Citi Warns The Greatest Monetary Experiment In The History Of The World Is Being Wound Down | Zero Hedge
As Citi’s Tom Fitzpatrick, a number of local market currencies are increasingly coming under pressure and look likely to fall even further. Whether this will turn into a dynamic as severe as 1997-1998 in unclear; however, at minimum Citi believes the “change in course” by the Fed in December (guided since May) has become a “game changer” for the EM World. The greatest monetary experiment in the history of the World is being wound down. In a globally interlinked economy it would be “naïve” to believe that the big beneficiaries of this “monetary excess” in recent years would be immune to the “punch bowl” no longer being refilled constantly.
Via Citi FX Technicals,
A look at some Subemerging currencies of interest.
There are a number of local market currencies that are increasingly coming under pressure and look likely to fall even further:
- In Latam we look at BRL,MXN,CLP and COP as well as the LACI (Latin America currency index)
- In Asia we look at PHP,KRW,SGD,IDR, TWD and MYR as well as the ADXY (Asia Dollar index)
- In CEEMA we look at TRY, ZAR and RUB
USDBRL long term chart continues to look ominous. (BRL is 33% of the LACI)
The uptrend in USDBRL that began off the double bottom formed in 2011(As the 2008 low held) has continued to develop steadily with a series of higher highs and higher lows.
Each new high (including the last one at 2.4550) has tended to result in a retracement back to test and hold the prior high.
If this trend is to continue (which we think it will) we would expect to see a successful break above that August 2013 high at 2.45 (possibly even within the next month) en route to a test of the major 2.62 resistance level. This is the major high from December 2008 and a decisive break above would complete the long term double bottom.
The target on such a development would be for a move towards 3.70 in the medium term
USDMXN starting to break out (MXN is 33% of the LACI)
USDMXN has clearly broken out of the triangle consolidation in place for most of the 2nd half of 2013.It did so while completing a bullish outside week last week after seeing strong support hold in recent months at the converged 55 and 200 week moving averages.(12.75-12.78)
It seems only a matter of time before pivotal resistance at 13.46-13.47 is likely to be tested.
A successful breach of this range should open up the way for further gains with little resistance of note evident before the downward sloping trend line at 14.09.
USDCLP now moving towards major resistance (CLP is 12% of the LACI)
Having broken through the 2011 highs at 535.75 USDCLP now looks set to rally further and test a whole range of resistance levels in the 551-556 range.
A decisive close above this range would suggest continued gains with next good resistance met around 622 (Downward sloping trend line from 2003 and 2008 peaks.
USDCOP attempting to complete a major double bottom (COP is 7% of the LACI)
A weekly close above the 1988 area would complete this formation and target a move as high as 2,200-2,225
Overall these 4 currencies make up 85% of the LACI (PEN is 5% and ARS 10%) suggesting further losses in this index are likely.
LACI (Latin America currency index) has really only 1 support level left
Having only been created in 2004 we now find that the only support level of note left in this index is the 2009 low at 89.39.(Around 3.4% below here)
We fully expect this level to be tested in the medium term and given the magnitude of moves possible in USDBRL, USDMXN, USDCLP and USDCOP new lifetime lows in this index are a distinct possibility.
USDKRW- Forming a base? (KRW is 13% of the ADXY)
For the 3rd time since 2011 USDKRW has held good support around 1,048. It now looks to be forming a double bottom with a neckline at 1,163. A break above here would target as high as 1,275.
Such a move, if seen, would complete an even bigger basing formation on a break of 1,208 that would suggest as high as 1,365-1,370
USDSGD testing good resistance (SGD is 10.27% of the ADXY)
Now testing good trend line and 200 week moving average resistance in the 1.27-1.28 area
A break through here would suggest extended gains towards horizontal resistance in the 1.3200-50 range.
A break above this latter range would open up the way for extended USD gains.
USDTWD: Breaking good resistance (TWD is 5.11% of the ADXY)
Has broken decisively above the 200 week moving average for the first time since Sept. 2009 and also completed a very clear inverted head and shoulders and horizontal trend line break (see insert).
The target for this move is at least 31.50
USDMYR: Re-testing the 2013 highs (MYR is 4.6% of the ADXY)
Having broken above good resistance around 3.21 (Double bottom neckline) USDMYR retraced back below and tested the 200 week moving average before rallying again.
It regained the 3.21 level and is now re-testing the 2013 high at 3.3377.
A break above here would put the double bottom well “back on track” and suggest a move to at least 3.48-3.50 again.
USDIDR: End of a 15 year consolidation? (IDR is 2.69% of the ADXY)
USDIDR looks simply to have been treading water for the past 15 years with signs growing that it may be in danger of break out.
A move above 13,000 would further support this view and suggest that the 1998 peak close to 17,000 could ultimately be tested again.
USDPHP breaking out (PHP is 1.64% of the ADXY)
Having broken out of the 8 year downtrend in May 2013 USDPHP has now completed a well-defined inverted head and shoulders that suggests a move towards 49.
In addition good resistance is met at 50.17 (2008 peak). A break through this latter level, if seen, would suggest continued gains to new all-time highs close to 60.
The ADXY has started to move lower again in recent weeks
So far it remains comfortably above pivotal support in the 113.60-114.00 area.
Only a break below this range would raise concerns about the potential for more extended losses in these Asian currencies.
While the currencies above only make up about 38% of this index the HKD and CNY together make up 49%. Therefore it is likely that moves in the charts above would be instrumental in determining the direction of the ADXY.
USDZAR looks like a long term breakout
We believe that USDZAR has now decisively broken out of a 12 year consolidation at the end of 2013.
We would expect a quick move up to test the 11.87 highs seen in 2008 and thereafter the 13.84 highs seen in 2001.
Ultimately we would not be surprised to see new all-time highs in the coming years.
USDTRY: The sky is the limit
Like USDZAR, we believe we have broken up out of a 12+ year consolidation. However looking at the pace of USDTRY prior to that we have no idea how far this can go, but it looks to be a long way.
