Tag: finance

In a shocking new set of cables released by Julian Assange's Wikileaks organization, highly classified documents show that the NSA bugged meetings between UN Secretary General Ban Ki-Moon's and German Chancellor Angela Merkel (over climate change); between Israel prime minister Netanyahu and Italian prime minister Berlusconi (begging for help to deal with Obama); between key EU and Japanese trade ministers discussing their secret trade red-lines at WTO negotiations; as well as details of a private meeting between then French president Nicolas Sarkozy, Merkel and Berlusconi, exclaiming that the Italian banking system would soon "pop like a cork." Time for some more explaining Mr.President.

As Wikileaks details:

Some documents are classified TOP-SECRET / COMINT-GAMMA and are the most highly classified documents ever published by a media organization.

WikiLeaks editor Julian Assange said:

"Today we showed that UN Secretary General Ban KiMoon's private meetings over how to save the planet from climate change were bugged by a country intent on protecting its largest oil companies.

 

We previously published Hillary Clinton orders that US diplomats were to steal the Secretary General's DNA.

 

The US government has signed agreements with the UN that it will not engage in such conduct against the UN–let alone its Secretary General. It will be interesting to see the UN's reaction, because if the Secretary General can be targetted without consequence then everyone from world leader to street sweeper is at risk."

Some examples are as follows:

European NSA Intercepts

EU, Japan Study Ways to Respond to U.S. Tactics in Doha Round Talks

 

Date    2006

Classification    TOP SECRET//COMINT//NOFORN

 

WikiLeaks Synopsis

NSA report on intercepted Japanese diplomatic talks reveals details on U.S. and EU participation in Japanese economy, and commitment of EU to avoid "under-the-table" deals with the U.S.

 

(TS//SI//NF) EU, Japan Study Ways to Respond to U.S. Tactics in Doha Round Talks

 

(TS//SI//NF) The EU and Japan were engaged as of early December in strategy sessions aimed at a common handling policy to deal with potential U.S. moves in the Doha Round negotiations. There was a conviction in both Brussels and Tokyo, according to Japanese reporting, that great care must be taken to avoid falling prey to U.S. moves designed to extort concessions through exaggerated initial demands. Regarding U.S. domestic supports for agriculture, for example, Japanese Minister of Agriculture, Forestry, and Fisheries Toshikatsu Matsuoka and EU Agriculture Commissioner Marianne Fischer-Boel recently pondered whether to jump-start the negotiations by asking the U.S. for a specific dollar figure in reduced supports. The problem for the EU, it was noted, is whether or not the proposed $17 billion mark is an acceptable point of departure, since U.S. supports at that level are judged to be in no way comparable to the breadth of market access that Brussels put on the table last July. A figure of $14 to $15 billion would be more in line with the EU's thinking, Fischer-Boel indicated. The EU also had concerns that Washington may be headed for a showdown with developing countries over special products. As for sensitive products, Fischer-Boel's deputy chef de cabinet, Klaus-Dieter Borchardt, hinted to the Japanese that the EU may be willing to go lower than its current official limit of 8 percent, possibly as low as 4 to 5 percent; however, that would be hard for Japan to accept. Borchardt also tried to allay Japanese fears that the EU might try again to enter into a bilateral, under-the-table deal with the U.S. (as had happened in Cancun in 2003), saying that Brussels had learned its lesson with respect to such back-door actions.

 

Unconventional

Japanese leadership

Z-3/OO/33343-06, 291712Z

United Nations Intercepts

Japan Seeks Long-Term Pact With Specific Figures on Climate Change at G-8

 

Date    2008
Classification    TOP SECRET//COMINT//NOFORN

 

WikiLeaks Synopsis
Intercepted communication between Japanese and German diplomats reveal plans and concerns regarding the negotiations on climate change to be had at the G-8 summit in Copenhagen in 2009.

 

Japan Seeks Long-Term Pact With Specific Figures on Climate Change at G-8 (TS//SI//NF)

(TS//SI//NF) Japan, preparing for its role as chairman of the Group-of-8 (G-8) summit at Lake Toya early in July, has given notice that it intends to strive for a long-term commitment on climate change with specific figures, while Germany believes that the crucial issue at the summit is whether the U.S. will accept going beyond Heiligendamm (the site of last year's G-8 summit) language in the framework of the G-8 if the emerging countries do not accept numerical targets at the Major Economies Meeting (MEM). (According to press reports, leaders from 16 countries, including the members of the G-8 plus China, India, Brazil, Australia, Indonesia, South Korea, South Africa, and Mexico, plan to discuss climate change on the margins of the G-8 summit in Japan.) Masaharu Kono, Japan's G-8 sherpa, emphasized Tokyo's position in an exchange with his German counterpart, Bernd Pfaffenback, on 17 June, while Pfaffenback provided his country's take on the issues to be addressed at Lake Toya. The German also noted that, in response to a U.S. request, his country would likely give up its demand for a 25- to 45-percent mid-term carbon dioxide reduction at the MEM. In addition, he does not believe that the emerging economies are willing to go beyond the Bali language at present, his feeling being that they prefer instead to wait until next year's G-8 summit in Copenhagen, because they do not wish to give up things now that they might be prepared to give up later. It is also Pfaffenback's position that a failure of the emerging economies to accept a long-term goal with numbers, even in brackets, would pose difficulties for the G-8 and possibly lead to a clash at the summit itself if there is no fallback position.

 

Unconventional
German leadership, Japanese diplomatic
Z-3/OO/4860-08, 191611Z

Italy Intercepts:

Italy Would Help Israel Mend Relations With U.S.

 

Date    2010
Classification    TOP SECRET//COMINT//ORCON/REL TO USA, FVEY

 

WikiLeaks Synopsis
Intercepted communication between Italian PM Berlusconi and Israeli PM Netanyahu show that Berlusconi promised to assist helping Israel in mending damaged relationship with the U.S.

 

Italy Would Help Israel Mend Relations With U.S. (TS//SI//OC/REL TO USA, FVEY)

(TS//SI//OC/REL TO USA, FVEY) Israel has reached out to Europe, including Italy, for help in smoothing out the current rift in its relations with the United States, according to Italian diplomatic reporting of 13 March. Speaking with Italian Prime Minister (PM) Silvio Berlusconi, Israeli PM Binyamin Netanyahu insisted that the trigger for the dispute–Israel's decision to build 1,600 homes in contested East Jerusalem–was totally in keeping with national policy dating back to the administration of Golda Meir, and blamed this mishandling on a government official with poor political sensitivity. The objective now, Netanyahu said, is to keep the Palestinians from using this issue as a pretext to block a resumption of talks or to advance unrealistic claims that could risk sinking the peace negotiations altogether. Continuing, he asserted that the tension has only been heightened by the absence of direct contact between himself and the U.S. President. In response, Berlusconi promised to put Italy at Israel's disposal in helping mend the latter's ties with Washington. Other Israeli officials, meanwhile, believed that this tiff goes far beyond merely the question of the construction plans, marking instead the lowest point in U.S.-Israeli relations in memory.

 

SCS, Unconventional

Italian leadership

3/79/37-10, 161635Z; 3/OO/506688-10, 171833Z

*  *  *

European Leaders Hold Berlusconi Accountable on Italian Financial Situation

Date    2011
Classification    TOP SECRET//COMINT//NOFORN

 

WikiLeaks Synopsis
Intercepted communication of Berlusconi's personal advisor on international relations, Valentino Valentini, describes concerns on the Italian financial crisis expressed by French President Sarkozy and German Chancellor Merkel to the Italian Prime Minister, and show that they pressured Berlusconi to take action.

