Aug 242014
 August 24, 2014  Posted by at 5:22 pm Finance Tagged with: , , , , , ,

Marjory Collins On the trolley in Baltimore Apr 1943

As the first subglacial eruption has been registered in the Barbardunga volcano, and there are earthquakes in the region about every minute, a German magazine reports that Berlin (or, actually, even Bonn) has been spying on NATO partners like Turkey for decades. Which is funny, because I was just wondering – with a degree of suspicion – where and how Merkel gets her information.

She’s in Kiev calling for a ceasefire – which at least is a step up from what Washington is doing -, but says that first the border between Ukraine and Russia needs to be sealed off so no more support for the rebels can be smuggled in. See, I’m getting the idea that perhaps Angela relies for these kinds of claims on information she gets from NATO, who in turn get it from Kiev. Which has proven to be the most unreliable source of information in a long time.

On Tuesday, presidents Putin and Poroshenko, and some EU leaders, will meet in Minsk, Belarus, for discussions on the ceasefire. It’s starting to look like “our” side is going into the talks with so many demands, and of such obviously impossible nature for Putin, that they will kill any serious discussion before it’s even started.

Over the past few days, NATO has claimed that the Russian aid convoy, which returned home on Saturday without any incidents, was a Trojan horse, “a disguised attempt to reinforce separatist forces”. And that the Russians are shelling the Ukraine army both cross-border and from within Ukraine. And that there are huge troop concentrations and movements happening at the Russian side of the border. And that Russia is delivering weapons and mercenaries into Ukraine. These are all things that Ukraine claimed first, and NATO simply repeated. And, you know what’s coming next, for none of it has one single piece of evidence been presented. Something we’ve long since ceased to expect from Kiev.

But NATO itself has the technology, the ability to find and present evidence. And the obligation to us, the people who pay for its entire apparatus, do so prior to making any claims. So why does it simply parrot Kiev claims, and in very aggressive language to boot, instead of finding its own truths, and present us with proof? I’m guessing it’s a combination of the proof simply not being there, and the same hubris that’s prevalent in Washington.

The Ukraine army claimed yesterday that the returning aid convoy trucks had taken ‘equipment from a factory in Luhansk that makes firearm magazines and a Topaz plant that produces radars’. And taken it back with them to Russia. They gave no reason why this would have been done, nor, once again, any proof that it happened at all. Inspections of the trucks as they crossed back over the border showed nothing.

Angela Merkel yesterday refused to rule out yet more sanctions against Russia. While Poroshenko today held a large military parade in Kiev, and vowed to spend $3 billon to prop up the Ukraine army. Funny, because Ukraine is not just bankrupt, it’s way beyond that stage. Which in fact means the west has pledged those $3 billion, in addition to all the other billions “invested” in Ukraine, to prop up that army. On the eve of the peace talks that Putin will attend.

Perhaps this is inevitable. NATO was a child of WWII and even more of the Cold War. It can be argued that it had an important function in keeping Europe out of Russian hands. So far, so good, you might think. But NATO also grew into a behemoth of an organization that is extremely secretive about its intelligence, and as such a potential powder keg, a state within its member states. The sort of institution that’s very hard to get rid of, because it acquires political power in and of itself.

NATO lost the enemy it had been built to withstand, 25 years ago when the Berlin wall came down. Given all that, it shouldn’t come as a big surprise that, provided a few hot heads rose up in its ranks, it would turn into an alliance looking for an enemy. This process began to take shape some 15 years after the Soviet Union fell apart, and NATO, despite clearly defined commitments not to, started expanding eastward. The US House voted on a resolution to officially authorize this expansion, and Ron Paul said this about it on the House floor on April 1, 2008:

Mr. Speaker, I rise in opposition to this resolution calling for the further expansion of NATO to the borders of Russia. NATO is an organization whose purpose ended with the end of its Warsaw Pact adversary. When NATO struggled to define its future after the Cold War, it settled on attacking a sovereign state, Yugoslavia, which had neither invaded nor threatened any NATO member state.

This current round of NATO expansion is a political reward to governments in Georgia and Ukraine that came to power as a result of US-supported revolutions, the so-called Orange Revolution and Rose Revolution. The governments that arose from these street protests were eager to please their US sponsor and the US, in turn, turned a blind eye to the numerous political and human rights abuses that took place under the new regimes. Thus the US policy of “exporting democracy” has only succeeding in exporting more misery to the countries it has targeted.

NATO expansion only benefits the US military industrial complex, which stands to profit from expanded arms sales to new NATO members. The “modernization” of former Soviet militaries in Ukraine and Georgia will mean tens of millions in sales to US and European military contractors. The US taxpayer will be left holding the bill, as the US government will subsidize most of the transactions.

Providing US military guarantees to Ukraine and Georgia can only further strain our military. This NATO expansion may well involve the US military in conflicts as unrelated to our national interest as the breakaway regions of South Ossetia and Abkhazia in Georgia. The idea that American troops might be forced to fight and die to prevent a small section of Georgia from seceding is absurd and disturbing.

Mr. Speaker, NATO should be disbanded, not expanded.

