Tuesday, 22 July 2014

Economic Warfare



Baltic Dry Index. 724  -08

LIR Gold Target in 2019: $30,000.  Revised due to QE programs.

If all else fails, immortality can always be assured by spectacular error.

J. K. Galbraith.

In our new lawless age, America has declared economic warfare on Russia and it has nothing to do with shooting down a Malaysian passenger jet. While the western media follows the CIA house line and bays for trials for whoever shot down MH17, and it still might turn out to be the drunken Ukrainian military, they conveniently overlook that no one ever has been put on trial in the past for mistakenly shooting down a passenger jet. Neither the Americans, the Russians, the Israelis, nor the Ukrainians, yes the Ukrainians have form, they mistakenly shot down a Russian passenger jet over the Black Sea in a missile “training exercise” gone wrong, who all have mistakenly shot down and killed hundreds of innocent passengers, have ever had anyone stand trial. Nor will they.

Below, the latest in America and the west’s attempt to start up World War Three for the spoils of slicing and dicing up the mineral wealth of EurAsia. On present policies, get ready for the spectacular crash of 2014.

Russia vastly outgunned in economic showdown with West

Combined sanctions by the US, Europe, Japan and the OECD bloc pit a $35 trillion colossus against a $2 trillion midget

The economic showdown unfolding between Russia and the West is almost entirely one-sided.

The US has the power to bring Russia to its knees through hegemonic control over the world’s banking system, using an array of lethal financial weapons developed by a cell at the US Treasury, and already deployed against Iran and North Korea.

Richard Christopher Granville, from Trusted Sources, said the US “crossed the Rubicon” last week even before the apparent missile strike against Malaysia Airlines flight 17, imposing sanctions that effectively shut the energy trio of Rosneft, Novatek, and Gazprombank out of international finance.

“The Americans have the power to throttle Russia unilaterally because no European or Western bank of any importance is going to defy the US after the fines imposed on BNP Paribas,” he said.

“What has been holding them back is fear of a damaging split between the US and Europe, since it is Europe that suffers the full blow-back from sanctions. This issue has been blown away completely by the crash. Europe’s leaders now have a duty to their own citizens to be tough,” he said.

More

http://www.telegraph.co.uk/finance/economics/10981648/Russia-vastly-outgunned-in-economic-showdown-with-West.html

July 21, 2014, 7:43 a.m. EDT

El-Erian: 'Notable complacency' over geopolitical risks

NEW YORK (MarketWatch) -- The market is complacent about the geopolitical risks flaring up across the globe, according to Mohamed El-Erian. The former chief executive at money manager Pimco said in a CNBC interview on Monday that while recent events in Ukraine and Gaza are tragic, the market does not believe they will have spillover effects across the world. "The market says even if there are spillover effects, it doesn't matter. Earnings are strong and the Fed is there," he said. "I think there is notable complacency in the market as to how much worse it can get. It has been rewarded in the past, so investors are conditioned." 

Nonetheless, El-Erian said the risks are heightening due to radicalization in global conflicts.

Next, in suicidal too big to fail or bail France, the first victims of America’s war on Russia looks likely to be French ship builders. European lunacy in the ever more brutal campaign against Russia following Obama’s botched coup in Kiev. Stay long fully paid up precious metals held outside of America and Great Britain. France is headed towards collapse taking the unloved wealth destroying euro with it. Sadly as continental Europe commits economic suicide for America, they are all too likely to crash Great Britain and America with them. We have entered economic idiocy to bailout geo-political American morons.

France Prepared to Cancel Warship Sale to Russia

Jul 22, 2014 1:45 AM GMT
French President Francois Hollande said he’s prepared to cancel the sale of a second Mistral helicopter carrier ship to Russia if the European Union decides to expand its sanctions against Russia.

The second ship, due in 2016, hasn’t yet been paid for, making it possible to withhold the sale if the EU agrees to broaden its measures on Russia, Hollande said yesterday at the annual presidential press dinner.

At the same time, sanctions can’t be retroactive and wouldn’t cover delivery of the Vladivostok, the first Mistral warship, which is already paid for and due for delivery in October, Hollande said.
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French economy 'catastrophic’, says business federation

President of France’s equivalent of the CBI calls for an end to the 75pc tax rate and 35-hour working week

By David Chazan, in Paris 10:18PM BST 21 Jul 2014
The head of France’s business federation has called for an end to the 75pc tax rate and to the 35-hour working week, saying the country’s economy is “catastrophic”.

