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5 Ways Russia’s Ukraine ‘Boomerang’ Could Strike Asia | The Diplomat

5 Ways Russia’s Ukraine ‘Boomerang’ Could Strike Asia | The Diplomat.

Putin has warned that U.S. action over Ukraine would have a boomerang effect. Will the target be Asia?

harry-kazianis
March 12, 2014

Last week I noted four lessons Asia watchers should ponder in light of the events unfolding in UkraineAs there has been no letup and various pundits warn of a new Cold War it seems timely to consider what actions Russia could take against the United States if tensions were to spiral out of control. Clearly Vladimir Putin has a number of options to create significant havoc in multiple areas of American national interest—especially in Asia.

Last week Russian Foreign Minister Sergey Lavrov declared that any sanctions introduced by Washington against Moscow will have a “boomerang” effect. And such a boomerang could have some oomph. What would such a boomerang look like? Here are five ways (beyond the one Ankit Panda pointed out last week) Putin could make life very difficult for America and its allies in Asia if tensions in Eastern Europe were to intensify and Russia sought to retaliate:

1. Russian Arms Sales to China go hog wild – Remember that deal that keeps floating around concerningRussian SU-35s and advanced conventional submarines to China? Even if things don’t get worse in Ukraine, I think we can consider that a done deal now. But, heck, why stop there! If Washington wants to keep upping the ante in Ukraine it might be a great time for Moscow to expand its dealings with China to levels never seen. Remember all that talk about hypersonic weapons in January? Since both nations are pursing such weapons, why not share the costs and the spoils? It seems 5th generation fighters aren’t easy for anyone to craft these days—so why not a joint Russo-Sino development project? If things were to get really nasty, and Russia decided to pull out of the INF treaty, maybe it’s time Moscow and Beijing exchange notes on all those lovelyA2/AD weapons systems we like to talk about here on Flashpoints? I could go on and on. The bottom line: If Russia wanted to make things hard for America in Asia at a time when its defense budget is shrinking, here is an easy way to do it.

2. Moscow goes all in on natural resource sales to Beijing – While large deals were announced late last year, China would love to purchase as much Russian oil, natural gas and any other natural resources it could get its hands on. While issues of price have slowed or halted other deals in the past, Russia this time might be a little more flexible, especially if it were to halt or slow sales to Ukraine or Western Europe. China clearly wins in such a deal as it would become less reliant on sea-borne natural resources imports that could be disrupted if things with America were to go really south.

3. Russian Arms Sales to Iran, Rebooted – While any analysis here must factor in P5+1 negotiations over Tehran’s nuclear deal, Moscow could seek to make trouble for Washington and its allies by rebooting arms sales to Iran. With Russia and Iran already trying to work out the aftermath of an aborted sale of the S-300 air defense system, Putin may decide to put the system back on the table for Iran. In fact, he may even suggest selling Tehran the more advanced S-400 system. Consider this: if nuclear negotiations fail and Iran fears an attack by the West over its nuclear facilities, Russia could be in position to supply all the weapons it needs to make such an attack even more complicated than it would already be.

4. Syria: Give Assad all the arms he wants: While Russia may have offered an unlikely solution to the chemical weapons crisis of last summer, the U.S. and its allies should expect nothing from Moscow if Putin’s boomerang comes lunging back at them. Putin could easily begin sending even more arms to his allies in Syria, raising the stakes and a death toll that is already reaching epic if not historic proportions. While it may be hard to envision Russia being able to completely turn the tide with Assad winning a clear victory, Moscow could certainly change the calculus if it decided to go all in and arm Syria to the teeth.

5. The Death of the Pivot/Rebalance: So say tensions in Eastern Europe were to escalate even further with Russia formally annexing Crimea or worse—Russia taking large sections of Eastern Ukraine. It does not seem out of the question that Washington would be forced to consider beefing up its security commitments in Europe. While additional forces could certainly move into the region as a deterrent to further Russia troublemaking, missile defense plans scuttled in the past could be re-crafted, and U.S. naval power could make a strong comeback. All this comes at a price however. Unless the U.S. were to increase its defense spending which, short of a shooting war I consider unlikely, American forces, already stretched thin to begin with, would be even more strained. Washington may simply have no choice but to reconsider its mighty pivot/rebalance to Asia. Add in the fact that a senior defense department official may have put the final coffin in it anyway– stating that “right now, the pivot is being looked at again, because candidly it can’t happen”– one more nail for good measure thanks to Russia would certainly seal its fate.

The Animal Spirits Page: How monetary policy drives foreign policy

The Animal Spirits Page: How monetary policy drives foreign policy.

It should now be evident that America’s foreign policy is to an extent being driven by our banking mess. Again and again, we see Washington, including Wall Street’s handmaiden, the Fed, exporting monetary chaos implicitely in order to weaken the status of potentially competing reserve currencies:

  • Wall Street sent a tsunami of bad AAA-rated mortgage debt to Europe, much to Germany, the locus of power for the Euro (and again, implicit admission of guilt is seen in the apparent fronting of billions of bailout dollars to the European banks by the Fed after the crisis);
  • Washington has apparently fomented or supported a coup in the Ukraine that increases the likelihood of war in Europe dramatically therefore sending the gigantic pools of liquid financial assets in the world scurrying into the greenback and US Treasuries, which the Chinese have stopped gobbling up;
  • the other factor is that the military-industrial complex needs war to get its funding, and when drone-bombing rag-heads can’t provoke a serious attack, destabilizing a former Eastern bloc nation and provoking a somewhat justifiably paranoid Russian leader into military action guarantees at least a shot in the arm of crisis funding.

Russia has repeatedly stated over the past decades that an EU move on the Ukraine crosses a red line. The EU ignored the warning, and with the US’s help and the ire of Ukrainians sick of a corrupt government crossed Putin’s red line. What the Ukrainians want is democracy and relief from their corrupt plutocrats (see previous post’s article by Paul Craig Roberts).