 

European Leaders Hold Berlusconi Accountable on Italian Financial Situation (TS//SI//NF)

(TS//SI//NF) A 22 October meeting attended by German Chancellor Angela Merkel, French President Nicolas Sarkozy, and Italian Prime Minister (PM) Silvio Berlusconi was later described by the Italian's personal adviser on international relations, Valentino Valentini, as tense and very harsh toward the Rome government. Merkel and Sarkozy, evidently brooking no excuses with respect to Italy's current predicament, pressured the PM to announce strong, concrete palliatives and then to implement them in order to show that his government is serious about its debt problem. Sarkozy was said to have told Berlusconi that while the latter's claims about the solidity of the Italian banking system may be true in theory, financial institutions there could soon "pop" like the cork in a champagne bottle, that "words are no longer enough," and that Berlusconi must now "make decisions." Also on the 24th, Valentini indicated that EU Council President Herman Van Rompuy had urged Italy to undertake policies aimed at reducing the impression within the EU that the country is weighed down with an enormous debt at a moment in time when it also is struggling with low productivity and showing little dynamism. In Van Rompuy's opinion, Spain is the model that Italy should now be seeking to emulate.

 

Unconventional
Italian leadership
Z-3/OO/550156-11, 251344Z

Read more details here.

 

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

Submitted by Richard Ebeling via EpicTimes.com,

Eighty years go, on February 4, 1936, one of the most influential books of the last one hundred years was published, British economist, John Maynard Keynes’s The General Theory of Employment, Interest and Money. With it was born what has become known as Keynesian Economics.

Within less than a decade after its appearance, the ideas in The General Theory had practically conquered the economics profession and become a guidebook for government economic policy. Few books, in so short a time, have gained such wide influence and generated so destructive an impact on public policy. What Keynes succeeded in doing was to provide a rationale for what governments always like to do: spend other people’s money and pander to special interests.

In the process Keynes helped undermine what had been three of the essential institutional ingredients of a free-market economy: the gold standard, balanced government budgets, and open competitive markets. In their place Keynes’s legacy has given us paper-money inflation, government deficit spending, and more political intervention throughout the market.

It would, of course, be an exaggeration to claim that without Keynes and the Keynesian Revolution inflation, deficit spending, and interventionism would not have occurred. For decades before the appearance of Keynes’s book, the political and ideological climate had been shifting toward ever-greater government involvement in social and economic affairs, due to the growing influence of collectivist ideas among intellectuals and policy-makers in Europe and America.

Before Keynes: Wise Free Market Policies

But before the appearance of The General Theory, many of the advocates of such collectivist policies had to get around the main body of economic thinking which still argued that, in general, the best course was for government to keep its hands off the market, maintain a stable currency backed by gold, and restrain its own taxing and spending policies.

The free market economists of the eighteenth and nineteenth centuries had persuasively demonstrated that government intervention prevented the smooth functioning of the market. They were able to clearly show that governments have neither the knowledge nor the ability to direct economic affairs. Freedom and prosperity are best assured when government is, in general, limited to protecting people’s lives and property, with the competitive forces of supply and demand bringing about the necessary incentives and coordination of people’s activities.

Lessons Learned: Gold Money and Balanced Budgets

During the Napoleonic wars of the early nineteenth century, many European countries experienced serious inflations as governments resorted to the money printing press to fund their war expenditures. The lesson the free market economists learned was that the hand of the government had to be removed from the handle of that printing press if monetary stability was to be maintained. The best way of doing this was to link a nation’s currency to a commodity like gold, require banks to redeem their notes for gold on demand at a fixed rate of exchange, and limit any increases in the amount of bank notes in circulation to additional deposits of gold left in the banks by their depositors.

They also concluded that deficit spending was a dangerous means of funding government programs. It enabled governments to create the illusion that they could spend without imposing a cost on society in the form of higher taxes; they could borrow and spend today, and defer the tax cost until some tomorrow when the loans would have to be repaid.

These free market economists called for annually balanced budgets, enabling the electorate to see more clearly the cost of government spending. If a national emergency, such as a war, were to force the government to borrow, then when the crisis passed, the government should run budget surpluses to pay off the debt.

Keynes’ Thinking on Markets, Wages and Government

These were considered the tried and true policies for a healthy society. And these were the policies that Keynes did his best to try to overthrow in the pages of his book, The General Theory. He argued that a market economy was inherently unstable, open to swings of irrational investor optimism and pessimism, which resulted in unpredictable and wide fluctuations in output, employment, and prices.

Only government, he believed, could take the long view and rationally keep the economy on an even keel by running deficits to stimulate the economy during depressions and surpluses to rein it in during inflationary booms. He therefore attacked the notion of annual balanced budgets; instead, government should balance its budget over the “business cycle,” that is, deficits during recessions and surpluses during full employment and economic growth years.

But to do this job, Keynes said, the “barbarous relic” of the gold standard should not hamstring governments. Wise politicians, guided by brilliant economists like himself, had to have the flexibility to increase the money supply, manipulate interest rates, and change the foreign-exchange rates at which currencies traded for each other. They required this power so they could generate any amount of spending needed to put people to work through public-works projects and government-stimulated private investments. Limiting increases in the money supply to the quantity of gold would only get in the way, Keynes insisted.

Keynes believed not only that the market economy could not keep itself on an even keel he also believed that it would be undesirable to allow the market to work. He once said that to have the market determine prices and wages to balance supply and demand was to submit society to a cruel and unjust “economic juggernaut.” Instead, he wanted wages and prices to be politically fixed on the basis of “what is ‘fair’ and ‘reasonable’ as between the [social] classes.”

During the Great Depression years of mass unemployment, he argued that the level of wages imposed by trade unions were to be viewed as sacrosanct, even if many workers were priced out of the market because the level was higher than potential employers thought those workers were worth. The government, instead, was to print money, run deficits, and push up prices to any level needed to make it again profitable for employers to hire workers. In other words, perpetual price inflation was to be the means to assure “full employment” in the face of aggressive trade unions demanding excessive wages.

The “Austrian” Alternative to Keynesian Economics

What Keynes completely discounted and, in fact, rejected was the alternative “Austrian” interpretation of the causes and cures for the Great Depression, as formulated by Ludwig von Mises, Friedrich A. Hayek and others. For the Austrian Economists, monetary expansion and interest rate manipulation had set in motion serious and distorting imbalances between savings and investment that resulted in mal-investment of capital, and misdirection of resources and labor – even though this happened in the United States under the seeming non-inflationary circumstances of a relatively stable price level.

Keynes’s new “macroeconomics” of focusing primarily on economy-wide statistical averages and aggregates – such as “aggregate demand,” “aggregate supply,” output and employment “as a whole” – hide from view all the real “microeconomic” relationships and interconnections between numerous individual supplies and demands that were being thrown out of coordination and balance due to the monetary policies of central banks.

When the financial and economic crisis of 1929-1930 began to snowball into wider and wider circles of falling output and rising unemployment, the Austrians had emphasized that a rebalancing throughout many parts of the economy required price and wage adjustments, and labor, capital and resource reallocations to restore coordination between those interconnected supplies and demands.

But this was the explanation and solution to the Great Depression that John Maynard Keynes rejected and refused to understand.

Deficit Spending and Special Interest Politics

In addition, when the balanced-budget rule was overthrown there was no longer any check on government spending. As economists, James M. Buchanan, and Richard E. Wagner pointed out in Democracy in Deficit (1977), once government is freed from the restraint of making taxpayers directly and immediately pay for what it spends, every conceivable special-interest group can appeal to the politicians to feed their wants. The politicians, desiring votes and campaign contributions, happily offer to satisfy the gluttony of these favored groups. At the same time, the taxpayers easily fall prey to the delusion that government can give something for nothing to virtually everyone at no or little cost to them.

