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Warning Shots Fired At OSCE Mission In Crimea; Russia Threatens Treaty Force Majeure Over “Unfriendly NATO Threats” | Zero Hedge

Warning Shots Fired At OSCE Mission In Crimea; Russia Threatens Treaty Force Majeure Over “Unfriendly NATO Threats” | Zero Hedge.

Perhaps it is time to finally admit that anyone who thought Putin’s Tuesday press conference, which the market so jubilantly assumed was a case of “blinking” and de-escalating tensions with the west, was wrong. If there is still any confusion, following yesterday’s news that Gazprom officially threatened Ukraine with cutting off its gas supplies, as well as the storming of a Ukraine base by Russian troops – luckily with no shots fired so far – then today’s developments should any remaining doubts. Moments ago AP reported that as the latest, third in a row, group of OSCE inspectors tried to enter Ukraine, they were not only barred from doing so, but warnings shots were fired to emphasize the point by pro-Russian forces.

From AP:

An Associated Press reporter says pro-Russian forces refused to let a foreign military mission enter Crimea on Saturday.

After the officers had stopped, the armed men fired warning bursts of automatic weapons fire into the air to make other unidentified vehicles halt. No injuries were reported.

The multinational group of military officers from the Organization for Security and Cooperation in Europe was attempting to enter the embattled peninsula from the north. The armed men told them they had no authorization to enter Crimea.

The OSCE mission will likely return to the Ukrainian city of Kherson where it had spent the night, the AP reporter said.

Russia and Ukraine are locked in a tense standoff over Crimea.

Bloomberg adds:

OSCE tried to enter Crimea for third day, warning shots were fired as it attempted to do so today, Tatyana Baeva, OSCE spokeswoman, said by phone from Vienna.

Nobody injured in incident, OSCE mission is now back in Kherson, southern Ukraine.

OSCE 29 member states that provided people for Crimea mission may meet today or tomorrow in Vienna to discuss further action: Baeva

Then there was this overnight escalation as reported by Ukraine’s TV5 station (of questionably credibility), via Bloomberg:

Pro-Russian armed men today captured building in Simferopol, capital city of Crimea, TV5 private news channel reports, citing Vladislav Selezniov, spokesman for Ukraine’s defense minister in Crimea.

Russian soldiers seized Ukraine’s state border guard division in Shcholkino near Kerch Strait, Ukraine’s border service says in statement on its website

Russian soldiers stormed Shcholkino unit last night, seized weapons storage, beat Ukrainian border guards, took away their mobile phones and forced them and their families to leave

Currently, 11 border guard units are being blocked: Ukraine border service says in separate statement

Ukraine denied entrance to 513 “extremists” from Russia during last 24 hrs, state border guard service says in another separate statement on its website

Remember, all it takes is for one stray bullet to hit a human target, on either side of the conflict, for the market to grasp just how wrong its assessment of de-escalation has been.

Elsewhere, while inspectors were trying to make their way into Ukraine – unsuccessfully – Russia announced it was considering a further freeze of U.S. military inspections under arms control treaties in retaliation to Washington’s decision to halt military cooperation with Russia, news reports said Saturday.

Interfax blasted earlier:

  • UNJUSTIFIED U.S., NATO THREATS SEEN AS UNFRIENDLY GESTURE, ALLOW TO DECLARE FORCE-MAJEURE – RUSSIAN DEFENSE SOURCE
  • RUSSIAN DEFENSE MINISTRY CONSIDERING SUSPENSION OF RECEIVING INSPECTION GROUPS UNDER START TREATY, VIENNA DOCUMENT 2011 – SOURCE

AP has more:

Russian news agencies carried a statement by an unidentified Defense Ministry official saying that Moscow sees the U.S. move as a reason to suspend U.S. inspections in Russia in line with the 2010 New START treaty on cutting U.S. and Russian nuclear arsenals and the 2011 Vienna agreement that envisages mutual inspections of Russian and NATO military facilities as part of confidence-building measures.

A Defense Ministry spokesman wouldn’t comment on the reports, which are a usual way in Russia to carry unofficial government signals.

The U.S. and the European Union have introduced sanctions over Russia in response to its move to send troops that have taken control of Ukraine’s Black Sea peninsula of Crimea.

So if the START treaty is suspended how long until its anti-proliferation clauses are scrapped completely once more, and the Cold War arms race returns once again.

Also, \while escalations such as these threaten to transform the new Cold War into a hot one, the clock is ticking, and in favor of Russia, because the longer Ukraine remains without western aid, the quicker its foreign reserves will run out, and the faster the country will become a vassal state of Gazpromia. Add the ticking countdown to the March 16 Crimean referendum, which the west and Ukraine have both declared illegitimate yet have no power to stop, and suddenly one can see how Putin once again outsmarted everything the west had to throw at it. WSJ explains:

Gazprom’s demand raises the prospect that some of the aid Western powers have guaranteed could end up flowing into Moscow’s coffers to pay Ukraine’s gas bill. Virtually all of the country’s natural-gas imports come from Russia. Late last year it was granted a discount that Moscow has threatened to rescind since the fall of Mr. Yanukovych.

“This now becomes an EU/U.S. problem: Who is going to lend Ukraine the money to pay the gas bill? If so, what will be the conditions?” said Jonathan Stern, an analyst at the Oxford Energy Institute.

A spokesman for Gazprom said that the threatened cutoff wouldn’t affect supplies to Europe, which gets about a third of its gas from Russia, much of it via pipelines that run through Ukraine.

 

 

In 2009, after the Russian energy giant switched off the supply to Ukraine, Ukrainian authorities began using the supply transiting their territory that Gazprom said was destined for customers in Europe. Gazprom then cut off the flow altogether, causing shortages and price increases for end customers.

 

“The EU, U.S. and IMF have just about three weeks to resolve this,” Mr. Stern said.

At which point it’s game, set match Putin once more.

Finally, what certainly helped Russia is that, as expected, China took the side of Putin, not of the “free world”, in what is now a very distinct and clear axis of power the New Normal dipolar world.

Need a Water Filter? Peel a Tree Branch – Our World

Need a Water Filter? Peel a Tree Branch – Our World.