The US has no compelling strategic interest in the Ukraine, or in the Crimea remaining part of the Ukraine. Yes, the Ukraine has been looted by its oligarchs, just as Russia was, and just as the US is being looted by its oligarchs right now; incomes of a majority of American households are falling so the banks can collect on bad debts. It would be nice for people everywhere if they could break the grip of the plutocrats over their livelihoods. In the Ukraine, to substitute debt servitude to Western banks for the domination of the oligarchs would only accelerate the collapse of the EU. And it’s not clear the EU, if it offers help, won’t be ripped off by the oligarchs as well. The new government in the Ukraine has already increased the power of the oligarchs by giving them provinces to rule, so it’s not clear the Western “rescuers” are even able to help solve the fundamental problem at all, and might end up losing their shirts again, as they have in Greece, Portugal, et al.

Until democratic governments around the world become strong enough to counteract the power of the plutocratsby taxing them, both their income and their wealth (as Sweden does) the revolving looting of sovereign governments and demolition of middle classes by the plutocrats and their corporations will continue.

A couple of posts ago I said the scariest thing I’ve heard recently was Catherine Anne Fitts saying what the world needs now is a global debt for equity swap. I should say I generally like Ms. Fitts’ analysis and suspect she may even have misspoken when she made this comment. Such a move would concentrate ownership of the world’s assets sufficiently to create even more of a Plantation Earth than we have currently.

She identified the problem, but not the solution. What the world needs now is a global jubilee, debt forgiveness. The debt that the Fed is shoving under the carpet via QE is what is known in banking circles as “bad debt.” It is loans that never should have been made because they will never be repaid. In honest not crony capitalism such debts come out of the profits (as losses) of the banks that made them. In crony capitalism, with a central bank controlled by the banks, such debts are “paid back” by being monetized and put on the backs of the taxpayers either directly or through inflation.

The austerity programs Europe has put in place so that Wall Street and European banks can be paid back bad debts have destroyed more than one economy and more are probably yet to fall. (The idea promoted ten plus years ago of “convergence” of interest rates in the EU between periphery and core caused me to gag at the time.) Debt slavery to Western banks is not the answer. (China is apparently making similar mistakes; it will be interesting to see what they do with the bad debt. I suspect their strong central government will tell the bankers to go stuff it.) Ms. Fitts suggests that sooner or later the plutocrats will destroy the banks in order to buy them cheap and collect the rents themselves, canny suggestion indeed.

Chaos in the world = a strong dollar. Until it doesn’t. Chaos has a way of being unpredictable.

Capitalism has killed democracy. “Free” markets dominated by monopolies and oligopolies are not what Adam Smith had in mind. It’s time for democracy to be reborn. There are degrees of economic inequality that are simply immoral and destructive and humankind has the right to reject them. When the top 85 families own as much as the bottom 3.5 billion people, as recently reported, we have reached such a point.

Testosterone Pit – Home – Loophole Makes Hilarious Mockery Of US Crude Oil Export Ban

Testosterone Pit – Home – Loophole Makes Hilarious Mockery Of US Crude Oil Export Ban.

FRIDAY, MARCH 7, 2014 AT 12:35AM

Washington is tangled up in spirited bouts of mudwrestling over exporting US-produced crude oil, which has been prohibited since the Arab oil embargo of 1973. Oil companies, environmentalists, consumer groups, lobbyists, lawmakers – they’re all at it.

Oil companies, faced with lackadaisical consumption and ballooning production in the US, are desperate. They have visions of dropping prices just when exploration and production costs are rocketing higher. So they want to benefit from the higher prices their US-produced oil would bring in other markets – and they want to create scarcity in the US to fire up local prices.

But environmentalists fear general mayhem if crude oil were allowed to be exported. Consumer groups are worried that it would raise the cost of gasoline, diesel, propane, and heating oil – though oil companies have sworn up and down a million times, via numerous studies they themselves directly or indirectly funded, that oil exports wouldn’t impact prices at the pump. Lobbyists of all stripes see in this conflict a mega-opportunity to fatten up their wallets. And lawmakers want to exact their pound of flesh from both sides; elections are coming, and they need to stuff their campaign coffers with money.

Meanwhile, behind the scenes, so to speak, something else has been happening: a breathtaking boom in exports, not of crude oil, which would be illegal, but of refined “petroleum products,” which is perfectly legal, even if it’s refined just enough to circumnavigate the crude-oil export ban.

BP, the British oil mastodon which is still in hot water over the Horizon oil spill in the Gulf of Mexico, figured it out too. It has inked a 10-year deal for at least 80% of the capacity of a refinery being built by Kinder Morgan Energy Partners LP in Houston, Bloomberg reported. The first phase of the 100,000 barrel-a-day refinery is expected to come online in July. It’s designed to refine crude just enough to turn it into a “petroleum product,” which then can be legally exported without limits.

To heck with the crude oil export ban.

It’s not just BP. The possibility of legally exporting barely refined “petroleum products” to profit from the price differential overseas has been such an irresistible lure that it has triggered a construction boom of specialized refineries along the Gulf Coast.

An “inexpensive way around the export prohibition” is what Judith Dwarkin, chief energy economist for ITG Investment Research, called the phenomenon. She told Bloomberg, “You can lightly ruffle the hydrocarbons and they are considered ‘processed’ and then they aren’t subject to the ban.”

Specialized refineries, built at a fraction of the cost of full-fledged refineries, can distill the lightweight crude or “condensate” found in parts of the US into various “petroleum products” that often need to be refined further in the receiving country. Production of condensate has doubled since 2011, creating glut-like conditions in some areas. Hence the drive for exports. And the drive to finagle a way around the crude-oil export ban.

This chart by the Energy Information Administration shows the “petroleum product” export boom that is making such hilarious mockery of the crude-oil export ban:

Since 2007, when this boom took off, exports of petroleum products have tripled to a full-year average of 3.5 million barrels per day (bbl/d) in 2013, up 11% from 2012, according to the EIA. And they hit 4.3 million bbl/d in December, the first month ever such exports exceeded the 4 million mark.

Among these petroleum products are “distillates,” the largest category that includes diesel, kerosene, and home heating oil. US refineries increased their production of distillates to an average of 4.7 million bbl/d for the year, and set a new record in December of 5.1 million bbl/d. About 1.1 million bbl/d were exported in 2013, up 10% from prior year, half of it to Central and South America, 400,000 bbl/d to Europe.

Worried about the price of gasoline at the pump? Exports of gasoline (finished gasoline and gasoline blending components) rose 9% to an annual average of 550,000 bbl/d, with December setting a new record of 770,000 bbl/d.

