War on Syria: Some US Military Officers Express Reservations

Instead of being able to muster a broad coalition for a military campaign against Syria, US President (and Nobel Prize for Peace awardee) Barack Obama seem to be finding significant roadblocks

UK’s parliament rejected PM David Cameron’s appeal for military action.  The NATO chief says there is no plans for actions against Syria.

Polls indicate that a substantial majority of Americans have been opposed to US involvement in Syria (Gallup May 2013), (Reuters Ipsos August 24 2013) or want congressional approval on military actions on Syria (NBC August 30, 2013)

Nevertheless war mongers like the Economist insist on a war on Syria (I hope those who penned the article would enlist to go to the front line or volunteer to fight with the rebels. It is always easy for someone else to pay the price for perceived political righteousness when these are in reality egotistical foolishness)

A more important development has been the fragmented sentiment of the US military over a Syria campaign.

From the Washington Post

The Obama administration’s plan to launch a military strike against Syria is being received with serious reservations by many in the U.S. military, which is coping with the scars of two lengthy wars and a rapidly contracting budget, according to current and former officers.

Having assumed for months that the United States was unlikely to intervene militarily in Syria, the Defense Department has been thrust onto a war footing that has made many in the armed services uneasy, according to interviews with more than a dozen military officers ranging from captains to a four-star general.

Former and current officers, many with the painful lessons of Iraq and Afghanistan on their minds, said the main reservations concern the potential unintended consequences of launching cruise missiles against Syria.

Some questioned the use of military force as a punitive measure and suggested that the White House lacks a coherent strategy. If the administration is ambivalent about the wisdom of defeating or crippling the Syrian leader, possibly setting the stage for Damascus to fall to fundamentalist rebels, they said, the military objective of strikes on Assad’s military targets is at best ambiguous.

Expect more false flags to be used by the US government to justify a war.

Obama’s Proposed War on Syria: Two Wrongs Don’t Make a Right

President Obama was awarded the Nobel Prize for Peace in 2009, now he is pushing for war against Syria to promote the interests of his Neocon-Israelite allies and to save face from early policy failures by doubling down.

Writes historian Eric Margolis at the lewrockwell.com

Let’s face some hard facts about the vicious conflict in Syria.

If the US directly attacks Syria,  the real cause will not be the recent chemical attacks.  What are 300 or so dead in a 2-year old war fuelled by the western powers that has so far killed over 100,000?

Chemical weapons are horrible. So are bullets, shells, bombs, cluster bombs, fuel-air explosive, white phosphorus, and napalm.  All wars are crime writ large.

We don’t yet know if the recent chemical massacre in Damascus was a real chemical attack using Sarin nerve gas,  a rebel provocation, an industrial accident, or an attack by rogue Syrian army units?  After Iraq, we can’t trust western intelligence and so-called evidence.

This is not even the main issue at hand though it makes an excellent pretext for outside powers to intervene.

The Syrian conflict is a proxy war being waged against Iran by the United States, conservative Arab oil producers, and three former Mideast colonial powers, Britain, France and Turkey who are seeking to restore their domination in the region.  Israel, hoping to isolate Hezbollah and cement its annexation of Syria’s Golan Heights, cheers from the sidelines.  Syria and Hezbollah are  Iran’s only Arab friends.

The US and allies ignited the anti-Assad uprising two years ago, using the underground Syrian Muslim Brotherhood and imported jihadis.   But Assad’s forces, with some limited help from Russia, Iran and Lebanon’s Hezbollah,  held on and are now beating the US-backed rebels.

As a result, the Obama administration is now leaning towards direct US military intervention to stave off defeat of its proxies by neutralizing Assad’s air force, armor and artillery.  As for Syria’s chemical weapons, they were developed as a counter to Israel large nuclear and chemical arsenal.

Read the rest here 

The possible unintended consequences: risk of war with Russia. Again Mr. Margolis

More tellingly, Gen. Colin Powell, who disgraced himself before the world by parroting the Bush administration’s lies about Iraq now also urges caution over Syria.