As an initial level to watch, the inverted head and shoulders (see insert) targets the 2.60 area
USDRUB testing a breakout point
USDRUB is testing the 2012 high at 34.14 and a break above there suggests a move towards 36.50, the converging 2009 high and channel top
So overall in an environment of relative calm in the US Bond market in recent months the currencies above have continued to weaken albeit to different degrees. If this is as good as they can do with US Bond yields stable/drifting lower what does that suggest if and when bond yields start to push up again?
We have focused previously on how the FX markets have traded in a similar path to that seen in the late 1980’s/late 1990’s…
1989-1991: Savings and loan and housing crisis- USD index hits its low in 1992
1992-1994: Exchange rate mechanism crisis hits Europe and existing financial architecture comes apart. USD weakens in 1994 as bond yields turn off their lows.
1995: USD-Index starts to rise again as the USD and fixed income both look cheap
1997-1998: Structurally low rates in US and then Europe led to carry trades and money flowing into local markets in search for yield. During this time European currencies performed well on the back of the “convergence trade”. Peripheral European bond yields and spreads collapsed versus Germany into late 1998. Emerging markets (Asia and Russia in particular) got hit hard as money flowed out again.
We have no idea if this will turn into a dynamic as severe as 1997-1998 (This caused the Fed to back off its tightening bias in 1998 as EM markets got hit hard and LTCM went bankrupt as its convergence trades “blew up”. The US Equity market (S&P) fell over 20% in July-October 1998.)
However, at minimum we believe the “change in course” by the Fed in December (guided since May) has become a “game changer” for the EM World.
The greatest monetary experiment in the history of the World is being wound down.
In a globally interlinked economy it would be “naïve” to believe that the big beneficiaries of this “monetary excess” in recent years would be immune to the “punch bowl” no longer being refilled constantly.
Cambodia imposed an indefinite ban on demonstrations in Phnom Penh after a wave of protests in early January [AP]
|At least eight people have been injured in Cambodia’s capital as police fired smoke grenades and used electric batons to break up an anti-government demonstration.Several hundred people, led by radio station owner Mam Sonando, gathered in front of the Ministry of Information on Monday to press demand for the government critic to be allowed a license for a television channel.
The government last week rejected the application, saying there was no frequency available. All existing stations are closely linked to Prime Minister Hun Sen and Cambodia has been accused of only granting television licences to pro-government media.
Protesters and journalists were hit by police batons during Monday’s rally, according to rights activists.
Activist Am Sam Ath of local rights group Licadho condemned the crackdown on the protesters as a “serious violation of human rights”.
Phnom Penh City Hall spokesman Long Dimanche said police dispersed the protest because it had not been permitted and could have led to violence.
The government imposed an indefinite ban on street demonstrations in Phnom Penh after a wave of protests in early January challenging the results of last year’s election, which the opposition alleges was rigged.
“It was illegal demonstration. So the authorities just implemented the law,” Long Dimanche said.
Sonando, who has dual Cambodian-French citizenship, was convicted in October 2012 on charges including insurrection and inciting people to take up arms against the state.
He was released from jail last March after a court cleared him of a secessionist plot, slashing his 20-year jail term and ordering his release from prison.
Baton-wielding police clashed on Sunday with protesters – including Buddhist monks – demanding higher wages for garment workers and the release of 23 people arrested during a recent bloody crackdown on striking garment workers, which left at least four civilians dead.
Authorities have quelled recent street protests against Hun Sen. He faces mounting criticism by rights groups of his government’s suppression of street protests intended to challenge his nearly three-decade rule.
Human Rights Watch has condemned the recent actions by the Cambodian government and is urging the United Nations member countries to press the country’s leadership to abide by previous commitments and fulfil new rights pledges.
Cambodia is scheduled to appear before the UN Human Rights Council’s Universal Periodic Review (UPR) in Geneva on Tuesday.
“Hun Sen’s government violates human rights on a daily basis by violently preventing the opposition, trade unions, activists and others from gathering to demand political change,” said Juliette de Rivero, Geneva director at Human Rights Watch.
Here is how Reuters summarized the soaring price expectations in the country under its first day with “relaxed” controls:
Argentina’s sudden relaxation of currency controls, long touted by the government as essential to the country’s financial health, has left investors wondering what’s next for Latin America’s crisis-prone No. 3 economy. Shopkeepers around the country hurriedly placed new price tags over the weekend on imported items from Cuban cigars to Asia-made televisions, reflecting a more than 20 percent drop in the official peso rate over recent days.
The consumer price surge came after the government said on Friday it would lift a two-year-old ban on Argentines buying foreign currency, allowing savers access to coveted U.S. dollars while the peso was left to plummet. Friday’s relaxation of controls came as central bank reserves fell beneath $30 billion, a level suggesting its interventions in support of the anemic peso had become unsustainable.
But allowing average wage-earners to access U.S. dollars was sure to pressure reserves as well, because the central bank is the main source of foreign exchange. The announcement on Friday ended a two-year ban on saving in the greenback.
So far inflation has been in check, mostly thanks to a price freeze imposed this month on staple foods which has kept a lid on basic supermarket items. Reuters says that “no one knows how long those prices can hold while labor unions prepare wage demands based on one of the world’s highest inflation rates.” For now, they are holding. They won’t for long, and if Argentina reports 30 percent inflation this year, as private analysts expect, it would mark the fastest rate since the 2002 crisis, when inflation reached 41 percent.
However, one thing is certain: dollar demand by the general population is sure to flood the central banks, and force reserve depletion, which have been declining at a pace of over $100MM per day and were last at $29.1 billion, at the central bank to really pick up pace. To wit:
Conditioned by previous crises to save in dollars, Argentines are obsessed with the greenback. The currency control regime ending on Monday forced people to go to the black market for dollars needed to protect them from the weak peso and fast-rising consumer prices.
