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ANTI-STATE ANTI-WAR PRO-MARKET
Updated: 9 hours 14 min ago

So It Is Written, So It Shall Be Done

Sat, 11/22/2014 - 02:01

Asserting a legal and constitutional authority he himself said he did not have, President Obama is going rogue, issuing an executive amnesty to 4 to 5 million illegal aliens.

He will order the U.S. government not to enforce the law against these 5 million, and declare that they are to be exempt from deportation and granted green cards.

Where did Obama get his 4-5 million figure, not 2-4 million, or 5-7 million? Nowhere in law, but plucked out of his own mind, as to what he can get away with. Barack Obama just felt it was about right.

Thus does our constitutional law professor-president “faithfully execute” the laws of the United States he has twice swore to uphold?

Our rogue president has crossed an historic line, and so has the republic. Future presidents will cite the “Obama precedent” when they declare they will henceforth not enforce this or that law, because of a prior commitment to some noisy constituency.

We have just taken a monumental step away from republicanism toward Caesarism. For this is rule by diktat, the rejection of which sparked the American Revolution.

The political, psychological and moral effects of Obama’s action will be dramatic. Sheriffs, border patrol, and immigration authorities, who have put their lives on the line to secure our broken borders, have been made to look like fools. Resentment and cynicism over Obama’s action will be deeply corrosive to all law enforcement.

Businessmen who obeyed the law and refused to hire illegals, hiring Americans and legal immigrants instead, and following U.S. and state law on taxes, wages and withholding, also look like fools today.

Obama’s action makes winners of the scofflaws and hustlers.

Bosses who hired illegals off the books will also receive de facto amnesty. La Raza is celebrating. But, make no mistake, a corrupt corporate crowd is also publicly relieved and privately elated.

Immigrants who waited in line for years to come to America, and those waiting still, have egg on their faces. Why, they are saying to themselves, were we so stupid as to obey U.S. laws, when it is the border-jumpers who are now on the way to residency and citizenship?

When the world hears of the Obama amnesty, millions more from Latin America, Africa, Asia and the Middle East will be coming. And if they cannot get in legally, they will walk in, or fly in, and overstay their visas.

Why not? It works.

That this action will be as much a part of Obama’s legacy as Obamacare is certain. The unanswered question is how the Obama amnesty will be remembered by history. His aides think that it will be seen as a second Emancipation Proclamation. Perhaps.

But with this amnesty Obama takes custody of and responsibility for the entire illegal population. He is the patron saint of illegal aliens. And for what they do, he will be held accountable, as was Jimmy Carter for the Marielitos Castro sent and Carter welcomed.

If the amnestied illegals contribute to the drug trade and violent crime, that will be Obama’s legacy to his country. If they turn up disproportionately on the welfare rolls, exploding state and federal deficits, that will be Obama’s legacy.

If this amnesty is followed by a new invasion across the border America cannot control, that, too, will be Obama’s gift to his countrymen.

One wonders. Will poor and working class blacks and whites, Hispanics and Asians, welcome this unleashed competition from the amnestied illegals, for jobs where the wages never seem to rise?

In the four decades before JFK, the nation had a pause in legal immigration. During that pause, the Germans, Irish, Italians, Jews, Poles, Greeks and Slav immigrants who had come in from 1890-1920, and their children and grandchildren, were fully assimilated. They had become not only U.S. citizens, but also identifiably American.

The Melting Pot had worked. We had become one nation and one people, almost all speaking the same language, and steeped in the same history, heroes, culture, literature and faiths.

Today, in 2014, after an influx of perhaps 50 million in 50 years, legal and illegal, no longer from Northwest Europe, or Europe at all, but Latin America, Africa, Asia, the Middle East, of every race, color, creed, culture and language we seem less a nation than some mammoth Mall of America. An economy, but not a country.

Running in 2008, Obama said he intended to become a “transformational president.” With this decision, he succeeds.

He has accelerated and ensured the remaking of America. Now when the wives and children of the illegals arrive, and their extended families apply for and receive visas, and bring their wives and children, we will become the Third World country of Obama’s dream, no more a Western nation.

But then the community organizer did not much like that old America.

Just What Is IS?

Sat, 11/22/2014 - 02:01

Sir John Baggot Glubb, better known as Glubb Pasha, was one of the modern Mideast’s most colorful and romantic figures. He and ‘Chinese’ Gordon of Khartoum were the last of the great British imperial officers.

Seconded by Britain to its protectorate, the Hashemite Kingdom of Jordan, Glubb built up its small  Bedouin army, the Arab Legion,  into the Arab world’s  finest military force.

Glubb’s Arab Legion would likely have defeated Israel’s forces in the 1948 Arab-Israeli War had Britain and Jordan’s double-dealing king Abdullah not blocked the Legion’s advance, as Glubb Pasha bitterly recalled in his memoires.

When asked which of his many medals and honors he valued most,  Glubb surprisingly replied , “Defender of the Shepherds of Iraq, ”  This obscure award was conferred upon Glubb by the King of Iraq when Sir John commanded the Iraq Border Constabulary during the 1930’s.

