Tag: news

While it is too early to know who shot down Malaysian Airlines flight MH-17 over Ukraine yesterday – and while it could have been a false flag –  it would be good to remember that airlines have accidentally been shot down numerous times in the past.

After all, the Malaysian airlines plane was way off course:

The plane flew over a war zone, which was well-known to be a “no fly zone” with “restricted airspace”.

The Los Angeles Times reports:

Malaysia Airlines Flight 17 was cruising just 1,000 feet above restricted airspace when it was struck by a missile in Ukraine’s Donetsk region, according to aviation and intelligence officials.

 

Despite ongoing violence in eastern Ukraine, including the recent downing of two military aircraft, Ukrainian aviation officials had closed the region’s airspace only below 32,000 feet in altitude.

 

The Boeing 777, en route from Amsterdam to Kuala Lumpur, the Malaysian capital, with 298 people aboard, was at 33,000 feet when it vanished from radar screens, according to European aviation authorities.

 

***

 

In recent days, though, military aircraft were downed by antiaircraft munitions, which should have concerned aviation authorities, he said.

Reuters notes:

Malaysia Airlines filed a flight plan requesting to fly at 35,000 feet throughout Ukraine airspace but was instructed by Ukraine air traffic control to fly at 33,000 feet upon entry ….

CBS writes in an article entitled “‘Big Question’ Is Why Plane Was Flying Over War Zone”:

During a phone interview with CBS News Thursday morning, Captain Capt. Chesley “Sully” Sullenberger was questioned why Malaysia Airlines flight 17 would be flying over Ukraine’s border with Russia despite ongoing political unrest in the area.

 

Sullenberger, the veteran of the 2009 Miracle on the Hudson landing, is an aviation expert for CBS News….

 

“That is one of the big questions right now,” said Sully. “The U.S. Federal Aviation Administration has barred U.S. Airlines from flying over this area for some time.”

The Atlantic points out:

Did aviation authorities know that this was a dangerous area?

Yes, they most certainly did. Nearly three months ago, on the “Special Rules” section of its site, the U.S. Federal Aviation Administration put out an order prohibiting American pilots, airlines, charter carriers, and everyone else over whom the FAA has direct jurisdiction, from flying over parts of Ukraine.

Bloomberg adds:

Qantas hasn’t used the route for a few months, said Andrew McGinnes, a spokesman for the Australian carrier, while Hong Kong-based Cathay Pacific said it has been detouring for “quite some time.” Korean Air Lines Co. and Asiana Airlines Inc. said in statements they have been avoiding the area since March 3.

This is not the first time such an incident has occurred …

Numerous Previous Accidental Shootdowns … By Russia, Ukraine, and Other Countries

In 1954, mainland China's Army shot down a Cathay Pacific Airways airplane, killing 10 out of the 19 passengers.   Cathay Pacific was the airline of Hong Kong, then under British control). In apologizing for the attack to Britain, the Chinese government said that they had thought the plane was a military aircraft from the Taiwan on an attack mission.

In 1973, a Libyan Arab Airlines Boeing 727 flying from Tripoli to Cairo got lost and flew over the Sinai peninsula,  under Israeli control since the Six-Day War in 1967. After giving signals to land and firing warning shots, Israeli jets shot down the plane, killing 108 of the 113 people on board.  The chief of staff of the Israeli armed forces took responsibility for ordering the shoot-down, the Defense Minister called the event an "error of judgment", and the Israeli government compensated the families of victims (Libya condemned the attack as "a criminal act" while the Soviets called it a "monstrous new crime").

In 1983, a Korean airlines passenger airline was shot down by a Soviet pilot killing all 269 passengers.  The pilot had accidentally deviated from the normal flight path:

The Soviets believed it was likely a military aircraft. Transcripts quote the shootdown order from Soviet General Kornukov:

What civilian? [It] has flown over Kamchatka! It [came] from the ocean without identification. I am giving the order to attack if it crosses the State border.

The Washington Post reported in 1988:

A U.S. warship fighting gunboats in the Persian Gulf yesterday mistook an Iranian civilian jetliner for an attacking Iranian F14 fighter plane and blew it out of the hazy sky with a heat-seeking missile, the Pentagon announced. Iran said 290 persons were aboard the European-made A300 Airbus and that all had perished.

 

“The U.S. government deeply regrets this incident,” Adm. William J. Crowe Jr., chairman of the Joint Chiefs of Staff, told a Pentagon news conference.

 

***

 

Navy officials said the Vincennes’ combat teams believed the airliner to be an Iranian F14 jet fighter.

Ukraine admitted to accidentally shooting down a Russian airliner in 2001, killing all 78 on board as the aircraft plunged into the Black Sea:

Ukraine finally admitted yesterday that its military shot down a Russian airliner that crashed into the Black Sea last week, killing all 78 passengers and crew.