Luckily for the central bank, as Bloomberg calculates, at most 20% of the population will actually be able to take advantage of the “relaxed” capital controls, because only Argentines who earn at least 7,200 pesos ($901) per month will be allowed to buy dollars, Cabinet Chief Jorge Capitanich told reporters today. And since only 20% of Argentines earned 7,000 pesos or more as of 3Q 2013,according to the National Statistics and Census Institute, it means that 80% of the population will get all the “benefits” of inflation with zero benefits from dollar purchase price protection.
And it’s not like even the rich will be able to truly benefit: he limit for FX purchases will be $2,000/month and will be taxed at 20% unless deposited with bank for at least a year.
So in other words, Argentina’s capital control “fix” was largely a sham, designed to hide the real motive behind last week’s announcement – push inflation far higher, perhaps under some persistent external influence, which in turn would lead to even more social instability. This could be a problem.
Consumer prices are a big worry on the street, but the issue has not sparked mass protests lately. Tensions could rise over the weeks ahead as labor demands pay increases in line with private economists’ 2014 inflation estimates. Fernandez has mentioned neither consumer prices nor the peso’s plight in recent speeches, leaving her cabinet to announce policy changes. The next presidential election is next year, with Fernandez unable to seek a third term.
Possible candidates from the main parties offer policies that lean in a more pro-investment direction that Fernandez’s, as the outgoing leader tucks into her last two years in power.
“If the government fails to prevent inflation from accelerating it will probably hurt the chances of presidential aspirants who are aligned with the administration,” said Ignacio Labaqui, an analyst with Medley Global Advisors.
“A deeper economic crisis could provide a window of opportunity for candidates who are more business friendly.”
Such as technocrats from… Goldman Sachs?
Activists in British Columbia have responded to the National Energy Board’s approval of the Northern Gateway oil pipeline with threats of illegal activism reminiscent of the 1990s. Greenpeace spokesman Mike Hudema, for example, said his group will “do what it takes” to ensure the pipeline is never built (and he specifically mentioned civil disobedience).
Given the nature of the NEB’s process, such civil disobedience would be inappropriate, and detrimental to society. It would overturn the assumption that people are free to engage in lawful commerce if they obey the rules, without an endless process of protests, lawsuits, and smear campaigns.
Others, however, disagree. One Vancouver writer has argued that potential civil disobedience against the oil pipeline is akin to historical protests in favour of female suffrage, slavery, indentured servitude, and against clear-cutting forests.
Civil disobedience has an honourable history; the question is whether a particular group on a particular matter is justified in such actions. Such steps are, after all, violations of the law, whether property rights, trespassing, and so on.
Where people’s rights are systematically violated, where they are denied recourse to the courts, or to their elected representatives, the case for civil disobedience is clear.
But the Northern Gateway Pipeline proposal does not represent such a violation, and there has already been a rather extensive process of discussion and consultation.
The consultation and regulatory process conducted by the National Energy Board spanned four years, cost some $500 million, involved 180 days of hearings, worked through 9,400 submitted letters and took oral testimony from nearly 1,200 people. That process may not have been perfect but even perfection would not have satisfied those opposing the pipeline: their opposition is absolute. They are not interested in whether Northern Gateway is safe or not, or economically helpful to Canada; they oppose it, period.
Threatened civil disobedience over Northern Gateway rather trivializes the idea of civil disobedience. Another pipeline is hardly an existential threat to Canada’s (or B.C.’s) environment, much less anyone’s civil rights. Already, 825,000 kilometers of pipelines criss-cross Canada, with about 40,000 km in British Columbia (as of 2011). Another 1,200 km is hardly earth-shattering.
Then there is another other argument made by some activists: that civil disobedience in the early 1990s against the forest industry did not collapse B.C.’s economy the last time environmental activists upped the ante, so neither will it this time. But economies need not collapse to harm some people and kill off opportunities for others.
Consider one example. The 1990s-era decision to ban mining in the Tatshenshini-Alsek region of northern B.C. — the Windy Craggy deposit, a claim owned by Geddes Resources. The mine potential (in 1992 estimates) of $15 billion in copper, silver and gold extraction was at stake, with 500 direct jobs then valued at $78,000 each annually, along with another 1,500 indirect jobs.
Rather than accept a mine proposal that amounted to 1,100 square km out of 958,000 square km in total — barely more than one-tenth of one per cent of the Tatshenshini-Alsek region — a 1993 decision by the provincial government killed off the potential mine. Tourism jobs could have co-existed with mining jobs in the Tatshenshini; instead, the current tourism potential in a remote corner of the province has not and never will match the high-paying jobs of the long-scuttled $15 billion mine ($22 billion in current dollars).
This absolutist positioning is an ongoing problem in Canada. In his 2000 book on the conflict in B.C.’s forests in the 1990s, then-UBC Professor William Stanbury noted the vandalism, sabotage, ignored court injunctions, and international boycott campaigns organized by some green activists. As Stanbury wrote, “one of the more disturbing issues raised in the course of this study is that there appears to be declining respect for rationality in making major public decisions in B.C. relating to environmental issues.”
Indeed. And we see a replay of the irrational, absolutist problem now with violent protests over pipelines and violent protests over hydraulic fracturing. We will probably see more such protests should Northern Gateway receive federal approval.
Threatened protests over Northern Gateway are not your grandmother’s civil disobedience where great injustices were challenged by brave people willing to suffer jail, violence, and more to right those wrongs that afflicted the daily lives of millions.
The current and predicted protests are, instead, the reflex action of absolutists who would destroy opportunities for others regardless of how one of the world’s better-functioning democracies allows for companies to engage in lawful commerce. There is nothing noble about such “resistance.” It instead has the distinct whiff of unnecessarily severe Puritans in more modern, green attire.
This blog was co-written by Kenneth P. Green, Senior Director, Natural Resource Studies at the Fraser Institute.
I wish I could be optimistic about Geneva II, but I cannot. That it happened at all is good. But “good for what” remains unclear. Listening to the speeches at the opening session established quite convincingly that none of the participants were ready to deal with the reality of what has become the most horrific tragedy of this new century.