Powell is right.  The US has lost its last two “crusades” in Afghanistan and Iraq.  The US  has no strategic interests in Syria beyond an obsession to overthrow Iran’s disobedient government.

Washington’s Syrian misadventure threatens to put the US on a very perilous collision course with Russia,  Syria’s close ally.  So far, Russia has sought a diplomatic solution, but it’s most unwise to push tough Vladimir Putin too hard.  Syria is as close to Russia as northern  Mexico is to the United States.

Courting even the remote threat of a possible nuclear confrontation with Russia just to overthrow President Assad, a former US ally,  is the height of irresponsibility.

This just shows how politics can render people obsessed with power arrogantly blind.

George Soros’ Investing Style

The ETFDailynews reveals of George Soros investing techniques  (hat tip EPJ)

George Soros, one the greatest Hedge Fund Managers of our time, trades stocks very different than a mutual fund or hedge fund manager might today. Soros was trained in economics at the London School of Economics. His view on stocks is driven by his macro view. He is less interested in what a company does or anything about its financials or fundamentals.

Soros trades stocks in sectors he expects to perform within his macro view. When he likes a sector he usually purchases 2 stocks from it: First, the market leader usually the Largest Market Cap Company and the second stock he usually purchases is the cheapest, lowest priced stock in the sector. He does this because he believes that if the sector takes off, the cheapest most speculative stock will double or triple while the industry leading stock will just slowly go up over time.

I somewhat share the same 'big picture' (rather than aggregate based macro economics)  investing template except that so far I have been limited to local equities.  My next step is to invest global using different markets not limited to equities.

Are Europe’s PIGS the Next Target of the Bond Vigilantes?

Two weeks back I noted and predicted that the seeming complacency in the bond markets of the crisis stricken EU countries would be temporary

Paradoxically bonds of the crisis stricken PIGS have shown a stark contrast: declining yields [GGGB10YR:IND Greece green, GBTPGR10:IND Italy red-orange, GSPT10YR:IND Portugal red and GSPG10YR:IND Spain orange.]

I do not subscribe to the idea that such divergence has been a function of the German and French economy having pushed the EU out of a statistical recession last quarter. Instead I think that such deviation has partly been due to the yield chasing by German, UK and French investors on debt of PIGS. But this would seem as a temporary episode.

Has the bond vigilantes landed in the shores of the PIGS?

Yields of Spanish 10 year bonds

Yields of Italian 10-year bonds

Yields of Greek 10 year bonds

Yields Portuguese 10 year bonds

And higher bond yields has coincided with falling stocks

Stock markets of the same nations, particularly Greece (ASE: IND), Portugal (PSI20: IND), Italy (FTSEMIB: IND) and Spain (IBEX:IND) seem to have markedly downshifted.

Has the magic of ECB's Mario Draghi of "do whatever it takes" started to wear off? Will the bond vigilantes continue truncate the mirage of "recovering" markets equals "economic recovery"?

The bottom line is that the damages from the rampaging bond vigilantes has been mounting and spreading on a global scale. 

Caveat emptor

Ron Paul: Planned war against Syria is merely the next step to take on the Iranian government

In the halls of US congress in June 19th 2012, the great Ron Paul exposes on the motivations behind the planned attack on Syria 

Transcript from RonPaul.com

Plans, rumors, and war propaganda for attacking Syria and deposing Assad have been around for many months.

This past week however, it was reported that the Pentagon indeed has finalized plans to do just that. In my opinion, all the evidence to justify this attack is bogus. It is no more credible than the pretext given for the 2003 invasion of Iraq or the 2011 attack on Libya.

The total waste of those wars should cause us to pause before this all-out effort at occupation and regime change is initiated against Syria.

There are no national security concerns that require such a foolish escalation of violence in the Middle East. There should be no doubt that our security interests are best served by completely staying out of the internal strife now raging in Syria.

We are already too much involved in supporting the forces within Syria anxious to overthrow the current government. Without outside interference, the strife—now characterized as a civil war—would likely be non-existent.

Whether or not we attack yet another country, occupying it and setting up a new regime that we hope we can control poses a serious Constitutional question: From where does a president get such authority?

