Jul 252014
 July 25, 2014  Posted by at 4:41 pm Finance Tagged with: , , , , ,

DPC The Flatiron Building, NY 1903

I don’t really want to keep talk about Ukraine, but it’s too hard to avoid. Besides, it’s not the same story anymore that it was when the week began, since the economic war vs Putin and Russia is now escalating. For reasons that have nothing to do with the plane crash, though they may seem to, a fact that completely seems to escape 999 out of 1000 people.

We still don’t know who shot that plane (we’re not even sure anyone did), and the longer is takes to get evidence for who did it, the more likely it is that such evidence will be tainted and/or fabricated.

That’s undoubtedly why the western media simply bypass the need for evidence, which is worrisome on multiple fronts. The “logic” behind it seems to go something like this: Russia is involved in the plane crash because it has been involved in east Ukraine after the Maidan coup ousted Yanukovych, by supporting – in undefined ways – the Russian speaking population and ‘rebels’.

The problem is that if you follow that logic, the west, too, is involved in the crash, since the EU and US have very actively supported the other side in the domestic Ukraine conflict. That would leave only the “but we are on the good side”, or even “God is on our side” defense (not that the west feels it needs to defend itself). But “good side” or “God’s side” are not arguments that hold up in for instance a legal environment: you’re either involved or you’re not.

So if, being the west, you want to put the blame for MH17 on the Russians, bypass the need for evidence, and accuse them on the grounds of “indirect involvement”, you’re also at the same time implicating yourself. You can’t escape the fact that your actions may have contributed to the disaster. And I don’t understand why western politicians and journalists fall into that trap, and why the population falls so easily and eagerly with them.

What’s more, as long as there is no evidence on the table, it’s at least as likely that the Ukraine army – or CIA or Blackwater – shot the plane as it is that the rebels did. It is as simple as that. The move to isolate Russia and Putin which has evolved over the past week, evidence be damned, makes clear that those operating on “our side” may well have had a lot more motive to shoot down a passenger plane than the ‘rebels’ did. And that they have a political agenda: those sanctions were not all drawn up on a rainy afternoon. .

After all, as we see now, it is the perfect excuse to blame and isolate Putin. Well, it’s of course not 100% perfect, since there’s no evidence, but if you shout loud enough and often enough, and you sufficiently play to people’s fear and anger, who needs perfection or even evidence? You only need to “implant” the suspicion and let it start fermenting.

Reuters quotes Dutch PM Mark Rutte today as saying:

“There’s an easy way out for Russia: to distance themselves from the separatists, and stop arming them.”

.. and that is really beyond reason. Rutte, like everyone else involved, knows that this would mean Kiev can continue murdering its own women and children with impunity. And that’s even assuming there would be evidence that Russia arms the rebels; all we have to date is hearsay and innuendo.

What Europe and the US should be doing right now, and that would be an easy thing to do, is to tell Kiev to stop shooting its own people, and go sit around a table with with all parties, including Kiev, Russia and the people east Ukrainians choose to represent them. Until that happens, if ever, we must look at the west’s actions with huge suspicion. There’s an easy way out for the west, and they’re not taking it.

Who would represent Kiev in such negotiations is not clear, since it has no government anymore, not even the US/EU handpicked one. It would be good to see someone investigate why the government resigned yesterday. And what, if anything, the resignation has to do with the plane crash. Russian media report:

“We can say with confidence that this intention reveals a wish to avoid responsibility for the troubles and misfortunes that were brought upon the people of Ukraine with his help, for the crimes that were committed by the authorities,” Irina Yarovaya, Chair of the State Duma (lower house of the Russian parliament) Security Committee, told ITAR-TASS. In her opinion, “the crimes that were committed over this time with Yatsenyuk’s direct participation are appalling”.

As far as the – additional – sanctions are concerned that the EU is supposed to announce, Reuters says:

… restrictions on Russian access to European financial markets, defence and energy technology and equipment useful for both defence or civilian purposes. [..] Under proposals put forward by the Commission, the EU would target state-owned Russian banks vital to financing Moscow’s faltering economy. Under the proposal, European investors would be banned from buying new debt or shares of banks owned 50% or more by the state.

Of course, in an integrated global economy, it is possible for one party to hurt another financially, presumably even hard. But demanding that Russia step aside and gives ‘leaders’ in Kiev time and space to execute the burning and nuking of all Russian speaking Ukrainians which several of them have openly spoken about, is a road to nowhere.

Proposed EU Sanctions Threaten To Shut Russia Out Of The Financial System

Here is the EU sanctions document under furious debate today, courtesy of our Brussels correspondent, Bruno Waterfield. Note the heading “Non paper”. It is leaked, not authorised. This is a menu of options. It requires unanimous backing of the 28 ambassadors. Any one country can veto it. Cyprus may find it too much to swallow, and will need a lot of sugar to help it go down. The MICEX index of stocks in Moscow rallied in the mid-morning session and is level for the day. The state-owned banks VTB and Sberbank scarcely missed a beat. Investors are clearly calculating that nothing will come of this.

The measures come into force only if Russia continues to help the rebels and funnel militants across the border (which in reality no longer exists). Still, I hope these investors have good political intelligence in Brussels, London, Paris, Berlin, and Washington, because this looks a little cavalier to me – rather like those who continued to buy the dips even after the Austro-Hungarian Empire issued its ultimatum to Serbia in July 1914. The document makes clear that the aim is to force Russian banks into the arms of the state, bleeding the Russian budget and reserves. This really is “tier III” level. It hammers the whole financial system.

In short, this is a financial war based on hearsay and humbug, which the US and EU can only start and continue if they keep their people angry enough, and therefore misinformed enough. That may not turn out to be as easy as they think today. It may depend on what Russia can show and tell the western media.

It may also depend on reactions in the west to fast rising energy prices. Which, if these sanctions are voted in (not certain by any means), seem inevitable. The US and its short term shale riches may feel fine about that (something that may come to haunt them), but for Europe the consequences could be devastating, and as rapidly as the sanctions hit Russia’s economy.

My guess is Brussels’ bureaucrats have been fooled into believing that they can beat Russia and take over – much of – its energy wealth. That does not look smart at all, but then these people never were. They know how to squeeze Greece and Italy, and the success there has gone to their heads. But as soon as they would even get close to Russia’s oil and gas – which I don’t think they will -, the US would step in and take it away from them. That’s how powers are divided in today’s world. As I said earlier this week, best remember who your friends are.

The US can’t wage a physical war against Russia, it wouldn’t dare. But it can try and coax the Brussels fat old boys into a battlefield here and there. We have entered what should be regarded as a next phase not just in the Ukraine situation (and my, did that plane crash come in handy), but a next phase in geopolitics as a whole. All parties know that there will be a battle, either today or tomorrow, over – fossil – energy. And all are preparing for that battle, moving pawns across the board, planting ideas in people’s heads that will make them easy to direct when the time comes.