Heating your home with propane? You got snookered this winter. Propane around the country prices nearly doubled since October, though they have started to wind their way back down to earth recently. Meanwhile, propane exports, supported by a new export terminal that came on line in September, soared, particularly in the last quarter, and averaged 300,000 bbl/d in 2013. A 76% jump from prior year!

Whatever the original purpose of the export ban, it wasn’t immensely helpful in keeping prices down – I mean, if I remember right, a gallon of gasoline cost a fraction of a buck at the time. Now the ballooning exports of “petroleum products” and the potential for outsized profits have nurtured along a specialized industry that is piling billions into infrastructure, plant, and equipment, with the sole goal of elegantly dodging the export ban.

What is perhaps the most gigantic loophole in the history of mankind may well obviate that spirited high-dollar mudwrestling show in Washington. Then lawmakers and lobbyists would have to go look for some other cause which they could leverage to exact their pound of flesh. And the industry will continue to use every trick in the book to light a fire under prices – and exporting “petroleum products” is just one of them.

This winter, things have begun to unravel. Natural gas inventories are near their 2003 low. Sure, weather is the main factor, but that’s always the case. The truth is that supply has not been able to meet winter demand, period. It’s a fact that is inconsistent with the fairy tales we continue to hear about cheap, abundant gas forever. Read…. Shale Oil & Gas: Not a Revolution But a Retirement Party

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Climate change: Evidence and Policy

Climate change: Evidence and Policy.

by Resilience.org Staff, originally published by Resilience.org  | MAR 5, 2014

Click on the headline (link) for the full text.

Climate Change: Evidence and Causes

Royal Society and the US National Academy of Sciences
From the Press Release:
The U.S. National Academy of Sciences and the Royal Society, the national science academy of the U.K., released a joint publication today in Washington, D.C., that explains the clear evidence that humans are causing the climate to change, and that addresses a variety of other key questions commonly asked about climate change science.

“As two of the world’s leading scientific bodies, we feel a responsibility to evaluate and explain what is known about climate change, at least the physical side of it, to concerned citizens, educators, decision makers and leaders, and to advance public dialogue about how to respond to the threats of climate change,” said NAS President Ralph J. Cicerone.

“Our aim with this new resource is to provide people with easy access to the latest scientific evidence on climate change, including where scientists agree and where uncertainty still remains,” added Sir Paul Nurse, president of the Royal Society. “We have enough evidence to warrant action being taken on climate change; it is now time for the public debate to move forward to discuss what we can do to limit the impact on our lives and those of future generations.”

Climate Change: Evidence and Causes, written and reviewed by leading experts in both countries, lays out which aspects of climate change are well-understood, and where there is still uncertainty and a need for more research.

Carbon dioxide (CO2) has risen to levels not seen for at least 800,000 years, and observational records dating back to the mid-19th century show a clear, long-term warming trend. The publication explains that measurements that distinguish between the different forms of carbon in the atmosphere provide clear evidence that the increased amount of CO2 comes primarily from the combustion of fossil fuels, and discusses why the warming that has occurred along with the increase in CO2 cannot be explained by natural causes such as variations in the sun’s output.

The publication delves into other commonly asked questions about climate change, for example, what the slower rate of warming since the very warm year in 1998 means, and whether and how climate change affects the strength and frequency of extreme weather events…

Link to report
(27 February 2014)


The GLOBE Climate Legislation Study

Globe International
From the website:
On 27 February 2014, the Global Legislators Organisation (GLOBE International) released the 4th edition of the GLOBE Climate Legislation Study – produced in partnership with the Grantham Research Institute at the London School of Economics.

The Study is the most comprehensive audit of climate legislation across 66 countries, together responsible for around 88% of global manmade greenhouse gas emissions. The new study (4th edition) was formally launched at the 2nd GLOBE Climate Legislation Summit held at the Senate of the United States of America and at the World Bank, Washington D.C

The 700 page study reviews almost 500 pieces of legislation that have been passed in the 66 study countries.

Link to the Executive Summary or full report from this page
(27 February 2014)


Potential climate engineering effectiveness and side effects during a high carbon dioxide-emission scenario

David P. Keller, Ellias Y. Feng & Andreas Oschlies, Nature Journal
Abstract:
The realization that mitigation efforts to reduce carbon dioxide emissions have, until now, been relatively ineffective has led to an increasing interest in climate engineering as a possible means of preventing the potentially catastrophic consequences of climate change. While many studies have addressed the potential effectiveness of individual methods there have been few attempts to compare them. Here we use an Earth system model to compare the effectiveness and side effects of afforestation, artificial ocean upwelling, ocean iron fertilization, ocean alkalinization and solar radiation management during a high carbon dioxide-emission scenario. We find that even when applied continuously and at scales as large as currently deemed possible, all methods are, individually, either relatively ineffective with limited (<8%) warming reductions, or they have potentially severe side effects and cannot be stopped without causing rapid climate change. Our simulations suggest that the potential for these types of climate engineering to make up for failed mitigation may be very limited.
(25 February 2014)

The end could be nearer than you think — Paul Craig Roberts – PaulCraigRoberts.org

The end could be nearer than you think — Paul Craig Roberts – PaulCraigRoberts.org.

March 3, 2014

The end could be nearer than you think

Readers:

We are having trouble today with the website. I do not know if it is problems caused by the typical incompetence of US business enterprises, including those who host websites and have offshored American jobs to foreign countries, or whether it is National Stasi Agency induced. Certainly, the propagandistic US government does not want any truth available to compete with Washington’s systematic lies. Washington is desperate to control the explanation of the situation in Ukraine that, as a result of Washington’s incompetence, has resulted in Ukraine falling under control of neo-nazi elements, whose rabid anti-semitic and Russophobic actions and rhetoric have caused Ukraine to split in half. If you were unable to access my column today, use this URL:http://www.paulcraigroberts.org/2014/03/03/washingtons-arrogance-hubris-evil-set-stage-war/

Eastern and southern Ukraine are Russian-speaking former Russian territories added to Ukraine in the 1950s by the Communist Party leadership of the Soviet Union. These provinces are agitating to be returned to Mother Russia where they certainly belong. They are determined not to be part of a neo-nazi regime that will be looted by Western bankers and corporations and be forced to host US missile bases that will make western Ukraine a target for nuclear annihilation, like Poland and Czech Republic.

