The Fed’s Catch 22 just got catchier. While most attention in the recently released FOMC minutes fell on the return of the taper as a possibility even as soon as December (making the November payrolls report the most important ever, ever, until the next one at least), a less discussed issue was the Fed’s comment that it would consider lowering the Interest on Excess Reserves to zero as a means to offset the implied tightening that would result from the reduction in the monthly flow once QE entered its terminal phase (for however briefly before the plunge in the S&P led to the Untaper). After all, the Fed’s policy book goes, if IOER is raised to tighten conditions, easing it to zero, or negative, should offset “tightening financial conditions”, right? Wrong. As the FT reports leading US banks have warned the Fed that should it lower IOER, they would be forced to start charging depositors.
In other words, just like Europe is already toying with the idea of NIRP (and has been for over a year, if still mostly in the rheotrical and market rumor phase), so the Fed’s IOER cut would also result in a negative rate on deposits which the FT tongue-in-cheekly summarizes “depositors already have to cope with near-zero interest rates, but paying just to leave money in the bank would be highly unusual and unwelcome for companies and households.”
If cutting IOER was as much of an easing move as the Fed believes, banks should be delighted – after all, according to the Fed’s guidelines it would mean that the return on their investments (recall that all US banks slowly but surely became glorified, TBTF prop trading hedge funds since Glass Steagall was repealed, and why the Volcker Rule implementation is virtually guaranteed to never happen) would increase. And yet, they are not:
Executives at two of the top five US banks said a cut in the 0.25 per cent rate of interest on the $2.4tn in reserves they hold at the Fed would lead them to pass on the cost to depositors.
Banks say they may have to charge because taking in deposits is not free: they have to pay premiums of a few basis points to a US government insurance programme.
“Right now you can at least break even from a revenue perspective,” said one executive, adding that a rate cut by the Fed “would turn it into negative revenue – banks would be disincentivised to take deposits and potentially charge for them”.
Other bankers said that a move to negative rates would not only trim margins but could backfire for banks and the system as a whole, as it would incentivise treasury managers to find higher-yielding, riskier assets.
“It’s not as if we are suddenly going to start lending to [small and medium-sized enterprises],” said one. “There really isn’t the level of demand, so the danger is that banks are pushed into riskier assets to find yield.”
All of the above is BS: lending has never been a concern for the Fed because if it was, then one could scrap QE right now as an absolute faiure. Recall that as we showed recently, the total amount of loans and leases in commercial US banks has been unchanged since Lehman, with the only rise in deposits coming thanks to the fungible liquidity injected by the Fed.
Furthermore, contrary to what the hypocrite banker said that “the danger is that banks are pushed into riskier assets to find yield”, banks are already in the riskiest assets: just look at what JPM was doing with its hundreds of billions in excess deposits, which originated as Fed reserves on its books – we explained the process of how the Fed’s reserves are used to push the market higher most recently in “What Shadow Banking Can Tell Us About The Fed’s “Exit-Path” Dead End.”
What the real danger is, is that once the Fed lowers IOER and there is a massive outflow of deposits, that banks which have used the excess deposits as initial margin and collateral on marginable securities to chase risk to record highs (as JPM’s CIO explicitly and undisputedly did) that there would be an avalanche of selling once the negative rate deposit outflow tsunami hit.
Needless to say, the only offset would be if the proceeds from the deposits outflows were used to invest in stocks instead of staying inert in some mattress or, worse (if only from the Fed’s point of view) purchase inert assets like gold or Bitcoin.
Which brings us back to the first sentence and the Fed’s now massive Catch 22: on one hand, shoud the Fed taper, rates will surge and stocks will once again plunge, as they did, in early summer, just to teach the evil, non-appeasing Fed a lesson.
On the other hand, should the Fed cut IOER as a standalone move or concurrently to offset the tapering pain, banks will crush depositors by cutting rates, depositors will pull their money from banks en masse, and banks will have no choice but to close on a record levered $2.2 trillion in margined risk position.
“The world has consumed more than it produced for more than a decade,” Jim Rogers explains to BoomBust’s Erin Ade; but his comments to the leather mini-skirted anchor with regard the actions of the world’s central banks bear the most attention. “The world is floating on an artificial ocean of printed money,” he blasts, adding that while it’s going on “everyone’s happy,” but at the first sign of it slowing, he warns, “we will all dry up.”
Rogers sees gold as a crucial holding in this respect but believes there will be a better price to buy more, as he reflects on the suppressive actions of the Indian government.
This excellent far-reaching interview covers everything from gold standards to China’s 3rd Plenum “I much prefer the Chinese system of open markets than the US with the government dictating everything” and from Bitcoin to a barbaric destruction of the Fed and all it stands for, “the Fed will self-destruct, before the polticians realize what is going on.”
Erin Ade… (you’re welcome – is it any wonder Maria B quit?) asks every question we need answered…
interviews a worried Jim Rogers…
4:30 Agriculture/Farmland – bullish sugar and farmland – “The world has consumed more than it produced for more than a decade,” and inventories are near record lows
6:25 Central Banks – “for the first time in history, all central banks are printing money… The world is floating on an artificial ocean of printed money,”
7:15 Gold – “I am not selling any of my gold, but believe there will better prices to buy… the Indian government is actually trying to make its people sell their gold.”
8:45 Gold Standard – “it might work for a while but eventually the politicians will cheat that too”… “people wil be desperate in the next decade to try anything – maybe it will be bitcoins”
9:40 Bitcoin – there are many more important things in the world than worrying about bitcoins
10:15 China’s Plenum – “the Chinese are becoming more and more capitalist”… they are becoming more and more market focused… as opposed to the US where when there is a problem “the government decides how to fix it… look at Obamacare” – “the government says “we will figure out the solution”… “I much prefer the Chinese system of open markets than the US with the government dictating everything”
15:20 The Fed – “The way the world has worked for a few thousand years is – that when people get into trouble, they fail; competent people come along, reorganize the assets and start over…” In America, he chides, “they decided to let incompetent people take over the assets from competent people and compete with the competent people.” – The Japanese tried this in the 90s and it failed for 2 lost decades.
