Geopolitical Risk Theater Links: More US Boots on the Ground, NeoCons versus Putin, Saudi Aramco Oil Fire, Proposed Russian Ban on US Dollar

1 Can’t get enough of Iraq.  Air warfare hasn’t worked, so the POTUS orders more boots on the ground: U.S. to Send 1,500 More Troops to Iraq New York Times November 8, 2014

2 There are no permanent friends only permanent interests: Obama sent 'secret letter' to Iran Daily Star November 8, 2014 (an expose by Israel to forestall sleeping with the enemy?)

3 The  POTUS panders to the opposition, the war lusting neoconservatives: Obama Call to Authorize Islamic State War Tests Congress Bloomberg/Businessweek.com November 6, 2014

4  War is a racket. Throw money at every problem charged to taxpayers for the benefit of the military industrial complex: Problems of U.S. nuclear forces must be addressed Washington Times November 5, 2014

Here is a quote:

U.S. strategic nuclear forces, both weapons and personnel, are experiencing serious problems that must be addressed urgently.

That is a central conclusion of a new study called the “Nuclear Enterprise Review” that the Pentagon is expected to release next week, according to defense officials familiar with the study.

Fixing nuclear forces’ problems will require the investment of billions of defense dollars in modernizing systems and greater leadership attention to training and readiness for the thousands of military personnel who operate and maintain the world’s most powerful arsenal.

5 Neocons are back on the seat of power. One of their likely goal will be to challenge Russia's Putin: Michael Rozeff: McCain versus Putin November 6, 2014

A confrontation is at hand between McCain and Putin. McCain will be the new chairman of the Senate Armed Services Committee. He wants to arm Ukraine. He’s anti-Putin and anti-Russia. Obama is in the middle, trying not to go as far as McCain while still coming out with his own anti-Putin and anti-Russia policies such as sanctions. Putin regards those as blackmail.

6  The easiest thing to do has been to spend or waste other people’s money: US Army Slow to Investigate Losses of Key Encryption Gear in Afghanistan; $420 Million in Gear Unaccounted For Anti-War.com November 5, 2014

An internal report by the Pentagon’s Inspector General found the US Army “lost” some $420 million worth of equipment in Afghanistan, including weapons, sensitive encryption devices, and even some vehicles. 

To make matters worse, the IG found that the Army brigade responsible for managing the gear failed to report the losses in a timely fashion, meaning there were no great efforts to recover it

7 Simmering Iraq battlefront: The Battle for Baiji Heating Up; 345 Killed, 48 Wounded Across Iraq Anti-war.com November 6, 2014

8 Developing brinkmanship across multi-fronts: Finland warns Europe is 'at the gates of a new cold war' in wake of Russian military activity Independent.co.uk November 5, 2014

9 Chinese government’s thrust towards modern warfare: This Video Of A Chinese 5th-Generation Fighter Prototype Shows The Plane Could Have One Huge Weakness Business Insider November 6, 2014

10 Developing geopolitical factional rivalry; the NATO versus SCO: Martin Katusa Putin Signs Secret Pact to Crush NATO Casey Research November 6, 2014 (bold mine)

But you can bet your last ruble that Vladimir Putin knows exactly where Tajikistan is. Because the group that met there is the Russian president’s baby. It’s the Shanghai Cooperation Organization (SCO), consisting of six member states: Russia, China, Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan.

The SCO was founded in 2001, ostensibly to collectively oppose extremism and enhance border security.But its real reason for being is larger. Putin sees it in a broad context, as a counterweight to NATO (a position that the SCO doesn’t deny, by the way). Its official stance may be to pledge nonalignment, nonconfrontation, and noninterference in other countries’ affairs, but—pointedly—the members do conduct joint military exercises…

As always, Putin is not thinking small or short term here. Among the priorities he’s laid out for the Russian chairmanship are: beefing up the role of the SCO in providing regional security; launching major multilateral economic projects; enhancing cultural and humanitarian ties between member nations; and designing comprehensive approaches to current global problems. He is also preparing an SCO development strategy for the 2015-2025 period and believes it will be ready by the time of the next summit.

We should care what’s going on inside the SCO. Once India and Pakistan get in (and they will) and Iran follows shortly thereafter, it’ll be a geopolitical game changer.

11 The right hand doesn’t know what the left hand (see number 2 Obama sends letter to Iran--under the table deal?) has been doing: Pentagon: Iran Giving ‘Lethal Aid to the Taliban’ to Fight U.S. Freebeacon November 6, 2014

12 On Oil politics, I recently wrote (bold mine): 

Saudi Arabia has lately stated that they will protect their oil market share. What if those affected oil welfare deficit governments resist? What if Russia or any of Saudi’s chief adversaries, say Iran, for instance finance rogue groups within Saudi to sabotage the latter’s pipelines?

Saudi oil pipeline fire under control, security source says Reuters Africa November 5, 2014

The source said that the fire was "not the work of terrorists".

Not the work of terrorist? Perhaps. But the Saudi government goes on an abrupt manhunt for terrorists where 26 suspected militants has been arrested “following security raids across the kingdom” aawsanet.com November 7, 2014 

Some coincidence eh? Hmmm.

13 American linguist and philosopher warns on the risk of US imperialism: Chomsky to RT: US and its NATO intervention force may spark nuclear war November 7, 2014 (italics original)

How dangerous is the current confrontation between Russia and the West? Noam Chomsky believes that NATO expansion and US quest for hegemony has put the world in a situation so unstable where any accidental interaction could result in a nuclear war.

The “new NATO” that emerged after the Soviet Union collapsed is basically a US-run intervention force, with a completely different mission as compared to the original, Chomsky tells RT’s Sophie&Co.