This I understand. But I still have trouble accepting that it must desecrate the lives and dignity of the innocent 298 people on board a crashed plane, thousands in east Ukraine, thousands more just recently in Gaza, God knows how many in Syria and Iraq. Perhaps that simply means I’m not ready for what’s to come.

Proposed EU Sanctions Threaten To Shut Russia Out Of The Financial System (AEP)

Here is the EU sanctions document under furious debate today, courtesy of our Brussels correspondent, Bruno Waterfield. Note the heading “Non paper”. It is leaked, not authorised. This is a menu of options. It requires unanimous backing of the 28 ambassadors. Any one country can veto it. Cyprus may find it too much to swallow, and will need a lot of sugar to help it go down. The MICEX index of stocks in Moscow rallied in the mid-morning session and is level for the day. The state-owned banks VTB and Sberbank scarcely missed a beat. Investors are clearly calculating that nothing will come of this.

The measures come into force only if Russia continues to help the rebels and funnel militants across the border (which in reality no longer exists). Still, I hope these investors have good political intelligence in Brussels, London, Paris, Berlin, and Washington, because this looks a little cavalier to me – rather like those who continued to buy the dips even after the Austro-Hungarian Empire issued its ultimatum to Serbia in July 1914. The document makes clear that the aim is to force Russian banks into the arms of the state, bleeding the Russian budget and reserves. This really is “tier III” level. It hammers the whole financial system. Basically they say there is no way for Russia to get around this if the EU and the US work together. I broadly agree, though it depends on what China does. It takes three to tango, these days.

Those arguing that sanctions do not work or are a feeble instrument are mostly drawing on pre-globalisation 20th-century views. They seem unaware of the new arsenal of financial measures that have been fine-tuned over the last decade that can bring countries to their knees in an integrated world system. Does that mean Putin will yield? Not necessarily, but that is an entirely different issue. He may indeed risk vast economic damage to his own country

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Longer than you think.

How Long Can Russia Go Without Selling Bonds? (CNBC)

Even before tougher sanctions against Russia hit the books, the country is facing potential hits as investors turn their backs on its financial assets. “With access to foreign capital likely to become more restrictive, the pick-up in investment needed to revive Russia’s ailing economy is starting to look ever more unlikely,” Neil Shearing, chief emerging markets economist at Capital Economics, said in a note Thursday. Russia also faces the risk that threats of further sanctions could spur more capital outflows, he said. Following the crash of Malaysia Airlines Flight MH17, believed to be downed by a surface-to-air missile, in territory controlled by pro-Russian separatists last week, both the U.S. and the EU are weighing sweeping new sanctions against Russia. The proposals include a potential ban on all Europeans purchasing any new debt or stock from the country’s largest banks, but not on Russian sovereign debt, according to a Financial Times report.

Some investors have already taken concerns over sanctions to heart. Nomura closed out its positions in the local bond market and Russian credit, with some losses expected, the bank said in a note earlier this week. “We now expect the story to shift to sovereign risk from stagflation and disinflation as investors assess whether they should be invested in Russia at all,” Nomura said. It believes the risk of “level three” sanctions, which would expand the number of affected companies and the scope of restrictions, has risen significantly and could be a systemic concern. According to Societe Generale, ratcheting up to level three would likely tip Russia’s already weak economy into a full-blown recession. In the second quarter, Russia’s economy grew just 1.2% from a year earlier, and is forecast to expand just 0.5% for the full year, the bank said in a note this week.

“The ongoing climate of uncertainty is already coming at a high cost,” with $74.4 billion exiting this year and foreign direct investment sharply down, Societe Generale said. To be sure, Capital Economics doesn’t expect the government itself to face much difficulty balancing its checkbook, despite canceling nine bond auctions so far this year, including one this week due to “unfavorable market conditions.” While Russia had a small budget deficit of 0.5% of gross domestic product (GDP) last year, it’s likely to balance the books this year as a weaker ruble raised the local currency value of its U.S. dollar-denominated oil revenues, Shearing said. The real concern is with Russia’s companies and banks, which face around $83 billion in external debt repayments by the end of the year, he noted. “Unlike the government, most firms do not have large external assets to fall back on,” he said, but he noted the government may step in to assist any systemically important companies.

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It’ll keep on cutting forecasts.

IMF Cuts 2014 Global Forecast After Slowdowns in China, US (Bloomberg)

IMF Cuts 2014 Global Forecast After Slowdowns in China, U.S. The International Monetary Fund lowered its outlook for global growth this year as expansions weaken from China to the U.S. and military conflicts raise the risk of a surge in oil prices. The world economy will advance 3.4% in 2014, the IMF said, less than its 3.6% prediction in April and stronger than last year’s 3.2%. Next year growth will be 4%, compared with an April forecast for 3.9%, the fund said. “Global growth could be weaker for longer, given the lack of robust momentum in advanced economies” even as interest rates stay low, the IMF said in an update to its World Economic Outlook report. “Monetary policy should thus remain accommodative in all major advanced economies.”

The IMF report reflected a world rattled by geopolitical risks that have risen since April, including the potential for “sharply higher oil prices” because of recent Middle East unrest. Growth in emerging markets is projected to be 4.6% this year, compared with an April forecast for 4.9%, the IMF said. China’s economy is seen growing 7.4% this year, less than the 7.5% forecast in April, the IMF said. Next year, growth in the world’s second-largest economy with slow further, to 7.1%, the Washington-based fund said, less than its forecast in April for 7.3% growth. Among developing economies, the biggest reduction in forecasts was for Russia’s growth, which was downgraded to 0.2% from 1.3% estimated previously amid capital flight caused by its involvement in the conflict in Ukraine.

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It’s going to go BOOM soon.

Draghi Safety Net Becomes Blindfold to Risk as Bonds Soar (Bloomberg)

Two years since European Central Bank President Mario Draghi’s historic promise to defend his currency bloc, there are signs bond investors are growing too complacent under his protection. While Draghi’s pledge, backed up with unprecedented policy action, held the euro region together, recent price moves suggest it also immunized investors against risk. The average yield on bonds from Europe’s most-indebted nations touched a record low yesterday, even after the downing of a passenger plane over Ukraine, an escalation of conflict in Gaza and financial woes at Portugal’s Espirito Santo Group. “It’s been an exercise in central banks desensitizing markets,” Marc Ostwald, a strategist at ADM Investor Services International Ltd. in London, said in a July 23 phone interview. “It’s a dictated complacency because globally there is a huge amount of liquidity. Everyone views everything as a localized problem.”