Pierre Gattaz, president of the Medef – France’s equivalent of the CBI – said the 75pc tax that companies are forced to pay on employees’ annual salaries above €100,000 (£79,000) was damaging France’s competitiveness.

“It’s a symbol which, like the 35 hours, has gone around the planet, and it’s destructive. I never meet a single Chinese or American who doesn’t bring it up,” said Mr Gattaz. “The economic situation of the country is catastrophic … if France was a company, it would be going bankrupt.”

Mr Gattaz conceded that the Socialist government had taken some steps to make France more competitive, but said they were insufficient and state expenditure needed to be drastically cut. “It’s time to turn the page for the sake of the image and the attractiveness of our country,” he said.

President Francoise Hollande has promised to reduce public spending by €50bn (£39.5bn) by 2017, although many commentators are doubtful that he will make the necessary cuts.
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Is Germany still the champion?

By Philip Blenkinsop BRUSSELS Sun Jul 20, 2014 5:13am EDT
(Reuters) - A week on from its World Cup soccer victory, Germany may return to center stage, though this time not with fan celebrations but concerns over the health of Europe's economic motor.

Investors saw dark clouds building on Friday after a Malaysian airlines jet was shot down at the Ukraine-Russia border and Israel launched a ground offensive in Gaza. That depressed shares and other risk assets, but the events are yet to disturb economic forecasts.

"We've seen a delayed impact of China and the Ukraine crisis," said ING economist Carsten Brzeski. "This is an explosive cocktail, but right now with limited impact on growth. The Ukraine/Russia issue was already there."

In a week relatively light on U.S. indicators, economists are looking for further signs that Europe's recovery and even German growth may be stalling, putting more pressure on the European Central Bank to act.

---- For Germany, the views of purchasing managers (PMIs) on Thursday and of company chiefs surveyed for Friday's influential Ifo report should show whether a slowdown of Europe's largest economy detected in the second quarter has spread to the third.

Weakness in German industrial output and both domestic and foreign orders have pointed to a poor April-June period after 0.8 percent expansion in the first three months of the year, the fastest rate in three years.

Last week's ZEW index of analyst and investor morale for July, which dropped this month to its lowest level since December 2012, suggested that the third quarter had also started shakily.
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Below, is this what the BDI is showing? Head for the hills if it is. Spurred on by US War Party madness, we are a heartbeat away from re-entering 2008-2009.

"In economics, hope and faith coexist with great scientific pretension."

J. K. Galbraith.

Global industry stalls as Europe's slowdown threatens recovery

Europe's recovery "runs out of steam" as broker Macquarie warns that China alone can't support global industrial output

Global industrial output growth has stalled, a leading commodities broker has warned, in a chilling reminder of the vulnerability of the economic recovery.

According to Macquarie’s survey of 52 leading industrial countries, the world’s factories, mines and utilities increased their year-on-year output by just 3.6pc in May, down from 3.8pc a month earlier.

“Global industrial production, a key driver of commodity demand, has continued its expansion in 2014, although the pace of growth has slowed in recent months as Europe’s recovery runs out of steam,” said Macquarie in a note today. “With growth heavily dependent on China, whose recent pick-up seems unsustainable, the risk of further deceleration is mounting.”

The European Union, the US, China and other BRIC nations account for 60pc of the world’s industrial output. However, the size of China’s industrial economy is so great that it presents a significant risk itself to global growth.

---- Although, Macquarie still forecasts industrial growth expanding throughout 2014 it has concerns over the immediate impact that a short-lived slow down could have.

“The short-term outlook, however, is less positive. In Europe the recovery is in danger of petering out, while China – which still accounted for 59pc of the global increase to May – is set for a weaker patch in 3Q. In the US things are a little brighter, but even there the most recent months have showed a slower pace of expansion,” wrote the broker.
More

Key Piece of Video “Evidence” for Russian Responsibility for Malaysian Plane Shootdown Debunked

Mish is a highly-respected financial blogger.   His Global Economic Analysis site routinely wins awards such as:
One of Mish’s trademarks is to speak with knowledgeable people in various subject areas, and report on what they said.

Today, Mish debunked one of the main pieces of video “evidence” claimed by the mainstream media to prove that Russia was behind the shootdown of the Malaysian plane over Ukraine:

Jacob Dreizin, a US citizen who speaks Russian and reads Ukrainian provided this update three hours ago.