 

Evhen Marchuk, the chairman of Ukraine’s security council, conceded that the plane had probably been brought down by “an accidental hit from an S-200 rocket fired during exercises”.

And – according to several government investigators tasked with determining what happened – an American missile test which went astray may have accidentally brought down TWA 800, killing all 230 on board.

via Zero Hedge http://ift.tt/1n1X4yT George Washington

Submitted by Simon Black of Sovereign Man blog,

If you ever find yourself vacationing in the western Pacific, I highly recommend swinging by Yap Island, home of one of the most bizarre forms of money in history.

Over a thousand years ago, natives would mine enormous chunks of limestone and carve them into gigantic circular discs.

I’m talking REALLY big… a typical disc would be 5 to 10 feet in diameter, over a foot thick, and weigh several tons.

They called them ‘Rai Stones’, and they were actually used as currency. Curiously, an indiviaul rai would be valued not based on its weight or size, but based on its story.

If many people had been killed transporting it, or if the stone had once belonged to a famous warrior, the rai would be worth more. So it was a bit of a collectible as well as a form of money.

Needless to say, the sheer size of these stones meant that they wouldn’t be moved very often. Everyone on the island just sort of knew who owned each rai, like a primative form of Bitcoin’s blockchain.

The polar opposite of this is the paper money system, something that has its origins in the Han Dynasty over 2,000 years ago.

It wasn’t quite paper, but the ancient Chinese experimented with leather-skinned money as early as the second century BC.

The idea died for over a thousand years in favor of (mostly) gold and silver. But it popped up again in the Middle Ages where Chinese merchants used short-term credit notes rather than haul around heavy coins.

When the Mongols basically took over the entire planet, they adopted this idea, much to the astonishment of their European visitors. Marco Polo writes of this in his diary with total incredulity:

“The Great Kaan causeth the bark of trees, made into something like paper, to pass for money all over his country. . . And nobody, however important he may think himself, dares to refuse them on pain of death.”

But it wasn’t until 1661 that the first modern paper money was born.

Johan Wittmacher was a Latvian merchant of Dutch descent who had a burning idea he wanted to try; he just needed a willing country.

Wittmacher moved to Sweden and tried several times to obtain a banking license. Finally, after promising a 50% profit share to King Charles X Gustav, his license for Stockholms Banco was approved in 1657.

On July 16, 1661, his bank became the first in history to issue paper banknotes– Kreditivsedlar.

These Kreditivsedlar solved a huge problem for Wittmacher. All the gold deposits he was holding on behalf of bank customers were primarily short-term. Customers would frequently withdraw coin, so he needed to keep inventory handy.

On the other hand, he wanted to increase profits by loaning out his customers’ gold. Problem was, most of the loans were longer term.

Wittmacher’s dilemma was satisfying his customers’ short-term withdrawals while still making long-term loans. The solution was paper.

When a customer would make a withdrawal, Wittmacher gave them paper notes as claims on the gold he was holding.

The customer could use the notes to pay for goods and services, and Wittmacher got to keep the gold and make more loans.

In time, the notes became a popular medium of exchange, accepted everywhere just like gold. People would pass them around as money, only occasionally showing up to the bank to redeem them for gold.

Naturally it didn’t take long for Wittmacher to start committing fraud. Before long he’d issued more notes than he had gold in his vault. And he was making more loans than the bank could afford.

After only seven years, the bank collapsed. But the idea of paper notes lived on to infect the evolution of money ever since.

Our modern system entitles a central banking elite to conjure trillions of dollars, euros, yen, etc. out of thin air, creating massive financial distortions and enabling politicians to rack up epic debt levels.

Today’s commercial banks take in customer deposits, maintain a laughably small portion in reserve, and use the rest of our money to make idiotic loans for their maximum benefit.

Their brokerage divisions front-run customers, trade against them, lend out customers’ shares without their knowledge, and even ‘borrow’ money from customer accounts to cover their own trading losses.

When they fail, they’re bailed out by taxpayers and do the same thing all over again.

In Wittmacher’s time, this was fraud. Today it’s not only legal, it’s the industry standard.

No one is held accountable save some sacrificial lamb, and we’re told that we should simply trust in the guarantee of a bankrupt, insolvent government.

So… happy birthday paper money. It’s a hell of a system you’ve brought us.

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There is a glaring divergence between the performance of US equities and high-yield credit’s spread over investment-grade credit. As BofAML warns, “either HY rallies or stocks soon in a bit of trouble,” because the only pillar left to hold up the fragile un-bubble-like stock market – buybacks – will disappear if costs of funding start to surge (there’s always a limit to the leverage a credit cycle will bear). The more concerning aspect is that it appears investors are already rushing for the doors… as this week saw the largest HY outflows in over a year.