“In America, they are kicking the can down the road, and when the can finally goes over the side, we are all going to go with it.”
“We’ve had 50-60 years of excess in America, you’ve got to pay the price some day whether you like it or not… the longer they delay the day of reckoning the worse it will be.”
17:40 Abolish The Fed – “the world has gotten along very well for most of history without central banks.”
“we would be better of with no central bank, than this central bank”
19:00 Stocks – “we are certainly gonna have a crash some day” – “as long as they keep printing money, and no restraints on congressional spending, this bubble could go on forever”
The following statement was made by British Prime Minister, Neville Chamberlain, on September 30, 1938 in front of #10 Downing Street, London, after his arrival home from the notorious Munich Conference of 1938.
We, the German Fuhrer and Chancellor, and the British Prime Minister, have had a further meeting today and are agreed in recognizing that the question of Anglo-German relations is of the first importance for our two countries and for Europe.
We regard the agreement signed last night and the Anglo-German Naval Agreement as symbolic of the desire of our two peoples never to go to war with one another again.
We are resolved that the method of consultation shall be the method adopted to deal with any other questions that may concern our two countries, and we are determined to continue our efforts to remove possible sources of difference, and thus to contribute to assure the peace of Europe.
My good friends, for the second time in our history, a British Prime Minister has returned from Germany bringing peace with honor. I believe it is “peace for our time.” Go home and get a nice quiet sleep
75 years later, last night appeasement came to Iran:
(L to R) British foreign secretary, German foreign minister, EU foreign policy chief, Iran’s foreign minister, Chinese foreign minister, US secretary of state and Russian and French foreign ministers in Geneva on November 24, 2013.
It remains to be seen if appeasing Iran will lead to yet another anschluss or worse, but for now one thing is certain: nobody really knows what to make of last night’s historic nuclear “deal” with Iran. Because when even the two main participants are unable to agree on what was decided…
Now, THAT’s “win-win” diplomacy —> pic.twitter.com/5zbI5Db6Kh
— Nima Shirazi (@WideAsleepNima) November 24, 2013
… how is everyone else expected to fare any better?
In any case, here is a sampling of the immediate reactions, most of which were as expected. First, Israel:
- Israel Foreign Minister Lieberman: Iran’s greatest diplomatic victory since the Islamic revolution
Which is a good thing right? Wrong:
“What was concluded in Geneva last night is not a historic agreement, it’s a historic mistake,” Netanyahu said. “It’s not made the world a safer place. Like the agreement with North Korea in 2005, this agreement has made the world a much more dangerous place.”
Not surprisingly, Israel hates any deal that diffuses tension in the region and lowers the probability of war. Iran, on the other hand was giddy:
Hassan Rouhani hails nuclear deal as turning point for Iran
A smiling Hassan Rouhani stepped on to the spiral staircase of the presidential palace to announce to an anxious nation the first nuclear deal reached with world powers in a decade – a major achievement which capped his first 100 days in office.
Departing from the austere conference hall press events of his predecessors, and opting instead for a White House Rose Garden-style appearance, he declared that the Islamic Republic had won global powers’ recognition of Iran’s right to enrich uranium.
Billing it as a turning point for Iran – both internationally and at home – the centrist president elected on the hope of ending Iran’s isolation and fixing a collapsing economy made the most of the little sanctions relief offered by the Geneva agreement. Putting his own spin on the deal – and along the way directly contradicting American officials’ assertions – Mr Rouhani said the sanctions regime “had been broken” by the agreement, “whether others like it or not”. With the passage of time, he predicted, the cracks “will widen.”
In another sign of his media savvy as president, Mr Rouhani produced relatives and children of four scientists killed since 2010, part of a covert war against the nuclear programme. Each family was presented with a roll of honour.
Mr Rouhani reserved some of his final words for the supreme leader, declaring his appreciation for the Ayatollah’s guidance and stressing that negotiators had worked within these guidelines.
A delighted Rouhani promptly took to twitter:
“The important part of the agreement is the recognition of #Iran‘s enrichment that has fortunately been described in a four-page document.”
— Dr. Hassan Rouhani (@drRouhani) November 24, 2013
“The important part of the agreement is the recognition of #Iran‘s enrichment that has fortunately been described in a four-page document.”
— Dr. Hassan Rouhani (@drRouhani) November 24, 2013
— Dr. Hassan Rouhani (@drRouhani) November 24, 2013
— Dr. Hassan Rouhani (@drRouhani) November 24, 2013
— Dr. Hassan Rouhani (@drRouhani) November 24, 2013
— Dr. Hassan Rouhani (@drRouhani) November 24, 2013
Also not surprising is that unlike last time when the deal was scuttled in the last minute due to a block by France, this time Obama made a few phone calls to his socialist peer:
- French President Francois Hollande “welcomes the conclusion of the Geneva negotiations on Iran’s nuclear program” in e-mailed statement by his office today.
“The accord that was reached respects the demands imposed by France on the issues of uranium storage and enrichment, suspension of new facilities, and international control”
- Agreement “constitutes a step toward the ending of Iran’s nuclear military program, and therefore toward the normalization of our relations with Iran”
- “France will continue to work to reach a final agreement on this issue. The intermediate accord reached last night represents an important step in the right direction”: Hollande
The other negotiating parties hailed the deal. From Iran’s PressTV:
China, Germany and Russia have hailed the deal between Iran and the Sextet over Tehran’s nuclear energy program.
After more than four days of intense negotiations, Iran and the five permanent members of the United Nations Security Council plus Germany sealed an interim deal in Geneva on Sunday morning to pave the way for the full resolution of the West’s decade-old dispute with Iran over its nuclear energy program.