2014•03•05 Jennifer Chu MIT News
  • Need a Water Filter? Peel a Tree Branch
A false-color electron microscope image showing E. coli bacteria (green) trapped over xylem pit membranes (red and blue) in the sapwood after filtration. Image courtesy of the MIT researchers.

MIT News: MIT group shows xylem tissue in sapwood can filter bacteria from contaminated water.

•••

If you’ve run out of drinking water during a lakeside camping trip, there’s a simple solution: Break off a branch from the nearest pine tree, peel away the bark, and slowly pour lake water through the stick. The improvised filter should trap any bacteria, producing fresh, uncontaminated water.

In fact, an MIT team has discovered that this low-tech filtration system can produce up to four litres of drinking water a day — enough to quench the thirst of a typical person.

In a paper published this week in the journal PLoS ONE, the researchers demonstrate that a small piece of sapwood can filter out more than 99 percent of the bacteria E. coli from water. They say the size of the pores in sapwood — which contains xylem tissue evolved to transport sap up the length of a tree — also allows water through while blocking most types of bacteria.

Co-author Rohit Karnik, an associate professor of mechanical engineering at MIT, says sapwood is a promising, low-cost, and efficient material for water filtration, particularly for rural communities where more advanced filtration systems are not readily accessible.

“Today’s filtration membranes have nanoscale pores that are not something you can manufacture in a garage very easily,” Karnik says. “The idea here is that we don’t need to fabricate a membrane, because it’s easily available. You can just take a piece of wood and make a filter out of it.”

The paper’s co-authors include Michael Boutilier and Jongho Lee from MIT, Valerie Chambers from Fletcher-Maynard Academy in Cambridge, Mass., and Varsha Venkatesh from Jericho High School in Jericho, N.Y.

Tapping the flow of sap

There are a number of water-purification technologies on the market today, although many come with drawbacks: Systems that rely on chlorine treatment work well at large scales, but are expensive. Boiling water to remove contaminants requires a great deal of fuel to heat the water. Membrane-based filters, while able to remove microbes, are expensive, require a pump, and can become easily clogged.

Sapwood may offer a low-cost, small-scale alternative. The wood is comprised of xylem, porous tissue that conducts sap from a tree’s roots to its crown through a system of vessels and pores. Each vessel wall is pockmarked with tiny pores called pit membranes, through which sap can essentially hopscotch, flowing from one vessel to another as it feeds structures along a tree’s length. The pores also limit cavitation, a process by which air bubbles can grow and spread in xylem, eventually killing a tree. The xylem’s tiny pores can trap bubbles, preventing them from spreading in the wood.

“Plants have had to figure out how to filter out bubbles but allow easy flow of sap,” Karnik observes. “It’s the same problem with water filtration where we want to filter out microbes but maintain a high flow rate. So it’s a nice coincidence that the problems are similar.”

Seeing red

To study sapwood’s water-filtering potential, the researchers collected branches of white pine and stripped off the outer bark. They cut small sections of sapwood measuring about an inch long and half an inch wide, and mounted each in plastic tubing, sealed with epoxy and secured with clamps.

Before experimenting with contaminated water, the group used water mixed with red ink particles ranging from 70 to 500 nanometers in size. After all the liquid passed through, the researchers sliced the sapwood in half lengthwise, and observed that much of the red dye was contained within the very top layers of the wood, while the filtrate, or filtered water, was clear. This experiment showed that sapwood is naturally able to filter out particles bigger than about 70 nanometers.

However, in another experiment, the team found that sapwood was unable to separate out 20-nanometer particles from water, suggesting that there is a limit to the size of particles coniferous sapwood can filter.

Picking the right plant

Finally, the team flowed inactivated, E. coli-contaminated water through the wood filter. When they examined the xylem under a fluorescent microscope, they saw that bacteria had accumulated around pit membranes in the first few millimeters of the wood. Counting the bacterial cells in the filtered water, the researchers found that the sapwood was able to filter out more than 99 percent of E. coli from water.

Karnik says sapwood likely can filter most types of bacteria, the smallest of which measure about 200 nanometers. However, the filter probably cannot trap most viruses, which are much smaller in size.

Karnik says his group now plans to evaluate the filtering potential of other types of sapwood. In general, flowering trees have smaller pores than coniferous trees, suggesting that they may be able to filter out even smaller particles. However, vessels in flowering trees tend to be much longer, which may be less practical for designing a compact water filter.

Designers interested in using sapwood as a filtering material will also have to find ways to keep the wood damp, or to dry it while retaining the xylem function. In other experiments with dried sapwood, Karnik found that water either did not flow through well, or flowed through cracks, but did not filter out contaminants.

“There’s huge variation between plants,” Karnik says. “There could be much better plants out there that are suitable for this process. Ideally, a filter would be a thin slice of wood you could use for a few days, then throw it away and replace at almost no cost. It’s orders of magnitude cheaper than the high-end membranes on the market today.”

While the pores in sapwood are too big to filter out salts, Saurya Prakash, an assistant professor of mechanical engineering at Ohio State University, says the design could be useful in parts of the world where people collect surface water, which can be polluted with fine dust and particles of decaying plant and animal matter. Most of this detritus, Prakash says, could easily be filtered out by the group’s design.

“The xylem tissue acts as a natural filter, similar to a manmade membrane,” says Prakash, who was not involved in the research. “The study by the Karnik group shows that use of abundant, naturally occurring materials could pave the way for a new generation of water filters that are potentially low-cost enough to be disposable.”

This research was supported by the James H. Ferry Jr. Fund for Innovation in Research Education.

'Full Disclosure' of Frack Chemicals Urged by Energy Department Advisors – Bloomberg

‘Full Disclosure’ of Frack Chemicals Urged by Energy Department Advisors – Bloomberg.

By Alan Kovski  Mar 7, 2014 11:43 AM ET

Photographer: Ty Wright/Bloomberg

Threaded drilling pipes are stacked at a hydraulic fracturing site in Washington…Read More

Bloomberg BNA – An Energy Department advisory board recommended “full disclosure of all known constituents” in fluids used for hydraulic fracturing, according to a draft report released March 6.

The “Task Force Report on FracFocus 2.0” from the Secretary of Energy Advisory Board (SEAB) said state and federal regulators should adopt standards for companies making trade secret claims for fracking fluid ingredients and establish a compliance process and challenge mechanism.

