to George Soros, Putin wants the “disintegration of the EU” and Russia is a bigger threat than the Jihadis.
6. Russia is so scary that the Pentagon wants to quadruple the money for the defense of Europe.
7. The Putin is strengthening ISIS in Syria and causing a wave of refugees.

There is no need to continue the list – you get the idea. It is really Bosnia, Kosovo, Iraq, Libya all over again, with the exact same “humanitarian crocodile tears” and the exact same rational for an illegal aggression. And instead of Sarajavo “martyr city besieged by Serbian butchers” we would now have Aleppo “martyr city besieged by Syrian butchers”. I even expect a series of false flags inside Aleppo next “proving” that “the world” “must act” to “prevent a genocide”.

The big difference, of course, is that Yugoslavia, Serbia, Iraq and Libya were all almost defenseless against the AngloZionist Empire. Not so Russia.

In purely military terms, Russia has taken a number of crucial steps: she declared a large scale “verification” of the “combat readiness” of the Southern and Central military districts. In practical terms, this means that all the Russian forces are on high alert, especially the AeroSpace forces, the Airborne Forces, the Military Transportation Aviation forces and, of course, all the Russian forces in Crimea and the Black Sea Fleet. The first practical effect of such “exercises” is not only to make a lot of forces immediately available, but it is also to make them very difficult to track. This not only protects the mobilized forces, but also makes it very hard for the enemy to figure out what exactly they are doing. There are also report that Russian Airborne Warning and Control (AWACS) aircraft – A-50M – are now regularly flying over Syria. In other words, Russia has taken the preparations needed to go to war with Turkey.

Needless to say, the Turks and the Saudis have also announced joint military exercises. They have even announced that Saudi aircraft will conduct airstrikes from the Incirlik air base in support of an invasion of Syria.

At the same time, the Russians have also launched a peace initiative centered around a general ceasefire starting on March 1^st or even, according to the latest leaks, on February 15^th. The goal is is transparent: to break the Turkish momentum towards an invasion of Syria. It is obvious that Russian diplomats are doing everything they can to avert a war with Turkey.

Here again I have to repeat what I have said already a million times in the past: the small Russian contingent in Syria is in a very precarious position: far away from Russia and very close (45km) to Turkey. Not only that, but the Turks have over 200 combat aircraft ready to attack, whereas the Russians probably has less than 20 SU-30/35/34s in total. Yes, these are very advanced aircraft, of the 4++ generation, and they will be supported by S-400 systems, but the force ratio remains a terrible 1:10.

Russia does, however, have one big advantage over Turkey: Russia has plenty of long-range bombers, armed with gravity bombs and cruise missiles, capable of striking the Turks anywhere, in Syria and in Turkey proper. In fact, Russia even has the capability to strike at Turkish airfields, something which the Turks cannot prevent and something which they cannot retaliate in kind for. The big risk for Russia, at this point, would be that NATO would interpret this as a Russian “aggression” against a member-state, especially if the (in)famous Incirlik air base is hit.

Erdogan also has to consider another real risk: that, while undoubtedly proficient, the Turkish forces might not be a match for the battle-hardened Kurds and Syrians, especially if the latter are supported by Iranian and Hezbollah forces. The Turks have a checkered record against the Kurds whom they typically do overwhelm with firepower and numbers, but whom they never succeeded in neutralizing, subduing or eliminating. Finally, there is the possibility that Russians might have to use their ground forces, especially in the task force in Khmeimim is really threatened.

In this regard, let me immediately say that the projection of, say, an airborne force so far from the Russian border to protect a small contingent like the one in Khmeimim is not something the Airborne Forces are designed for, at least not “by the book”. Still, in theory, if faced with a possible attack on the Russian personnel in Khmeimin, the Russians could decide to land a regimental-size airborne force, around 1’200 men, fully mechanized, with armor and artillery. This force could be supplemented by a Naval Infantry battalion with up to another 600 men. This might not seem like much in comparison to the alleged 18’000 men Erdogan has massed at the border, but keep in mind that only a part of these 18’000 would be available for any ground attack on Khmeimin and that the Russian Airborne forces can turn even a much larger force into hamburger meat (for a look at modern Russian Airborne forces please see here). Frankly, I don’t see the Turks trying to overrun Khmeimin, but any substantial Turkish ground operation will make such a scenario at least possible and Russian commanders will not have the luxury of assuming that Erdogan is sane, not after the shooting down of the SU-24. After that the Russians simply have to assume the worst.

What is clear is that in any war between Russia and Turkey NATO will have to make a key decision: is the alliance prepared to go to war with a nuclear power like Russia to protect a lunatic like Erdogan? It is hard to imagine the US/NATO doing something so crazy but, unfortunately, wars always have the potential to very rapidly get out of control. Modern military theory has developed many excellent models of escalation but, unfortunately, no good model of how de-escalation could happen (at least not that I am aware of). How does one de-escalate without appearing to be surrendering or at least admitting to being the weaker side?

The current situation is full of dangerous and unstable asymmetries: the Russian task force in Syria is small and isolated and it cannot protect Syria from NATO or even from Turkey, but in the case of a full-scale war between Russia and Turkey, Turkey has no chance of winning, none at all. In a conventional war opposing NATO and Russia I personally don’t see either side losing (whatever ‘losing’ and ‘winning’ mean in this context) without engaging nuclear weapons first. This suggests to me that the US cannot allow Erdogan to attack the Russian task force in Syria, not during a ground invasion and, even less so, during an attempt to establish a no-fly zone.

The problem for the USA is that it has no good option to achieve its overriding goal in Syria: to “prevent Russia from winning”. In the delusional minds of the AngloZionist rulers, Russia is just a “regional power” which cannot be allowed to defy the “indispensable nation”. And yet, Russia is doing exactly that both in Syria and in the Ukraine and Obama’s entire Russia policy is in shambles. Can he afford to appear so weak in an election year? Can the US “deep state” let the Empire be humiliated and its weakness exposed?

