Tag: finance

In September of 2011, when looking at the insurmountable debt catastrophe that the world finds itself (which has only gotten worse in the past several years) we warned that “the only way to resolve the massive debt load is through a global coordinated debt restructuring (which would, among other things, push all global banks into bankruptcy) which, when all is said and done, will have to be funded by the world’s financial asset holders: the middle-and upper-class, which, if BCS is right, have a ~30% one-time tax on all their assets to look forward to as the great mean reversion finally arrives and the world is set back on a viable path.”

Two years later, the financial asset tax approach, in the form of depositor bail-ins, was tried – successfully (as there was no mass rioting, no revolution, in fact the people were perfectly happy to accept the confiscation of their savings) – in Cyprus, further emboldening the status quo, in this case the IMF, to propose, tongue in cheek, that the time has come for the uber-wealthy to give back some (“it’s only fair”), and to raise income taxes through the roof (which of course would mostly impact the middle class as the bulk of current income for the 1% is in the form of dividend income, ultra-cheap leverage extraction on assets and various forms of carried interest).

And now, a new tax is not only on the horizon but coming fast and furious to allow the insolvent global regime at least one more can kicking: one which will impact current and future homeowners across the world.

But first, let’s step back.

Last week, the IMF did what only the IMF could do: come to the realization that we proposed in 2009, and even the Davosites discussed earlier this year: namely that the middle class is effectively an endangered species, and rapidly on its way to wholesale extinction, and that the polarity between the rich and poor has never been greater. The IMF concluded, with the panache that only this comical organization is capable of, that income inequality “is weighing on global economic growth and fueling political instability.”

The WSJ reports:

The International Monetary Fund’s latest salvo came Thursday in a top official’s speech and a 67-page paper detailing how the IMF’s 188 member countries can use tax policy and targeted public spending to stem a rising disparity between haves and have-nots.

 

IMF Managing Director Christine Lagarde has made the issue a high priority for the fund, warning—along with some of the fund’s most powerful shareholders—that inequality is threatening longer-run economic prospects. Last month, Ms. Lagarde said the income gap risked creating “an economy of exclusion, and a wasteland of discarded potential” and rending “the precious fabric that holds our society together.”

The IMF’s solution? The same as that of socialists everywhere: redistribute the wealth… because apparently socialism works every time, all the time, with stellar results.

“Redistribution can help support growth because it reduces inequality,” David Lipton, the fund’s No. 2 official and a former senior White House aide, said in a speech Thursday at the Peterson Institute for International Economics. “But if misconceived, this trade-off can be very costly.”

 

“There’s a sense that the burdens of the crisis have been unevenly distributed, that the middle classes and the poor have footed more of the bill of the crisis than the economic elite,” said Moisés Naím, a senior economist at the Carnegie Endowment for International Peace and Venezuela’s former trade minister.

Oh is there a sense? Is that why the Fed has halted its QE program which takes from what little is left of the middle class and gives to those who already have more money than they can spend in several lifetimes. Guess not.

So how does the IMF suggest going about this wholesale, global socialist revolution? Simple: the way we explained nearly three years ago.

The IMF’s latest paper doesn’t prescribe country-specific measures, but it does offer several proposals that are likely to be controversial. Most notably, the IMF says many advanced and developing economies can narrow inequality by more aggressively applying property taxes and “progressive” personal income taxes that rise as incomes increase.

 

The median top personal income-tax rate across the globe has halved since the 1980s to around 30%. But the IMF says “revenue-maximizing [personal income tax] rates are probably somewhere between 50% and 60% and optimal rates probably somewhat lower than that.”

We wouldn’t be too concerned about income taxes. After all, one needs to have a job to have income, and as everyone knows by now, jobs also are on their way to extinction, and every central bank everywhere will merely print the money needed to cover the income tax shortfall, leading to that “other” alternative to fixing the debt problem: global hyperinflation (with a little precious metals confiscation on the side: just like FDR did in the 1930s).

