Apr 222015
 
 April 22, 2015  Posted by at 11:08 am Finance Tagged with: , , , , , , , , ,  6 Responses »


Jack Delano AT&SF Railroad locomotive shops, San Bernardino, CA 1943

Appalled doesn’t cover it. Disgusted won’t do either. Angry doesn’t come close. Maybe I have yet to learn of a word that would express my feelings on the following topic. There’s a disease, an epidemic, that spreads through out the western world. We are all turning into accomplices to murder. And I still believe we are better than that. Just perhaps not all of us.

The US, and the rest of the west, have made plenty enemies already without needing to create their own out of thin air – as if there were ever a need to create enemies. But that’s still what we’ve been doing in many places in the world, including Ukraine. And there’s an entire multi-billion machine working just to make us think what someone else wants us to think about these ‘enemies’.

These days, when you call someone ‘pro-Russian’, that’s about on on the same level as ‘murderer’, rapist, things like that. And that must be why the western press once again resorts to ‘pro-Russian’ as a swear word, or even curse, in reporting on the murders of at least 10 people in Ukraine over the past 3 months. As far as we can see, all were considered ‘allies’ of former President Yanukovych (whatever ‘allies’ may mean in this context) and 2 were journalists (of whom at least 1 was also a historian).

Yanukovych was (or is, actually) not a saint. He was the utterly corrupt president of a country that has been utterly corrupt for a very long time. It still is today, and it’s getting worse, fast. Whereas Russia didn’t feel it had the right or need to interfere in the country, the west did. Its interference culminated in the ouster of Yanukovych in late February 2014, and the introduction of a ‘government’ that is extremely pro-western and extremely anti-anything-‘that has anything to do’-with Russia (including the language).

First, we saw the US install its puppet Yatsenyuk as PM (we know about this through leaked tapes of US Dep. Secretary Victoria Nuland). ‘Yats’ to this day has never been elected to office by ‘his’ people (or any other people, for that matter) . A few months later came oligarch Poroshenko as president, who was.

Both men have been instrumental in waging a very bloody and deadly war against a significant segment (a third) of their own population, in east Ukraine. This warfare has coincided with an ever more blatant propaganda war against anything-‘that has anything to do’-with Russia, both in Ukraine and across the west. Need I repeat not one of the accusations against Russia has, still to date, ever been substantiated, despite the best spy satellites etc. equipment in human history?

Whereas someone who cannot be accused of anything worse than being pro-Russian is merely equal to a murderer or rapist, being – labeled as – pro-Putin is several levels worse than that. Meanwhile, Russian President Putin himself has been compared to the biggest mass-murderers in human history, amongst others by US presidential candidate Hillary Clinton.

And lest we forget, Yatsenyuk has labeled all east Ukrainians ‘subhuman’. Let’s see any other prime minster in any other country in the world do that and remain in office.

So far, nothing new. Why then get back to this? Because of all those people who are being killed. The Kiev regime for quite a while attempted to label them all ‘suicides’ (something that was eagerly quoted in western media), hindered in this ‘policy’ only by facts getting in the way.

And when these facts get in the way, they blame Russia for the murders. The ‘rationale’ being that Moscow sought to prevent all these now deceased Ukrainians from divulging details about ‘anti-Maidan’ protests they may have been involved in (can’t have that in a democracy).

One western ‘news source’ even quoted an ‘expert’ just the other day as claiming Putin had ordered two of the murders to coincide with his latest yearly phone-in TV show last week: “political analyst Volodymyr Fesenko said the fact that the killings coincided with Vladimir Putin’s annual phone-in “aroused great suspicion”.

What remains most galling – well, other than us supporting cold blooded murder – is the extent to which western media blindly keep reporting whatever Kiev says, despite the fact that it should be clear to every single reporter that neither Poroshenko nor Yatsenyuk has ever been caught saying anything of substance that proved to be true.

Putin did mention the murder of journalist and historian Oles Buzina last week briefly on that show, and added there has been a series of murders recently in Ukraine, which are not being (or don’t seem to be) properly investigated by Kiev. “”This is not the first political assassination. Ukraine is dealing with a whole string of such murders..”

‘The difference with Russia, Vladimir Putin said, was that killings such as that of opposition figure Boris Nemtsov got properly investigated, leading to arrests. “In Ukraine, which pretends to be a democratic state and wants to be part of a democratic Europe, nothing like that is happening. Where are the murderers of these people? They are simply not there, neither those who carried them out nor those who ordered them, But Europe and North America prefer not to notice.“’

While the killing spree is ongoing, US troops arrived last week to ‘train’ the Ukraine government (and oligarchs) army. The British have had ‘instructors’ there for a long time. We know Blackwater aka XE aka Academi has boots on the ground. We also know that Right Sector leader Dmitro Yarosh (known for various photographs with his ‘troops’ which feature swastikas), was appointed to a high post in that same Ukraine army. Yarosh is also an MP. Nice assembly.

And ‘we’ support this? By we, I mean not only the US, Europe is just as hungry for a fight, and just as blind when it comes to facts vs fiction. But what on earth are we doing paying for all this? Have we all completely lost our heads, hearts and minds? We’re supposed to support democracies, not death squads!

Here’s a list of the victims, largely taken from a piece by Justin Raimondo last week, with a few additions on my part. As you can see, most of them would be considered intellectuals. The ‘cream’ of what was left in Ukraine and did not support Poroshenko, Yatsenyuk and their supporters abroad, in the west, is systemically being eradicated and may now be gone.

• January 26 – Nikolai Sergienko, former deputy chief of Ukrainian Railways and a supporter of Viktor Yanukoych’s Party of Regions, reportedly shot himself with a hunting rifle. The windows were all locked from inside, and no note was found.

• January 29 – Aleksey Kolesnik, the former chairman of the Kharkov regional government and a prominent supporter of the now-banned Party of Regions, supposedly hung himself. There was no suicide note.

• February 24 – Stanislav Melnik, another former Party of Regions member of parliament, was found dead in his bathroom: he is said to have shot himself with a hunting rifle. We are told he left a suicide note of “apologies,” but what he was apologizing for has never been revealed, since the note has not been released.

• February 25 – Sergey Valter, former Party of Regions activist and Mayor of Melitopol, was found hanged hours before his trial on charges of “abuse of office” was set to begin. Whoever was responsible neglected to leave a “suicide” note.

• February 26 – Aleksandr Bordyuga, Valter’s lawyer and former deputy chief of Melitopol police, was found in his garage, dead, another “suicide.”

• February 26 – Oleksandr Peklushenko, a former Party of Regions member of parliament and chairman of Zaporozhye Regional State Administration, was found dead in the street with a gun wound to his neck. Officially declared a “suicide.”

• February 28 – Mikhail Chechetov, a professor of economics and engineering, former member of parliament from the Party of Regions, and former head of the privatization board, supposedly jumped from the seventeenth floor window of his Kiev apartment. Another “suicide”!

• March 14 – Sergey Melnichuk, a prosecutor and Party of Regions loyalist, “fell” from the ninth floor window of an apartment building in Odessa. Or was he pushed?

• April 15 – Oleg Kalashnikov, yet another prominent Party of Regions leader, died of a gunshot wound – the eighth since the beginning of the year.

• April 16 – Oles Buzina, historian and journalist, shot dead.

• April 16 – Serhiy Sukhobok, journalist, shot dead.

• April 17? – Olga Moroz, editor-in-chief of the Neteshinskiy Vestnik, found dead in her home. Her body showed ‘signs of violent death’.

Moreover, in a perhaps separate incident, on March 22, Yanukovych’s 33-year-old son Viktor Jr., a former Ukraine MP, died after his car ‘apparently fell through ice on Russia’s Lake Baikal’.

There are also an unknown number of people who simply disappeared. This happened for instance on April 15 with Dr. Skorokhodov Vitali and ‘militiaman’ Alexey Astanin. There may be many more. Which reminds me of an interview that Patrick Smith posted a few days ago in Salon, with Stephen F. Cohen, arguably America’s top expert on Russia. One of the things Cohen said – more of him later – puts a major question mark behind official – UN – numbers of Ukraine civil war casualties:

The horror of this has been Kiev’s use of its artillery, mortars and even its airplanes, until recently, to bombard large residential cities, not only Donetsk and Luhansk, but other cities. These are cities of 500,000, I imagine, or 2 million to 3 million. This is against the law. These are war crimes, unless we assume the rebels were bombing their mothers and grandmothers and fathers and sisters.

This was Kiev, backed by the United States. So the United States has been deeply complicit in the destruction of these eastern cities and peoples. When Nuland tells Congress there are 5,000 to 6,000 dead, that’s the U.N. number. That’s just a count of bodies they found in the morgues. Lots of bodies are never found. German intelligence says 50,000.

We haven’t seen the German data Cohen cites, but we see no reason to doubt him either. It would place the entire matter in a whole different light, however.

There are some details behind the murder spree coming to the surface. There’s a site called ‘Peacemaker’ (psb4ukr.org), supported by Ukraine MP and government advisor Anton Gerashchenko, who has said: “Information from the website of the “Peacemaker” center has long enjoyed the Ministry of Internal Affairs, security service, intelligence, border service to collect information to open criminal cases and obtaining a court decision on the detention and arrest of separatists and terrorists.”. Gerashenko is also involved in financing the operation.

“Peacemaker”
RESEARCH CENTRE FEATURES OF CRIMES AGAINST UKRAINE’S NATIONAL SECURITY, PEACE, SECURITY AND HUMANITY international law
Information for law enforcement authorities and special services about pro-Russian terrorists, separatists, mercenaries, war criminals, and murderers.

The site apparently has a list to download with some 7,700 names of “saboteurs” and “terrorists”. People are invited to post personal information, including addresses and phone numbers, of people deemed hostile to the Kiev regime. Such information for Buzina and Kalashnikov was posted on the site less than 48 hours before they were murdered.

A few people in the west have done some further digging into the site’s origins (with ‘traceroutes’, ‘nslookup’, ‘reverse nslookup’ etc.), and they claim to have found links to Dallas, Texas and Calgary, Alberta, as well as one to a NATO server – located in Dallas. You can find further details at Moon of Alabama and Niqnaq.

Meanwhile, the murders were claimed by a group that calls itself Ukrainian Insurgent Army, quoted by the BBC as having written: “We are unleashing a ruthless insurgency against the anti-Ukrainian regime of traitors and Moscow’s lackeys. From now on, we will only speak to them using the language of weapons, all the way to their elimination.”

As far as I can tell, nobody has been arrested for any of the murders to date.

And yes, we are all involved in this. You, me, all of us. How did we get there? Perhaps the second quote from that interview with Stephen F. Cohen serves to explain how we did:

Stephen F. Cohen on the U.S./Russia/Ukraine History the Media Won’t Tell You
(The New York Times “basically rewrites whatever the Kiev authorities say”)

I wrote an article in, I think, 2012 called the “The Demonization of Putin,” arguing that there is very little basis for many of the allegations made against Putin, and that the net result was to make rational analysis in Washington on Russian affairs at home and abroad impossible, because it was all filtered through this demonization. If we didn’t stop, I argued, it was only going to get worse to the point where we would become like heroin addicts at fix time, unable to think about anything except our obsession with Putin. We couldn’t think about other issues. This has now happened fully. The article was turned down by the New York Times, and an editor I knew at Reuters published it on Reuters.com.

The history of how this came about [begins] when Putin came to power, promoted by Yeltsin and the people around Yeltsin, who were all connected in Washington. These people in Moscow included Anatoly Chubais, who had overseen the privatizations, had relations with the IMF and had fostered a lot of the corruption. He came to United States to assure us that Putin was a democrat, even though he had been at the KGB.

When he came to power, both the Times and the Post wrote that Putin was a democrat and, better yet, he was sober, unlike Yeltsin. How we got from 2000 to now, when he’s Hitler, Saddam, Stalin, Gaddafi, everybody that we have to get rid of, whom we know killed Boris Nemtsov because from the bridge where Nemtsov was killed [on February 27] you can see the Kremlin…. Well, remember, Sarah Palin could see Russia from Alaska! It’s preposterous. But the demonization of Putin has become an institution in America. It is literally a political institution that prevents the kind of discussion that you and I are having.

Kissinger had the same thought. He wrote, last year, I think, “The demonization of Putin is not a policy. It’s an alibi for not having a policy.” That’s half correct. It’s much worse now, because they did have a policy. I think the “policy” growing in some minds was how to get rid of Putin. The question is, “Do they have the capacity to make decisions?” I didn’t think so, but now I’m not so sure, because in a lot of what comes out of Washington, including the State Department, the implication is that Putin has to go.