Dr. Paul reiterated some of this a few days ago, when he launched a fund raiser for the Ron Paul Insititute for Peace and Prosperity, on his birthday:

We are fighting the war party, challenging their propaganda at every turn. But we are on the ropes and we need your help – as I write this to you they are trying to lie us into yet another war that could be the end of us all. Our job is to tell the truth and to expose their lies.

That’s why I founded the Ron Paul Institute for Peace and Prosperity, and right now I am especially concerned about the drive to war against Russia. Indeed, I have never seen such a dangerous stand-off between nuclear powers. The US government continues to add sanction upon sanction against Russia over a civil war in Ukraine resulting from a US-staged coup.

The propaganda over the Malaysian jetliner, and the pushing of NATO missiles right up to the Russian border – to take just two worrisome events – are chilling. How would Americans react to Russian missiles on the Texas border?

But Paul is a lone voice in the desert. Unfortunately. More than ever in the past 25 years. NATO’s back! And it’s got a new leader:

NATO Secretary General Anders Fogh Rasmussen said Friday the alliance has observed an alarming buildup of Russian ground and air forces in the vicinity of Ukraine. “We have also seen transfers of large quantities of advanced weapons, including tanks, armored personnel carriers and artillery to separatist groups in eastern Ukraine,” Rasmussen said in a statement. Rasmussen said Russia continued to escalate the crisis in eastern Ukraine and that this could lead to further isolation of Moscow.

He also condemned Russia for sending a “so-called humanitarian convoy” into Ukraine without the consent of the Ukrainian authorities and without any involvement of the International Committee of the Red Cross. “It can only deepen the crisis in the region, which Russia itself has created and has continued to fuel,” Rasmussen said in a statement. He said it was a blatant breach of Russia’s international commitments.

And Rasmussen’s been making similar statements as long as any journalist was willing to listen. Which is not that long, since only with Ukraine NATO has found itself a long and badly desired stage again. And don’t let’s forget NATO’s other preferred media go-to guy:

Nato’s Supreme Allied Commander, U.S. Air Force General Philip Breedlove, accused Russia of using the convoy as “a front for the resupply of separatists and Russian operatives”.

If there is a place for NATO in the world today, it must be as a force for peace. If not, it can only be a war mongerer, a tool for what Dr. Paul calls the war party. NATO started as a deterrent force, a united stand versus Russia’s alleged expansionist aspirations post-WWII. How real those were is questionable, but what is not is that they are now in the past. NATO’s recent aggressive language is not. And neither is its endless string of unproven claims about Russia.

German vice-chancellor Sigmar Gabriel yesterday talked about a wish for the federalization of Ukraine. But because that appears to be a sensitive topic in Ukraine, Chancellor Angela Merkel said he had meant ‘decentralization’. Apparently, Poroshenko supports such a thing. To grant a few more ‘rights’ to what remains of east Ukraine, as it will supposedly still be ruled by Kiev, which just destroyed much of its infrastructure and killed thousands of Ukrainian citizens there.

Yeah, that should work. It’s not like Kiev will finance the rebuilding of the area, because it’s already devoting what funds are left, to rebuilding the very army that ransacked east Ukraine. Does anyone think that Putin will say yes to this, that the rebels will lay down their arms and risk being slaughtered by what poses as the Ukraine army, the sturmtroops and mercenaries?

We’ve seen no evidence that Putin arms and supports the rebels, we’ve only seen allegations. But we do have proof of far-reaching western involvement in Ukraine, of billions in financial support, of US secret service operatives, US mercenaries, and swastika waving Ukrainians. What side are we on again? And how did we get there?

But all may not be lost for NATO. It may even find itself spread thin. As we get news that Iranian soldiers are fighting in Iraq against IS, a weird pair of bedfellows, along with the US and the Kurds (Iran also just announced it downed an Israeli drone), the Observer has a report that NATO should find interesting, and the rest of us alarming:

IS Surges Towards The Borders Of Turkey As West Mulls Options

Islamic State extremists are pushing to secure the border between Turkey and north-western Syria as the main gateway for recruits to join the caliphate they have imposed across much of eastern Syria and western Iraq. Large numbers of jihadists from Islamic State (formerly Isis) are moving this weekend towards the Turkish border area, about 60 miles north of Aleppo, in columns of armoured trucks that they looted from abandoned Iraqi military bases.

The area is now one of the most active front lines in the group’s attempt to redraw the borders of the Levant, a campaign that will have huge ramifications for Turkey. Residents and Syrian opposition militants in the town of Marea, close to the Turkish border, on Saturday said that Isis had advanced to within sight of the town and had sent envoys to negotiate access. “They could storm in like the Mongols, if they wanted to,” said a fighter from Syrian rebel group Islamic Front. “But they’re trying to be nice. We have dealt with them before. There is no reconciling with them. We will have to fight.”

[..] “The Turkish border is the only way to smuggle oil, weapons and foreign fighters into [Iraq and Syria],” said Dr Hisham al-Hashimi, an Iraqi expert on Isis. “If it’s closed, it will cut three things: funding, an entrance for the foreign fighters and links to Europe which they are trying to open. If those plans are destroyed, they will aim for another gate to Lebanon.”

some senior figures in the Middle East and Europe say Turkey has facilitated either through neglect or undeclared policy. “Let’s see how they react to the latest Isis advance,” said one regional leader on Saturday. “For more than a year now people have been telling them this has got out of control. They have to seal their border now. This so-called caliphate cannot be allowed to stand.” Al-Hashimi said Ankara would now be forced to act. “This time Turkey will do something and block the borders because they don’t trust Isis any more after they attacked Kurdistan. They understand now that Isis could turn on them.”