The propagandistic rhetoric issuing from the mouths of the White House Fool and the excrement that the Fool placed in charge of the Department of State is designed to cover up the abject failure of the Obama regime’s plot to install its puppets as Ukraine’s new rulers. The Obama regime is too stupid to comprehend that its rhetoric is preparing the gullible and ignorant American population for war with Russia. The neoconservative ideologues, who have been lusting for war with Russia ever since the 1980s when I was a member of the Committee on the Present Danger, will take advantage of the war preparation, which the White House Fool and his State Department excrement are creating with their rhetoric, to start a war that will destroy life on earth.

The neoconservatives are insane. They believe that nuclear war can be won, and that the US has the advantage to destroy Russia in a first strike.

Americans are so ignorant and gullible that they do not realize that their very existence is on the line, and that the insane neoconservatives who control the weak Obama puppet are determined to cross the line.

If any are still so gullible as to believe that the illegal deposing of the elected government of Ukraine was a “sincere indigenous revolt against a corrupt government,” the delusional should watch this video of the neo-nazi intimidating the US stooge who is a member of what Washington pretends is the government of Ukraine. https://www.youtube.com/watch?v=BV5Wm3qXfy4

Here is a video of the same nazi thug intimidating another collection of US stooges that Washington pretends is a government: https://www.youtube.com/watch?v=1oVsgJMqHNY

God help the American people. Their ignorance and gullibility make them an enormous threat to life on earth.

Yes, I know. I have readers who have escaped The Matrix. But the majority of the American population is lost.

War will be the result of the ignorance, gullibility, and stupidity of the American population, its prostitute media, and the hegemonic ambitions of the evil neoconservatives. The corrupt rulers of Europe will sell out their peoples for American money until they are all vaporized in nuclear explosions.

The total corruption of truth, integrity, and morality that Washington has imposed on the Western world has aligned the West with the powers of Darkness and death. No greater evil exists than the government of the United States.

About Dr. Paul Craig RobertsPaul Craig Roberts was Assistant Secretary of the Treasury for Economic Policy and associate editor of the Wall Street Journal. He was columnist for Business Week, Scripps Howard News Service, and Creators Syndicate. He has had many university appointments. His internet columns have attracted a worldwide following. His latest book,The Failure of Laissez Faire Capitalism and Economic Dissolution of the West is now available.

Bruce Berkowitz’s Bogus Bombast | David Stockman’s Contra Corner

Bruce Berkowitz’s Bogus Bombast | David Stockman’s Contra Corner.

by  • March 5, 2014

Source: WSJ

Click to enlarge

The Fed’s serial bubble machine has not only bestowed massive speculative windfalls on the 1%, but it has also fostered a noxious culture of plunder and entitlement in the gambling casinos of Wall Street. After each thundering sell-off during the bust phase, crony capitalist gamblers have been gifted with ill-gotten windfalls during the Fed’s subsequent maniacal money printing spree.

Worse still, this trash-to-riches syndrome has unfolded so consistently since the late 1980s that there now exists a marauding gang of permanent vulture-speculators who impudently claim entitlement to any and all action by the state that might be needed to quickly reflate their gleanings from the bottom. The passel of hedge funds led by Elliot Capital which blackmailed the Obama White House into paying billions for the worthless debt of Delphi during the GM bailout is only one especially odious example.

In this context comes Bruce Berkowitz “scolding” and firing “salvos” at Washington from the front page of the Wall Street Journal. As it has happened, the usually craven denizens of the beltway have so far managed to ignore his petulant demands for a multi-billion payday on the worthless Fannie and Freddie preferred stock that his fund scooped up after the housing bust. Recall, these were the securities issued in 2008 at $25 per share to shore up the tottering housing finance agencies just before Hank Paulson’s bazooka sputtered.

Not inappropriately, when the Republican White House nationalized Freddie and Fannie in September 2008 these preferred shares plunged to 25 cents—-their true value all along. The fact is, the so-called GSEs do not “earn” profits; they merely book bloated accounting margins that reflect nothing more profound than the fact that Freddie and Fannie drastically underpay for renting Uncle Sam’s balance sheet. As finally became official when the U.S. Treasury threw them a $180 billion lifeline, the GSEs are now—and have always been—a branch office of the U.S. Treasury Department.

The only reason Freddie and Fannie are not prosecuted for filing fraudulent accounting statements, therefore, is the beltway fiction that they are “off-budget”. This convenient scam was first invented by Lyndon Johnson to magically shrink his “guns and butter” fiscal deficits, but it has since metastasized into a giant business fairy tale—namely, that behind the imposing brick façade of Fannie Mae there is a real company generating value-added services that are the source of its reported profits and current multi-billion pink sheet valuation. In fact, there is nothing behind those walls except a stamping machine that embosses the signature of the American taxpayer on every billion dollar package of securitized mortgages it guarantees and on all the bonds it issues to fund a giant portfolio of mortgages and securities from which it strips the interest.

If we wanted to have honest socialist mortgage finance, a handful of GS-14s could run Freddie and Fannie out of the U.S. Treasury building. Civil servants could emboss the taxpayers’ guarantee on every family’s home mortgage just as proficiently as the make-believe business executives who populate the GSEs today; and in the process we could dispense with the sheer waste involved in applying GAAP accounting to the operations of a mere government bureau.

In an alternative political universe not corrupted by crony capitalist mythology about the elixir of homeownership, of course, there would be no need for a Treasury Bureau of Home Mortgage Finance. The decision to own own or rent would be made by 115 million American households based on their best lights, not the inducements and favors of the state. Markets would clear the interest price of mortgage debt and set credit terms and maturities consistent with the risks involved. Undoubtedly, rates would be a few hundred basis points higher and 30-year fixed rates mortgages quite rare. And like in the seemingly prosperous precincts of Germany, the home-ownership rate might be 55% or any other number not selected by pandering politicians of the type who pinned the 70% disaster on the wall during the Clinton-Bush era.