Bond markets show Draghi’s July 26, 2012 pledge to do “whatever it takes” to protect the euro was the turning point in the region’s debt crisis. The day before the message, delivered in a speech in London, Spanish 10-year bond yields had surged to a euro-era record 7.751%, above the 7% level that pushed the Greek, Irish and Portuguese governments to seek international aid. Those words, which were followed with an emphatic “and believe me, it will be enough,” and backed up with a series of unprecedented stimulus measures from the ECB, fueled a rally in the bonds of Europe’s most-indebted nations that cut Spanish 10-year borrowing costs to a record 2.529% and allowed Greece, Ireland and Portugal to regain access to capital markets.

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Talk about disconnect.

New US Home Sales Collapse 20% As Builder Sentiment Surges (Zero Hedge)

New Home Sales in June plunged to 406k vs 504k in May (remember that 504k print was the catalyst for ‘weather’ is over and the market to surge: it somehow was magically revised lower by more than 10% to only 442K) Now that has soaked in, consider this is equal lowest sales print since September 2013 (and Dec 2012) and the biggest miss since July 2013. The last 3 months of exuberance have all been revised significantly lower as follows: March: 410K to 408K; April: 425K to 408K; May: 504K to 442K What is even more troubling in the “survey” vs “reality” world is this collapse in sales when NAHB Sentiment surged to near cycle highs.

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We all have, really.

Pity The Japanese: They’ve Been Turned Into Keynesian Lab Rats (Alhambra)

I have little doubt that the most perverse aspect of orthodox economics is the idea of monetary neutrality. Taken as nothing more than an article of faith, monetary practitioners use the principle as cover to undertake drastic and blunt intrusions into markets and economies, with no guilt over having done so because they can simply invoke neutrality and proclaim some other “mysterious” and convoluted culprit. Usually, however, it never gets that far since accountability typically fails to get beyond “the benefits outweigh any potential short-run disruptions.” There is nothing by way of empiricism to prove neutrality, since it entirely depends upon semantics and definitions. But we have a grand experiment with almost pure “laboratory” conditions with which to see neutrality fail spectacularly. Unfortunately, the Japanese people are forced to be the unwitting lab rats, though without the “benefit” of having been given the placebo instead.

Churchill was right in that democracy is the worst form of government except all others that have been tried, but I’m not so sure how central banks fit into that calculation, which is particularly dubious where neutrality is uncovered as simple academic make-believe. The primary premise of yen devaluation, purposeful and heavy intervention, was exports, exports, exports. More than a full year into the tenth and largest QE episode, Japan’s once salvationary trade machine, the Japan Inc of lore, is but a figment of past imagination. What little room Japan had left for a possible re-entry into economic health has been squandered, taken asunder by the very same yen intentions that were unequivocally believed to be the solution. And now Japan faces utter impoverishment as exports decline (not expand), imports accelerate (not decline) and real wages collapse.

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If more debt no longer leads to more GDP, game’s up.

China’s Detour on Highway to Default (Bloomberg)

Odd as it may sound, the fact that Huatong Road & Bridge Group dodged a default on July 23 is bad news. Until Wednesday, markets had been buzzing about the possibility the Shanxi-based builder might become the second mainland company in four months to renege on a bond payment. Then, Huatong beat the odds, repaying all principal and interest on a $65 million bond. How? Some aggressive fundraising, along with a little help from local government bodies. According to press reports, municipal officials intervened to prevent the company’s collapse. Two immediate worries spring to mind. One, China’s moral-hazard bubble continues to swell as public officials insulate companies from the effects of bad business decisions. For all the talk of epochal reform in China, there’s still no price to pay for questionable borrowing and lending. Two, local government debt is growing even as Communist Party leaders pledge to reduce public liabilities.

A key pillar of President Xi Jinping’s plan to avoid a Japan-like bad-loan crash is reining in credit and the opaque shadow-banking industry. The effort includes dissuading local governments from risking their own defaults should growth markedly undershoot Beijing’s 7.5% target. But as Bloomberg News reported on July 15, more and more regional governments are upping stimulus efforts to help Beijing meet that goal. Northern Hebei province alone is pumping a fresh $193 billion into areas including railways, energy and housing. A more recent Bloomberg analysis shows that as of July 23, 20 of 25 provinces and provincial-level cities reported a pickup in growth in the first half of the year. Some of the gain, of course, is the result of central-government stimulus: expedited railway spending and tax cuts. Most of it reflects local fiscal pump-priming, funded by untold billions of dollars of fresh debt.

The People’s Bank of China has also eased curbs on bank lending and distanced itself from a November projection that the economy might experience an unwinding of debt. Credit outstanding rose to 206% of gross domestic product last quarter from 202% in January-to-March. Beijing’s talk of downshifting to a “new normal” to rebalance the economy toward services is belied by July’s surge in manufacturing to an 18-month high. The big worry is that we just don’t know how bad China’s debt profile really is. As of June 2013, local government debt had swelled to about $3 trillion. Given efforts since then to meet growth targets, it’s a pretty safe assumption that the figure is now considerably higher – and poised to rise further.

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Might just as well be 2015.

‘Perfect Storm’ To Hit China Economy In 2016 (CNBC)

Recent positive data from China may have allayed some doubts about the state of the economy, but PNC Financial Services Group is staying cautious, warning of a “perfect storm” that could surface in two years’ time. “Several problems long on China’s back burner are likely to come to a head by 2016,” Stuart Hoffman, chief economist at Financial Services Group wrote in a report this week, citing challenges including a weakening credit market, a slowdown in corporate reinvestment of earnings and a correction in the all-important housing market. These headwinds could slow Chinese real GDP (gross domestic product) growth to around 6.0% in 2016, the slowest since 1990, the firm noted. China’s economy expanded 7.5% in the second quarter, a touch above expectations of and rising from 7.4% in the first three months of the year, as the government’s targeted stimulus measures began to pay off.

The so-called perfect storm could unfold with a dramatic slowdown in the flow of credit for investment, especially from non-traditional lenders like trust companies, as corporate credit quality deteriorates, the report said. “If trust credit does indeed dry up, Chinese borrowers will struggle to roll over their loans and could be pushed into default, throwing even more sand into the gears of financial intermediation,” Hoffman said. Reduced credit would then reinforce a sharp slowdown in capital expenditures, PNC said, noting that spending in labor-intensive manufacturing sector has already slowed amid rising labor costs and an appreciating currency. “And Chinese private businesses with idle funds are unable to invest in more attractive opportunities in the domestically-oriented service sector [because] regulatory barriers protect state-owned business from private competition,” he added. Any major correction in the country’s housing market, an important pillar of the economy which affects more than 40 other sectors, could exacerbate events.