But going back to the original point, here is why those in the market for a house should be worried. Very worried. From page 40 of the IMF’s paper on “Fiscal Policy and Income Inequality“:

Some taxes levied on wealth, especially on immovable property, are also an option for economies seeking more progressive taxation. Wealth taxes, of various kinds, target the same underlying base as capital income taxes, namely assets. They could thus be considered as a potential source of progressive taxation, especially where taxes on capital incomes (including on real estate) are low or largely evaded. There are different types of wealth taxes, such as recurrent taxes on property or net wealth, transaction taxes, and inheritance and gift taxes. Over the past decades, revenue from these taxes has not kept up with the surge in wealth as a share of GDP (see earlier section) and, as a result, the effective tax rate has dropped from an average of around 0.9 percent in 1970 to approximately 0.5 percent today. The prospect of raising additional revenue from the various types of wealth taxation was recently discussed in IMF (2013b) and their role in reducing inequality can be summarized as follows.

• Property taxes are equitable and efficient, but underutilized in many economies. The average yield of property taxes in 65 economies (for which data are available) in the 2000s was around 1 percent of GDP, but in developing economies it averages only half of that (Bahl and Martínez-Vázquez, 2008). There is considerable scope to exploit this tax more fully, both as a revenue source and as a redistributive instrument, although effective implementation will require a sizable investment in administrative infrastructure, particularly in developing economies (Norregaard, 2013).

And there you have it: if you are buying a house, enjoy the low mortgage (for now… and don’t forget – if and when the time comes to sell, the buyer better be able to afford your selling price and the monthly mortgage payment should the 30 Year mortgage rise from the current 4.2% to 6%, 7% or much higher, which all those who forecast an improving economy hope happens), but what will really determine the affordability of that piece of property you have your eyes set on, are the property taxes.

Because they are about to skyrocket.

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As the daily street protests grow bloodier and bloodier, Venezuelan President Maduro has escalated his comments today, exclaiming that he "won't be bullied," and warning "prepare yourself, we are coming for you," if protesters don't "go home within hours."

• *VENEZUELAN PROTESTERS HAVE 'HOURS' TO CLEAR BARRICADES: MADURO
• *MADURO SAYS HE'LL SEND ARMED FORCES TO 'LIBERATE' PROTEST AREAS

With 28 dead in the last month of protests, things are very serious but as we warned previously, Maduro still enjoying the support of the poor – as EuroNews reports, it appears he is not going anywhere soon. John Kerry also came under fire as the foreign minister called him "a "murderer of the Venezuelan people," accusing him of encouraging the protests.

As Bloomberg reports,

Venezuela President Nicolas Maduro says he will send armed forces to clear barricaded areas if "protesters don’t go home within hours."

"Prepare yourself, we are coming for you," Maduro tells soldiers at army event in Caracas

Plaza Altamira in eastern Caracas, the center of the protests, first to be “liberated,” Maduro says

As tensions with the US continue to rise:

The United States on Friday brushed aside "absurd" accusations by Venezuelan President Nicolas Maduro that it was meddling in the country's internal affairs by intervening in anti-government protests.

 

Venezuela's foreign minister Elias Jaua had earlier called top US diplomat John Kerry a "murderer of the Venezuelan people," accusing him of encouraging the protests that have killed 28 people in five weeks.

 

"The solution to Venezuela's problems lies in democratic dialogue among Venezuelans, not in repression or in hurling verbal brickbats at the United States," a state department official said on condition of anonymity.

 

"Venezuela's government needs to focus on solving its growing economic and social problems, not on making absurd allegations against the United States."

 

Maduro, however, charged that "the desperate government interventionism of the United States is clear."

 

"There's a slew of statements, threats of sanctions, threats of intervention. There has been lobbying by the highest officials in the US government," he said.

As Stratfor notes, these protests could mark a turning point as the economic situation deteriorates there is a chance that protests like this could begin to generate additional social momentum in rejection of the status quo…Perhaps things could be changing for Maduro…

Relatively large student-led opposition protests convened in Caracas, Valencia, Maracaibo and many other cities throughout the country. Rough Stratfor estimates put the crowd in Caracas at between 15,000-20,000 people based on aerial photos posted on social media. Venezuela's students are very politically active and protests are frequent. However, the relatively large turnout and widespread geographic distribution of this week's protests indicate that the movement may be gaining traction.