“In fact, one might ask why NATO even continued to exist,” he said. “The official justification for NATO was that its purpose was to defend Western Europe from Russian hordes who might attack Western Europe.”

With no more “Russian threat”, the natural conclusion in the 90s would be to disband the alliance, but instead the opposite happened – against all agreements NATO expanded all the way towards the Russian borders.

“Its mission changed. The official mission of NATO became to control the international, the global energy system, pipelines. That means, to control the world.”

14 Looking for a catalyst for World War III? Russia may ban circulation of US dollar APA.com November 5, 2014

If the bill is approved, Russian citizens will have to close their dollar accounts in Russian banks within a year and exchange their dollars in cash to Russian ruble or other countries’ currencies.

Otherwise their accounts will be frozen and cash dollars levied by police, customs, tax, border, and migration services confiscated.

Have a nice day.

Eric Margolis: US Supplied Iraq’s Saddam with Chemical and Biological Weapons

Writing at the LewRockwell.com historian Eric Margolis claims that the US has been responsible for supplying chemical and biological weapons to their once favored tyrant ally, Saddam Hussein (bold mine, italics original)

While covering Iraq in 1990 – just before the first massive US bombing campaign – I discovered the US and Britain had secretly built a germ weapons arsenal for Iraq to use against Iran in the eight year-Iran-Iraq War.

This while both the US and Britain were fulminating with breathtaking hypocrisy against the alleged dangers of Iraq’s supposed WMD’s (weapons of mass destruction) that never existed. Some years later, the two leading apostles of attacking Iraq, George W. Bush and Tony Blair, delivered Philippics against Saddam Hussein’s weapons programs while never mentioning that high level of western support for Iraq’s late leader.

Last week the widely read “New York Times” ran a multi-page exposé entitled “Abandoned Chemical Weapons and Secret Casualties in Iraq.”

The NY Times played a key role in driving the US into two wars against Iraq. America’s leading newspaper is finally facing part of the ugly truth over Iraq’s non-existent weapons of mass destruction, the pretext used by the US to bomb, then invade Iraq. Perhaps it’s trying to atone, or clear its besmirched name.

Iraq had no nuclear weapons, as the US falsely claimed. But it did have an arsenal of chemical and biological weapons – delivered by the western powers. All were battlefield arms, not strategic, weapons. None could be delivered more than 100 kms.

According to the “New York Times,”  after the second war against Iraq in 2003, 17 US servicemen and seven Iraqis were injured by mustard and nerve gas after they dug up buried caches of Iraq’s 1980’s chemical weapons. Shamefully, their plight was kept secret by the Pentagon; the soldiers were refused adequate medical care in order to cover up this sordid story.

But what I uncovered in Baghdad was far worse.

I found two British scientists who had been employed at Iraq’s top secret Salman Pak chemical and biowarfare laboratory near Baghdad. The Brits confided to me they were part of a large technical team secretly organized and “seconded” to Iraq in the mid-1980’s by the British government and the MI6 Secret Intelligence Service. Their goal was to develop and “weaponize” anthrax, plague, botulism and other pathogens for use as tactical germ weapons.

The US and  Saudi Arabia feared Iran’s Islamic revolution would sweep the Mideast and overthrow its oil monarchs. So Washington and its Arab allies convinced Iraq’s president, Saddam Hussein, to invade Iran and overthrow its new government. Arms and money flowed to Iraq from the US, Britain,  Kuwait and the Saudis.

After three years of WWI-style warfare, Iraq found its outnumbered troops could not stop Iranian human-wave attacks. Iran was slowly winning its bloody war against Iraq.

So the US and Britain supplied Saddam Hussein with chemical and biological weapons to break the waves of attacking Iranians. Chemical warfare manufacturing equipment – disguised as insecticide plants – came from Germany, France and Holland. The feed stock for the germ weapons came from a US laboratory in Maryland –approved by the US government. 

Over 500,000 soldiers and civilians died in the eight-year Iran-Iraq conflict. To this day, Iran blames the US and the Saudis for instigating the war and causing some 250,000 Iranian casualties.

By contrast, in the Anglo-American view, chemical and biological weapons were fine – so long as used to kill Muslim Iranians. Used against westerners, they would be denounced as “terrorism.” In 2013, US President Barack Obama threatened Syria with war over unfounded claims that Damascus planned to use chemical weapons on US-backed insurgents.

Read the rest here

The consequence of the past has been relevant to current events. Mr. Margolis concludes:

the current horrible mess in Iraq and Syria is a direct result of the US-led invasion of Iraq in 2003. ISIS is a manufactured monster that could have crawled out of the germ warfare plant at Salman Pak.

US Government’s Frankenstein: How the ISIS Emerged from the ‘Sunni Turn’

Like Osama Bin Laden, the ISIS monster signifies the unintended consequences that has emerged from perverted US foreign imperialist policies in the Middle East.

Writes author and editor Justin Raimondo of the Antiwar.com (ht: Contra Corner) [bold mine]

ISIS didn’t just arise out of the earth like some Islamist variation on the fabled Myrmidons: they needed money, weapons, logistics, propaganda facilities, and international connections to reach the relatively high level of organization and lethality they seem to have achieved in such a short period of time. Where did they get these assets?

None of this is any secret: Saudi Arabia, Qatar, and the rest of the oil-rich Gulf states have been backing them all the way. Prince Bandar al-Sultan, until recently the head of the Kingdom’s intelligence agency – and still the chief of its National Security Council – has been among their biggest backers. Qatar and the Gulf states have also been generous in their support for the Syrian jihadists who were too radical for the US to openly back. Although pressure from Washington – only recently exerted – has reportedly forced them to cut off the aid, ISIS is now an accomplished fact – and how can anyone say that support has entirely evaporated instead of merely going underground?