HY better rally soon – or stocks are in a bit of trouble…

As last week saw massive outflows from HY…

The biggest HY outflows since last summer’s Taper Tantrum as perhaps the professionals realize the repo market’s breakdown is something to worry about…

This week alone has seen major derisking in HY…

Simply put, the Fed can’t have it both ways – if they think HY credit is in a bubble then it directly implies costs of capital for stocks are too low and thus stock prices too high…

*  *  *

Just to be clear – this is not a “rotation” excuse from HY corporate bonds to stocks – the two assets are intricately exposed to exactly the same underlying business volatility on an idiosyncratic basis… if credit spreads start to widen (which they are) and the endless demand that has enabled massive issuance used for buybacks starts to weaken (which it is) then the hopes of this bubble ending well – as firms are forced to admit just how weak ‘real’ earnings are when unadjusted for shrink-floating manipulations…

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Wolf Richter   www.wolfstreet.com   http://ift.tt/Wz5XCn

Don’t let a good crisis go to waste – that appears to be the newest slogan of Russian President Vladimir Putin, as his approval rating in Russia soared from 54% a year ago to 83% now, matching the record of the data series in 2008, when he switched roles to become Prime Minister. The rating was, as Gallup put it, “likely propelled by a groundswell of national pride with the annexation of Crimea in March on the heels of the Sochi Olympic Games in February.”

By contrast, President Obama’s job approval rating in the US, according to Gallup’s daily tracker, languishes at a miserable 42%. Bad, but still head and shoulders above the most despised tax-and-retreat French President of the Fifth Republic, François Hollande, whose approval rating has finally stopped plunging once it got to about 20%.

But it’s not just Putin

Russian’s confidence in their military jumped to an all-time record of 78%, up from 65% a year ago, wowed perhaps by the military’s awe-inspiring performance in the Crimean debacle.

Confidence in the Russian government skyrocketed from 39% in 2013 to 64% now. And that at a time when the US Congress is mired down in a well-deserved or perhaps too generous job approval rating of 15% by the hapless American voters who just can’t seem to figure out how to throw the rascals out.

The crisis also has given the Russian government a boost overall: 73% of Russians believe their government is leading them in the right direction, a majority for the first time since 2008, when Putin left the presidency. Russians really do have confidence in him, and they miss him when he’s gone. Yet, their economic outlook, while up, remains crummy: only 35% see conditions getting better, but 19% see them deteriorating.

And even Russians’ confidence in the elections has soared, albeit from an abysmal 23% in 2013 to a somewhat less abysmal 39%. That’s more than double the terrible level of 2006 and 2007, during Putin’s first reign, when only 17% of the Russian were confident in the honesty of their elections. Well, OK, honest or not, but at least they got their Putin back.

Here is Putin’s all-around triumphant chart, where everything has soared since last year:

And what do Russians think about America?

Man! First the good news. For China, that is. The $400 billion holy-grail natural gas deal Russia inked with China, with money flowing one way and gas the other, and all the hope and hype that came along with it have endeared China to the Russians. Their approval rating of China jumped on cue, from 25% last year to 42% now. The fact that China had Russia in a vice when the final touches were put on the deal and was thus able to extract pricing that would be good only for China has been lost somewhat in the shuffle at home. But hey.

Instead of offering Russia some kind of holy-grail deal on energy, the EU and the US have engineered an ingenious sanction spiral that so far has done wonders. In return, Russians’ approval of the EU swooned from 21% to 6%, and of America from the already awful 16% to 4% (not a typo). The diametrically opposed movement of China and the US looks terrible:

But it might even be worse: Given the survey’s margin of error of ± 2.7 percentage points (at a 95% confidence level), the approval rating could actually be as low as 1.3%. That’s as close to zero as you can get in a survey!

So if our local heroes, Obama and Congress, with their phenomenally well-thought-out reactions to the fiasco in the Ukraine, are trying to win the hearts and minds of the Russian people so that they could apply some pressure on Putin (LOL), they have abysmally failed. And in regards to his standing in his country, Putin is once again grinning his wicket triumphant smile. So far for him – at least through the period when the survey was conducted – the crisis has been a flawless success.

Capital flight, particularly from the vast underground economy, is Russia’s most pressing economic problem. And Putin’s angle of attack has been, well, brutal in its own way. Read…. Sanction Spiral Hits London, Plays Into Putin’s Master Plan

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Following this morning’s farce of huge investor demand and then Bank of Portugal’s Costa ‘hoping’ for demand from investors willing to pile more money on losing money into Espirito Santo, it appears things have escalated rapidly…

• *ESPIRITO SANTO INTERNATIONAL SAYS IT CAN’T MEET OBLIGATIONS
• *ES INTERNATIONAL APPLIES FOR `CONTROLLED MANAGEMENT’ REGIME
• *ES INTERNATIONAL APPLIES FOR REGIME UNDER LUXEMBOURG LAW

The “controlled management” application is the equivalent of declaring a breakup or controlled bankruptcy process (as we explained here). ESI is the ultimate HoldCo in the Banco Espirito Santo family.