Glubb Pasha and his men had waged a long campaign against  the Ikhwan of Saudi Arabia. The Ikhwan (Brotherhood) was a collection of fanatical Saudi tribesmen imbued with the puritan desert creed of Wahabism. They saw all non-Wahabi Muslims as infidels (kufr), fair game to be robbed or killed. Even the king of Saudi Arabia failed to control the marauding Ikhwan.

Eight decades later, the Ikhwan is back, this time with heavy weapons. Instead of camels and horses, its men are riding Toyota Land Cruisers and American Humvees captured from Iraq’s puppet army. The Ikhwan in Syria and Iraq now calls itself, the Islamic State.

There is nothing Islamic about the Islamic State, or ISIS.  It is not a state. What we are seeing is the recrudescence of the fanatical Wahabi movement from Saudi Arabia combined with a bizarre  modern form of violent Arab nihilism embraced by bitter, marginalized young men from the Mideast and Europe who have too much testosterone, too little sense, and deep anger from being discriminated against in Europe. They are Europe’s forgotten underclass among whom unemployment is over 60% and drug dealing endemic.

ISIS is also pure blowback from western imperial bungling in the Mideast. The fanatical group was formed and armed in Jordan by CIA, British, French, and Turkish intelligence, and funded by Saudi Arabia.

ISIS, in Washington’s thinking,  was supposed to be composed of “moderates,” a short-lived, easily controlled force used to overthrow Syria’s government, which had been marked for death  by the western powers for refusing to turn against ally Iran.

As often in the past, the Saudis sought to use militants, in this latest case ISIS, as a tool to vent revolution  away from their borders.  The Saudis contribution to ISIS was arms, cash, and Wahabi fanaticism. Ironically, while the world recoiled in horror at ISIS beheadings, its Saudi patrons cut off the heads of 27 prisoners at the same time – with hardly any notice from the western media.

But the ISIS Frankenstein quickly  ran out of control and turned on its creators.

The next step in this disaster was to further widen the chasm between Sunni and Shia. Soon after invading Iraq in 2003, the US, in the best imperial divide and conquer policy, made an alliance with the Shia majority against the nation’s Sunni minority. The strategy of using Shia against Sunni was highly successful in keeping US control of Iraq. Washington even quietly aligned itself with Tehran over Iraq.

Shia death squads were unleashed against Sunni regions; Shia torturers used electrical drills and acid to make Sunni prisoners talk and break the anti-US resistance. The US funded and abetted this dirty war, using technique perfected in Central America’s civil wars. Israel provided much useful advice.

Turning Shia against Sunnis “stabilized” Iraq, but it intensified dangerous tensions across the Muslim world all the way east to Pakistan. The long proxy war between Saudi Arabia and Iranian intensified.

As religious hatred was being fanned, out of the bowels of the Mideast came the ferocious ISIS claiming to be waging jihad against Shia “unbelievers” and “apostates,” among them the Assad Alawite regime in Syria. ISIS became Saudi Arabia’s weapon of choice. But then ISIS turned on the US-installed regime in Iraq and routed its toy soldiers.

Throw into this witch’s brew the hatred and fury of the Arab world that has been invaded, bombed, and exploited by the western colonial powers for a century. The US has committed acts of war against at least ten Muslim nations in our era, killing untold numbers of people and imposing ruthless tyrants as overseers, all under the banner of fighting “terrorism.”

Can there be any doubt that the thirst for revenge is intense? These are the sons of the aborted “Arab Spring” that has withered and died under western and Saudi counter-revolution. They are the cousins of the 9/11 hijackers – who were mostly from Saudi Arabia.

ISIS uses the idiom of Islam, but it’s a bloodthirsty mob of enraged young men who understand little about Islam. Their stupid brutality is stirring up intense Islamophobia everywhere.

Interestingly, there is an ancient Muslim saying (hadith) that warns of the coming of dangerous men with black flags, phony geographical names and long hair.

They appear to have finally arrived. Now it’s up to the Muslim world, not outsiders, to eradicate this lethal plague of 20-something crusaders.

Paid With Your Money To Steal Your Money

Sat, 11/22/2014 - 02:01

Since 2009, Washington, D.C. officers have made more than 12,000 civil asset seizures under city and federal laws, according to records and data obtained from the city by The Washington Post through the District’s open records law. Half of the more than $5.5 million in cash seizures were for $141 or less, with more than a thousand for less than $20. D.C. police have seized more than 1,000 cars, some for minor offenses allegedly committed by the children or friends of the vehicle owners, documents show. Any excuse to simply rob the people is in full bloom.

Worse yet, cities need money desperately. They are now including civil asset forfeitures as part of their budget. In other words, police are under orders to confiscate your money for any excuse possible. This was the end phase of the Roman Empire. The army began sacking Roman cities on the pretense they stood against whoever the proclaimed to be emperor. Rome weakened itself and cannibalized its own civilization. This is what government is doing now in the USA. Where are our real representatives of the people on Congress?

Reprinted from Armstrong Economics.