Guess what? Turkey, even if Germany has been spying on it for decades, and its new president has been highly critical of the US and the rest of the west, is a member of … NATO! And NATO is based on one for all, all for one. If any of its member states are attacked, all others are obligated to come to its defense. IS know this, and it therefore also knows how to draw the US and Europe into the next major war. At a time of its choosing.

Pressure Builds Within Fed To Signal New Policy Course (Reuters)

Pressure is building within the Federal Reserve for officials to move as early as next month to more clearly acknowledge improvements in the U.S. economy and lay the groundwork for the central bank’s first interest rate hike in nearly a decade. According to some U.S. central bankers and their close advisers, signs of economic resilience and growing anxiety about the risks of holding rates too low for too long have set the stage for an intense debate over rewriting their policy statement. It is uncertain whether officials will use their upcoming meeting on Sept. 16 and 17 to scrap key parts of the language they have been using to keep rate-hike expectations at bay, but if they do not, October looks like a good bet. “Some shift of language is on the table, and should be on the table in the coming meetings,” Atlanta Federal Reserve Bank President Dennis Lockhart, a policy centrist, said in an interview. While a handful of officials have argued for prompt changes, Lockhart said he thinks September “is still early.”

Adding, dropping or adjusting even a few words in the Fed’s post-meeting statement is a potentially treacherous task. A miscommunication by the world’s most powerful central bank could shock financial markets globally and, in a worst case, reverse the economic recovery it seeks to foster. At issue is a 5-month old pledge from the Fed to keep benchmark rates near zero for a “considerable time” after it shelves an asset-purchase program in October. Another line that has drawn internal objections is the month-old statement that “significant” slack remains in the labor market, a suggestion that not even strong job growth and a further drop in unemployment will prompt a tightening of policy any time soon. “The language puts us in a box that I think is not a good box to be in,” Philadelphia Fed President Charles Plosser told Reuters on the sidelines of the central bank’s annual Jackson Hole conference.

Read more …

ECB’s Mario Draghi Signals Departure From Austerity Focus (WSJ)

European Central Bank President Mario Draghi on Friday signaled a departure from the austerity-focused mind-set that has dominated economic policy-making in the euro zone since the onset of the region’s debt crisis nearly five years ago, as officials struggle with stagnant economies, weak prices and high unemployment. Speaking at the Federal Reserve Bank of Kansas City’s annual conference Jackson Hole, Wyo., Mr. Draghi said European central bankers and politicians each have a role to play in boosting demand and reducing joblessness. For its part the ECB is willing to take more stimulus measures if needed to keep low rates of inflation from becoming embedded in expectations of future price growth, he said. “It would be helpful for the overall stance of policy if fiscal policy could play a greater role alongside monetary policy, and I believe there is scope for this, while taking into account our specific initial conditions and legal constraints,” Mr. Draghi said in his prepared remarks.

Although Mr. Draghi’s comments didn’t constitute an endorsement of rampant deficit spending to boost euro-zone economies, they nevertheless marked a shift away from years of preaching by ECB officials that governments needed to shrink deficits and undertake economic reforms even during times of economic weakness. Critics say that mixing fiscal austerity with labor-market reforms exacerbated Europe’s downturn, even though they have long-term payoffs. Mr. Draghi’s comments came days after a report showed that the euro-zone economy stalled in the second quarter, fanning fears that the bloc’s roughly $13.5 trillion economy is stuck in a lasting rut of stagnation and high unemployment.

The GDP data “confirm that the recovery in the euro area remains uniformly weak, with subdued wage growth even in non-stressed countries suggesting lackluster demand,” he said. His remarks signaled a new approach to these risks: combining policies to stimulate demand with efforts to make labor markets more flexible. With inflation at very low levels—annual inflation in the euro zone was just 0.4% last month, far below the ECB’s 2% target—policy makers should cast aside any fears that stimulus policies may lead to inflation and instead focus on keeping high unemployment from taking root in Europe, he suggested. The euro zone’s unemployment rate was 11.5% in June, far higher than in the U.S., U.K. and Japan. “The risks of ‘doing too little'” and allowing temporary unemployment to become more entrenched “outweigh those of ‘doing too much’—that is, excessive upward wage and price pressures,” Mr. Draghi said.

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Real cost of capital is very high for PIIGS.

The Real Cost of Capital: Eurozone ‘Periphery’ Dilemma (Gurdgiev)

Staying on the topic of debt, here is IMF research on real cost of corporate capital (linked to the cost of debt) in the Euro area ‘periphery’ (this is from an IMF July 2014 publication that accompanied its Article 4 paper on Euro Area). I highlighted with the red the range of recent capital costs range in each country to trace out historical comparatives. … [the] real cost of capital across the euro area ‘periphery’ shows one simple thing: investment is still a very costly proposition for businesses, especially compared to the pre-crisis period. Starting with the Euro area as a whole:

Two points:
• Current real cost of capital across the euro area is relatively benign, compared to both 1990s – early 2000s period and shows low volatility in recent (crisis) years post 2009 peak
• 2009 peak is pronounced but moderate compared to the one found in some ‘peripheral’ countries.