 

The challenge that the student movement will face is in finding a way to include Venezuela's laboring class, which for the most part still supports the government, and relies on its redistributive policies. Their inability to rouse broad support across Venezuela's social and economic classes was in part why previous student uprisings, including significant protests in 2007, failed to generate enough momentum to trigger a significant political shift.

 

But the situation has changed in Venezuela, and as the economic situation deteriorates there is a chance that protests like this could begin to generate additional social momentum in rejection of the status quo. President Nicolas Maduro has been in office for less than a year, and in that time the inflation rate has surged to over 50 percent and food shortages are a daily problem. Though firmly in power, the Chavista government is still struggling to address massive social and economic challenges. Massive government spending, years of nationalization and an overreliance on imports for basic consumer goods have radically deteriorated inflation levels, and undermined industrial production.

 

How the government responds will play a key role in the development of these protests going forward. The government cannot afford to crack down too hard without risking even worse unrest in the future. For its part, the mainstream opposition must walk a careful line between supporting the sentiment behind open unrest and being seen as destabilizing the country. Maduro retains the power to punish opposition politicians, and reaffirmed that Feb. 11 when he stated on national television that he intends to renew the law allowing him to outlaw political candidates who threaten the peace of the country. The statement was a clear shot over the bow of opposition leaders, and may foreshadow a more aggressive government policy designed to limit political opposition.

Perhaps it is the use of armed forces directly and aggressively that will roil the "poor"'s perspective – we will see

via Zero Hedge http://ift.tt/Nislz3 Tyler Durden

… in the sand trap.

Spot the pattern. From March 1, 2014, the day Russia announced it would send armed forces in Crimea:

President Barack Obama’s national security team met on Saturday for an update on the situation in Ukraine and to discuss potential policy options, a senior Obama administration official said. The meeting came as Ukraine asked the United States and other key members of the U.N. Security Council to help safeguard its territorial integrity after Russia announced plans to send armed forces into the country’s autonomous Crimea region. 

 

Obama did not attend the meeting, but he has been briefed about it by his national security adviser, Susan Rice, and his national security team, an official said.

Fast forward to today, March 15, 2014, the day Russia is said to have “invaded” East Ukraine, and the day before Crimea’s critial referendum which may cement the second coming of the Cold War.

President Barack Obama’s national security team discussed the Ukraine crisis in a session at the White House on Saturday after Secretary of State John Kerry’s return from talks with his Russian counterpart in London.

 

Obama did not attend the meeting but was being briefed about it and other developments involving Ukraine, said Laura Lucas Magnuson, a spokeswoman for the White House National Security Council.

Because obviously there are more pressing matters at hand like pitching Obamacare to toddlers, and because there is always time for 18 holes before World War III. And let’s not forget, nobody does a better job of explaining to Vladimir Vladimirovich the “costs” of showing the world just how much of a laughing stock US foreign policy has become.

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With Chinese authorities clamping down on the shadow-banking system, taking action of their bubble-bursting reforms, and now increasing the trading bands on the Yuan (to increase volatility and hopefully unwind, in a controlled manner, the biggest and most one-sided carry trade in the world's markets), we thought it perhaps surprising that growing numbers of Chinese are using UnionPay – a state-backed bank card – to illegally funnell billion of dollars out of the country. As Reuters reports, its unclear why the PBOC has not clamped down on this as documents show they are well aware of it… and as one clerk noted "don't worry… everyone's doing it."

Via Reuters,

Growing numbers of Chinese are using the country's state-backed bankcards to illegally spirit billions of dollars abroad, a Reuters examination has found.

 

This underground money is flowing across the border into the gambling hub of Macau, a former Portuguese colony that like Hong Kong is an autonomous region of China. And the conduit for the cash is the Chinese government-supported payment card network, China UnionPay.

How It Works:

In a warren of gritty streets around Macau's ritzy casino resorts, hundreds of neon-lit jewellery, watch and pawn shops are doing a brisk business giving mainland Chinese customers cash by allowing them to use UnionPay cards to make fake purchases – a way of evading China's strict currency-export controls.

 

On a recent day at the Choi Seng Jewellery and Watches company, a middle-aged woman strode to the counter past dusty shelves of watches. She handed the clerk her UnionPay card and received HK$300,000 ($50,000) in cash. She signed a credit card receipt describing the transaction as a "general sale", stuffed the cash into her handbag and strolled over to the Ponte 16 casino next door.