Sanctions Are Immoral

Sat, 11/22/2014 - 02:01

RT says:  It’s not only politicians, business leaders in Europe consider sanctions to be harmful for the EU. RT speaks to Lew Rockwell, chairman of the Ludwig von Mises Institute in Auburn, Alabama (and founder of LRC: lewrockwell.com ) who thinks that ordinary people are hit the hardest.

Comments open on YouTube

Can You Really Live Off the Land?

Sat, 11/22/2014 - 02:01

A common plan tossed around by survivalists and preppers is this idea that in the event of martial law or some other crisis, they are going to head off to the hills, presumably for weeks or months, and just live off the land.  While this sort of plan might appeal to the pioneer and bushcraft spirit, if nothing else, the reality is that for most people, this is just planning to fail.

Basic Problems

There are a few problems with falling into what I call the Living Off the Land Fallacy.  For starters, while the DNR isn’t likely going to be enforcing fair hunting rules, you aren’t going to be the only goofball out there with a rifle or bow.  If you’ve ever gone hunting with someone brand new to it, you know just how frustrating, even dangerous, it can be.  They don’t know how to be quiet.  They want to take shots that are risky at best.  They just don’t know what the heck they are doing, right?  Now, multiply that times a thousand as there are going to be a ton of other folks, just like that, out there looking for their own dinners.

On top of that, it won’t take long before tens of thousands of house pets are going to turn feral and be competing with you for the small game.  Granted, some folks might look at that as just being an addition of potential targets for lunch.  Even so, competition is going to be fierce.  It won’t take long before even the ubiquitous squirrel is scarce.

Fishing

What about fishing?  Okay, not a bad plan but do you really think you’re going to be the only Babe Winkelman out there wetting a line?  Plus, likely as not you’re also going to have at least a small segment of the population who will sit on the sidelines and wait for someone to reel in a good sized bass, then take it from them by hook or by crook.

I grew up in an area where deer hunting is akin to religion.  The school district darn near shuts down during gun season, given how many students head up north with their parents to see about adding a trophy to the wall.  These people have been hunting for generations and know all the tricks.  Yet, for all of that, only about a third of them are successful in a given year.  Granted, that’s big game, but still, food for thought.

Read the rest of the article

Gold Repatriation Stunner

Sat, 11/22/2014 - 02:01

A week ago, we penned “The Real Reason Why Germany Halted Its Gold Repatriation From The NY Fed“, in which we got, for the first time ever, an admission by an official source, namely the bank that knowseverything that takes place in Germany – Deutsche Bank – what the real reason was for Germany’s gold repatriation halt after obtaining a meager 5 tons from the NY Fed:

… the gold community paid great attention to the decision of the German Bundesbank to “bring German gold home”. At the beginning of 2013, the Bundesbank announced it would repatriate 300 tonnes of gold stored in the US by 2020. It is well behind schedule, citing logistical difficulties. Yet diplomatic difficulties are more likely to be the chief cause of the delay, especially seeing as the Bundesbank has proven its capacity to organise large-scale gold transports. In the early 2000s, the Bundesbank incrementally repatriated 930 tonnes of German gold held by the Bank of England.

Some took offense with this, pointing out, accurately, that the gold held at the NY Fed in deposit form for foreign institutions had continued to decline into 2014 despite the alleged German halt. Well, today we know the answer: it wasn’t Germany who was secretly withdrawing gold from the NYFed contrary to what it had publicly disclosed.  

It was the Netherlands.

This is the stunning statement made by the Dutch Central Bank earlier today, and which, all compliments to China’s rate cut, is truly the biggest news of the day, as it shows that one doesn’t need a referendum to repatriate their gold, nor does one run into logistic or diplomatic problems if one is truly set on procuring their physical.

As to why the DNB decided it was time to cut its gold held at the NY Fed by 122 tons? “”It is no longer wise to keep half of our gold in one part of the world,” a DNB spokesman told Telegraaf. “Maybe it was desirable during the Cold War, but not now.”

From the source:

De Nederlandsche Bank (DNB) has adjusted its gold stock location policy and has shippedgold from the United States to the Netherlands to spread its gold stock in a more balanced way.

Under the previous policy, 11% of the gold stock was located in the Netherlands, 51% in the United States, with the remainder held in Canada (20%) and the United Kingdom (18%). Under the new policy, the breakdown by location is as follows: 31% in Amsterdam, 31% in New York, with the relative holdings in Ottawa and London remaining unchanged at 20% and 18%, respectively. Following this adjustment, DNB is in line with other central banks holding a greater part of their gold stock in their own countries. Beyond realising a more balanced distribution of the gold stock across the different locations, this may also have a positive effect on public confidence.

Changing the distribution of the gold holdings across the different locations is not without precedent. From the end of the Second World War until the early 1970s, for example, DNB increased its gold reserves following the Bretton Woods Accord, mainly in New York. Since then, there have been other movements in DNB’s gold stock. The main reasons for this being the gold sales in the past few decades and the closure of the vaults of the Reserve Bank of Australia, as a result of which DNB shipped gold from Australia to the United Kingdom in 2000.