The draft report praised the FracFocus website as a good registry for public disclosure of the chemical additives in hydraulic fracturing fluids. “It has accomplished a good deal and shows the capacity to make improvements at modest additional cost,” the report said.

But a large portion of the FracFocus reports on hydraulic fracturing of oil and gas wells claim at least one trade secret exemption, the report said. It said there should be “few, if any exceptions” to full disclosure.

The report also recommended expanding what is reported beyond the chemical additives in the fluids.

Fracking fluids are mostly water and sand, and the water can have chemical constituents of its own, especially if it’s recycled water containing traces of minerals and residues of previously used fracking fluids. Disclosure of the constituents of the water, not just the additives, would be appropriate if the data were available, the report said.

Secrets Protection Suggested

To avoid divulging trade secrets, companies could report additive chemicals separately from the commercial products containing the chemicals, the report said.

“A list of chemicals that includes the contributions from all the constituents added makes it extremely difficult to reverse engineer to determine which chemicals and in what proportions these chemicals are present in a particular additive or product with specific trade name,” the report said.

The report summarized its disclosure recommendations as no trade secret disclaimers unless documented and attested, as done in Wyoming or Arkansas—and the fewer the better; complete lists of chemicals reported by their quantities and Chemical Abstracts Service registry numbers; and complete lists of products reported without linking to the list of chemicals.

Many companies provide such information to the FracFocus website voluntarily. As of Nov. 1, reporting of chemicals on FracFocus was mandatory in 14 states, including Colorado and Texas, according to the report. The Interior Department is considering whether to make reporting on the site mandatory for companies drilling on federal lands.

States often require full disclosure to regulators, firefighters, medical personnel or other “first responders” when requested, while the public gets a lesser degree of disclosure, with trade secrets withheld.

Upgraded Website Examined

The utility of FracFocus has been much discussed, with critics typically saying it fails to disclose enough information. It was improved in June to a “2.0” version to make it easier to use.

In November, Energy Secretary Ernest Moniz charged the SEAB to establish a task force to review FracFocus 2.0. The Energy Department doesn’t have regulatory authority over oil and gas drilling, but its recommendations can carry weight with other federal regulators and states.

The new report serves as a follow-up to a 2011 SEAB report on ways to increase environmental protection and safety in shale gas drilling and production .

The task force report said its recommendations were endorsed by the SEAB. The report was labeled a final draft for public comment, but the SEAB gave no indication of when a public announcement would be coming and a comment mechanism would be established. The report was dated Feb. 24.

The report contained a variety of proposals for technical improvements in the website that would enhance its functionality for anyone seeking data. The report also recommended procedural or policy improvements.

Data Quality Control Sought

FracFocus should examine the entire data entry workflow and structure, looking for opportunities to simplify data structure and steps for data entry to reduce the probability of errors, the report said.

FracFocus 2. 0 has introduced basic error checking that alerts users if an entered Chemical Abstracts Service number is in the proper format but not whether the CAS number matches the chemical name or even if the CAS number is in use.

While FracFocus doesn’t assert authority to reject operator entries, the automatic validation system should be expanded and improved, the report said.

When FracFocus discovers an error in a company submission, the website operators should inform the company and indicate on the website that the submitted data are in some doubt. Such a notice on the website would inform regulators and the public that there is an issue and serve as an incentive to the company to revise the submission, the report said.

Funding Changes Urged

The Ground Water Protection Council and the Interstate Oil and Gas Compact Commission, two organizations formed by state regulators, operate the FracFocus website.

The annual budget for FracFocus, less than $1 million, is covered by an Energy Department grant, occasional contributions from a state and from two oil and gas industry associations. The report by the task force said the importance of FracFocus justifies a stable source of funding.

A combination of Energy Department support and a use fee “will comfortably provide for FracFocus,” the report said. The task force recommended that the Energy Department establish a stable multiyear budget for FracFocus employing one or both of those mechanisms.

The Energy Department may want to make more use of the website itself. The report said discussions are under way between FracFocus and the department’s Energy Information Administration to include FracFocus as an element of EIA’s contemplated National Oil and Gas Information Gateway.

Visit 
www.bloomberg.com/sustainability for the latest from Bloomberg News about energy, natural resources and global business.

‘Full Disclosure’ of Frack Chemicals Urged by Energy Department Advisors – Bloomberg

‘Full Disclosure’ of Frack Chemicals Urged by Energy Department Advisors – Bloomberg.

By Alan Kovski  Mar 7, 2014 11:43 AM ET

Photographer: Ty Wright/Bloomberg

Threaded drilling pipes are stacked at a hydraulic fracturing site in Washington…Read More

Bloomberg BNA – An Energy Department advisory board recommended “full disclosure of all known constituents” in fluids used for hydraulic fracturing, according to a draft report released March 6.

The “Task Force Report on FracFocus 2.0” from the Secretary of Energy Advisory Board (SEAB) said state and federal regulators should adopt standards for companies making trade secret claims for fracking fluid ingredients and establish a compliance process and challenge mechanism.

The draft report praised the FracFocus website as a good registry for public disclosure of the chemical additives in hydraulic fracturing fluids. “It has accomplished a good deal and shows the capacity to make improvements at modest additional cost,” the report said.

But a large portion of the FracFocus reports on hydraulic fracturing of oil and gas wells claim at least one trade secret exemption, the report said. It said there should be “few, if any exceptions” to full disclosure.

The report also recommended expanding what is reported beyond the chemical additives in the fluids.

Fracking fluids are mostly water and sand, and the water can have chemical constituents of its own, especially if it’s recycled water containing traces of minerals and residues of previously used fracking fluids. Disclosure of the constituents of the water, not just the additives, would be appropriate if the data were available, the report said.

Secrets Protection Suggested

To avoid divulging trade secrets, companies could report additive chemicals separately from the commercial products containing the chemicals, the report said.

“A list of chemicals that includes the contributions from all the constituents added makes it extremely difficult to reverse engineer to determine which chemicals and in what proportions these chemicals are present in a particular additive or product with specific trade name,” the report said.