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300 million people moved in China in 20 years. Guinness Book of Records.

Skyscraper Mania Grips China as Ambitions Trump Economy (Bloomberg)

The eastern Chinese city of Suzhou isn’t even the biggest in Jiangsu province, yet it’s joining a national rush for the sky with what’s slated to become the world’s third-tallest building. By 2020, China may be home to six of the world’s 10 highest skyscrapers, including Suzhou’s 700-meter (2,297-foot) Zhongnan Center. Developers finished 37 structures higher than 200 meters, or about 50 stories, in China last year, the most in the world, according to the Chicago-based Council on Tall Buildings and Urban Habitat, a non-profit organization that maintains the world’s largest free database on tall buildings. China is witnessing a skyscraper boom, with lesser-known cities like Suzhou vying to erect ever-bigger structures and counting on the prestige and potential commercial benefit those mega-buildings may bring.

Construction has been fueled by a tripling in property values since 1998 and government policy that moved 300 million people – almost the entire population of the U.S. – into cities since 1995. “What’s happening in China is similar to what happened in the U.S. 80 to 100 years ago, on a different scale,” Antony Wood, the council’s executive director, said in an interview in Shanghai. “Cities are competing both within China and also globally for attention and for the appearance that they are first-world.” The council says Suzhou’s will be the world’s third-tallest building when it’s done in 2020. Other Chinese cities planning or building skyscrapers that could join the world’s tallest include Shenyang in the northeast, Wuhan, along the Yangtze River, and Tianjin, a metropolis 68 miles (109 kilometers) southeast of Beijing that’s planning a replica of Manhattan.

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China’s China.

Ethiopia Becomes China’s China in Global Search for Cheap Labor (Bloomberg)

Ethiopian workers strolling through the parking lot of Huajian Shoes’ factory outside Addis Ababa last month chose the wrong day to leave their shirts untucked. Company President Zhang Huarong, just arrived on a visit from China, spotted them through the window, sprang up and ran outside. The former People’s Liberation Army soldier harangued them loudly in Chinese, tugging at one man’s aqua polo shirt and forcing another’s shirt into his pants. Nonplussed, the workers stood silently until the eruption subsided. Shaping up a handful of employees is one small part of Zhang’s quest to profit from Huajian’s factory wages of about $40 a month -– less than 10% the level in China. “Ethiopia is exactly like China 30 years ago,” said Zhang, 55, who quit the military in 1982 to make shoes from his home in Jiangxi province with three sewing machines and now supplies such brands as Nine West and Guess?. “The poor transportation infrastructure, lots of jobless people.”

Almost three years after Zhang began his Ethiopian adventure at the invitation of the late Prime Minister Meles Zenawi, he says he’s unhappy with profits at the Dongguan Huajian Shoes Industry Co. unit, frustrated by “widespread inefficiency” in the local bureaucracy and struggling to raise factory productivity from a level he says is about a third of China’s. Transportation and logistics that cost as much as four times those in China are prompting Huajian to set up its own trucking company. And the use of four languages in the plant — Ethiopia’s national language, Amharic; the local tongue, Oromo; English and Chinese — further complicates operations, Zhang says.

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America’s Dumbest Move Yet: Seizing A Foreign Bank (Simon Black)

Ten dark suited men entered the premises of FBME bank in Cyprus on Friday afternoon and took it hostage. It must have looked like a scene from the Matrix. And given the surrealism of how this conflict is escalating, maybe it was. The men were from the Central Bank of Cyprus (CBC). And they commandeered FBME because an obscure agency within the US government recently issued a report accusing the bank of laundering money. It just so happens that FBME… and Cyprus in general… is where a lot of wealthy Russians hold their vast fortunes. Bear in mind, there has been no proof that any crime was committed. There was no court hearing. No charges were read. It wasn’t even the government of Cyprus who accused them of anything. There was just a generic report penned by some bureaucrat 10,000 miles away.

Funny thing—when HSBC got caught red-handed laundering funds for a Mexican drug cartel last year, the US government gave them a slap on the wrist. HSBC got off with a fine. Yet when the US government merely hints that FBME could be laundering money, the bank gets taken over at gunpoint. Welcome to warfare in the 21st century. It’s not about battleships and ground troops anymore. This time the adversaries are battling each other using what ultimately affects everyone: money. And on this battlefield the US doesn’t really have many options.

• US banks still form the nucleus of the global financial system, but this is quickly being replaced.
• Just last week the BRICS nations met in Fortaleza, Brazil to launch the origins of a brand new, non-US financial system.
• The US is still the largest economy in the world, but will likely lose this status to China by the end of the year.
• The US dollar is still the most widely used currency in global trade, but even America’s closest allies (Canada, Western Europe) recognize that the time has come to move beyond the dollar.

So while the US is still running around and barking at others, it is quickly losing its capacity to bite.

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Bubbles Are Caused By Central Bankers, Not “Human Nature” (Stockman)

Alan Greenspan just cannot give up the ghost. During his baleful 18-year reign, the Fed was turned into a serial bubble machine—and thereby became a clear and present danger to honest free market capitalism and an enemy of the 99% who do not benefit from the Wall Street casino and the vast inflation of financial assets which it has enabled. His legacy is a toxically financialized economy that has extracted huge windfall rents from main street, and left it burdened with overwhelming debts and sharply reduced capacity for gains in real living standards and breadwinner jobs. Yet after all this time Greenspan still insists on blaming the people for the economic and financial havoc that he engendered from his perch in the Eccles Building. Indeed, posturing himself as some kind of latter day monetary Calvinist, he made it crystal clear in yesterday’s interview that the blame cannot be placed at his feet where it belongs:

I have come to the conclusion that bubbles, as I noted, are a function of human nature.

C’mon. The historical record makes absolutely clear that Greenspan panicked time and again when speculation reached a fevered peak in financial markets. Instead of allowing the free market to cleanse itself and liquidate reckless gamblers employing too much debt and too many risky trades, he flooded Wall Street with liquidity and jawboned the speculators into propping up the casino. Within months of his August 1987 arrival, for example, he panicked on Black Monday and not only inappropriately flooded with liquidity a Wall Street that was rife with rotten speculation and a toxic product called “portfolio insurance”, but also intervened directly to garrote the markets attempt at self-correction.

In that context he sent his henchman, Gerald Corrigan who was head of the New York Fed, down to Wall Street to break arms and bust heads in an effort to insure that firms continued to trade with each other and extend credit where their own risk control managers appropriately wanted to cancel credit lines to insolvent counter-parties. Then and there, the Greenspan “put” was born, and the stock market was en route to becoming a Fed-driven casino rather than an honest venue for real price discovery.