Washington’s responsibility for the success of ISIS is less direct, but no less damning.

The US was in a de facto alliance with the groups that merged to form ISIS ever since President Barack Obama declared Syria’s Bashar al-Assad "must go" – and Washington started funding Syrian rebel groups whose composition and leadership kept changing. By funding the Free Syrian Army (FSA), our "vetted" Syrian Islamists, this administration has actively worked to defeat the only forces capable of rooting out ISIS from its Syrian nest – Assad’s Ba’athist government. Millions of dollars in overt aid – and who knows how much covertly? – were pumped into the FSA. How much of that seeped into the coffers of ISIS when constantly forming and re-forming chameleon-like rebel groups defected from the FSA? These defectors didn’t just go away: they joined up with more radical – and militarily effective – Islamist militias, some of which undoubtedly found their way to ISIS.

How many ISIS cadres who started out in the FSA were trained and equipped by American "advisors" in neighboring Jordan? We’ll never know the exact answer to that question, but the number is very likely not zero – and this Mother Jones piece shows that, at least under the Clinton-Petraeus duo, the "vetting" process was a joke. Furthermore, Senator Rand Paul (R-Kentucky) may have been on to something when he confronted Hillary with the contention that some of the arms looted from Gaddafi’s arsenals may well have reached the Syrian rebels. There was, after all, the question of where that mysterious "charity ship," the Al Entisar, carrying "humanitarian aid" to the Syrian rebels headquartered in Turkey, sailed from.

Secondly, the open backing by the US of particular Syrian rebel groups no doubt discredited them in the eyes of most Islamist types, driving them away from the FSA and into the arms of ISIS. When it became clear Washington wasn’t going to provide air support for rebel actions on the ground, these guys left the FSA in droves – and swelled the ranks of groups that eventually coalesced into ISIS.

Thirdly, the one silent partner in all this has been the state of Israel. While there is no evidence of direct Israeli backing, the public statements of some top Israeli officials lead one to believe Tel Aviv has little interest in stopping the ISIS threat – except, of course, to urge Washington to step deeper into the Syrian quagmire.

In a recent public event held at the Aspen Institute, former Israeli ambassador to the US Michael Oren bluntly stated that in any struggle between the Sunni jihadists and their Iranian Shi’ite enemies, the former are the "lesser evil." They’re all "bad guys," says Oren, but "we always wanted Bashar Assad to go, we always preferred the bad guys who weren’t backed by Iran to the bad guys who were backed by Iran." Last year, Sima Shine, Israel’s Minister of Strategic Affairs, declared:

"The alternative, whereby [Assad falls and] Jihadists flock to Syria, is not good. We have no good options in Syria. But Assad remaining along with the Iranians is worse. His ouster would exert immense pressure on Iran."

None of this should come as much of a surprise to anyone who has been following Israel’s machinations in the region. It has long been known that the Israelis have been standing very close to the sidelines of the Syrian civil war, gloating and hoping for "no outcome," as this New York Times piece put it.

Israel’s goal in the region has been to gin up as much conflict and chaos as possible, keeping its Islamic enemies divided, making it impossible for any credible challenge to arise among its Arab neighbors – and aiming the main blow at Tehran. As Ambassador Oren so brazenly asserted – while paying lip service to the awfulness of ISIS and al-Qaeda – their quarrel isn’t really with the Arabs, anyway – it’s with the Persians, whom they fear and loathe, and whose destruction has been their number one objective since the days of Ariel Sharon.

Why anyone is shocked that our Middle Eastern allies have been building up Sunni radicals in the region is beyond me – because this has also been de facto US policy since the Bush administration, which began recruiting American assets in the Sunni region as the linchpin of the Iraqi "surge." This was part and parcel of the so-called "Sunni turn," or "redirection," in Seymour Hersh’s phrase, which, as I warned in 2006, would become Washington’s chosen strategy for dealing with what they called the "Shia crescent" – the crescent-shaped territory spanning Iran, Iraq, Syria, and parts of Lebanon under Hezbollah’s control, which the neocons began pointing to as the Big New Threat shortly after Saddam Hussein’s defeat.

The pro-Sunni orientation of US policymakers wasn’t reversed with the change of administrations: instead, it went into overdrive, especially after the much-vaunted Arab Spring. Both Hillary Clinton, then Secretary of State, and David Petraeus, who had yet to disgrace himself and was still CIA director, lobbied intensively for more support to the Syrian rebels. The Sunni Turn took a fateful turn when the Three Harpies of the Apocalypse – Hillary, Susan Rice, and now UN ambassador Samantha Power – hectored Obama into pursuing regime change in Libya. In this case the US and its NATO allies acted as the Islamist militia’s air force while supplying them with arms on the ground and diplomatic support internationally.

Yet even as Libya was imploding from the effects of its "liberation," the neocons and their "liberal" interventionist allies in the Democratic party – and in the highest reaches of the Obama administration – were building support for yet another fateful "Sunni turn," this time in Syria. Caving to this pressure, the Obama administration decided to act on accusations of poison gas supposedly used by Assad against the rebels to directly intervene with a bombing campaign modeled along Libyan lines. Only a huge public outcry stopped them.

ISIS could never have been consolidated in the form it has now taken without the strategic disaster of Washington’s "Sunni turn." While the US may have reason to regret this harebrained strategy, it’s far too late for that – and it looks to me like our "allies" in the region, including Israel, aren’t about to turn on a dime at Obama’s command.