Sure enough, AP confirmed:

The Dutch Central Bank says it has recently shipped 122.5 tons of gold worth around 4 billion euros ($5 billion) from safekeeping in New York back to its headquarters in Amsterdam.

In a statement Friday morning the bank said that its 612.5-ton national gold reserve is now divided 31 percent in Amsterdam, 31 percent in New York, 20 percent in Ottawa, Canada and 18 percent in London.

“With this adjustment the Dutch Central Bank joins other banks that are keeping a larger share of their gold supply in their own country,” the bank said in a statement. “In addition to a more balanced division of the gold reserves...this may also contribute to a positive confidence effect with the public.”

This is how the Old and New gold allocation of the Dutch Central Bank look currently:

Note: the reallocation has already taken place, and is not – like Germany – subject to a 5 year period during which the NY Fed is expected to recoup the gold. So it can be done!?

As to when it was done, here is the NY Fed’s monthly reports of gold deposits by foreign entities: here we can see that while the 5 tons outflow in 2013 was most likely Germany, the recent surge in gold repatriation from Liberty 33 was the Netherlands. That said, only 57.5 tons of NY deposits gold has been officially repatriated through September, which means the October update, when it comes out, will be a doozy.

Some more details from the Dutch Telegraaf, google-translated:

In the vaults at the Amsterdam Frederiksplein was until recently 11% percent of the total of 612 tons of government gold. That is screwed up to 31%.

For years there were major concerns of the gold was still there. This months of almost military organized gold shipments from Manhattan DNB wants a ‘balanced’ distribution of the national gold buffer.

In addition, DNB expects Dutch citizens more confident that enough of our gold is in their own ‘home’ to guide the country if necessary following major crises.

At that effect also highlights the German Bundesbank, which are gold also partially recovered. De Nederlandsche Bank has great silence in recent months retrieved 130 tons of gold bars.

Last week drove armored trucks back and forth towards the Amsterdam Frederiksplein. “It is no longer wise to keep half of our gold in one part of the world,” the DNB spokesman on the massive operation with gold bars to Amsterdam says. “Maybe that was during the Cold War still desirable, not now. ”

In Amsterdam is recently 31% of the gold. In the vaults of New York is 31%. It remains. De Nederlandsche Bank carries no gold bars back from the protected storage in Ottawa, Canada, where 20% of the gold remains. In London, the Netherlands keeps 18% of all Dutch ‘sandwiches’ gold as nest egg.

Netherlands moved his gold in the past frequently. In the period after the Second World War until the early seventies the Dutch central bank bought gold to replenish its reserves. That was mainly focused on the vaults in New York, which are built to earthquakes and bomb attacks endured. Since then bought and sold DNB gold and earned it every robustly.

Another curiosity: the gold was repatriated by ship. From Dutch News:

In total, 120 tonnes of gold valued at €4bn has been brought back to the Netherlands by ship, Nos television said. The high security reparations for the move took months.

Luckily, that particular vessel did not suffer any “boating incidents.”

And now that the Dutch have shown just how “easy” it is to repatriate one’s gold when not entangled in shifting alliances, diplomatic feuds, or suffering from “logistical problems” preventing one from collecting their gold, we wonder just how much more eager Germany or Switzerland will be to collect their own gold, or whether the Swiss November 30 referendum will decide to let countries like the Netherlands have a right of first refusal of whatever gold may still be held at the vault located 90 feet below street level at the New York Federal Reserve Bank (which as we reported a year ago, is connected by an underground tunnel to the JPMorgan precious metal which was located just across the street).

Reprinted with permission from ZeroHedge.

The Perverse Ingenuity of the Police State

Sat, 11/22/2014 - 02:01

Sweeney Gillette, a very successful cattle trader from Ontario, Oregon, had barely finished a pleasant chat with his ex-wife when his phone rang. In an agitated voice, Gillette’s attorney reported that he had just been contacted by a Malheur County deputy District Attorney who accused the rancher of “unlawfully interfering with a witness” – namely, his ex-wife.

Since the attorney called literally seconds after Gillette had hung up, the call from the deputy DA must have come in the middle of the conversation with his ex-wife, who later insisted that she hadn’t told anyone about the phone call.

Both Sweeney and his former wife were under surveillance by the Malheur County Sheriff’s Office, most likely through a “trap and trace” system. This form of electronic eavesdropping records what the NSA calls “metadata” – the telephone numbers and Internet addresses of people who communicate with the subject of a warrant.

Sweeney’s ex-wife was not the focus of an investigation, nor was she a witness. Her ex-husband, however, had been targeted by the Malheur County Sheriff’s Office for a campaign of harassment and defamation that would eventually destroy his business and drive his family out of the state.

Although he was never charged with a crime, Gillette suffered millions of dollars in losses – and the lawsuit he has filed against Malheur County may eventually require tax victims residing therein to pay millions of dollars to indemnify the department’s misconduct.