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Not to me: these people see how poor Europe really is.

Scale Of Fall In German Business Climate A Surprise (Reuters)

The scale of decline in the German business mood in July came as a surprise, Ifo economist Klaus Wohlrabe said on Friday, as tensions in Ukraine and the Middle East coincided with easing economic momentum after a strong first quarter. “Tensions are weighing on the mood in general,” he said, adding that the influence of the conflicts in the Middle East and Ukraine could not be measured in concrete terms. The Munich-based Ifo think tank’s business climate index, based on its survey conducted July 4 to 24, fell to a nine-month low of 108.0 from 109.7, data showed on Friday.

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Why Germans are richer: they don’t like debt.

German Thrift Damps Lending as Cheap Money Is Distrusted (Bloomberg)

Demand for mortgages in Germany is being tempered by concerns that recent home-price increases can’t be sustained. Bundesbank President Jens Weidmann said last month that the first signs of a housing bubble may be appearing. Finance Minister Wolfgang Schaeuble said on June 19 that excessive liquidity is leading to “dangerous” developments in the market. Prices in Germany’s largest cities, including Berlin, Hamburg and Munich, have risen more than 30% in the past five years, according to data compiled by Berlin-based research firm Bulwiengesa AG. Across Germany, prices have risen by an average of 5.7% per year since 2009, when the market began climbing for the first time since 1994. The price gains have been fueled by record-low interest rates that make it cheaper than ever to buy a home and not much more expensive than renting, according to Michiel Goris, chief executive officer of Munich-based Interhyp AG, Germany’s biggest online mortgage broker.

Low rates have also slashed returns for bonds and savings accounts, making real estate investment a more attractive alternative. The growing caution among buyers means that mortgage lending may decline this year amid circumstances similar to those that sparked borrowing sprees in other European markets. German banks probably will provide €197 billion of new mortgages in 2014 if lending continues at the current pace, according to data compiled by Interhyp. That would be 0.5% less than in 2013, when there was a 3% increase from the previous year. The value of all outstanding German mortgages was €1.16 trillion in May, the highest level since 1998, according to data compiled by the Bundesbank. A lack of lending growth would maintain Germans’ comparatively low level of indebtedness. Private household debt equals about 93% of net disposable income in the country, compared with about 325% in Denmark, 150% in the U.K and 151% in the U.S., according to data compiled by the OECD.

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House of cards.

Third Espírito Santo Company Seeks Creditor Protection (WSJ)

Espírito Santo Financial Group SA, which holds 20% of Portuguese lender Banco Espírito Santo SA, has filed for creditor protection in Luxembourg, becoming the third company in the group to do so in less than two weeks. “Espírito Santo Financial Group SA has asked the Luxembourg courts for controlled management following the company’s conclusion that it is unable to meet its obligations under its commercial paper program and obligations associated with the company’s stand-alone debt obligations,” it said in a statement.

Espírito Financial Group’s shares have been halted from trading since July 10, when the company said it was assessing the impact of troubles at Espírito Santo International SA, which owns 49% of the financial group. Espírito Santo International, which was found to be in serious financial condition by an audit ordered by the country’s central bank, filed for creditor protection last week. Its main unit, Rioforte Investments SA, filed for protection this week. Espírito Santo Financial Group has said its exposure to Espírito Santo entities, including Espírito Santo International and Rioforte totaled €2.35 billion ($3.16 billion).

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Time for more cheap loans?

London House Prices Stagnate as Survey Sees Rapid Cooling (Bloomberg)

London house prices stagnated in July, the first month with no growth since December 2012, as demand plunged and properties took longer to sell, Hometrack Ltd. said. The survey of real-estate agents showed values were unchanged in the capital in July after increasing 0.5% in June. Higher-value markets in the west and southwest slid, taking the number of postcodes registering declines to 11%. Areas recording price gains slumped to 12.1% from 40.6% in June. London had propelled U.K. house prices over the past year and today’s data add to evidence that measures to cool the market are working. The Bank of England introduced measures in June to limit riskier mortgages and new rules came into force in April requiring tougher mortgage-affordability tests.

“Seasonal factors always lead to a slowdown in demand and market activity in the summer months, but it is clear that there are bigger forces at work with a pronounced loss of momentum in the London housing market,” said Richard Donnell, director of research at Hometrack. The slowdown is “in part due to warnings from the Bank of England and others of a possible house-price bubble,” he said. The rate of growth in London peaked at 1.1% in February, the data showed. In July, homes took an average 4.3 weeks to sell, up from 2.7 weeks in March. The slowdown will probably “linger” as the market in the capital “cools rapidly,” the report said. Across England and Wales, prices grew 0.1% in July, compared with an increase of 0.3% in June. That makes this the slowest month since February 2013. The number of new buyers registering with estate agents fell 0.9%.

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Lovely. This is from Bloomberg of all places.

U.S. Tortures, Poland Pays (Bloomberg)

The Council of Europe today found the U.S. guilty of torture, illegal detention and administering unfair trials – and made Poland pay the penalty. That, in effect, is what happened at the council’s judicial arm, the European Court of Human Rights. The U.S. wasn’t on trial, of course, because it isn’t subject to the court’s jurisdiction. Poland, however, is. Call it the cost of being a loyal U.S. ally. The case concerned two suspected terrorists the U.S. picked up – Abd al-Rahim al-Nashiri in Dubai and Zayn al-Abidin Muhammad Husayn in Pakistan – and took on a tour of so-called black rendition sites that ended with Guantanamo Bay, Cuba.

Poland was among several European countries suspected of facilitating the air flights and providing detention locations at which the Central Intelligence Agency, alone, conducted the questioning. The seven judges, who included a Pole, found that the Polish authorities did indeed help the CIA, should have known the men would be tortured and denied the right to a fair trial, and did nothing to prevent these things from happening. The judges also found that the Polish courts and authorities had failed to properly investigate the case against their own government. Remedying the failures of national authorities to police themselves is a big part of what the court in Strasbourg, France, does.

The facts of the two cases were pretty clear. Some were acknowledged in an excised CIA document released by the U.S. government in 2009. The men were “high-value detainees,” Al-Nashiri suspected of carrying out the assault on the USS Cole in Yemen in 2000 and Husayn of helping to plan the Sept. 11 attacks. Both were subjected to “enhanced interrogation techniques.” The court ordered Poland to pay 100,000 euros ($135,000) in damages to each of the two, who remain imprisoned in Guantanamo. The U.S. is unlikely ever to submit to the jurisdiction of such a supra-national court — that’s one reason it has declined to join the International Criminal Court in the Hague. Anyway, it wouldn’t qualify for the Council of Europe unless the organization changed its criteria.