At the end of the day, having 40 million renter-households and 25 million mortgage-free owner-households provide (in their capacity as taxpayers) trillions of subsidized credit to upwards of 50 million mortgage-encumbered households is absurd. Yet it could be dismissed as just another expression of the capricious and random shuffling of income among American citizens that is the tradecraft of the Washington puzzle palace.

Unfortunately, the reality is not so anodyne. In order to hide this random redistribution mischief, the Treasury Bureau of Home Mortgage Finance has been gussied-up to form the simulacrum of a profit-making enterprise—otherwise known as a GSE. In that posture, the GSEs have been repeatedly plundered by insiders like Franklin Rains, the 90 million dollar man who drove Fannie off the cliff; and by fast money stock speculators who managed to drive the combined market cap of Freddie and Fannie to the lunatic level of $140 billion during their hay-day at the turn of the century; and by the Wall Street dealers and so-called fund managers who inventory trillions of GSE debt securities in order to scalp profits from the economically pointless spread between regular treasury bonds and the GSE variant of the same thing.

All of these hundreds of billions were pocketed by adept cronies and speculators in the various debt, equity and preferred securities of the GSEs during the decades culminating in the 2008 financial crisis. Given the trauma of those events, Secretary Paulson’s desperate and ill-disguised nationalization of Freddie and Fannie should have put an end to the plunder.

But it hasn’t because there is no end to the zero cost-of-goods carry trades by which speculators scoop-up and fund financial assets—busted and not—during the Fed’s money printing marathons. Likewise, there is no end to crony capitalist marauders like Berkowitz, who have the temerity to demand make-wholes from the state, and K-Street hirelings—lawyers, accountants and consultants— who are skilled at the manufacture of specious public policy rationalizations for outright thievery.

So now comes the patented crony capitalist rush. The worthless Freddie and Fannie preferreds have lately erupted from $0.25 per share to $12, meaning that some speculators have already garnered a paper return of 48X. And why did this revival miracle transpire? Quite simply because Berkowitz’s Fairholme Capital and his posse of punters—-John Paulson, Perry Capital and Pershing Square, among others—have taken turns bidding up the paper.

Meanwhile, their deplorable plan to do the American people a favor and swap these bogus securities for those of a new tax-payer underwritten, mortgage guarantee stamping machine, has but one objective—that is, to put a statutory floor under the current $12 per share price and enable them to dicker with Capitol Hill staffs for an ultimate take-out at par($25) under the guise of “privatization”. The larceny intended here is not modest: the payday for Berkowitz and his hedge fund posse would amount to $35 billion on toxic paper which was purchased for rounding errors.

To be sure, Berkowitz and his sharpies blather that Freddie and Fannie have now returned $200 billion to the US Treasury, thereby repaying the original $180 billion drawdown, with some change to spare. But what hay wagon do they think even the clueless officialdom of Washington rides upon? Roughly $50 billion of that was for writing-up a “tax asset” that had earlier been written-down, owing to the fact that absent nationalization the GSEs had no prospect of booking even accounting income in the future. And the remaining $150 billion represents dividends paid to the Treasury since 2009 based on using Uncle Sam’s credit card to issue the bonds and guarantees which fund the assets from which these so-called GSE dividends are scalped.

In other words, the Berkowitz Gang wants to be paid a king’s ransom for ownership shares in what amounts to a bureau of the US Treasury. And yet these con men pound the table demanding to “wake up the (GSE) boards” so that they will execute their “fiduciary responsibility”. Indeed, so shameless are Wall Street’s princes of plunder that Berkowitz told a skeptical CNBC questioner last fall “we’ve helped before with AIG”, and that he now merely seeks a “win-win” to “help with jobs, help with the economy, help with the dream of homeownership”!

That gibberish is the measure of the crony capitalist deformation that has infested the nation’s financial markets and system of political governance. The obvious thing for Washington to do is close the doors at Fannie and Freddie and allow their $5 trillion portfolio to run-off in the manner of any liquidation. And if it must subsidize home mortgage credit, just bring back the metal filing cabinets in the Treasury Building where the so-called “secondary mortgage market” was birthed in 1938. Yet what it dare not do is succumb to the bogus bombast of the punters and sharpies who troll the financial wreckage inexorably created by the Fed’s serial bubble machine.

If it does, the people will find their pitchforks and torches—–one of these days.

Bruce Berkowitz’s Bogus Bombast | David Stockman's Contra Corner

Bruce Berkowitz’s Bogus Bombast | David Stockman’s Contra Corner.

by  • March 5, 2014

Source: WSJ

Click to enlarge

The Fed’s serial bubble machine has not only bestowed massive speculative windfalls on the 1%, but it has also fostered a noxious culture of plunder and entitlement in the gambling casinos of Wall Street. After each thundering sell-off during the bust phase, crony capitalist gamblers have been gifted with ill-gotten windfalls during the Fed’s subsequent maniacal money printing spree.

Worse still, this trash-to-riches syndrome has unfolded so consistently since the late 1980s that there now exists a marauding gang of permanent vulture-speculators who impudently claim entitlement to any and all action by the state that might be needed to quickly reflate their gleanings from the bottom. The passel of hedge funds led by Elliot Capital which blackmailed the Obama White House into paying billions for the worthless debt of Delphi during the GM bailout is only one especially odious example.

In this context comes Bruce Berkowitz “scolding” and firing “salvos” at Washington from the front page of the Wall Street Journal. As it has happened, the usually craven denizens of the beltway have so far managed to ignore his petulant demands for a multi-billion payday on the worthless Fannie and Freddie preferred stock that his fund scooped up after the housing bust. Recall, these were the securities issued in 2008 at $25 per share to shore up the tottering housing finance agencies just before Hank Paulson’s bazooka sputtered.

Not inappropriately, when the Republican White House nationalized Freddie and Fannie in September 2008 these preferred shares plunged to 25 cents—-their true value all along. The fact is, the so-called GSEs do not “earn” profits; they merely book bloated accounting margins that reflect nothing more profound than the fact that Freddie and Fannie drastically underpay for renting Uncle Sam’s balance sheet. As finally became official when the U.S. Treasury threw them a $180 billion lifeline, the GSEs are now—and have always been—a branch office of the U.S. Treasury Department.