Since World War II the proper authority to go to war has been ignored. It has been replaced by international entities like the United Nations and NATO, or the President himself, while ignoring the Congress. And sadly, the people don’t object.

Our recent presidents explicitly maintain that the authority to go to war is not the U.S. Congress. This has been the case since 1950 when we were taken into war in Korea under UN Resolution and without Congressional approval.

And once again, we are about to engage in military action against Syria and at the same time irresponsibly reactivating the Cold War with Russia. We’re now engaged in a game of “chicken” with Russia which presents a much greater threat to our security than does Syria.

How would we tolerate Russia in Mexico demanding a humanitarian solution to the violence on the U.S.-Mexican border? We would consider that a legitimate concern for us. But, for us to be engaged in Syria, where the Russian have a legal naval base, is equivalent to the Russians being in our backyard in Mexico.

We are hypocritical when we condemn Russian for protecting their neighborhood interests for exactly what we have been doing ourselves, thousands of miles away from our shores. There’s no benefit for us to be picking sides, secretly providing assistance and encouraging civil strife in an effort to effect regime change in Syria.

Falsely charging the Russians with supplying military helicopters to Assad is an unnecessary provocation. Falsely blaming the Assad government for a so-called massacre perpetrated by a violent warring rebel faction is nothing more than war propaganda.

Most knowledgeable people now recognize that the planned war against Syria is merely the next step to take on the Iranian government, something the neo-cons openly admit.

Controlling Iranian oil, just as we have done in Saudi Arabia and are attempting to do in Iraq, is the real goal of the neo-conservatives who have been in charge of our foreign policy for the past couple of decades.

War is inevitable without a significant change in our foreign policy, and soon. Disagreements between our two political parties are minor. Both agree the sequestration of any war funds must be canceled. Neither side wants to abandon our aggressive and growing presence in the Middle East and South Asia.

This crisis building can easily get out of control and become a much bigger war than just another routine occupation and regime change that the American people have grown to accept or ignore.

It’s time the United States tried a policy of diplomacy, seeking peace, trade, and friendship. We must abandon our military effort to promote and secure an American empire.

Besides, we’re broke, we can’t afford it, and worst of all, we’re fulfilling the strategy laid out by Osama bin Laden whose goal had always been to bog us down in the Middle East and bring on our bankruptcy here at home.

It’s time to bring our troops home and establish a non-interventionist foreign policy, which is the only road to peace and prosperity.

This week I am introducing legislation to prohibit the Administration, absent a declaration of war by Congress, from supporting — directly or indirectly — any military or paramilitary operations in Syria. I hope my colleagues will join me in this effort.

Indonesian Government Succumbs to Market Forces, Raises Interest Rates

I have been pointing out that it is inherent in governments and their monetary institutional apparatus, the central bank, to see interest rates as an obstacle to their perception of a politically shaped economic nirvana. This has mostly been premised on an ideological framework justifying their political mandate and their power over society. 

Thus resisting rate increases has been intuitive for them UNLESS forced by the markets.

Well Indonesia seems like a wonderful example. The Indonesian government succumbed to market forces by raising rates anew.

From the New York Times:

The Indonesian central bank raised its interest rates on Thursday, in a desperate effort to shore up a currency that has been badly hit by the recent sell-off in emerging markets worldwide.

The Indonesian central bank’s decision, announced at a hastily called board meeting, raised the benchmark rate by half a percentage point, to 7 percent, and highlighted the increasing pressure that many of the world’s largest developing economies have faced while market sentiment has withered.

Investors have poured billions of dollars into emerging economies in recent years, as buoyant growth rates and relatively high interest rates made them attractive investments compared with the United States and Europe. Since May, however, a gradual recovery in the West and signs that the Federal Reserve would soon scale back its support of the American economy have prompted a stark shift away from emerging markets back to assets like United States Treasury securities.

That shift has dragged down stocks and currencies in emerging markets, depriving them of the cash that fueled their previous growth spurts and raising the cost of crucial imports like oil.

