by Zero Hedge - October 4th, 2015 11:15 am
Submitted by Tyler Durden.
While the US has certainly made some epic strategic blunders in Syria that raise serious questions about just how “intelligent” US intelligence actually is, there’s little doubt that if one were to look behind all of the media parroting, the Pentagon and Langley understand all too well what’s going on in the Middle East.
That is, the significance of the Russia-Iran “nexus” in Syria isn’t lost on anyone in the US military and you can bet there have been quite a few high level discussions over the past 72 hours about the best way to counter Moscow and Tehran’s powerplay before it spills over into Iraq and ends up degrading Washington’s influence in Baghdad.
As we put it on Friday, “if Russia ends up bolstering Iran’s position in Syria (by expanding Hezbollah’s influence and capabilities) and if the Russian air force effectively takes control of Iraq thus allowing Iran to exert a greater influence over the government in Baghdad, the fragile balance of power that has existed in the region will be turned on its head and in the event this plays out, one should not expect Washington, Riyadh, Jerusalem, and London to simply go gentle into that good night.”
Sure enough, some experts now predict Saudi Arabia, Qatar, and Turkey will move to counter Russia militarily if Moscow continues to rack up gains for Assad. Here’s The Guardian with more:
Regional powers have quietly, but effectively, channelled funds, weapons and other support to rebel groups making the biggest inroads against the forces from Damascus. In doing so, they are investing heavily in a conflict which they see as part of a wider regional struggle for influence with bitter rival Iran.
In a week when Russia made dozens of bombing raids, those countries have made it clear that they remain at least as committed to removing Assad as Moscow is to preserving him.
“There is no future for Assad in Syria,” Saudi foreign minister Adel Al-Jubeir warned, a few hours before the first Russian bombing sorties began. If that was not blunt enough, he spelled out that if the president did not step down as part of a political transition, his country would embrace a military option, “which also would end with the removal of Bashar al-Assad from power”. With at least
by Zero Hedge - October 4th, 2015 10:30 am
Submitted by Tyler Durden.
$10 Trillion Goes to Money Heaven
What was the best place for your money so far in 2015? Cash! Compared to cash, almost everything is down. We are headed for the worst quarter for stocks since 2011, says the lead story in today’s Financial Times.
Global stock markets have lost $10 trillion of their value over the last three months. What? Where did all that paper wealth go? The old-timers say it went to “money heaven.”
One fine morning in money heaven….will it ever rain down again? Of course, no money has actually disappeared. Only make-believe values have.
We’re not so sure. But we stop. We stare. We look at it as we would at a corpse. What happened to its life force? Where did it go? Why is it no longer there? We have no answer. But looking at a stock market sell-off is like standing over an open coffin: We are in awe at the power of the gods to take as well as to give.
They ask no one’s permission. They follow their own playbook (which they never reveal to mortals). And they are as much a law unto themselves as the NSA. But what’s $10 trillion that never actually existed anyway? Easy come, easy go, right?
Well… yes… and no. It’s usually a pleasure to welcome a baby, but a funeral can be painful. And every one of those dollars – now headed for heaven or hell – will be missed by someone.
On Wednesday, the Dow rose 154 points to 16,049. That left the stock market overvalued by about 8,000 points. At least, that is the assessment of billionaire investor and Wall Street legend Carl Icahn. The current price-earnings ratio for the Dow is 15, he says, and “half of that is bulls**t.”
The ½ bulls**t index, daily – click to enlarge.
by Zero Hedge - October 4th, 2015 10:12 am
Submitted by Marc To Market.
Normally we look at macroeconomic news to provide the incremental additional information that shapes the expected returns on investments. However, in the week ahead, the macroeconomic data is of less importance than the reaction function of policymakers. What we mean by this how policymakers will respond to the recent data may be a bigger driver of financial assets than the new data.
Recall that the ECB staff cut its growth and inflation forecasts. Is that not a necessary pre-condition for a policy response? Japan recently reported an unexpected decline in industrial output and the BOJ’s core inflation measure (excludes fresh food) slipped back into negative territory for the first time since April 2013. Is this something that monetary policy can address or should fiscal policy? Will the apparent pick-up in wage pressure in the UK over the past few months push the Bank of England toward a more hawkish posture?
