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After Annexing Crimea, Russian Troops Are Piling Up By The East Ukraine Border | Zero Hedge

After Annexing Crimea, Russian Troops Are Piling Up By The East Ukraine Border | Zero Hedge.

Despite the relentless protests of Kiev, and of course the G7 group of world’s most indebted nations, in the past two weeks Vladimir Putin once again succeeded in outplaying the west and annexed the Crimea peninsula without firing a single shot (granted there is still potential for material situational deterioration, one which would involve military participation by NATO whose outcome is not exactly clear). The market has “priced in” as much, with prevailing consensus now dictating that Russia will preserve its foothold in the Crimea however without additional attempts for annexation: certainly Poland is hoping and praying as much.

However, as the following photos taken on the Russian side of East Ukraine, next to Belgorod, the Russian airborne troops (“VDV“) are now piling up, only not in Crimea, which needs no further Russian military presence, but ostensibly to prepare for the next part of the annexation: that of Russian-speaking east Ukraine.

On the clip and pictures below, one can see Russian troops on the move near the border with Ukraine in the Belgorod Oblast, about 20 kilometers from the border with Ukraine near Kharkiv:

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?????? ???????

?????? ???????

The indicative location:

 

Meanwhile, on the birder with Crimea, Ukrainian troops are digging in and mining fields in anticipation of Russians rolling out of the Penninsula:

H/T @raymond_saint, Censor.netmkoinov

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After Annexing Crimea, Russian Troops Are Piling Up By The East Ukraine Border | Zero Hedge

After Annexing Crimea, Russian Troops Are Piling Up By The East Ukraine Border | Zero Hedge.

Despite the relentless protests of Kiev, and of course the G7 group of world’s most indebted nations, in the past two weeks Vladimir Putin once again succeeded in outplaying the west and annexed the Crimea peninsula without firing a single shot (granted there is still potential for material situational deterioration, one which would involve military participation by NATO whose outcome is not exactly clear). The market has “priced in” as much, with prevailing consensus now dictating that Russia will preserve its foothold in the Crimea however without additional attempts for annexation: certainly Poland is hoping and praying as much.

However, as the following photos taken on the Russian side of East Ukraine, next to Belgorod, the Russian airborne troops (“VDV“) are now piling up, only not in Crimea, which needs no further Russian military presence, but ostensibly to prepare for the next part of the annexation: that of Russian-speaking east Ukraine.

On the clip and pictures below, one can see Russian troops on the move near the border with Ukraine in the Belgorod Oblast, about 20 kilometers from the border with Ukraine near Kharkiv:

?????? ???????

?????? ???????

?????? ???????

The indicative location:

 

Meanwhile, on the birder with Crimea, Ukrainian troops are digging in and mining fields in anticipation of Russians rolling out of the Penninsula:

H/T @raymond_saint, Censor.netmkoinov

oftwominds-Charles Hugh Smith: How The Fed Has Failed America, Part 2

oftwominds-Charles Hugh Smith: How The Fed Has Failed America, Part 2.

The only way to eliminate the financial parasites is to stop subsidizing their skimming and scamming, and the only way to stop subsidizing the financial parasites is to shut down the Fed.

Before I explain how the Federal Reserve has failed America, let’s do a little thought experiment. Let’s imagine that instead of creating $3.2 trillion and giving it to the banking sector to play with–funding carry trades and high-frequency trading, for example–the Fed had invested in carry trades itself and returned the profits directly to taxpayers.

Before we go through the math, let’s recall how a carry trade works: Financiers borrow billions at near-zero interest from the Fed and then use the free money to buy bonds in other countries where the return is (say) 5%. The financiers are skimming 4.75% or more for doing nothing other than having access to the Fed’s free money.

If the bonds rise in value (because interest rates decline in the nation issuing the bonds), the financiers skim additional profit. If the trade can be leveraged via derivatives, then the annual return can be bumped up from 5% to 10%.

OK, back to the experiment. The Fed created $3.2 trillion in its quantitative easing (QE) programs. let’s say the Fed’s money managers (or gunslingers hired by the Fed to handle the trading) earn around 5% annually with various low-risk carry trades.