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What can you do but get out? It will turn – back – into a desert.

NASA Study Finds Dramatic Loss Of Underground Water In Western US (Telegraph)

The water crisis in the south west of the US is likely to worsen according to a new study carried out by the American space agency and University of California. Research has found that the Colorado River Basin, the prime source of water in the region, is being sucked dry. Only last week California announced daily fines of $500 for residents who water their lawns with nearly four fifths of the state being classified as being under “extreme” and “exceptional” drought conditions. The Colorado River is the only major river in the southwestern US, with the basin supplying water to 40 million people in seven states and irrigating around four million acres of farmland. In California, the basin is a key source of water for Los Angeles and San Diego. The new study is the first to look at the role of groundwater in the parched region and has been carried out against a backdrop of a severe drought dating back to 2000. A series of monthly measurements have shown that over nine years the Colorado River Basin lost nearly twice as much water as Lake Mead, Nevada – the country’s largest reservoir.

“This is a lot of water to lose. We thought that the picture could be pretty bad, but this was shocking,” said Stephanie Castle, a water resources specialist at the University of California, Irvine. Jay Famiglietti, the senior water cycle scientist at the Jet Propulsion Laboratory in Pasadena, warned the findings have long term implications for the entire region. “The Colorado River Basin is the water lifeline of the western United States,” he said. “With Lake Mead at its lowest level ever, we wanted to explore whether the basin, like most other regions around the world, was relying on groundwater to make up for the limited surface-water supply. “We found a surprisingly high and long-term reliance on groundwater to bridge the gap between supply and demand. “Combined with declining snowpack and population growth, this will likely threaten the long-term ability of the basin to meet its water allocation commitments to the seven basin states and to Mexico.”

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UPDATE: an ebola infected woman was taken out of a hospital in Sierra Leone this afternoon by her family. It seems a matter of time before the disease spreads ot other continents.

Liberian Man Being Tested For Ebola In Lagos, Nigeria (Reuters)

A Liberian man in his 40s is being tested for the deadly Ebola virus in Nigeria’s commercial capital of Lagos, a megacity of 21 million people, the Lagos State Health Ministry said on Thursday. Ebola has killed 632 people across Guinea, Liberia and Sierra Leone since an outbreak began in February, straining a string of weak health systems despite international help. This would be the first recorded case of one of the world’s deadliest diseases in Nigeria, Africa’s biggest economy and most populous nation, with 170 million people and some of Africa’s least adequate health infrastructure.

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Japanese Monkeys’ Abnormal Blood Linked To Fukushima Disaster (Reuters)

The scientists compared 61 monkeys living 70km (44 miles) from the the Fukushima Daiichi nuclear power plant with 31 monkeys from the Shimokita Penisula, over 400km (249 miles) from Fukushima. The Fukushima monkeys had low blood counts and radioactive caesium in their bodies, related to caesium levels in the soils where they lived. No caesium was detected in the Shimokita troop. Professor Shin-ichi Hayama, at the Nippon Veterinary and Life Science University in Tokyo, told the Guardian that during Japan’s snowy winters the monkeys feed on tree buds and bark, where caesium has been shown to accumulate at high concentrations. “This first data from non-human primates — the closest taxonomic relatives of humans — should make a notable contribution to future research on the health effects of radiation exposure in humans,” he said. The work, which ruled out disease or malnutrition as a cause of the low blood counts, is published in the peer-reviewed journal Scientific Reports.

White blood cell counts were lowest for immature monkeys with the highest caesium concentrations, suggesting younger monkeys may be more vulnerable to radioactive contamination. Hayama noted: “Abnormalities such as a decreased blood cell count in people living in contaminated areas have been reported from Chernobyl as a long-term effect of low-dose radiation exposure.” But other blood measures did not correlate with caesium levels, which vary with the seasons. Prof Geraldine Thomas, at Imperial College London, said the Chernobyl studies were not “not regarded as scientifically validated” and that the correlations between the caesium and low blood counts in the Fukushima study were not statistically strong.

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Home Forums Debt Rattle Jul 25 2014: The Big Energy = Power Battle Is Coming

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    DPC The Flatiron Building, NY 1903 I don’t really want to keep talk about Ukraine, but it’s too hard to avoid. Besides, it’s not the same story anymor
    [See the full post at: Debt Rattle Jul 25 2014: The Big Energy = Power Battle Is Coming]


    The acerbic Pepe Escobar’s take on matters.


    The “policy” of the Empire of Chaos is clear, and multi-pronged; diversify the “pivot to Asia” by establishing a beachhead in Ukraine to sabotage trade between Europe and Russia; expand the North Atlantic Treaty Organization to Ukraine; break the Russia-China strategic partnership; prevent by all means the trade/economic integration of Eurasia, from the Russia-Germany partnership to the New Silk Roads converging from China to the Ruhr; keep Europe under US hegemony.


    ” in his latest book, Strategic Vision (2012), Dr Zbig ( Zbigniew Brzezinski) was in favor of an enlarged “West” annexing Turkey and Russia, with the Empire of Chaos posing as “promoter” and “guarantor” of broader unity in the West, and a “balancer” and “conciliator” between the major powers in the East. A quick look at the record since 2012 – Libya, Syria, Ukraine, encirclement of China – reveals the Empire of Chaos only as fomenter of, what else, chaos.
    Now compare a fearful Dr Zbig with Immanuel Wallerstein – who was a huge influence in my 2007 warped geopolitical travel book Globalistan. In this piece (in Spanish) Wallerstein argues that the Empire of Chaos simply can’t accept its geopolitical decadence – and that’s why it has become so dangerous. Restoring its hegemony in the world-system has become the supreme obsession; and that’s where the whole “policy” that is an essential background to the MH17 tragedy reveals Ukraine as the definitive do or die battleground. ”

    I’m not necessarily buying it all but it seems pretty clear some grand strategy is being introduced. The thing is I can’t figure out who would be in charge of it. Obama? The neo cons salted all through the intelligence and military bureaucracy and somehow the financial giants of the West?


    The most vital premise for understanding the causes and development of the ukrainian situation is that the ukrainian government did fall victim to a violent antidemocratic coup in february 2014. Evidence thereto is provided by exhibits A and B:

    Exhibit A:
    One of the thousands of available online press releases which announces that the ukrainian parliament did unanimously impeach president Yanukovych on feb 22.