According to the Iranian Foreign Ministry, the deal allows Iran to continue its activities at Arak, Fordow and Natanz facilities. The agreement also stipulates that no additional sanctions will be imposed on Tehran because of its nuclear energy program.
China on Sunday welcomed the deal, saying the agreement with Tehran would “help safeguard peace and stability in the Middle East”.
German Foreign Minister Guido Westerwelle also hailed the agreement and said the nuclear deal marks “a turning point.”
Russian Foreign Minister Sergei Lavrov also praised the deal and stressed it would benefit all sides. “Nobody lost, everyone ends up winning,” he said.
Kerry’s own spin may not have actually mentioned “peace in our time” just yet, but it was vigorous regardless:
- “We believe very strongly that because the Iranian nuclear program is actually set backwards and is actually locked into place in critical places, that that is better for Israel than if you were just continuing to go down the road and they rush towards a nuclear weapon”
- “The basic architecture of the sanctions is staying in place. There is very little relief. We are convinced over the next few months, we will really be able to put to the test what Iran’s intentions are,” Kerry told CNN chief political correspondent Candy Crowley.
- “When you’re dealing with nuclear weapons, it’s not an issue of trust,” Kerry said. “Verification is the key.”
And the punchline:
- Kerry: If Iran’s nuclear program is really only for peaceful purposes, then “prove it”
Just how does one prove they are not doing something they are not doing? Anyway, all of this is merely more theatrics. As the AP reports, the deal was prepared secretly months in advance following secret talks between the US and Iran:
The United States and Iran secretly engaged in a series of high-level, face-to-face talks over the past year, in a high-stakes diplomatic gamble by the Obama administration that paved the way for the historic deal sealed early Sunday in Geneva aimed at slowing Tehran’s nuclear program, The Associated Press has learned.
The discussions were kept hidden even from America’s closest friends, including its negotiating partners and Israel, until two months ago, and that may explain how the nuclear accord appeared to come together so quickly after years of stalemate and fierce hostility between Iran and the West.
But the secrecy of the talks may also explain some of the tensions between the U.S. and France, which earlier this month balked at a proposed deal, and with Israel, which is furious about the agreement and has angrily denounced the diplomatic outreach to Tehran.
The talks were held in the Middle Eastern nation of Oman and elsewhere with only a tight circle of people in the know, the AP learned. Since March, Deputy Secretary of State William Burns and Jake Sullivan, Vice President Joe Biden’s top foreign policy adviser, have met at least five times with Iranian officials.
The last four clandestine meetings, held since Iran’s reform-minded President Hassan Rouhani was inaugurated in August, produced much of the agreement later formally hammered out in negotiations in Geneva among the United States, Britain, France, Russia, China, Germany and Iran, said three senior administration officials. All spoke only on condition of anonymity because they were not authorized to discuss by name the highly sensitive diplomatic effort.
The AP was tipped to the first U.S.-Iranian meeting in March shortly after it occurred, but the White House and State Department disputed elements of the account and the AP could not confirm the meeting. The AP learned of further indications of secret diplomacy in the fall and pressed the White House and other officials further. As the Geneva talks appeared to be reaching their conclusion, senior administration officials confirmed to the AP the details of the extensive outreach.
Politics aside, Bloomberg reports on the actual elements of the deal:
Iran will get as much as $7 billion in relief from economic sanctions over six months under the first-step agreement reached today in Geneva, the Obama administration said.
In return for Iran limiting its nuclear program, the interim agreement provides for the release of $4.2 billion in frozen oil assets and will let Iran continue exporting oil at current levels, rather than forcing continued reductions by buyers, as would be required under current law, according to a White House statement.
The accord also will “suspend certain sanctions on gold and precious metals, Iran’s auto sector and Iran’s petrochemical exports, potentially providing Iran approximately $1.5 billion in revenue,” the administration said.
Israeli officials and some U.S. lawmakers have said sanctions should be tightened, not eased, to keep pressure on Iran. Rejecting those pleas, the U.S. and the five other countries negotiating with Iran have agreed to “not impose new nuclear-related sanctions for six months if Iran abides by its commitments under this deal, to the extent permissible within their political systems,” according to the White House statement.
The no-new-sanctions pledge will be tested when the U.S. Senate returns for legislative business on Dec. 9 after a Thanksgiving break. A group of 14 senators from both parties issued a statement last week pledging to “pass bipartisan Iran sanctions legislation as soon as possible.”
Critics of an interim accord in Congress and in Israel have predicted Iran would reap $20 billion or more in relief. U.S. officials have rejected such estimates and have said the accord won’t lift the most punishing sanctions — those on oil sales and banking. The Obama administration estimated in its statement that Iran will continue to lose $4 billion a month in crude it otherwise would have exported.
Finally, while the cynics may say this was merely yet another attempt to redirect attention from the Obamacare debacle especially since Iran’s nuclear power plants have been controlled by US-Israel made computer virus Stuxnet for years, we will one-up their cynicism and this was all merely an advertising photo op for Nike:
Close up: pic.twitter.com/pGKuPJPdYq
— southpaw (@nycsouthpaw) November 24, 2013
Peak Oil responds, “The report of my death was an exaggeration.”
A recent post entitled The Welcome Death of Peak Oil by George Koch on the Ludwig von Mises Institute of Canada website begins with the following optimistic comment: “Improved technology and more efficiency mean North America could eventually become an oil exporter.” [i] The author goes on to argue that technology has placed the theory of Peak Oil in its grave and that energy independence for North America is just around the corner. That Peak Oil is a mistaken and buried theory has been argued recently elsewhere,[ii] and the idea of North American energy independence is one that has been and continues to be widely disseminated by the corporate media, the oil industry, and investment firms.[iii] There is one significant problem, however. The statement is based on an unsound foundation.