In basic terms, this means that euro area’s capital costs are benign – above the 2004-2007 trough, but historically well below those observed in the 1990s.


Two points:
• Current capital cost levels are consistent with crisis peak
• Capital today is as expensive in real terms as in the pre-euro era.

Which means that Spanish real cost of capital is now as bad as in the pre-euro period and is much worse than during the credit boom of the late 1990s-early 2000s.

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G-20′ Solution To Unstable, “Too Big To Fail” Banks: More Debt (Zero Hedge)

It’s been 6 years since Lehman went bankrupt overnight, stunning bondholders who were forced to reprice Lehman bonds from 80 to 8 in a millisecond, and launching the world’s worst depression since the 1930s, which courtesy of some $10 trillion in central bank liquidity injections, has been split up into several more palatable for public consumptions “recessions”, of which Europe is about to succumb to the third consecutive one even if for the time being the Fed’s has succeeded in if not breaking the business cycle, then certainly delaying the inevitable onset of the next major contraction in the US economy.

Paradoxically, instead of taking advantage of this lull in volatility and relative economic calm, and making the financial system more stable, all so-called regulation has done, is paid lip service to the underlying problems, hoping that should the next crisis appear the Fed will be able to delay it yet again by throwing countless amounts of taxpayer money at the problem. In the meantime, the biggest banks have gotten so big that the failure of one JPM or Deutsche Bank, and their hundreds of trillions in gross notional derivatives, would lead to the biggest financial and economic catastrophe ever witnessed and make 2008 seem like a fond memory of economic euphoria.

So finally, with a 6 year delay, the western world’s “government leaders” have finally decided to do something about a TBTF problem that has never been more acute. According to Reuters, in November said leaders will agree “that the world’s top banks must issue special bonds to increase the amount of capital which can be tapped in a crisis instead of calling on taxpayers to come to the rescue, industry and G20 officials said.” In other words, suddenly the $2.8 trillion in Fed injected excess reserves, split roughly equally between US and European banks, are no longer sufficient, and while regulators are on one hand delaying the implementation of Basel III and its tougher capital rules, on the other they are tacticly admitting that whatever “generous” capital buffer banks have on their books right now will not be sufficient when the next crisis strikes.

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I love the term ‘property porn’

Soaring House Prices In Dublin Spark Fears Of New Property Bubble (Observer)

The spectre of property speculation is stalking Ireland once more, as soaring house prices in Dublin bring warnings that the country is in danger of repeating the mistakes that brought the economy to its knees during the financial crisis. Property prices in the Irish capital are rising by an average of €6,600 a month, according to the country’s Central Statistics Office, which puts them 24.4% higher than last year. But as demand for new homes now outstrips supply across Ireland, the body representing mortgage holders warns that the country is becoming obsessed again with inflated house prices. The Irish Mortgage Holders Organisation (IMHO) points out that the legacy of the boom-to-bust years is still weighing on thousands of households. Figures from Ireland’s central bank show 35,000 homeowners unable to pay their mortgages for up to 24 months, and 135,000 households in mortgage arrears, despite an economic upturn and expectations that GDP will grow by 2.5% this year.

IMHO founder David Hall said: “People crippled by debt and paying new austerity taxes such as property tax and upcoming water taxes are watching with shock at the new development of property porn. We see commentary after commentary that prices are rising and negative equity is reducing, yet this is no comfort to those crippled in debt. A reduction in negative equity might be of benefit to banks who consider repossessing homes. But increases in property prices do not help with a family’s affordability in paying their mortgage.” Hall accuses Ireland’s banks and property industry of fuelling a fake mini-boom. He claims it is designed to increase the paper assets of Irish banks before they face stress tests from the European Central Bank in October. “This property bubble being developed by vested interests needs bursting and bursting sooner rather than later,” he added. “The financial system owes a gratitude to the Irish citizen for keeping it afloat and now it needs to back off irresponsible promoting of a property bubble, which could land many citizens in deep financial trouble again.”

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Drowning in debt.

Swedish Household Debt Soars As Election Nears (Reuters)

Johan and Alejandra are the kind of Swedes the IMF has been warning about – piling up debt to keep up with an ever-rising property market and fund a lifestyle of travel, maids and nights out. The couple plan to buy a flat in Stockholm for 5 to 6 million Swedish crowns ($724,000 to $869,000), initially with an interest-only bank loan, among other spending plans. “I may travel, I may want to invest in a new business,” said Alejandra, who runs a cafe in the city centre. Less than a month away from a general election, there are no votes in campaigning to stop the credit flowing, but there are fears that such Swedes could be the Achilles heel of a country that boasts a coveted AAA score from credit rating agencies Fitch and S&P. Four in 10 mortgage borrowers in Sweden are not paying off their debt, and those that are repaying the principal do so at a rate that would on average take nearly a century.