    Exhibit B:
    The ukrainian constitution itself, being the only legal document to delineate the parliament’s authority and duty in the matter of presidential impeachment:

    Article 85
    The authority of the Verkhovna Rada of Ukraine comprises:
    -10. removing the President of Ukraine from office in accordance with the special procedure (impeachment) established by Article 111 of this Constitution;

    Article 111
    -The President of Ukraine may be removed from office by the Verkhovna Rada of Ukraine by the procedure of impeachment, in the event that he or she commits state treason or other crime.
    -The issue of the removal of the President of Ukraine from office by the procedure of impeachment is initiated by the majority of the constitutional composition of the Verkhovna Rada of Ukraine.
    -To conduct the investigation, the Verkhovna Rada of Ukraine establishes a special temporary investigatory commission whose composition includes a special procurator and special investigators.
    -The conclusions and proposals of the temporary investigatory commission are considered at a meeting of the Verkhovna Rada of Ukraine.
    For cause, the Verkhovna Rada of Ukraine, by no less than two-thirds of its constitutional composition, adopts a decision on the accusation of the President of Ukraine.
    -The decision on the removal of the President of Ukraine from office by the procedure of impeachment is adopted by the Verkhovna Rada of Ukraine by no less than three-quarters of its constitutional composition, after the review of the case by the Constitutional Court of Ukraine and the receipt of its opinion on the observance of the constitutional procedure of investigation and consideration of the case of impeachment, and the receipt of the opinion of the Supreme Court of Ukraine to the effect that the acts, of which the President of Ukraine is accused, contain elements of state treason or other crime.

    The impeachment prodedure must always be followed so as to establish the charge of a particular impeachable offense accruing to the office of the president, and must involve a ‘special temporary investigatory commission’ (to establish evidence) and the ukrainian supreme court (to judge legitimacy of the procedure (and the evidence thereto)). These devices were never applied.

    As none of the necessary procedures required to establish an actual impeachable offense were followed by the Rada, and as the Rada apparently did not attempt or intend to follow any of the necessary procedures, despite having opportunity to do so, the entire body of said Rada, having voted unanimously to impeach the president in direct contravention to their constricted constitutional authority, therefore did commit to an act of state treason against the office of the president and the ukrainian state on february 22 2014, as did all civilian and military officials who aided the Rada in this matter, whether by dereliction of duty, conscious inaction, violent coercion or active collaboration.

    To prevent incidental treason upon the office of the president, article 111 delineates the only lawful impeachment procedures consequent upon the establishment of any particular impeachable offense, to be designated by devices separate to the parliament. Therefore, the act of unlawfully conducting any means of presidential impeachment other than specified in article 111, being without legitimate authority, is legally identical to state treason, insofar as the criminal offense of treason must necessarily be consequent upon a coup d’etat on the office of the president, such as the Rada did commit to.

    The assertion that the ukrainian parliament is evidently commited to a coup d’etat by means of constitutional state treason cannot reasonably be rejected upon admission of evidence exhibitions A and B, being adequately incontrovertible.

    Therefore, a constitutional crisis does exist in the Ukraine and shall persist until reconstitution is effected and a new constitution is ratified, including the national election of a new parliament, but naturally excluding eligibility for office of all those government officals provably committed to aforementioned treason.
    Absent reconstitution, in regards to the evident coup d’etat in Kiev, if one were a natural-born separatist in the east, ethnically russian or not, one would remain morally and legally obligated to forcibly resist the insane and genocidal military assault by the regime in Kiev on the eastern regions, such (armed) separatist resistance now being the most appropriate function of legitimate self-defense or democratic self-determination.

    Additional evidence that no impeachable offense was ever established by proper parliamentary procedure is otherwise provided by the fact that the ukrainian coup regime has now publicly requested that the Hague’s International Criminal Court investigate the coup regime’s allegations that Yanukovych was personally responsible for the sniper killings during the maidan riots. But logically, Yanukovych could not have been legally impeached for such responsibility without the Rada having already proved such an allegation themselves beforehand, which they did not do.

    Does anyone disagree that exhibits A and B establish that an antidemocratic coup in Kiev did happen on feb 22 because unlawful impeachment of the president did cause the ukrainian parliament to commit to an act of treason under their own consititution?



    This article mentions that the vote for impeachment was not actually unanimous, only 328 of 450 members grossly exeeded their authority according to this interpretation.

    “A majority of 328 lawmakers of the 450-seat parliament voted on February 22 to remove Yanukovych from power, citing as grounds his abandoning office and the deaths of more than 80 protesters and police in the past chaotic week of violence.”

    Abandonment of office may not be impeachable unless it is equivalent to a dereliction of presidential duties, and, together with other allegations, such facts must first be incontrovertibly established per article 111 to be actual impeachable offenses, upon review by the specified devices. Mere allegations of misconduct are insufficient grounds.

    John Day

    Vineyard of the Saker has a purported Ukrainian document or two regarding military losses from July 14 – July 19. These are fairly catastrophic desertion losses, and a lot of killed and wounded. If a true document, it implies a very good reason for Yatsenyuk and company to leave their offices. Likewise, their leaving must be quite a signal to the dispirited conscript army.



    “The US can’t wage a physical war against Russia, it wouldn’t dare.”

    Though I appreciate your faith in the US Government’s ability to exercise constraint in that category, I beg to differ.


    “The move to isolate Russia and Putin which has evolved over the past week, evidence be damned, makes clear that those operating on “our side” may well have had a lot more motive to shoot down a passenger plane than the ‘rebels’ did. And that they have a political agenda: those sanction were not all drawn up on a rainy afternoon. .”
    Exactly Right!

    i was pondering such possibility some days ago upon gaining information indicating “the west’s action”.


    Russia’s side:

    “I want to expose the airspace situation in the Donetsk area that day. In the picture you can see the information of the objective air traffic control between 17.10 to 17.30 Moscow time.

    During that period, there were 3 civilian aircraft:

    Flight from Copenhagen to Singapore at 17.17;

    Flight from Paris to Taipei at 17.24

    Flight from Amsterdam to Kuala Lumpur… Beside it, the Russian system for air traffic control detected a Ukrainian Air Force aircraft, supposedly a Su-25, moving upwards towards the Malaysian Boeing-777. The distance between two aircraft was 3-5 kilometers.

    The Su-25 can gain an altitude of 10,000 meters in a short time. It is armed with an air-to-air missile R-60, which is able to lock-on and destroy a target at a distance of 12 kilometers, and destroy it definitely at a distance of 5 kilometers. What was the mission of the combat aircraft, in the flight-path of civilian aircraft, almost at the same time and same altitude with the civilian craft? We want to have this question answered.”

    “…MH17 deviated significantly from its usual flight path; routinely it was flying more to the south.”

    “…the Ukraine Air Traffic Control ordered the plane’s crew to divert from the regular more southerly route to go north over the combat zone, a Ukraine jet fighter was recorded by Russian radar climbing rapidly towards it just before it went down…”

    “According to our records from 17:06 till 17:21 Moscow time on the July 17 over the Southeastern territory of Ukraine, a US space satellite flew overhead.”