The latest news strongly suggests to me that the White House has taken the decision to let Turkey and Saudi Arabia invade Syria. Turkish officials are openly saying that an invasion is imminent and that the goal of such an invasion would be to reverse the Syrian army gains along the boder and near Aleppo. The latest reports are also suggesting that the Turks have begun shelling Aleppo. None of that could be happening without the full support of CENTCOM and the White House.

The Empire has apparently concluded that Daesh is not strong enough to overthrow Assad, at least not when the Russian AeroSpace forces are supporting him, so it will now unleash the Turks and the Saudis in the hope of changing the outcome of this war or, if that is not possible, to carve up Syria into ‘zones of responsibility” – all under the pretext of fighting Daesh, of course.

The Russian task force in Syria is about to be very seriously challenged and I don’t see how it could deal with this new threat by itself. I very much hope that I am wrong here, but I have do admit that a *real* Russian intervention in Syria might happen after all, with MiG-31s and all. In fact, in the next few days, we are probably going to witness a dramatic escalation of the conflict in Syria.

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

Two weeks ago, in our latest report on the Hong Kong housing market, we observed that according to the local Centaline Property Agency total Hong Kong property transactions in January were on track to register the worst month since 1991, when it started compiling monthly figures. In other words, the biggest drop in recorded history.

Centaline estimated that only 3,000 transactions will have registered with developers slowing down new launches, while only 394 units were sold in the first 27 days of January, 80.3 per cent lower than the 2,127 deals lodged in December. Meanwhile, sales of used homes fell by a fifth to 1,276 deals in January.

But while the number of transactions was crashing, prices – while down 10% from the recent all time highs…

… have been relatively tame, as sellers have not been desperate enough to hit the collapsing bids, yet.

Yet one place that provides some glimpse into true price discovery was the just completed government tender, in which a parcel of land sold by the government in the New Territories went for nearly 70% less per square foot than a similar transaction in September.

In the deal that could not be postponed “because the seller waits for a better market”, the 405,756 square foot (37,696 square meter) site in Tai Po sold for HK$2.13 billion ($274 million) or HK$1,904 per square foot, in a tender that closed on Feb. 12, according to the Hong Kong Lands Department website. According to Bloomberg, the buyer was Asia Metro Investment Ltd., a subsidiary of China Overseas Land & Investment Ltd.

As we have noted previously, the Hong Kong housing bubble has already suffered a “spectacular collapse”, and all that is left now is confirmation not only in terms of transactions, but prices. We already had the former; now we have the latter.

Hong Kong home prices surged 370 percent from their 2003 trough through the September peak before the correction began, spurred by a rising supply of housing and a slowdown in China. As Bloomberg notes, lower prices paid for land could eventually lead to cheaper home prices down the road, and are viewed as a leading indicator of the negative sentiment on the market.

Making matters worse is that just like in the oil market, Hong Kong is now facing a spike in supply: “adding to the downward pressure on prices was the government on Jan. 13 raising its five-year target for new housing supply to 97,100 new homes, up from a previous estimate of 77,100 units.“

It is unclear who will be the biggest victims of Hong Kong’s housing bust: recent land sales have been dominated by mainland Chinese developers. Hong Kong property companies have been less active, as they’re struggling to sell existing units in their inventories and offering discounts of more than 12 percent to entice new buyers.

Yet stunningly, even the bursting of the Hong Kong housing bubble will not be fully clear as Chinese construction companies are merely using the HK real estate market as yet another way to circumvent Chinese capital controls and park their funds offshore: according to Nicole Wong, head of property research at CLSA Ltd. said mainland companies are outbidding their Hong Kong counterparts because they expect lower margins and are also anxious to park money offshore given the devaluation of the yuan.

One can imagine where HK real estate prices would be, if it weren’t for the ingenuity of mainlanders to park hot money into one of the few remaining venues willing to accept it, and that hasn’t been blocked by Beijing.

Still, local real estate experts remain “cautiously optimistic” even in the face of a property tsunami:

Wong cautioned against drawing conclusions on the basis of two land transactions, as it’s impossible to find two sites that are identical. She estimates land prices overall have fallen about 15 percent since their peak, based on the assumption that housing prices have fallen about 10 percent and land accounts for about 60 percent of overall development costs.

Ironically, it was Hong Kong Chief Executive Leung Chun Ying who introduced a raft of measures to cool the property market since 2012 after a rally in home prices fueled complaints of a widening wealth gap. Well, can now now undo those measures. Now that prices are finally starting to fall, property analysts including Raymond Ngai of Bank of America Corp.’s Merrill Lynch unit expect the government will ease the measures and pray to reflate the bubble once more.

However, one way to be absolutely certain that the housing crash will be far worse before all is said and done, comes courtesy of Standard & Poor’s which just issued a report today projecting a 10% to 15% decline in property prices, and said that they would need to fall 30 percent before triggering a ratings downgrade on Hong Kong developers. With S&P’s track record, a 50% collapse is now virtually assured.

The ultimate winner, however, from the bursting of the HK housing bubble are local residents, for whom housing may finally become affordable once again: Hong Kong ranked as the most expensive housing market among 87 major metropolitan regions, according to the annual Demographia International Housing Affordability Survey, which used data from the third quarter of 2015. The median home in Hong Kong costs 19 times the median annual pretax household income, the highest multiple Demographia has measured, and up from 17 in last year’s report, according to the company’s website.

Now if only the Chinese would stop buying up every piece of real estate in the US and Canada as well…

via Zero Hedge http://ift.tt/1Km0MBY Tyler Durden