Pls read the entire article here

Ron Paul: What Have We Accomplished in Iraq?

Ron Paul on the US Government’s favorite battleground: (from Ron Paul Institute) [bold mine]

We have been at war with Iraq for 24 years, starting with Operations Desert Shield and Storm in 1990. Shortly after Iraq’s invasion of Kuwait that year, the propaganda machine began agitating for a US attack on Iraq. We all remember the appearance before Congress of a young Kuwaiti woman claiming that the Iraqis were ripping Kuwaiti babies from incubators. The woman turned out to be the daughter of the Kuwaiti ambassador to the US and the story was false, but it was enough to turn US opposition in favor of an attack.

This month, yet another US president – the fifth in a row – began bombing Iraq. He is also placing in US troops on the ground despite promising not to do so.

The second Iraq war in 2003 cost the US some two trillion dollars. According to estimates, more than one million deaths have occurred as a result of that war. Millions of tons of US bombs have fallen in Iraq almost steadily since 1991.

What have we accomplished? Where are we now, 24 years later? We are back where we started, at war in Iraq!

The US overthrew Saddam Hussein in the second Iraq war and put into place a puppet, Nouri al-Maliki. But after eight years, last week the US engineered a coup against Maliki to put in place yet another puppet. The US accused Maliki of misrule and divisiveness, but what really irritated the US government was his 2011 refusal to grant immunity to the thousands of US troops that Obama wanted to keep in the country.

Early this year, a radical Islamist group, ISIS, began taking over territory in Iraq, starting with Fallujah. The organization had been operating in Syria, strengthened by US support for the overthrow of the Syrian government. ISIS obtained a broad array of sophisticated US weapons in Syria, very often capturing them from other US-approved opposition groups. Some claim that lax screening criteria allowed some ISIS fighters to even participate in secret CIA training camps in Jordan and Turkey.

This month, ISIS became the target of a new US bombing campaign in Iraq. The pretext for the latest US attack was the plight of a religious minority in the Kurdish region currently under ISIS attack. The US government and media warned that up to 100,000 from this group, including some 40,000 stranded on a mountain, could be slaughtered if the US did not intervene at once. Americans unfortunately once again fell for this propaganda and US bombs began to fall. Last week, however, it was determined that only about 2,000 were on the mountain and many of them had been living there for years! They didn’t want to be rescued!

This is not to say that the plight of many of these people is not tragic, but why is it that the US government did not say a word when three out of four Christians were forced out of Iraq during the ten year US occupation? Why has the US said nothing about the Christians slaughtered by its allies in Syria? What about all the Palestinians killed in Gaza or the ethnic Russians killed in east Ukraine?

The humanitarian situation was cynically manipulated by the Obama administration --  and echoed by the US media -- to provide a reason for the president to attack Iraq again. This time it was about yet another regime change, breaking Kurdistan away from Iraq and protection of the rich oil reserves there, and acceptance of a new US military presence on the ground in the country.

President Obama has started another war in Iraq and Congress is completely silent. No declaration, no authorization, not even a debate. After 24 years we are back where we started. Isn’t it about time to re-think this failed interventionist policy? Isn’t it time to stop trusting the government and its war propaganda? Isn’t it time to leave Iraq alone?

The US government can’t seem to get enough of Iraq. (hat tip zero hedge)

This video may perhaps explain why. The video shows the US Centcom blowing up a US made Humvee held by the ISIS. 

The US government provide weapons then they blow them up. Who pays for this? Naturally the average Americans. Who benefits from this? The military industrial complex.

The late Major General Smedley Butler, USMC is right: War is a racket

Iraq War: Washington’s Confused Policy

Analyst David Stockman explains of how US foreign imperial policy in Iraq has been one colossal jumbled mess. The US government has not only been bombing their own weapons, they are bombing jihadist troops which they previously trained and armed at the expense of the opposing sect which the US government has previously fought against but ironically are now protecting. 

As a side note, the US bombing of own weapons means more business for the the military industrial complex.

Back to Mr. Stockman 

But then again, ISIS got provisioned by none other than the Iraqi Army. The latter not only dropped its uniforms for civvies during the battle for Mosul, but also left behind armored Humvees, heavy artillery, night vision systems, state of the art firearms and much else of like and similar nature. Nor was this the first time that the Iraqi Army disarmed itself unilaterally. A while back they also surrendered their uniforms and guns when another American President—George W. Bush—-bombed them.

That was called “shock and awe”. Afterwards, the remnants of the Iraqi army must have found it indeed shocking and awesome that Washington immediately pivoted— after hanging the country’s leader—and spent $25 billion re-equipping and training them in brand new uniforms and with far better weapons.

Fast-forward to 2014. The hasty hand-off of these American weapons to ISIS during its June blitzkrieg was easy enough to explain. On their way out of Baghdad, the Washington “nation builders” had equipped and trained a native army so that it could defend a “nation” which did not exist. What passed for “Iraq” was some very long, straight lines drawn on a map exactly 98 years ago by the British and French foreign offices as they carved up their winnings from the Ottoman Empire. What passed for governance within these so-called Sykes-Picot boundaries was a series of kings, generals and dictators—- culminating in Saddam Hussein—-who ruled from the barrel of whatever gun had been supplied by the highest bidder among the Great Powers.

Thus, Brezhnev gave the Iraqi generals weapons in the 1970s. In the 1980s, President Reagan joined in, green lighting exports of the components and precursors for chemical weapons and providing Saddam with the satellite-based intelligence to practice using them on his “enemies” ( i.e. teenage boys in the Iranian Army) before he used them on his own people (i.e. the Kurds and the Shiite).