    MH17 – Sacrificed Airliner

    The airplane deviated from its course by 14 kilometers. Questions, questions.


    Unfortunately, from here on, pretty much any scenario presented by outsiders will be dismissed as conjecture and/ or conspiracy theory. In other words, moot.

    The establishment will have the last word.

    “What difference does it make”. Hillary Clinton


    On one of the above articles about Chinese debt, the Western bloggers were saying, “China is surviving because they’re bailing everybody out,” to which the Chinese bloggers said, “Yes, the same as America did with Wall Street, Fannie/Freddie, GM,” blah, blah, blah. Same in Europe, Japan…

    Whose bailing arm is going to give out first? Because the debt is racking up fast and it’s all being bailed into the taxpayers’ boats, and their boats are starting to sink below the waterline. “It takes many sheep to satisfy one wolf.”

    The central banks are either in collusion, one taking over from another in holding the world up by its neck, or they are each waiting for one to blink. Which is it? Whose ship will go down first?


    I’ve noticed an abrupt change of tone in the dutch press concerning Ukraine. Suddenly the separatists are being called butchers and child-killers in newspapers. What little sympathy or political support the separatist cause had with the dutch population is mostly gone, whereas the coup regime in Kiev garners additional support for their assault on the east. The dutch were merely disinterested or mostly neutral on the ukrainian matter before.
    The entire ukrainian civil war so far has been consistently misrepresented. The corporate media conveniently forgot to mention that an unlawful and antidemocratic coup actually did happen in Kiev. The whole Maidan movement was portrayed as a pro-EU, pro-western and therefore pro-democratic assault against corrupt pro-russian elites. Washington’s role in fomenting the regime change by bribery, aggression and subversion, or the criminally suspect nature of Kiev’s new political powers backed by Washington, is never mentioned by the MSM.
    It remains unknown who was responsible for the sniper-killings in Kiev, these killing were still more likely perpetrated by Washington’s CIA or Blackwater than Yanukovych.

    Its really frightening to see emotional irrationality dominate people’s opinions now, fueled by a constant stream of ridiculous anti-russian propaganda.
    I would openly support the separatist cause politically, favoring self-determination over Washinton’s military agenda and the asset stripping of Ukraine, but now my compatriots will resent me for such nuances.
    Its just like 9/11, whether the event was synthetic terror or not, the situation is instantly being misused by the same powers who perpetrated the Kiev coup for despicable demagogy, to capitalise on people’s sense of vulnerability and helplessness.

    I mean, look at this:
    Biased nonsense. The only reason there are separatists at all is because of Washington’s coup in the Ukraine.

    I’ve also heard MH-17’s flightpath was changed by someone, perhaps by Kiev’s air traffic control itself, to fly directly over the warzone, which is suspicious insofar as it creates a unique opportunity which otherwise might not coincide with motives or means of any party to shoot MH-17 down. It is therefore important to also confirm whether the flight was placed under ukrainian fighter escort, and whether this escort coerced MH-17 into following the adjusted flightpath.

    Presumably MH-17 was accidentally misidentified as someone’s military flight and subsequently targeted by anti-air weaponry.
    The separatists, being the only party who have previously been reported to shoot down Kiev’s military aircraft assaulting them, would make likely suspects to misidentify MH-17 as a warplane, but they had no confirmed means to target the flight at high altitude.

    The other main suspects with greater means to target MH-17 are Kiev and Russia, but there remains a logical problem with motive for both.
    Kiev’s anti-air capability could not accidentally shoot down BH-17 unless it was misidentified as a warplane, yet the separatists have no airforce besides Russia.
    Kiev must see Russia as a potential aerial opponent, otherwise they’d have no AA at all in the contested region.
    Its been previously reported that russian airforces have invaded ukrainian airspace to aid the separatists, presumably to intimidate and scare off Kiev’s airforces and prevent them from bombing separatist positions, although actual aerial combat between ukrainian and russian warplanes may have happened in ukrainian airspace.
    If Kiev does expect russian warplanes to invade ukraines airspace on behalf of the separatists, then Kiev’s AA may have misidentified MH-17 for a russian warplane and targeted it, although shooting down russian warplanes inside ukrainian airspace would quickly lead to open war.
    There was also a joint Kiev-NATO airforce excercise being held at the time involving aerial warfare drills and simulations, which could have provided opportunity for accidental mistargeting of civilian flights passing over, though the use of live munition must have been an additional mistake then.

    The russians themselves could have shot MH-17 down if misidentified as a ukrainian warplane, but that would depend on whether russian airforces, aiding the separatists, are now in the business of targeting and shooting down ukrainian warplanes in ukrainian airspace, clearly being an open act of war.
    Besides accidental targeting of MH-17, by misidentification as warplane, neither Russia nor the separatists have possible motive to target a civilian flight deliberately.
    Neither party could afford to create an international atrocity on purpose over separatist controlled territory, they would be highly motivated to avoid such bad press.

    Otherwise there are conceivable false flag motives for Kiev or Washington’s other assets to shoot down MH-17 deliberately as a civilian flight, in order to blame the separatists and widen the front against them, since Kiev was losing ground in the east as well as popular support in the west. Only Washington’s allied parties had the means, motive and opportunity to perpetrate any such false flag, and then utilise the controlled media fallout to demonise both the separatists and Russia.

    I still dont see how only the separatists should be blamed for MH-17 without evidence or the clear means to do so, they certainly didn’t shoot it down deliberately as some are intent on believing.
    And it is important to maintain an open discourse on the matter, whether the establishment media says the case is closed or not. Strongly nonconforming public opinion which questions the dominant narrative may actually prevent Washington’s NATO from furthering its military agenda in Ukraine.

    Gravity is a recursive algorithm, look it up.


    Gravity – there was a lot of non-conforming public opinion in the “Comment” section of a Guardian story I read a few days ago, and people were strongly questioning everything they were being told. It was refreshing. People who wrote “questioning” posts got most of the “like” votes, while the people who just simply said it was Russia (with no evidence to back them up) had very few “likes”. People were saying, “Where’s the evidence?”

    A criminal police investigator said he was told early in his career, “When looking at evidence and trying to tie facts together, you’ll see that the clean just keep getting cleaner, while the dirty just keep getting dirtier.” I think that’s about right. The truth will come out, just like with Syria and Iraq. The separatists have treated the bodies with respect and they’ve handed over the black box. Russia is asking all of the good questions. The U.S. had their spy satellite going overhead at precisely the time the plane went down, coincidentally; they know exactly what happened.

    The truth will surface.

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