Oil, Power, And Psychopaths

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James F. Gibson Tent of A. Foulke, Horse Artillery, Brandy Station, Virginia 1864

Courtesy of Raul Ilargi Meijer @ Automatic Earth Blog:

Iran has a – very – long running dispute with the US about its nuclear technology. The US wants Assad (Bashar Al-Assad) out of Syria, while Iran and Russia support Assad (Russia’s sole proper base in the Middle East), who’s an Alawite (a Shi-ite branch), a people historically persecuted by Sunni’s. ISIS (or Daesh in the region) is Sunni. So are the Saudi’s. Iran is Shi’ite. Bahrain is ruled by Sunni but has a majority Shi’ite population. And I could go on for a while. A long while.

All this plays into the oil game, the falling oil prices. Blaming OPEC for the recent price fall is seeing the world from a child’s perspective. OPEC and its major voteholder, Saudi Arabia, are no more to blame for the plunge than the US, Russia or other non-OPEC producers. Everybody produces as if there’s no tomorrow, and the Saudi’s have merely concluded that their only choice is to do the same. It’s a race to the bottom.

The reason is the fast declining demand for oil; China is nowhere near as mighty as we seem to think, Europe is a basket case, emerging economies are being strangled as we speak by the surging dollar and the Fed taper, and we’re just getting started. It’s cute and all that nobody wonders how much virtual money has vanished into the great beyond as both oil itself and the companies that get it out of the earth have lost half of their ‘values’ in Q4 2014, let alone the countries that depend on oil for their very existence. But cute doesn’t cut it.

Oliver Stone talks about ‘Ukraine: The CIA Coup’. I’ve talked about exactly that all of last year. While on vacation, Obama declares new sanctions on North Korea for hacking a Japanese company only the FBI claims it was guilty of. While US sanctions against Iran are ongoing.

America is trying to control the world by throwing it into confusion, emboldened by poorly understood theories about military superiority, and creating conflicts all over the place that look like they will never be solved. Whereas all it would need to do is make sure it secures itself, its own territory, not control the entire planet. Continue reading

The Empire is Crumbling, That is Why it Needs War

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Courtesy of Andre Vltchek @ Counterpunch:

Last night, in Beijing, I sat in a historic Szechuan restaurant with a friend who happens to be a Chinese diplomat. We exchanged some stories, ordered food, and then, suddenly, my throat felt dry and my eyes got misty.

I bowed and thanked her for the heartfelt offer China made to rescue Russia.

Just before leaving my hotel, I read the news on the RT:

“China’s foreign minister has pledged support to Russia as it faces an economic downturn due to sanctions and a drop in oil prices. Boosting trade in Yuan is a solution proposed by Beijing’s commerce minister.

‘Russia has the capability and the wisdom to overcome the existing hardship in the economic situation,’ Foreign Minister Wang Yi told journalists. China Daily reported Monday: ‘If the Russian side needs it, we will provide necessary assistance within our capacity.’”

By no means was I representing the Russian Federation here, in Beijing, nor was my friend representing China that night, at the dining table. It was an informal meeting attended by just a few friends, nothing more.

Not to mention that I am not really, ‘technically’ a Russian. Yes, I was born in Leningrad but almost my entire life I spent elsewhere… all over the world, to be precise. And in my veins, not that it really matters; it is also all confused… there circulates an explosive mixture of Russian, Chinese and European blood.

But lately, to be Russian, to me and to many others, is much more than just about blood. ‘I am a rebel; therefore I am Russian’, to paraphrase Albert Camus. Or: ‘I am Russian because I refuse to abandon the struggle.’

‘Ya Russkii!’ or ‘Cubano soy!’ It simply feels good, and makes one proud, and stronger.

***

The world is in turmoil. Like in the early 1940’s, something tremendous is gaining shape, something irreversible. Continue reading

Debt, Propaganda And Now Deflation

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Dorothea Lange Negro woman who has never been out of Mississippi July 1936

Courtesy of Raul Ilargi Meijer @ The Automatic Earth blog:

Looks I have to return to the deflation topic. I’m a bit hesitant about it, because the discussion always gets distorted by varying definitions and a whole bunch of semi-religious issues. The Automatic Earth has for many years said that an immense bout of deflation is inevitable because of global debt levels, and it’s all only gotten a lot worse since we first said that. Our governments and central banks have ‘fought’ deflation with more debt, and that was always the stupidest idea in human history. Or at least, most of us were stupid for believing it would work, or was even intended to.

Just so we don’t get into yet more confusion, i probably need to explain that the debt deflation we’re talking about here is not some subdivision like consumer inflation or price inflation or cookie inflation, those are just hollow and meaningless terms. Debt deflation is deflation caused by too much debt, and the deleveraging it must and will lead to. Deflation does not equal falling prices, those are merely an effect of it.