Hit hardest have been those countries that, like Indonesia, have trade deficits and are more risky in the eyes of investors.

Remember in 2011, Indonesia had been the darling among emerging markets, as credit rating agencies feted on her alleged 'success' story. Endorsements by credit rating agencies are really a 'kiss of death'

Yet the problem hasn’t been about trade deficits. Trade deficits are merely symptoms of a deeper underlying problem: a debt inflated political economic bubble.

Like all central banks, Indonesia’s interest rates went into the direction of Zero Bound over the past few years. 

Doing so or the implementation of the policy of negative real rates (financial repression) encouraged deficit spending by the government which ballooned her external debt position.

In 9 years Indonesia’s external debt posted a CAGR of 6.71%. This is more than the average annual GDP growth of 5.42% from 2000-2013 according to tradingeconomics.com

But the kernel of the growth in Indonesia’s debt has been during the past 3 and 1/2 years as shown by the red trend line. This means that much of the aggregate growth in debt has been acquired during this record ultra low interest rate period.

Now the mainstream used to say that Indonesia’s macro fundamentals has been allegedly sound given the declining debt-to-gdp ratio. 

Yet again we won’t be seeing today’s market turmoil if such statistical data is valid.

The reality is that ballooning debt has been camouflaged by a credit bubble in both the private and the public sector. 

And speaking of the private sector, Indonesia’s loans to the private sector has burgeoned by 48.5% or CAGR 21.88% over the last two years

All these debt financed consumption based growth story has led to the trade deficit bogeyman. 

Today's market upheavals also suggests of the culmination of the bubble cycle.

Thus in the recognition of the huge buildup in systemic leverage, the Indonesian government has struggled to resist increasing rates. They initially even used foreign reserves as shield in futility.

Nonetheless the tightening process, even without the actions of the Indonesian government, has been running in course via the dramatic selloffs in Indonesia’s financial markets, the currency the rupiah, the stock markets the JCI and the bond markets.  So the Indonesian government attempts to “save face” via raising rates.

Higher interest rates means debt service cost will rise, which should put pressure on the humongous debt acquired by both the private sector and the government. 

Higher interest rates will also depress the statistical economy, thereby we should expect the ballooning of the debt to gdp ratio and this will also unmask the mirage of the 'strong' statistical economy. 

Higher interest rates could also signify as the proverbial pin that bursts Indonesia’s homegrown bubbles, which the government has fervently tried to ensconce.

Yet if the popping up of domestic bubbles will hit the Indonesia’s banking sector hard, then we may see Asian banking currency crisis 2.0 (circa 2013).  We will know of the gravity of the damage from the recent market selloff and from the sharp hike in interest rates in a couple of months and its ramifications.

The risks of popping of bubbles wouldn’t just be an Indonesian story, but for much of her neighbors too, the Philippines included.

The illusions of a statistical boom fueled by inflationism are being exposed.

Caveat emptor

ASEAN Meltdown: Finally a Relief Rally

Finally a breather following a torrent of heavy losses.

The badly mauled ASEAN equity markets pulled up a substantial comeback today.

Indonesia’s JCI jumped 1.92%.

Thailand’s SETI got a lift from the bulls, the SETI was up 1.31%

Malaysia KLCE was higher by 1.04%

Singapore’s STI climbed 1.13%

Meanwhile the biggest gainer today has been the Philippine equity market as the local benchmark, the Phisix, soared by 3.59% (chart from technistock.net)

But the gains of the Phisix has conspicuously fallen short from a similar reactionary oversold bounce (from a crash).

When the first bear market struck late June (see red ellipse), the reactionary bounce saw the Phisix boom by 5.7% as noted here.

Today, there had been an apparent attempt to push the Phisix beyond the 4% threshold gains, but foreign sellers foiled the local bulls during the last minute. Today’s 3.59% advance pales in comparison with June 26th 5.7% oversold bounce.

And also in contrast to last June’s dead cat’s bounce, foreigners bought into the rebound. Today, foreigners sold some Php 1.542 billion (US $34.45 million @ 44.75 today’s PDEX closing).