Indeed, politicians can now play the game of offering more and more dollars to special interests, while sometimes even lowering taxes. The government simply fills the gap by borrowing, imposing a greater debt burden on future generations. Either taxes will have to go up in the years ahead or the government will turn to the printing press to pay what it owes, all the while claiming that it’s being done to generate “national prosperity” and fund the “socially necessary” programs of the welfare state.

And no need to worry about all this in the present, Keynes assured us, after all “in the long run we are all dead,” as he famously once said. Our problem, of course, is that we are increasingly living through the long-run consequences of Keynes’ short-run policies.

Enduring Wisdom of the Free Market Economists

The free market economics that preceded Keynes had been founded on two insights about man and society.

First, there is an invariant quality to man’s nature that makes him what he is; and if society is to be harmonious, peaceful, and prosperous, men must reform their social institutions in a way that directs the inevitable self-interests of individual men into those avenues of action that benefit not only themselves but others in society as well.

 

They therefore advocated the institutions of pri­vate property, voluntary exchange, and peaceful, open competition. Then, as Adam Smith had concisely expressed, men would live in a system of natural liberty in which each individual would be free to pursue his own ends, but would be guided as if by an invisible hand to serve the interests of others in society as the means to his own self-improvement.

 

Second, it is insufficient in any judgment concerning the desir­ability of a social or economic policy to focus only upon its seemingly short-run benefits. The laws of the market always bring about certain effects in the long run from any shift in supply and demand or from any government intervention in the market order. Thus, as French economist Frederic Bastiat emphasized, it behooves us always to try to determine not merely “what is seen” from a government policy in the short run, but also to discern as best we can “what is unseen,” that is, the longer-run consequences of our actions and policies.

 

The reason it is desirable to take the less immediate conse­quences into consideration is that longer-run effects may not only not improve the ill the policy was meant to cure, but can make the social situation even worse than had it been left alone. Even though the specific details of the future always remain beyond our ability to predict fully, one use of economics is to assist us to at least qual­itatively anticipate the likely contours and shape of that future aid­ed by an understanding of the laws of the market.

Keynes’s assumptions deny the wisdom and the insights of those free market economists. The biased em­phasis is toward the benefits and pleasures of the moment, the short run, with an almost total disregard of the longer run consequences.

Keynes’s economics of the short-run, led Austrian economist, F. A. Hayek, to lament in 1941:

“I cannot help regarding the increasing concentration on short-run effects . . . not only as a serious and dangerous intellectual error, but as a betrayal of the main duty of the economist and a grave menace to our civilization . . . It used, however, to be regarded as the duty and the privilege of the economist to study and to stress the long run effects which are apt to be hidden to the untrained eye, and to leave the concern about the more immediate effects to the practical man, who in any event would see only the latter and nothing else. . . .

 

“It is not surprising that Mr. Keynes finds his views anticipated by the mercantilist writers and gifted amateurs; concern with the surface phenomena has always marked the first stage of the scientific approach to our subject . . . Are we not even told that, “since in the long run we all are dead,” policy should be guided entirely by short-run considerations. I fear that these believers in the principle of ‘après nous le deluge’ [‘after us, the flood’] may get what they have bargained for sooner than they wish.”

 

Keynes’s Ideology of Ethical Nihilism

On what moral or philosophical basis, it is reasonable to ask, did Keynes believe that policy advocates such as himself had either the right or the ability to manage or direct the economic interactions of multitudes of peoples in the marketplace? Keynes explained his own moral foundations in Two Memoirs, published posthumously in 1949, three years after his death. One memoir, written in 1938, examined the formation of his “Early Beliefs” as a young man in his twenties at Cambridge University in the first decade of the twentieth-century.

He, and many other young intellectuals at Cambridge, had been influenced by the writings of philosopher G. E. Moore. Separate from Moore’s argument, what are of interest are the conclusions reached by Keynes from reading Moore’s work. Keynes said:

“Indeed, in our opinion, one of the greatest advantages of his [Moore’s] religion was that it made morals unnecessary . . . Nothing mattered except states of mind, our own and other people’s of course, but chiefly our own. These states of mind were not associated with action or achievement or consequences. They consisted of timeless, passionate states of contemplation and communion, largely unattached to ‘before’ and ‘after’.”

In this setting, traditional or established ethical or moral codes of conduct meant nothing. Said Keynes:

“We entirely repudiated a personal liability on us to obey general rules. We claimed the right to judge every individual case on its own merits, and the wisdom, experience and self-control to do so successfully. This was a very important part of our faith, violently and aggressively held . . . We repudiated entirely customary morals, conventions and traditional wis­doms. We were, that is to say, in the strict sense of the term immoralists . . . We recognized no moral obligation upon us, no inner sanction to conform or obey. Before heaven we claimed to be our own judge in our own case.”

Keynes declared that he and those like him were “left, from now onwards, to their own sensible devices, pure motives and reliable in­tuitions of the good.”

Then in his mid-fifties, Keynes declared in 1938, “Yet so far as I am concerned, it is too late to change. I remain, and always will remain, an immoralist.” As for the social order in which he still claimed the right to act in such unrestrained ways, Keynes said that “civilization was a thin and precarious crust erected by the per­sonality and the will of a very few, and only maintained by rules and conventions skillfully put across and guilely preserved.”

Thus, the decisions concerning the affairs of society are to be made on the basis of the self-centered “state of mind” of the policymakers, with total disregard of traditions, customs, mor­al codes, rules, or the long-run laws of the market. Their rightness or wrongness was not bound by any independent standard of “achievement and consequence.”

Instead it was to be guided by “timeless, passionate states of contemplation and communion, largely unattached to ‘before’ and ‘after’.” The decision-maker’s own “intuitions of the good,” for himself and for others, were to serve as his compass. And let no ordinary man claim to criticize such actions or their results. “Before heaven,” said Keynes, “we claimed to be our own judge in our own case.”

Here was an elitist ideology of nihilism. The members of this elite were self-appointed and shown to belong to this elect pre­cisely through mutual self-congratulations of having broken out of the straightjacket of conformity, custom, and law.

For Keynes in his fifties, civilization was this thin, precarious crust overlaying the animal spirits and irrationality of ordinary men. Its existence, for whatever it was worth, was the product of “the personality and the will of a very few,” like himself, naturally, and maintained through “rules and conventions skillfully put across and guilely preserved.”

Society’s shape and changing form were to be left in the hands of “the chosen” few who stood above the passive conventions of the masses. Here was the hubris of the social engineer, the self-selected philosopher-king, who through manipulative skill and guile direct­ed and experimented on society and its multitudes of individuals.

Keynes’s arrogance and self-confidence in his ability to manage and manipulate public opinion and public policy was expressed shortly before his death in 1946. Friedrich Hayek once recounted a conversation he had with Keynes in the immediate post-World War II period.

Hayek asked Keynes if he was not concerned that some of his own intellectual disciples were taking his ideas into dangerous and undesirable directions.

“After a not very complementary remark about the persons concerned he proceeded to reassure me: those ideas had been badly needed at the time he had launched them. But I need not be alarmed; if they should ever become dangerous I could rely upon him that he would again quickly swing round public opinion – indicating by a quick movement of his hand how rapidly that would be done. But three months later he was dead.”

Politicians Hear Keynes’ Defunct Voice in the Air

In one of the most famous passages in The General Theory, Keynes said,

“The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be exempt from any intellectual influences, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back.”