The reason this matters is that when you equate inflation and deflation with rising or falling prices, you’re not going to be able to know when you actually have deflation. Because prices can rise for all sorts of reasons. Inflation/deflation is the money/credit supply in an economy multiplied by the speed at which money is spent in that economy, the velocity of money.

It should be obvious that prices for some items can still rise, certainly initially, when deflation sets in. Producers that see less sales can try to raise prices for their remaining buyers. Basic necessities will always be needed. Governments can raise taxes. Rising/falling prices tell us only part of the story, and with a considerable time delay.

Ergo: rising/falling prices are a lagging factor, and if you look at them only, you will have missed the point where deflation has set in. What follows, obviously, is that you can’t measure deflation by looking at consumer prices (CPI) or production prices (PPI) numbers. You’d be way behind the curve. CPI and PPI tell you something, but they don’t tell what causes falling or rising prices. And that is a valuable thing to know. Continue reading

And The Gold Bank Appears: following Fekete, China is embracing New Austrian Economics as the foundation for the new International Monetary System

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Courtesy of Conscience Sociale blog:

You might already know that China aims for Official Gold Reserves at 8500 tonnes.

But you surely not know about the golden treasure embedded in the original opinion editorial by Song Xin, General Manager of the China National Gold Group Corporation, Party Secretary and President of the China Gold Association, 07/30/2014.

He spoke about the strategic role of gold, and new institutions needed for gold circulation, precisely in the logic based on New Austrian Economics that I’m using in my articles on Conscience Sociale and elsewhere since 2011. [articles in english ; en français].

His sentences about the GOLD BANK is truly one of strong evidence of what I called the ‘Grande Renaissance’ which will transform the whole world in the following decades (another one is the growing interest in Agile Democracy).

Chosen excerpts of Xin’s editorial [Translation by BullionStar], with emphasis mine :

“For China, the strategic mission of gold lies in the support of RMB internationalization, and so let China become a world economic power and make sure that the “China Dream” is realized.

Gold is the only thing carrying the dual mantels of a commodity as well as a monetary substance. It’s both a very ‘honest’ asset and forms the very material basis for modern fiat currencies. Historically, gold has played an irreplaceable role in responses to financial crises and wars as it comes to protecting a country’s economic security. Because of this, gold carries with it an honored and divine-given strategic mission in the ascend of the Chinese people and the pursuit of the “China Dream”.

The Important Function Of Gold.

Gold is the world’s only monetary asset that has no counter party risk, and is the only cross-nation, cross-language, cross-ethnicity, cross-religion and cross-culture globally recognized monetary asset. Gold is the last protection for a country’s economic security; it safeguards a nations sovereignty in times of crises. […] Continue reading

Very quietly, the coalition tries to dismantle judicial review

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Courtesy of Ian Dunt @ Politics.co.uk:

When the local council gave permission to put up a 66 metre wind turbine next to the home of Chris and Julia Holder, it initially seemed they were powerless to stop it. Despite 1,125 letters of objections, the plans went through. It was judicial review which gave the couple the ability to fight the case in the Court of Appeal.

When the Department for Education stripped headteachers of their discretion to approve absences during term-time, a group of parents suddenly found they couldn’t afford to take their kids on trips overseas. They used judicial review to challenge the decision.

When Sefton Borough Council refused to fund care for elderly Ms Blanchard until she’d diminished her savings to £1,500, it was judicial review which ended up finding the policy unlawful. The decision forced 120 other authorities to review their budget decisions and saved vulnerable people from having their savings slashed to pay for care.

Judicial review sounds boring. You shouldn’t put it in a headline, as I have, because people won’t click on it. You can’t mention it across a dinner table because everyone will stare at their plate and wait for you to shut up. But it is one of the most powerful tools citizens have over their government. In almost every case of injustice by the Home Office I’ve come across – especially in relation to immigration and asylum – it is judicial review which allowed the most vulnerable people in the country to challenge the most powerful.

When Chris Grayling was found to have turned legal aid into “an instrument of discrimination”, it was because of judicial review. When two immigration officers detained, shouted at, bullied, harassed, imprisoned and conspired against an innocent Indian mother, how did her family fight the case? Judicial review.

So of course it should come as no surprise that the government is trying to dismantle it in the Lords this afternoon. They will do so not by banning it or anything as obvious as that. Instead they will do what the coalition always does: price it out. They will make it too expensive and risky for anyone but the most reckless and wealthy to contemplate. Continue reading

The Economics Of Perpetual War

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Courtesy of Matt McCaffrey @ Mises Economics Blog:

The 100th anniversary of the beginning of World War I seems like an ideal opportunity to spread a message of peace and economic cooperation; sadly, 2014 has so far been a year of new and renewed conflict far more than one of reconciliation.