I asked a question rhetorically several years ago of these regime changers: Have you thought about what would happen in Russia in the event of regime change? If what you say is true, if Putin is the pivot of the whole system, you remove Putin the whole system collapses. Russia has every known weapon of mass destruction in vast quantities. What would be the consequence of that conceit on your part—that we’re going to get rid of Putin—for the rest of the world?

So this Putin phenomenon has to be explained. How did he go from a democrat for sure, now to maybe the worst Russian leader since Ivan the Terrible. How do you explain it? Does that tell us more about Putin or more about us?

I guess the main question is not ‘How did we get here?’, but ‘How do we get out?’.

Here’s the now unfortunately no longer among us Oles’ Buzina talking about the history of Ukraine (don’t forget to turn on subtitles/CC)

Feb 262015
 
 February 26, 2015  Posted by at 8:12 am Finance Tagged with: , , , , , , , ,  2 Responses »


Ben Shahn “Scene in Jackson Square, New Orleans” 1935

Oh well, some are more equal than others. One day after Eurogroup head Dijsselbloem says France won’t get any more lenience …

France Must Respect EU Budget Rules

France must meet EU budget targets or risk damaging the bloc’s entire framework for policing countries’ spending plans, the head of the Eurogroup said on Tuesday. “I don’t think small or larger countries should be treated differently … It is crucial for the credibility of the whole fiscal framework that also France commits to it, both in fiscal terms and in reform terms,” Jeroen Dijsselbloem, who chair meetings of eurozone finance ministers, told the European Parliament. “I think that the Commission has allowed itself and France more time to scrutinise the figures but also to take more measures and prepare more proposals. The Commission will assess them first and then report to us at the beginning of March.”

… the EC overrules him. Just like he overruled them a few days ago on the proposal for Greece that EC head Juncker had prepared for Varoufakis, but which Dijsselbloem swept off the table. A tit for tat battle of the peacocks? Talking with one voice it ain’t.

France Gets More Time to Meet EU Budget Rules

European Union officials on Wednesday gave France until 2017 to bring its government finances in line with the bloc’s budget rules, despite the country’s continued failure to adhere to them. The European Commission said it was recommending that France be given what amounted to a two-year extension to cut its deficit, which is expected to come in at around 4.1% of GDP this year and next, well above the 3% ceiling for the bloc. The commission, the executive arm of the European Union, is charged with signing off on member states’ budgets to ensure they comply with Union rules.

The commission also said it would not recommend that Italy, Finland and Belgium be punished, despite their failure to meet deficit goals, owing to “account key relevant factors,” including the weak economic picture. In November, the commission gave France, Belgium and Italy a three-month extension on their budget deadlines. The decision “fully reflects the current economic situation,” Pierre Moscovici, the commissioner for economic and financial affairs, said in a statement, adding: “The commission is demonstrating both the importance of structural reforms and the respect of our fiscal rules.”

In another 180º within 24 hours, Ukraine central bank head Valeria Gontareva withdrew a measure that banned purchases of foreign currencies by banks for clients, for 48 hours. Apparently, PM Yatsenyuk didn’t agree with the measure, and never got the memo about central bank independence. He must have a bunch of wealthy friends, no wait, that weasel has no friends, make that puppeteers, who told him to yank the measure or else. Which means more cash will flee and the hryvnia can keep plunging, after having lost 40-50% (depending on the blackness of the market you would trade in) over the past 10 days.

Earlier, President Willy Poroshenko, who didn’t get that memo either, had ordered(!) the central bank to stabilize the currency at 21 to the dollar as it was trading at 32 officially and 44 on the street. Look, Wonka, no politician can order a central banker to do anything, not in an alleged democracy. Well, perhaps (s)he could be ordered to step down, but not change policy. You might as well run monetary policy yourself from your candy empire.

Besides, it’s a stupid order: central banks don’t fix rates, certainly not of countries waging wars against their own people. No matter what Poroshenko says, or Yatsenyuk, who apparently called Gontareva ‘negligent’ and claimed she should have come to talk to him first. No, that’s exactly what she should not have done. Your currency’s exchange rate is not a political instrument. Because if you open that Gontareva’s box, you lose all credibility. Just ask Ben Bernanke.

Mish Shedlock has a great series on Ukraine going, and I fully agree with his advice for Valeria Gontareva: Get the hell out of Ukraine immediately!” Because once these people see their economy crash, they’re going to try and blame you for it.

Developments in Ukraine have accelerated enormously the past two weeks or so, even if that is not always obvious. The Ukraine army is losing big time, Russia may cut its access to gas because it doesn’t pay its bills, and now the economy is in the last throngs of its debt death rattle. Even the IMF today started to backpeddle on the billions more that it promised Kiev only a few days ago. It’s prone to be a battlefield in more ways than one.

Compared to that, Yanis Varoufakis is having a tea party in Athens. Though there was the indefinite ban the government slapped on professional soccer (football) because of fan violence, and that is more important to many Greeks than their own limbs, bot other than that, compared to Ukraine, it’s smooth sailing.

One detail Varoufakis came up with yesterday had me crack a smile. He told Bloomberg TV that the ECB was sitting on about €2 billion that the bank itself admits belongs to Greece (it stems from earlier purchases of Greek sovereign bonds). Therefore, Yanis suggested, if the ECB would use that money for the upcoming payment Greece owes the IMF, that would show ‘good faith and sportsmanship’ (I’m paraphrasing here). Bloomberg records a somewhat lame response by ECB head Draghi, but, let’s say, the die is cast:

Varoufakis Counts On ECB to Avoid Greek Default in March

ECB President Mario Draghi told the European Parliament earlier on Wednesday it was a popular misconception that it was up to the central bank to return any profit from buying bonds through the Securities and Markets Program. “The profits are ready to be distributed if Greece obliges with the program,” Draghi said. “It’s a commitment by the member states, not by the ECB.”

There is a principal agreement for a 4-month loan extension to carry Greece over, though there are still plenty loose ends. There is also the fact that Europe has reacted positively to the long list of proposals Greece prepared over the weekend. So Varoufakis is not only right in saying …

“I find it very hard to imagine that Europe and the IMF will allow us to trip over what is a relatively small cash problem.”

… it’s also a great moment to bring up that $2 billion. He could have done it two weeks ago, but that wouldn’t have had the same effect. At this point in time, the ‘institutions’ are going to look vindictive, and not acting in good faith, if they decide not to throw Athens that lifeline. It’s all about perception. The money’s there, and it’s theirs.

That doesn’t mean the fight is won or over, but it does mean Greece won the day. And that’s all it has, and all it can hope for: one step at a time.

That’s kind of true for Ukraine as well, only for them, every single one of their steps marks a further descent into hell.

And I still don’t like ‘our’ role in that one bit. We’re all far too silent.

Feb 252015
 
 February 25, 2015  Posted by at 3:18 am Finance Tagged with: , , , , , , , , , , , ,  8 Responses »


Gordon Parks “New York, New York. Scene in Harlem area.” 1943

Riddle me this, Batman. I don’t think I get it, and I definitely don’t get why nobody is asking any questions. The IMF and EU make a lot of noise – through the Eurogroup – about all the conditions Greece has to address to get even a mild extension of support, while the same IMF and EU keep on handing out cash to Ukraine without as much as a whisper – at least publicly.

The Kiev government, which has been ceaselessly and ruthlessly attacking its own people, is now portrayed as needing – monetary and military – western help in order to be able to ‘defend’ itself. From the people it’s been attacking, presumably. And hardly a soul in the west asks what that is all about.

Why did Kiev kill 5000 of its own citizens? Because there are people in East Ukraine who had – and still have – the guts to say they don’t want to be ruled by a regime willing to murder them for saying they don’t want to be ruled by it. And just in case there’s any confusion left about this, yes, that is the regime we are actively supporting, in undoubtedly many more ways than are made public. All the doubts about the western narrative are swept aside with one move: blame Putin.

Of the two countries, Greece, despite its humanitarian issues, is by far the luckiest one. Ukraine is quite a few steps further down the hill. One can be forgiven for contemplating that the west, aided by President Poroshenko and the Yats regime in Kiev, is dead set on obliterating the entire nation.

There are again peace talks under way, with no – direct – Anglo-Saxon involvement, but as the Foreign Ministers of Russia, Ukraine, France and Germany meet, Britain announces it’s sending military personnel into Ukraine and Poroshenko buys weapons from UAE, which is the same as saying from America. Where does he get the money? Chocolate sales? Had a good Valentine’s campaign?

Baltic states reinforce their armies (Lithuania just launched conscription), as NATO expands its presence there. The constantly repeated message is that Putin will attack them. It’s a made-up story. Poroshenko says he wants Crimea back, even as he knows full well that’s not going to happen.

What part of the fresh round of IMF/EU loans will go towards arms purchases? Can Brussels please supply a run-down ASAP? Don’t Europeans have a right to know where their money goes?

To start with, here’s a – partial – overview of loans from Constantin Gurdgiev:

IMF Package for Ukraine: Some Pesky Macros

Ukraine package of funding from the IMF and other lenders remains still largely unspecified, but it is worth recapping what we do know and what we don’t.Total package is USD40 billion. Of which, USD17.5 billion will come from the IMF and USD22.5 billion will come from the EU. The US seemed to have avoided being drawn into the financial singularity they helped (directly or not) to create. We have no idea as to the distribution of the USD22.5 billion across the individual EU states, but it is pretty safe to assume that countries like Greece won’t be too keen contributing.

Cyprus probably as well. Ireland, Portugal, Spain, Italy – all struggling with debts of their own also need this new ‘commitment’ like a hole in the head. Belgium might cheerfully pony up (with distinctly Belgian cheer that is genuinely overwhelming to those in Belgium). But what about the countries like the Baltics and those of the Southern EU? Does Bulgaria have spare hundreds of million floating around? Hungary clearly can’t expect much of good will from Kiev, given its tango with Moscow, so it is not exactly likely to cheer on the funding plans… Who will?

Austria and Germany and France, though France is never too keen on parting with cash, unless it gets more cash in return through some other doors. In Poland, farmers are protesting about EUR100 million that the country lent to Ukraine. Wait till they get the bill for their share of the USD22.5 billion coming due.

Recall that in April 2014, IMF has already provided USD17 billion to Ukraine and has paid up USD4.5 billion to-date. In addition, Ukraine received USD2 billion in credit guarantees (not even funds) from the US, EUR1.8 billion in funding from the EU and another EUR1.6 billion in pre-April loans from the same source. Germany sent bilateral EUR500 million and Poland sent EUR100 million, with Japan lending USD300 million.

Here’s a kicker. With all this ‘help’ Ukrainian debt/GDP ratio is racing beyond sustainability bounds. Under pre-February ‘deal’ scenario, IMF expected Ukrainian debt to peak at USD109 billion in 2017. Now, with the new ‘deal’ we are looking at debt (assuming no write down in a major restructuring) reaching for USD149 billion through 2018 and continuing to head North from there.

In other words, the loans are only and exclusively making Ukraine’s position worse. The Greeks may feel like debt slaves, but Ukrainians face a far darker feudal situation. They’re going to be -debt -prisoners in their own country. And that has nothing to do with Putin, it’s the ultimate shock doctrine. The distinct impression to me is the country will be turned into a testing ground for NATO and western military industries. Which is why ‘we’ have been so intent on engaging Russia in the Ukraine conflict.

But back to the loans first:

The point is that the situation in the Ukrainian economy is so grave, that lending Kiev money cannot be an answer to the problems of stabilising the economy and getting economic recovery on a sustainable footing. With all of this, the IMF ‘plan’ begs three questions:

  1. Least important: Where’s the European money coming from?
  2. More important: Why would anyone lend funds to a country with fundamentals that make Greece look like Norway?
  3. Most important: How on earth can this be a sustainable package for the country that really needs at least 50% of the total funding in the form of grants, not loans? That needs real investment, not debt? That needs serious reconstruction and such deep reforms, it should reasonably be given a decade to put them in place, not 4 years that IMF is prepared to hold off on repayment of debts owed to it under the new programme?

Why indeed? One thing seems certain: reconstruction is not in the cards. All assets will be sold for scrap, and most citizens ‘encouraged’ to cross one of many borders Ukraine has. Britain is next up in the escalation process. Again, as German/French talks with Russia continue.

Britain To Send Military Advisers To Ukraine, Announces Cameron

Britain was pulled closer towards a renewed cold war with Russia when David Cameron announced UK military trainers are to be deployed to help Ukraine forces stave off further Russian backed incursions into sovereign Ukraine territory. The decision – announced on Tuesday but under consideration by the UK national security council since before Christmas – represents the first deployment of British troops to the country since the near civil war in eastern Ukraine began more than a year ago. Downing Street said the deployment was not just a practical bilateral response to a request for support, but a signal to the Russians that Britain will not countenance further large scale annexations of towns in Ukraine.