The notion that hydraulic fracturing will result in American energy independence appears to have been debunked.[iv] In fact, just recently Faith Birol, president of the International Energy Administration, has stated that the increase in American oil production is simply a surge, not a revolution.[v] To put it simply: the bold assertion of energy independence is predicated on early production numbers of shale oil wells; unfortunately, these production rates cannot be sustained for very long except through an exponential increase in the number of wells drilled.[vi] This only serves, however, to increase the speed at which the resource deposit is drawn-down, quickening the arrival of the day that the wells will no longer be economically viable. It is interesting to note that a number of companies have already lost money investing in shale oil and others are actively looking to get out of the business.[vii]
If an argument’s underlying foundation is faulty, then it is axiomatic that the conclusion drawn from it is also flawed. To paraphrase that classic movie, Monty Python and The Holy Grail, Peak Oil is ‘not quite dead yet’. In fact, I would argue that it is alive and as pertinent as ever, perhaps more so. I offer the following evidence to support that view.
While the American government was not interested in the topic of Peak Oil when Marion King Hubbert first proposed the model for petroleum resource depletion in 1948, by 1974, shortly after his prediction of US oil production peaking became reality, Hubbert was asked to provide written testimony to a Congressional committee writing the National Energy Conservation Policy Act as to the impact of Peak Oil on the monetary system.[viii] Jimmy Carter’s administration was driven by the concept of finite resources, creating the Department of Energy and prompting the president to present the issues in a televised speech in 1977.[ix]
More recently, the secretive National Energy Policy Development Group (NEPDG)–that was created only ten days after George Bush defeated Al Gore for the 2001 presidency and placed under the direct authority of Vice President Dick Cheney–brainstormed for ten meetings over an nine week period from January to May 2001 about Peak Oil and other energy security issues; issues that would significantly shape American government policies for the next few years. Although agendas and minutes of the meetings have been classified, seven pages were released after two lawsuits. These pages show that the group was reviewing how much oil remained in the world, where it was located, and who controlled it.[x] The public report from the NEPDG made dozens of recommendations based on the underlying belief that oil resources were finite and securing them were in the national interest of the United States.[xi]
The picture has not changed. The shale oil ‘boom’ is a short-term blip in a long-term trend that has been known to the American government for decades. The fact is the previous American administration perceived the issue of energy security as one requiring immediate response by all levels of government. I think most would acknowledge that the geopolitical tensions and military interactions in the Middle East over the last several decades have been centred upon one main objective: control of the oil and gas in the region. The idea of Peak Oil was very much driving American policy, especially foreign policy, less than a decade ago and it’s naïve to believe it is no longer a driving force in the current administration’s geopolitical strategising. Despite assurances and rhetoric, the current administration has not drawn down the number of military personnel in the Middle East and has actually become involved in additional conflicts in the region (e.g. Libya, Syria).[xii]
Leaving North America for the moment. It was only three years ago that the Future Analysis Branch of the Bundeswher Transformation Centre, a branch of the German military,[xiii] carried out its initial study for the German government’s Federal Ministry of Defence on the impact of Peak Oil.[xiv] As taken from the report’s Forward: “…the purpose of security-related future analysis is to acquire knowledge precociously and scientifically based in order to refine conceptual specifications and objectives without making predictions…[and] to enable the Federal Ministry of Defence to identify long-term issues with relevance to security policy at an early stage...” That Germany focused this branch’s first research on the topic of Peak Oil and its security implications speaks volumes as to the seriousness of finite oil resources and how they will impact the globe.
But back to the idea that Peak Oil is dead and buried. Here is what the report has to say: “It is a fact, however, that oil is finite and that there is a peak oil. Since this study is mainly focused on understanding cause-effect relations following such a peak oil situation, it is not necessary to specify a precise point in time…. Depending on the development of globally relevant factors, we cannot rule out that peak oil could have serious security policy implications within the review period of the 30-year investigation perspective” (emphasis added). So, the German military and the German Federal Defence Department not only believe that Peak Oil exists, but that the country must begin to prepare for the implications of Peak Oil sooner rather than later.
I think one has to take a step back in temporal perspective to get a good view of Peak Oil and to understand it and its implications for our global, industrial world. After about 200,000 years of low energy existence, humans happened upon a one-time windfall of energy-intensive resources and it has taken us less than two centuries to reach the production peak of this resource bonanza. On the way up the curve we have used the easy-to-retrieve and highest energy-return-on-energy-invested (EROEI) resources first, leaving us the less energy efficient (lower EROEI) and much more difficult-to-retrieve and expensive dregs; much of which may never get extracted.
Small ‘successes’, such as that of the American shale oil industry’s, are seen as minor deviations or perturbations in the long-term picture that emerges. For example, discoveries at Prudhoe Bay, Alaska, bumped up American oil production for a few years in the late 1970s and early 1980s but by the mid- to late-1980s the country resumed its journey down the Hubbert curve that began in 1970. The same pattern seems to be emerging with the ‘shale boom;’ a slight blip in the production numbers for a couple of years beginning in late 2009 and then it will be back to the downward slide of Hubbert’s Peak in the not-too-distant future.
This is not just true of the U.S.. It is true of every oil-producing country. Peak Oil is factual and based upon geologic patterns observed in every finite resource extracted to date. In fact, M.K. Hubbert predated his work on petroleum resources by studying extraction rates for various minerals that mimic the Hubbert curve.[xv]
The implications of Peak Oil are sure to be extremely upsetting to many. They range from James Howard Kunstler and John Michael Greer’s argument that the transition from fossil fuels will be a rather gradual fall from grace that will take generations, with possible spits and spurts of crises[xvi], to Michael Ruppert’s more apocalyptic and quick-moving collapse scenario. The reality of it, however, cannot be denied. But denial, of course, is the first stage of the Kubler-Ross model, also known as the five stages of grief, that psychiatrist Elisabeth Kubler-Ross uses to argue that when faced with impending death or some other horrible fate, a person will experience a series of emotional stages: denial, anger, bargaining, depression and acceptance.[xvii]
We won’t know when we’ve actually passed the peak of the Hubbert Curve with respect to oil production except in retrospect, and there are not likely to be any apocalyptic scenarios emerging as a result when we do; the truth is we may have already passed the point–global production rates of conventional oil have not moved above the levels reached in 2005/06.[xviii] There are many who have learned to accept it as inevitable but there are also a great many people still in the denial stage about Peak Oil.