Eighty years after the appearance of The General Theory, many practical men of affairs and politicians in authority remain the slaves of defunct economists and academic scribblers. The tragedy for our times is that among the voices they still hear in the air as they corruptly mismanage everything they touch is that of John Maynard Keynes.

via Zero Hedge http://ift.tt/1L7piH2 Tyler Durden

When the Russians started flying from Latakia on September 30 it put the Syrian opposition in a decisively precarious situation.

Whereas the Syrian air force was largely out of date and relied on replacement parts and continual maintenance to remain viable, Moscow brought one of the most formidable sky attacks on the planet to a fight against rebels with zero air capability and exceptionally limited capacity to defend themselves against an aerial assault.

Starting in October, the Russian Defense Ministry began posting video clips (hundreds of them) depicting strikes on a variety of rebel and militant targets and The Kremlin also went out of its way to capture full color, HD footage of Su-34s and long-range bombers in action over Syria where the opposition was quite simply powerless to defend itself.

For about a month (sometime between mid-November and mid-December) it appeared that President Obama was right. The fanfare around the initial wave of Russian airstrikes had subsided and the push north to Aleppo appeared to have stalled. The “quagmire” it seemed, was real. Then, suddenly, Hezbollah surrounded Aleppo and reports indicated the Russian air force had implemented what amounts to a scorched earth policy when it comes to the militants battling Iranian forces.

Once it became apparent that the country’s largest city would soon be recaptured by forces loyal to Assad, both Turkey and Saudi Arabia began to weigh their options. A ground assault by Ankara and Riyadh would be a veritable nightmare for the US and the West. It would invariably devolve into a direct conflict with Iranian forces and the first time a Russian jet hit Saudi or Turkish troops the world would be plunged into a global conflict with the potential to drag every nation in the developed world to war.

So far, the Turks and the Saudis haven’t invaded, although Ankara is now shelling the YPG in the Azaz corridor in an effort to roll back Kurdish efforts to consolidate border gains. According to Saudi Foreign Minister Adel al-Jubeir, Riyadh’s next move may be to introduce surface-to-air missiles so that the rebels will be able to defend themselves against the Russian air attack.

“Is Saudi Arabia in favor of supplying anti-aircraft missiles to the rebels?,” Der Spiegel asked al-Jubeir on Friday. Here was the minister’s response:

Yes. We believe that introducing surface-to-air missiles in Syria is going to change the balance of power on the ground. It will allow the moderate opposition to be able to neutralize the helicopters and aircraft that are dropping chemicals and have been carpet-bombing them, just like surface-to-air missiles in Afghanistan were able to change the balance of power there. This has to be studied very carefully, however, because you don’t want such weapons to fall into the wrong hands.

Now obviously, the whole “dropping chemicals” line is a ruse. The only thing introducing advanced surface-to-air missiles would do is allow the opposition to shoot at Russian air power and that’s completely at odds with the following response al-Jubeir gave when asked about the kingdom’s relationship with the Russians:

Other than our disagreement over Syria, I would say our relationship with Russia is very good and we are seeking to broaden and deepen it. Twenty million Russians are Muslims. Like Russia, we have an interest in fighting radicalism and extremism. We both have an interest in stable energy markets. Even the disagreement over Syria is more of a tactical one than a strategic one. We both want a unified Syria that is stable in which all Syrians enjoy equal rights.

No, no you both do not want that. Syria was already a state where citizens enjoyed equal rights, loosely speaking. That’s not to say that Assad tolerated much in the way of dissent when it came to his grip on power, but when it came to Mid-East states where different sects and religions could live alongside one another, things were going ok in Syria before Riyadh, Washington, Doha, and Ankara decided to play on fears of Iranian influence to whip impoverished Sunnis into a sectarian frenzy.

The hypocrisy and outright absurdity only gets worse from there (in fact, this is one of the most egregious interviews in recent memory with a Saudi official) and we’ve included some of the “highlights” (or “lowlights” as it were) below, but the point here is that the Saudis appear set to supply surface-to-air missiles to the rebels. We’re not sure how today’s announced “ceasefire” will ultimately affect those plans, but it’s worth noting that when the US, Turkey and the Saudis supplied TOWs to the opposition in an effort to combat the advance of pro-government armored vehicles, the FSA ended up using one of the weapons to destroy a Russian search and rescue helicopter. Footage of that effort was posted by the FSA on YouTube.

Does Saudi Arabia really believe the best idea is to supply the rebels with the capability to shoot at the Russian air force? At what point do Washington’s Sunni allies admit that this has been a giant mistake that’s cost the lives of hundreds of thousands of people? Perhaps most importantly, when will the US and NATO finally admit that they are on the wrong side of the sectarian divide and thus on the wrong side of history? Does The Pentagon really want to get behind arming Sunni extremists (who espouse the same ideology as ISIS and al-Nusra) with weapons to shoot down Russian warplanes?

We’ve said it before and we’ll say it again: the traditional distinction between the “good” guys and the “bad” guys no longer holds. Long live the “good” guys – whoever they are.

*  *  *

Excerpts from Adel al-Jubeir’s interview with Der Spiegel (try not to laugh):

SPIEGEL: Russian Prime Minister Dmitry Medvedev spoke of the danger of “World War III” at the Munich Security Conference.

Al-Jubeir: I think this is an over-dramatization. Let’s not forget: This all began when you had eight- and nine-year-old children writing graffiti on walls. Their parents were told: “You will never see them again. If you want to have children, go to your wife and make new ones.” Assad’s people rebelled. He crushed them brutally. But his military could not protect him. So he asked the Iranians to come in and help. Iran sent its Revolutionary Guards into Syria, they brought in Shia militias, Hezbollah from Lebanon, militias from Iraq, Pakistan, Afghanistan, all Shia, and they couldn’t help. Then he brought in Russia, and Russia will not save him. At the same time, we have a war against Daesh (the Islamic State, or IS) in Syria. A coalition that was led by the United States, with Saudi Arabia being one of the first members of that coalition.

SPIEGEL: That sounds well and good, but you are also providing support to the opposing camp in a war. Even more than your relationship with Russia, the world is worried about the deep schism between Saudi Arabia and Iran.

Al-Jubeir : Iran has been a neighbor for millenia, and will continue to be a neighbor for millenia. We have no issue with seeking to develop the best terms we can with Iran. But after the revolution of 1979, Iran embarked on a policy of sectarianism. Iran began a policy of expanding its revolution, of interfering with the affairs of its neighbors, a policy of assassinating diplomats and of attacking embassies. Iran is responsible for a number of terrorist attacks in the Kingdom, it is responsible for smuggling explosives and drugs into Saudi Arabia. And Iran is responsible for setting up sectarian militias in Iraq, Pakistan, Afghanistan and Yemen, whose objective is to destabilize those countries.

SPIEGEL: Your Iranian counterpart, Foreign Minister Mohammad Javad Zarif, accused Saudi Arabia of provoking Iran by actively sponsoring violent extremist groups.

Al-Jubeir: What’s the provocation that he’s talking about?

SPIEGEL: Is Saudi Arabia not financing extremist groups? Zarif speaks of attacks by al-Qaida, the Syrian al-Nusra and other groups — of attacks on Shiite mosques from Iraq to Yemen.

Al-Jubeir: Yes, but that’s not us. We don’t tolerate terrorism. We go after the terrorists and those who support them and those who justify their actions. Our record has been very clear, contrary to their record. They harbor al-Qaida leaders. They facilitate al-Qaida operations. They complain about Daesh, but Iran is the only country around the negotiating table that has not been attacked by either al-Qaida or Daesh.