The report summarized its disclosure recommendations as no trade secret disclaimers unless documented and attested, as done in Wyoming or Arkansas—and the fewer the better; complete lists of chemicals reported by their quantities and Chemical Abstracts Service registry numbers; and complete lists of products reported without linking to the list of chemicals.

Many companies provide such information to the FracFocus website voluntarily. As of Nov. 1, reporting of chemicals on FracFocus was mandatory in 14 states, including Colorado and Texas, according to the report. The Interior Department is considering whether to make reporting on the site mandatory for companies drilling on federal lands.

States often require full disclosure to regulators, firefighters, medical personnel or other “first responders” when requested, while the public gets a lesser degree of disclosure, with trade secrets withheld.

Upgraded Website Examined

The utility of FracFocus has been much discussed, with critics typically saying it fails to disclose enough information. It was improved in June to a “2.0” version to make it easier to use.

In November, Energy Secretary Ernest Moniz charged the SEAB to establish a task force to review FracFocus 2.0. The Energy Department doesn’t have regulatory authority over oil and gas drilling, but its recommendations can carry weight with other federal regulators and states.

The new report serves as a follow-up to a 2011 SEAB report on ways to increase environmental protection and safety in shale gas drilling and production .

The task force report said its recommendations were endorsed by the SEAB. The report was labeled a final draft for public comment, but the SEAB gave no indication of when a public announcement would be coming and a comment mechanism would be established. The report was dated Feb. 24.

The report contained a variety of proposals for technical improvements in the website that would enhance its functionality for anyone seeking data. The report also recommended procedural or policy improvements.

Data Quality Control Sought

FracFocus should examine the entire data entry workflow and structure, looking for opportunities to simplify data structure and steps for data entry to reduce the probability of errors, the report said.

FracFocus 2. 0 has introduced basic error checking that alerts users if an entered Chemical Abstracts Service number is in the proper format but not whether the CAS number matches the chemical name or even if the CAS number is in use.

While FracFocus doesn’t assert authority to reject operator entries, the automatic validation system should be expanded and improved, the report said.

When FracFocus discovers an error in a company submission, the website operators should inform the company and indicate on the website that the submitted data are in some doubt. Such a notice on the website would inform regulators and the public that there is an issue and serve as an incentive to the company to revise the submission, the report said.

Funding Changes Urged

The Ground Water Protection Council and the Interstate Oil and Gas Compact Commission, two organizations formed by state regulators, operate the FracFocus website.

The annual budget for FracFocus, less than $1 million, is covered by an Energy Department grant, occasional contributions from a state and from two oil and gas industry associations. The report by the task force said the importance of FracFocus justifies a stable source of funding.

A combination of Energy Department support and a use fee “will comfortably provide for FracFocus,” the report said. The task force recommended that the Energy Department establish a stable multiyear budget for FracFocus employing one or both of those mechanisms.

The Energy Department may want to make more use of the website itself. The report said discussions are under way between FracFocus and the department’s Energy Information Administration to include FracFocus as an element of EIA’s contemplated National Oil and Gas Information Gateway.

Visit 
www.bloomberg.com/sustainability for the latest from Bloomberg News about energy, natural resources and global business.

Economist Warns of Collapse Risk: "Will Not Allow Life to Continue As We Know It"

Economist Warns of Collapse Risk: “Will Not Allow Life to Continue As We Know It”.

Mac Slavo
March 7th, 2014
SHTFplan.com

theendisnear-wide

Earlier this week we noted that an invasion of the Ukraine by Vladimir Putin would likely lead to a complete destruction of U.S. stock markets. It’s not so much the invasion force itself, but rather, the economic maneuvers that would come with it should Russia take this course of action.

Well known economist and founder of the Shadow Stats web site John Williams seems to agree. If Russia were to begin unloading US Dollars it would almost instantly lead to a collapse of not only our financial markets, but our entire way of life. And while Russia alone may not have the economic power to single-handedly crush the U.S. economy, if their trading partners and allies like China got into the mix, coupled with front-running investors who may suspect the move is about to happen, it could well be a blood bath on a global scale.

This wouldn’t even be an issue if the U.S. economy were operating at healthy levels, but as Williams notes in the following interview with Greg Hunter’s USA Watchdog, it’s anything but:

What you have to keep in mind is that back in 2008 we had one of the greatest financial crises the United States ever faced. The system was on the brink of collapse at that point in time. 

What the Fed and the federal government did was spend every penny they could, anything they could create or anything they could guarantee.  They did everything they could possibly do to keep the system from crashing.  They guaranteed all bank accounts.  So, they saved the system, but now what they did has not borne fruit.  We have not seen an economic recovery.  We have not seen a return of health to the banking system.

So, the system is very vulnerable; and if the Russians carry through with their threat, you have, indeed, the risk of it collapsing the system.


(Video via Alt Market)

It does have the effect of creating a hyperinflation, which I think it would.  It’s the type of circumstance that will not allow life to continue as we know it because the U.S. is not able to handle hyperinflation.

We’re not structured for it.  Zimbabwe had one of the worst hyperinflations that anyone has ever seen.  They were still able to function for a while because they get paid in a rapidly depreciating currency.

It was so rapid it became like toilet paper overnight… they would go to a black market and exchange it for dollars.  We (the U.S.) don’t have a black market to escape from our dollars.  Gold is probably the closest thing to that.  Gold will tend to rally here as the dollar sells off, barring very heavy intervention by the central banks which you may see.

The fundamentals will eventually dominate, and you will see a very weak dollar and very strong gold coming out of this.

As it stands now, even without Russia and China, our economic system is, once again, on the cusp of a serious deleveraging. John Williams highlights that January retail sales, a leading indicator of economic health, gave the strongest signal since September 2007 that a recession is looming, if not already here.

One huge indicator of this is that Staples, a leading supplier of office supplies nationwide, is shutting the doors on 225 stores. And, they aren’t the only ones getting hammered by a pullback in consumer spending. The world’s largest retailer, Walmart, saw sales drop over 20% year-over-year in the fourth quarter of 2013.

And as trend forecaster Gerald Celente once noted, “as goes Walmart, so goes America.”

So, in reality, Russia can probably sit back and watch the U.S. economy slip into a coma over the next couple of years. Of course, if their intention is to return their nation to super power status, an attack on the US economy by dumping the dollar would speed up the process and amplify the fall-out, causing a multi-generational depression.