The prime minister said Britain would be “the strongest pole in the tent”, and argued for tougher sanctions against Moscow if Russian-backed militias in eastern Ukraine failed to observe the provisions of a ceasefire agreement reached this month with the Ukrainian president, Petro Poroshenko. Downing Street said some personnel would be leaving this week as part of the training mission. Initially 30 trainers will be despatched to Kiev with 25 providing advice on medical training, logistics, intelligence analysis and infantry training. A bigger programme of infantry training is expected to follow soon after taking the total number of trainers to 75.

That’s simply war-mongering, and precious little else. We may wonder about the timing, but not the intention. Cameron goes on to make some really bizarre statements:

He said there was no doubt about Russian support for the rebels. “What we are seeing is Russian-backed aggression, often these are Russian troops, they are Russian tanks, they are Russian Grad missiles. You can’t buy these things on eBay, they are coming from Russia, people shouldn’t be in any doubt about that. “We have got the intelligence, we have got the pictures and the world knows that. Sometimes people don’t want to see that but that is the fact.”

No, Mr. Cameron, the problem is, the world does not know that, because it has never been shown either the intelligence or the pictures. Why not provide them? Because you don’t have them, is the only reason I can think of after a full year full of alleged activity of which there is not one shred of proof, but a million tons of accusations and innuendo. It’s literally a propaganda war, with the other side hardly firing back at all. And then there’s this from RT:

East Ukraine Artillery Withdrawal In Focus – As Poroshenko Buys UAE Weapons

While the foreign ministers of France, Germany, Russia and Ukraine were meeting in Paris to talk about the Eastern Ukraine peace settlement, it was revealed that the Ukrainian president has struck a deal on arms supplies from the UAE. The four ministers agreed on the need for the ceasefire to be respected, as well as on the need to extend the OSCE mission in Eastern Ukraine, reinforcing it with more funding, personnel and equipment. It’s important for Kiev troops and the rebels to start withdrawing heavy weapons right now, without waiting for the time “when not a single shot is fired,” Russian Foreign Minister Sergey Lavrov said after the meeting.

He added that his German and French counterparts thought it a positive development that the Donetsk and the Lugansk rebels had started to pull their artillery back. “The situation has significantly improved, that was acknowledged by my partners,” Lavrov said. “However, sporadic violations are being registered by the OSCE observers.” The withdrawal of heavy weaponry by Kiev troops and the rebels is part of the ceasefire deal struck in Minsk earlier in February. The Donetsk militia has announced it is complying.

Ukrainian President Petro Poroshenko has meanwhile reached an agreement on weapons supplies from the United Arab Emirates. That’s according to a Facebook post by advisor to Ukrainian Interior Minister, Anton Gerashchenko. The deal was struck with the Crown Prince of Abu Dhabi and deputy supreme commander of the UAE Armed Forces, Mohammed bin Zayed bin Sultan Al Nahyan. “It’s worth emphasizing that unlike Europeans and Americans, the Arabs aren’t afraid of Putin’s threats of a third world war starting in case of arms and ammunition supplies to Ukraine,” Gerashchenko wrote. He also said he believed the UAE blamed Russia for the drop in oil prices. “So, this is going to be their little revenge,” the adviser said.

Curious. Now it’s the Russians who are to blame for the oil price plunge? Weren’t they supposed to be the major victims? And when did Putin threaten with WWIII? There’s more to this:

[..].. former US diplomat James Jatras told RT: “This discussion in Washington about supplying weapons has been going on for some time. Usually that indicates that some kind of a covert program is already in operation and that we already are supplying some weapons directly,” he said. Jatras added that it is hard to believe that UAE would sell these weapons to Ukraine “without a green light from Washington.”

I would think the same thing: plenty forces in Washington who want nothing more than to supply weapons to Kiev, and there’s always a way. Note that Germany and France, the western partners in the peace talks, have so far managed to prevent direct arms supplies. They’ve now been blindsided, or so it would seem. Maybe it’s time for Merkel to pull her weight here, and a bit less on Greece. Germany doesn’t want an escalating warzone on its doorstep.

Meanwhile, the gas delivery issue is heating up again (pun intended). Ukraine continues to provoke Russia, but it will have to pay eventually. Unless escalation is the real goal, and freezing Eastern Europeans will be deemed a justifiable sacrifice.

Kiev Cash-For-Gas Fail Could Cost EU Its Supply (In 2 Days) – Gazprom

Russia will completely cut Ukraine off gas supplies in two days if Kiev fails to pay for deliveries, which will create transit risks for Europe, Gazprom has said. Ukraine has not paid for March deliveries and is extracting all it can from the current paid supply, seriously risking an early termination of the advance settlement and a supply cutoff, Gazprom’s CEO Alexey Miller told journalists. The prepaid gas volumes now stand at 219 million cubic meters. “It takes about two days to get payment from Naftogaz deposited to a Gazprom account. That’s why a delivery to Ukraine of 114 million cubic meters will lead to a complete termination of Russian gas supplies as early as in two days, which creates serious risks for the transit to Europe,” Miller said.

Earlier this month, Russian Energy Minister Aleksandr Novak estimated Ukraine’s debt to Russian energy giant Gazprom at $2.3 billion. In the end of 2014, Kiev’s massive gas debt that stood above $5 billion, forced Moscow to suspend gas deliveries to Ukraine for nearly six months. On December 9, Russia resumed its supplies under the so-called winter package deal, which expires on April 1, 2015. [..] On Monday, Ukrainian state energy company Naftogaz accused Gazprom of failing to deliver gas that Kiev had paid for in advance. Naftogaz says Russia has broken an agreement to deliver 114 million of cubic meters of natural gas to Ukraine by delivering only 47 million cubic meters.

During a meeting with President Vladimir Putin on February 20, Russian Prime Minister Dmitry Medvedev expressed concern about an increase in daily applications by Ukraine for the supply of gas, TASS reports. He noted that “Ukraine’s consumers have requested a larger supply; the volume has increased by 2.5 times. This means that the prepaid volumes left are enough for no more than two to three days.”

Overall, there seems to be little left that can be done to de-escalate the situation. The Donbass rebels may retreat some heavy weapons, but they won’t want to risk being defeated by a freshly replenished Ukraine/US/UK army. The make-up of which is ever harder to envision, since a few hundred thousand potential soldiers have already fled the country. Unless they extend the draft to 12- to 80-year-old women, what Ukrainians will be left to fight? And who will want to? Except for the private battallions of questionable make-up, that is.

Ukraine will at some point in the not too distant future be so impoverished that a new Maidan type revolution may be inevitable. There should really be elections in the country as soon as possible, but that doesn’t look likely to happen. Why Yatsenyuk is still PM should be a mystery, he was elected by a parliament at gunpoint. And he’s a US puppet, who’s recently invited three US citizens into key positions in his cabinet. Ukrainians may be scared to speak up, but if they don’t, things could get much worse real fast.

It’s once again time for the people to take to the streets. But that risks turning into an awful bloodbath that could make Kiev look like the Dresden. Unless all international parties retreat from Ukraine, there doesn’t seem to be a solution that would benefit the people.

Sep 032014
 
 September 3, 2014  Posted by at 5:38 pm Finance Tagged with: , , ,  8 Responses »


Ben Shahn Refreshment stand at county fair, central Ohio Aug 1938

After yesterday’s claim from Kiev that Russia had threatened multiple times to drop nukes on Ukraine, I had fully expected that today would start with the Ukraine government stating such a bomb had indeed been dropped, in the ‘hide a lie with a bigger one’ sense. But no. What did come was president Poroshenko announcing a ‘permanent ceasefire’, an agreement he said was the result of a phone conversation with Vladimir Putin.

Of course it was an obviously phony announcement, since Putin can’t – and won’t, as he said last week in Minsk – declare a ceasefire in a war he’s at least always insisted Russia is not a part of. Which was exactly what the Kremlin said in a reaction, and Poroshenko withdrew his announcement (it took hours for the western media to mention this ‘little’ detail). By then European markets had already surged, and it should perhaps be no surprise that they never came down again.

So that was a little disappointing in the lying basterds escalation department. But then US lapdog PM Yatsenyuk came to the rescue. He had two main things to say. First, Ukraine is starting to build some sort of wall along its border with Russia.

Yatsenyuk: Ukraine Beginning ‘Wall’ Project to Build ‘Actual Border’ With Russia

Ukraine is beginning work on a “Wall” project that envisages the construction of an actual state border with Russia, Ukrainian Prime Minister Arseniy Yatsenyuk said Wednesday. “We are beginning the ‘Wall’ project. This is the construction of an actual state border between Ukraine and the Russian Federation,” Yatsenyuk said during a government session. Earlier the same day, Yatsenyuk said Kiev needed to create a new military doctrine that would reflect that Russia as an “aggressor nation,” which threatens the territorial integrity and national security of Ukraine.

And second, a western ‘mission’ is going to assess the damage done to East Ukraine, there’ll be an international fundraiser and Kiev are going to rebuild the region.

Yatsenyuk: West to Send Mission to Assess Destruction in Ukraine’s East

The West will send a mission to Ukraine to assess the destruction in the country’s eastern regions, Ukrainian Prime Minister Arseniy Yatsenyuk said Wednesday. “The EU and our Western partners will send their missions here to assess the destruction [in the country’s eastern republics] and in November, we will hold a large donor conference with the goal of raising money to rebuild Donbass,” Yatsenyuk said during a government session.

“We are currently assessing all the losses, all the destruction in the Donbas. We cannot evaluate them yet. It’s impossible. I reiterate that, just two months ago, when we were liberating Slaviansk, our estimation was eight billion hryvnias, I can say today that you are free to substitute the hryvnia with the dollar. This is billions of dollars,” Yatsenyuk said.

Now, where do we start? How about: maybe the west should first send a mission to find out who shot down MH17. We could simply say that this wall – whatever form it would take – will never be built, and if anyone’s going to rebuild the Donbass, it won’t be Kiev. But where’s the fun in that? Moreover, it wouldn’t sufficiently put Kiev’s ever-increasing level of lying absurdity in the spotlight, and it’s high time to put it there. Again. Because it doesn’t seem to register in the west. And I still have hope that if we do this often enough, they’ll have to.

Building a wall in the region is ridiculous for many reasons. Just mentioning it is insensitive to so many people (how do you think Germans would feel?). Would Yats like to separate families from each other the way the Berlin wall did, or the way it happens in Korea? The Ukraine-Russia border is 1500 miles long, and the money might be better used elsewhere. Also, don’t forget, the East Ukrainians would still be on Yats’ side of the wall …

As for the fictional rebuilding ‘project’, Kiev would first have to reconquer the area, which is not going to happen. And then, again … the East Ukrainians would still be there. The people the Kiev government is still waging a bloody war against. Besides, rebuilding the region would mostly mean undoing the damage inflicted by Yats’s own armed forces.

The whole thing is just too stupid. But it’s also very calculated: Yats counts on his western buddies to go to battle for him, and to make sure their media present their point of way. And his. The way he talks about East Ukraine, he pretends it’s still his to make decisions about, though he knows very well that’s not so. Unless, perhaps, his backers – i.e. ‘us’ – bomb the crap out of it. That’s his bet.

I also like this bit from RT:

‘Thank Army On Your Knees’: Rada MP Muzzled After Criticizing East Ukraine Shelling

The Ukrainian parliament speaker has told a female MP she must “get to her knees” after she criticized the “criminal” shelling of peaceful cities in the east. It was accompanied by accusations of “Russian propaganda” and switching off her microphone. After she’d asked for a moment of silence to honor the memory of those who have been killed in Donbass, Elena Bondarenko of the Regions Party gave a scathing review of her government, which “separates people into Ukrainians and non-Ukrainians.”

However, as she delivered her speech, alleging the new Ukrainian government’s “criminal” behavior in “sending its army to bomb peaceful cities” and “depriving children of the right to education,” cries were heard from some of the louder opponents of the MP’s position. Then, former acting president and chairman of the Rada, Aleksandr Turchinov, asked for the microphone to be turned off, amid a stream of insults from Bondarenko’s opponents.

Turchinov then joined the abuse. After stating that anti-government views were “Russian propaganda,” he proceeded to sternly tell her off in a defense of the Ukrainian army, “which protects all of us – even you,” he told her, before telling Bondaernko she would do well to “get down on your knees” in front of the military.

Seconds later, cries of support and protest turned into a now-traditional Ukrainian Rada row, with curses and verbal abuse being exchanged among members. An outburst followed from the radical, Oleg Lyashko, who suggested that such views should be followed by immediate expulsion and the label of “traitor.” “Traitors must be shot on the frontlines,” he said, finishing his tirade with “Glory to Ukraine!”