The Federal Reserve officials were likely as surprised by the weakness of the September jobs report as were market participants. There was nothing in the ADP estimate or weekly jobless claims that had hinted at the weakness. Did the disappointing jobs data really redeem the Fed was criticized for not raising rates last month? Will the jobs data be understood by the central bank as a sign that the economy is deteriorating, as the cynics have argued, and require additional monetary stimulus in the form of new asset purchases as former Treasury Secretary Summers and others have claimed?
There are three major central banks that meet in the week ahead. They are the Reserve Bank of Australia, the Bank of Japan, and the Bank of England. None is expected to change policy. If there is a surprise, the Reserve Bank of Australia is a most likely candidate. The policy has been on hold since May. The headwinds emanating from China and through a negative terms of trade shock are still feeding through the economy. However, with recent economic data firm, and the Australian dollar chopping around its recent trough, the RBA need not be in a hurry to cut rates now.
by Zero Hedge - October 4th, 2015 9:45 am
Submitted by Tyler Durden.
By way of excuse for what President Obama called "a tragic incident," (and The UN called a 'war crime') US officials have claimed that the Taliban were fighting from within the Kabul hospital (which was destroyed by a US air strike yesterday killing at least 19 including 3 children) using aid workers as "a human shield." However, this justification for the 'collateral damage' has been vehemently denied by Medecins Sans Frontier (MSF) who have issued a statement dismissing the US claims, "the gates of the hospital compound were closed all night so no one that is not staff, a patient or a caretaker was inside the hospital when the bombing happened…" but, the US strike has done one thing, as one local health official concluded, "this city is no longer for the living."
In a statement, President Barack Obama offered condolences to the victims of what he called "the tragic incident" where as we detailed previously, the aid group MSF has said an air strike, probably carried out by U.S.-led coalition forces, killed 19 staff and patients on Saturday in a hospital it runs in Kunduz, leaving 37 wounded. The 'reason' offered by US officials, as Reuters reports,
The U.S. military said it conducted an air strike "in the vicinity" of the hospital, as it targeted Taliban insurgents who were directly firing on U.S. military personnel.
In Kabul, the Afghan Ministry of Defense said Taliban fighters had attacked the hospital and were using the building "as a human shield".
But the medical aid group denied this.
"The gates of the hospital compound were closed all night so no one that is not staff, a patient or a caretaker was inside the hospital when the bombing happened," Medecins Sans Frontieres said in a statement on Sunday. "In any case, bombing a fully functioning hospital can never be justified."
Witnesses said patients were burned alive in the crowded hospital after the airstrike. Among the dead were three children being treated.
Frantic MSF staff telephoned military officials at NATO in Kabul and Washington after the attack, but bombs continued to rain down for nearly an hour, one official of the group said. The medical charity that was a lifeline for thousands in the city said it was pulling most of its
by Zero Hedge - October 4th, 2015 9:09 am
Submitted by Secular Investor.
We have been studying the behavior of the financial markets in the past few months and quarters was we are convinced that not only is the economy running out of steam, there might be another overdue correction.
What really frightened us is the fact there are several similarities and correlations with the previous market crashes in 1929 and 2008. Let’s start with 1929 and pull up a first chart. You can clearly notice there was a brief stock market slide which was converted in a temporary uptrend before the entire index was completely crashing.
This seems to show an awful lot of similarities with the situation we’re currently in:
Just as in 1929, the market was performing fantastic and the continuous wealth increase seemed to be unstoppable. A short 10% correction was seen as ‘healthy’ and soon a new uptrend was starting (the green line). This is exactly the same scenario we saw in the past few weeks. Market commenters said the 10% drop in the Dow Jones was a ‘healthy correction’ and we’re on our way to the next uptrend and Christmas rally.
Let’s have a look at why the stock market crashed in 1929. First of all, the harvests were higher than expected, pushing farming families into poverty. Additionally, the house sales, car sales and steel production were falling back down to earth in the USA. Is this once again the case in the US? Not really, but keep in mind this is a globalized world and you’ll have to look at the global picture. So let’s expand our horizon and focus on for instance China, which undoubtedly is one of the main (if not, the main) economic forces on this world.
There’s no real crash in the steel production but that’s usually an ‘ex post facto’; the real drop in the steel production numbers usually occurs àfter the second leg down has started. In that view, the stagnating steel production in conjunction with a reduced demand for iron ore is already an important sign the steel mills aren’t too optimistic about the future and want to reduce their existing stockpiles before taking on too much balance sheet risk.
by Zero Hedge - October 4th, 2015 7:49 am
Submitted by Tyler Durden.