During the past three years, the Syrian people have been victimized by a cruel and unrelenting war. While the competing sides may argue over who is at fault and what should now be done, what remains indisputable are the cold hard numbers of those who have been killed or forced to flee from their homes. Less quantifiable, but still real, is the physical destruction of once beautiful neighborhoods and world heritage treasures, and the emotional destruction visited upon a generation of Syrian children who will bear the scars of this war for a generation.
Despite all of this, the fighting continues without letup with neither side willing or able to accept the responsibility of contributing to ending it. The people may be exhausted, but the regime and the opposition are not.
We are three years into this bloody mess and what should have been clear from the outset has now become certain. This conflict will not end with one side claiming a decisive victory. Neither the regime and its international sponsors, nor the opposition and the countries that support them will be able to win. That this simple fact is not, and maybe cannot be, accepted by either side is what keeps the conflict going.
While it is easy find fault with the combatants, equally at fault are those who have funded them, armed them, and provided them with political support without control or conditions. Continuing the fight and continuing to fuel the fight is worse than a fool’s errand, it is a crime.
Delusions abound. The fragmented and deeply divided opposition, represented at Geneva by a rump delegation, still claims to speak for the Syrian people. The reality on the ground speaks otherwise. They blame the U.S. for not supporting them and refuse to accept responsibility for their own disarray. Some of their elements continue to maintain that their revolution is democratic and pluralistic, but the main forces doing the fighting — even those who are now termed as “moderates” — are anything but. Among the main rebel forces are disciplined extremist groups that have committed deplorable acts against civilians. Even now the opposition coalition insists on the precondition that the regime must step aside, as if they would be in a position to govern in its stead.
For its part, the regime continues to speak of its “legitimacy”, but its behavior has, if anything, cost it the right to claim that mantle. It was a brutal dictatorship before the war began and its conduct during the conflict has rightly earned it the epitaph of “war criminal”.
In this context, it was especially galling to listen to the Syrian Foreign Minister in his opening address speak of the “will of the Syrian people,” lecturing the U.S. Secretary of State saying “No one, Mr. Kerry, has the right to withdraw legitimacy of the [Syrian] president other than the Syrians themselves.” He said this, I presume, with a straight face, ignoring the tens of thousands killed, the millions who have been forced to flee, and the cities that have been devastated — all supposedly in the vain effort to establish this claim of “legitimacy”.
Surely this regime has run its course. Just as surely, this opposition, such as it is, is not in a position to lead. Therein lies the core of the Syrian tragedy. It is not just that neither side can win, but that neither side deserves to win — nor can they, in any event, govern the country.
Syria and the Syrian people deserve better. Those who maintain that the culture of the Syrian people is open, tolerant, and progressive are right. But those qualities are fast fading. Three years of conflict have ushered in a new reality of fanaticism, violence, and the evil of sectarian hostility. Out of all this, it will hard to build the new Syria. But Syrians still deserve the chance.
I have never supported a war and find it difficult to do so now, but I find myself increasingly convinced that the U.S. and international community have a responsibility to act and may need to use force to help end this conflict. If Geneva II fails to make progress toward any meaningful compromise, then I believe action must be taken.
There are firm demands that should be presented to all sides. The regime must stop its aggressive assault on “rebel-held positions” in populated areas. The destruction created by attacks on neighborhoods and the suffering that has been inflicted on innocent civilians is unacceptable. The opposition must be pressed to consolidate its ranks by becoming more inclusive and adopting a non-sectarian agenda for change. And they must purge their ranks of sectarian extremists. Both sides must agree to begin serious negotiations, without preconditions, to implement the transitional authority envisioned in the Geneva I formula.
Establishing a power-sharing transitional government will not be easy. It will take time. But both sides must be disabused of the notion that they can govern alone. The opposition has its base, as does the regime. If they want to be part of Syria’s future and if their funders and supporters want to be seen as making a constructive contribution to a resolution to this conflict, then they must agree to such a power-sharing arrangement. There is no other way.
If this does not occur within a defined period of time, then the U.S. may find it necessary to mobilize international support to launch strikes in Syria against both the regime and positions held by extremist groups. The strikes would in all likelihood need to be significant and sustained enough to change the calculations of the combatants. The Russians may choose to be part of this solution or not. But we are long past the time when the fate of Syria should be decided by a Russian veto.
Simultaneously, the U.S. would also need to lead an effort to mobilize a post-agreement peace-keeping force and a reconstruction and resettlement fund for Syria and its millions of refugees and internally displaced persons. Even after a power-sharing arrangement is reached, international support will be important to give the Syrians the time they need to make it work.
This degree of U.S. involvement may not be welcomed by many Americans and it will likely be rejected in many parts of the Arab World. But enough is enough. Something must be done to help end this Syrian nightmare.
» Soros Activists Take Over Ukrainian Government Buildings Alex Jones’ Infowars: There’s a war on for your mind!
Early Monday members of Spilna Sprava took over the Justice Ministry in Kiev and demanded President Viktor Yanukovych resign. They smashed windows and erected barricades. In response, the government has threatened to impose a state of emergency.
Soros and EU activists leave Ukrainian Justice Ministry.
Justice Minister Olena Lukash said negotiations between the protesters and the government should be discontinued if Spilna Sprava activists do not leave the ministry and other government buildings. “I will be forced to ask the president of Ukraine to stop the talks if the building is not freed immediately and negotiators are not given a chance to find a peaceful solution to the conflict,” Lukash told Ukraine’s Inter channel. Lukash said she would also demand Ukraine’s national security council “discuss imposing a state of emergency in this country.”
Following the action at the Justice Ministry, Spilna Sprava announced on its Facebook page it had decided to blockade the building instead of occupying it following Justice Minister Olena Lukash’s threat to declare a national emergency. “The activists form a tight cordon and are not allowing media representatives into the building,” the Ukrainian News Agency reported on Monday. “According to them, all Spilna Sprava activists have left the building because continued occupation of the Ministry of Justice could have led to an escalation of the conflict.”