That works out to an annual profit of $160 billion (5% of $3.2 trillion). Now let’s say the Fed divvied the profit up among everyone who paid Social Security taxes the previous year. That’s around 140 million wage earners. Every person who paid Social Security taxes would receive $1,100 from the Fed’s carry trade profits.

The point of this experiment is to suggest that there were plenty of things the Fed could have done with its $3.2 trillion that would have directly benefited taxpaying Americans, but instead the Fed funneled all those profits to financiers and banks.

The Fed apologists claim that lowering interest rates to zero benefited American who saw their interest payments decline. Nice, but not necessarily true. Try asking a student paying 9% for his student loans how much his interest rate dropped due to Fed policy. Or ask someone paying 19.9% in credit card interest (gotta love that .1% that keeps it under 20%)–how much did your interest drop as a result of Fed policy?

Answer: zip, zero, nada. The Fed’s zero interest rate policy (ZIRP)funneled profits to the banks, not to borrowers.

And let’s not forget that many Americans chose not to borrow at all. What did the Fed do for them? It stole the interest they once earned on their savings. Estimates vary, but it is clear that the Fed’s ZIRP transferred hundreds of billions of dollars in interest to the banking sector, income forceably “donated” by savers to the banks.

Lowering interest rates to zero is effectively a forced subsidy of borrowers by savers. But that’s not the only subsidy: who makes money from originating and managing loans? Banks. The more loans that are originated, the higher the transaction fees and profits flowing to banks. So incentivizing borrowing generates more profits for banks.

Humans make decisions based on the incentives and disincentives in place at the time of their decision. Lowering the cost of money (interest) to zero creates an incentive to gamble the money on low-yield bets. After all, if you can earn 3% on the free money, then why not skim the free 3%?

If speculators had to pay 6% for money and 7.5% for mortgages (the going rate in the go-go 1990s), then the number of available carry trades plummets. The only carry trades that make sense when you’re paying 6% for money are those with yields of 10%–and any bond paying 10% carries a high risk of default (otherwise, the issuer wouldn’t have to offer such a high rate of interest to lure buyers).

All of these incentives to borrow money at zero interest rate are only available to banks and financiers. And that’s the point of the Fed’s policies: to stripmine the bottom 99.5% and transfer the wealth to banks and financiers. Lowering interest rates to zero incentivizes carry trades and speculative bets that do absolutely nothing for America or the bottom 99.5% of taxpayers.

A self-employed worker pays 50% more tax than a hedge funder skimming billions of dollars in carry trades. A self-employed worker pays 15.3% in Social Security and Medicare taxes and a minimum of 15% Federal income tax for a minimum of 30.3%. (The higher your income, the higher your tax rate, which quickly rises to 25% and up.) The hedge funder pays no Social Security tax at all because the carry trade profits are “long-term capital gains” which are taxed at 15% (20% if the Hedgie skims more than $400,000 a year).

Despite the Fed apologists’ claims that ZIRP and free money handed to banks and financiers create jobs and start businesses, there is absolutely no evidence to support this claim. The only beneficiaries of Fed policies are tax accountants for the banks and financiers and luxury auto dealerships. Since Porsches and Maseratis are not made in the U.S., the benefits of the top .5% buying costly gew-gaws and evading taxes is extremely limited.

Attention, all apologists, lackeys, toadies, minions and factotums of the Fed: is there any plausible explanation for the wealthiest .5% pulling away from everyone else since the Fed launched ZIRP and QE other than Fed policies? And while we’re at it, how about publishing a verifiable list of companies that were founded and now employ hundreds of people because the owners could borrow millions of dollars at zero interest?



Get real–no new business can borrow Fed money for zero interest. The only entities that can borrow the Fed’s free money are banks and other financial parasites.

The truth is the Fed incentivizes and rewards the most parasitic, least productive sector of the economy and forcibly transfers the interest that was once earned by the productive middle class to the parasites. Though the multitudes of apologists, lackeys, toadies, minions and factotums of the Fed will frantically deny it, the inescapable truth is that the nation and the bottom 99.5% would be instantly and forever better off were the Fed closed down and its assets liquidated.