SPIEGEL: How do you explain the ideological closeness between the Wahhabi faith in Saudi Arabia and Islamic State’s ideology? How do you explain that Daesh applies, with slight differences, the same draconian punishments that the Saudi judiciary does?

Al-Jubeir: This is an oversimplification which doesn’t make sense. Daesh is attacking us. Their leader, Abu Bakr al-Baghdadi, wants to destroy the Saudi state. These people are criminals. They’re psychopaths. Daesh members wear shoes. Does this mean everybody who wears shoes is Daesh?

SPIEGEL: Are you contesting the similarities between the extremely conservative interpretation of Islam in Saudi Arabia and Islamic State’s religious ideology?

Al-Jubeir: ISIS is as much an Islamic organization as the KKK in America is a Christian organization. They burned people of African descent on the cross, and they said they’re doing it in the name of Jesus Christ. Unfortunately, in every religion there are people who pervert the faith. We should not take the actions of psychopaths and paint them as being representative of the whole religion.

SPIEGEL: Doesn’t Saudi Arabia have to do a lot more to distance itself from ISIS and its ideology?

Al-Jubeir: It seems people don’t read or listen. Our scholars and our media have been very outspoken. We were the first country in the world to hold a national public awareness campaign against extremism and terrorism. Why would we not want to fight an ideology whose objective is to kill us?

SPIEGEL: At the same time, your judges mete out sentences that shock the world. The blogger Raif Badawi has been sentenced to prison and 1,000 lashes. On Jan. 2, 47 men were beheaded, among them Sheikh Nimr al-Nimr. His nephew Ali has been sentenced to death as well and his body is to be crucified after the execution.

Al-Jubeir: We have a legal system, and we have a penal code. We have the death penalty in Saudi Arabia, and people should respect this. You don’t have the death penalty, and we respect that.

SPIEGEL: Should we respect the flogging of people?

Al-Jubeir: Just like we respect your legal system, you should respect our legal system. You cannot impose your values on us, otherwise the world will become the law of the jungle. Every society decides what its laws are, and it’s the people who make decisions with regards to these laws. You cannot lecture another people about what you think is right or wrong based on your value system unless you’re willing to accept others imposing their value system on you.

SPIEGEL: Is it even compatible with human rights to display the body of an executed person?

Al-Jubeir: This is a judgment call. We have a legal system, and this is not something that happens all the time. We have capital punishment. America has capital punishment. Iran has capital punishment. Iran hangs people and leaves their bodies hanging on cranes. Iran put to death more than a thousand people last year. I don’t see you reporting on it.

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

Submitted by Peter Schiff via Euro Pacific Capital,

Operating under the mistaken belief that a modest dose of inflation is either a prerequisite for, or a by-product of, economic growth, the nation’s top economists have been assuring us for quite some time that inflation will stay very low until the currently mediocre economy finally catches fire. As a result, they believe that the low inflation of the past few months has frustrated Federal Reserve policy makers, who have been supposedly chomping at the bit to keep hiking rates in order to restore confidence in the present and to build the ability to cut rates in the future if the nation were to ever, god forbid, enter another recession.

In the weeks leading up to the Fed’s December 16 decision to raise rates by 25 basis points (their first increase in nearly a decade) the consensus expectations on Wall Street was that the Fed would deliver three or four additional interest rate hikes in 2016. But with the global markets now in turmoil, GDP slowing, and the stock market off to one of its worst starts in memory, a consensus began to emerge that the Fed is reluctantly out of the rate hiking business for the rest of the year.

With such thoughts firmly entrenched, many were largely caught off guard by the arrival last Friday (February 19th) of new inflation data from the Labor Department that showed that the core consumer price index (CPI) rose in January at a 2.2 % annualized rate, the highest in more than 4 years, well past the 2.0% benchmark that the Fed has supposedly been so desperately trying to reach. It was received as welcome news.

A Reuter’s story that provided immediate reaction to the inflation data summed up the good feeling with a quote by Chris Rupkey, chief economist at MUFG Union Bank in New York, "It is a policymaker's dream come true. They wanted more inflation and they got it." The widely respected Jim Paulsen of Wells Capital Management said that the stronger inflation, combined with upticks in consumer spending and jobs data would force the Fed to get on with more rate hikes.

But higher inflation is not “a dream come true". In reality it is the Fed’s worst possible nightmare. It will expose the error of their eight-year stimulus experiment and the Fed’s impotence in restoring health to an economy that it has turned into a walking zombie addicted to cheap money.

While most economists still want to believe that the recent slowdown in economic growth (.7% annualized in the 4th quarter of 2015, which could be revised lower on Friday) was either caused by the weather, confined to manufacturing, oil related, or just some kind of statistical fluke that will likely reverse in the current quarter, and that the stock market declines of 2016 have resulted from distress imported from abroad, a much more likely trigger for all these developments can be found in the Fed’s own policy.

The Chinese economic deceleration and market turmoil made little impact on U.S markets prior to the Fed’s rate hike. And although U.S. markets rallied slightly in the days around the historic December rate hike, they began falling hard just a few days later. Stocks remained on the downward path until a recent rally inspired by dovish comments from various Fed officials which led many to conclude that future rate hikes may be fewer and farther between then was originally believed.

In truth, the markets and the economy have been walloped not just by December’s quarter point increase, but from the hangover from the withdrawal of QE3, and the anticipation of higher rates in 2016, all of which contributed to a general tightening of monetary policy.

The correlation between monetary tightening and economic deceleration is not accidental. As it had been in Japan before us, the unprecedented stimulus that has been delivered by central banks, in the form of zero percent interest and trillions of dollars in quantitative easing bond purchases, failed to create a robust and healthy economy that could survive in its absence. Our stimulus, which was launched in the wake of the 2008 crash, may have prevented a deeper contraction in the short term, but it also prevented the economy from purging the excesses of artificial boom that preceded the crash. As a result, we are now carrying far more debt, and the nation is far more levered than it was prior to the Crisis of 2008. We have been able to muddle through with all this extra debt only because interest rates remained at zero and the Fed purchased so much of the longer-term debt.

In the past I argued that even a tiny, symbolic, quarter point increase would be sufficient to prick the enormous bubble that eight years of stimulus had inflated. Early results show that I was likely right on that point. The truth is that the economy may be entering a period of “stagflation” in which very low (or even negative) growth is accompanied by rising prices. This creates terrible conditions for consumers whereby prices rise but incomes don’t. This leads to diminished living standards.

The recent uptick in inflation does not somehow invalidate all the other signs that have pointed to a rapidly decelerating economy. Just because inflation picks up does not mean that things are getting better. It actually means they are about to get a whole lot worse. Stagflation is in fact THE nightmare scenario for the Fed. If inflation catches fire now, the Fed will be completely incapable of controlling it. If a measly 25 basis point increase could inflict the kind of damage already experienced, imagine what would happen if the Fed made a real attempt to raise rates to get out in front of rising inflation? With growth already close to zero, a monetary shock of 1% or 2% rates could send us into a recession that could end up putting Donald Trump into the White House. The Fed would prefer that fantasy never become reality.

But the real nightmare for the Fed is not the extra body blow higher prices will deliver to already bruised consumer, but the knockout punch that will be delivered to its own credibility. The markets believe the Fed has a dual mandate, to promote employment and to maintain price stability. But it is currently operating like it has just a single unspoken mandate: to continue to shower markets with easy money until asset prices and incomes rise high enough to reduce the real value of our debts to the point where they can actually be serviced with higher rates, regardless of what happens to employment or consumer prices along the way.