Last year Barack Obama faced off with Russia over Syria, a situation that could easily have led to a much wider conflict.

Now, the same players have taken the game to Ukraine.

In both instances we’ve heard warnings of a potential collapse of our economic system in the event of an escalation.

The point is that it really doesn’t matter if it’s Syria, Ukraine, Iran or some other periphery conflict.

It should be clear that eventually this is exactly how it’s going to play out with respect to the US dollar.

China and Russia will make their move when they are good and ready.

When that day comes the implosion will be so fast that most Americans won’t even realize what has happened or know how to cope.

Economist Warns of Collapse Risk: “Will Not Allow Life to Continue As We Know It”

Economist Warns of Collapse Risk: “Will Not Allow Life to Continue As We Know It”.

Mac Slavo
March 7th, 2014
SHTFplan.com

theendisnear-wide

Earlier this week we noted that an invasion of the Ukraine by Vladimir Putin would likely lead to a complete destruction of U.S. stock markets. It’s not so much the invasion force itself, but rather, the economic maneuvers that would come with it should Russia take this course of action.

Well known economist and founder of the Shadow Stats web site John Williams seems to agree. If Russia were to begin unloading US Dollars it would almost instantly lead to a collapse of not only our financial markets, but our entire way of life. And while Russia alone may not have the economic power to single-handedly crush the U.S. economy, if their trading partners and allies like China got into the mix, coupled with front-running investors who may suspect the move is about to happen, it could well be a blood bath on a global scale.

This wouldn’t even be an issue if the U.S. economy were operating at healthy levels, but as Williams notes in the following interview with Greg Hunter’s USA Watchdog, it’s anything but:

What you have to keep in mind is that back in 2008 we had one of the greatest financial crises the United States ever faced. The system was on the brink of collapse at that point in time. 

What the Fed and the federal government did was spend every penny they could, anything they could create or anything they could guarantee.  They did everything they could possibly do to keep the system from crashing.  They guaranteed all bank accounts.  So, they saved the system, but now what they did has not borne fruit.  We have not seen an economic recovery.  We have not seen a return of health to the banking system.

So, the system is very vulnerable; and if the Russians carry through with their threat, you have, indeed, the risk of it collapsing the system.


(Video via Alt Market)

It does have the effect of creating a hyperinflation, which I think it would.  It’s the type of circumstance that will not allow life to continue as we know it because the U.S. is not able to handle hyperinflation.

We’re not structured for it.  Zimbabwe had one of the worst hyperinflations that anyone has ever seen.  They were still able to function for a while because they get paid in a rapidly depreciating currency.

It was so rapid it became like toilet paper overnight… they would go to a black market and exchange it for dollars.  We (the U.S.) don’t have a black market to escape from our dollars.  Gold is probably the closest thing to that.  Gold will tend to rally here as the dollar sells off, barring very heavy intervention by the central banks which you may see.

The fundamentals will eventually dominate, and you will see a very weak dollar and very strong gold coming out of this.

As it stands now, even without Russia and China, our economic system is, once again, on the cusp of a serious deleveraging. John Williams highlights that January retail sales, a leading indicator of economic health, gave the strongest signal since September 2007 that a recession is looming, if not already here.

One huge indicator of this is that Staples, a leading supplier of office supplies nationwide, is shutting the doors on 225 stores. And, they aren’t the only ones getting hammered by a pullback in consumer spending. The world’s largest retailer, Walmart, saw sales drop over 20% year-over-year in the fourth quarter of 2013.

And as trend forecaster Gerald Celente once noted, “as goes Walmart, so goes America.”

So, in reality, Russia can probably sit back and watch the U.S. economy slip into a coma over the next couple of years. Of course, if their intention is to return their nation to super power status, an attack on the US economy by dumping the dollar would speed up the process and amplify the fall-out, causing a multi-generational depression.

Last year Barack Obama faced off with Russia over Syria, a situation that could easily have led to a much wider conflict.

Now, the same players have taken the game to Ukraine.

In both instances we’ve heard warnings of a potential collapse of our economic system in the event of an escalation.

The point is that it really doesn’t matter if it’s Syria, Ukraine, Iran or some other periphery conflict.

It should be clear that eventually this is exactly how it’s going to play out with respect to the US dollar.

China and Russia will make their move when they are good and ready.

When that day comes the implosion will be so fast that most Americans won’t even realize what has happened or know how to cope.

Obama uses the Same Nonsense as Putin | Armstrong Economics

Obama uses the Same Nonsense as Putin | Armstrong Economics.

Obama-Putin

We are still awaiting panic cycles at the end of the month so this is not over until the fat lady sings as they say, albeit we do not expect military action between any major powers before the October/November time period. For Obama to claim that a public vote in Crimea would violate the Constitution of Ukraine and International Law is really just as absurd that the same argument put forth by Putin that nothing in Kiev was legal because it was not signed by Yanukovych. There should be a vote, but it should be monitored independently to ensure it is real. To argue that no state may move to secede from a federal government is ridiculous. Obama said:

“Any discussion about the future of Ukraine must include the legitimate government of Ukraine. In 2014, we are well beyond the days when borders can be redrawn over the heads of democratic leaders.”

Texas has the ABSOLUTE right to secede from the United States if it so desired and the Washington has no right to invade Texas to prevent that – although they too would in the blink-of-an-eye. There are no “democratic” leaders in Kiev as of yet because this is a grass-roots uprising that distrusts anyone who has EVER been in government before.

Meanwhile, you cannot say the people have no right to decide their own fate because this violates the will of “democratic” leaders. No elected official has the right to trump the wishes of the people and let us call a spade a spade – the EU suppresses the right to vote because they are afraid the people in Europe would vote against the euro. The EU interfered with Italian elections and it threatened Georgios Papandreou of Greece that it was NOT ALLOWED to allow the people to vote on staying in the Euro. Greece back-down and did not allow that to take place – so much for democratic ideals.