Multi-state campaign of harassment

In April 2011, Gillette owned 3,500 cattle, 130 acres of land, and a feedlot. The business Gillette had built from the ground up after dropping out of school at age 14 was thriving: In the previous year, he had traded more than seven million dollars’ worth of cattle. He had loyal customers throughout the Intermountain West, and a $2 million line of credit. The family was well-regarded in their community, and the business was well-respected within a cliquish and gossip-prone industry.

This happy state of affairs changed abruptly after Sweeney Gillette was contacted by a federal investigator named Kirk Miller, who claimed that there were paperwork irregularities regarding a herd of 600 cattle the family was running on leased ranch in Nevada called Soldier Meadows. Sweeney was given notice that his BLM grazing permit had been canceled, and that he had thirty days to assemble the necessary paperwork, and have the cattle inspected and identified by the appropriate authorities.

Sweeney’s wife Kendra, who took care of bookkeeping for the cattle company, was able to document that the paperwork was in order. Sweeney and Kendra flew to Reno, and drove out to the ranch to show Miller their cattle and the necessary documents. The permit was reinstated – at the cost of $6,000 and the diversion of four days from their very busy schedule.

Within a few weeks, the couple began to hear rumors that their business remained under investigation by the Malheur County Sheriff’s Office.

“At first, we just kind of laughed about it,” Kendra later recalled. “We even joked that the deputies wouldn’t have much fun following us around. We are pretty boring.”

Like too many people in similar circumstances, the Gillettes severely underestimated the perverse ingenuity that police and prosecutors display in finding ways to turn innocent people into criminal suspects. They also made the mistake of believing that the MCSO would be content merely to investigate their business, rather than setting out to destroy it by ruining their reputation and intimidating their customers.

“That summer we started getting phone calls from our customers telling us that an Idaho brand inspector and a Malheur County deputy were asking about Sweeney, wanting to look at cows we sold them and our paperwork,” Kendra relates. “Our regular customers were not returning to buy our cows.” One of the lost accounts was worth $500,000.

Within a few weeks, MCSO deputies began following trucks carrying Gillette’s cattle, often stopping and inspecting them for hours in the sweltering heat. Not surprisingly, this led to the death of some of the livestock. Other deputies – including Robert Speelman, who headed the “investigation” – fanned out to harass customers and business partners in Washington, California, Nevada, Wyoming, and Arizona. Without cause or explanation, deputies would trail cattle trucks to kill plants, where they insisted that it would be necessary to shave and “re-inspect” the stock purchased from Gillette.

Although the family was able to find new customers for their cattle, the damage inflicted to their reputation was quickly killing their business.

“We started losing money,” Kendra points out. “The kill plants started quoting us lower prices so they didn’t have the hassle of the Sheriff and Brand Department.”

Covert surveillance, overt intimidation

Operating on the pretense that the Sheriff’s Office was dealing with a multi-state “racketeering” operation, Sgt. Speelman obtained a warrant in June 2011 to conduct secret video surveillance of Gillette’s feedlot in Ontario. A few months later he obtained a warrant to conduct “trash pulls” at the homes of the Gillettes and Ric Hoyt – Kendra’s father, who operates a cattle shipping business — in search of incriminating documents. This involved recruiting personnel from the Idaho Power Company and the Ontario Sanitation Service to help spy on their customers.

Through the use of such Gestapo-style tactics the deputies were able to produce irrefutable evidence that Gillette and his father-in-law Ric Hoyt were lawfully engaged in the practice of selling and transporting cattle to willing buyers on terms agreeable to both parties. But the musk of insinuation emitted by the deputies clung tenaciously to the family, poisoning their business relationships and destroying their standing among neighbors and friends.

In the absence of evidence that Gillette and Hoyt had done anything illegal, the MCSO escalated from defamation to undisguised intimidation. Investigators hired by the family would later discover that Sgt. Speelman and his comrades systematically contacted the Gillette family’s friends, relatives, and business associates, telling them that criminal charges against Sweeney were pending. Dr. Robert Derby, a veterinarian from nearby Nyssa, Oregon who had worked with the Gillette family, was confronted by deputies who demanded that he “cooperate” with the investigation, or face charges as a “co-conspirator.”

According to a lawsuit subsequently filed by the family, the MCSO “witch hunt” did not spare suspected heretics within the department. Among them, allegedly, was former MSCO deputy and livestock investigator Chance Stringer.

“At every meeting with law enforcement [Stringer] would hear [Sgt.] Speelman and others focus on Sweeney Gillette and how they were going to `nail him,’” asserts the lawsuit. “When Deputy Stringer spoke up on behalf of Gillette, attempting to explain why they were wrong, and that Sweeney Gillette was running a legitimate operation, he was threatened with criminal prosecution and accusations that he was part of Gillette’s criminal conspiracy.”

Perhaps not surprisingly, Stringer quit the Malheur County Sheriff’s Office and started a business on the Idaho side of the Snake River. Stringer, who is not a defendant in the lawsuit, declined to comment about the matter beyond saying that the whole affair was “behind him” and that he wants “nothing to do” with the continuing controversy.

By the winter of 2011, “rumors and gossip were running wild and our `friends’ in the community started avoiding us,” Kendra laments. “We heard the words `cattle thief’ constantly.”