The only way to eliminate the financial parasites is to stop subsidizing their skimming and scamming, and the only way to stop subsidizing the financial parasites is to shut down the Fed.


Source: Wealth, Income, and Power (G. William Domhoff)

Fossil Fuel and High Energy Burn Uses | The Energy Collective

Fossil Fuel and High Energy Burn Uses | The Energy Collective.

Posted March 11, 2014

Fossil fuels and energy density

There are few more remarkable machines than a Boeing 747. Four hundred people can be hurled half way across the planet with levels of comfort, efficiency and reliability that would have been deemed miraculous by those living a few centuries ago. A vision of the incredible technical proficiency humanity has gained since the Industrial Revolution, the Boeing 747 is also a remarkably potent symbol of what we can achieve with fossil fuels, and what we currently cannot achieve with their low carbon alternatives.

The Boeing 747: a vision of high power density

The impossibility of solar powered aviation

Last year an adventuring Swiss team managed to fly across the United States in a solar powered plane. This feat, which took a leisurely two months, was described by some as a symbol of what can be achieved with solar energy, a rather curious inversion of reality. It is a symbol of exactly the opposite.

Could commercial flight ever be powered by solar panels? The answer is an obvious no, and any engineer who suggests it is yes is likely to find themselves unemployed. However considering why the answer is no is illustrative of the multiple challenges faced by a transition to renewable sources of energy, which is principally a transition from high density fuels to diffuse energy sources.

So, why can a Boeing 747 not be powered by solar panels?

I will now reach for the back of an envelope and compare the energy consumption of a Boeing 747 with what you could possibly get from a solar powered plane. This calculation will tell us all we need to know about solar powered flight.

Mid-flight a Boeing 747 uses around 4 litres of jet fuel per second. Therefore given the energy density of jet fuel, approximately 35 MJ/litre, a Boeing 747 consumes energy at a rate of around 140 MW (million watts).

We can then convert this rate of energy consumption into power density, that is the rate of energy consumption per square metre. Typically this is measured in watts per square metre (W/m2 ). A Boeing 747 is 70 by 65 metres. So the power density over this 70 by 65 metre square is approximately 30,000 W/m2, and of course the power density over the surface area of the plane will be a few times higher, over 100,000 W/m2.

What can be delivered by solar energy? Solar panels essentially convert solar radiation into electricity, and average solar irradiance is no higher than 300 W/m2 on the planet. In the middle of the day this can be perhaps 4 or 5 times higher than the average. However solar panels are typically less than 20% efficient. So sticking solar panels on the roof of a Boeing 747 is unlikely to provide anything close to 1% of the flight’s energy consumption. Perhaps they can power the in-flight movie.

The power density of a Boeing 747 can further be compared with that of a wind farm.

140 MW. How big would a wind farm need to be to provide this in electricity on average? Probably bigger than Europe’s largest onshore wind farm.

Whitelee Wind Farm, outside Glasgow in Scotland, is a 140 turbine wind farm covering 55 square kilometres. It has a rated capacity of 322 MW, and given its average capacity factor of 23%, it has an average output of around 75 MW, almost two times lower than the rate of energy consumption of a Boeing 747. (Of course chemical and electrical energy are not strictly speaking completely comparable, but when I am trying to illustrate here is the orders of magnitude differences in power density.)

The obvious lesson here is that fossil fuels can deliver power densities orders of magnitude higher than wind or solar. And mobile sources of energy consumption such as Boeing 747s require power density at a level that is physically impossible from direct provision of wind or solar.

The limits of batteries

Perhaps we could store low carbon energy in batteries and use them to power planes. Here we move from the problem of low power density to the problem of low energy density. Despite one hundred years of technical progress batteries still offer very poor energy density compared with fossil fuels.

Consider the lithium-ion batteries that power that excessively hyped luxury car the Tesla S. They offer up just over 130 Wh/kg according to Tesla.  So in conventional scientific units they provide an energy density of below 0.5 MJ/kg. In contrast jet fuel provides over 40 MJ/kg. This is a two order of magnitude difference.

Again, reaching for the back of an envelope. A fully loaded Boeing 747 weighs around 400 tonnes at take off, with around 200 tonnes of fuel. The Tesla lithium-ion batteries that could store the same amount of energy would weigh as much as about fifty Boeing 747s.