Until more people arrive at the last stage of acceptance, we are destined to hear and read more stories with the theme reflected in Koch’s post. That Peak Oil is dead, technology will continue to save the day, and it’s time to move along, there’s nothing to see here. Unfortunately, I believe that the longer we maintain policies based on a denial of its existence, the less likely we will be able to prepare ourselves adequately and the more dire of the consequences will emerge.
What will befall an energy-dependent society as it begins its trip down the global, post-peak curve of Hubbert’s model can only be imagined. Will it reflect the brutal world of the television show Revolution where the power grid has failed due to wayward nanites?[xix] While failure of the grid in this science fiction series is not the result of Peak Oil, grid failure is a real possibility in a post-Peak Oil world, as pointed out by Richard Duncan in his Olduvai Theory.[xx] Will there be a massive die-off of humans as some predict?[xxi] Nobody knows.
One thing is sure though.
Peak Oil is dead, long live Peak Oil.
[i] G. Koch. The Welcome Death of Peak Oil. http://mises.ca/posts/blog/the-welcome-death-of-peak-oil/. November 9, 2013.
[ii] R. Wile. Peak Oil is Dead. http://www.businessinsider.com/death-of-peak-oil-2013-3. March 29, 2013.
B. Walsh. The IEA Says Peak Oil is Dead. That’s Bad News for Climate Policy.
D. Blockman. As Fracking Rises, Peak Oil Theory Slowly Dies. http://www.forbes.com/sites/davidblackmon/2013/07/16/as-fracking-rises-peak-oil-theory-slowly-dies/. July 16, 2013.
K. Smith. No Peak Oil Really is Dead.
[iii] G. Smith. U.S. to Be Top Oil Producer by 2015 on Shale, IEA says.
P. Domm. Ship, baby, ship! Calls come for U.S. to export oil. http://www.cnbc.com/id/101087815. October 4, 2013.
R. Plank. North American Energy Independence Now Possible. http://www.chron.com/business/energy/article/North-American-energy-independence-now-possible-4007354.php. November 4, 2012.
D. Burney and F.O. Hanson. Pipelines are the ticket to North American energy independence. http://www.theglobeandmail.com/globe-debate/pipelines-are-the-ticket-to-north-american-energy-independence/article8952216/. February 22, 2013.
C. Assis. North America energy independent by 2020, but still tied to markets: report. http://blogs.marketwatch.com/energy-ticker/2013/09/27/north-america-energy-independent-by-2020-but-still-tied-to-markets-report/. September 27, 2013
Wood Mackenzie Press Release. Wood Mackenzie: Global Geopolitics Reshaped by North American Energy Independence. http://www.woodmacresearch.com/cgi-bin/wmprod/portal/corp/corpPressDetail.jsp?oid=11572576. September 26, 2013.
S. Arsenault. U.S. could reclaim role as net energy exporter. http://www.aljazeera.com/indepth/features/2013/08/2013831142514713250.html. August 31, 2013.
[iv] W. Koch. Could fracking boom peter out sooner that DOE expects? http://www.usatoday.com/story/news/nation/2013/11/03/fracking-boom-bust-us-energy-independence/3328561/. November 3, 2013.
T. Whipple. The Peak Oil Crisis: The Shale Oil Bubble. http://www.resilience.org/stories/2013-10-30/the-peak-oil-crisis-the-shale-oil-bubble. October 30, 2013.
R. Heinberg. America’s natural gas revolution isn’t all it’s ‘fracked’ up to be. http://www.csmonitor.com/Commentary/Opinion/2013/1023/America-s-natural-gas-revolution-isn-t-all-it-s-fracked-up-to-be. October 23, 2013.
M. Mushalik. The U.S. will always remain a crude oil importer. http://www.resilience.org/stories/2013-10-31/us-will-always-remain-crude-oil-importer. October 31, 2013.
S. Kelly. Could California’s Shall Oil Boom Be Just a Mirage? http://www.desmogblog.com/2013/11/07/could-california-s-shale-oil-be-just-mirage. November 7, 2013.
M. Lardelli. The propaganda campaign against peaking fossil fuel production. http://www.resilience.org/stories/2013-11-05/the-propaganda-campaign-against-peaking-fossil-fuel-production. November 5, 2013.
J.D. Hughes. Drill, Baby, Drill: Can unconventional fuels usher in a new era of energy abundance? http://www.postcarbon.org/reports/DBD-report-FINAL.pdf. February 2013.
[v] K. Cobb. Will the real International Energy Agency please stand up? http://resourceinsights.blogspot.ca/2013/11/will-real-international-energy-agency.html/ November 16, 2013.
[vi] SRSrocco. The coming bust of the great Bakken Oil Field. http://srsroccoreport.com/the-coming-bust-of-the-great-bakken-oil-field/the-coming-bust-of-the-great-bakken-oil-field/. November 16, 2013.
M. Katusa. U.S. #1 in Oil: So Why Isn’t Gasoline $0.80 per Gallon? http://www.caseyresearch.com/cdd/us-1-in-oil-so-why-isnt-gasoline-0.80-per-gallon. October 29, 2013.
[vii] K. Sloan. What’s next for oil shale? http://thebusinesstimes.com/whats-next-for-oil-shale/. October 8, 2013.
G. Chazan. Shell write-down bad new for US shale.
G. Chazan. Peter Voser says he regrets Shell’s huge bet on US shale.
[viii] M. King Hubbert. On the Nature of Growth. http://www.hubbertpeak.com/hubbert/OnTheNatureOfGrowth.pdf. 1974.