Swedish property prices have nearly tripled in just two decades. In July, home prices rose at a double-digit pace from a year ago – the first time in more than four years. The IMF has warned financial instability in Sweden is an increasing concern and urged a comprehensive set of macroprudential measures to temper soaring mortgage debt. Nobel Prize laureate and economist Paul Krugman has chimed in, saying Sweden probably has a significant housing bubble. With Sweden’s household debt-to-income ratio above 170 percent – among the highest in Europe and rising – the issue is worrying Riksbank policymakers. Out of fear of spurring more borrowing, the central bank has kept interest rates higher than warranted by inflation, but they are nevertheless at historic lows. The main concern is that private consumption – which makes up nearly half of Swedish GDP – would suffer if rates rose or property prices fell, which could spell problems for the lenders and the economy, which is only just finding its feet.

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IS Surges Towards The Borders Of Turkey As West Mulls Options (Observer)

Islamic State extremists are pushing to secure the border between Turkey and north-western Syria as the main gateway for recruits to join the caliphate they have imposed across much of eastern Syria and western Iraq. Large numbers of jihadists from Islamic State (formerly Isis) are moving this weekend towards the Turkish border area, about 60 miles north of Aleppo, in columns of armoured trucks that they looted from abandoned Iraqi military bases. The area is now one of the most active front lines in the group’s attempt to redraw the borders of the Levant, a campaign that will have huge ramifications for Turkey. Residents and Syrian opposition militants in the town of Marea, close to the Turkish border, on Saturday said that Isis had advanced to within sight of the town and had sent envoys to negotiate access. “They could storm in like the Mongols, if they wanted to,” said a fighter from Syrian rebel group Islamic Front. “But they’re trying to be nice. We have dealt with them before. There is no reconciling with them. We will have to fight.”

The Syrian opposition fought a bitter and costly war with Isis in the same area in January, ousting them from ground they had used as a rallying point for foreign fighters and for a successful push into Iraq. The six-week battle cost the lives of more than 2,500 opposition fighters and allowed the Syrian regime, together with its proxies, to slowly encircle Aleppo from the north-west, a move which is likely to prove decisive in the Syrian civil war. Since that battle, the flow of foreign fighters from across the Turkish border to Isis has slowed. Isis now wants to reverse that, making it easier for anyone who wants to join them to cross a 130-mile strip of the frontier that has been used by the vast majority of foreign fighters, including British and European jihadists. “The Turkish border is the only way to smuggle oil, weapons and foreign fighters into [Iraq and Syria],” said Dr Hisham al-Hashimi, an Iraqi expert on Isis. “If it’s closed, it will cut three things: funding, an entrance for the foreign fighters and links to Europe which they are trying to open. If those plans are destroyed, they will aim for another gate to Lebanon.”

Western officials told the Observer that they were obliged to tread carefully when talking to the Turks about foreign passport holders suspected of trying to travel to Syria through Turkey. Using the term “extremist” or “terrorist” in official correspondence would generally lead nowhere, but Turkish officials were more forthcoming when inquiries were made about “those who abuse religion”. The battle over semantics underscores the deepening sensitivity surrounding the fast-growing regional extremist threat that some senior figures in the Middle East and Europe say Turkey has facilitated either through neglect or undeclared policy. “Let’s see how they react to the latest Isis advance,” said one regional leader on Saturday. “For more than a year now people have been telling them this has got out of control. They have to seal their border now. This so-called caliphate cannot be allowed to stand.” Al-Hashimi said Ankara would now be forced to act. “This time Turkey will do something and block the borders because they don’t trust Isis any more after they attacked Kurdistan. They understand now that Isis could turn on them.”

Read more …

Ukraine Announces $3 Billion Army Investment At Military Parade (BBC)

Ukraine’s president has announced that almost $3bn will be spent on re-equipping the army after an “exhausting” campaign against pro-Russian rebels. Petro Poroshenko said that a “constant military threat will hang over Ukraine” for the foreseeable future. He was speaking ahead of a large military parade in the capital Kiev. Meanwhile, fighting continues in eastern Ukraine, where more than 2,000 people have died in recent months. Mr Poroshenko said the investment would be spread out over two years, from 2015-2017. “The events of the last months have for us turned into a real war, albeit an undeclared one,” he said in a televised speech on Ukrainian independence day.

“Over the last six months, a new Ukrainian army has been born in heavy and exhausting fighting,” he said. The military parade featured hundreds of marching servicemen and military hardware. Critics said it was inappropriate when Ukraine was at war. Pro-Russian rebels in the eastern city of Donetsk – the scene of the heaviest fighting – say they will hold their own parade and display captured soldiers. More than 330,000 people have fled their homes because of fighting in eastern Ukraine. The bodies of six civilians, including a child, were seen by an AFP correspondent in Donetsk on Saturday.

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Merkel And Poroshenko Call For “Decentralised” Ukraine (Euronews)

German Chancellor Angela Merkel and Ukrainian President Petro Poroshenko presented a united front in Kyiv on Saturday over the crisis in eastern Ukraine. Their meeting came on the eve of Ukraine’s Independence Day celebrations, which Merkel will attend. The German Chancellor said that the open border between Russia and Ukraine must be controlled – either by the OSCE or another authority – before there could be any ceasefire. Both Merkel and Poroshenko stressed they wanted to ensure decentralisation but not federalisation of Ukraine along with respect for cultural and linguistic differences.