Lithium-oxygen batteries perhaps could reach close to 4 MJ/kg, an order of magnitude lower than jet fuel, after a couple of decades of future technical progress, according to a recent report in Nature.

So, this is where we are with batteries: a couple of decades from now they might reach energy densities of only 10% of that provided by the best fossil fuels. Clearly a solar energy and battery powered world has its limits.

Aviation’s limited and unpromising low carbon options

Put simply getting a Boeing 747 off the ground requires the provision of high energy dense fuels. This clearly cannot be done with direct provision of renewable electricity, or by storing it in batteries. Nuclear energy is capable of providing extremely high power density, but try powering a plane with a nuclear reactor (or even more importantly try getting a few hundred people to sit in a nuclear powered plane).

There appear to only be two half-plausible low carbon options. The first is the use of biofuels. The second is the use of low carbon electricity to generate synthetic hydro-carbon fuel, so called renewable fuels. Neither of these options is particularly promising.

A growing consensus indicates that current biofuels offer little benefit either economically or environmentally. We have converted large amounts of cropland over to biofuel plantation, all so that we can burn a fuel that an increasing amount of scientific evidence indicates is not reducing carbon emissions. From an environmental and humanitarian perspective this has become indefensible.

Few people realise how dreadful the land use impacts of biofuels are. Consider this: 6% of Germany is used to produce liquid biofuels, yet they only provide around 1% of German energy consumption. Can you imagine a less efficient use of land? Next generation biofuels appear to offer more of the same. The fundamental problem of bio-energy’s low power density cannot be overcome any-time soon.

The only prospect for biofuel production that is actually low carbon and does not have a significant land use impact is to use synthetic biology and genetic engineering to radically alter plants so that they are far more photosynthetically efficient. However the results to date of the research by Craig Venter’s team suggest that this will be the work of a generation, and perhaps generations, of geneticists.

Renewable synthetic fuels are similarly many decades from being an economic reality, if they ever will be. In essence the idea is that you use renewable (or if you prefer nuclear) electricity to convert carbon dioxide into a hydro-carbon based fuel, such as methane or methanol.

However for this to be half-economical, there are no shortage of problems to be overcome. First we need to figure out a way to suck carbon dioxide out of the air on a billion tonne scale. This is obviously not going to happen tomorrow. The cost of this renewable fuel is also guaranteed to be at least two times more expensive than renewable electricity, because of the efficiencies of the conversion process. In other words you will pay for 1 kWh of renewable electricity and get less than 0.5 kWh of renewable fuel out the other end. These scale and cost barriers will be incredibly difficult to overcome, and will likely require either a drastic reduction in the cost of low carbon electricity, or increase in the price of oil.

Renewable fuels then don’t seem to be very promising, on a one or perhaps two generation timescale, as a replacement for jet fuel. This did not stop the German Environment Agency from recently putting forward a scenario where Germany can completely move away from fossil fuels by 2050, which depended heavily on renewable fuels. How heavily? Well, Germany would be sucking around 200 million tonnes of carbon dioxide out of the air by 2050 in this supposedly “technically achievable” future.

I will realise this is all rather pessmistic, but things are what they are. So I will close with a prediction. Aviation will still be powered by fossil fuels by the middle of the century, but this is put forward in the hope that someone proves me wrong.

Authored by:

Robert Wilson

Robert Wilson is a PhD Student in Mathematical Ecology at the University of Strathclyde.

His secondary interests are in energy and sustainability, and writes on these issues at The Energy Collective.
Email: robertwilson190@gmail.com

Fossil Fuel and High Energy Burn Uses | The Energy Collective

Fossil Fuel and High Energy Burn Uses | The Energy Collective.

Posted March 11, 2014

Fossil fuels and energy density

There are few more remarkable machines than a Boeing 747. Four hundred people can be hurled half way across the planet with levels of comfort, efficiency and reliability that would have been deemed miraculous by those living a few centuries ago. A vision of the incredible technical proficiency humanity has gained since the Industrial Revolution, the Boeing 747 is also a remarkably potent symbol of what we can achieve with fossil fuels, and what we currently cannot achieve with their low carbon alternatives.