Also market breadth has been relatively unimpressive, the difference between the advance-decline spread was only 79 today compared to June 26th’s 112.

However trading volume has almost been similar at Php 6.9 billion

In short, all these suggests of a fading conviction from local bulls to pull on the same feat similar to June. Such lack of conviction could mean that the relief rally phase may be shorter and less powerful than the earlier episode.

Nevertheless, today's relief rally also covered ASEAN currencies.

Based on the PDEX the Philippine peso closed at 44.75 today or at the same level as of yesterday.

But based on Bloomberg’s spot market quotes, the Peso trades at 44.65 along with the rebounding Indonesian rupiah, Malaysian ringgit, and the Singapore dollar.

No trend goes in a straight line. And as previously noted:

“Denial” rallies are typical traits of bear market cycles. They have often been fierce but vary in degree. Eventually relief rallies succumb to bear market forces.

Bottom line: the fate of ASEAN markets ultimately depends on comport of the international bond markets, particularly the US 10 year note. Current developments in global bonds barely indicates of reduced volatility.

Use the relief rally to reduce risk position. 

Caveat emptor.

When Bond Yields Hurt the Stock Markets

The Canadian research outfit BCA Research seems to have second thoughts about the US bull market:  (bold mine)

The speed of the yield jump is unnerving for stock bulls. Bond yields are rising much faster than profit growth. The broad market has run into trouble whenever the growth in yields has surpassed the growth in earnings. More serious equity pullbacks have occurred when this differential is negative 10% or lower, as is currently the case. This scenario has historically been associated with too rapid an increase in inflation expectations, which spells valuation and monetary trouble ahead. The current signal from this indicator is negative, as the differential is at its widest level in more than 20 years. However, it should be noted that inflation expectations are not problematic at the moment, and the very low starting point in yields reduces the indicator’s efficacy. Still, this gauge has a reliable track record, underscoring that capital preservation should remain of paramount concern.

Yes, capital preservation should indeed be anyone's paramount goal.

And volatile bond markets marked by rising bond yields are likely to continue, because of the unintended consequences from the US Federal Reserve policies of inflating a global bond bubble

Writes Dr. Ed Yardeni

The sharp increase in yields caused by the QE tapering talk suggests that the Fed's bond purchases inflated a big bubble in the bond market. As I’ve noted previously, the 10-year yield normally tends to trade around the y/y growth rate in nominal GDP. The jump in yields is normalizing this relationship. The Fed’s tapering talk has caused investors around the world to taper their holdings of bonds. That’s starting to poke holes in other bubbles as well, particularly emerging market bonds, currencies, and stocks.

To add to the above, increases in bond yields (10 year USTs) has coincided with slowing economic growth. 

Also emerging markets and ASEAN markets are behaving like a periphery to the core dynamics.

The bond bubble has been underpinned by unsustainable accumulation of debt from government deficits, which I have been pointing out.

Writing at the Project Syndicate, economist, president emeritus of the National Bureau of Economic Research (NBER) Harvard professor Martin Feldstein warns of an upward trend of bond yields for the same reasons…

Although it is difficult to anticipate how high long-term interest rates will eventually rise, the large budget deficit and the rising level of the national debt suggest that the real rate will be higher than 2%. A higher rate of expected inflation would also cause the total nominal rate to be greater than 5%.

…as well as the risks of a comeback of price inflation

The greatest risk to bond holders is that inflation will rise again, pushing up the interest rate on long-term bonds. History shows that rising inflation is eventually followed by higher nominal interest rates. It may therefore be tempting to invest in inflation-indexed bonds, which adjust both principal and interest payments to offset the effects of changes in price growth. But the protection against inflation does not prevent a loss of value if real interest rates rise, depressing the value of the bonds.

Mr. Feldstein says that the current environment seems ripe for a crisis.

The relatively low interest rates on both short-term and long-term bonds are now causing both individual investors and institutional fund managers to assume duration risk and credit-quality risk in the hope of achieving higher returns. That was the same risk strategy that preceded the financial crisis in 2008. Investors need to recognize that reaching for yield could end very badly yet again.