If you recall back in 2009 and 2010, when unemployment was in the 8% to 10% range, former Fed Chair Ben Bernanke initially indicated that the fed would raise rates from zero once unemployment fell to 6.5%. At the time I wrote that it was a bluff, and that if those goalposts were ever reached, they would be moved. That is exactly what happened. But when 5% unemployment finally backed the Fed into a credibility corner it had to do something symbolic. This resulted in the 25 basis points we got in December. Yet even as official unemployment is now 4.9%, the Fed can postpone future, more damaging rate hikes, so long as low-inflation provides the cover. 

But can the Fed get away with moving its inflation goal post as easily as it had for unemployment? In fact, the Fed has already done so, with little backlash at all. When created by Congress the Federal Reserve was tasked with maintaining “price stability”. The meaning of “stability” should be clear to anyone with a rudimentary grasp of the English language: it means not moving. In economic terms, this should mean a state where prices neither rise nor fall. Yet the Fed has been able to redefine price stability to mean prices that rise at a minimum of 2% per year. Nowhere does such a target appear in the founding documents of the Federal Reserve. But it seems as if Janet Yellen has borrowed a page from activist Supreme Court justices (unlike the late Antonin Scalia) who do not look to the original intent of the framers of the Constitution, but their own “interpretation” based on the changing political zeitgeist.

The Fed’s new Orwellian mandate is to prevent price stability by forcing price to rise 2% per year. What has historically been seen as a ceiling on price stability, that would have forced tighter policy, is now generally accepted as being a floor to perpetuate ultra-loose monetary policy. The Fed has accomplished this self-serving goal with the help of naïve economists who have convinced most that 2% inflation is a necessary component of economic growth.

But as officially measured consumer prices surpass the 2% threshold by an ever-wider margin, (which could occur in earnest once oil prices find a bottom) how far up will the Fed be able to move that goal post before the markets question their resolve? Will the Fed allow 3% or 4% inflation to go unchallenged? President Nixon imposed wage and price controls when inflation reached 4%. It’s amazing that 2% inflation is now considered perfection, yet 4% was so horrific that such a draconian approach was politically acceptable to rein it in.

Once markets figure out that the Fed is all hat and no cattle when it comes to fighting inflation, the bottom should drop out of the dollar, consumer price increases could accelerate even faster, and the biggest bubble of them all, the one in U.S. Treasuries may finally be pricked. That is when the Fed’s nightmare scenario finally becomes everyone’s reality.

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

While such things are virtually impossible to verify due to the difficulty of getting “inside the caliphate” so to speak, word on the jihadist circuit is that ISIS is running short on money.

Successive rounds of Russian strikes on crude tankers and on the group’s oil infrastructure have crippled the illicit oil trade and tax revenue has also fallen in the wake of Baghdad’s decision to stop paying the salaries of public sector workers in Islamic State-held Mosul and other militant strongholds. Typically, Baghdadi would tax those earnings by 20% to 50%, creating a key revenue stream for the caliphate.

Additionally, ISIS is now reportedly beginning to release captives for as little as $500 and has moved to accept only US dollars as payment for utility bills, a policy we said is somewhat ironic given that it was last August when the group released a propaganda video promising to bring back the gold dinar to replace “a worthless “piece of paper called the Federal Reserve dollar note.”

But perhaps the surest sign yet that the self-styled caliphate is running into financial trouble comes from several on-the-ground sources who told AP last week that ISIS is no longer giving away free Snickers bars and Gatorade to its fighters.

Now, we learn that Islamic State has resorted to a tried and true method of generating “a little” extra profits here and there: currency manipulation.

“The group earns dollars by selling basic commodities produced in factories under its control to local distributors, but pays monthly salaries in dinars to thousands of fighters and public employees,” currency traders in Mosul told Reuters. “It earns profits of up to 20 percent under preferential currency rates it imposed last month that strengthen the dollar when exchanged for smaller denominations of dinars.”

It’s a simple concept. ISIS takes in dollars, pays salaries in dinars, and calls the exchange rate whatever Bakr al-Baghdadi wants it to be.  

“At the official rate set by the Iraqi government, $100 is currently valued at around 118,000 dinars,” Reuters goes on to note. “In Mosul, the same amount costs 127,500 dinars when purchased with 25,000-dinar notes, the largest bill in circulation, [and] the rate rise to 155,000 dinars when purchased with 250-dinar notes – the smallest bill available.”

Presto: magic profits at the expense of the populace.

There’s no way around this for Iraqis living under ISIS rule. “Nobody would risk [setting up parallel trading],” traders told Reuters.

This underscores the extent to which simply bombing cash centers and vaporizing currency won’t be sufficient to completely cripple the group’s finances. ISIS has capitve populations in two large urban centers – Mosul and Raqqa. Those populations can be exploited and extorted to plug the gaps and the group is pushing to capture key oil assets in Libya which they hope will help to replace what’s been lost to the Russians in Syria.

Of course the real irony here is that ISIS has learned that when it comes to illicit gains, nothing beats white collar crime. Sure you can rape and pillage and even set out to establish your very own oil trafficking routes, but when it comes to racking up effortless gains, nothing works like rigging rates, a concept those “other” international criminal organizations (banks) figured out long ago. 

We’re reminded of the rather unfortunate incident that unfolded last year at HSBC when a group of bankers dressed up like Jihadi John and staged a mock execution. It appears the line between investment banks and terrorist organizations is getting more blurry by the day…

via Zero Hedge http://ift.tt/1Uj6g2x Tyler Durden

Quietly as an aside in a speech, the Head of the Bank of Japan, Haruhiko Kuroda, confessed that QE has little if any impact on GDP growth.

 

I touched upon this issue previously, but I want to reiterate it here because it is absolutely ASTOUNDING.

 

The Bank of Japan is the global leader for monetary policy. Indeed, it has been experimenting with severe monetary policy for DECADES.

 

The Fed first implemented ZIRP and QE in 2008. The ECB first cut rates to ZIRP in 2014 and implemented QE in 2015.

 

The Bank of Japan began easing back in the early ‘90s. It implemented ZIRP for the first time in 1999. Thus it has been maintaining ZIRP for the better part of two decades.

 

 

The Bank of Japan also launched its first QE program in 2001. And it never looked back. Currently its balance sheet is over $3 trillion, equal to over 65% of Japan’s GDP.

 

 

To give some perspective on this, the Fed’s balance sheet even after its $3.5 trillion expansion is a mere 25% of US GDP. For the Fed to approach a balance sheet expansion equal to that of Japan it would need to grow its balance sheet to OVER $11 TRILLION!

 

In short, the Bank of Japan is THE leader for Central Banker monetary policy.

 

This is why the Head of the Bank of Japan, Haruhiko Kuroda’s admission that Japan has a GDP “potential” of 0.5% of less is such a huge deal. It is effectively the head of the single most aggressive Central Bank on the planet admitting that no matter how much QE or ZIRP he employs there is a definitive ceiling (a low one at that) for GDP growth.

 

Imagine if an athlete stated that no matter how much he or she trained there would be next to no improvement… or better yet, imagine if a Doctor told you that no matter how much medicine or treatment you took, you would not recover from an illness?

 

That is what Kuroda admitted regarding Central Bank monetary policy.

 

Frankly, I am shocked he said it. But then again, he and his bank are over two decades into the biggest monetary failure in history (despite 16 years of ZIRP and 15 years of QE, Japan’s growth rate continues to trend down).