It’s not just Yats and Poroshenko, Ukraine is run by a whole bunch of guys who’ve done nothing but lie to us, to everyone, from the get go, while they were killing their own people. Their series of false claims about Russia, and about those compatriots of theirs they labeled ‘terrorists’, is astounding in both length and breadth, and as their side is losing the – military – battle, after thousands of people have been killed and they destroyed the entire infrastructure of a large part of their own country, they can only double up.

Or admit defeat, but that they won’t do. They still have tomorrow’s NATO top to wait and hope for, to drag the west into their war. Already NATO has announced military exercises in or near west Ukraine, later this month, an empty and useless display of force.

There are many people in Washington, Brussels and NATO who want nothing more than to fight this out, no matter what the death toll, military and civilian, may be. But like Kiev, they too have been defeated. They can’t carpet-bomb the Donbass without Putin saying ‘it’s too much and way too far already’.

Ukraine is in the hands of very questionable people, many of whom are not just supported by ‘us’, but ‘we’ put them where we are. Because we found they would be willing to execute ‘our’ plans. Add that to the longtime and opportunist corrupt cabal that was always there, and a handful of shady billionaires with private armies to protect their business interests, and we have a group of people you and I, in our daily lives, would never want to have anything to do with.

So why are ‘we’ still propping up the destruction and bloodshed these psychopaths have unleashed in their own country, and for their own narrow personal interests? You know why? Because ‘we’ started the whole thing.

It’s high time to take our hands off these guys, and in the very likely case that the September 4-5 NATO conference decides anything other than that, it’s time you let your representatives know how you feel about this. If we don’t get peace now, things can only get worse, potentially much worse.

It’s time to start caring again about something more than just our own petty little lives, or those too will be taken away from us. And no, you’re not innocent just because you keep silent. That’s no excuse. That’s not how it works.

Deliberate mistakes.

Kiev Retracts Ceasefire Statement, Says Only Steps For Peace Agreed (RT)

Kiev retracted its earlier statement regarding a “permanent ceasefire” in eastern Ukraine, which followed a phone call between the Russian and Ukrainian leaders. The new wording from Poroshenko’s office talks of a ceasefire “regime”. The Russian and Ukrainian languages use the word to mean “mode”, signifying the possibility of a softer, less permanent version of the previous suggestion. Although an earlier corresponding message from Poroshenko’s office initially talked of a “permanent ceasefire”, Putin’s spokesperson Dmitry Peskov underlined that this wording is not applicable because Russia isn’t a party to the violence. “In the course of today’s phone call between Putin and Poroshenko there was indeed an exchange of views that went a long way toward an agreement on steps to be taken for a swift end to the clashes taking place between the Ukrainian military and south-eastern uprising,” Peskov said.

But the spokesperson thought it important to point out that because the conflict is an internal one – and not one between two countries. This view has already been voiced by President Putin last week in Minsk, where he met the Ukrainian leader. “Frankly speaking, we can’t frame the discussion in ceasefire terms, those concerning any possible negotiations between Kiev, Donetsk and Lugansk – this isn’t any of our business, it is Ukraine’s,” the Russian president said then. Donetsk authorities say they are willing to engage in a diplomatic settlement with Kiev if it proves its commitment to peace by stopping the shelling. Ukraine’s Aydar battalion has acknowledged its readiness to carry out the order to cease fire, if such an order is given, its commander Sergey Melnichuk told local TV channel ‘112 Ukraine’.

Read more …

Russia Calls on US to Push Ukraine Into Halting Military Campaign (WSJ)

Russia called on the U.S. to push Kiev into giving up its military campaign against pro-Russia rebels in eastern Ukraine and negotiating a political deal, as recent Ukrainian gains on the battlefield were reversed by what Western officials called an influx of Russian men and materiel. Foreign Minister Sergei Lavrov said Washington should pressure Ukrainian President Petro Poroshenko to reach a deal during his planned visit to the U.S. later this month. “It is imperative to moderate the ‘party of war’ in Kiev, and the only one who can really do that is the U.S.,” Mr. Lavrov said at a briefing Tuesday, according to the Interfax news agency. “It is very important the U.S. uses its influence and capabilities to give the signals necessary to transition to the political process from attempts to solve the situation by force.” For months, Ukrainian forces had been gaining ground in Donetsk and Luhansk, the two rebellious regions along the Russian border. But late last month the rebels emerged with fresh reinforcements and weaponry that Western and Ukrainian officials said came directly from Russia.

That has changed the battlefield dramatically, sending Ukrainian forces into retreat. At the same time, Russian officials including President Vladimir Putin and Mr. Lavrov have stepped up demands that Ukraine negotiate a political truce with the rebel leaders, putting pressure on an increasingly weak-looking Kiev government. Though Kiev has offered to give more authority to the regions, Ukrainian officials largely view the rebel militants as Russian proxies. Ukraine dismisses the idea of formalizing what it warns could become a destabilizing Russian vassal state within its borders, able to scuttle any national initiatives deemed contrary to Kremlin interests. Russia has denied accusations that its troops entered Ukraine to prop up the rebels, despite the recent capture of Russian soldiers on Ukrainian territory and an assessment by the North Atlantic Treaty Organization that Russia has “well over” 1,000 troops operating in Ukraine. Separatist leader Alexander Zakharchenko has said Russian soldiers have been fighting in the rebel ranks while on vacation.

Read more …

Fools.

US, Allies To Stage Exercises In West Ukraine As Battles Rage (Reuters)

As fighting between the army and Russian-backed rebels rages in eastern Ukraine, preparations are under way near its western border for a joint military exercise this month with more than 1,000 troops from the United States and its allies. The decision to go ahead with the Rapid Trident exercise Sept. 16-26 is seen as a sign of the commitment of NATO states to support non-NATO member Ukraine while stopping well short of military intervention in the conflict. The annual exercise, to take place in the Yavoriv training center near Ukraine’s border with Poland, was initially scheduled for July, but was put back because early planning was disrupted by the crisis in the eastern part of the country.

“At the moment, we are still planning for (the exercise) to go ahead,” U.S. Navy Captain Gregory Hicks, spokesman for the U.S. Army’s European Command said on Tuesday. NATO stepped up military activity in its eastern member states after Russia’s annexation of Crimea in March, and is expected to agree at a summit in Wales this week to create a new rapid reaction force of several thousand troops. In addition to staging air force exercises, the United States is moving tanks and 600 troops to Poland and the Baltic states of Estonia, Latvia and Lithuania for joint maneuvers in October, replacing a more lightly armed force of paratroopers. But Rapid Trident will entail the first significant deployment of U.S. and other personnel to Ukraine since the crisis erupted.

Read more …

Oh, really?

Slovakia Begins Reverse Gas Flow To Ukraine (RT)

Slovakia initiated reverse deliveries of natural gas to Ukraine on Tuesday with enough capacity to cover up to a fifth of the country’s needs. Twenty-seven million cubic meters of gas will be supplied daily, Vagram Chuguryan of Slovakia’s national pipeline operator Eustream told RIA Novosti. Some technical work and adjustments need to be done before delivery is fully functional, which should be by March 1, 2015, he added. Slovakia can gradually reach a maximum supply capacity of about 10 billion cubic meters annually sometime in 2015.

“If we put together three reverse points in Slovakia, Hungary and Poland then we can reach 25 billion cubic meters a year in the mid-term which would provide the solution Ukraine needs at the moment,” Slovak Prime Minister Robert Fico told reporters. The decision to start the so-called reverse gas flows is part of the EU’s response to Gazprom’s decision to cut supplies to Kiev on June 16. Domestic gas production in Ukraine annually is about 20 billion cubic meters. Hungary and Poland also have pipelines capable of delivering gas to Ukraine. However the Slovak pipeline has the biggest capacity of the three.

Read more …

How Europe’s Economic Slump Could Doom Ukraine (Fiscal Times)

As the full impact of sanctions against Russia hit the European Union and as the EU attempts to recover from the sovereign debt crisis that nearly destroyed it, the European economy is once again in contraction, threatening to derail the country’s unified response to the Ukraine crisis. European leaders met in Brussels over the weekend after Russian troops and pro-Russia separatists opened a third front in the fight for eastern Ukraine. However, despite strong talk, the group could not reach agreement on how to increase punishments against Moscow. Some European leaders urged restraint in the face of stagnation across the eurozone. “I believe that the sanctions will become senseless and counter-productive. Slovakia may use its right of veto,” Slovak Prime Minister Robert Fico said Sunday.

Economic data released Monday revealed by Fico is concerned about the residual impacts of sanctions on Europe. The manufacturing purchasing managers index (PMI), an indicator of the health of an economy’s manufacturing sector, dropped to a 13-year low of 50.7 in August, down from 53.8 in July. In short, economic output is dropping fast. “Although some growth is better than no growth at all, the braking effect of rising economic and geopolitical uncertainties on manufacturers is becoming more visible,” said Rob Dobson, senior economist at Markit. Even Germany, whose economy powered the eurozone’s tepid recovery, is slipping. According to Eurostat, the German economy contracted from April to June. France and Italy, the continent’s second and third largest economies respectively, also are in trouble. “France remains a real concern, as does Italy’s descent from solid expansion to stagnation. Signs that growth impetus waned in the key industrial engine of Germany, and in Spain and the Netherlands too, is also less than reassuring,” Dobson said.

Read more …

That would be your money.

Ukraine May Need $19 Billion More If Conflict Continues: IMF (Reuters)

Ukraine may need as much as $19 billion in additional funds from donors if its conflict with pro-Russian separatists in the eastern part of the country continues in 2015, the International Monetary Fund warned on Tuesday. Even under Kiev’s current $17 billion IMF bailout, the Fund said Ukraine will not be able to meet all of its targets due to the ongoing fighting and an intensified gas dispute with Russia, which supplies the bulk of Ukraine’s natural gas needs. But the money planned under the program is largely sufficient for now as long as the fighting between the government in Kiev and the rebels subsides in the ‘coming months,’ the IMF said in a detailed review of Ukraine’s progress and the state of its economy. The IMF report painted a dire picture of a country trying to reform everything from banking management to the legal system, while also boosting spending on fighting in the eastern regions of Donetsk and Luhansk.

Those regions together accounted for 23% of Ukraine’s industrial production and 14.5% of its retail trade in the first quarter. The Fund, which provided a bailout to Kiev as part of an overall $27 billion international rescue, said it would relax some conditions for Ukraine going forward, including for the government’s budget deficit. In return, Kiev would have to make up for the shortfall elsewhere, including by doing a better job of collecting payments for Naftogaz, the state-run oil and gas company. The IMF also warned that Ukraine’s reforms may become more difficult if the country calls early elections. The Fund on Friday confirmed Kiev was on track with most of the loan’s conditions so far, allowing the disbursement of $1.7 billion. It said the next disbursement, of about $2.7 billion, would come in mid-December if Kiev complies with the loan conditions.

Read more …

How is it possible?

Eurozone Retail Sales Slow Sharply In July (Reuters)

Euro zone retail sales slowed as expected in July, data showed on Wednesday, adding to worries about euro zone economic growth, which ground to a halt in the second quarter. The European Union’s Statistics Office, Eurostat, said that the volume of retail sales in the 18 countries sharing the euro fell 0.4% month-on-month in July and rose 0.8% year-on-year. Economists polled by Reuters had forecast a 0.4% monthly fall and a 0.9% annual rise. Eurostat also lowered its estimate for retail sales growth in June to 0.3% month-on-month from the 0.4% reported previously and to 1.9% year-on-year from 2.4% previously.

“July’s 0.4% drop in euro zone retail sales volumes fuels concern that recently weakening consumer confidence across the euro zone is starting to lead to increased caution in spending, thereby harming growth prospects,” said Howard Archer, an economist at IHS Global Insight. The decline in July was mainly caused by falling sales of food, drinks and tobacco. Sales slowed even though inflation had reached just 0.4% year-on-year in July and slowed to 0.3% in August.

Read more …

Count me in.

Deutsche Bank’s Jain Skeptical On Need For ECB QE (CNBC)

Deutsche Bank Co-CEO Anshu Jain warned on Wednesday that additional liquidity measures by the European Central Bank (ECB) would achieve little. His comments come as markets are increasingly anticipating the launch of a bond buying program at the ECB’s monthly policy meeting and announcement on Thursday. “We’re getting to the point where much more won’t make a difference,” Jain said. Speaking on the sidelines of a banking conference in Frankfurt, Germany, Jain said the group had “excellent momentum” but conceded that challenges linked to low interest rates would be “with us for a long time”. “The reality is, thanks to the ECB’s actions which were required, low interest rates are a reality which will not go away any time soon.”