Caveat emptor.

Fodders for the Bond Vigilantes: US Debt Ceiling, Japanese Government’s Interest Payments

The following developments signify as fodder for the bond vigilantes

In the US, increased political pressure to increase the debt ceiling.

From the  New York Times;

Unless Congress raises the debt ceiling, the Treasury Department said on Monday that it expected to lose the ability to pay all of the government’s bills in mid-October.

That means a recalcitrant Congress will face two major budget deadlines only two weeks apart, since the stopgap “continuing resolution” that finances the federal government runs out at the end of September.

Members of Congress are sharply divided over what to include in measures financing the government and raising the debt ceiling…

The debt ceiling stands at about $16.7 trillion. Congress passed a measure increasing it by about $300 billion in January.

The insatiable US government will keep racking up on debts to finance her extravagant spending. Improving budget deficits today are only temporary.

In Japan, the ramifications of higher bond yields, the Japanese government requests an increase in  budget for servicing debt. From Reuters:

Japan's Finance Ministry will request a record 25.3 trillion yen ($257 billion) in debt-servicing costs under its fiscal 2014/15 budget, up 13.7 percent from the amount set aside for this year, a document obtained by Reuters showed on Tuesday.

The decision, aimed at guarding against any future rise in long-term interest rates, underscores the increasing cost Japan must pay to finance its massive public debt.

The country's debt is double the size of its $5 trillion economy and is the biggest among major industrialised nations.

Rising bond yields in the face of slowing global economic growth means higher costs of real funding. This entails higher credit risks which should be manifested in interest rates.

The Likely Implications of a US War Against Syria

One of the major developments being ignored today by domestic media has been the heating up of the war rhetoric by US and her allies against Syria.

From Bloomberg:

The Obama administration is constructing the legal and political justification for a limited military strike on Syria that would demonstrate international censure against chemical weapons, according to a U.S. official.

Any action taken by the U.S. would have a narrow scope and not be aimed at taking out Syrian President Bashar al-Assad, the official said, contrasting it to the allied offensive in Libya that targeted Muammar Qaddafi. A strike would concentrate on Syria’s weapons capabilities.

President Barack Obama and his aides are consulting with U.S. lawmakers and allies such as the U.K. and France about possible military action. French President Francois Hollande said today that Syria’s use of chemical arms must be punished. U.K. Prime Minister David Cameron has summoned Parliament back from its recess on Aug. 29 to discuss the country’s response.

Any action by Obama to intervene in Syria will run up against U.S. public opinion that offers little support for new military commitments in the region. It also would consume political capital as Obama also seeks to get agreement from U.S. lawmakers on fiscal policy, the nation’s debt limit and a new chairman of the Federal Reserve.

As pointed out in the past the relationship between inflation and war are intertwined.

For governments, war serves as diversion for the public from economic troubles usually caused or aggravated by inflationism, and importantly, war serves as justification for expanding control over society’s resources. And wars are mainly financed by inflationism. Of course, wars provide lavish businesses to defense and defense related industries. They also boost the egos of war mongers

Brinkmanship geopolitics in Syria has led to a spike in gold and oil prices. These are signs that shouldn’t be ignored as they will have spillover effects on the economy.

While the US and her allies accuses Syria of having to recently use chemical weapons to justify war, many has  countered that this has been a false flag—or a planted operation. For instance a hacked email from a defense contractor of the British government revealed of a (INFOWARS.com) “plan “approved by Washington” and funded by Qatar to stage a chemical weapons attack in Syria and blame it on the Assad regime”

A war in Syria could mean big trouble for the world.

Paul Craig Roberts, former Assistant Secretary of the US Treasury and former associate editor of the Wall Street Journal explains at the Huffington Post:

What is the West’s real agenda? This is the unasked and unanswered question. Clearly, the US, UK, and French governments, which have displayed continuously their support for dictatorial regimes that serve their purposes, are not the least disturbed by dictatorships. They brand Assad a dictator as a means of demonizing him for the ill-informed Western masses. But Washington, UK, and France support any number of dictatorial regimes, such as the ones in Bahrain, Saudi Arabia, and now the military dictatorship in Egypt that is ruthlessly killing Egyptians without any Western government speaking of invading Egypt for “killing its own people.”