The only reason Freddie and Fannie are not prosecuted for filing fraudulent accounting statements, therefore, is the beltway fiction that they are “off-budget”. This convenient scam was first invented by Lyndon Johnson to magically shrink his “guns and butter” fiscal deficits, but it has since metastasized into a giant business fairy tale—namely, that behind the imposing brick façade of Fannie Mae there is a real company generating value-added services that are the source of its reported profits and current multi-billion pink sheet valuation. In fact, there is nothing behind those walls except a stamping machine that embosses the signature of the American taxpayer on every billion dollar package of securitized mortgages it guarantees and on all the bonds it issues to fund a giant portfolio of mortgages and securities from which it strips the interest.

If we wanted to have honest socialist mortgage finance, a handful of GS-14s could run Freddie and Fannie out of the U.S. Treasury building. Civil servants could emboss the taxpayers’ guarantee on every family’s home mortgage just as proficiently as the make-believe business executives who populate the GSEs today; and in the process we could dispense with the sheer waste involved in applying GAAP accounting to the operations of a mere government bureau.

In an alternative political universe not corrupted by crony capitalist mythology about the elixir of homeownership, of course, there would be no need for a Treasury Bureau of Home Mortgage Finance. The decision to own own or rent would be made by 115 million American households based on their best lights, not the inducements and favors of the state. Markets would clear the interest price of mortgage debt and set credit terms and maturities consistent with the risks involved. Undoubtedly, rates would be a few hundred basis points higher and 30-year fixed rates mortgages quite rare. And like in the seemingly prosperous precincts of Germany, the home-ownership rate might be 55% or any other number not selected by pandering politicians of the type who pinned the 70% disaster on the wall during the Clinton-Bush era.

At the end of the day, having 40 million renter-households and 25 million mortgage-free owner-households provide (in their capacity as taxpayers) trillions of subsidized credit to upwards of 50 million mortgage-encumbered households is absurd. Yet it could be dismissed as just another expression of the capricious and random shuffling of income among American citizens that is the tradecraft of the Washington puzzle palace.

Unfortunately, the reality is not so anodyne. In order to hide this random redistribution mischief, the Treasury Bureau of Home Mortgage Finance has been gussied-up to form the simulacrum of a profit-making enterprise—otherwise known as a GSE. In that posture, the GSEs have been repeatedly plundered by insiders like Franklin Rains, the 90 million dollar man who drove Fannie off the cliff; and by fast money stock speculators who managed to drive the combined market cap of Freddie and Fannie to the lunatic level of $140 billion during their hay-day at the turn of the century; and by the Wall Street dealers and so-called fund managers who inventory trillions of GSE debt securities in order to scalp profits from the economically pointless spread between regular treasury bonds and the GSE variant of the same thing.

All of these hundreds of billions were pocketed by adept cronies and speculators in the various debt, equity and preferred securities of the GSEs during the decades culminating in the 2008 financial crisis. Given the trauma of those events, Secretary Paulson’s desperate and ill-disguised nationalization of Freddie and Fannie should have put an end to the plunder.

But it hasn’t because there is no end to the zero cost-of-goods carry trades by which speculators scoop-up and fund financial assets—busted and not—during the Fed’s money printing marathons. Likewise, there is no end to crony capitalist marauders like Berkowitz, who have the temerity to demand make-wholes from the state, and K-Street hirelings—lawyers, accountants and consultants— who are skilled at the manufacture of specious public policy rationalizations for outright thievery.

So now comes the patented crony capitalist rush. The worthless Freddie and Fannie preferreds have lately erupted from $0.25 per share to $12, meaning that some speculators have already garnered a paper return of 48X. And why did this revival miracle transpire? Quite simply because Berkowitz’s Fairholme Capital and his posse of punters—-John Paulson, Perry Capital and Pershing Square, among others—have taken turns bidding up the paper.

Meanwhile, their deplorable plan to do the American people a favor and swap these bogus securities for those of a new tax-payer underwritten, mortgage guarantee stamping machine, has but one objective—that is, to put a statutory floor under the current $12 per share price and enable them to dicker with Capitol Hill staffs for an ultimate take-out at par($25) under the guise of “privatization”. The larceny intended here is not modest: the payday for Berkowitz and his hedge fund posse would amount to $35 billion on toxic paper which was purchased for rounding errors.

To be sure, Berkowitz and his sharpies blather that Freddie and Fannie have now returned $200 billion to the US Treasury, thereby repaying the original $180 billion drawdown, with some change to spare. But what hay wagon do they think even the clueless officialdom of Washington rides upon? Roughly $50 billion of that was for writing-up a “tax asset” that had earlier been written-down, owing to the fact that absent nationalization the GSEs had no prospect of booking even accounting income in the future. And the remaining $150 billion represents dividends paid to the Treasury since 2009 based on using Uncle Sam’s credit card to issue the bonds and guarantees which fund the assets from which these so-called GSE dividends are scalped.

In other words, the Berkowitz Gang wants to be paid a king’s ransom for ownership shares in what amounts to a bureau of the US Treasury. And yet these con men pound the table demanding to “wake up the (GSE) boards” so that they will execute their “fiduciary responsibility”. Indeed, so shameless are Wall Street’s princes of plunder that Berkowitz told a skeptical CNBC questioner last fall “we’ve helped before with AIG”, and that he now merely seeks a “win-win” to “help with jobs, help with the economy, help with the dream of homeownership”!

That gibberish is the measure of the crony capitalist deformation that has infested the nation’s financial markets and system of political governance. The obvious thing for Washington to do is close the doors at Fannie and Freddie and allow their $5 trillion portfolio to run-off in the manner of any liquidation. And if it must subsidize home mortgage credit, just bring back the metal filing cabinets in the Treasury Building where the so-called “secondary mortgage market” was birthed in 1938. Yet what it dare not do is succumb to the bogus bombast of the punters and sharpies who troll the financial wreckage inexorably created by the Fed’s serial bubble machine.

If it does, the people will find their pitchforks and torches—–one of these days.

Venezuelan activists urge more protests – Americas – Al Jazeera English

Venezuelan activists urge more protests – Americas – Al Jazeera English.

Call for nationwide rallies comes after dozens are arrested in street battles between government forces and protesters.