[ix] J. Carter. Primary Resources: Proposed Energy Policy. http://www.pbs.org/wgbh/americanexperience/features/primary-resources/carter-energy/. April 18, 1977.
Miller Center, University of Virginia. Jimmy Carter. http://millercenter.org/president/carter/essays/biography/print.
Wikipedia. Energy Task Force. http://en.wikipedia.org/wiki/Energy_Task_Force
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[xii] T. Dokoupil. Who’s the War President? http://www.thedailybeast.com/articles/2011/08/05/president-obama-president-bush-and-the-march-of-u-s-soldiers-abroad-where-they-are-and-why.html. August 5, 2011.
D. Degraw. Obama Far Outdoes Bush in Escalating War–The Numbers Will Surprise You. http://www.alternet.org/story/144449/obama_far_outdoes_bush_in_escalating_war_–_the_numbers_will_surprise_you. December 8, 2009.
P. Woodward. More US troops deployed overseas under Obama than Bush. http://warincontext.org/2009/10/13/more-us-troops-deployed-overseas-under-obama-than-bush/. October 13, 2009.
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[xv] M. King Hubbert. Future Ore Supply and Geophysical Prospecting: Mineral Properties Now Entering a New Epoch. http://www.hubbertpeak.com/hubbert/FutureOreSupply.pdf. January 1934.
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Egyptian protests have brought down the governments of Mubarak and Morsi [Gregg Carlstrom]
|Cairo – Egypt’s interim president, Adly Mansour, has signed a restrictive new “protest law” that would require Egyptians to seek approval days in advance before organising demonstrations.
The law will take effect later this week once the final text is published in the official state register. It gives police wide latitude to use force against demonstrators, which could give the government a pretext for a widespread crackdown.
The law has gone through numerous revisions, but rights groups say the latest version requires protesters to seek approval from police three days in advance, and allows the interior ministry to block rallies that could “pose a serious threat to security or peace”.
Election campaign events are subject to a 24-hour notification period in some drafts, and “processions” of more than 10 people are only allowed for “non-political” purposes. Violators could face fines of up to $4,360.
“They could have stuck to earlier versions, where if the interior ministry wants to ban a protest, the onus is on them to go to court and seek a ban,” said Heba Morayef, the Egypt director for Human Rights Watch. “Instead they’ve done the opposite. The end result is that we could see an increase in violent crackdowns on peaceful protests.”
More laws on way
Egypt’s interim cabinet is also debating a slate of other restrictive laws. One would criminalise “abusive graffiti”; another, a vaguely-worded “anti-terrorism” law, could be used to further clamp down on peaceful political activism.
The cabinet says the laws are needed to regulate near-daily protests in Cairo and across the country, some of which turn violent.
Authorities last week lifted a three-month state of emergency and night-time curfew imposed after security forces cleared two Cairo sit-ins filled with supporters of the deposed president, Mohamed Morsi, who was overthrown in July.
More than a thousand people were killed in the clearings and several days of unrest that followed.
Many of the ongoing protests have taken place on university campuses, which have become a hotbed of political unrest.
One person was killed late Wednesday night in clashes at Al-Azhar University between police and student supporters of Morsi. Protesters accused security forces of firing live ammunition at them; the interior ministry said students threw petrol bombs at police. Daily rallies have occurred since at Al-Azhar, Cairo University, and other schools.
Painting by Anthony Freda
Governments Admit They Carry Out False Flag Terror
Governments from around the world admit they carry out false flag terror:
- A major with the Nazi SS admitted at the Nuremberg trials that – under orders from the chief of the Gestapo – he and some other Nazi operatives faked attacks on their own people and resources which they blamed on the Poles, to justify the invasion of Poland. Nazi general Franz Halder also testified at the Nuremberg trials that Nazi leader Hermann Goering admitted to setting fire to the German parliament building, and then falsely blaming the communists for the arson
- Soviet leader Nikita Khrushchev admitted in writing that the Soviet Union’s Red Army shelled the Russian village of Mainila in 1939, and declared that the fire originated from Finland as a basis launching the Winter War four days later
- Israel admits that an Israeli terrorist cell operating in Egypt planted bombs in several buildings, including U.S. diplomatic facilities, then left behind “evidence” implicating the Arabs as the culprits (one of the bombs detonated prematurely, allowing the Egyptians to identify the bombers, and several of the Israelis later confessed) (and see this and this)
- The CIA admits that it hired Iranians in the 1950′s to pose as Communists and stage bombings in Iran in order to turn the country against its democratically-elected prime minister
- The former Italian Prime Minister, an Italian judge, and the former head of Italian counterintelligence admit that NATO, with the help of the Pentagon and CIA, carried out terror bombings in Italy and other European countries in the 1950s and blamed the communists, in order to rally people’s support for their governments in Europe in their fight against communism. As one participant in this formerly-secret program stated: “You had to attack civilians, people, women, children, innocent people, unknown people far removed from any political game. The reason was quite simple. They were supposed to force these people, the Italian public, to turn to the state to ask for greater security” (and see this)(Italy and other European countries subject to the terror campaign had joined NATO before the bombings occurred). And watch this BBC special
- As admitted by the U.S. government, recently declassified documents show that in the 1960′s, the American Joint Chiefs of Staff signed off on a plan to blow up AMERICAN airplanes (using an elaborate plan involving the switching of airplanes), and also to commit terrorist acts on American soil, and then to blame it on the Cubans in order to justify an invasion of Cuba. See the following ABC news report; the official documents; and watch this interview with the former Washington Investigative Producer for ABC’s World News Tonight with Peter Jennings.
- 2 years before, American Senator George Smathers had suggested that the U.S. make “a false attack made on Guantanamo Bay which would give us the excuse of actually fomenting a fight which would then give us the excuse to go in and [overthrow Castro]“.