In remarks made to delegates at the conference, Jain warned European banks were losing out in the competitiveness stakes to the U.S. as they contend with increased regulation. Deutsche Bank is one of many European lenders currently undergoing tough tests carried out by the European Central Bank to see how it would cope with a hypothetical downturn. Results of a so-called Asset Quality Review, part of a broader Comprehensive Review, are due to be published in October. Banks have divested assets and written off bad loans in preparation for the stress tests. It has faced huge costs related to lawsuits and investigations including the Libor benchmark rate scandal. It has already paid more than €5 billion ($6.57 billion) over the past two years in settlements and fines.

Read more …

Long term.

IMF’s Zhu: Long-Term Growth And Jobs Challenges For Global Economy (CNBC)

Growth and job creation are the major challenges for the global economy while the low interest rate environment presents a risk, the International Monetary Fund’s (IMF) deputy managing director Zhu Min told CNBC on Tuesday. It’s important for central banks to keep interest rates low amid weak global growth but the rise in risk appetite amid ample liquidity is a concern, Zhu said. “We see long-term uncertainty for the people looking for yield… or for the returns in the market,” said Zhu. “[It’s] important to observe the risks associated with low interest rates.” Interest rates at major central banks including the Federal Reserve, the European Central Bank and the Bank of England are currently at record lows.

The timing of a Fed rate hike has been the subject of much debate this year. It’s uncertain whether the Fed will act in the first or second half of 2015 but whatever happens, Zhu doesn’t expect the central bank to take markets by surprise. “I don’t think we will see rates rising very soon and very quickly because growth is still relatively weak,” he said. “Growth inthe first half of the year was surprisingly weak.” Meanwhile, Zhu seemed upbeat on the Chinese economy despite IMF director Christine Lagarde’s warning of a potential hard landing in April. “Overall the Chinese economy runs quite well, and we expect the Chinese growth rates for this year [at] roughly from 7.2 to 7.5%,” he said, noting that low inflation of 2.3 to 2.4% would help.

Read more …

US Bank Regulators Set To Adopt Liquidity, Swaps Margin Rules (Reuters)

U.S. bank regulators plan to adopt on Wednesday rules forcing big banks to hold more assets that they could sell easily in a credit crunch, a requirement that is closely linked to the experience of the 2007-2009 financial crisis. Regulators also will unveil a separate proposal governing how much money swaps buyers and sellers must set aside when they make trades outside central clearing houses. The rules from the Federal Reserve, Federal Deposit Insurance Corp (FDIC) and Office of the Comptroller of the Currency (OCC) are part of a series of reforms aimed at making banks sturdier and heading off another economic meltdown. The liquidity rules, which call for big banks to hold enough liquid assets to meet their cash needs for 30 days, are a key pillar of the international agreement known as Basel III. They aim to ensure banks have easy-to-sell assets on hand so they could meet customer withdrawals or post collateral in a crunch.

U.S. regulators in October 2013 proposed liquidity requirements that were more stringent than the global agreement, with a shorter phase-in period for domestic banks such as JPMorgan Chase (JPM.N) and Goldman Sachs (GS.N) than their foreign counterparts would face. The final rules, to be unveiled on Wednesday, have already sparked protests. That is because regulators will spell out which assets count as highly liquid. Banks will have to hold a minimum amount of these assets, such as U.S. Treasuries. As in the initial proposal, municipal bonds will not count toward that buffer, a person familiar with the situation said. That has angered state officials, who say banks will buy fewer of their bonds and taxpayers will shoulder more costs for projects such as new roads. “As stewards of our states’ coffers and protectors of our states’ financial resources, state treasurers were surprised to learn that federal regulators quietly posted their intent…to vote on significant and potentially very harmful rules,” the National Association of State Treasurers said in a statement.

Read more …

Abe wants people to buy toilet paper. To save the economy?!

The One Thing The Bank Of Japan Apparently Can’t Print More Of (Zero Hedge)

First it was socialist utopia Venezuela and now Keynesian-economics favorite playground Japan is concerned about a troubling problem – fear of a toilet-paper shortage. As WSJ reports, the Ministry of Economy, Trade and Industry is encouraging families to stockpile at least one month’s worth of toilet paper in the event of a major disaster, as they “fear there would be a serious shortage of toilet paper nationally.” Ironic really, given Shinzo Abe’s past ‘problems’. As WSJ reports, the government is using the day to advise families to stock up on toilet paper.

Using the motto, “If you prepare, no despair,” the Ministry of Economy, Trade and Industry is encouraging families to stockpile at least one month’s worth of toilet paper in the event of a major disaster. The ministry is holding an exhibition at its headquarters and sponsoring panel discussions on the subject of toilet paper. According to the ministry, “The biggest supply problem during the 1995 Hanshin Earthquake was not food or clothing, but toilet paper.”

If an earthquake strikes central Japan, the shortages could become even more severe. Forty percent of the nation’s toilet paper is produced in Shizuoka prefecture. “If an earthquake in the area affected Shizuoka, we fear there would be a serious shortage of toilet paper nationally,” says a METI news release. Shizuoka-based Kasuga Paper Industry Co. has established a “Secure Supply System” for its toilet paper, allowing concerned families to preorder toilet paper for ready dispatch in case of disaster.

Read more …

Don’t we all?

China To Revise GDP Definition Until Growth Targets Hit (Zero Hedge)

When all it takes for a country to “hit” its GDP target, is to adjust said definition by adding the benefit of estimated ancillary items as prostitution and drugs, GDP loses all relevancy and meaning in its transformation to an arbitrary, goalseeked policy measurement and validation tool straight out of China’s Department of Truth. After all how else would the Spanish political kleptocracy boast the “favorable” impact of its disastrous policies if it wasn’t for a slew of recent definitional revisions. And yet, all throughout our commentary we were doing so tongue-in-cheek: after all, it is taboo for the very serious economists to discuss the hilarious systemic failures that allow their most prized indicator of “growth” to become a mockery of fringe tinfoil blogs. At least, it was taboo until now, because moments ago, in an example of “very serious phrasing”, none other than the bank that does god’s work on earth (especially when it means providing off balance sheet financing for the bank of the Holy Spirit), just reported that the reason why China will hit its growth target is because of, drumroll, its fudged GDP.

Only Goldman is far more serious when it says all of this, with the result being just too hilarious for words: to wit: “In the coming months, China’s National Bureau of Statistics is to make adjustments to the methodology used to calculate GDP. These adjustments are likely to boost real GDP growth by 0.1-0.2pp, thereby making it easier for the government to reach its goal of “around 7.5%” GDP growth in 2014.” But wait there’s more, because the biggest adjusted “contributor” to China’s economy will be the retroactive benefit from R&D that previously was treated as a cost rather than an “investment.” Yup: research and development, which in China has a different name: Piracy and Reverse Engineering, only R&D is sexier than P&RE. Which brings us to the question of the day: have we finally gone full econotard? Or is changing the rules to hit your target, while fabricating the dumbest possible adjustments, now considered very serious economic policy?

Read more …

My kind of guy: “Hall predicts that growth in shale output will begin to moderate this year and U.S. production will peak as soon as 2016.”

Trader Who Scored $100 Million Payday Bets Shale Is A Dud (Bloomberg)

Andrew John Hall — known as the God of Crude Oil Trading to some of his peers — has built his success on a simple creed: Everyone who disagrees with him is wrong. For most of the past 30 years, that has been a killer strategy. Like a poker player on an endless hot streak, Hall has made billions for the companies for which he’s traded by placing one aggressive bet after another. He was one of the few traders who anticipated both the run-up in and the eventual crash of oil prices in 2008. Hall was so good that he bagged a $98 million payday in 2008, when he ran Citigroup Inc.’s Phibro LLC trading unit [..] His wager that oil prices would rise and rise has run headlong into an unanticipated energy revolution — the frenetic push in the U.S. and elsewhere to wring crude out of shale. Shale drilling has boosted U.S. oil output to the highest level in 27 years; it helped the U.S. supply 84% of its energy demand last year. Oil prices, far from taking the upward trajectory Hall predicted, have been essentially unchanged since 2011.

[..] Hall is going all in on a bet that the shale-oil boom will play out far sooner than many analysts expect, resulting in a steady increase in prices to as much as $150 a barrel in five years or less. Investing ever-larger sums of his own money, he’s buying contracts for so-called long-dated oil, to be delivered as far out as 2019 [..] To attract buyers, the sellers of these long-dated contracts – typically shale companies that have financed the boom with mounds of debt – need to offer them at a discount to existing prices. In February, a futures contract for a barrel of December 2019 West Texas Intermediate benchmark crude was selling for $76. In July, those contracts were selling for $88. That means Hall could have made $12 a barrel by cashing out – a 16% gain, according to those who understand his positions. The thing is, Hall may not cash out. He may stand pat, waiting for those price spikes he’s certain are coming. If he’s right, he could pocket way more than $12 a barrel, perhaps doubling the money he’s invested for himself and his clients.

In his arguments, he digs deep, delving into the minutiae of how Texas discloses oil production, the tendency of some shale wells to play out quickly and the degree to which the boom has relied on debt. The simplest of his reasons, though, is that producers have already drilled in many of the best areas, or sweet spots. Hall predicts that growth in shale output will begin to moderate this year and U.S. production will peak as soon as 2016. “Once those areas have been drilled out, operators will have to move to more-marginal locations and well productivity will fall,” Hall wrote in March. “Far from continuing to grow, production will start to decline.”

Read more …

Very good from George.

Scottish ‘No’ Vote Would Be An Astonishing Act Of Self-Harm (Monbiot)

England is dysfunctional, corrupt and vastly unequal. Who on earth would want to be tied to such a country? Imagine the question posed the other way round. An independent nation is asked to decide whether to surrender its sovereignty to a larger union. It would be allowed a measure of autonomy, but key aspects of its governance would be handed to another nation. It would be used as a military base by the dominant power and yoked to an economy over which it had no control. It would have to be bloody desperate. Only a nation in which the institutions of governance had collapsed, which had been ruined economically, which was threatened by invasion or civil war or famine might contemplate this drastic step. Most nations faced even with such catastrophes choose to retain their independence – in fact, will fight to preserve it – rather than surrender to a dominant foreign power.

So what would you say about a country that sacrificed its sovereignty without collapse or compulsion; that had no obvious enemies, a basically sound economy and a broadly functional democracy, yet chose to swap it for remote governance by the hereditary elite of another nation, beholden to a corrupt financial centre? What would you say about a country that exchanged an economy based on enterprise and distribution for one based on speculation and rent? That chose obeisance to a government that spies on its own citizens, uses the planet as its dustbin, governs on behalf of a transnational elite that owes loyalty to no nation, cedes public services to corporations, forces terminally ill people to work and can’t be trusted with a box of fireworks, let alone a fleet of nuclear submarines? You would conclude that it had lost its senses.

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Judge Turns Monsanto’s Mexican GMO Dream Into Legal Nightmare (Don Quijones)

The U.S. agribusiness giant Monsanto is long accustomed to getting its own way. Through a combination of back-channel lobbying, opaque political funding and revolving-door politics, the multinational agrochemical and biotechnology corporation has subverted, corrupted and infiltrated the elected governments of countries around the world, from the smallest and poorest to the biggest and richest. However, if recent events in Europe and Latin America are any indication, the tide may well be subtly turning against the interests of Monsanto and its fellow GMO oligopolies and in the favor of independent food growers and consumers. Despite their tireless lobbying efforts in Brussels, the “Big Six” (Monsanto, Du Pont Pioneer, Syngenta, Vilmorin, Winfield and KWS) continue to hit a brick wall of resistance in many of Europe’s biggest markets, including Germany and France.

As I reported in April this year, popular resistance is on the rise across Latin America, as indigenous and peasant communities rise up against government legislation that would apply brutally rigid intellectual copyright laws to the crop seeds they are able to grow. The latest country to put a spanner in the works is Mexico. This past week the country’s Federal Court voted to uphold Judge Marroquín Zaleta’s 2013 ruling to suspend the granting of licenses for GMO field trials sought by Monsanto, Syngenta, Dow, Pionner-Dupont and Mexico’s SEMARNAT (Environment and Natural Resources Ministry). Zaleta’s ruling was in response to a suit brought by a collective of 53 scientists and 22 civil rights organizations and NGOs. In defending his ruling, Zaleta cited the potential risks to the environment posed by GMO corn. If the biotech industry got its way, he argued, more than 7000 years of indigenous maize cultivation in Mexico would be endangered, with the country’s 60 varieties of corn directly threatened by cross-pollination from transgenic strands.

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Headline says it all.