“Decentralisation in Ukraine – this is exactly what the President and myself want and what I support. I think as well that this is an important step to further include the Russian-speaking population,” Merkel said. Poroshenko thanked Merkel for her support of the Ukrainian people and for promised German and EU financial assistance to rebuild war-torn eastern Ukraine. “We all remember the Marshall Plan that helped post-war Europe. And today I can say that this is the beginning of a “Merkel Plan”, for the reconstruction of the infrastructure in the Donbass region. And I am very grateful for this”. Next week Russian and Ukrainian leaders along with top EU officials will meet in Belarus. Diplomats say Merkel is urging Poroshenko to be open to peace proposals when he meets Putin.

Read more …

Must see video. Smart cookie.

Putin Advisor Warns “Transition Has Always Come Through War” (Zero Hedge)

When we last met Sergei Glazyev, Vladimir Putin’s chief ‘integration’ adviser he explained “how the U.S. military and oligarchs are trying to maintain leadership in the global competition with China.” Arguably the best informed man in Russia, his perspective seems important to grasp as he considers:

“The world today is going through a year of overlapping cyclical crises. This is a period when the global economy is changing as the structure that has driven economic growth for 30 years has exhausted itself. The world needs to transition to a new system and transition has always come about through war… [..] The last elections to the European Parliament showed that all European citizens are not fooled by the false pro-American, anti-Russian propaganda… and by the constant stream of lies. [..] In order to avoid the constant threat of foreign asset confiscation, we need to build our own sovereign monetray macro-economic policy.”

As Glazyev concluded previously:

To further insulate its economy, Russia should abandon the use of the U.S. dollar as a reserve currency, according to Glazyev. Russia, which international reserves are the world’s fifth-biggest, needs to diversify its holdings to include China’s yuan, India’s rupee and Brazil’s real. “If a country aspires to reserve status for its currency, it should behave properly, and that isn’t the case today,” Glazyev said.

And this is how Putin sees the world. De-escalation? Good luck.

Make sure to switch on subtitles in YouTube (below clip)

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Strong Earthquakes Shake Icelandic Volcano On Red Alert (AFP)

Two strong earthquakes on Sunday, August 24, shook Iceland’s largest volcano, which is on red alert for imminent risk of eruption, the Icelandic Met Office said. A large explosion at the Bardarbunga volcano could signal a replay of the global travel chaos caused by the eruption of another Icelandic peak four years ago, which created a massive ash cloud across Europe. The earthquakes were listed on the Met Office’s website with intensities of 5.3 and 5.1 on the Richter scale, which makes them the strongest recorded in the region since the current seismic cycle began last week. On Saturday, August 23, Iceland raised its alert over the Bardarbunga volcano to the highest level and closed airspace in the area, but all of Iceland’s airports remained open.

Met Office official Gunnar Gudmundsson told Icelandic public broadcaster RUV that it was difficult to say whether the earthquakes indicated an increased risk of an eruption. Earlier this week, authorities evacuated tourists and hikers from the area around the volcano, which is covered by a glacier. Seismologists had recorded an earthquake of 4.5 in the Richter scale on Monday, when Iceland decided to raise its aviation alert to orange, the second-highest level of five. The eruption of Eyjafjoell, a smaller volcano, in April 2010 caused travel mayhem, stranding more than eight million people in the widest airspace shutdown since World War II.Iceland’s most active sub-glacial volcano Grimsvotn erupted in 2011, forcing the country to temporarily shut its airspace and sparking fears of a repeat of the Eyjafjoell flight chaos.

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‘Incredible’ Rate Of Polar Ice Loss Alarms Scientists (Guardian)

The planet’s two largest ice sheets – in Greenland and Antarctica – are now being depleted at an astonishing rate of 120 cubic miles each year. That is the discovery made by scientists using data from CryoSat-2, the European probe that has been measuring the thickness of Earth’s ice sheets and glaciers since it was launched by the European Space Agency in 2010. Even more alarming, the rate of loss of ice from the two regions has more than doubled since 2009, revealing the dramatic impact that climate change is beginning to have on our world. The researchers, based at Germany’s Alfred Wegener Institute Helmholtz Centre for Polar and Marine Research – used 200m data points across Antarctica and 14.3m across Greenland, all collected by CryoSat, to study how the ice sheets there had changed over the past three years. The satellite carries a high-precision altimeter, which sends out short radar pulses that bounce off the ice surface and then back to the satellite. By measuring the time this takes, the height of the ice beneath the spacecraft can be calculated.

It was found from the average drops in elevation that were detected by CryoSat that Greenland alone is losing about 90 cubic miles a year, while in Antarctica the annual volume loss is about 30 cubic miles. These rates of loss – described as “incredible” by one researcher – are the highest observed since altimetry satellite records began about 20 years ago, and they mean that the ice sheets’ annual contribution to sea-level rise has doubled since 2009, say the researchers whose work was published in the journal Cryosphere last week. “We have found that, since 2009, the volume loss in Greenland has increased by a factor of about two, and the West Antarctic ice sheet by a factor of three,” said glaciologist Angelika Humbert, one of the study’s authors. “Both the West Antarctic ice sheet and the Antarctic peninsula, in the far west, are rapidly losing volume. By contrast, East Antarctica is gaining volume, though at a moderate rate that doesn’t compensate for the losses on the other side of the continent.”