- And Official State Department documents show that – only nine months before the Joint Chiefs of Staff plan was proposed – the head of the Joint Chiefs and other high-level officials discussedblowing up a consulate in the Dominican Republic in order to justify an invasion of that country. The 3 plans were not carried out, but they were all discussed as serious proposals
- The South African Truth and Reconciliation Council found that, in 1989, the Civil Cooperation Bureau (a covert branch of the South African Defense Force) approached an explosives expert and asked him “to participate in an operation aimed at discrediting the ANC [the African National Congress] by bombing the police vehicle of the investigating officer into the murder incident”, thus framing the ANC for the bombing
- An Algerian diplomat and several officers in the Algerian army admit that, in the 1990s, the Algerian army frequently massacred Algerian civilians and then blamed Islamic militants for the killings (and see this video; and Agence France-Presse, 9/27/2002, French Court Dismisses Algerian Defamation Suit Against Author)
- Senior Russian Senior military and intelligence officers admit that the KGB blew up Russian apartment buildings and falsely blamed it on Chechens, in order to justify an invasion of Chechnya (and see this report and this discussion)
- According to the Washington Post, Indonesian police admit that the Indonesian military killed American teachers in Papua in 2002 and blamed the murders on a Papuan separatist group in order to get that group listed as a terrorist organization.
- The well-respected former Indonesian president also admits that the government probably had a role in the Bali bombings
- As reported by BBC, the New York Times, and Associated Press, Macedonian officials admit that the government murdered 7 innocent immigrants in cold blood and pretended that they were Al Qaeda soldiers attempting to assassinate Macedonian police, in order to join the “war on terror”.
- Although the FBI now admits that the 2001 anthrax attacks were carried out by one or more U.S. government scientists, a senior FBI official says that the FBI was actually told to blame the Anthrax attacks on Al Qaeda by White House officials (remember what the anthrax letters looked like). Government officials also confirm that the white House tried to link the anthrax to Iraq as a justification for regime change in that country
- Former Department of Justice lawyer John Yoo suggested in 2005 that the US should go on the offensive against al-Qaeda, having “our intelligence agencies create a false terrorist organization. It could have its own websites, recruitment centers, training camps, and fundraising operations. It could launch fake terrorist operations and claim credit for real terrorist strikes, helping to sow confusion within al-Qaeda’s ranks, causing operatives to doubt others’ identities and to question the validity of communications.”
- United Press International reported in June 2005:
U.S. intelligence officers are reporting that some of the insurgents in Iraq are using recent-model Beretta 92 pistols, but the pistols seem to have had their serial numbers erased. The numbers do not appear to have been physically removed; the pistols seem to have come off a production line without any serial numbers. Analysts suggest the lack of serial numbers indicates that the weapons were intended for intelligence operations or terrorist cells with substantial government backing. Analysts speculate that these guns are probably from either Mossad or the CIA. Analysts speculate that agent provocateurs may be using the untraceable weapons even as U.S. authorities use insurgent attacks against civilians as evidence of the illegitimacy of the resistance.
- Undercover Israeli soldiers admitted in 2005 to throwing stones at other Israeli soldiers so they could blame it on Palestinians, as an excuse to crack down on peaceful protests by the Palestinians
- Quebec police admitted that, in 2007, thugs carrying rocks to a peaceful protest were actually undercover Quebec police officers (and see this)
- At the G20 protests in London in 2009, a British member of parliament saw plain clothes police officers attempting to incite the crowd to violence
- A Colombian army colonel has admitted that his unit murdered 57 civilians, then dressed them in uniforms and claimed they were rebels killed in combat
- U.S. soldiers have admitted that if they kill innocent Iraqis and Afghanis, they then “drop” automatic weapons near their body so they can pretend they were militants
- The highly-respected writer for the Telegraph Ambrose Evans-Pritchard says that the head of Saudi intelligence – Prince Bandar – admitted last the Saudi government controls “Chechen” terrorists
So Common … There’s a Name for It
This tactic is so common that it was given a name for hundreds of years ago.
“False flag terrorism” is defined as a government attacking its own people, then blaming others in order to justify going to war against the people it blames. Or as Wikipedia defines it:
False flag operations are covert operations conducted by governments, corporations, or other organizations, which are designed to appear as if they are being carried out by other entities. The name is derived from the military concept of flying false colors; that is, flying the flag of a country other than one’s own. False flag operations are not limited to war and counter-insurgency operations, and have been used in peace-time; for example, during Italy’s strategy of tension.
The term comes from the old days of wooden ships, when one ship would hang the flag of its enemy before attacking another ship in its own navy. Because the enemy’s flag, instead of the flag of the real country of the attacking ship, was hung, it was called a “false flag” attack.
Leaders Throughout History Have Acknowledged False Flags
Leaders throughout history have acknowledged the danger of false flags:
“This and no other is the root from which a tyrant springs; when he first appears he is a protector.”
“If Tyranny and Oppression come to this land, it will be in the guise of fighting a foreign enemy.”
– U.S. President James Madison
“A history of false flag attacks used to manipulate the minds of the people! “In individuals, insanity is rare; but in groups, parties, nations, and epochs it is the rule.”
― Friedrich Nietzsche
“Terrorism is the best political weapon for nothing drives people harder than a fear of sudden death”.
– Adolph Hitler
“Why of course the people don’t want war … But after all it is the leaders of the country who determine the policy, and it is always a simple matter to drag the people along, whether it is a democracy, or a fascist dictatorship, or a parliament, or a communist dictatorship … Voice or no voice, the people can always be brought to the bidding of the leaders. That is easy. All you have to do is to tell them they are being attacked, and denounce the pacifists for lack of patriotism and exposing the country to danger. It works the same in any country.”
– Hermann Goering, Nazi leader.
“The easiest way to gain control of a population is to carry out acts of terror. [The public] will clamor for such laws if their personal security is threatened”.
– Josef Stalin
People Are Waking Up to False Flags
People are slowly waking up to this whole con job by governments who want to justify war.
More people are talking about the phrase “false flag” than ever before.