One Judge to Decide the Future of Detroit (NY Times)

In a trial set to open in the federal courthouse here on Tuesday, nothing short of this city’s future is at stake. If Judge Steven W. Rhodes approves a blueprint drawn up by Detroit officials to eliminate more than $7 billion of its estimated $18 billion in debts and to invest about $1.5 billion into the city’s now dismal services, it will mark the beginning of the end of the nation’s largest-ever municipal bankruptcy. The outcome will set this troubled city’s new course for the coming decades, perhaps longer. In deciding whether the city’s plan is equitable, feasible and in the best interest of creditors, Judge Rhodes will send significant messages beyond Detroit about the rarely tested powers and limits of municipal bankruptcy, at a time when many cities are struggling with underfunded pensions, neglected infrastructure and declining industries. Municipal bankruptcy, known as Chapter 9, was designed to give creditors, and even judges, less power than Chapter 11 corporate bankruptcy does, but the law has never before been tested on this scale.

Leaders of other cities will be watching closely, turnaround experts said, as the judge decides whether a city may shelter municipal retirees even as it imposes harsher losses on financial creditors; whether it can use bankruptcy to repudiate some capital-markets debts entirely; and whether a city in bankruptcy may avoid selling off valuable assets to raise money for its creditors, as Detroit hopes to do with its art collection. For months, as the city’s lawyers struck deals during mediation with retirees and other creditors, Detroit’s passage through bankruptcy has gained momentum, raising the possibility that after seeking bankruptcy protection just one year ago, it might emerge with relative ease and remarkable speed, by fall. Yet, as Judge Rhodes prepares to hear what is expected to be more than a month of testimony on the city’s blueprint, serious impediments and numerous unknowns remain. In voting that is part of the bankruptcy process, majorities of six classes of the city’s creditors cast ballots in favor of the city’s plan in recent months, but five other voting classes rejected it.

Read more …

Maybe we should get serious about this. Instead of only saving a handful of western lives.

Doctors Strike, Food Prices Spike As West Africa Fights Ebola (Reuters)

– Doctors in Liberia were out on strike on Tuesday as they struggled to cope with the outbreak of the deadly Ebola virus, while the United Nations warned the spread of the disease in West Africa was causing food shortages in one of the world’s poorest regions. Governments and aid organizations are scrambling to contain the disease, which has killed more than 1,500 since March. Medical charity Medecins Sans Frontieres (MSF) said 800 more beds for Ebola patients were urgently needed in the Liberian capital Monrovia alone, while in Sierra Leone highly infectious bodies were rotting in the streets. MSF called for rich nations to send military medical teams to support buckling healthcare systems in West Africa. U.S. missionary organization SIM USA said on Tuesday that an American doctor treating obstetrics patients at the ELWA hospital in Monrovia had tested positive for Ebola. The doctor, who was not working in the hospital’s Ebola treatment center, was in an isolation ward at the hospital and was responding well so far, SIM said on its Web site.

Scores of staff went on strike at the John F. Kennedy Medical Center (JFK) in Monrovia in a protest over unpaid bonuses and working conditions. More than 120 healthworkers have died in West Africa during the Ebola outbreak amid shortages of equipment and trained staff. “Health workers have died (fighting Ebola), including medical doctors at … JFK and to have them come to work without food on their table, we think that is pathetic,” George Williams, secretary general of the Health Workers Association of Liberia, told Reuters. Williams said healthcare workers at JFK, the country’s largest referral hospital, had gone unpaid for two months. The strike followed a one-day protest over pay and conditions at the Connaught hospital in Sierra Leone’s capital Freetown on Monday. Staff at the main Ebola clinic at Kenema in eastern Sierra Leone also walked off the job last week, in protest at conditions. The World Health Organization and other international bodies are rushing to support fragile healthcare systems in affected countries, but additional staff and resources have been slow to arrive.

The president of MSF, Joanne Liu, said in a speech to U.N. members in New York that the outbreak was now an issue of international security and needed specialized biological disaster response teams to contain it, both civilian and military. “Six months into the worst Ebola epidemic in history, the world is losing the battle to contain it,” Liu said, slamming what she called “a global coalition of inaction.” Liu called for the urgent dispatch of field hospitals with isolation wards and mobile medical laboratories to West Africa.

Read more …

And now you can follow where your shopping bag went.

World’s Oceans Hold Garbage Patches Twice The Size Of Texas (ISNS)

If you toss a message in a bottle into the ocean, instead of washing up on a distant shore, it will probably end up in one of the world’s five major floating garbage patches – but which one? By using models of ocean currents, researchers have calculated the boundaries of each section of the ocean, which can extend beyond the traditionally defined borders. In the process, they found that they can predict which garbage patch will receive a piece of plastic depending on where the litter is tossed. The research may one day pinpoint areas where wildlife interacts with the moving trash. It may also help identify the biggest plastic polluters, which contribute to garbage patches that some researchers estimate to be twice the size of Texas. “We’ve redefined how one should draw the borders of the oceans,” said coauthor and mathematician Gary Froyland, at University of New South Wales in Sydney, Australia. “It’s more scientifically meaningful to draw the boundaries according to where the water moves as opposed to just the legal, geographical boundaries.”

Though the locations of the garbage patches are already well-known, this study reveals the areas of the ocean that contribute to each patch. “If you throw out your plastic on a beach somewhere in California, or somewhere in Virginia, then how does that move through the ocean and in which ocean basin will it get into?” asked Erik van Sebille, an oceanographer also at the University of New South Wales. The five garbage patches occur in each of the north and south Atlantic, the north and south Pacific, and the middle of the Indian Ocean. The plastic comes mainly from litter, which falls off of boats, is left on beaches or washes downstream in rivers. Though most people pictures these patches as islands of debris, they’re more like a very thin soup of plastic, said Froyland. Churning waves and ultraviolet light break down the trash into tiny pieces, which are sometimes eaten by fish and other marine life. Toxic chemicals in plastics could in theory accumulate through the food chain when many smaller fish are eaten by larger fish, which are eaten by humans.

Read more …

Jul 272014
 
 July 27, 2014  Posted by at 1:35 pm Finance Tagged with: , , , , ,  17 Responses »


Lewis Hine 10-year-old oyster shucker, does 5 pots a day; been working 3 years Feb 1912

As the propaganda war over 298 innocent dead people plunges into ever deeper absurdity, I think we may have found the answer to a question that intrigued me over the past few days: why did Ukraine PM Yatsenyuk and his government resign all of a sudden last week? A banker, installed by the west, who produced some of the most over the top language against Russia and his own Russian speaking fellow citizens, who leaves mere days after the battle he’s involved in gained a whole new dimension with MH17. Puzzling.

But there are now clues as to why he may have done it (note: I don’t rule out his possible personal involvement in the MH17 crash either). The clues don’t come from western media, but that’s probably not surprising. I therefore have to turn to Russian media, and though many will say they may be part of the propaganda war as well, I don’t think these particular things are made up, simply because it makes no sense to invent a TV talk show and a parliamentary vote out of thin air; these things are easy to trace.

First, Ria Novosti reports on a Yatsenyuk talk show appearance after his resignation:

“My decision to resign has one motive: I want the whole country to see that the parliament refuses to support the Ukrainian Armed Forces, the parliament refuses to fight for the east and impose taxes on those who need to pay taxes,” Yatsenyuk said in a Shuster LIVE Ukrainian talk show. Yatsenyuk said the country’s parliament needs a “reset” and also called to carry out reforms even if this demands taking unpopular steps among the Ukrainian population. He urged the parliament to allocate additional 9 billion hryvnia ($0.7 billion) to support the troops and also approve the bills on levying taxes on the most profitable sectors and attracting European and US companies to the management of the country’s gas transmission network.

In my view, that last bit is the clincher. RT expands on the story.

Ukraine Votes To Keep Western Companies Out Of Gas Industry

Ukraine’s parliament has rejected allowing EU and US companies to buy up to 49% of oil and gas company Naftogaz, and also said they were against liquidating the national energy monopoly . Kiev rejected splitting the company in two, a measure encouraged by the West in order for Naftogaz to comply with Europe’s third energy package, which doesn’t allow one single company to both produce and transport oil and gas. The bill proposed creating two new joint stock companies in order to conform to the package, “Ukraine’s Main Gas Transmission” and “Ukraine’s Underground Storages.” The proposal sought to meet the requirements of EU legislation and strengthen Ukraine’s energy independence.

Earlier in July, the Ukrainian parliament passed a first reading of the bill that would have allowed Western companies up to a 49% of Ukraine’s Gas Transportation System (GTS). There had been rumors the state would sell off at least 15% of Naftogaz in a public offering, however, the conditions in Ukraine’s capital and equity market aren’t strong enough to get a high enough price. The changes was rejected because of the large monopoly and influence Naftogaz has over the Ukrainian market, the country’s political scientist Alexander Ohrimenko, told Russian business daily RBC.

Ukraine’s Rada needed a minimum of 226 votes to support the reform, but only 94 deputies were “for” the change. In the first reading, it received 229 of the 226 votes required to restructure the company. Voting bloc dynamics changed on Thursday after the ruling coalition dissolved itself triggering an early parliamentary election after the government resigned. Following the rejection of privatizing Naftogaz, Prime Minister Yatsenyuk announced his resignation as head of the government. The vote took place among other proposed budget reforms, defense spending, as well as a discussion on how to tackle Ukraine’s gas debt. Naftogaz’s debt to Russia now exceeds $5 billion.

While I don’t rule out that URDA, Kiev mayor Klitschko’s party, may have left the coalition in part as a protest against the army’s continued and intensified assault on east Ukraine, I’d put my money on Yatsenyuk’s failure to deliver control over Ukraine’s energy industry to western interests as the reason he left. And I’m equally sure there is a plan B in place to use the ensuing political – and military – chaos to let the west take over large parts of Naftogaz anyway.

That’s why we’re there. It’s an energy war. IMF loans, IMF-style reforms – in an EU sauce -, the whole package is in place. And Yats failed to make it happen. It’s very possible that “we” have found an alternative option to get what we want in President Poroshenko, who can rule like an emperor until the end of this year.

Meanwhile, Poroshenko’s army launched another major offensive against east Ukraine, which makes it impossible for international forensic experts to work on the crash scene. This has basically been going on since the plane came down, and all the blame has been put with the rebels.

Who, when asked why they removed – some of – the bodies from the scene, said no-one turned up for three days to claim them, and the sweltering heat made it seem respectless to leave them out in the sun any longer. And, despite what the Kiev government and western media said to the contrary, this was done in a dignified way. A fact that was corroborated by the experts who took possession of the remains.

The overall western storyline remains Putin’s desire for empire building, but from where I’m sitting it looks a whole lot more like it’s not Putin but Washington and Brussels who dream of empires. And that, as I said earlier, is directly linked to to the demise of the age of fossil fuels. That age is not over yet, and shale provides some – futile – hope for more oil, but empires need to look forward lest they crumble and fall.

While many may not yet be fully aware of how valid it already is, the energy=power principle will become much more pronounced as less energy becomes available – we’ve entered that phase – . If energy equals power, less energy equals less power, and if you don’t want to lose your power, you will have to take someone else’s resources, and that will in almost all cases involve some act of war, be it economic, physical or otherwise (e.g. propaganda).

Putin, and Russia, were fine with Ukraine the way it functioned before the Maidan protests, and especially before the western involvement in these protests. They had a good oil and gas deal going, they had steady customers and steady income. There was one weak link in that chain: the pipelines that delivered the gas destined for Europe ran largely under Ukraine soil (dating back to Ukraine being part of the Soviet Union). This is the weak link US and EU are now seeking to explore. That’s why they seek to take over Naftogaz.

And now it’s sanctions time. Time for Brussels to self-righteously squeeze Moscow, or something like that. I got to tell you, I can only see this go horribly wrong. I have a picture in my head of a boomerang hitting the various EU politburos straight back in the jaw. But they certainly don’t see it coming, they’re far too smug about what they think is their new found power:

“The shooting down of the airliner was a tipping point that’s changed the EU constellation,” Joerg Forbrig, senior program officer for central and eastern Europe at the Berlin bureau of the German Marshall Fund of the U.S., said in a phone interview. “Putin has crossed a line and misread the mood in European capitals to close ranks on new sanctions.”

Europe rides the train of public anger that their own spin doctors have created. And that is a hazardous thing to do. The EU can agree amongst itself to define – new – sanctions on Russia, or perhaps it can’t even do that, we’ll have to wait and see. And the US can unilaterally announce all sorts of additional sanctions of its own. And some of these sanctions may hurt Russia quite a bit, simply because it’s part of the global financial system.

Still, if either US or EU wants a UN resolution to be accepted (they’ll need it at some point), they will, despite all the applied propaganda, have to produce hard evidence. Something both have so far categorically refused to do. They’ve managed to change the mood in many places without even one piece of evidence. Maybe we should congratulate them on that.