Once again the reactions of desperate government policies looks like creating an even worse situation thanks to unintended (though entirely foreseeable) consequences. Amid the prospect of sharply higher shipping taxes in Greece – designed to increase revenues and 'fix' the debt-ridden nation, WSJ reports many of Greece’s world-leading shipowners are actively exploring options to leave their home country. With Greece controlling 20% of the world's shipping fleet, the 'quadriga' of Greek creditors' demands to raise taxes (because debt restructuring is out of the question) on such an 'easy target' as the world's largest shipping industry appears likely to backfire as an entire industry's revenues move out of reach of government taxers.
Dominated by some 800 largely family-run companies that control almost a fifth of the global shipping fleet from their base at the main Greek port of Piraeus, the industry has long been a source of national pride.
But at the behest of Greece’s international creditors, the newly re-elected Syriza-led government has reluctantly agreed to raise taxes on the long-protected sector.
And the effect of this forced action…
Many in the Greek shipping world say any increase in taxes on shipping operations would prompt a mass exodus of the country’s shipowners. Relatively low-tax global shipping centers such as Cyprus, London, Singapore and Vancouver, Canada, are positioning themselves to benefit.
“With all these places from Cyprus to Vancouver coming to Greek owners and trying to get them to move, I hope that everyone realizes there is a real possibility that many people might leave if things are handled the wrong way,” said George Gratsos, president of the Hellenic Chamber of Shipping.
shipping remains a bright spot in the reeling Greek economy, generating €13 billion to €19 billion, or $14.6 billion to $21.4 billion, in annual revenue and employing about 250,000 people.
“Shipping makes up 7% of Greek economic output, and logic dictates that the sector should enjoy a friendly business environment and a steady taxation system so it can grow and create more jobs, rather than moves to push it out,” he said.
* * *
by Zero Hedge - October 4th, 2015 7:07 am
Submitted by Tyler Durden.
There’s so much negative real bad economic and financial news out there that it’s hard to choose a ‘favorite’, but I guess I’m going to have to go with what underlies and ‘structures’ it all, the IIF stating that for the first time since 1988 and the Reagan presidency, there’s more money flowing out of emerging markets than there’s flowing in. That is for sure a watershed moment.
And no, that trend is not going to be reversed either anytime soon. Emerging economies, even if they wouldn’t include China -but they do-, have relied exclusively on selling ‘stuff’ to the rich world which combined cheap commodities with cheap labor, and now they see their customer base shrink rapidly just as they were preparing to harvest the big loot.
Now, I hope I can be forgiven for thinking from the get-go that this was always a really dumb model. That emerging nations would provide the cheap labor, and the west would kill of its manufacturing base and turn into a service economy.
This goes very predictably wrong if and when we figure out that A) economies that don’t manufacture anything can’t buy much of anything, and B) that we can sell those services our economies are ‘producing’ only to ourselves, as long as the emerging nations maintain a low enough pay model to make their products worth our while to import.
It makes one wonder how many 6 year-olds would NOT be able to figure this out. In the same vein, how many of them would be hard put to understand that our economies, overwhelmed by, and drowning in, debt, cannot be rescued by more debt? Here’s thinking the sole reason so many of us don’t get it is that we’ve been told it’s terribly hard to grasp, and you need a 10-year university course to ‘get it’.
I see a bad US jobs report coming in as we speak, and that’s not really saying much of anything. The damage not only runs far deeper than those massaged reports, it’s also already been done ages ago. Non-farm employment reports are Brooklyn Bridge-for-sale territory.
The Largest US Foreign Policy Blunder Since Vietnam Is Complete: Iran Readies Massive Syrian Ground Invasion
by Zero Hedge - October 4th, 2015 7:04 am
Submitted by Tyler Durden.
On Thursday, in “Mid-East Coup: As Russia Pounds Militant Targets, Iran Readies Ground Invasions While Saudis Panic”, we attempted to cut through all of the Western and Russian media propaganda on the way to describing what Moscow’s involvement in Syria actually portends for the global balance of power. Here are a few excerpts that summarize what’s taking shape in the Middle East:
Putin looks to have viewed this as the ultimate geopolitical win-win. That is, Russia gets to i) expand its influence in the Middle East in defiance of Washington and its allies, a move that also helps to protect Russian energy interests and preserves the Mediterranean port at Tartus, and ii) support its allies in Tehran and Damascus thus preserving the counterbalance to the US-Saudi-Qatar alliance.