 

The withdrawal far exceeded the daily limit of 20,000 yuan, or $3,200, in cash that individual Chinese can legally move out of the mainland. "Don't worry," said a store clerk when asked about the legality of the transaction. "Everyone does this."

Why has The PBOC done nothing about it?

The practice violates China's anti-money-laundering regulations as well as restrictions on currency exports, according to Chinese central bank documents reviewed by Reuters. Chinese authorities also fear the UnionPay conduit is being used by corrupt officials and business people to send money out of the country.

 

It's unclear why the central bank, the Peoples Bank of China (PBOC), hasn't cracked down harder on the practice, although the documents Reuters reviewed show the bank was aware it had become a growing problem.

 

Industry experts point to a weak enforcement culture in China, a reluctance to hurt Macau financially with 80 percent of the city's revenues drawn from gambling, and a willingness to tolerate some capital flight – especially if it can be tracked through names on bank cards. Moreover, the rapid growth of UnionPay, including the spread of its terminals at retail stores across the world, is playing a key role in China's strategy for making the yuan a global currency.

 

…

 

Any steps to clamp down on UnionPay cashback transactions would likely rattle Macau, because the cash also feeds the casino sector on which the territory's $43.6 billion economy overwhelmingly depends. Macau is now the world's biggest gambling hub, with revenues seven times those of Las Vegas. Last year, gambling revenue rose 19 percent to $45.2 billion. Nearly 40 percent of that went to the government in taxes.

The people are following their money out of the country…

Many card users follow their money abroad. Since the mid-1990s, an estimated 16,000 to 18,000 Communist party officials, businessmen, CEOs and other individuals have "disappeared" from China, according to a separate PBOC report prepared in 2008 – taking with them some 800 billion yuan ($133 billion).

It won't stop soon…

Though relatively unknown in the West, UnionPay has quietly grown to become one of the biggest card brands and payment networks in the world, accepted in 142 countries. There are more UnionPay cards in circulation now than any other brand – 3.53 billion, or nearly a quarter of the world's total, according to the industry newsletter, the Nilson Report. Visa remains the world leader by transaction value with $4.6 trillion in card transactions in the first half of 2013; UnionPay was second with $2.5 trillion.

 

If UnionPay poses a problem for Chinese authorities, it is a problem of their own making. The card brand is often seen as an arm of Chinese state policy.

 

UnionPay was established in 2002 by the PBOC and the State Council or Cabinet.

 

…

 

UnionPay dominates the card market in China thanks to a central bank decree that requires all card issuers, including foreign ones, to process their yuan-based transactions through UnionPay's electronic payment network.

And is increasing as capital flight spreads…

Today, the outflow is gathering pace.

 

In Macau, UnionPay card transactions reached 130 billion Macau patacas ($16.77 billion) in just the first four months of 2012, up from 88.1 billion patacas in all of 2011, according to a confidential report by Macau's banking regulator, the Macau Monetary Authority reviewed by Reuters. Around 90 percent of those transactions were "highly concentrated in jewellery, ornament and luxury watch sales", the report said.

 

If that rate persisted for the full year, UnionPay sales in Macau for all of 2012 would have reached nearly $50 billion – nearly $45 billion of it for jewellery-related sales, a figure exceeding even Macau's total gambling revenues that year.

 

"Are these actual transactions? Where does this money come from?" the deputy head of the Monetary Authority, Wan Sin Long, asked in the document.

And there's no limit…

"I would say there's no upper limit for UnionPay," said the black-suited manager, who spoke on the condition he not be identified. "The credit limits aren't enforced at all."

 

An executive at Las Vegas Sands, speaking on condition of anonymity, said vendors with UnionPay card-swiping machines have been caught wandering around the casino.

 

"People walk around with mobile union pay card machines on the gaming floor," the executive said. "They are linked to China (computer) servers, not (ones in) Macau. So it is like they are getting cash out in China. When we see them on the floor we kick them out."

 

That practice also exists outside the casinos, too. Macau's merchants lately have tried to better disguise the UnionPay transactions by routing transactions electronically across the border to China to escape the scrutiny of Macau authorities, a banker in Macau said.