Clearly also, the forthcoming Western attack on Syria has nothing whatsoever to do with bringing “freedom and democracy” to Syria any more than freedom and democracy were reasons for the attacks on Iraq and Libya, neither of which gained any “freedom and democracy.”

The Western attack on Syria is unrelated to human rights, justice or any of the high sounding causes with which the West cloaks its criminality.

The Western media, and least of all the American presstitutes, never ask Obama, Cameron, or Hollande what the real agenda is. It is difficult to believe than any reporter is sufficiently stupid or gullible to believe that the agenda is bringing “freedom and democracy” to Syria or punishing Assad for allegedly using chemical weapons against murderous thugs trying to overthrow the Syrian government.

Of course, the question wouldn’t be answered if asked. But the act of asking it would help make the public aware that more is afoot than meets the eye. Originally, the excuse for Washington’s wars was to keep Americans safe from terrorists. Now Washington is endeavoring to turn Syria over to jihad terrorists by helping them to overthrow the secular, non-terrorist Assad government. What is the agenda behind Washington’s support of terrorism?

Perhaps the purpose of the wars is to radicalize Muslims and, thereby, destabilize Russia and even China. Russia has large populations of Muslims and is bordered by Muslim countries. Even China has some Muslim population. As radicalization spreads strife into the only two countries capable of being an obstacle to Washington’s world hegemony, Western media propaganda and the large number of US financed NGOs, posing as “human rights” organizations, can be counted on by Washington to demonize the Russian and Chinese governments for harsh measures against “rebels.”

Another advantage of the radicalization of Muslims is that it leaves former Muslim countries in long-term turmoil or civil wars, as is currently the case in Iraq and Libya, thus removing any organized state power from obstructing Israeli purposes.

Secretary of State John Kerry is working the phones using bribes and threats to build acceptance, if not support, for Washington’s war crime-in-the-making against Syria.

Washington is driving the world closer to nuclear war than it ever was even in the most dangerous periods of the Cold War. When Washington finishes with Syria, the next target is Iran. Russia and China will no longer be able to fool themselves that there is any system of international law or restraint on Western criminality. Western aggression is already forcing both countries to develop their strategic nuclear forces and to curtail the Western-financed NGOs that pose as “human rights organizations,” but in reality comprise a fifth column that Washington can use to destroy the legitimacy of the Russian and Chinese governments.

Russia and China have been extremely careless in their dealings with the United States. Essentially, the Russian political opposition is financed by Washington. Even the Chinese government is being undermined. When a US corporation opens a company in China, it creates a Chinese board on which are put relatives of the local political authorities. These boards create a conduit for payments that influence the decisions and loyalties of local and regional party members. The US has penetrated Chinese universities and intellectual attitudes. The Rockefeller University is active in China as is Rockefeller philanthropy. Dissenting voices are being created that are arrayed against the Chinese government. Demands for “liberalization” can resurrect regional and ethnic differences and undermine the cohesiveness of the national government.

Once Russia and China realize that they are riven with American fifth columns, isolated diplomatically, and outgunned militarily, nuclear weapons become the only guarantor of their sovereignty. This suggests that nuclear war is likely to terminate humanity well before humanity succumbs to global warming or rising national debts.

The war criminals in Washington and other Western capitals are determined to maintain their lie that the Syrian government used chemical weapons. Having failed in efforts to intimidate the UN chemical inspectors in Syria, Washington has demanded that UN Secretary General Ban Ki-moon withdraw the chemical weapons inspectors before they can assess the evidence and make their report. The UN Secretary General stood up to the Washington war criminals and rejected their demand.

This only shows of the tendency of the public to focus on the sensational and overlook the more important events. 