Not surprisingly, after the US had “liberated” Iraq from 90 years of dictatorship—democracy took hold with lightening speed subsequent to the 2011 departure of American GIs. The “rule of the majority”—that is, the Shiite majority—-soon ripped through most governmental institutions, but especially the military. In short order the “Iraqi” army became a Shiite army. Hence the precipitous surrender and flight from the battles of Mosul and other northern cities. That was Sunni and Kurd territory—–not a place where Shiite soldiers wanted to be shot dead or caught alive.

The more interesting mystery is how the ISIS fighters learned how to use Uncle Sam’s advanced weaponry so quickly. Perhaps the CIA knows. It did train several thousand anti-Assad fighters in its secret camps in Jordan in preparation for Washington’s “regime change” campaign in Syria. Undoubtedly, in the fog of war—-especially the sectarian wars in the Islamic heartland that have been raging for 13 centuries—it is difficult to have friend and foe vetted effectively.

Please read the rest here

Breaking: US President Obama Authorizes Air Strikes in Iraq, Global Equity Markets Convulses

The US government (and vested interest groups) has been itching to get involved in wars. So the 2009 Nobel Prize for Peace awardee US President Barack Obama found justification to get into one, thereby authorizing airstrikes in Iraq.

From CNN:

U.S. President Barack Obama said Thursday that he's authorized "targeted airstrikes" in Iraq to protect American personnel and help Iraqi forces.

"We do whatever is necessary to protect our people," Obama said. "We support our allies when they're in danger."

A key concern for U.S. officials: American consular staff and military advisers working with the Iraqi military in Irbil, the largest city in Iraq's Kurdish region.

Obama said Thursday he'd directed the military to take targeted strikes against Islamist militants "should they move towards the city."

Rapid developments on the ground, where a humanitarian crisis is emerging with minority groups facing possible slaughter by Sunni Muslim extremists, have set the stage for an increasingly dire situation.

It’s not farfetched where ground forces will be next. Besides, after all these years money spent and lives lost, the US government can't seem to get enough of Iraq

Oh, don’t forget there is the Ukraine crisis in the pipeline. So far, the Ukraine crisis has been a ‘civil war’. But this localized war may mutate into an international war or even World War III very soon.

As I explained here War has almost always been associated with inflationism: 

War has always been used as opportunities to exploit society (through financial repression) and suppress internal political opposition in order to advance the interests of the ruling political class whose interest are interlinked with the politically favored banking class, the welfare and the warfare class.

American Novelist Ernest Hemmingway said it best: 

The first panacea for a mismanaged nation is inflation of the currency; the second is war. Both bring a temporary prosperity; both bring a permanent ruin. But both are the refuge of political and economic opportunists.

Stocks have been taking a drubbing, as of this writing Japan’s Nikkei are off nearly 3%

Asian markets have been mostly bloodied (Bloomberg).

So as with US futures (CNN)

But for the bulls, such would represent a 'buying opportunity'. That's because for the "don't worry be happy" crowd, stocks are bound to go up forever....until it won't.

Has the Middle East Stock Market Bubble been Popped?

Has the escalating violence in Iraq popped the Middle East stock market bubble? Have investors been cashing in to seek safehaven from  further deterioration in region's social conditions?  Or has the current abrupt declines been about raising funds to finance parties engaged in the sectarian war? Or has the Iraq war served as an aggravating factor to a bubble naturally set to bust? 

The following charts are from Bloomberg and referenced from a 3 year perspective

The Bloomberg GCC  200 Index or BGC200 or the “capitalization weighted index of the top 200 equities in the GCC region”. GCC stands for Gulf Cooperation Council or the “regional intergovernmental political and economic union consisting of all Arab states of the Persian Gulf, except for Iraq. Its member states are the Islamic monarchies of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates” (Wikipedia)

The Bahrain Bourse all Share index (BHSEASI). Despite the recent decline, the BHSEASI remains up 14.89% year to date.

The Kuwaiti Stock Exchange Index (KWSEIDX) –8.07% y-t-d

Oman’s Muscat Securities (MSM30) +1.5% y-t-d

Qatar Exchange Index (DSMID) +19.98 y-t-d

Saudi Arabia’s Tadawul All Share (SASEIDX) +13.04% y-t-d

Finally the United Arab Emirates Dubai Financial Market General Index (DFMGI) +36.31% y-t-d

Are these writing on the wall for global stock markets? 

We will see how these will play out.

Stay tuned.

Quote of the Day: The ISIS as evidence to theories of the state’s origins

How does ISIS spend the money it collects? This too sheds light on how a state embeds itself with a population and creates its own particular equation of sources and uses of funds. Every state (and organization of any kind) by definition has this equation: sources of funds = uses of funds.

“‘It’s assumed that ISIS pays the foreign fighters in its ranks, but perhaps it pays all its troops,’ according to Charles Lister. ‘In the areas under ISIS control, the organization subsidizes bread, water, and fuel, and also finances the maintenance and operation of basic public services. All that costs money.’”

ISIS has three main uses of funds: military + goods to the population + support of government administration. The “population goods” keep its subjects quiet. The military provides the force and threat to be able to extract the taxes and other resources from looting. The support of government pays for the government officials, tax collectors and bureaucracies. Every state, not only ISIS, is the same. The equation, in simplified terms as exemplified by ISIS, looks like this:

TAXES = MILITARY SPENDING + GOODS TO THE POPULATION + GOVERNMENT ADMINISTRATION

(TAXES includes all forms of looting, and I’ve omitted charitable giving as a source because it is typically not a continuing major source for states. It can be a significant startup source.)