 

"They closed the Macau tap, but they've opened an even larger China tap," said the Macau banker with direct knowledge of the practice. "The merchants are always cunning."

Backdoor to Yuan internalization and the demise of the dollar?

UnionPay's increasing use overseas is part of Beijing's multi-pronged strategy to eventually open up China's capital account and internationalize the yuan, which is formally known as the renminbi or yuan. Beijing also eased restrictions on many kinds of capital transfers as it gradually loosens up control over the currency, making it easier for money to leave China's borders. The efforts have paid dividends. The renminbi has already overtaken the euro to become the second-most used currency in trade finance, according to data from global transaction services organization SWIFT.

 

"(China) may be happy to see UnionPay sweeping different markets across the world in different countries and territories," said Yan Lixin, head of Fudan University's China Centre for Anti-Money Laundering Studies in Shanghai. "It is backed up by the government. It is the real son of the government."

And no one seems to care:

"We can remit as much money as you like with your UnionPay card," said a red-haired man surnamed Lai at one jewellery shop. A yellow sign carried the slogan: "Welcome Renminbi. Welcome UnionPay cards."

 

"You don't actually buy anything," said Lai, standing near a half-empty display case containing a messy spread of watches and jewellery. "We just help people get money out of China so they can gamble more."

Read more here

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

Submitted by Simon Black of Sovereign Man blog,

My research team recently passed along a piece of legislation they were looking at called the “ENFORCE the Law Act of 2014.”

It immediately piqued my interest… because anytime you see all CAPS in government documents, it signifies some absurd acronym. And the ‘ENFORCE the Law Act’ did not disappoint.

ENFORCE stands for “Executive Needs to Faithfully Observe and Respect Congressional Enactments”.

And the stated objective of the legislation is “to protect the separation of powers in the Constitution of the United States by ensuring that the President takes care that the laws be faithfully executed. . .”

The bill goes on with specific language to authorize Congress bringing civil legal action against the President of the United States, or any cabinet secretary, for implementing some rule or executive order that does not conform with Article II of the Constitution.

This pretty much sums up the sad state of affairs in the Land of the Free.

When Congress has to pass a new law just to get the President of the United States to, you know, follow the Constitution that he swore to ‘support and defend’, you can be certain that the system has become broken beyond all repair.

This isn’t a commentary on the current POTUS; the disturbing trend of rapidly expanding executive abuse has been increasing for years.

It has nothing to do with Mr. Obama, or Mr. Bush before him, or future Presidents that will continue to expand their offices.

It’s the system itself that is fundamentally flawed. The model is simply no longer valid. Having an election and voting in a new commander-in-chief won’t fix the problem. All you’re doing is changing the players. It’s time to change the game.

via Zero Hedge http://ift.tt/1gua3Gq Tyler Durden

A critical element for investors to consider is that the Fed is not forward thinking when it comes to monetary policy. Indeed, if we reflect on the last 15 years, we see that the Fed has been well behind the curve on everything.

First and foremost, recall that Alan Greenspan was concerned about deflation after the Tech Crash (this, in part is why he hired Ben Bernanke, who was considered an expert on the Great Depression).

Bernanke and Greenspan, both fearing deflation (Bernanke’s first speech at the Fed was titled "Deflation: Making Sure It Doesn't Happen Here"), created one of the most extraordinary bouts of IN-flation the US has ever seen.

From 1999 to 2008, oil rose from $10 per barrel to over $140 per barrel. Does deflation look like it was the issue here?

Over the same time period, housing prices staged their biggest bubble in US history, rising over three standard deviations away from their historic relationship to incomes.

Here are food prices during the period in which Greenspan and then Bernanke saw deflation as the biggest threat to the US economy:

The message here is clear, the Greenspan/ Bernanke Fed was so far behind the economic curve, that it created one of the biggest inflationary bubbles in history in its quest to avoid deflation.

Indeed, by the time deflation did hit (in the epic crash of 2007-2008), the Fed was caught totally off guard. During this period, Bernanke repeatedly stating that the subprime bust was contained and that the overall spillage into the economy would be minimal.

Deflation reigned from late 2007 to early 2009 with the Fed effectively powerless to stop it. Then asset prices bottomed in the first half of 2009. From this point onward, generally speaking, prices have risen.