UPDATE: Details of the deal are emerging including $4.2bn in FX
Despite earlier denials from Iran’s Deputy FinMin, EU, Iran, and US officials have confirmed:
- *IRAN NUCLEAR ACCORD WITH WORLD POWERS ENDS 10-YEAR DEADLOCK
- *IRAN WILL HALT 20% ENRICHMENT FOR 6 MONTHS, FARS REPORTS
- *IRAN AGREEMENT DOESN’T FORMALLY RECOGNIZE RIGHT TO ENRICH
- *IRAN AGREEMENT WILL STILL ALLOW IRAN TO ENRICH URANIUM
- *IRAN INTERIM AGREEMENT FREEZES ADDITIONAL SANCTIONS
- *IRAN DEAL LIFTS TRANSPORT AND INSURANCE SANCTIONS ON OIL
There are no details yet – but an interim agreement has been reached to ‘roll back’ some of Iran’s nuclear program in exchange for a lifting of some sanctions. Close U.S. ally Israel opposes the deal as too generous to an enemy it sees as a mortal threat. Israel is not a party to the talks. President Obama will address the nation at 1015ET to take a victory lap (perhaps this foreign victory will lift his domestic approval rating off record lows)…
The Iranian President seems pleased…
— Hassan Rouhani (@HassanRouhani) November 24, 2013
But not so much The Israelis:
— Zaid Benjamin (@zaidbenjamin) November 24, 2013
Some details on the deal…
#Iran will get access to $4.2 bn in foreign exchange as part of the agreement, a Western diplomat said on Sunday.
— AJELive (@AJELive) November 24, 2013
Close U.S. ally Israel opposes the deal as too generous to an enemy it sees as a mortal threat. Israel is not a party to the talks.
The proposed deal offered to Iran would reportedly allow limited uranium enrichment, although under tight restrictions and heavy international monitoring. But Western officials have balked at recognizing a legal “right” to uranium enrichment, hoping instead to craft language in the final agreement that acknowledges the right of all countries to pursue nuclear energy for peaceful purposes. Zarif appeared to endorse that approach publicly last week.
The sides also continued to haggle over details of the limited sanctions relief to be offered to Iran in return for scaling back its nuclear program, diplomats said. The relief would reportedly include freeing up a small portion of Iran’s overseas currency accounts and easing other trade restrictions.
The most painful sanction, affecting Iran’s oil and banking sectors, would remain until the end of the deal’s first phase, depending on Iran’s willingness to accept permanent curbs on its nuclear program, Western officials said.
The President deep in negotiation:
WH posted photos of Pres Obama conferring with top aides today about nuclear weapons talks with Iran. http://t.co/BoMDNBYYJz
— Mark Knoller (@markknoller) November 24, 2013
Via Al Jazeera,
Iran and six world powers have reached an agreement on curbing Iran’s nuclear programme in exchange for limited sanctions relief, several delegations in the talks said on Sunday.
“We have reached an agreement,” Iranian Foreign Minister Mohammad Javad Zarif announced on his Twitter feed.
Al Jazeera’s Jonah Hull speaking from Geneva said “marathon talks have come to an end, the French foreign minister gave a thumbs up as he departed the Intercontinental hotel.
“Foreign ministers of the P5+1 negotiation with Iran will be going to Geneva’s UN headquarters where they will announce details of the deal,” he said. “There are no details yet, but a interim agreement has been struck to roll back some of Iran’s nuclear programme.”
“It is extrordinarily significant,” he added.
A diplomatic solution is unquestionably the preferred approach to resolving the Iranian nuclear issue. But for years Iran has maintained an indisputable posture of deceit and defiance towards the United Nations, the International Atomic Energy Agency, and nations around the world, including, centrally, the P5+1.
Given this history, and the concomitant lack of trust, the P5+1 will need to be ever vigilant in determining whether Iranian leaders are, in fact, sincere and will fulfill their part of the deal, or will rather play for time while trying to advance their nuclear program.
Serious questions for us to consider in evaluating the merits of this agreement with Iran include:
— How do America’s closest allies in the Middle East view the deal, since, after all, they are the nations most immediately threatened by the prospect of Iran’s belligerence, nuclear weapons capability and delivery systems?
— Does the agreement preserve, explicitly or implicitly, an Iranian “right” to enrich uranium? And, specifically, what are the implications for permitting Iran to continue to enrich uranium to 3.5% during the six-month interim deal?
— Are there precise, satisfactory monitoring arrangements for halting all construction, inside and outside, at the plutonium facility in Arak?
— Is Iran permitted to continue building centrifuges, for potential installation later — say, at the end of the six-month interim deal — to enhance still further its enrichment capability?
— Is Iran required to provide full access to all of its enrichment facilities, centrifuges and nuclear material holdings, including yellow cake?
— Does Iran have to declare and allow inspections of all work related to nuclear-weapons development, as the IAEA has identified, including triggers, computer simulations of nuclear explosions, ballistic missiles and nuclear warheads?
— Have the six world powers received any concrete commitment on Tehran’s involvement in the brutal war in Syria, support for Hezbollah, and efforts to develop intercontinental ballistic missiles?
Ultimately, the true test of this agreement will be the ability of the world powers and UN agencies to verify Iranian compliance, including openness to, and full cooperation with, regular, intrusive inspections of all of its nuclear facilities.
Meanwhile, we believe that existing sanctions should remain in place and new sanctions, whose trigger date would not necessarily be immediate, should be pursued to underscore the seriousness of America’s determination — and the consequences of an Iranian failure to act in good faith.
Tangible deeds, not poetic words, will ultimately determine whether Iran has embarked on a new path of cooperation and compliance, or is pursuing the same aggressive and destabilizing policies, which pose such a threat to regional and global security, simply wrapped in new packaging.
And in other news…
BREAKING: Republican Party to change name to “Iran” in order to get Obama to negotiate with them
— Right Scoop (@trscoop) November 24, 2013