Occupiers Work for Soros and the EU
Spilna Sprava, translated as “The Right Deed,” is an Open Society Institute supported and funded group. George Soros’ Open Society Institute, now known as Open Society Foundations (OSF), doles out grants to activist NGOs in central Europe attempting to undermine the Russian Federation. It builds upon andcontinues the work of the Ford Foundation. Since the early 1950s, the CIA has used the Ford Foundation as a funding cover.
Spilna Sprava is mentioned in the 2009 annual report of the International Renaissance Foundation (IRF), an organization described as “an integral part of the Open Society Institute network (established by American philanthropist George Soros) that incorporates national and regional foundations in more than thirty countries around the world, including Africa, Central and Eastern Europe and the former Soviet Union.” IRF cooperates with the International Monetary Fund and European banksters interested in “economic reforms” and “integration processes and trends” in Ukraine and Moldova.
The IRF report describes Spilna Sprava as “[s]haring best practices, facilitating cooperation between Ukrainian, Polish and German NGOs through creation of a network of support for migrants and refugees.” It is partnered with a Polish NGO, the Euro-Concret Association, that conforms to the “the standards of the EU countries” and works closely with Arbeiterwohlfahrt Kreisverband Bremerhaven, a German NGO funded with support from the European Commission.
“Germany, the EU and the US are pursuing not only economic, but also geopolitical, objectives in Ukraine. Given Russia’s loss of influence in Eastern Europe since the dissolution of the Soviet Union, the incorporation of Ukraine into the EU would push Russia off to the edge of Europe,” writes Peter Schwarz.
The destabilization of the Ukrainian government is part of an ongoing geostrategic move by the globalists to undermine any challenge to their hegemonic designs:
Since the end of the 18th Century, Ukraine formed an important part of the Russian and Soviet state. Moreover, the Russian Black Sea Fleet is located in Crimea at a port leased to Russia by Ukraine.
Both the US and the EU have an interest in weakening Russia, which is considered to be an important ally of China. Immediately after his election in March, Chinese President Xi Jinping traveled to Moscow to strengthen the two countries’ “strategic partnership.” Both countries feel threatened economically and strategically by the aggressive incursions of the US and its allies in Asia, the Middle East and Africa.
The offensive against Ukraine raises profound historical questions. In two world wars, Germany sought to bring Ukraine under its control and committed abominable crimes in the process. The current brazenness of the German government is fraught with new dangers. The growing international tensions can quickly turn into armed conflict.
These international tensions and the globalist connection to the escalating protests not only in Kiev but now across Ukraine are naturally ignored by the corporatist media. Significant developments on Monday were overshadowed by the usual pablum, notably ad nauseam coverage of the 56th annual Grammy Awards ceremony on Sunday night.
Peak Resources investigates the growing concern of global water stress. It is no big secret that the world population of humans is growing at an exponential rate. The growth of the human population has caused almost every nation around the globe to focus its attention on the available of freshwater for the future while some nations must focus on having fresh water today. Add into the mix the continual pressure from global climate change, and you have a lot of trouble. Hotter temperatures mean less ground water, shallower lakes, and rivers, and less water for crops, drinking, and bathing. To set this into motion, MIT researchers developed a new tool that models the ability of the hydrologic cycle to meet the growing needs of the world population through the year 2050.
Water resources are tied to populations of people. By 2050, the world population, is expected to rise to 9.7 Billion. Of those 9.7 billion people, 5 billion are expected to be living in water-stressed communities or regions. Of those 5 billion people, 1 billion are expected to live where there is not enough water to meet daily needs of people, environment, and agriculture. For some nations, this is not news, India, and Middle Eastern countries are already facing water stress issues.
What the MIT model does is it allows researchers to look at the two variables that are going to have the most impact on freshwater over time. Those being socioeconomics, and global climate change. What they find when they look into how the socioeconomic data changes over time, they discovered that the rate at which populations grow and the changes to economic growth lead to situations of water-stress. What they are talking about are emerging markets, where water is already limited. The impact of the situation is made worse by adding in global climate change.
Results of the MIT Model
As populations of villages and cities grow more food is needed, more drinking water is needed, and more water is needed for industry, but water is finite and the amount of available water is decreased as temperatures rise. But emerging markets and developing countries are not the only people hit by water issues and global warming. The study shows that developed nations are also going to feel increased water-stress as time passes and global warming increases. Overall, global warming is expected to impact how, when, and where rain falls. Changing patterns of precipitation will impact most countries around the globe.
While this model shows a good picture of what the future will look like, it shows something even more valuable. It shows that studies and modeling of this nature are deeply important to humanity. Peak Resources sees clearly that those who have the knowledge to forecast accurately, will be the ones who have the power to make changes. Those changes represent resource investment opportunities. Knowledge is the tool that will shape the future. Water demand is getting worse, and as time goes by the question is how do we deal with it today.
Melville Knew Them, We Still Live With Them
Cross-posted with TomDispatch.com
A captain ready to drive himself and all around him to ruin in the hunt for a white whale. It’s a well-known story, and over the years, mad Ahab in Herman Melville’s most famous novel, Moby-Dick, has been used as an exemplar of unhinged American power, most recently of George W. Bush’s disastrous invasion of Iraq.
But what’s really frightening isn’t our Ahabs, the hawks who periodically want to bomb some poor country, be it Vietnam or Afghanistan, back to the Stone Age. The respectable types are the true “terror of our age,” as Noam Chomsky called them collectively nearly 50 years ago. The really scary characters are our soberest politicians, scholars, journalists,professionals, and managers, men and women (though mostly men) who imagine themselves as morally serious, and then enable the wars, devastate the planet, and rationalize the atrocities. They are a type that has been with us for a long time. More than a century and a half ago, Melville, who had a captain for every face of empire, found their perfect expression — for his moment and ours.
For the last six years, I’ve been researching the life of an American seal killer, a ship captain named Amasa Delano who, in the 1790s, was among the earliest New Englanders to sail into the South Pacific. Money was flush, seals were many, and Delano and his fellow ship captains established the first unofficial U.S. colonies on islands off the coast of Chile. They operated under an informal council of captains, divvied up territory, enforced debt contracts, celebrated the Fourth of July, and set up ad hoc courts of law. When no bible was available, the collected works of William Shakespeare, found in the libraries of most ships, were used to swear oaths.