The Fed, however, continued to battle deflation in the post-2009 era, unveiling one extraordinary monetary policy after another. They’ve done this at a period in which stocks and oil have skyrocketed:

Home prices bottomed in 2011 and have since turned up as well (in some areas, prices now exceed their bubble peaks):

Which brings us to today. Inflation is once again rearing its head in the financial system with the cost of living rising swiftly in early 2014.

Rents, home prices, food prices, energy prices, you name it, they’re all rising.

And the Fed is once again behind the curve. Indeed, Janet Yellen and Bill Evans, two prominent members what is now the Yellen Fed (Bernanke stepped down in January), have both recently stated that inflation is too low. They’ve also emphasized that rates need to remain at or near ZERO for at least a year or two more.

Investors should take note of this. The Fed claims to be proactive, but its track record shows it to be way behind the curve with monetary policy for at least two decades. Barring some major development, there is little reason to believe the Yellen Fed will somehow be different (Yellen herself is a huge proponent of QE and the Fed’s other extraordinary monetary measures).

Which means… by the time the Fed moves to quash inflation, the latter will be a much, much bigger problem than it is today.

For a FREE Special Report on how to protect your portfolio from inflation, swing by

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Best Regards

Phoenix Capital Research

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It has been over a week since Malaysia Airlines Flight MH370 disappeared without a trace, and the world is nowhere closer to finding either where the airplane and its 239 passengers and crew are to be found, nor what actually happened. Instead, what initially was speculation about a midair disintegration, and subsequently suggested a potential case of airplane terrorism gone wrong, has now transformed into a theory that the pilot and/or crew may have been engaged in “foul play”, especially since it appears that based on tracking data, that the plane flew for nearly seven hours after someone “skilled” purposefully shut down its communications and tracking beacon: possibly indicative of a stealthy midair hijacking. However, the same satellite data gave no precise location, and the plane’s altered course could have taken it anywhere from central Asia to the southern Indian Ocean.

More importantly, and what is missing so far, is that if indeed this was a hijacking, then where is the list of demands? Or was this merely repossession of something already onboard the plane, i.e. theft, ostesnisbly of something in the cargo hold, or the kidnapping or repossession of one or more passengers on board the plane? Also, if indeed the plane is safely somewhere else, as per the pilot’s wishes, then how and why are the 200+ passengers, most of whom likely have portable communication devices, keeping quiet?

On the topic of the plane’s possible location considering the latest satellite tracking data, the Malaysian officials on Saturday released this map showing two corridors that the plane might be located on.

WaPo reports:

Malaysian Prime Minister Najib Razak said Saturday that, based on newly analyzed satellite data, the plane could have made last made contact anywhere along one of two corridors: one stretching from northern Thailand toward the Kazakhstan-Turkmenistan border, the other, more southern one stretching from Indonesia to the remote Indian Ocean.

 

Although U.S. officials previously said they believed the plane could have remained in the air for several extra hours, Najib said Saturday that the flight was still communicating with satellites until 8:11 a.m. — 7 ½ hours after takeoff, and more than 90 minutes after it was due in Beijing. There was no further communication with the plane after that time, Najib said. If the plane was still in the air, it would have been nearing its fuel limit.

 

The U.S. official said the search area is somewhere along the arc or circumference of a circle with a diameter of thousands of miles.

 

The new leads about the plane’s path, though ambiguous, have drastically changed a search operation involving more than a dozen nations. Malaysia on Saturday said that efforts would be terminated in the Gulf of Thailand and the South China Sea, the spot where the plane first disappeared from civilian radar.

 

Malaysian authorities are now likely to look for help from other countries in Southeast and South Asia, seeking mysterious or unidentified readings that their radar systems might have picked up.

The largely clueless Malaysian police, with few leads to puruse, have rapidly shifted their suspicion on the team of pilot and co-pilot. Reuters reports that minutes after Malaysian leader Najib Razak outlined investigators’ latest findings about flight MH370 at a news conference, police began searching the house of the aircraft’s 53-year-old captain for any evidence that he could have been involved in foul play.

Investigative sources told Reuters on Friday they believed the plane was following a commonly used navigational route when it was last spotted early on Saturday, northwest of Malaysia.