 

 

I’m not surprised that the markets haven’t reacted to this. It’s so incredible that virtually no one caught on. And truth be told, it’s going to take the markets months to truly “get” Kuroda’s confession.  Once this happens, the REAL Crisis (the crisis of faith in Central Banks) will have officially begun.

 

Another Crisis is coming. Smart investors are preparing now.

 

We just published a 21-page investment report titled Stock Market Crash Survival Guide.

 

In it, we outline precisely how the crash will unfold as well as which investments will perform best during a stock market crash.

 

We are giving away just 1,000 copies for FREE to the public.

 

To pick up yours, swing by:

http://ift.tt/1HW1LSz

 

Best Regards

 

Graham Summers

Chief Market Strategist

Phoenix Capital Research

 

 

 

 

via Zero Hedge http://ift.tt/21m9W5y Phoenix Capital Research

The Bush dynasty ended not with a bang, but a whimper on Saturday when Jed Bush officially threw in the towel at the feet of Donald Trump, but not before spending $130 million for his now failed presidential campaign.

As the NYT reminds us, when Jeb Bush formally entered the presidential campaign in June, there was already more money behind him than every other Republican candidate combined. When he suspended his campaign on Saturday night in South Carolina, Mr. Bush had burned through the vast majority of that cash without winning a single state. It may go down as one of the least successful campaign spending binges in history.

Here are some of the things Jed spent his backers’ money on:

Positive Advertising: $84 Million

When Mr. Bush finally did get in the race, he needed to reintroduce himself to the Republican electorate. After all, it had been eight years since the end of his final term as Florida’s governor, and he had spent the intervening period as a philanthropist, consultant and investment banker. His campaign and a super PAC supporting him spent heavily on sunny advertising spots in the hopes of announcing Mr. Bush to the post-Tea Party Republican Party as a credentialed conservative.

Clubbing: $94,100

Instead of spending last winter on the hustings of Iowa and New Hampshire, Mr. Bush held off, instead using the first half of 2015 to raise money in places like New York, Chicago, Texas and Florida. His goal: Raise enough money for a “super PAC” to scare other candidates — especially those with a similar political profile — out of the race. Over the entire campaign, Mr. Bush’s team racked up tens of thousands of dollars in dinner and event tabs at the Yale Club, the Union League Club of Chicago, Nantucket’s Westmore Club, and more than two dozen other haunts of the well heeled and racquetball-inclined.

Valets: $15,800

Donors’ cars don’t park themselves. With an aggressive fund-raising schedule and several major donor gatherings, Mr. Bush and the super PAC, Right to Rise, incurred a proportional parking tab.

People: $8.3 Million

As Mr. Bush’s campaign matured, he and the group supporting him built one of the largest organizations of any candidate in either party, banking that his superior fund-raising would sustain his high overhead costs, which in turn would yield him wins or near-wins in states like Iowa and New Hampshire, where organizing is critical. But Mr. Bush’s message — experience, civility and technocratic competence — did little to win over voters mesmerized by the billionaire provocateur Donald J. Trump, who outshone his rivals with a bare-bones organization and millions in free media exposure.

Branding: $88,387

Right to Rise, the super PAC supporting Mr. Bush, and then his campaign directly, retained 30 Point Strategies, a public relations company in Bethesda, Md., specializing in “thought leadership” and “brand journalism,” according to the firm’s website. But in the end, the most lasting label of Mr. Bush was supplied by Mr. Trump: “low energy.”

Vegas, Baby: $48,544

Mr. Bush and his staff racked up sizable travel bills, including $3.3 million in airfare and hundreds of thousands of dollars at hotels, ranging from a Best Western in Phoenix to the Biltmore in Coral Gables, Fla. But what stands out is the Bush team’s taste for the Vegas Strip, where aides and allies patronized the Bellagio, the Wynn and the Venetian, owned by Sheldon Adelson, the Republican megadonor.

The Consultants: $10 Million

A well-funded candidate tends to attract hordes of consultants, and Mr. Bush had plenty. All told, his team paid consulting fees to around 140 different companies or individuals, including senior campaign staff members, opposition research firms, and get-out-the-vote operatives in Iowa and South Carolina.

Pizza: $4,837

As his fortunes declined this winter, Mr. Bush sharply pared back employees’ salaries and consulting fees, even laying off some campaign staff members to bring down costs. But let it never be said that Mr. Bush allowed his team to go hungry. His campaign and super PAC were particularly fond of the pizza, whether from Domino’s or from Pizza Ranch, the Iowa chain.

* * *

Or as summarized best by a tweet…

 

Summing up: a Bush spends fortune to lose war against extremists.

— Paul Musgrave (@rpmusgra) February 21, 2016

via Zero Hedge http://ift.tt/21m84d4 Tyler Durden

Submitted by Mac Slavo via SHTFPlan.com,

Earlier this month, as retail investors lost confidence in the global economy and broader stock markets, an air of panic began to set in. Reports indicate the lines were literally forming around the block at gold stores throughout London and elsewhere. It was, by all accounts, the very scenario one might expect in an environment where trust in government and central banks has been eroded.

But it’s only the beginning, explains Auryn Resources executive chairman Ivan Bebek in an interview with SGT Report, as nation states and large investors are trying to get their hands on gold as fast as they can:

Before any big move in gold we have always seen extreme volatility or volatility pick up. This was just a taste of what’s to come in the next few years… We’ll look back at this and be reflecting on how minimal this move was compared to what’s going to happen as we go forward…

 

It’s a smart money trend… they can see where their countries are going… where the world economy is going… it’s surprising how late they are to the party… late to a very small door to get a bit of gold that’s out there… it’s going to be a remarkable reaction when that all comes to fruition. They’re just positioning themselves for what’s to come and that’s what they have to do. And getting back into the gold trade, the gold business and hoarding gold… they’re doing that because they see a very big gold market coming ahead like the rest of us.

Full Video Interview:

And while there is most certainly big money moving into gold ahead of negative interest rates, a potential ban on high denomination cash bills and the global calamity to come, Bebek highlights the fact that retail investors haven’t yet begun to get involved on any meaningful scale. Many remain committed to the view of mainstream financial pundits and entrenched analysts talking their books, so they’re going to hold on to their more traditional investments until such time that they see everyone else panic. And when that inevitable rush to the exit door comes they’ll be looking to shift their capital into safe haven assets, along with the rest of the herd.

But just as there will be only one exit door for the mob trying to sell, there will also be a small entrance way for those looking to protect themselves with gold:

When you took the 2011 gold run to $1900… and you took the market cap of all the gold companies in the world… they would have fit into one big tech company on the NASDAQ. That’s how small the world gold investing market is.

 

So, when you look at the size and scope of the money that can come into the gold market… the door on the way out and the door on the way in… it’s really small.

 

…

 

This is the start of the turn and it’s a very small door, meaning there are very few gold investments to make. In a few years there will be hundreds of gold companies like ourselves, or even thousands like there were before.

 

But that first wave is where all the money is made. You can go back to 2002 – 2004 and you look at the first wave and you look at what happens when gold starts to move… what happens to gold equities… the 100%, 200%, 1000%, and 10,000%  returns… those all can happen from this point forward.

 

It’ll be the place to put your money. At the same time, the early few years will be where most of the money is made percentage-wise.

What we saw in London a couple of weeks ago was a microcosm of what’s to come. Though there remain those like former Federal Reserve Chairman Ben Bernanke who say central banks and governments buy gold not because it’s money but because it’s tradition, that narrative, says Bebek, has fallen apart:

Five or six years ago they got onto that page, but now they can no longer say it. When you have China, Germany, Europe and all these world economies believing that it’s not a tradition… that they need to own it as a currency… it doesn’t matter what they say because the demand is so big worldwide… actions are bigger than words… the world is hoarding gold… they’re starting to go long gold… so that defeats the whole argument they have been making.