From his first expedition, Delano took hundreds of thousands of sealskins to China, where he traded them for spices, ceramics, and tea to bring back to Boston. During a second, failed voyage, however, an event took place that would make Amasa notorious — at least among the readers of the fiction of Herman Melville.
Here’s what happened: One day in February 1805 in the South Pacific, Amasa Delano spent nearly a full day on board a battered Spanish slave ship, conversing with its captain, helping with repairs, and distributing food and water to its thirsty and starving voyagers, a handful of Spaniards and about 70 West African men and women he thought were slaves. They weren’t.
Those West Africans had rebelled weeks earlier, killing most of the Spanish crew, along with the slaver taking them to Peru to be sold, and demanded to be returned to Senegal. When they spotted Delano’s ship, they came up with a plan: let him board and act as if they were still slaves, buying time to seize the sealer’s vessel and supplies. Remarkably, for nine hours, Delano, an experienced mariner and distant relative of future president Franklin Delano Roosevelt, was convinced that he was on a distressed but otherwise normally functioning slave ship.
Having barely survived the encounter, he wrote about the experience in his memoir, which Melville read and turned into what many consider his “other” masterpiece. Published in 1855, on the eve of the Civil War, Benito Cereno is one of the darkest stories in American literature. It’s told from the perspective of Amasa Delano as he wanders lost through a shadow world of his own racial prejudices.
One of the things that attracted Melville to the historical Amasa was undoubtedly the juxtaposition between his cheerful self-regard — he considers himself a modern man, a liberal opposed to slavery — and his complete obliviousness to the social world around him. The real Amasa was well meaning, judicious, temperate, and modest.
In other words, he was no Ahab, whose vengeful pursuit of a metaphysical whale has beenused as an allegory for every American excess, every catastrophic war, every disastrous environmental policy, from Vietnam and Iraq to the explosion of the BP oil rig in the Gulf of Mexico in 2010.
Ahab, whose peg-legged pacing of the quarterdeck of his doomed ship enters the dreams of his men sleeping below like the “crunching teeth of sharks.” Ahab, whose monomania is an extension of the individualism born out of American expansion and whose rage is that of an ego that refuses to be limited by nature’s frontier. “Our Ahab,” as a soldier in Oliver Stone’s movie Platoon calls a ruthless sergeant who senselessly murders innocent Vietnamese.
Ahab is certainly one face of American power. In the course of writing a book on the history that inspired Benito Cereno, I’ve come to think of it as not the most frightening — or even the most destructive of American faces. Consider Amasa.
Since the end of the Cold War, extractive capitalism has spread over our post-industrialized world with a predatory force that would shock even Karl Marx. From the mineral-rich Congo to the open-pit gold mines of Guatemala, from Chile’s until recently pristinePatagonia to the fracking fields of Pennsylvania and the melting Arctic north, there is no crevice where some useful rock, liquid, or gas can hide, no jungle forbidden enough to keep out the oil rigs and elephant killers, no citadel-like glacier, no hard-baked shale that can’t be cracked open, no ocean that can’t be poisoned.
And Amasa was there at the beginning. Seal fur may not have been the world’s first valuable natural resource, but sealing represented one of young America’s first experiences of boom-and-bust resource extraction beyond its borders.
With increasing frequency starting in the early 1790s and then in a mad rush beginning in 1798, ships left New Haven, Norwich, Stonington, New London, and Boston, heading for the great half-moon archipelago of remote islands running from Argentina in the Atlantic to Chile in the Pacific. They were on the hunt for the fur seal, which wears a layer of velvety down like an undergarment just below an outer coat of stiff gray-black hair.
In Moby-Dick, Melville portrayed whaling as the American industry. Brutal and bloody but also humanizing, work on a whale ship required intense coordination and camaraderie. Out of the gruesomeness of the hunt, the peeling of the whale’s skin from its carcass, and the hellish boil of the blubber or fat, something sublime emerged: human solidarity among the workers. And like the whale oil that lit the lamps of the world, divinity itself glowed from the labor: “Thou shalt see it shining in the arm that wields a pick or drives a spike; that democratic dignity which, on all hands, radiates without end from God.”
Sealing was something else entirely. It called to mind not industrial democracy but the isolation and violence of conquest, settler colonialism, and warfare. Whaling took place in a watery commons open to all. Sealing took place on land. Sealers seized territory, fought one another to keep it, and pulled out what wealth they could as fast as they could before abandoning their empty and wasted island claims. The process pitted desperate sailors against equally desperate officers in as all-or-nothing a system of labor relations as can be imagined.
In other words, whaling may have represented the promethean power of proto-industrialism, with all the good (solidarity, interconnectedness, and democracy) and bad (the exploitation of men and nature) that went with it, but sealing better predicted today’s postindustrial extracted, hunted, drilled, fracked, hot, and strip-mined world.
Seals were killed by the millions and with a shocking casualness. A group of sealers would get between the water and the rookeries and simply start clubbing. A single seal makes a noise like a cow or a dog, but tens of thousands of them together, so witnesses testified, sound like a Pacific cyclone. Once we “began the work of death,” one sealer remembered, “the battle caused me considerable terror.”
South Pacific beaches came to look like Dante’s Inferno. As the clubbing proceeded, mountains of skinned, reeking carcasses piled up and the sands ran red with torrents of blood. The killing was unceasing, continuing into the night by the light of bonfires kindled with the corpses of seals and penguins.
And keep in mind that this massive kill-off took place not for something like whale oil, used by all for light and fire. Seal fur was harvested to warm the wealthy and meet a demand created by a new phase of capitalism: conspicuous consumption. Pelts were used for ladies’ capes, coats, muffs, and mittens, and gentlemen’s waistcoats. The fur of baby pups wasn’t much valued, so some beaches were simply turned into seal orphanages, with thousands of newborns left to starve to death. In a pinch though, their downy fur, too, could be used — to make wallets.