By now, talk of the horrors of war is nothing new. Everyone knows about the total destruction war brings; in fact, we’ve known for millennia. As Lew Rockwell points out, “just about everyone makes the perfunctory nod to the tragedy of war, that war is a last resort only, and that everyone sincerely regrets having to go to war”—but war continues all the same. Even classical military strategists like Sun Tzu believed war should only be used only as a last resort, and argued that military campaigns could bankrupt states and ultimately, destroy them. Art of War actually states that “no country has ever profited from protracted warfare,” and cautions generals to “fight under Heaven with the paramount aim of ‘preservation.’” Yet as far back as we have historical records, these sorts of ideas have fallen on deaf ears among governments and military organizations alike.

Economics offers many insights into war making and why it persists, but the most fundamental explanation is an institutional one. It’s tragically simple: warnings about the horrors of war go unheeded because the power to make war—as well as “justify” it in the eyes of those forced to fight and finance it—lies in the hands of the state and its business and intellectual allies. States are monopolists of organized force, and as such decide when and how to use their power on a grand scale, especially when they wish to confront other monopolists. Continue reading

Economic Laws Are Not Optional

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Courtesy of Monty Pelerin @ Economic Noise:

Economic laws are not optional. They are like the laws of physics – inexorable!

Economic laws are less precise in terms of their timing and effects, only because they deal with human behavior rather than physical particles. Human beings alter their behavior to cope with changing conditions. Particles do not. Free will and the survival instinct make prediction, especially regarding timing, very different and difficult in the human realm. Nevertheless, the laws are immutable!

Long-time readers of this website know that no recovery is possible given past and current economic policies. Initially, it was argued by some that government intervention was necessary and would effect an economic recovery. By now, even the dullest of Keynesians know their policies failed. Yet they continue.

Why would failed policies continue? The political class argues for their continuance, but not on the basis of sound economics. Their arguments are motivated by political self-interest. The appearance of a recovery is more important for politicians facing another election or a legacy than the damage being done to the economy. Remember when the focus of the Clinton campaign against George H. W. Bush claimed that it was the worst economy in fifty years? That was not true, but it was effective.

Stopping the Federal Reserve juice threatens what remains of our economy. No one wants to be known as the “new Herbert Hoover,” although someone will inevitably be tarred with that association.

Early Warnings

This website began in September 2009 recognizing the futility of applied economic efforts to “cure” the problem. The very first post appeared on September 7, 2009 and was entitled No Exit From Economic Mess. To put matters into perspective, the government claimed the recession had ended in June of 2009. This economic lie was apparent to anyone who had a modicum of economic understanding or common sense. The more of the latter one possessed, the less of the former was required.

Over time I have come to believe that the two types of knowledge may now be incompatible — a sad commentary on how the economic profession has been hijacked by the political class. A good rule of thumb is to ignore any economist who is involved in politics. Unfortunately, with government grants, that includes much of the profession, including those never directly employed by government. Continue reading

Order Out Of Chaos: The Doctrine That Runs The World

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Courtesy of Brandon Smith @ Alt Market:

“From the days of Spartacus-Weishaupt to those of Karl Marx, and down to Trotsky (Russia), Bela Kun (Hungary), Rosa Luxembourg (Germany), and Emma Goldman (United States), this world-wide conspiracy for the overthrow of civilization and for the reconstitution of society on the basis of arrested development, of envious malevolence, and impossible equality, has been steadily growing. It played, as a modern writer, Mrs. Webster, has so ably shown, a definitely recognizable part in the tragedy of the French Revolution. It has been the mainspring of every subversive movement during the Nineteenth Century; and now at last this band of extraordinary personalities from the underworld of the great cities of Europe and America have gripped the Russian people by the hair of their heads and have become practically the undisputed masters of that enormous empire.”

– Winston Churchill, February 1920, in an article that appeared in the Illustrated Sunday Herald

The concept of conspiracy frightens some people, so much so that they are willing to overlook any and all evidence that world events are for the most part directed, rather than chaotic and coincidental. For those who are uneducated and unaware, explanations for the terrible tides of politics and war generally revolve around a false understanding of Occam’s razor. They argue that the theory states that the “simplest explanation” is usually the correct one for any particular problem or crisis. But Occam’s razor actually states that the simplest explanation according to the evidence at hand is usually the correct answer for any given problem. That is to say, the simplest explanation must conform to the evidence, or it is likely not correct.