The Boeing 747: a vision of high power density

The impossibility of solar powered aviation

Last year an adventuring Swiss team managed to fly across the United States in a solar powered plane. This feat, which took a leisurely two months, was described by some as a symbol of what can be achieved with solar energy, a rather curious inversion of reality. It is a symbol of exactly the opposite.

Could commercial flight ever be powered by solar panels? The answer is an obvious no, and any engineer who suggests it is yes is likely to find themselves unemployed. However considering why the answer is no is illustrative of the multiple challenges faced by a transition to renewable sources of energy, which is principally a transition from high density fuels to diffuse energy sources.

So, why can a Boeing 747 not be powered by solar panels?

I will now reach for the back of an envelope and compare the energy consumption of a Boeing 747 with what you could possibly get from a solar powered plane. This calculation will tell us all we need to know about solar powered flight.

Mid-flight a Boeing 747 uses around 4 litres of jet fuel per second. Therefore given the energy density of jet fuel, approximately 35 MJ/litre, a Boeing 747 consumes energy at a rate of around 140 MW (million watts).

We can then convert this rate of energy consumption into power density, that is the rate of energy consumption per square metre. Typically this is measured in watts per square metre (W/m2 ). A Boeing 747 is 70 by 65 metres. So the power density over this 70 by 65 metre square is approximately 30,000 W/m2, and of course the power density over the surface area of the plane will be a few times higher, over 100,000 W/m2.

What can be delivered by solar energy? Solar panels essentially convert solar radiation into electricity, and average solar irradiance is no higher than 300 W/m2 on the planet. In the middle of the day this can be perhaps 4 or 5 times higher than the average. However solar panels are typically less than 20% efficient. So sticking solar panels on the roof of a Boeing 747 is unlikely to provide anything close to 1% of the flight’s energy consumption. Perhaps they can power the in-flight movie.

The power density of a Boeing 747 can further be compared with that of a wind farm.

140 MW. How big would a wind farm need to be to provide this in electricity on average? Probably bigger than Europe’s largest onshore wind farm.

Whitelee Wind Farm, outside Glasgow in Scotland, is a 140 turbine wind farm covering 55 square kilometres. It has a rated capacity of 322 MW, and given its average capacity factor of 23%, it has an average output of around 75 MW, almost two times lower than the rate of energy consumption of a Boeing 747. (Of course chemical and electrical energy are not strictly speaking completely comparable, but when I am trying to illustrate here is the orders of magnitude differences in power density.)

The obvious lesson here is that fossil fuels can deliver power densities orders of magnitude higher than wind or solar. And mobile sources of energy consumption such as Boeing 747s require power density at a level that is physically impossible from direct provision of wind or solar.

The limits of batteries

Perhaps we could store low carbon energy in batteries and use them to power planes. Here we move from the problem of low power density to the problem of low energy density. Despite one hundred years of technical progress batteries still offer very poor energy density compared with fossil fuels.

Consider the lithium-ion batteries that power that excessively hyped luxury car the Tesla S. They offer up just over 130 Wh/kg according to Tesla.  So in conventional scientific units they provide an energy density of below 0.5 MJ/kg. In contrast jet fuel provides over 40 MJ/kg. This is a two order of magnitude difference.

Again, reaching for the back of an envelope. A fully loaded Boeing 747 weighs around 400 tonnes at take off, with around 200 tonnes of fuel. The Tesla lithium-ion batteries that could store the same amount of energy would weigh as much as about fifty Boeing 747s.

Lithium-oxygen batteries perhaps could reach close to 4 MJ/kg, an order of magnitude lower than jet fuel, after a couple of decades of future technical progress, according to a recent report in Nature.

So, this is where we are with batteries: a couple of decades from now they might reach energy densities of only 10% of that provided by the best fossil fuels. Clearly a solar energy and battery powered world has its limits.

Aviation’s limited and unpromising low carbon options

Put simply getting a Boeing 747 off the ground requires the provision of high energy dense fuels. This clearly cannot be done with direct provision of renewable electricity, or by storing it in batteries. Nuclear energy is capable of providing extremely high power density, but try powering a plane with a nuclear reactor (or even more importantly try getting a few hundred people to sit in a nuclear powered plane).