Occasionally, elephant seals would be taken for their oil in an even more horrific manner: when they opened their mouths to bellow, their hunters would toss rocks in and then begin to stab them with long lances. Pierced in multiple places like Saint Sebastian, the animals’ high-pressured circulatory system gushed “fountains of blood, spouting to a considerable distance.”
At first the frenetic pace of the killing didn’t matter: there were so many seals. On one island alone, Amasa Delano estimated, there were “two to three millions of them” when New Englanders first arrived to make “a business of killing seals.”
“If many of them were killed in a night,” wrote one observer, “they would not be missed in the morning.” It did indeed seem as if you could kill every one in sight one day, then start afresh the next. Within just a few years, though, Amasa and his fellow sealers had taken so many seal skins to China that Canton’s warehouses couldn’t hold them. They began to pile up on the docks, rotting in the rain, and their market price crashed.
To make up the margin, sealers further accelerated the pace of the killing — until there was nothing left to kill. In this way, oversupply and extinction went hand in hand. In the process, cooperation among sealers gave way to bloody battles over thinning rookeries. Previously, it only took a few weeks and a handful of men to fill a ship’s hold with skins. As those rookeries began to disappear, however, more and more men were needed to find and kill the required number of seals and they were often left on desolate islands for two- or three-year stretches, living alone in miserable huts in dreary weather, wondering if their ships were ever going to return for them.
“On island after island, coast after coast,” one historian wrote, “the seals had been destroyed to the last available pup, on the supposition that if sealer Tom did not kill every seal in sight, sealer Dick or sealer Harry would not be so squeamish.” By 1804, on the very island where Amasa estimated that there had been millions of seals, there were more sailors than prey. Two years later, there were no seals at all.
The Machinery of Civilization
There exists a near perfect inverse symmetry between the real Amasa and the fictional Ahab, with each representing a face of the American Empire. Amasa is virtuous, Ahab vengeful. Amasa seems trapped by the shallowness of his perception of the world. Ahab is profound; he peers into the depths. Amasa can’t see evil (especially his own). Ahab sees only nature’s “intangible malignity.”
Both are representatives of the most predatory industries of their day, their ships carrying what Delano once called the “machinery of civilization” to the Pacific, using steel, iron, and fire to kill animals and transform their corpses into value on the spot.
Yet Ahab is the exception, a rebel who hunts his white whale against all rational economic logic. He has hijacked the “machinery” that his ship represents and rioted against “civilization.” He pursues his quixotic chase in violation of the contract he has with his employers. When his first mate, Starbuck, insists that his obsession will hurt the profits of the ship’s owners, Ahab dismisses the concern: “Let the owners stand on Nantucket beach and outyell the Typhoons. What cares Ahab? Owners, Owners? Thou art always prating to me, Starbuck, about those miserly owners, as if the owners were my conscience.”
Insurgents like Ahab, however dangerous to the people around them, are not the primary drivers of destruction. They are not the ones who will hunt animals to near extinction — or who are today forcing the world to the brink. Those would be the men who never dissent, who either at the frontlines of extraction or in the corporate backrooms administer the destruction of the planet, day in, day out, inexorably, unsensationally without notice, their actions controlled by an ever greater series of financial abstractions and calculations made in the stock exchanges of New York, London, and Shanghai.
If Ahab is still the exception, Delano is still the rule. Throughout his long memoir, he reveals himself as ever faithful to the customs and institutions of maritime law, unwilling to take any action that would injure the interests of his investors and insurers. “All bad consequences,” he wrote, describing the importance of protecting property rights, “may be avoided by one who has a knowledge of his duty, and is disposed faithfully to obey its dictates.”
It is in Delano’s reaction to the West African rebels, once he finally realizes he has been the target of an elaborately staged con, that the distinction separating the sealer from the whaler becomes clear. The mesmeric Ahab — the “thunder-cloven old oak” — has been taken as a prototype of the twentieth-century totalitarian, a one-legged Hitler or Stalin who uses an emotional magnetism to convince his men to willingly follow him on his doomed hunt for Moby Dick.
Delano is not a demagogue. His authority is rooted in a much more common form of power: the control of labor and the conversion of diminishing natural resources into marketable items. As seals disappeared, however, so too did his authority. His men first began to grouse and then conspire. In turn, Delano had to rely ever more on physical punishment, on floggings even for the most minor of offences, to maintain control of his ship — until, that is, he came across the Spanish slaver. Delano might have been personally opposed to slavery, yet once he realized he had been played for a fool, he organized his men to retake the slave ship and violently pacify the rebels. In the process, they disemboweled some of the rebels and left them writhing in their viscera, using their sealing lances, which Delano described as “exceedingly sharp and as bright as a gentleman’s sword.”
Caught in the pincers of supply and demand, trapped in the vortex of ecological exhaustion, with no seals left to kill, no money to be made, and his own crew on the brink of mutiny, Delano rallied his men to the chase — not of a white whale but of black rebels. In the process, he reestablished his fraying authority. As for the surviving rebels, Delano re-enslaved them. Propriety, of course, meant returning them and the ship to its owners.
Our Amasas, Ourselves
With Ahab, Melville looked to the past, basing his obsessed captain on Lucifer, the fallen angel in revolt against the heavens, and associating him with America’s “manifest destiny,” with the nation’s restless drive beyond its borders. With Amasa, Melville glimpsed the future. Drawing on the memoirs of a real captain, he created a new literary archetype, a moral man sure of his righteousness yet unable to link cause to effect, oblivious to the consequences of his actions even as he careens toward catastrophe.
They are still with us, our Amasas. They have knowledge of their duty and are disposed faithfully to follow its dictates, even unto the ends of the Earth.
TomDispatch regular Greg Grandin’s new book, The Empire of Necessity: Slavery, Freedom, and Deception in the New World, has just been published.