 

Their suspicion has hardened that it was flown off-course by the pilot or co-pilot, or someone else with detailed knowledge of how to fly and navigate a large commercial aircraft. No details have emerged of any passengers or crew with militant links or psychological problems that could explain a motive for sabotaging the flight.

 

The experienced captain, Zaharie Ahmad Shah, was a flying enthusiast who spent his off days tinkering with a flight simulator of the plane that he had set up at home, current and former co-workers said. Malaysia Airlines officials did not believe he would have sabotaged the flight.

 

The 27-year-old co-pilot Fariq Abdul Hamid was religious and serious about his career, family and friends said, countering news reports suggesting he was a cockpit Romeo who was reckless on the job.

A photo of the flight simulator set up in the pilot’s house is shown below:

AFP provides some additional perspective on the pilot:

An Australian television report broadcast an interview with a young South African woman who said Fariq and another pilot colleague invited them into the cockpit of a flight he co-piloted from Phuket, Thailand to Kuala Lumpur in 2011. Since 9/11, passengers have been prohibited from entering cockpits during a flight. Malaysia Airlines has said it was “shocked” by the report, but that it could not verify the claims.

 

The son of a high-ranking official in the public works department of a Malaysian state, Fariq joined Malaysia Airlines when he was 20.

 

He is a mild-mannered “good boy” who regularly visited his neighbourhood mosque outside Kuala Lumpur, said the mosque’s imam, or spiritual leader.

 

The far more seasoned Zaharie joined MAS in 1981 and had logged 18,365 hours of flying time.

 

Malaysian media reports quoted colleagues calling Zaharie a “superb pilot”, who also served as an examiner, authorised by the Malaysian Civil Aviation Department, to conduct simulator tests for pilots.

 

The whole passenger manifest is likely to be re-examined.

So if the pilots were not involved, could it have been a hijacking by someone among the passengers (with or without the complict participation of the pilors)? Here suspicion will once again fall on two passengers who boarded with stolen EU passports. Interpol had identified the two men as Iranians: Seyed Mohammed Reza Delavar, who used a stolen Italian passport, and Pouria Nourmohammadi, who used an Austrian one. Both passports had been stolen in Thailand. Interpol chief Ronald Noble said last Tuesday that the men were thought to be illegal immigrants who had travelled from Doha to Kuala Lumpur in a round-about bid to reach Europe.

Interpol’s information suggested the pair were “probably not terrorists”, Noble said at the time.

Adam Dolnik, a professor of terrorism studies at the University of Wollongong in Australia, said he still doubted that organised terrorism was behind the Malaysian plane mystery.

 

While a group like Al-Qaeda “would love to bring down an airliner”, a Malaysia Airlines plane made little sense as a target and the stolen passports had an “amateurish” element, Dolnik said. “Terrorists don’t do (hijackings), because the chances of success have gone down,” he said, citing the challenge of bringing weapons onto a plane and subduing other passengers.

 

There has been no indication yet of any possible terrorist involvement. But some academics suggest the theory requires further consideration. “Investigations should focus on criminal and terrorist motives,” said Rohan Gunaratna, a terrorism expert at Singapore’s Nanyang Technological University.

 

“It is likely that the aircraft was hijacked by a team knowledgeable about airport and aircraft security. It is likely they are supported by a competent team from the ground.”

Which is why instead of merely looking at the passenger manifest, perhaps it is time to look at the cargo manifest as well. Was there anything on board the plane, one serving the all-important Beijing route, that may have made the stealthy theft of the plane a sufficiently attractive risk/return proposition to the pilots?

Purely hypothetically, a 777 has a cargo hold that, in addition to passengers and baggage, can hold somewhere between 20 and 25 tons. 25 tons of gold, on a less than public Malaysia-China “official import-bypassing” route, would have a value of a little over $1 billion, four times more than the value of a new Boeing 777. So perhaps instead of robbing the cargo from the plane, some more enterprising thought would be to get the pilots in on the play, and steal the entire plane, mid-flight.

Of course, all of the above is purely hypothetical, and we are confident once the plane is uncovered safe and sound (or not as the case may be) and with all the cargo accounted for, that yet another crazy conspiracy theory can be disproved.