As Bloomberg reports,

Espirito Santo International, a holding company that’s part of Grupo Espirito Santo, requested to be placed under “controlled management” under Luxembourg law, co. says in statement.

 

ESI says can’t meet obligations, “due to a significant part of its debt maturing”: statement

 

“Once under this regime, all judicial actions by creditors are suspended to allow the implementation of an asset management and liquidation plan under a court’s control”: statement

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Submitted by Martin Armstrong of Armstrong Economics blog,

This idea that we live in a world where government cares about us is just the biggest propaganda ever. Everyone one will only pursue their own self-interest. The OECD has interesting come out and warned that if governments are unable to stop the transfer of wealth to a small financial elite, the displeasure of the dispossessed middle class could easily turn and go against the prevailing governmental systems. The OECD has claimed to have discovered the existence of a veritable “lumpenproletariat” in the supposedly rich Germany. Even though the systems attempt to provide citizens with bread and circuses in the traditional Roman style to keep them quiet, such  tactics they warn may have now become obsolete after the ultimate circus is over – the World Cup.

The problem with all of these studies is the look at class warfare and not at the consumption of government. They do not follow the breadcrumbs. What if you take everything from the elites? Who will start businesses to create jobs? Who will be left to take as government pensions keep ticking away. In Germany, it has now surpassed 50% of the average persons labor goes to taxes.

 

There are a host of books coming out all about just taxing the rich more ignoring reducing the cost of government. The German bestseller “The plunder of the world” presents just another socialist agenda arguing that the rich get richer even in times of crisis, while the consequences of a crisis are always carried by the lower-income groups and the middle class. It fails to explain that the rich get richer from investment, not wage income. This is an argument to effective tax investment substantially to even out the disparity? But who then creates the jobs that produce anything? Is it that those who invest unfairly make money when the others pay too much in taxes and do not invest? Anyone who thinks that these books are real must be insane. If you think for one second raising the taxes on the rich will mean your taxes will decline – good luck. In Germany, Tax Freedom Day has passed the 50% and even in Canada it is now June 9, 2014. In the United States it is April 21st for 2014.

 

In France, the magazine Challenges has determined that the richest Frenchmen saw their assets in 2013 rise by 15% since they benefit from the profits in foreign companies. There is no discussion that government consumes too much – EVER!

 

 

The consequences of unequal distribution of wealth in the world is becoming the tipping point argued and funded by governments to blame the rich – never government. Nobody seems to be doing the math that if you confiscate all that wealth you end up with communism with taxation and government just keeps growing until it consumes everything. We borrow with no intent of paying anything back and that about 70% of the national debts is all interest that built no schools, reduced nobody’s tax bills, and did nothing for the middle class. This is fairly consistent in all major countries. Governments are trying to push interest rates exceptionally lower to reduce their deficits exploiting the middle class creating a disincentive to save even for retirement when it pays next to nothing.

The OECD is now warning like Picketty that a growing gap between rich and poor will erupt into revolution – not that government is taxing too much. According to the words of the OECD Secretary General Jose Angel Gurria, the problem since the global financial and economic crisis has exacerbated massive. “In the first three years of crisis, inequality increased more than in the twelve years before, “he told the Business Week”. On average across OECD countries, the top 10% of the population now earn 9.5 times as much as the lowest 10% but fail to explain this is from investment. Inequality has grown by 35% because stock markets are rising to escape from the craziness of government. The higher they rise, the greater the disparity.

The OECD claims this is clearly felt in the USA more so than Europe omitting the fact that the disparity comes from investment not wages. They they compare that to Europe claiming there is no welfare state in Europe so somehow this is implied to be better. The OECD then highlights supposedly rich Germany as a dangerous development with a rising disparity stating this is “namely that it is a lumpenproletariat, a very poorly trained and poorly paid part of the Arbeiterschich.”

The argument now is the middle class civil unrest they know is coming is simply because they have not confiscated the wealth of the investors they call the financial elites. So if you invest and make any money, you are the new financial elites – sorry it is anyone who now invests. Michael Maier’s The plunder of the world is another book released to justify plundering the financial elites without actually identifying who they are. Sorry – it is you.

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“Costs” and “Consequences”… not only has US foreign policy enabled Vladimir Putin’s approval rating to surge to record highs but, perhaps more importantly, it has driven a massive wedge between the West and the rest…

It seems US “costs” are not affecting Russian support for their leader…

and dividing the world even more aggressively…

What does Obama think Putin is worried about?

h/t edwardnh via Gallup

Bonus Chart…

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