Since taxes are necessarily higher than goods returned to the population, the subjects of any state continually incur a loss. They supply the funds that go to the military that keeps them under the rule of the state. That and the resources that go to government administration are a deadweight monetary loss. (There are other losses. There is a loss in utility or happiness because the taxes do not go to goods that the citizens want. There are losses from the disincentive effects of taxes and government rules.)

ISIS, now a proto-state and seeking to become a state, began in violence and conquest. This is how states begin according to Franz Oppenheimer and Albert Jay Nock, among others. ISIS provides further evidence consistent with their theories of the state’s origins.

This excerpt is from former economics and finance Professor Michael S. Rozeff at the lewrockwell Blog

Iraq War: Dick Cheney’s predictions come true

Mises Academy director Daniel Sanchez at the lewrockwell.com evaluates the predictions of former US VP Dick Cheney

In a 1994 interview, Cheney was taken to task over this “missed opportunity” by the neocon American Enterprise Institute. Cheney defended the decision using the following predictions:

Once you got to Iraq and took it over, took down Saddam Hussein’s government, then what are you going to put in its place? That’s a very volatile part of the world, and if you take down the central government of Iraq, you could very easily end up seeing pieces of Iraq fly off: part of it, the Syrians would like to have to the west, part of it — eastern Iraq — the Iranians would like to claim, they fought over it for eight years. In the north you’ve got the Kurds, and if the Kurds spin loose and join with the Kurds in Turkey, then you threaten the territorial integrity of Turkey.

Let’s look at the events of this past week, and see how clear Cheney’s crystal ball was.

Cheney predicted Syrians taking over western Iraq. Western Iraq, including oil-rich Mosul (the second-largest city in the country), has indeed been taken over by a force entering from Syria: namely, ISIS (the Islamic State of Iraq and Syria), an Al Qaeda splinter group (and beneficiary of American military aid to the rebel forces in the Syrian civil war). True, it’s not the Syrian state, and only partially consists of Syrian people. But he got the geography right, and the demographics partially right. 

Check.

Cheney predicted the Iranians taking eastern Iraq. The U.S. war that overthrew Saddam’s Sunni Muslim regime put the government and the capital in the east, Baghdad, into the hands of a Shi’ite regime allied with Shi’ite Iran, who backed the election of the current prime minister. And now Iran has actually deployed troops to combat ISIS into Iraq from the east. With the U.S. ground presence already mostly gone, and now rapidly evacuating, and Iraqi government soldiers stripping off their uniforms and abandoning their U.S.-supplied weapons to ISIS at the first sight of them, the Iranian troops are becoming the only serious ground force in the east.

Check. 

Finally, Cheney predicted the Kurds spinning loose and being a threat in the north. The Kurds have indeed become autonomous, and recently seized the northern city of Kirkuk for themselves, after it was abandoned by Iraqi government forces fleeing the oncoming ISIS forces.

Check. That’s 3 for 3. 

Pls read the rest here

Middle East Crisis: The geopolitics of my enemy’s enemy has become my friend’s enemy

The current crisis in the Middle East has really been a product of the politics of imperialism of which the unraveling political conditions of Iraq represents just one of the many emerging and potential symptoms.  

Iraq emerged as part of the territorial allocation (divisions of spoils from war) awarded to Britain, taken from the vanquished Ottoman Empire, via the Sykes-Picot treaty/agreement (a secret agreement of United Kingdom and France with the assent of Russia in defining their sphere of influence), following the close of World War I. This makes Iraq an artificial nation bound by deep ethnic and religious divide. And US government meddling in the region has only opened up old wounds and complicated highly sensitive relationships.

The Middle East geopolitics of "no permanent friends and only permanent interests" as explained historian Eric Margolis.

The late Saddam Hussein was certainly right when he predicted that America’s invasion of Iraq would become “the Mother of All Battles.” Eleven years later, it continues….

ISIS is a combination of Sunni jihadist groups fighting the Shia-backed Damascus government of Bashar Assad( a US enemy backed by Shia Iran), and resurgent units of Saddam’s old Ba’athist army, led by Izzat Ibrahin al-Douri, the last surviving member of Saddam’s inner circle, and a handful of al-Qaida in Iraq.

They are battling to overthrow the US-installed Shia regime in Baghdad of Nuri al-Maliki, an Iranian ally. There are suspicions ISIS may be secretly financed by Sunni Saudi Arabia, a US ally.

Wait a minute. My enemy’s enemy is my friend, as the old Mideast saying goes. The US is trying to overthrow Syria’s secular government to undermine its ally, Iran. The US has been using brutal jihadist groups against the Assad regime in Damascus. But now these jihadists in Syria have mostly fallen under the sway of ISIS – which is chewing up the US-backed regime in Baghdad. Confusing, is it not? My enemy’s enemy has become my friend’s enemy.

The major beneficiary from the Middle East Crisis….

Following the time-tested Roman imperial formula of ‘divide et impera’ (divide and rule), Washington played Iraq’s long downtrodden Shia against its Sunni minority, igniting a wider Sunni-Shia conflict in the Arab world, notably in Syria. In fact, Israel emerged as the sole strategic victor of the Bush/Cheney war against Iraq.

That war, so far, has cost the US 4,500 soldiers killed, 35,700 wounded, 45,000 sick and over $1 trillion. Iraq lies in ruins, likely shattered beyond all attempts to put it back together. No senior American or British official has faced trial for this disastrous, trumped-up war.

The blowback on Sykes-Picot

Interestingly, efforts by ISIS to forge an Islamic state in a merged Syria and Iraq is one of the first major challenges to the foul Sykes-Picot agreement of 1916 under which the British and French Empires secretly colluded to divide up the moribund Ottoman Empire’s Mideast domains. Today’s artificial Mideast borders were drawn by the Anglo-French imperialists to impose their rule on the region. Iraq and Syria were the most egregious examples.