Meanwhile, Iran gets to enjoy the support of the Russian military juggernaut on the way to protecting the delicate regional nexus that is the source of Tehran’s Mid-East influence. It is absolutely critical for Iran to keep Assad in power, as the loss of Syria to the West would effectively cut the supply line between Iran and Hezbollah.
It would be difficult to overstate the significance of what appears to be going on here. This is nothing short of a Middle Eastern coup, as Iran looks to displace Saudi Arabia as the regional power broker and as Russia looks to supplant the US as the superpower puppet master.
In short, the Pentagon’s contention that Russia and Iran have formed a Mid-East “nexus” isn’t akin to the Bush administration’s hollow, largely bogus attempt to demonize America’s foreign policy critics in the eyes of the public by identifying an “axis of evil.” Rather, the Pentagon’s assessment was an attempt to come to grips with a very real effort on the part of Moscow and Tehran to tip the scales in the Mid-East away from Riyadh and Washington.
Solidifying the Assad regime in Syria serves to shore up Hezbollah and presents Tehran with an opportunity to assert itself in the name of combatting terror. The latter point there is critical. The West has long contended that Iran is the world’s foremost state sponsor of terror, and the Pentagon has variously accused the Quds Force of orchestrating attacks on US soldiers in Iraq after cooperation between Washington and Tehran broke…
by Zero Hedge - October 3rd, 2015 9:27 pm
Submitted by Tyler Durden.
A day after we ran “Meet Your “Independent” Media, America“, in which we showed how prime time entertainment like 60 Minutes is strategically and voluntarily “planted” with propaganda trolls and “concerns” thus crushing any “unbiased” credibility mainstream US media may have, we dug into the archives to bring you “Conspiracy Theory Rock.”
This cartoon created by SNL cartoonist Robert Smigel in 1998 ran once in a “TV Funhouse” segment, and has been since removed from all subsequent airings of the Saturday Night Live episodes. As a reminder, 90% of US media is currently controlled by 6 corporations: General Electric, News Corp., Disney, Viacom, Time Warner and CBS…
… whose shareholders vastly overlap.
Michaels claimed the edit was done because it “wasn’t funny.”
Well, it’s funny now because for once the propaganda facade of the mainstream media cracked from within, and the result was this critique of corporate media ownership, including then NBC’s ownership by General Electric/Westinghouse, and how only the stuff the owners deem appropriate is distributed for general consumption.
We doubt the current parent of NBC (and CNBC), Comcast, would play it either.
by Zero Hedge - October 3rd, 2015 8:29 pm
Submitted by Tyler Durden.
Earlier today, we ventured to characterize the breakdown of Washington’s strategy in Syria as the worst US foreign policy blunder since Vietnam.
To be sure, that’s a bold claim, but it’s supported by the sheer number of missteps, bad outcomes, and outright absurdities that have developed in the Mid-East as a result of the effort to oust Bashar al-Assad.
At the most basic level, the support provided by Washington, Riyadh, and Doha for the various Sunni extremist groups battling for control of Syria has created a humanitarian crisis of epic proportions. Hundreds of thousands of people are dead and millions are displaced. As tragic as the situation already is, the conditions are ripe for it to get even worse if the move by Brussels to force recalcitrant EU countries into accepting a migrant quota system they are opposed to ends up triggering a dangerous bout of xenophobia in the Balkans.
Washington’s move to train and arm the Syrian opposition has of course also led directly to the creation of a group of black flag-waving jihadists that have taken the term “extremists” to a whole new level on the way to producing a series of slickly-produced videos depicting the murder of Westerners. This same group is now stomping around between Syria and Iraq wreaking havoc on civilians and committing acts so heinous that even al-Qaeda has condemned them.
Of course the outright chaos the West has managed to create in Syria has now come full circle, providing Iran and Russia with a unique opportunity to tip the scales and seize power in the Mid-East.
What’s important to understand here, is that this isn’t confined to Syria.
That is, Iran isn’t content to preserve its supply line with Hezbollah and Russia isn’t content to play spoiler to the US by propping up Assad. There’s something far more meaningful going on here and it can be readily observed in Iraq.
For years, Iran exercised its influence in Iraq via various Shiite militias controlled by Quds commander Qasem Soleimani. Now, it looks as though the deal struck between Tehran and Moscow in July included a power play designed to gradually muscle the US out of the way in Baghdad. The first concrete evidence of this came late last month when Iraq announced an intelligence sharing agreement with Russia…