ASEAN Meltdown: Phisix and SETI crashes into Bear Markets, Singapore and Malaysia Slumps

Back in June I wrote:

The volatility in global bond markets remains a clear and present danger. Until these markets subside either naturally or through political interventions (in the hope that such interventions will have the desired effect), the prospects of further deterioration of markets should not be discounted. On the contrary, this should be expected.

And continued volatility may push many emerging markets including the Phisix into respective bear markets which increases the risks of a global crisis. There are many flashpoints not limited to Japan. They may come from China, ASEAN, Eurozone or elsewhere. Perhaps the US will be the last in the domino chain.

Today, the Philippine Phisix and Thailand’s SET joined the Indonesia in their respective bear markets partially fulfilling my earlier predictions.

Indonesia's tail spinning equity markets as represented by the JCI has been intensifying at an incredibly alarming rate. The JCI sank 3.71%.

Indonesian Rupiah

10 year Indonesian bond

Indonesia’s rupiah has been under sustained pressures as the domestic 10 year bond yields continue with its almost daily dramatic ascent.

A popular aphorism "misery loves company" seems relevant to the contemporary conditions of ASEAN markets.

The bears have retaken command over the Philippine Phisix which tanked today by another wicked 3.96%, adding to last week's 5.5+% injury.

Foreigners posted net selling of Php 2.457 billion (US $ 55.217) as the local equity benchmark reentered the bear market territory for the second time in three months.  

The second bear market strike essentially reinforces the 1st bear assault last June. Along with 3 ASEAN stocks in bear markets, bears appear to be firmly in command. And it would likely take a Deus ex machina (new QE by the FED perhaps?) to save the day for the bulls. But if the damage from the financial markets spread into the real economy, even a new QE won't likely restore bubble conditions for ASEAN.

While Philippine bonds had been marginally changed, the local currency sympathized with the dreary region, the Peso fell .54% to 44.50. The USD-PHP rose to a 31 month high.

Plummeting by 2.65%, Thailand’s SETI also encroached into the bear market.  The frenzied liquidations also hounded the Thai currency the baht, as well as Thai’s 10 year bonds.

Malaysia’s equities as represented by the KLSE declined 1.23% accompanied by her currency the ringgit. Malaysian bonds had been little changed today.

What seem as striking has been that of the equity markets of Singapore which fell harder than Malaysia today. The STI now trades BELOW the June lows. 

The Singaporean dollar also got battered today.

As I wrote last Sunday, (bold original)

Should the bond vigilantes persist to haunt Singapore, then this would signify as a warning sign for a possible black swan event to occur in Asia.

Add the unfolding events in Indonesia and Thailand with Singapore’s predicament, these are distressing signs, not just of foreign outflows and of the growing risks of a regional recession, but of a brewing regional crisis.

Pardon the appeal to authority but Stephen S. Roach, former chairman and chief economist of Morgan Stanley Asia and senior fellow at Yale University, also suspects that the world could be “in the early stages of another crisis”

Writing at the Project Syndicate, Mr. Roach puts the onus on Asia’s meltdown on Bernanke’s ‘QE Exit strategy’ laps.

Never mind the Fed’s promises that any such moves will be glacial – that it is unlikely to trigger any meaningful increases in policy rates until 2014 or 2015. As the more than 1.1 percentage-point increase in 10-year Treasury yields over the past year indicates, markets have an uncanny knack for discounting glacial events in a short period of time.

Courtesy of that discounting mechanism, the risk-adjusted yield arbitrage has now started to move against emerging-market securities. Not surprisingly, those economies with current-account deficits are feeling the heat first. Suddenly, their saving-investment imbalances are harder to fund in a post-QE regime, an outcome that has taken a wrenching toll on currencies in India, Indonesia, Brazil, and Turkey.

As a result, these countries have been left ensnared in policy traps: Orthodox defense strategies for plunging currencies usually entail higher interest rates – an unpalatable option for emerging economies that are also experiencing downward pressure on economic growth.

In my view and as explained last Sunday, the current EM and ASEAN turmoil has been about the global bond vigilante’s growing recognition of the eroding capability of central banks to influence the markets.

ASEAN's rapidly deteriorating risk environment should not be dismissed or ignored.

Caveat emptor