There appear to only be two half-plausible low carbon options. The first is the use of biofuels. The second is the use of low carbon electricity to generate synthetic hydro-carbon fuel, so called renewable fuels. Neither of these options is particularly promising.

A growing consensus indicates that current biofuels offer little benefit either economically or environmentally. We have converted large amounts of cropland over to biofuel plantation, all so that we can burn a fuel that an increasing amount of scientific evidence indicates is not reducing carbon emissions. From an environmental and humanitarian perspective this has become indefensible.

Few people realise how dreadful the land use impacts of biofuels are. Consider this: 6% of Germany is used to produce liquid biofuels, yet they only provide around 1% of German energy consumption. Can you imagine a less efficient use of land? Next generation biofuels appear to offer more of the same. The fundamental problem of bio-energy’s low power density cannot be overcome any-time soon.

The only prospect for biofuel production that is actually low carbon and does not have a significant land use impact is to use synthetic biology and genetic engineering to radically alter plants so that they are far more photosynthetically efficient. However the results to date of the research by Craig Venter’s team suggest that this will be the work of a generation, and perhaps generations, of geneticists.

Renewable synthetic fuels are similarly many decades from being an economic reality, if they ever will be. In essence the idea is that you use renewable (or if you prefer nuclear) electricity to convert carbon dioxide into a hydro-carbon based fuel, such as methane or methanol.

However for this to be half-economical, there are no shortage of problems to be overcome. First we need to figure out a way to suck carbon dioxide out of the air on a billion tonne scale. This is obviously not going to happen tomorrow. The cost of this renewable fuel is also guaranteed to be at least two times more expensive than renewable electricity, because of the efficiencies of the conversion process. In other words you will pay for 1 kWh of renewable electricity and get less than 0.5 kWh of renewable fuel out the other end. These scale and cost barriers will be incredibly difficult to overcome, and will likely require either a drastic reduction in the cost of low carbon electricity, or increase in the price of oil.

Renewable fuels then don’t seem to be very promising, on a one or perhaps two generation timescale, as a replacement for jet fuel. This did not stop the German Environment Agency from recently putting forward a scenario where Germany can completely move away from fossil fuels by 2050, which depended heavily on renewable fuels. How heavily? Well, Germany would be sucking around 200 million tonnes of carbon dioxide out of the air by 2050 in this supposedly “technically achievable” future.

I will realise this is all rather pessmistic, but things are what they are. So I will close with a prediction. Aviation will still be powered by fossil fuels by the middle of the century, but this is put forward in the hope that someone proves me wrong.

Authored by:

Robert Wilson

Robert Wilson is a PhD Student in Mathematical Ecology at the University of Strathclyde.

His secondary interests are in energy and sustainability, and writes on these issues at The Energy Collective.
Email: robertwilson190@gmail.com

Guaranteeing a Housing Market Crash in Canada

The following image depicts an advertisement that came within our local community’s newspaper, The Stouffville Sun-Tribune. It is a perfect example of the type of market behaviour that will ensure people who cannot truly afford to own a home, that already are experiencing financial distress and should not be seeking to go further into debt,  will be caught in even worse financial straits when the most-overvalued housing market in the world collapses. Canada’s own subprime mortgage fiasco in the making…

image

Take That Putin: US To Release 5 Million Barrels From Strategic Petroleum Reserve In "Test" | Zero Hedge

Take That Putin: US To Release 5 Million Barrels From Strategic Petroleum Reserve In “Test” | Zero Hedge.

WTI crude prices are faling rapidly as Reuters reports that the US is set to ‘unleash’ its Strategic Petroelum Reserves in a “test-sale”…

  • *U.S. TO RELEASE CRUDE FROM STRATEGIC PETROLEUM RESERVE: REUTERS

Of course, this is a direct aim at Putin’s pocket-book as his stumbling economy needs high prices to sustain itself. However, the 5 million barrell release is less than a third of the US daily consumption rate (though does sound some alarms we are sure).

 

 

Via Bloomberg,

U.S. to release up to 5 million bbls of crude from Strategic Petroleum Reserve (SPR), Reuters reports, citing govt “source.”