And still, we wonder, would Malaysia Airlines be so kind as the disclose just what “other” cargo may have been on board the mysterious flight. Inquiring minds are dying to know.

Finally, for all those pressed for time, just watch the following clip summarizing all the recent theories and views on flight MH370’s whereabouts:

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

Given this morning's UN vote declaring the Crimea referendum invalid (and Russia's obvious veto – along with China's abstention), and on the heels of Lavrov's words Friday that Russia would decide how to respond to the Crimean vote after the referendum had been held, it is thought-provoking to consider Putin's options given the vote's outcome is a near-certainty voting in favor of accession to the Russian Federation (especially in light of this morning's images across Crimea). Europe's Council on Foreign Relations notes "not knowing Vladimir Putin’s strategy makes it hard for Europe and the West to come up with meaningful and workable responses. In a way, we are all speculating and trying to get a glimpse into Putin’s soul. The five points below attempt to reinforce or refute some aspects of the conventional wisdom that has emerged from all this speculation."

Via CEFR,

1. Has Putin always wanted to invade Crimea?  

Russian diplomats (who probably hate their jobs these days) have made elaborate attempts to demonstrate that no international law has been broken in Crimea. But the breach is blatant and the pretext used to justify invasion is thinner than thin – and Moscow knows it.  

It is true that some hawkish groups in Moscow probably could not care less about international law. They would approve of any means to reunify Slavic lands. However, the bulk of the establishment has in fact always maintained a different position. For example, the Russian foreign ministry has traditionally adhered to a rigidly legalistic view of world affairs: in effect, post-1945 international law, with its strict emphasis on state sovereignty, non-interference in the internal affairs of other countries, and the inviolability of borders. Newer and softer concepts, such as the responsibility to protect, are alien to them. 

Putin himself has always passionately belonged to that legalistic camp, as evidenced by his positions on Libya, on Syria, and on multiple other issues. Therefore, deciding to invade Crimea cannot have been easy for him. He must consider that something extremely important is at stake. The corollary is that in defending his conception of what is at stake, he may well be ready to go further than many of us assume. 

2. Is Putin out of touch with reality?

Angela Merkel’s statement that Putin is out of touch with reality, which was leaked to the New York Times, gave rise to a considerable amount of conjecture and comment. Some people concluded that Putin has gone mad. In fact, while he may be living in his own version of reality, it looks like Putin’s world has actually been around for a long time.  

Putin seems to sincerely believe that dangerous extremist groups have taken power in Kiev. He may genuinely not realise that the events in Kiev represented a classic popular revolution. As pointed out by Fiona Hill, it is possible that the whole concept of popular revolutions is alien to Putin. In the late 1980s and early 1990s, when Russia was having its own revolution, Putin was not there – he was serving the KGB in Dresden. He did not personally witness the fact that a massive number of people were involved in the overthrow of the Soviet Union. His being abroad for these pivotal events, as well as his KGB schooling and worldview, may have made it easy for him to see the collapse of the Soviet Union as the result of a conspiracy by a few combined with betrayal by others. 

Similarly, Putin may see current events in Ukraine as a conspiracy by the West, which was definitely his view of the Orange revolution of 2004. Or he may see the situation as the result of recklessness: actions along the same lines as Western involvement in Libya and Syria. As Putin sees it, in both places the West has supported marginal and extremist groups against legitimate leaders, in a naïve hope that democracy will somehow take root in the ruins of the old regimes. It may well be that he saw the West applying the same logic to Ukraine and decided that he could not allow anything of the kind to happen in Ukraine. 

Added to this, he likely feels a sense of betrayal over the West’s (as he sees it) geopolitical incursion into Ukraine, and over the West’s failure (as he sees it) to support Viktor Yanukovych after the agreement of February 21. All this comes together to form the reality in which Putin lives. 

This means that what we are seeing as Putin’s revisionism may still be inspired largely by his conservatism. Also, much of his reality is indeed based on false premises. But understanding this does not make it easier to set the record straight and make Putin see sense – as multiple Western interlocutors have by now discovered. 

3. Does Putin want to use Crimea as leverage over Ukraine? 

via Zero Hedge http://ift.tt/1o83GuA Tyler Durden