Hello Mish,
On Friday, the Daily Mail, one of the major UK tabloids carried photos and video of what was alleged to be a rebel “Buk” launcher heading back to Russia.  The article carried a claim from some Ukrainian source that the launcher was missing several missiles after having shot them at the Malaysian 777.  The article was prominently linked to the Drudge Report, and so was probably viewed by several million people.

Today, this meme made it into Uncle Sam’s official narrative, as per the following New York Times excerpt:
On the CBS program “Face the Nation,” Mr. Kerry referred to a video that the Ukrainians have made public showing an SA-11 unit heading back to Russia after the downing of the plane with “a missing missile or so.”

The video referenced by the New York Times was, in fact, posted on the Facebook account of the Ukrainian Interior Minister. The allegation was that the launcher was crossing the border with Russia.

However, going by the billboard and other features of the scenery, Russian bloggers and news sources claim to have identified the road in the video as having been taken in or near the town of Krasnoarmeisk (“Krasnoarmiysk” in Ukrainian), which has been under Kiev’s control since May.

In fact, the billboard is supposedly advertising a Krasnoarmeisk car dealership.  Also, one of the structures in the background is said to be a construction materials store on Gorkii Street, Krasnoarmeisk.

Please note that this town is (very roughly) 120 kilometers from the Russian border and 80 kilometers from where the Malaysian 777 went down.  And again, it has been under Kiev’s control since May.
More

Russia Says Has Photos Of Ukraine Deploying BUK Missiles In East, Radar Proof Of Warplanes In MH17 Vicinity

Ukraine hasn’t said how it immediately knew rebels downed Malaysian plane, notes the Russian Foreign Ministry, as it unveils 10 awkward questions for Ukraine (and perhaps the US 'snap judgment') to answer about the MH17 disaster. However, what is perhaps more concerning for the hordes of finger-pointers is that:
  • RUSSIA HAS IMAGES OF UKRAINE DEPLOYING BUK ROCKETS IN EAST: IFX
  • RUSSIA: UKRAINE MOVED BUK NEAR REBELS IN DONETSK JULY 17: IFX
  • RUSSIA DETECTED UKRAINIAN FIGHTER JET PICK UP SPEED TOWARD MH17
Obviously, if there is proof that this is so, aside from CIA-created YouTube clips, these would deal another unpleasant blow to US foreign policy.

Russia wants to know why Ukraine moved its BUK missiles systems the day of the MH17 crash:
  • RUSSIAN GENERAL STAFF HAS SPACE IMAGES OF SECTORS OF UKRAINIAN FORCES' POSITIONS IN SOUTHEASTERN UKRAINE, INCLUDING BUK MISSILE LUNCH SITES 8 KILOMETERS FROM LUHANSK - RUSSIAN DEFENSE MINISTRY - interfax
The day the Malaysian airliner crashed, the Ukrainian forces deployed an air defense group of three or four 
Buk-M1 missile batteries near Donetsk, Lt. Gen. Andrei Kartapolov, head of the Russian General Staff's Main Operations Department, told reporters on Monday.

"These surface-to-air systems are capable of hitting targets at a distance of up to 35 kilometers at an altitude of 22 kilometers. For what purpose and against whom were these missile systems deployed? As is known, the militia has no aviation," he said.

Russia has the flight paths of the Ukrainian fighters and MH17. Furthermore, it is asking the same question we asked last Thurday:
  • RUSSIA SAYS MH17 DIVERGED 14 KM FROM FLIGHT PATH NEAR DONETSK
And wants to know why. The image (as seen in the presentation above) allegedly shows Ukraine fighter jets near MH17:
More

In other more sane, normal news, a Chinese food scandal grows and grows. Visit the Great Wall, eat at Mickey D’s and get sick. Would you buy a food or pet product made in China?

Starbucks, Burger King dragged in as China food scandal spreads

By Adam Jourdan SHANGHAI Tue Jul 22, 2014 12:58am EDT
(Reuters) - A toxic food scandal in China is spreading fast, dragging in U.S. coffee chain Starbucks, Burger King Worldwide Inc and others, as well as products of McDonald's Corp as far away as Japan.

McDonald's and KFC's parent Yum Brands Inc apologized to Chinese customers on Monday after it emerged that Shanghai Husi Food Co Ltd, a unit of U.S.-based OSI Group LLC, had supplied expired meat to the two chains.

On Tuesday, Starbucks said some of its stores previously sold products containing chicken originally sourced from Shanghai Husi, a firm that was shut down on Sunday by local regulators after a TV report showed staff using expired meat and picking up meat from the floor to add to the mix.