Let the people decide and YES we can redraw the borders if the PEOPLE so desire. If splitting Ukraine PREVENTS war – then so be it. The word for “slave” in Latin is “servus”and that is the root of public servant. Politicians should remember they are NOT the dictators of the people, but the servants of the people. There can never be any justification to deny the people the right to be heard. That is the oldest right and those who like to use the Bible, it is called today due process for in Genesis God calls Able and asks where is his brother even though he knows the answer. God extended to him the right to be heard and that is the cornerstone of democracy. So do not use that word in the same breadth with calling it illegal to allow a the public to be heard.

Obama uses the Same Nonsense as Putin | Armstrong Economics

Obama uses the Same Nonsense as Putin | Armstrong Economics.

Obama-Putin

We are still awaiting panic cycles at the end of the month so this is not over until the fat lady sings as they say, albeit we do not expect military action between any major powers before the October/November time period. For Obama to claim that a public vote in Crimea would violate the Constitution of Ukraine and International Law is really just as absurd that the same argument put forth by Putin that nothing in Kiev was legal because it was not signed by Yanukovych. There should be a vote, but it should be monitored independently to ensure it is real. To argue that no state may move to secede from a federal government is ridiculous. Obama said:

“Any discussion about the future of Ukraine must include the legitimate government of Ukraine. In 2014, we are well beyond the days when borders can be redrawn over the heads of democratic leaders.”

Texas has the ABSOLUTE right to secede from the United States if it so desired and the Washington has no right to invade Texas to prevent that – although they too would in the blink-of-an-eye. There are no “democratic” leaders in Kiev as of yet because this is a grass-roots uprising that distrusts anyone who has EVER been in government before.

Meanwhile, you cannot say the people have no right to decide their own fate because this violates the will of “democratic” leaders. No elected official has the right to trump the wishes of the people and let us call a spade a spade – the EU suppresses the right to vote because they are afraid the people in Europe would vote against the euro. The EU interfered with Italian elections and it threatened Georgios Papandreou of Greece that it was NOT ALLOWED to allow the people to vote on staying in the Euro. Greece back-down and did not allow that to take place – so much for democratic ideals.

Let the people decide and YES we can redraw the borders if the PEOPLE so desire. If splitting Ukraine PREVENTS war – then so be it. The word for “slave” in Latin is “servus”and that is the root of public servant. Politicians should remember they are NOT the dictators of the people, but the servants of the people. There can never be any justification to deny the people the right to be heard. That is the oldest right and those who like to use the Bible, it is called today due process for in Genesis God calls Able and asks where is his brother even though he knows the answer. God extended to him the right to be heard and that is the cornerstone of democracy. So do not use that word in the same breadth with calling it illegal to allow a the public to be heard.

China Is Crashing … As Predicted Washington's Blog

China Is Crashing … As Predicted Washington’s Blog.

Big Bubble Brutally Bursts … Bringing Bankruptcies, Bond Busts

The head of China’s sovereign wealth fund noted in 2009: “both China and America are addressing bubbles by creating more bubbles”.

He’s right …

Global credit excess is worse than before the 2008 crash.

The U.S. and Japan have been easing like crazy, but – as Zero Hedge notes  – China has been much worse:

 Here is just the change in the past five years:

You read that right: in the past five years the total assets on US bank books have risen by a paltry $2.1 trillion while over the same period, Chinese bank assets have exploded by an unprecedented $15.4 trillion hitting a gargantuan CNY147 trillion or an epic $24 trillion – some two and a half times the GDP of China!

Putting the rate of change in perspective, while the Fed was actively pumping $85 billion per month into US banks for a total of $1 trillion each year, in just the trailing 12 months ended September 30, Chinese bank assets grew by a mind-blowing $3.6 trillion!

Here is how Diapason’s Sean Corrigan observed this epic imbalance in liquidity creation:

Total Chinese banking assets currently stand at some CNY147 trillion, around 2 ½ times GDP. As such, they have doubled in the past four years of increasingly misplaced investment and frantic real estate speculation, adding the equivalent of 140% of average GDP – or, in dollars, $12.5 trillion – to the books. For comparison, over the same period, US banks have added just less than $700 billion, 4.4% of average GDP, 18 times less than their Chinese counterparts – and this in a period when the predominant trend has been for the latter to do whatever it takes to keep commitments off their balance sheets and lurking in the ‘shadows’!

Indeed, the increase in Chinese bank assets during that breakneck quadrennium is equal to no less than seven-eighths of the total outstanding assets of all FDIC-insured institutions! It also compares to 30% of Eurozone bank assets.

Truly epic flow numbers, and just as unsustainable in the longer-run.

And here:

So what’s the problem?

Well, the world’s most prestigious financial agency – the central banks’ central bank, called the Bank of International Settlements or “BIS”  –  has long criticized the Fed and other central banks for blowing bubbles.  The World Bank and top economists agree.  So do many others.

As such, it was easy for us to predict a crash in China when the bubble collapses.

We argued in 2009 that China’s period of easy credit was analogous to America’s monetary easing starting in 2001 … and Rome’s in 11 B.C.

We noted in 2009 and against in 2011 that China is suffering from a lot of the same malaises as the American economy, including corruption, crony capitalism, and failure to disclose bad debt.

In 2010, we asked “When Will China’s Bubble Burst?

China’s $23 Trillion Dollar Credit Bubble Is Bursting

International Business Times noted last year that China’s debt-laden steel industry was on the verge of bankruptcy.

Quartz reported in December that a huge coal company called Liansheng Resources Group declared bankruptcy with 30 billion yuan ($5 billion) in debt.

Chinese Business Wisdom argues (via China Gaze) that waves of bankruptcies are striking in 10 Chinese industries: (1) shipbuilding; (2) iron and steel: (3) LED lighting; (4) furniture; (5) real estate development; (6) cargo shipping; (7) trust and financial institutions; (8) financial management; (9) private equity; and (10) group buying.

AP notes today:

Chinese authorities have allowed the country’s first corporate bond default, inflicting losses on small investors in a painful step toward making its financial system more market-oriented.

A Shanghai manufacturer of solar panels paid only part of 90 million yuan ($15 million) in interest [it owed] …

Until now, Beijing has bailed out troubled companies to preserve confidence in its credit markets. But the ruling Communist Party has pledged to make the economy more productive by allowing market forces a bigger role.