The researchers say they detected the biggest elevation changes caused by ice loss at the Jakobshavn glacier in Greenland, which was recently found to be shifting ice into the oceans faster than any other ice-sheet glacier, and at Pine Island glacier, which like other glaciers in West Antarctica, has been thinning rapidly in recent years.

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    Marjory Collins On the trolley in Baltimore Apr 1943 As the first subglacial eruption has been registered in the Barbardunga volcano, and there are ea
    [See the full post at: War and Peace and NATO]

    John Day

    NATO is like Cujo these days, the most heavily armed rabid dog ever.
    Could Bardarbunga go off big enough to give us some non-war emergency, big enough to get us all on-board behind our shadowy puppet masters?
    I’m grasping at straws, and willing to pray to the aliens, if it will help.

    Diogenes Shrugged

    There seems to be some sort of a common understanding shared by the people running this show. Something uniting them in their calls for wars in so many places at once. Something that causes them to embrace torture and mass murder as good things. Something they feel vindicates their constant lying and deception. Something that not only forgives their incredible levels of theft from honest citizens, but enshrines it.

    Is it greed? The people at the top have far more money than their families could ever hope to spend, so I can’t imagine why it would be greed. On the other hand, maybe it’s just a matter of the Rothschilds always getting their way simply because nobody’s price is ever too high.

    Is it power? That would presume that the kicks one gets from jerking around millions of people are beyond what could be derived from wine, women, song, honest achievement or sport fishing.

    Is it control? Sure, we humans are unruly, but we’d do just fine (actually much better) without the controllers.

    Is it blackmail? Have all our “leaders” been threatened if they don’t go along with the big plan? Or perhaps it’s the ultimate blackmail – – the Sampson Option – – in which case, Israel does indeed rule the world. But that still leaves the question of what motivates the blackmailer?

    Is it psychopathic ego? All the visible warmongers do seem to love the camera, the prestige, and inflated feelings of self-importance.

    Is it supernatural “evil?” Some people blame Satan, some blame Satanism. The Devil makes the elites do what they do.

    Is it religion? Maybe there’s a shared vision of the future from holy books. A promise of future utopia, if only we rid the planet of the ones God hates.

    Is it empire, or worse, dynasty? The Rothschilds, Rockefellers, Bushes, Clintons and Pauls come to mind. A real-life “game of thrones.”

    Is it petroleum reserves? Is it land? Is it other resources? Why have the anointed ones decided to act criminally and as enemies of mankind?

    Is it population reduction? Are all the people in charge Malthusians?

    Is it malice? Are they all sadists? Do they just love being the ones to make people suffer?

    Is it fear? They do have good reason to be terrified by us, especially considering all they’ve done to make us terrified of them.

    I’m sure all those motivations explain a lot of the crimes against mankind we see from the people pulling the strings, but I’m still unable to discern why so many of them seem to be on the same page, as if they all support a master plan – – an overarching conspiracy – – with dozens of subordinate, complementary conspiracies that dovetail.

    Am I a conspiracy theorist? Of course. How could an informed person be otherwise? You’d have to be completely daft not to see it, or possibly an idiot. Take your pick.

    The richest, most powerful movers-and-shakers of the world and their minions are the terrorists. You’re either with us, or you’re with the terrorists.


    Every developed country, having taken way, way more than their fair share of the world’s resources, also want to take what’s left. If they have to lie, cheat, create chaos and mayhem in order to get energy cheaply, so be it. If you are a country with a lot of resources and you want to get a fair buck for them, watch your back. They are coming for you.

    Diogenes – once you have power, you don’t want to lose it, you want to maintain your position. As our leaders are unethical/diabolical power-hungry types, they know there are people just like themselves who wouldn’t hesitate to gain control if they could. It takes one to know one. This is all about staying on top. A big game.


    “Bureau of Meteorology ‘altering climate figures’”

    This ties in perfectly with my observations of how temperature is reported in Australia.

    V. Arnold

    This is our world today:
    “War is peace.
    Freedom is slavery.
    Ignorance is strength.”
    ― George Orwell, 1984
    I suggest you look up George Orwell’s letter to Noel Willmett, written in May 1944.
    It’s most prescient and very important for an understanding of this very fucked up world.
    Our world has had a polar shift; north is now south…

    Here’s a link to the letter.

    I feel the details, so eloquently stated by you (Raul), aren’t as important as understanding the very big picture.
    I do feel we are past changing the course of this very big vessel headed for the rocks.
    Understand the ramifications and prepare as best you can; relocation is probably the best route IME.

    V. Arnold

    Erm: Addendum;
    relocation, depending where one is, of course. If one is in Europe, U.S.A., Canada, Britain? Then leave as soon as possible. It may give you choices not available in the west in the near future.



    “If one is in Europe, U.S.A., Canada, Britain? Then leave as soon as possible. It may give you choices not available in the west in the near future.”