SPR to be test sale, check operational capabilities of system infrastructure; timing unclear

 

By way of reference, this 5 million barrel release compares to average US consumption of around 18 million barrels per day.

Take That Putin: US To Release 5 Million Barrels From Strategic Petroleum Reserve In “Test” | Zero Hedge

Take That Putin: US To Release 5 Million Barrels From Strategic Petroleum Reserve In “Test” | Zero Hedge.

WTI crude prices are faling rapidly as Reuters reports that the US is set to ‘unleash’ its Strategic Petroelum Reserves in a “test-sale”…

  • *U.S. TO RELEASE CRUDE FROM STRATEGIC PETROLEUM RESERVE: REUTERS

Of course, this is a direct aim at Putin’s pocket-book as his stumbling economy needs high prices to sustain itself. However, the 5 million barrell release is less than a third of the US daily consumption rate (though does sound some alarms we are sure).

 

 

Via Bloomberg,

U.S. to release up to 5 million bbls of crude from Strategic Petroleum Reserve (SPR), Reuters reports, citing govt “source.”

SPR to be test sale, check operational capabilities of system infrastructure; timing unclear

 

By way of reference, this 5 million barrel release compares to average US consumption of around 18 million barrels per day.

Saudi Arabia threatens to blockade Qatar over terrorism – The Irish Times – Tue, Mar 11, 2014

Saudi Arabia threatens to blockade Qatar over terrorism – The Irish Times – Tue, Mar 11, 2014.

Riyadh wants to contain radical groups and media at odds with foreign jihad policy

Saudi Arabia’s foreign minister Prince Saud al-Faisal attends  an Arab foreign ministers emergency meeting to discuss the Syrian crisis  at the Arab League headquarters in Cairo yesterday. Photograph: Reuters Saudi Arabia’s foreign minister Prince Saud al-Faisal attends an Arab foreign ministers emergency meeting to discuss the Syrian crisis at the Arab League headquarters in Cairo yesterday. Photograph: Reuters

Tue, Mar 11, 2014, 01:00

First published:Tue, Mar 11, 2014, 01:00

Saudi Arabia has threatened to blockade neighbouring Qatar by air, land and sea unless Doha cuts ties with Egypt’s Muslim Brotherhood, closes global channel al-Jazeera, and expels local branches of the US Brookings Institution and RandCorporation think tanks.

The threat was issued by Riyadh before it withdrew its ambassador to Doha and branded as “terrorist organisations” the brotherhood, Lebanon’s Hizbullah and al-Qaeda-linked Islamic State of Iraq and Syria and Jabhat al-Nusra.

Although the kingdom has long been the font of Sunni ultra-orthodox Salafism and jihadism, it now seeks to contain radical movements and media and other organisations giving them publicity.

King Abdullah has decreed that any Saudi who fights abroad could be jailed for 20-30 years, and those who join, endorse or provide moral or material support to groups classified as “terrorist” or “extremist” will risk prison sentences of five to 30 years.

The decree followed the gazetting of a sweeping new anti- terrorism law prohibiting acts that disturb public order, promote insecurity, undermine national unity or harm the reputation of the kingdom.
Contradiction
While the law and decree are meant to curb jihadi operations on Saudi soil as well as counter non-jihadi dissidence, these legal instruments appear to contradict government policy on foreign jihad.

While 400 Saudis have returned home from Syrian battlefields, another 1,000-2,000 are believed to be fighting with jihadi groups funded by the government as well as wealthy Saudis, Kuwaitis and Qataris.

An informed source speculated the decree sends a message to Saudis: “Don’t come home. Fight unto death or victory.”

For half a century Saudi Arabia used its oil wealth to promote Muslim fundamentalists, notably the brotherhood and its offshoots, to counter the secular pan-Arab nationalism preached by Egyptian president Gamal Abdel Nasser and the Syrian and Iraqi Baath parties.

The kingdom provided refuge for brotherhood officials and activists from Egypt and other countries where governments were battling the movement. However, in recent years, Riyadh fell out with the brotherhood because it did not follow Saudi dictation.