To illustrate: RT has another video on its YouTube channel of a conversation between State Dept. spokesperson Marie Harf and AP journalist Matt Lee (see below), and it’s as painful to watch as the first one a few days ago. Perhaps it’s simply the arrogance of the aggressor, edged on by countless polls being done among the public that show huge support for unsubstantiated claims. Still, one would think having Ms Harf do the talking doesn’t help, but that’s what we all once thought about W. too.

And it’s not just the UN either. The Telegraph reports on a whole new potential threat to the propaganda induced storyline:

Putin To Face Multi-Million Class-Action Suit Over MH17 Crash

Vladimir Putin is facing a multi-million-pound legal action for his alleged role in the shooting down of a Malaysia Airlines passenger jet over eastern Ukraine, The Sunday Telegraph can disclose. British lawyers are preparing a class action against the Russian president through the American courts. Senior Russian military commanders and politicians close to Mr Putin are also likely to become embroiled in the legal claim.

The case would further damage relations between Mr Putin and the West, but politicians would be powerless to prevent it. Last week, lawyers from McCue & Partners, the London law firm, flew to Ukraine for discussions about how to bring the case and where it should be filed. Victims’ families will be invited to join the action. The case will inevitably highlight the role allegedly played by Russia in stoking conflict in eastern Ukraine.

Though the neutrality of US courts can be questioned, and justifiably at times, one would still have to assume that mere propaganda wouldn’t cut it, if only because no court wants to make itself a laughing spectacle in the eyes of the entire world. Will the US, the EU and the British government persist in their refusal to provide evidence for their version of the truth even when a US court asks them for it? If they do, how can any case be brought forward? And if they do provide the evidence, the question will be why they didn’t do that sooner, like today.

As for the sanctions themselves, the EU attempts to maximize the pain for Russia (or maybe I should say they try to make the impression that they’re doing that), while minimizing the pain for its member nations. To achieve that double goal, however, it must bend itself into a convoluted pretzel shape. Because Italy wants exemptions to sanctions, and Britain too, but different ones, and there are 28 separate nations in the EU. Who in the end will all have to sign off on everything.

What we see now is compromises, like the sanctions on shared technology are supposed to impact oil but not gas, and military but not civil applications. As if these things are so easy to tear apart. The reason is obvious: many EU nations are very vulnerable to disruptions in Russian gas deliveries – and other business interests. Reuters has a reasonable take:

EU Edges To Economic Sanctions On Russia But Narrows Scope

The European Union reached outline agreement on Friday to impose the first economic sanctions on Russia over its behaviour in Ukraine but scaled back their scope to exclude technology for the crucial gas sector. The sanctions on access to capital markets, arms and hi-tech goods are also likely to apply only to future contracts ..

Brussels seeks a short cut, to profit from the still fresh public anger, and before people start asking questions about evidence.

Van Rompuy said the proposed sanctions package “strikes the right balance” in terms of costs and benefits to the EU and in its flexibility to ramp up sanctions or reverse them over time. “It should have a strong impact on Russia’s economy while keeping a moderate effect on EU economies,” he wrote in the letter, seen by Reuters. But the narrowing of the proposed measures highlighted the difficulty of agreeing to tough sanctions among countries which have widely different economic interests and rely to varying degrees on Russian gas.

European Commission President Jose Manuel Barroso said the Commission had adopted a draft legal text for the Russia sanctions package. “The final decision now lies with the EU’s member states, but I believe that this is an effective, well-targeted and balanced package … I call on Russia to take decisive steps to stop the violence and genuinely engage in peace plan discussions,” he said.

Russia has been calling for peace plan discussions for half a year. What have Europe and America done? They bring demands to such a discussion that they know will fail: for Russia to withdraw altogether, and let its people in Ukraine perish. That is not an honest discussion. It’s Europe that has never been willing to “genuinely engage in peace plan discussions”.

Key measures include closing EU capital markets to state-owned Russian banks, an embargo on arms sales to Moscow and restrictions on the supply of dual-use and energy technologies. They would not affect current supplies of oil, gas and other commodities from Russia. Van Rompuy said there was an “emerging consensus” among EU governments that “the measures in the field of sensitive technologies will only affect the oil sector in view of the need to preserve EU energy security.”

If the sanctions had applied to gas technology, they could have affected Gazprom’s huge South Stream pipeline project to Europe and Novatek’s Arctic Yamal LNG facility. That in turn would have hit large EU energy suppliers and manufacturers with an interest in the project, including in Germany, Austria and Italy.

See, when I read these things, my first reaction is Russia has the longer scope: it still has time left to further develop non-conventional resources. Europe – and Big Oil – need energy now, and immediate supplies are under threat for both. Killing off the South Stream line will hurt the EU at least as much as Russia. And when van Rompuy talks about measures that will “only affect the oil sector in view of the need to preserve EU energy security”, he puts his foot so far up his mouth Putin can only be slapping his thighs. Cherry picking sanctions is a game as silly as it is dangerous. Not that van Rompuy would know.

Separately, the EU was due to publish on Saturday the names of 15 individuals and 18 entities, including companies, subject to asset freezes for their role in supporting Russia’s annexation of Crimea and destabilisation of eastern Ukraine. That will bring the number of people under EU sanctions to 87 and the number of companies and other organisations to 20.

Yes, rich Russians that have their assets spread around the world can be hurt.

Spreading the burden evenly among EU member states is a delicate balancing act. Britain is strong in financial services, Germany in technology and machinery, France in arms sales, while Italy is heavily dependent on Russia for energy. “To a degree everyone is reverting to trying to protect their own national interests from harm,” a senior European diplomat said. As things stood, Britain would probably face more pain than any other state from the proposed measures because of London’s key position as a financial centre.

Finally, to put it all into perspective, especially my contention that the underlying “logic” beneath the propaganda, the sanctions and all the dead bodies are dwindling global energy supplies, look at how the once mighty oil giants are falling:

Are We On The Cusp Of The Oil Mega Mergers?

[..] … some senior City sources think falling fortunes could force the giants into each other’s arms in the next year or two. Their central argument for a fresh flurry of deal-making is a problem affecting the whole industry: a slump in profits. In January, Shell issued a shock quarterly profit warning and weeks later posted a 23% fall in annual earnings from $25.3bn the year before to £19.5bn in 2013. In April, BP followed suit, reporting a similar drop in profits for 2013 and the first quarter of 2014.

Their US rivals are similarly struggling. In May, Exxon Mobil, the titan of the world’s oil majors, reported falling profits for the fourth quarter in a row. ConocoPhilips also posted a dip. The industry is being hit by a perfect storm of headwinds: lower oil and gas prices which mean falling margins in their downstream businesses, which make petrol, diesel, and other finished products; as well as higher exploration expenses and dwindling reserves. Oil executives say their profits are pinched because, as many fields around the world age and produce less oil, they are forced to drill in deeper oceans and more remote places such as the Arctic to keep up with production.

The days of easy discoveries seem to be over and widening the search costs more money. There is certainly plenty of rationale for a further round of mega deals such as that led by Browne in the late Nineties. And there may be appetite from investors too. Some of Shell’s big shareholders are said to be frustrated by the company’s continued spending on expensive far-flung projects that fail to yield healthy returns.

Big Oil is done, toast. But its political clout will make that a very hard thing to absolve. So much so that it’s not at all hard to imagine Shell and BP and Exxon playing a role in the battle over Ukraine, which is part of a larger battle against Russia, and against its control over what today must look to the oil majors like very abundant resources, compared to what they themselves have left. I have no doubt they were among the major bidders for Naftogaz.

One thing’s for sure: we have entered a whole new chapter in global energy and power policy, and we’ve entered it for good.

UPDATE 10 am EDT: The Ukraine army, as per Dutch press just now, is fighting to ‘conquer’ the plane crash scene. What a great way to get rid of evidence. Needless to say, forensic experts still can’t do their work.

As promised, here’s State Dept.’s Marie Harf in another embarrassing conversation with AP’s Matt Lee:

I give you: The Recovery!

Median US Household Net Worth Down 36% Since 2003 (NY Times)

Economic inequality in the United States has been receiving a lot of attention. But it’s not merely an issue of the rich getting richer. The typical American household has been getting poorer, too. The inflation-adjusted net worth for the typical household was $87,992 in 2003. Ten years later, it was only $56,335, or a 36% decline, according to a study financed by the Russell Sage Foundation. Those are the figures for a household at the median point in the wealth distribution — the level at which there are an equal number of households whose worth is higher and lower. But during the same period, the net worth of wealthy households increased substantially. The Russell Sage study also examined net worth at the 95th percentile. (For households at that level, 94% of the population had less wealth and 4% had more.)

It found that for this well-do-do slice of the population, household net worth increased 14% over the same 10 years. Other research, by economists like Edward Wolff at New York University, has shown even greater gains in wealth for the richest 1% of households. For households at the median level of net worth, much of the damage has occurred since the start of the last recession in 2007. Until then, net worth had been rising for the typical household, although at a slower pace than for households in higher wealth brackets. But much of the gain for many typical households came from the rising value of their homes. Exclude that housing wealth and the picture is worse: Median net worth began to decline even earlier. “The housing bubble basically hid a trend of declining financial wealth at the median that began in 2001,” said Fabian T. Pfeffer, the University of Michigan professor who is lead author of the Russell Sage Foundation study.

Read more …

Ukraine Votes To Keep Western Companies Out Of Gas Industry (RT)

Ukraine’s parliament has rejected allowing EU and US companies to buy up to 49% of oil and gas company Naftogaz, and also said they were against liquidating the national energy monopoly. Kiev rejected splitting the company in two, a measure encouraged by the West in order for Naftogaz to comply with Europe’s third energy package, which doesn’t allow one single company to both produce and transport oil and gas. The bill proposed creating two new joint stock companies in order to conform to the package, “Ukraine’s Main Gas Transmission” and “Ukraine’s Underground Storages.” The proposal sought to meet the requirements of EU legislation and strengthen Ukraine’s energy independence.

Earlier in July, the Ukrainian parliament passed a first reading of the bill that would have allowed Western companies up to a 49% of Ukraine’s Gas Transportation System (GTS). There had been rumors the state would sell off at least 15% of Naftogaz in a public offering, however, the conditions in Ukraine’s capital and equity market aren’t strong enough to get a high enough price. The changes was rejected because of the large monopoly and influence Naftogaz has over the Ukrainian market, the country’s political scientist Alexander Ohrimenko, told Russian business daily RBC. Ukraine’s Rada needed a minimum of 226 votes to support the reform, but only 94 deputies were “for” the change. In the first reading, it received 229 of the 226 votes required to restructure the company. Voting bloc dynamics changed on Thursday after the ruling coalition dissolved itself triggering an early parliamentary election after the government resigned.

Following the rejection of privatizing Naftogaz, Prime Minister Yatsenyuk announced his resignation as head of the government. The vote took place among other proposed budget reforms, defense spending, as well as a discussion on how to tackle Ukraine’s gas debt. Naftogaz’s debt to Russia now exceeds $5 billion. Crippled finances prevent the company from paying for Russian gas supplies, much of which have already been delivered. Gazprom halted supplies to Naftogaz in June following Kiev’s unwillingness to start paying off the amassed debt. Ukraine has recently increased its effort to find alternative sources of gas to substitute Russian supplies. One of its main goals is to soon start reverse gas flows from neighboring Slovakia, an undertaking that may not be legal.

Read more …

Boeing To Banking: How Russian Sanctions Will Hit Western Business (Guardian)

The downing of flight MH17 could become a turning point in the west’s economic relations with Russia. Since the Ukraine crisis flared up last year, sanctions have mostly been targeted at individuals and companies associated with Russia’s annexation of Crimea or those stirring up unrest in eastern Ukraine. The European Union extended these sanctions on Friday, adding 15 names and 18 organisations (mostly companies) to the list. As it stands, the list includes Kremlin officials, separatists and state companies. But the game could change this week, when the EU is expected to unveil more sweeping “tier three” economic sanctions aimed at entire sections of the economy.

This weekend, diplomats have been examining proposals to restrict Russian state-owned companies from accessing capital markets, impose an arms embargo, and issue an export ban on specialist energy technology and “dual use” equipment, such as computers and machinery, that can be put to both civilian and military uses. The draft proposal notes pointedly that European leaders should decide whether the arms embargo should be retrospective, thus annulling France’s €1.2bn contract to deliver Mistral assault ships to Russia. Tightening the economic screws will hurt Russia’s economy, but the consequences will also be felt by western companies – and not just the usual suspects of energy and arms companies that have made high-profile deals with the Kremlin. Germany, for example, has 6,000 companies doing business in Russia, mostly small and medium-sized enterprises. But large conglomerates will be the bellwethers, showing how serious the consequences will be.