ISIS appears set on erasing the British-French borders and re-creating the unified Ottoman province (Turkish: vilyat) of Syria, Lebanon and Iraq. In the West, the neocon-dominated commentariat calls ISIS terrorists. In the Mideast, many see them as anti-colonial fighters struggling to reunite the Arab world sundered and splintered by the western powers. The western powers are now preparing to strike back.

Read the entire article here

If the conditions in the Middle East spreads and deteriorates, such poses a substantial risk on the stability of the region. Aside from the potential impact on oil prices which will compound on the growing global inflationary pressures, a regional conflict will destabilize global trade and economy (e.g. OFWs)

Don't worry be happy, stocks will rise forever.

Watch Out, Surging Oil Prices will COMPOUND on Inflation Risks!

Low-flation eh?

From Reuters:

Oil prices jumped to nine-month highs on Thursday, as concerns mounted that escalating violence in Iraq could disrupt oil supplies from the second-largest OPEC producer.

Sunni Islamist militants, who took over Iraq's second-biggest city Mosul earlier this week, extended their advance south toward Baghdad and surrounded the country's largest refinery in the northern town of Baiji on Thursday.

Let us see these via charts.

The US crude benchmark the WTIC just had a breakout!

US gasoline likewise posted a seeming breakout, which will likely be confirmed or falsified during the coming sessions.

This will ADD to the growing inflation pressures in the US which will jeopardize the stock market bubble.

Even Europe's Brent Crude seems as testing a critical resistance level.

The question is will troubles in Iraq signify a temporary event or will these escalate?

The recent twist of events reveals how the US Bush-Obama war on Iraq has not only been a dramatic failure of US interventionist policies, but a blowback, as the so-called terrorists seemingly beating back the Americans at their own game.  Talk about Karma.

These also seem as the unintended consequence of the confused and self contradictory imperial policies by the US government in the region.

Paradoxically, the client state or the US sponsored Iraq government has been fighting off insurgents whom has relations with US backed rebels in Syria!

From the PBS Frontline (May 2014): The interviews are the latest evidence that after more than three years of warfare, the United States has stepped up the provision of lethal aid to the rebels. In recent months, at least five rebel units have posted videos showing their members firing U.S.-made TOW anti-tank missiles at Syrian positions…many both inside and out of government fear U.S.-provided weapons could make their way into extremist hands, particularly in a place like Syria, where alliances and foes change with breakneck fluidity. Moderate rebel groups have worked closely with the al Qaida-aligned Nusra Front and the Islamic Front, one of whose factions, Ahrar al Sham, includes al Qaida members among its founders."

Now Iraq’s rebels could be using some of the US provided weapons in their war to take control of Iraq via Baghdad. 

Al Qaida-inspired militants from ISIS, the Islamic State of Iraq and al-Sham, have reportedly seized US Black Hawk helicopters, looted 500 billion Iraqi dinars - the equivalent of $429m (£256m) - from Mosul's central bank, has now laid siege or surrounded Iraq's largest refinery in Baiji, and may have unleashed a sectarian war.

Reports the Zero Hedge: As the WSJ reports, after hard core Al Qaeda spin off ISIS (no relation to Sterling Archer) took over Saddam's home town of Tikrit yesterday, Iraq edged closer to all-out sectarian conflict on Thursday as Kurdish forces took control of a provincial capital in the oil-rich north and Sunni militants vowed to march on two cities revered by Shiite Muslims.  Kurdish militia known as peshmerga said they had taken up positions in key government installations in Kirkuk, as forces of the Shiite-dominated government of Prime Minister Nouri al-Maliki abandoned their posts and fled in fear of advancing Sunni militants, an official in the office of the provincial governor said.

Cumulative years of US interventions seem to have triggered a regional conflagration.

Yet the US government will continue to intervene as wars signifies as good business for the politically influential military industrial complex. President Obama has pledged to support the incumbent Iraq government, but did not offer ground troops.

Aside from the renewed outbreak violence in Iraq, one ramification of the US –Russia proxy civil war in Ukraine has been a test of mettle between two major military powers: The US government acknowledged that they have scrambled jet fighters to intercept 4 Russian bombers who flew nearly 50 miles off the California Coast. Wow! Russians frontally testing the US.

As geopolitical risks have been simmering, the effects of which has been to disrupt supply chains (as oil), thereby compounding on pressures to global consumer price inflation.

But for the don’t worry be happy crowd, whether in the Philippines or the US or elsewhere, various additional risks aside from inflation, such as protectionism or war should be dismissed because stocks are bound to rise forever, based on the kooky idea of "don't fight the FED" or central banks! Maybe they think that central banks can print oil too.

On the Boston Bombing and the US Police State

Mainstream media has been projecting that the Boston bombing incident has been a triumph of government over terrorism.

But there has been more than meets the eye. Many of things has been occurring beyond the surface.

There was supposedly a police drill that happened “complete with bomb squads and rooftop snipers” at the start of the race. A mere coincidence?

Suspected terrorists have reportedly been “manipulated and harassed” by US authorities for years even before the atrocious act.

Here is Daniel McAdams at the Lew Rockwell Blog:

As Infowars reports, the Boston Bomber the Younger had been manipulated and harassed by the FBI for years. How many of the post-9/11 wannabe terrorists have been actually developed, nurtured, and supported by the FBI and other US intelligence agencies? All of them? These guys too? Will no one but LRC and Alex Jones ask the question?