Last updated: 01 Mar 2014 18:13
Venezuelan activists have called for nationwide protests after 41 people were arrested in street battles between government forces and protesters.Leaders of the activist wing of the opposition, legislator Maria Corina Machado and members of the Popular Will party, led by jailed ex-mayor Leopoldo Lopez, called on people to rally on Saturday against what they called “repression, torture and persecution.”

This comes as eight foreigners were arrested during a rally in Caracas on charges of “international terrorism,” state VTV television said.

Venezuela’s barricades are symbol of protest

Popular Will said that an arrest warrant was issued for Carlos Vecchio, the party’s national political coordinator, accused of crimes linked to the protests that include arson and criminal damage.

On Friday, hooded protesters set up barricades and responded with a steady barrage of Molotov cocktails against the National Guard, as they were fired on with water and tear gas canisters in an attempt to break up the crowd in Caracas’ wealthy district of Chacao.

Journalists under fire

Venezuela’s journalist association SNTP has said that one of the foreigners arrested was US freelance reporter Andrew Rosati, from the Miami Herald.

Rosati was detained for half an hour and released after being “struck in the face and his abdomen” by security forces, the SNTP, said on Twitter.

Also detained and released was a team of journalists from the Associated Press, the SNTP said.

The SNTP also said that Italian photographer Francesca Commissari, who works for the local daily El Nacional, was being held.

In the past week, the Venezuelan government threatened to expel CNN if it did not “rectify” its coverage of the unrest.

Government officials released no details on the arrest of foreigners.

Escalating violence

Angry at the policies of the country’s leftist government, three weeks of violent protests against President Nicolas Maduro’s socialist government have left 18 dead, with the crisis showing little sign of abating.

Protest organiser Alfredo Romero, president of the Venezuelan Penal Forum, said 33 cases of “cruel and inhuman treatment or torture” have been reported to the public ombudsman.

The Venezuelan government said it was investigating 27 cases of human rights abuses, though it provided no details of possible wrongdoing.

Attorney General Luisa Ortega Diaz said that the death toll linked to the protests stood at 18, while of the 1,044 that had been detained, 72 remain behind bars.

Some of the deaths have been attributed to violent clashes with police, but other victims have been shot by unidentified gunmen.

The government has denied all links to such killings.

US urges dialogue

With no sign of a breakthrough, Washington urged Maduro to talk to the protesters.

“They need to reach out and have a dialogue, and bring people together and resolve their problems,” Secretary of State John Kerry said in Washington Friday, urging against “arrests and violence in the streets.”

Kerry said the United States was working with Colombia and other countries to bolster mediation efforts.

Maduro has labelled the protests that began on February 4 a Washington-backed attempted “coup.”

He claims that radical opposition leaders have joined students angered by high inflation and goods shortage in plotting to topple his nearly year-old government.

The Ron Paul Institute for Peace and Prosperity : In Ukraine, EU and US Interventionists Nearing the Civil War They Caused

The Ron Paul Institute for Peace and Prosperity : In Ukraine, EU and US Interventionists Nearing the Civil War They Caused.

written by michael scheuer
sunday february 23, 2014
Bbc

“The pretext of propagating liberty can make no difference. Every nation has a right to carve out its own happiness in its own way, and it is the height of presumption in another to attempt to fashion its political creed.”
-Alex. Hamilton to George Washington, 2 May 1793.

It always seems to start with the BBC. Months ago when the Ukrainian president patiently explained that his country’s economic and energy realities — which Vladimir Putin underscored — required that it stay close to Russia and not yet enter into a closer relationship with the EU, the BBC flooded Kiev with correspondents. These “independent” journalists began covering every angle of the crisis, or at least the angles that coincided with the view of pro-EU Ukrainian demonstrators and the BBC’s own, now thoroughly institutionalized, worship of the divinity known as the EU.

As one rule of thumb, any non-EU government that is dealing with domestic unrest ought to immediately close all BBC facilities in its country and issue no visas for BBC correspondents who want to enter the country and “cover” — a word that always means “support” — the demonstrations. The BBC — except for five minutes at the top and bottom of the hour — has long since ceased being a news organization. It is now better seen as a “campaign group,” the name the BBC itself uses for reckless, irresponsible, and violence-and-anarchy causing international groups like Amnesty International and other components of the human-rights mafia.

With the BBC positioned and intending to make Ukrainian matters worse, the European Commission and individual EU states began to send their senior officials to sympathize with and support the anti-government forces in Kiev, as well as to threaten, belittle, and ridicule the Ukrainian president, his government, and their decision about what was economically best for the Ukraine. The prize ass of this herd of incendiary EU officials was without question the Swedish Foreign Minister Carl Bildt. On numerous visits to Kiev, Bildt openly supported the demonstrators, damned the Ukrainian president and his government, and threatened EC sanctions if the Ukrainian regime did not surrender to the rabble in the street.

Two points come immediately to mind on this issue. First, why would any Europeans in their right mind listen to anything that a senior Swedish official had to say? Sweden’s 20th century behavior speaks for itself. In two world wars it stayed neutral so that it could make enormous profits by selling nickel ore, iron ore, and other strategic minerals to Imperial Germany and Hitler’s Reich, entities which in turn used the metals to kill millions of other Europeans. This simple fact alone, one would think, should be enough to ensure no Swedish official gets a hearing anywhere in Europe, ever.

The second point is another rule of thumb. Any non-EC government that is dealing with domestic unrest ought never to issue visas for EU or US diplomats to visit their protesting citizens. Such a government also should not allow resident EU and US diplomats to involve themselves with the demonstrators, and should expel those who seek to do so.

These EU and US official visitors and resident diplomats do not intend to negotiate an even-handed end to the government-protestors confrontation. They mean to force the government to surrender, and, if that does not occur, to foment increased resistance among the demonstrators, even if such encouragement leads to violence. No matter. EU and US diplomats will easily get away with recklessly stoking violence because whatever happens in Kiev’s streets will be reported by the BBC as the Ukrainian regime’s fault.

In the past two weeks, a new dimension of the West’s civil war-stimulating intervention in Ukraine has appeared in the form of those self-proclaimed if clearly addled avenging angels of freedom — Joe Biden and Barack Obama. Although late to the intervention party, Biden and Obama have made up for lost time by starting to beat the drums of economic war against Ukraine, a country that probably neither could find on a map. Obama also has threatened that the Ukrainian president would be “held responsible” by Washington for the violence in his country; this from the first US president who is responsible for absolutely nothing that occurs on his watch.