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Russia Criticizes EU Sanctions, Raps US Over Ukraine Role (Reuters)

Russia reacted angrily on Saturday to additional sanctions imposed by the European Union over Moscow’s role in the Ukraine crisis, saying they would hamper cooperation on security issues and undermine the fight against terrorism and organized crime. Russia’s Foreign Ministry also accused the United States, which has already imposed its own sanctions against Moscow, of contributing to the conflict in Ukraine through its support for the pro-Western government in Kiev. The 28-nation EU reached an outline agreement on Friday to impose the first economic sanctions on Russia over its behavior in Ukraine but scaled back their scope to exclude technology for the crucial gas sector.

The EU also imposed travel bans and asset freezes on the chiefs of Russia’s FSB security service and foreign intelligence service and a number of other top Russian officials, saying they had helped shape Russian government policy that threatened Ukraine’s sovereignty and national integrity. “The additional sanction list is direct evidence that the EU countries have set a course for fully scaling down cooperation with Russia over the issues of international and regional security,” Russia’s Foreign Ministry said in a statement. “(This) includes the fight against the proliferation of weapon of mass destruction, terrorism, organized crime and other new challenges and dangers.” The EU had already imposed asset freezes and travel bans on dozens of senior Russian officials over Russia’s annexation in March of Ukraine’s Black Sea peninsula of Crimea and its support for separatists battling Kiev’s forces in eastern Ukraine.

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Mergers, acquisitions and bankruptcies.

Are We On The Cusp Of The Oil Mega Mergers? (Telegraph)

Ten years ago, Lord Browne, the then chief executive of BP, flew to Williamsburg, Virginia, for a board meeting, where he planned to outline detailed proposals for a mega-merger with Royal Dutch Shell. The radical tie-up had been discussed in secret weeks earlier with Jeroen van Der Veer, his counterpart at Shell, during a stroll around Lake Como in Italy. With an estimated $9bn (£5.3bn) of synergies from the deal and Browne’s conviction that he had the backing of his own executive team, including his eventual successor Tony Hayward, the BP chief was ready to deliver the grand plan. But on the flight out of the UK, he suddenly got cold feet. “I knew the answer even before the meeting started. The sentiment was ‘why rock the boat?’ The Shell merger was not discussed. It was not going to be done and that was that… In the end we did not rock the boat; we missed it,” he recounted in his memoirs four years ago.

Browne, who stepped down in 2007, was among a generation of buccaneering oil major executives who had overseen a wave of mega-mergers at the end of the nineties that totally reshaped the industry. BP moved first, merging with Amoco and kicking off a flurry of tie-ups including Exxon and Mobil, Texaco and Chevron, and TotalFina and Elf, that created the so-called supermajors. More than a decade and a half on from those unions, could we be on the cusp of another round of mega-mergers? Not immediately, but some senior City sources think falling fortunes could force the giants into each other’s arms in the next year or two. Their central argument for a fresh flurry of deal-making is a problem affecting the whole industry: a slump in profits. In January, Shell issued a shock quarterly profit warning and weeks later posted a 23pc fall in annual earnings from $25.3bn the year before to £19.5bn in 2013. In April, BP followed suit, reporting a similar drop in profits for 2013 and the first quarter of 2014.

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Why only half? Pussies!

Half Of Britain To Be Opened Up To Fracking (Telegraph)

Ministers are this week expected to offer up vast swathes of Britain for fracking in an attempt to lure energy companies to explore shale oil and gas reserves. The Department for Energy and Climate Change is expected to launch the so-called “14th onshore licensing round”, which will invite companies to bid for the rights to explore in as-yet untouched parts of the country. The move is expected to be hugely controversial because it could potentially result in fracking taking place across more than half of Britain. Industry sources said the plans could be announced at a press conference tomorrow.

The Government is a big proponent of fracking and last year revealed that it would “step up the search” for shale gas and oil. Ministers said they would offer energy companies the chance for rights to drill across more than 37,000 square miles, stretching from central Scotland to the south coast. Michael Fallon, the former energy minister, has previously described shale as “an exciting prospect, which could bring growth, jobs and energy security”.

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Putin To Face Multi-Million Class-Action Suit Over MH17 Crash (Telegraph)

Vladimir Putin is facing a multi-million-pound legal action for his alleged role in the shooting down of a Malaysia Airlines passenger jet over eastern Ukraine, The Sunday Telegraph can disclose.
British lawyers are preparing a class action against the Russian president through the American courts. Senior Russian military commanders and politicians close to Mr Putin are also likely to become embroiled in the legal claim. The case would further damage relations between Mr Putin and the West, but politicians would be powerless to prevent it.

Last week, lawyers from McCue & Partners, the London law firm, flew to Ukraine for discussions about how to bring the case and where it should be filed. Victims’ families will be invited to join the action. The case will inevitably highlight the role allegedly played by Russia in stoking conflict in eastern Ukraine. [..]

A legal source close to the planned class action said the burden of proof in a civil case was lower than in a criminal investigation, meaning that senior Kremlin politicians, including Mr Putin, could be held to account through the civil courts, even if they escape criticism in the official inquiry. The case against Mr Putin could be worth hundreds of millions of pounds, possibly more, in potential damages. The action is likely to be brought through the US courts and could – if held liable – eventually see assets of Mr Putin and those closest to him frozen if any resulting compensation is not paid.

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There are reports Ukraine is using white phosphorus bombs. Israel too.

Ukraine Army Advances as EU Plans Tougher Putin Sanctions (Bloomberg)

Ukraine’s army advanced on a last main separatist stronghold as the U.S. said Russian President Vladimir Putin is poised to give the rebels heavy weapons and European Union leaders considered their toughest sanctions yet on Russia. Ukrainian troops are battling insurgents in the town of Horlivka, about 20 kilometers (12 miles) northeast of the regional capital Donetsk, a city of 1 million people where rebels retreated after abandoning other positions earlier this month. Taking Horlivka would open the way to attack one of their last redoubts, Ukrainian Defense Ministry spokesman Andriy Lysenko said yesterday in Kiev.

“Fighting to take over Horlivka is going on,” he told journalists. “Donetsk will be next.” CNN reported that long lines of cars jammed roads leading south from the city yesterday as residents tried to flee. The military gains come as German Chancellor Angela Merkel is pushing EU leaders to sign off on new sanctions aimed at Russia after the shooting down of Malaysian Airlines Flight MH17. The jet’s downing over eastern Ukraine on July 17 is isolating Putin in the international community. While he denies arming pro-Russian rebels, the U.S. says its intelligence shows that the missile that destroyed the plane and killed all 298 passengers and crew was supplied by Russia.

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Why isn’t anyone is the west asking about the aIr traffic control conversation logs? Don’t we want to find out what happened?

MH17 Black Box Reveals “Massive Explosive Decompression” (Zero Hedge)

While it was already reported that the black boxes of flight MH 17 were supposedly not tempered with, despite early propaganda attempts via planted YouTube clips to claim otherwise (clips which have since disappeared replaced by other propaganda), the question of what the data recovery team operating in London would find was unanswered, until earlier today when CBS reported that “unreleased data” from a black box retrieved from the wreckage of Malaysia Airlines Flight 17 in Ukraine show findings consistent with the plane’s fuselage being hit multiple times by shrapnel from a missile explosion.

“It did what it was designed to do,” a European air safety official told CBS News, “bring down airplanes.” [..] The official described the finding as “massive explosive decompression.”

Of course none of this is surprising, and has been widely known from the beginning: it was also widely known that the black box would provide no additional information on the $64K question: whose missile was it, and was it a missile launched from the ground or an air-to-air missile fired by a fighter jet. Perhaps a better question is who is leaking the “unreleased data” and what propaganda is it meant to achieve in what is, as we said a week ago, nothing but a propaganda war on both sides. As for the real questions the “released” black box data should reveal, they remain as follows:

• why was the plane diverted from its traditional flight path; and

• what was said between the pilots and air traffic control in the minutes before the crash.

Recall that the Ukraine secret service confiscated the ATC conversation logs a week ago, and the fate of said conversations has been unknown ever since, something that Malaysian Airlines revealed to the public promptly after its other, just as infamous plane anomaly, flight MH 370 disappeared forever from radar.

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Yeah, imagine having to agree with Pat Buchanan.

In Praise of Pat Buchanan’s Take On America’s Ukraine Fiasco (Stockman)

In just 800 words Pat Buchanan exposes the sheer juvenile delinquency embodied in Washington’s current Ukrainian fiasco. He accomplishes this by reminding us of the sober restraint that governed the actions of American Presidents from FDR to Eisenhower, Reagan and Bush I with respect to Eastern Europe during far more perilous times. In a word, as much as they abhorred the brutal Soviet repression of the Hungarian uprising in 1956, the Prague Spring in 1968 and the solidarity movement in Poland in the early 1980s, among many other such incidents, they did not threaten war for one simple reason: These unfortunate episodes did not further endanger America’s national security. Instead, in different ways each of these Presidents searched for avenues of engagement with the often disagreeable and belligerent leaders of the Soviet Empire because they “felt that America could not remain isolated from the rulers of the world’s largest nation”.

Accordingly, during the entire span from 1933, when FDR recognized the Soviet Union, until 1991, when it ended, the US never once claimed Ukraine’s independence was part of its foreign policy agenda or a vital national security interest. Why in the world, therefore, should we be meddling in the backyard of a far less threatening Russia today? More importantly, if Ike could invite Khrushchev to tour America and pow-wow with him at Camp David after the suppression of the Hungarian freedom fighters and his bluster over Berlin, what in the world is Obama doing attempting to demonize Putin and make him an international pariah?

The fact is, Crimea had been part of Russia for 200 years, and the Donbas had been its Russian-speaking coal, steel and industrial heartland since the time of Stalin. Putin’s disagreements with the Ukrainian nationalists who took over Kiev during the Washington inspired overthrow of its constitutionally-elected government in February are his legitimate geo-political business, but have nothing to do with our national security. And whatever his considerable faults, Putin is no totalitarian menace even remotely in the same league as his Soviet predecessors. In that regard, Hillary Clinton’s sophomoric comparison of him to Hitler is downright preposterous.

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Ebola gets scarier. Someday soon someone will label it out of control.

U.S. Doctor in Africa Tests Positive for Ebola (WSJ)

An American doctor working with Ebola patients in Liberia has tested positive for the deadly virus, an aid organization said Saturday. North Carolina-based Samaritan’s Purse issued a news release saying that Dr. Kent Brantly tested positive for the disease and was being treated at a hospital in Monrovia, Liberia. Dr. Brantly is the medical director for the aid organization’s case management center in the city. Dr. Brantly, 33, has been working with Samaritan’s Purse in Liberia since October 2013 as part of the charity’s post-residency program for doctors, said the group’s spokeswoman Melissa Strickland. The organization’s website says he had worked as a family practice physician in Fort Worth, Texas.

The highly contagious virus is one of the most deadly diseases in the world. Photos of Dr. Brantly working in Liberia show him in white coveralls made of a synthetic material that he wore for hours a day while treating Ebola patients. Dr. Brantly was quoted in a posting on the organization’s website earlier this year about efforts to maintain an isolation ward for patients. “The hospital is taking great effort to be prepared,” Dr. Brantly said. “In past Ebola outbreaks, many of the casualties have been health-care workers who contracted the disease through their work caring for infected individuals.” Ms. Strickland says that Dr. Brantly’s wife and children had been living with him in Africa, but they are currently in the U.S.

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Get out of the desert.

Pumping Groundwater in a Drought Is Great, Until You Run Out (Bloomberg)

Water is becoming so precious in the drought-stricken U.S. West that – why not – states are even taking steps to figure out how much of it they have. California governor Jerry Brown in January challenged towns and state agencies to cut their water use by 20%. Now they’re trying to measure what 20% means. It’s hard. Cities and the state in some cases are coming up with estimates that differ by up to 10 times. “Despite our longstanding water problems, we don’t accurately report and measure water in any sector — urban or agricultural,” Peter Gleick, president of the Pacific Institute, a water think tank in Oakland, told James Nash of Bloomberg News. “That makes it difficult to implement programs to conserve water and deal with this crisis.”

All of California is in severe drought, according the U.S. Drought Monitor. Nearly 82% is in extreme drought and more than 36% is in exceptional drought, which is marked by crop and pasture loss and water shortage that fall within the top two%iles of drought indicators. In the Southwest, the Colorado River Basin remains “the most over-allocated river system in the world,” according to a study that will be published in Geophysical Research Letters. The basin lost 64.8 cubic kilometers (15.5 cubic miles) of freshwater — two-thirds of that disappearing from underground reservoirs — over the time period in the study. That’s an amount of water almost twice the size of Lake Mead, the biggest U.S. reservoir, gone from the basin.

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