We know for a fact that the smart money including major global players like George Soros and Carl Icahn are gobbling up all the gold they can get their hands on. When the rush for the exit in global equities starts – and you better believe it will – there will be an equally panicked rush into safe haven assets.

We literally saw how small the door was as people lined up to get their hands on physical gold. Now imagine, as Auryn Resources’ Ivan Bebek noted, what that line will look like on a global scale and what it will do to gold prices.

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

If you want our take – and let’s face it, you must because that’s why you’re here – we wouldn’t put too much faith in today’s announced Syrian “ceasefire” agreement.

Although the deal calls for the cessation of hostilities as of Saturday at midnight, you shouldn’t expect the Russians and the Iranians to halt their advance on Aleppo and likewise, you shouldn’t expect Turkey to stop shelling the Azaz corridor in a largely transparent effort to keep the supply lines to the rebels open.

The stakes are simply too high now. As we’ve explained exhaustively, the fall of Aleppo to Hezbollah and the Russians would for all intents and purposes be the end of the rebellion. Assad would once again control the bulk of the country’s urban backbone in the west and that would mean his rule would be effectively restored.

Additionally, don’t expect Hezbollah to simply pack up and head back to Lebanon once the rebels are defeated. Iran will most likely keep Hassan Nasrallah’s army in place to provide security as well as members of the various Shiite militias the Quds called over from Iraq. Similarly, the Russians won’t be going anywhere either. Vladimir Putin now has an air base and a naval base in Syria and The Kremlin will want to protect those installations vociferously during what is likely to be a turbulent couple of years following the demise of the rebel cause.

Turkey and Saudi Arabia know all of this and they’re fuming mad. The last thing Saudi Arabia wants is for Tehran to preserve the Shiite crescent and the supply line to Lebanon and Turkey is now in a bitter feud with the Russians following Erdogan’s ill-fated move to down an Su-24 near the border on November 24.

Both Riyadh and Ankara have indicated that they would participate in ground operations in Syria and most recently, the Turks have been busy shelling the Syrian Kurds to keep what’s left of the supply lines to the rebels open and prevent the Russian-backed YPG from consolidating territorial gains and uniting a Kurdish proto-state on Turkey’s border.

All of the above has NATO rattled, but the thing that worries the alliance the most is the possibility that Turkey will end up in an armed, direct confrontation with Russia. Were Russia to attack Turkey, NATO would be obligated to defend Ankara but that defense would mean going to war with Moscow and, most likely, with Iran.

Below, find some insightful – if slightly biased – commentary from Der Spiegel on NATO’s “Article 5” problem.

*  *  *

From “Putin Vs. Erdogan: NATO Concerned Over Possible Russia-Turkey Hostiities” as published in Der Spiegel

It was a year deep in the Cold War, a time when the world was closer to nuclear war than ever. There were myriad provocations, red lines were violated, airspace was infringed upon and a plane was shot down.

The situation was such that an accidentally fired missile or a submarine captain losing his cool would have been enough to trigger World War III. It was 1962, the year of the Cuban Missile Crisis — an incident the current Russian prime minister finds himself reminded of today. At the Munich Security Conference last weekend, Dimitri Medvedev invoked the danger of a new Cold War. “Sometimes I think, are we in 2016 or 1962?”

Officials in Berlin have likewise been struck recently by a strange sense of déjà vu.

Syria is the Cuba of 2016 and the risk of an international confrontation there is growing by the day.

Officials in Angela Merkel’s Chancellery in Berlin are concerned about how close NATO has already come to a conflict with Russia. Indeed, Syria could become a vital test case for the military alliance. But the situation is complex: In order to thwart Putin, NATO must make it clear that it stands behind its member states in their moment of need. Yet NATO also wants to avoid a military conflict with Russia at all costs.

Officials at NATO headquarters in Brussels view the situation between Ankara and Moscow as being extremely volatile. “The armed forces of the two states are both active in fierce fighting on the Turkish-Syrian border, in some cases just a few kilometers from each other,” one NATO official says.

Since Russia became a party to the war in Syria at the end of September, there has been a significant risk of open confrontation between Moscow and Ankara. Russia has thrown its support behind the troops loyal to Syria’s unscrupulous dictator Bashar Assad while Turkey is supporting the rebels who would like to topple his autocracy.

The conflict intensified at the end of November when Turkey shot down a Russian warplane and now Putin has forged an alliance with the Syrian Kurds, Erdogan’s archenemies. The Turkish president holds the Syrian Kurds responsible for the attack on Wednesday in the Turkish capital, which saw an explosion in central Ankara kill 28 and wound 61. Syrian Kurds have denied responsibility, but the bombing has ratcheted up tensions between Ankara and Moscow even further.

Turkey too has done its part in recent weeks to ratchet up the escalation. Turkish troops are now firing artillery across the border at Kurds in Syria and Ankara has also been thinking out loud about possibly sending ground troops into Syria to take on the Kurds.

That would be a nightmare for the West: Direct fighting between the Kurds and the Turks could mean that Russian troops would be soon to follow. What, though, would happen were a NATO member state to fire at Russian soldiers? Officials in the Chancellery hope that the alliance wouldn’t be directly called on to get involved, as long as the fighting was limited to Syrian territory.

In an effort to prevent further escalation, NATO has made it exceedingly clear to the Turkish government that it cannot count on alliance support should the conflict with Russia head up as a result of a Turkish attack. “NATO cannot allow itself to be pulled into a military escalation with Russia as a result of the recent tensions between Russia and Turkey,” says Luxembourg Foreign Minister Jean Asselborn.

Should Turkey be responsible for escalation, say officials in both Berlin and Brussels, Ankara would not be able to invoke the NATO treaty. Article 4 of the alliance’s founding treaty grants member states the right to demand consultations “whenever, in the opinion of any of them, the territorial integrity, political independence or security of any of the Parties is threatened.” Turkey has already invoked this article once in the Syrian conflict. The result was the stationing of German Patriot missiles on the Syrian border in eastern Turkey.

The decisive article, however, is Article 5, which guarantees that an “armed attack against one or more of (the alliance members) in Europe or North America shall be considered an attack against them all.” But Luxembourg’s Foreign Minister Asselborn notes that “the guarantee is only valid when a member state is clearly attacked.”

“We are not going to pay the price for a war started by the Turks,” says a German diplomat. Because decisions taken by the North Atlantic Council, NATO’s primary decision-making body, must always be unanimous, it is enough for a single country to exercise its veto rights, the official says. But, the official adds, it won’t get that far: there is widespread agreement with the US and most other allies that Turkey would get the cold shoulder in such a case.

Much more in the full article

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Yes, but as Erdogan advisor Seref Malkoc made clear over the weekend, Ankara is getting fed up with the “cold shoulder” and if there’s anything the Turkish isn’t scared to do, it’s act unilaterally. 

While NATO might indeed scold Ankara and seek to stay out of an open conflict in the initial stages, it’s unlikely that the alliance would stand idly by should Russia and Turkey actually go to war.

As a reminder, Turkey has already gotten two strikes. Erodgan downed a Russian drone and then shot down a Russian warplane. Turkey is now shelling areas where Russian and Iranian forces are very likely to be operating, if not now, then within a couple of weeks. 

We can promise you that when it comes to shooting at Russian assets, be they planes, drones, or soldiers, Turkey will not get a strike three.

via Zero Hedge http://ift.tt/1TvX0Ya Tyler Durden