Frantic to save their business and recover from the unwarranted attack on their character, Sweeney and Kendra reached out to the local media, their congressional representatives, the US Department of Agriculture, and the Oregon Cattlemen’s Association (in a spasm of misplaced confidence, they eventually contacted the FBI) — only to be ignored by public officials and shunned by their peers.

During the December 2011 Oregon Cattlemen’s Convention, Sweeney and Kendra – who were puzzled by the cold, hostile reception that greeted them — received a phone call from a customer in Wyoming informing them of a visit from MCSO Deputy Travis Johnson (who is now undersheriff) and an Idaho brand inspector named Lynn Gibson, who shaved and inspected cattle that had been purchased from the Gillettes two years earlier. No irregularities were discovered but the visit had the intended effect: The customer, who had bought more than $200,000 worth of cattle, never did business with the couple again.

In February of the following year, the Gillettes shipped cattle to a JBS kill plant in Arizona. The shipment was trailed by two MCSO deputies, who “re-inspected” the shipment and informed the plant owners that Gillette was a suspected “cattle thief.” As a result, the JBS accounting department contacted their bank and stopped payment on a $126,000 check.

The Gillettes did eventually receive their payment – but by this point it had become clear that they would have to leave Malheur County in order to make a living. They hired an attorney and a private investigator, made arrangements to sell their home and feedlot, and prepared to file a lawsuit against the MCSO.

Although Sweeney’s reputation had been unjustly destroyed in the Intermountain West, he was able to find a job buying butcher cows in Northeast Oklahoma. He and Kendra flew to Tusla in June 2012 to look for a house. Returning to Oregon, they set about wrapping up their business and family affairs, which meant selling their home and feedlot, working with an attorney to compose a tort claim against the MCSO, and preparing for the wedding of Kendra’s daughter, Blair.

Retaliatory strike

The Gillettes filed their notice of tort claim against Malheur County on August 1, 2012. On September 26, while Sweeney was in Oklahoma buying cattle, the MCSO dispatched 17 deputies to raid the Gillette family’s home. A separate raid was carried out against Ric Hoyt’s home.

Speelman’s affidavit in support of the search warrant is morbidly obese, yet severely malnourished in terms of actual evidence. In addition to being littered with errors of spelling and grammar, the 79-page document is suffused with speculation, clotted with conjecture, rancid with rumor, and larded with leaps of logic. At one point in the bloated harangue, Speelman relies on paraphrased double hearsay in accusing Sweeney of fraud and claiming that he had made self-incriminating statements.

Any conscientious judge would have examined Speelman’s affidavit carefully, and rejected it quickly. It was Speelman’s tremendous good fortune that his affidavit was presented to District Judge Patricia Sullivan, a jurist who has never been inhibited by principle. Sullivan signed the document on the day of the raid, most likely without bothering to read it.

“I went to the door and was greeted by two sheriff’s deputies,” Kendra relates. “The next thing I knew 17 deputies were in my home. I asked my son Casey and his wife to leave. He reluctantly did, but only after they searched my car.”

Frightened to the depths of her being, Kendra called her husband and her attorney. While she was on the phone, Kendra was informed that she would have to submit to a pat-down search “for your safety and ours.”

“Something inside me just snapped,” she recounts. Not in the mood to be treated like a criminal, she informed the intruders in no uncertain terms that “Nobody is going to lay a hand on me – period!”

Composing herself, she walked out her front door “and looked at all the law enforcement in my home. Not one person would look me in the eye.”

She collected her three-year-old son and went to pick up her daughter from school. In the car, Kendra says, she offered a prayer “asking my Heavenly Father to protect my family and forgive my enemies.”

A few hours later, she “went home to devastation. They had gone through every room, drawer, and closet, and left a huge mess. My office was gone – all my drawers from my desk, my computer, fax machine, back-up discs, message books, file cabinets, cork boards, etc. were gone. My cellphone was gone; my laptop was gone.”

The pillagers had indiscriminately confiscated her business and personal financial records, as well as her checkbooks, leaving Kendra without the means to pay bills or meet the company payroll. For all of this, the malice of the MCSO was not exhausted.

Investigators contacted the local bank where the family maintained its business account “and alleged that [Sweeney Gillette and Ric Hoyt] were being investigated for cattle theft and that the bank should protect itself because [they] would soon be arrested,” summarizes the lawsuit. This led the bank to foreclose on the Gillette family’s business loan – which was not in default – and seize their cattle.

The seized property and records – which included legally protected personal medical information — were never returned. No evidence was ever found of any criminal wrongdoing by Sweeney Gillette or his father-in-law. Ironically, almost exactly one year prior to the raid, Kendra Gillette had published a letter in the local newspaper, the Argus Observer, urging the use of modernized cattle tracing technology for the purpose of preventing cattle theft – a peculiar, if not inexplicable, gesture for someone who supposedly profited from that criminal practice. As a result of the concerted campaign of official harassment, the Gillette family’s estimated financial losses amounted to more than $6 million; the damages inflicted on Ric Hoyt account for another $300,000.