McDonald's said meat from the supplier had been sold to its branches in Japan where it was used in the firm's McNuggets.

Fast-food chain Burger King and Dicos, China's third-ranked diner owned by Ting Hsin International, said they would remove Shanghai Husi food products from their outlets.

Pizza chain Papa John's International Inc said on its Weibo blog that it had taken down all meat products supplied by Shanghai Husi and cut ties with the supplier.

Food safety is one of the top issues for Chinese consumers after a scandal in 2008 where dairy products tainted with the industrial chemical melamine led to the deaths of six infants and made many thousands sick.
Other food scandals have hit the meat and dairy industries in recent years, and many Chinese look to foreign brands as offering higher safety standards.

Starbucks said on its Chinese microblog site that it had no direct business relationship with Shanghai Husi, but that some of its chicken acquired from another supplier had originally come from Husi for its "Chicken Apple Sauce Panini" products. This had been sold in 13 different provinces and major cities.

---- The scare has stirred local consumers and become one of the most discussed topics online by the country's influential 'netizens', with some users writing and spreading long lists of firms thought to be tarnished.

The incident highlights the difficulty in ensuring quality and safety along the supply chain in China. Wal-Mart Stores Inc came under the spotlight this year after a supplier's donkey meat product was found to contain fox meat. It also came under fire for selling expired duck meat in 2011.
More
http://www.reuters.com/article/2014/07/22/us-china-food-idUSKBN0FR07K20140722

“The problem with fiat money is that it rewards the minority that can handle money, but fools the generation that has worked and saved money.”

“Adam Smith” aka George Goodman.

At the Comex silver depositories Monday final figures were: Registered 58.69 Moz, Eligible 116.96 Moz, Total 175.65 Moz.  

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.

Today, now comes Juncker time. Does anyone seriously expect the EC’s liar in chief to bite the hand that feeds him?

"As fewer and fewer people have confidence in paper as a store of value, the price of gold will continue to rise. The history of fiat money is little more than a register of monetary follies and inflations. Our present age merely affords another entry in this dismal register."

Hans F. Sennholz

Juncker faces political test as fines loom on illegal German trade surplus

IMF says Germany's surplus has become economically destructive for struggling eurozone nations

Germany’s current account surplus is the largest ever recorded in proportional terms and far above the threshold for EU sanctions, posing a major political test for the incoming commission of Jean-Claude Juncker.

The International Monetary Fund said the country’s surplus has reached 8.25pc of GDP when adjusted for the economic cycle and has become economically destructive, making it ever harder for eurozone crisis states to claw their way out of trouble.

The surplus is between three and six percentage points higher than is either “desirable” or justified by fundamentals, the IMF said in its annual health check on Germany.

This is unlikely to change much unless Berlin takes active steps to reduce the imbalance. The Fund called on Germany to do more to help weaker EMU states in “liquidity traps” by boosting its own internal demand.

The headline surplus will be 7pc of GDP this year, well above the 6pc limit set by Brussels the under the EU’s new Macroeconomic Imbalance Procedure. The Commission caused fury in Germany last year by threatening Berlin with sanctions if it failed to do its "homework", chiefly by taking steps to wean its economy off reliance on foreign markets.

The issue is highly sensitive for Mr Juncker. He must choose whether to set the sanctions machinery in motions and provoke a showdown with Germany – the country that pushed hardest for his nomination -- or turn a blind eye and risk the accusation that EMU rules are enforced only against the weaker countries.

Under the procedure, the eurozone can order Germany to present an "action plan" to cut its surplus. If that fails EU ministers may sit in judgment on Germany, forcing Berlin to pay a deposit of up to 0.1pc of GDP (€2.4bn). This money can be seized if Germany still fails to cut the surplus.

Any such action would set off a storm in the German media and the Bundestag. Most German citizens already think their country is spending too much bailing out Southern Europe. Germany agreed to the rules on imbalances in the belief that it would applied only against deficit “sinners”. But currency unions require both sides to reduce the imbalances.
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"Those entrapped by the herd instinct are drowned in the deluges of history. But there are always the few who observe, reason, and take precautions, and thus escape the flood. For these few gold has been the asset of last resort."

Antony C. Sutton

The monthly Coppock Indicators finished June

DJIA: +169 Down. NASDAQ: +332 Down. SP500: +241 Down.  The Fed’s final bubble still grows, but …..

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