After Shia clerics overthrew the shah of Iran in 1979 and tried to export their “Islamic revolution” to the wider Muslim world, which is 85 per cent Sunni, Saudi Arabia, which sees itself as the guardian of Sunni orthodoxy, turned to evangelism.

The object has been to convert Muslims to “Wahhabism,” the Saudi puritanical interpretation of Islam. The Saudi campaign in Syria is against Damascus’s ally Shia Iran as well as godless, secular Baathism.

The rise in the price of oil since the 1970s has enabled the Saudis to train clerics and build schools, Islamic centres, universities and mosques around the world.

Traditionally gentle, tolerant, mystic Sufis, who had served as Islam’s missionaries, have been replaced by narrow, harsh Wahhabi preachers and imams. Over the past 30 years the kingdom has spent more than $100 billion (€72 billion) on promoting Wahhabism.

Even before the 1979 Soviet invasion of Afghanistan, Saudi Arabia – partnered by the US Central Intelligence Agency – trained and armed mujahideen (holy warriors) from Afghanistan and across the Muslim world to fight the Soviet Afghan republic. After the war ended with the Soviet withdrawal from that country in 1989, veterans of this conflict fanned out to fight in Bosnia, AlgeriaLibya, the Caucasus and elsewhere.
Blowback
Fearing blowback from Saudi jihadis engaged in the Syrian war, Riyadh has recently given the Syrian file to the interior minister Prince Mohamed bin Nayef, who has been in charge of an anti-terrorism campaign in the kingdom and Yemen, replacing intelligence chief Prince Bandar bin Sultan.

The Wall Street Journal has quoted a key Saudi source who said the shift suggests that Riyadh could rely more on diplomatic than military means by exerting pressure onRussia, Iran and Hizbullah, Damascus’s chief supporters, to resolve the conflict by removing President Bashar al-Assad.

Nevertheless, Riyadh also favours providing shoulder-fired anti-aircraft missiles to “vetted” rebels, well aware these weapons could fall into al-Qaeda hands.

Chairman Of Joint Chiefs: US Ready For "Military Response" In Ukraine | Zero Hedge

Chairman Of Joint Chiefs: US Ready For “Military Response” In Ukraine | Zero Hedge.

With diplomacy having failed miserably to resolve the Russian annexation of Crimea, and soon East Ukraine (and with John Kerry in charge of it, was there ever any doubt), the US is moving to the heavy artillery. First, moments ago, the US DOE announced in a shocking announcement that it would proceed with the first draw down and sale of crude from the US strategic petroleum reserve, the first since June 2011, in what it said was a “test sale to check the operational capabilities of system infrastructure”, but is really just a shot across the bow at Putin for whom high commodity prices are orders of magnitude more important than how the Russian stock market performs. And now, as Bloomberg just reported, the US has escalated even further, citing the Chairman of the Joint Chiefs of Staff, General Martin Dempsey, who “has claimed that in the case of an escalation of unrest in Crimea, the U.S. Army is ready to back up Ukraine and its allies in Europe with military actions.

So much for those peaceful hour long phone calls between Obama and Putin.

From Bloomberg:

According to the Web site of the Atlantic Council, Dempsey said that “he’s been talking to his military counterparts in Russia, but he’s also sending a clear message to Ukraine and members of NATO that the U.S. military will respond militarily if necessary.”

“We’re trying to tell [Russia] not to escalate this thing further into Eastern Ukraine, and allow the conditions to be set for some kind of resolution in Crimea. We do have treaty obligations with our NATO allies. And I have assured them that if that treaty obligation is triggered [in Europe], we would respond,” Dempsey said.

According to the General, the incursion of Russian troops into the Crimea creates risks for all the countries of Europe and NATO allies. “If Russia is allowed to do this, which is to say move into a sovereign country under the guise of protecting ethnic Russians in Ukraine, it exposes Eastern Europe to some significant risk, because there are ethnic enclaves all over Eastern Europe and the Balkans,” Dempsey said.

And with that, the USDJPY ramp takes the pair to overnight highs, and futures are set to go green. BTFWWIIID!

More seriously, the real question is how Putin will react to this quantum escalation in verbal hostilities: wild guess here, but somehow we doubt he will pick up and leave.

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