Sweeney had practically no money to his name when he began his business as a teenager. He was in similar straits after relocating his family to Vinita, Oklahoma, where he rebuilt his business just as the price of beef headed skyward. Hoyt’s trucking company, however, was put into stasis for two years because of the merit-less “racketeering” investigation.

“People have been asking me, `What are you doing now? Are you keeping busy?’” Hoyt remarked when I contacted him in early November. “I tell them that for the last year or more all I’ve been able to do is write checks to lawyers.”

Sgt. Speelman and his colleagues didn’t uncover a cattle theft ring, but they succeeded in shutting down a business that provided jobs in an economically depressed county at a time when unemployment was spiking. They also managed to rack up untold thousands of dollars overtime and travel expenses through road trips to destinations throughout the western U.S.

How and why did Sweeney Gillette and Ric Hoyt come under the MCSO’s scrutiny? Matthew Mankee, a Portland-based inspector with the US Department of Agriculture who participated in the investigation, told me that some MCSO deputies were involved in a “task force” to investigate cattle theft. When I asked if the task force had received federal funds, Mankee declined to discuss the matter in detail, insisting that he couldn’t “comment on ongoing cases.”

Although the source of funding for the task force remains elusive, it appears to have been provided through a shell company called the Oregon Livestock and Rural Crime Investigators Association. The now-defunct company, which identified Sgt. Speelman as “president,” had reported annual revenues of $86,000, and listed its business address as 151 B St. in Vale, Oregon – the location of the Malheur County Sheriff’s Office. Apart from Speelman, the company had one other employee, Deputy Robert Wroten, who is also a member of the Malheur County Rodeo Board (about which more will be said anon).

An organization of the same name appears to have been founded more than a quarter-century ago, and spent most of its time educating sheriffs about livestock law and related issues. However, the company involved in the Sweeney Gillette investigation wasn’t created until 2010 – and it was quietly disbanded just a couple of years later, at about the same time the Gillettes started discussing a lawsuit against the county.

Cattle rustling remains a problem in Oregon, albeit one that is difficult to quantify. As is the case with all varieties of property crime, law enforcement’s chief contribution where cattle theft is concerned is to offer an expensive demonstration of its uselessness. Seeking some way to justify its subsidized existence but lacking the skills to identify actual cattle thieves, the task force devoted its attention on Gillette’s very successful cattle business, and his father-in-law’s cattle-shipping company – neither of which was proven to have committed an offense more serious than the occasional, quickly-corrected paperwork error.

What role was played by Malheur County Sheriff Brian Wolfe as his deputies committed what Sweeney’s lawsuit reasonably describes as “a litany of conspiratorial activities” at the expense of the Gillette and Hoyt families? According to the suit, on November 29, 2011 – nearly a year before the armed raid on the Gillette and Hoyt homes – Sheriff Wolfe called Sweeney Gillette to “apologize” for the methods used in the investigation, “claiming a sergeant and another deputy `made him do it.’”

It’s not clear how subordinates who serve at the pleasure of an elected sheriff could “make” him violate the rights of innocent constituents and drive their business into oblivion – then prolong the pretense of an impending prosecution for years in order to exhaust the financial resources the victims would need in order to pursue redress.

“Malheur County has a history of condoning and ratifying police misconduct,” contends Sweeney Gillette’s lawsuit, which provides abundant evidence in support of that claim.

Litigation “time bomb”

Earlier this year, Malheur County settled a civil rights lawsuit filed by Steve Hindi, founder of an animal rights organization called Showing Animals Respect and Kindness (SHARK). Hindi was subjected to an illegal traffic stop by Malheur County deputies during the 2013 Big Loop Rodeo in Jordan Valley – an event in which the Sheriff’s Office had a financial interest. This happened after SHARK volunteer Adam Fahnestock was assaulted and arrested by MCSO deputies while he was attempting to video-record evidence of “horse tripping” – a practice that has subsequently been made illegal.

Hindi was able to obtain the dashcam recordings of the stop, in which the one of the deputies candidly admitted that the unwarranted stop was made because of pressure from the “Rodeo Board” and expressed concern that “we’re going to get sued” – before exclaiming: “Dammit, I was still recording!”

It cost Malheur County $12,500 to settle Hindi’s lawsuit. That figure is not even a tithe of what the county would have to pay in order to make Sweeney Gillette’s lawsuit disappear: Sweeney, his wife, and Ric Hoyt are seeking a total of no less than $7.3 million in damages.

Malheur County DA Dan Norris appeared to allude to the Sweeney lawsuit during a county budgetmeeting last February 12. Norris requested additional funding to pay the salary of deputy DA Michael Dugan, who prosecuted the 45th Parallel medical marijuana case (which was also fraught with official misconduct, and is pregnant with potential lawsuits as well).

At one point late in the discussion Norris enigmatically commented that “in the meantime you have some issues where attorneys in the drug case are seeking sanctions against the Sheriff’s Office and I don’t have anyone working on dealing with that issue. And it’s a time bomb ticking for the Sheriff’s Office.”