Unfortunately, “skeptics” of directed conspiracy often turn a blind eye to evidence that is contrary to their simple explanations, while arguing that simplification is its own vindication. In other words, they don’t feel the need to defend their simplistic world view because, in their minds, simplicity stands on its own as self-evident. There was a time when men believed that the planets revolved around each other because they were tied together by long glass strings, and this was evident to them because it was the simplest explanation they could come up with. The thinking of skeptics of the New World Order and concerted globalization is much like this.

The most common argument they tend to exploit is that the world is far too “chaotic” and that if the elites are actually seeking a fully centralized one-world system, they are “failing miserably” because so many cultures are so clearly divided. For anyone who holds this argument as logical or practical, first I would suggest they look beyond the surface of the various conflicts at the similarities between these so called “enemies.”

For example, what about the United States versus Russia? These two nations have a long history of opposing ideologies and have come close to war time and time again. Certainly, average Americans see themselves as individualists and Russians as socialist or communist. Average Russians see Americans as capitalist imperialists and see themselves as humanists. But what about their respective governments? What about their respective financiers and oligarchs? Do they really see each other as enemies?

If that were so, then why did American Wall Street tycoons and the U.S. military aid the Bolshevik Revolution in 1917? Continue reading

BRICS Announce $100 Billion Reserve To Bypass Fed, Developed World Central Banks

Courtesy of The Hedge:

As we suggested last night, the anti-dollar alliance among the BRICS has successfully created a so-called “mini-IMF” since the BRICS are clearly furious with the IMF as it stands currently: this is what the world’s developing nations just said on this topic “We remain disappointed and seriously concerned with the current non-implementation of the 2010 International Monetary Fund (IMF) reforms, which negatively impacts on the IMF’s legitimacy, credibility and effectiveness.”

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As Putin explains, this is part of “a system of measures that would help prevent the harassment of countries that do not agree with some foreign policy decisions made by the United States and their allies.” Initial capital for the BRICS Bank will be $50 Billion – paid in equal share among the 5 members (with a contingent reserve up to $100 Billion) and will see India as the first President. The BRICS Bank will be based in Shanghai and chaired by Russia. Simply put, as Sovereign Man’s Simon Black warns, “when you see this happen, you’ll know it’s game over for the dollar…. I give it 2-3 years.”

  • BRICS MINISTERS SIGN DEVELOPMENT BANK AGREEMENT
  • INITIAL SUBSCRIBED CAPITAL OF BRICS BANK IS $50 BLN: STATEMENT

A quick take on existing monetary policy.

  • MONETARY POLICY MUST BE CAREFULLY CALIBRATED: BRICS STATEMENT

The punchline, however, is that using bilateral swaps, the BRICS are effectively disintermediating themselves from a Fed and other “developed world” central-bank dominated world and will provide their own funding.

We are pleased to announce the signing of the Treaty for the establishment of the BRICS Contingent Reserve Arrangement (CRA) with an initial size of US$ 100 billion. This arrangement will have a positive precautionary effect, help countries forestall short-term liquidity pressures, promote further BRICS cooperation, strengthen the global financial safety net and complement existing international arrangements…. The Agreement is a framework for the provision of liquidity through currency swaps in response to actual or potential short-term balance of payments pressures.
Incidentally, the role of the dollar in such a world is, well, nil.

Continue reading

Do You Have A Plan B? “This Is Not A Consequence-Free Environment”

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Courtesy of Simon Black @ Sovereign Man:

In August 1939, just days before Hitler’s invasion into southern Poland, General Wilhelm List walked the lines of his German 14th Army making final checks and inspections.

He must have thought it strange– between Army Group North and Army Group South, there were over one million German troops hovered on the Polish border. And they weren’t exactly hiding under rocks.

Everyone knew that the invasion was coming. Especially civilians in Poland.

They were surrounded by German forces on three sides. And on 23 August 1939, the Soviet Union signed a non-aggression pact, effectively acquiescing the fourth side.

It was obvious that the entire country was about to be turned into a war zone.

Yet seemingly unfazed by this prospect, well-to-do locals were on holiday at the seaside, or keeping cool up in the Carpathian mountains.

Sixty miles to the north of List’s 14th Army, people in Krakow were a enjoying warm summer days in Blonia Park and on the banks of the Vistula River near Wawel Castle.

It was as if they were completely oblivious to the enormity of the consequences about to befall them.

After all, the government and local papers were telling them to not worry. Poland had prepared some basic defenses, and their military commander Edward Rydz-?mig?y was supposed to be a strong general.

They had been told to be confident. So they were confident.

On the first of September, 1939, Hitler’s armies invaded. And despite suffering massive military losses, the Polish government spread all sorts of misinformation on the radio, telling its people about phony victories against the invading German hordes. Continue reading