    Care to expand on this line of reasoning?

    My biggest concern with relocation is that it often seems poorly thought out (in my opinion). Predominantly Anglo-saxon / Caucasian westerners have been at the top of the hill for a good many years, and unfortunately we’ve made a pretty bad name for ourselves in most other places that are not predominantly populated Anglo-saxon / Caucasian westerners (e.g. South America, South-east Asia, India, Africa… basically everywhere, as our Empire exploits virtually everyone who is not us).

    While I’m sure people think places like Thailand, Peru, Brazil, Mexico, Morocco, Kenya, etc. are very lovely places to live/visit and the people treat you well there now, that might not always be the case. When the chips start to fall for the West, perhaps old grudges will be settled; years of exploitation will be paid back against any westerner that an upset local can get his/her hands on.

    If one heavily integrates themselves into the community through marriage and genuine philanthropy, one may find themselves not as susceptible to these risks… but even in those cases you’ll always be an outsider to that culture as it is not your own and they know that just as well as we do (even if we are blind to that fact at times).

    Another large concern is that the world is grossly overpopulated, and food production is constantly at risk of collapsing to levels that cannot sustain the world’s current population. I see far greater risk of food scarcity (and thus riots, violence, chaos) in some of the places I’ve mentioned above than in the near-dictatorial western nations.

    Basically, I’m of the mind that there will be very few places to hide and wait for the storm to blow over when things finally start falling apart…

    Things fall apart; the centre cannot hold;
    Mere anarchy is loosed upon the world,
    The blood-dimmed tide is loosed, and everywhere
    The ceremony of innocence is drowned;
    The best lack all conviction, while the worst
    Are full of passionate intensity.

    V. Arnold

    @ Variable81

    The view from the outside is almost never the fact/reality on the ground.
    Fear is a thief; don’t let it steal from you. (Me)
    I’m 11+ years out and doing fine.
    Yours is a long post, but significant of nothing outside of your familiarity.
    Again, don’t let fear rule your decisions; its a big wonderful world “out there”…
    All I’m saying is this; we’re all faced with decisions, and the present situation, improperly understood, could mean your ability of movement is limited, if not forbidden.
    Look, this is complicated and if you haven’t been paying attention then you are pretty well fucked. Act now or you may not have the choice to act later.
    I cannot be more clear than that…



    Ah, and since you’ve been out for 11+ years, I suppose that’s a reasonable argument that things will continue to go well for you, eh? Because certainly nothing will change wherever you are located…

    To be clear, it’s not that I’m suggesting I’m not fucked – I know at the very least I there’s change coming my way and I need to prepare for it, but I’m also suggesting that perhaps most of us (if not all of us?) are fucked regardless of what choices we make due to the magnitude of the predicament we’ve created. Those who stay will likely have to revolt, live a lie or die, and those who go are trusting in the goodness of the people in their newly chosen home not to treat them as outsiders when inevitable collapse finally arrives.

    As a young Canadian, I’m pretty big on multiculturalism. I could, like you, say things have been going swimmingly here in Toronto now for 100+ years, and thus they will continue to do so. But I know history suggests that isn’t true – not only is Toronto more of “balkanized” metropolis where minorities tend to gather with those who share their culture (sadly, in places where poverty is also more obvious), but when harsher times arrive old wounds will resurface and people’s distrust of other cultures/communities will return.

    That’s not me spreading fear, but the human condition demonstrated over thousands of years of history, and I see nothing that suggests it will be any different this time around (for all our knowledge, sometimes I lament that mankind is more ignorant, arrogant and unwise than they ever have been before).

    To my knowledge, there are no western Anglo-saxon / Caucasian countries that have already collapsed and have moved to a standard of living that is anywhere close to realistic – the only places I see this is in third-world countries that I identified above where I would be a visible minority/outsider. The only other place that it could be argued this might be happening would be in small transition/prepper communities that seem to be forming in small pockets throughout North America and other western countries; but whether they will grow into something more or be extinguished by an increasingly oppressive government is hard to say at this time.

    Bottom line – makes no sense to me to flee what small community and family resources I do have in Canada to go somewhere that I’m a complete outsider, particularly if it is a location that has endured several years of exploitation by North American / Western culture, or one with huge divides in wealth and risk to their food/water/resource supplies.

    That being said, if you have any insight/advice on how to go about building a strong community and sense of culture in non-Westernized, post-collapse (or “collapse-irrelevant”, if it was never overly developed and exploited in the first place) haven, please do share. Most of the people I’ve met who have “fled” the westernized world to live in better environs are those who are young, poor and living hand-to-mouth in backpacker dens (lots of ideas, yet no action / results) or those older, despicable human beings who relocate somewhere that their money can go further and live off their pension (that was made off the backs of others our Empire oppressed, or future generations, no less… and they have the gall to suggest they “earned” it) and think their newly adopted community actually has some sort of love/respect for them simply because they’ve got US dollars in their pockets and the indigenous people do not, further exploiting them through their ill-gotten wealth.


    V. Arnold

    @ Variable81

    Your closing paragraph is quite enough for me to end this back and forth.
    Have a good life…or not…

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