Hemingway was a paranoid who killed himself over his delusions that he was being followed and manipulated by the US intelligence agencies. What a kook! Until it came out that he was in fact being followed and manipulated by US intelligence agencies.

How much more power and money do they have now, sixty years and many convenient terrorist attacks later? How many of these terrorists are the creation of the FBI and homeland security and the shadow government? Sure, it's kooky to even ask the question. But evidence shows this is a very kooky time. Maybe we can ask the Black and Tans what they think about it... Whoa, I sound like a kook.

UPDATE: In answer to my questions above, it turns out even the establishment New York Times reports that "Of the 22 most frightening plans for attacks since 9/11 on American soil, 14 were developed in sting operations." In other words, two-thirds of the planned terrorist attacks against us were hatched by our own government!

TV personality Glenn Beck points to a supposed cover up by the White House on an alleged involvement of a Saudi national. Conspiracy theory?

The manhunt against 2 bombers turned part of Boston into a virtual police state. People homes had been raided even without search warrants. More photos here. And such martial law tactics used to happen only in banana republics. Not anymore. 

Yet the martial law in Boston didn’t lead to the arrest of the second suspect, the community did.

From Boston.com (hat tip Professor David Henderson)

By 6 p.m., frustrated officials relaxed the rule and allowed residents to leave their homes. The people of Watertown began to venture outside.

But within an hour, the crack of gunshots again blasted through the neighborhood. ­Sirens blared, and officers on foot scrambled down Franklin Street.

Police found Dzhokhar ­Tsarnaev hiding on a boat stored in a backyard on ­Franklin Street. Police ­exchanged gunfire with him before capturing him alive. Spontaneous celebrations erupted across the region, from the ­Boston Common to the Back Bay streets near the bombing.

The boat’s owners, a couple, spent Friday hunkered down under the stay-at-home order. When it was lifted early in the evening, they ventured outside for some fresh air and the man noticed the tarp on his boat blowing in the wind, according to their his son, Robert Duffy.

The cords securing it had been cut and there was blood near the straps. Duffy’s father called police, who swarmed the yard and had the couple evacuated, Duffy said.

Residents, who had barricaded themselves in their homes for nearly 20 hours, were still deeply shaken.

Shaken by whom, the terrorists or by police action?
 
And in spite of the community lockdown, authorities “requested” or "chose" Dunkin Donuts to remain open, from another Boston.com article

On block after block of the Boston’s Financial District and Downtown Crossing, Starbucks shops went dark as the city locked down, spurred by a manhunt for the second marathon bombing suspect. Dunkin’ Donuts stayed open.

Law enforcement asked the chain to keep some restaurants open in locked-down communities to provide hot coffee and food to police and other emergency workers, including in Watertown, the focus of the search for the bombing suspect. Dunkin’ is providing its products to them for free.

Cronyism amidst the police state? Think of free lunches for authorities. No wonder the allure of the police state. 

Meanwhile while media blares about the virtues of capturing suspects of the Boston bombing, the US Senate passed a Cyber 'privacy-infringement' law without much ado from the public.

Former Texas Congressman Ron Paul writes,

While it did not receive nearly as much attention as the debate on gun control, the House of Representatives passed legislation with significant implications for individual liberty: the Cyber Intelligence Sharing and Protection Act (CISPA). CISPA proponents claim that the legislation is necessary to protect Americans from foreign “cyber terrorists,” but the real effect of this bill will be to further erode Americans’ online privacy.

Boston bombing as a diversion tactic?

And the Boston incident had also been used as justification for a clampdown on people’s civil liberties. More from Mr. Paul

Sadly, I expect this week’s tragic attacks in Boston to be used to justify new restrictions on liberty. Within 48 hours of the attack in Boston, at least one Congressman was calling for increased use of surveillance cameras to expand the government’s ability to monitor our actions, while another Senator called for a federal law mandating background checks before Americans can buy “explosive powder.”

If there is any clue which the unfortunate Boston Incident tell us, it is that the US seems headed towards a police state.

For instance, 1.6 billion rounds of ammo have been recently purchased by the Department of Homeland Security.

From the Forbes.com

The Denver Post, on February 15^th, ran an Associated Press article entitled Homeland Security aims to buy 1.6b rounds of ammo, so far to little notice.  It confirmed that the Department of Homeland Security has issued an open purchase order for 1.6 billion rounds of ammunition.  As reported elsewhere, some of this purchase order is for hollow-point rounds, forbidden by international law for use in war, along with a frightening amount specialized for snipers. Also reported elsewhere, at the height of the Iraq War the Army was expending less than 6 million rounds a month.  Therefore 1.6 billion rounds would be enough to sustain a hot war for 20+ years.  In America.

For what? Has the DHS been preparing for foreign invasion or the Red dawn? Or alien invasion?

The Boston incident adds to many more signs of America’s transition towards a police state or the "Road to serfdom".

Meanwhile a suicide bombing in Iraq claimed 32 lives and wounded 65 more. Yet such incident hardly gets into the headlines. Why?

Also a US Senator estimates death toll from US drones at 4,700 which included civilians. The senator says because of war, collateral damage is legit. Notice the self-contradiction?  In war, any American civilian fatalities are considered immoral, but foreign civilian deaths are justified. Could such kind of cavalier thinking and actions prompted for the growth of terrorism?

Yet along with the fast expanding police state is the widening dragnet of financial repression via QE, negative interest rates, more taxes, more regulations, FACTA and etc..

Americans seem to have forgotten the admonitions of Benjamin Franklin on sacrificing liberty for safety 

They who can give up essential liberty to obtain a little temporary safety deserve neither liberty nor safety.