Time asks whether China has reached its “Bear Stearns moment”:

A dangerous build-up of debt and an explosion of risky and poorly regulated shadow banking have raised serious concerns about the health of China’s economy. That’s why the Chaori default — the first ever in China’s domestic corporate bond market — has sparked fears that the country could be headed for a full-blown economic crisis like the one that slammed Wall Street in 2008. “We believe that the market will have reached the Bear Stearns stage,” warned strategist David Cui and his team at Bank of America-Merrill Lynch in a report to investors.

The concern of Cui and others is that the Chaori default will be the tip-off point for an unravelling of China’s financial system. The default could wake investors and bankers to the realization that companies they thought were safe bets are potentially not, and they could begin to reassess other loans and investments to other corporations. In other words, they might start redefining what is and is not risky. That could then lead to a credit crunch, when nervous bankers become wary of lending money, or lending at affordable interest rates. More bankruptcies could result. That eventually causes the financial markets to lock up — and we end up transitioning from a Bear Stearns moment to a Lehman Brothers moment, when the financial sector melts down. “We think the chain reaction will probably start,” Cui wrote. “In the U.S., it took about a year to reach the Lehman stage when the market panicked … We assess that it may take less time in China.”

The Financial Post reported in January:

The U.S. and Europe learned the hard way about the dangers of shadow banks in the financial crisis but, five years later, China appears set to get its own painful lesson about what can happen when large capital flows get diverted to unregulated corners of the financial system.

***

“We estimate that 88% of the revenues of Chinese trust companies is at risk in the long term,” said McKinsey and Ping An.

***

Billionaire investor George Soros recently wrote on a popular news website that the impending default and the growing fear reflected in Chinese markets has “eerie resemblances” to the global crisis of 2008.

The big picture:  the $23 trillion dollar Chinese credit bubble is starting to collapse.

As Michael Snyder wrote in January:

It could be a “Lehman Brothers moment” for Asia.  And since the global financial system is more interconnected today than ever before, that would be very bad news for the United States as well.  Since Lehman Brothers collapsed in 2008, the level of private domestic credit in China has risen from $9 trillion to an astounding $23 trillion.  That is an increase of $14 trillion in just a little bit more than 5 years.  Much of that “hot money” has flowed into stocks, bonds and real estate in the United States.  So what do you think is going to happen when that bubble collapses?

The bubble of private debt that we have seen inflate in China since the Lehman crisis is unlike anything that the world has ever seen.  Never before has so much private debt been accumulated in such a short period of time.  [Note:Private debt is much more dangerous than public debt.] All of this debt has helped fuel tremendous economic growth in China, but now a whole bunch of Chinese companies are realizing that they have gotten in way, way over their heads.  In fact, it is being projected that Chinese companies will pay out the equivalent of approximately a trillion dollars in interest payments this year alone.  That is more than twice the amount that the U.S. government will pay in interest in 2014.

***

As the Telegraph pointed out a while back, the Chinese have essentially “replicated the entire U.S. commercial banking system” in just five years…

Overall credit has jumped from $9 trillion to $23 trillion since the Lehman crisis. “They have replicated the entire U.S. commercial banking system in five years,” she said.

The ratio of credit to GDP has jumped by 75 percentage points to 200pc of GDP, compared to roughly 40 points in the US over five years leading up to the subprime bubble, or in Japan before the Nikkei bubble burst in 1990. “This is beyond anything we have ever seen before in a large economy. We don’t know how this will play out. The next six months will be crucial,” she said.

As with all other things in the financial world, what goes up must eventually come down.

***
The big underlying problem is the fact that private debt and the money supply have both been growing far too rapidly in China.  According to Forbes, M2 in China increased by 13.6 percent last year…

And at the same time China’s money supply and credit are still expanding.  Last year, the closely watched M2 increased by only 13.6%, down from 2012’s 13.8% growth.  Optimists say China is getting its credit addiction under control, but that’s not correct.  In fact, credit expanded by at least 20% last year as money poured into new channels not measured by traditional statistics.

Overall, M2 in China is up by about 1000 percent since 1999.  That is absolutely insane.

***

But I am not the only one talking about it.

In fact, the World Economic Forum is warning about the exact same thing…

Fiscal crises triggered by ballooning debt levels in advanced economies pose the biggest threat to the global economy in 2014, a report by the World Economic Forum has warned.

***

What has been going on in the global financial system is completely and totally unsustainable, and it is inevitable that it is all going to come horribly crashing down at some point during the next few years.

It is just a matter of time.

China Is Crashing … As Predicted Washington’s Blog

China Is Crashing … As Predicted Washington’s Blog.

Big Bubble Brutally Bursts … Bringing Bankruptcies, Bond Busts

The head of China’s sovereign wealth fund noted in 2009: “both China and America are addressing bubbles by creating more bubbles”.

He’s right …

Global credit excess is worse than before the 2008 crash.

The U.S. and Japan have been easing like crazy, but – as Zero Hedge notes  – China has been much worse:

 Here is just the change in the past five years:

You read that right: in the past five years the total assets on US bank books have risen by a paltry $2.1 trillion while over the same period, Chinese bank assets have exploded by an unprecedented $15.4 trillion hitting a gargantuan CNY147 trillion or an epic $24 trillion – some two and a half times the GDP of China!

Putting the rate of change in perspective, while the Fed was actively pumping $85 billion per month into US banks for a total of $1 trillion each year, in just the trailing 12 months ended September 30, Chinese bank assets grew by a mind-blowing $3.6 trillion!

Here is how Diapason’s Sean Corrigan observed this epic imbalance in liquidity creation:

Total Chinese banking assets currently stand at some CNY147 trillion, around 2 ½ times GDP. As such, they have doubled in the past four years of increasingly misplaced investment and frantic real estate speculation, adding the equivalent of 140% of average GDP – or, in dollars, $12.5 trillion – to the books. For comparison, over the same period, US banks have added just less than $700 billion, 4.4% of average GDP, 18 times less than their Chinese counterparts – and this in a period when the predominant trend has been for the latter to do whatever it takes to keep commitments off their balance sheets and lurking in the ‘shadows’!

Indeed, the increase in Chinese bank assets during that breakneck quadrennium is equal to no less than seven-eighths of the total outstanding assets of all FDIC-insured institutions! It also compares to 30% of Eurozone bank assets.

Truly epic flow numbers, and just as unsustainable in the longer-run.