The fact that the phrase sounds antique should warn us of the scale of our folly. We have lost, given away, pawned the power we once claimed. We have ceased to be who we once were. Or at least who we claimed and hoped to be – The People. Now who are we? The Consumer? The Unemployed. The Unwanted? ”We, the Unwanted” does not have the same ring about it does it? And yet that is what we are fast becoming. It is time to chose. Sit in front of your television or computer screen and let it sooth you, until one day you too find you have have become one of the unheard, unlamented, Unwanted. Or reach out to others and grasp hold.
It is surely time that we re-assert what the phrase “We, The People” once meant. It is symbolic I know. But symbols are powerful. And the powerful fear them.
For too long now we have been supine, docile and cowed. There have been sputterings of resolve when a million people took to the streets to oppose the War in Iraq. But the rulers of the day ignored us and ‘the people’ simply went home vaguely disquieted, perhaps a little hurt at being ignored but mainly just confused as to what to do next – if anything.
For decades now we have let others have the initiative, let others define what was acceptable and legitimate. When it was never their position to do so. This must stop.
Once, a certain people declared, “No taxation without representation.” It was and still is a simple idea. You may not tax me unless you represent my interests. Only those with my interests in mind may ask me for taxes. Today that definitiion of democracy has withered and been quietly replaced by another similar sounding but actually radically different version – I would say perversion – of democracy. Today we are taxed by people who represent every interest but ours. They are still representatives but not of our interests. Democracy has now become a kind of opera – more and more lavish in direct proportion to its separation from ordinary people and their lives. Every four or five years we get to chose between two teams who represent some interest which is not ours. They may represent the interests of bankers, or global corporations, or militarists and the industrial complex which gets rich from their adventures, or some other grouping within the machinery of the State, or the intersts of a powerful global 1% – whatever interest they serve it is never yours and mine. For those who will clamour and say the Democrats or Labour or La Gauche represent the interests of the labour unions, WAKE UP! It’s been decades since that was even partially true. Labour under Blair and Brown was Thatcherism by another name and ignored a million people who said very clearly and en masse, that the Bush/Blair war was unjust, illegal and unwanted. The Democrats under Obama followed the same financial and economic ideology as Bush, even chosing the same people to run things, and was as warlike and arrogant as well. Change? Tell it to a moron. He might believe you.
Democracy is broken. No one represents us. We are allowed only to chose between different teams of The Entitled who, once chosen, ignore us completely. The whole idea of a mandate has mutated. Once that idea meant that a government could do what it had said it would do when it was trying to win our votes. Beyond those things, it had to consider ‘The People’. Today all parties consider that being elected means to be handed absolute power to do whatever they feel like doing, whatever they can ram through the tattered remains of accountability and oversight.
Elected dictatorship in installments is what we have today. And when each installment, no matter the different names and colours of the teams, is almost indistinguishable from the last, what is representative democracy if not a street parade of oversized cartoon characters and their pantomimed arguments. Are we not amused?
If we do not speak up soon we will find when we finally do, nothing is heard but grunting and bleating. We are, to borrow a phrase from the brilliant Roberto Callaso, already walking through a vast slaughter house. And those who run it have no good intent.
It is past time when we must revivify what We the People means. We must stop reacting like frightened animals and take the initiative.We cannot allow those who presume to rule over us to continue to tell us what ‘must’ be done and to over-rule all debate by insisting ‘there is no alternative.’ We must state what We the People will accept and what we won’t, what we regard as legitimate and what is not. It is for us to decide these things not them. It may seem like just words and on one level of course it is. But it was only words when it was said the first time. What those words did the first time and can do again, is to stop our rulers’ proclamations always being against a blank and passive background. Simply by declaring what We will and won’t tolerate or accept we force their proclamations to appear as what they are – aggressive, partisan and debateable.
You might say that it will still be just words and that blood would still have to be spilt upon the ground before their point had force. Which may be true. But still, simply by re-stating that there IS a “We the People” we take a stand, and are heard.
So here is my suggestion, for what it might be worth – What matters is that we state what WE will and won’t accept, what WE do and do not recognize as legitimate. What matters is how many of us sign. It does not matter that we may not all agree or that we may have differing lists. What matters is that they are not so different, that we can all stand together, and all take back what is ours – the power to DECIDE for ourselves what powers we lend and what powers we do NOT.
We the People:
Will not accept taxation for the purpose of paying off, even temporarily, private banking or other financial debts.
We will not accept the rulings of international arbitration panels on which our interests are not represented and which are convened on the basis of Bilateral Investment Treaties about which we were not consulted.
We will do not recognize the right of bond holders of ANY standing to be given seniority over the tax payers and people of a nation. We will NOT bail them out.
We reserve the sovereign right to decide in the event of another finacial crisis, who does not get paid, whose wealth is anulled. It is not for the unelected market and its experts to tell us.
We, the people do not accept the right or authority of private or unnaccountable State organizations to collect, hold or use private data gathered by any means that the law and courts have not specifically and publically granted.
We do not accept the legitimacy of any private law enforcement body.
We do not accept that there is any justification for secret or unaccountable bodies to hold any power over us. We simply do not recognize they have any legitimacy.
We will not tolerate military actions taken in secret without any parliamenary and public accountabilbity and permission.
We reserve the absolute right to hold to public and legal account any leader who takes actions which disregard the above. No elected official is above the law and no leader has the power to aquit those the courts have proceeded against.
No organization is above or outside the law.
We the People do not accept that any organization is too big to prosecute or too big to fail. Any organization that becomes so or remains so depsite this clear instruction, and then fails, forfeits its entire worth to the public purse at a post bankruptcy price.
I offer this as a start only. Others will no doubt be better informed and able to formulate a far clearer, better and sharper declaration.
If they do, I would like to sign it and offer it to as many others as technology will permit me to reach, for them to consider signing. The internet gives us this chance, to put up a document that any number of ordinary people can chose to sign. People might wish to have a seperate version for each Nation. Or, in a global world, perhaps we need to remain together as the global 99%. What matters is that enough of us sign so we can really say with a single voice – WE THE PEOPLE serve you notice that we are back!