If it was not clear that their words and threats are already getting Ukrainians killed, these two dilettante American diplomatists would be hilarious. Indeed, the Biden-and-Obama team could be the next Laurel and Hardy, except that neither is smart enough to make up for the other’s hopeless arrogance, historical ignorance, and naiveté. In this regard, the death-causing propensities of the Biden-Obama team in conducting US foreign policy mirrors that of the other well-know team of US war-causers, McCain and Graham.

As civil war inches closer in the Ukraine — with an outside chance of an European war — it is clear that its arrival will be the responsibility of the EU and the United States who, through their intervention in Ukraine in the name of democracy, have ensured many dead Ukrainians, much less democracy and a ruined economy there, and greater influence for Russia in Kiev. What Alexander Hamilton called the “height of presumption” is the standing operating procedure for US and EU political leaders and diplomats, men and women who are out to teach the world’s nations how to be behave — as long as they are weak nations — and who absolutely know that no nation can solve its problems without their brilliant assistance and close instruction.

There is nothing Americans can do to stop the EU empire-builders and their BBC cheerleaders from causing war in the Ukraine, but Washington must not help them. For the sake of US security, as the ever-reliable Dr. Ron Paul has said, Americans should just shut up and watch because the United States has no genuine national interest at stake in the Ukraine that would require any involvement whatsoever by our government. “That’s their [the Ukrainians’] business, and it certainly isn’t ours,” Dr. Paul said. “We’ve tried it for too long [to tell others what to do], and the American people are sick and tired of it, and we’re also out of money.”

Cogent and ardently patriotic as always, Dr. Paul is a too-long under-appreciated national treasure, except among some citizens and most U.S. military personnel, men and women who know that he would defend America but not waste their lives in unnecessary wars fought for unsavory allies. Indeed, Dr. Paul stands forthrightly in the tradition of America’s greatest citizen, whose birthday happens to be today.

Always the deadly foe of US interventionism, General Washington fathered the non-interventionist path that Dr. Paul and his admirers and supporters follow. “I have always given it as my decided opinion that no nation has the right to inter-meddle in the internal affairs of another …,” Washington told James Monroe, who wanted US intervention to aid French revolutionaries who would cause a world war, in July 1794, “and that, if this country could, consistent with its engagements, maintain a strict neutrality and thereby preserve peace, it was bound to do so by motives of policy, interest, and every other consideration.” That is the path of sanity and security for the United States, and it mandates no US involvement in the Ukraine.

Finally, a Well Done to Dr. Paul, a great American, and a Happy Birthday to General Washington, the greatest American.

Sleepwalking Again – PaulCraigRoberts.org

Sleepwalking Again – PaulCraigRoberts.org.

February 22, 2014Paul Craig Roberts

On the 100th Anniversary of World War 1, the Western powers are again sleepwalking into destructive conflict. Hegemonic ambition has Washington interfering in the internal affairs of Ukraine, but developments seem to be moving beyond Washington’s control.

Regime change in Ukraine for a mere $5 billion dollars would be a bargain compared to the massive sums squandered in Iraq ($3,000 billion), Afghanistan ($3,000 billion), Somalia, and Libya, or the money Washington is wasting murdering people with drones in Pakistan and Yemen, or the money Washington has spent supporting al Qaeda in Syria, or the massive sums Washington has wasted surrounding Iran with 40 military bases and several fleets in the Persian Gulf in an effort to terrorize Iran into submission.

So far, in Washington’s attempt at regime change in Ukraine large numbers of Americans are not being killed and maimed. Only Ukrainians are dying, all the better for Washington as the deaths are blamed on the Ukrainian government that the US has targeted for overthrow.

The problem with Washington’s plot to overthrow the elected government of Ukraine and install its minions is twofold: The chosen US puppets have lost control of the protests to armed radical elements with historical links to nazism, and Russia regards an EU/NATO takeover of Ukraine as a strategic threat to Russian independence.

Washington overlooked that the financially viable part of today’s Ukraine consists of historical Russian provinces in the east and south that the Soviet leadership merged into Ukraine in order to dilute the fascist elements in western Ukraine that fought for Adolf Hitler against the Soviet Union. It is these ultra-nationalist elements with nazi roots, not Washington’s chosen puppets, who are now in charge of the armed rebellion in Western Ukraine.

If the democratically elected Ukraine government is overthrown, the eastern and southern parts would rejoin Russia. The western part would be looted by Western bankers and corporations, and the NATO Ukraine bases would be targeted by Russian Iskander missiles.

It would be a defeat for Washington and their gullible Ukrainian dupes to see half of the country return to Russia. To save face, Washington might provoke a great power confrontation, which could be the end of all of us.

My series of articles on the situation in Ukraine resulted in a number of interviews from Canada to Russia, with more scheduled. It also produced emotional rants from people of Ukrainian descent whose delusions are impenetrable by facts. Deranged Russophobes dismissed as propaganda the easily verifiable report of Assistant Secretary of State Nuland’s public address last December, in which she boasted that Washington had spent $5 billion preparing Ukraine to be aligned with Washington’s interests. Protest sympathizers claim that the intercepted telephone call between Nuland and the US Ambassador in Ukraine, in which the two US officials chose the government that would be installed following the coup, is a fake.

One person actually suggested that my position should be aligned with the “sincerity of the Kiev students,” not with the facts.

Some Trekkers and Trekkies were more concerned that I used an improper title for Spock than they were with the prospect of great power confrontation. The point of my article flew off into space and missed planet Earth.

Spock’s mental powers were the best weapon that Starship Enterprise had. Among my graduate school friends, Spock was known as Dr. Spock, because he was the cool, calm, and unemotional member of the crew who could diagnose the problem and save the situation.

There are no Spocks in the US or any Western government and certainly not among the Ukrainian protesters.

I have often wondered if Spock’s Vulcan ancestry was Gene Roddenberry’s way of underlining by contrast the fragility of human reason. In the context of modern military technology, is it possible for life to survive humanity’s penchant for emotion to trump reason and for self-delusion to prevail over factual reality?

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