And here:

So what’s the problem?

Well, the world’s most prestigious financial agency – the central banks’ central bank, called the Bank of International Settlements or “BIS”  –  has long criticized the Fed and other central banks for blowing bubbles.  The World Bank and top economists agree.  So do many others.

As such, it was easy for us to predict a crash in China when the bubble collapses.

We argued in 2009 that China’s period of easy credit was analogous to America’s monetary easing starting in 2001 … and Rome’s in 11 B.C.

We noted in 2009 and against in 2011 that China is suffering from a lot of the same malaises as the American economy, including corruption, crony capitalism, and failure to disclose bad debt.

In 2010, we asked “When Will China’s Bubble Burst?

China’s $23 Trillion Dollar Credit Bubble Is Bursting

International Business Times noted last year that China’s debt-laden steel industry was on the verge of bankruptcy.

Quartz reported in December that a huge coal company called Liansheng Resources Group declared bankruptcy with 30 billion yuan ($5 billion) in debt.

Chinese Business Wisdom argues (via China Gaze) that waves of bankruptcies are striking in 10 Chinese industries: (1) shipbuilding; (2) iron and steel: (3) LED lighting; (4) furniture; (5) real estate development; (6) cargo shipping; (7) trust and financial institutions; (8) financial management; (9) private equity; and (10) group buying.

AP notes today:

Chinese authorities have allowed the country’s first corporate bond default, inflicting losses on small investors in a painful step toward making its financial system more market-oriented.

A Shanghai manufacturer of solar panels paid only part of 90 million yuan ($15 million) in interest [it owed] …

Until now, Beijing has bailed out troubled companies to preserve confidence in its credit markets. But the ruling Communist Party has pledged to make the economy more productive by allowing market forces a bigger role.

Time asks whether China has reached its “Bear Stearns moment”:

A dangerous build-up of debt and an explosion of risky and poorly regulated shadow banking have raised serious concerns about the health of China’s economy. That’s why the Chaori default — the first ever in China’s domestic corporate bond market — has sparked fears that the country could be headed for a full-blown economic crisis like the one that slammed Wall Street in 2008. “We believe that the market will have reached the Bear Stearns stage,” warned strategist David Cui and his team at Bank of America-Merrill Lynch in a report to investors.

The concern of Cui and others is that the Chaori default will be the tip-off point for an unravelling of China’s financial system. The default could wake investors and bankers to the realization that companies they thought were safe bets are potentially not, and they could begin to reassess other loans and investments to other corporations. In other words, they might start redefining what is and is not risky. That could then lead to a credit crunch, when nervous bankers become wary of lending money, or lending at affordable interest rates. More bankruptcies could result. That eventually causes the financial markets to lock up — and we end up transitioning from a Bear Stearns moment to a Lehman Brothers moment, when the financial sector melts down. “We think the chain reaction will probably start,” Cui wrote. “In the U.S., it took about a year to reach the Lehman stage when the market panicked … We assess that it may take less time in China.”

The Financial Post reported in January:

The U.S. and Europe learned the hard way about the dangers of shadow banks in the financial crisis but, five years later, China appears set to get its own painful lesson about what can happen when large capital flows get diverted to unregulated corners of the financial system.

***

“We estimate that 88% of the revenues of Chinese trust companies is at risk in the long term,” said McKinsey and Ping An.

***

Billionaire investor George Soros recently wrote on a popular news website that the impending default and the growing fear reflected in Chinese markets has “eerie resemblances” to the global crisis of 2008.

The big picture:  the $23 trillion dollar Chinese credit bubble is starting to collapse.

As Michael Snyder wrote in January:

It could be a “Lehman Brothers moment” for Asia.  And since the global financial system is more interconnected today than ever before, that would be very bad news for the United States as well.  Since Lehman Brothers collapsed in 2008, the level of private domestic credit in China has risen from $9 trillion to an astounding $23 trillion.  That is an increase of $14 trillion in just a little bit more than 5 years.  Much of that “hot money” has flowed into stocks, bonds and real estate in the United States.  So what do you think is going to happen when that bubble collapses?

The bubble of private debt that we have seen inflate in China since the Lehman crisis is unlike anything that the world has ever seen.  Never before has so much private debt been accumulated in such a short period of time.  [Note:Private debt is much more dangerous than public debt.] All of this debt has helped fuel tremendous economic growth in China, but now a whole bunch of Chinese companies are realizing that they have gotten in way, way over their heads.  In fact, it is being projected that Chinese companies will pay out the equivalent of approximately a trillion dollars in interest payments this year alone.  That is more than twice the amount that the U.S. government will pay in interest in 2014.

***

As the Telegraph pointed out a while back, the Chinese have essentially “replicated the entire U.S. commercial banking system” in just five years…

Overall credit has jumped from $9 trillion to $23 trillion since the Lehman crisis. “They have replicated the entire U.S. commercial banking system in five years,” she said.

The ratio of credit to GDP has jumped by 75 percentage points to 200pc of GDP, compared to roughly 40 points in the US over five years leading up to the subprime bubble, or in Japan before the Nikkei bubble burst in 1990. “This is beyond anything we have ever seen before in a large economy. We don’t know how this will play out. The next six months will be crucial,” she said.

As with all other things in the financial world, what goes up must eventually come down.

***
The big underlying problem is the fact that private debt and the money supply have both been growing far too rapidly in China.  According to Forbes, M2 in China increased by 13.6 percent last year…

And at the same time China’s money supply and credit are still expanding.  Last year, the closely watched M2 increased by only 13.6%, down from 2012’s 13.8% growth.  Optimists say China is getting its credit addiction under control, but that’s not correct.  In fact, credit expanded by at least 20% last year as money poured into new channels not measured by traditional statistics.

Overall, M2 in China is up by about 1000 percent since 1999.  That is absolutely insane.

***

But I am not the only one talking about it.

In fact, the World Economic Forum is warning about the exact same thing…

Fiscal crises triggered by ballooning debt levels in advanced economies pose the biggest threat to the global economy in 2014, a report by the World Economic Forum has warned.

***

What has been going on in the global financial system is completely and totally unsustainable, and it is inevitable that it is all going to come horribly crashing down at some point during the next few years.

It is just a matter of time.

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