Neither Susan Gerber nor Larry Kiyuna, the defense attorneys involved in the 45th Parallel case, sought sanctions against the Sheriff’s Office, and Hindi had nothing to do with a “drug case” of any kind. However, the Gillette lawsuit has been a “time bomb” for the county since he filed the notice of tort claim in August 2012.

The MSCO’s misconduct has been so abundant that it’s unfair to blame Norris for losing track of some important details. Neither he, nor Sheriff Wolfe, nor any of their underlings will suffer personal injury when the litigation “time bomb” goes off – unless that detonation is of sufficient magnitude to wake up the somnolent tax victims of Malheur County.

Eat These 3 Delicious, Fatty Foods

Sat, 11/22/2014 - 02:01

Do you shun fatty foods because you fear eating fat will make you fat? If so, it’s time to re-evaluate your view on food with fat, as many of them are great for your health and can actually help you lose weight! In addition, many fatty foods offer a powerful boost to the brain, which is about 60% fat and needs constant replenishment to work well. Not surprisingly, each of these foods is naturally occurring and has been either very minimally processed or not processed at all.

Have a look at these 3 fatty foods that can actually help you lose weight.

1. Coconut Oil

This oil is nature’s richest source of medium-chain fatty acids that lead to weight loss. Most plant-based fats are made up of long chain  fatty acids, which are typically stored in the body as fat. On the other hand, medium chain triglycerides are transported directly to the liver to promote thermogenesis (the production of heat), which increases body metabolism and spurs weight loss.

Coconut oil is a great source of conjugated linoleic acid (CLA). Scientists at the University of Nebraska have found that mice fed a diet rich in coconut oil were more trim and fit than mice fed a diet high in soybean oil due to coconut oil’s level of CLA.

What’s more, the fatty acids in coconut oil are turned into ketones, which can supply energy for the brain. Researchers are now studying ketones as an alternative energy source for malfunctioning cells that lead to dementia and Alzheimer’s.

Extra virgin coconut oil is fully saturated oil, making it the perfect oil to use in high heat cooking and even frying. Use it for everything from popping corn to making a morning smoothie.

2. Butter

If you’ve been wondering whether to choose butter or margarine – don’t. Butter is chock-full of CLA, too, and has been shown to inhibit the body’s mechanism for storing fat. Eating butter results in the body’s utilization of fatty reserves for energy rather than for creating obesity.

The association between intake from 21 food and beverage groups and the subsequent 5-year difference in waist circumference was studied by scientists in DenmarkThey found that those who consumed butter tended to maintain or reduce their waist measurement, compared to those who did not consume butter.

CLA has been shown to inhibit lipoprotein lipase, an enzyme that breaks down fat in the blood so that fat cell uptake, or body fat accumulation, can occur. This inhibition results in reduced fat deposits. CLA also increases the breakdown of fatty acids stored in the body’s fat cells so they can then be returned to the blood stream to be used as an energy source for muscle cells, meaning simply that CLA directs the body to use fat reserves for energy.

Further, medium chain fatty acids have become a favorite energy source for many athletes who require a quick source of energy. Unlike carbohydrates which may cause a rapid increase in insulin production, resulting in weight gain and other health problems, medium chain fatty acids do not cause weight gain because of their ability to stimulate thermogenesis.

And weight loss isn’t the only benefit of butter. Butter is loaded with vitamin A, a potent signaling molecule. A recent review of studies noted that retinoid acid, a metabolite of vitamin A, modulates production of neurons and neuron survival, as well as synaptic plasticity. Vitamin A improves learning and memory, and can ameliorate the cognitive decline associated with normal aging.

Like coconut oil, butter is saturated and stable, so it can be used at high temperatures as well as eaten cold right out of the fridge.

Read the rest of the article

Operation Mongoose and the Murder of JFK

Sat, 11/22/2014 - 02:01

Every aspect of the assassination of John F Kennedy on 22 November 1963 has been pored over, scrutinized, dissected and analysed. There is a sizeable literature on the subject, ranging from the erudite to the certifiably insane. That six short seconds should have generated so much speculation is unprecedented. In this Whodunit saga, pretty much everyone has been implicated: the Mafia, the CIA,  the FBI, the military-industrial complex, Lyndon B Johnson, Fidel Castro, the KGB… An objective purchase on the event, lost in the mists of time, appears to be unrecoverable. Instead, we are left with a matrix of subjectivity and perspective. The JFK assassination has become the ultimate postmodern riddle.

The Warren Commission kicked off this process when it published its 26 volumes. Publicly, Bobby Kennedy did not question the lone assassin theory, but privately he shared his doubts with confidantes. It has always been puzzling why, as Attorney-General, he did not go to greater lengths to investigate the murder of his brother. On the afternoon of the assassination, he called up a prominent anti-Castro Cuban leader and, his voice not betraying any emotion, coolly told him, ‘One of your guys did it.’ It is likely Bobby Kennedy realized he was up against powerful forces and the reputation of the Kennedys was at stake. He may even have later resolved that running for the Presidency might be the only way the truth would be disclosed.

This period of US history proved to be toxic, with a poisonous legacy that is still felt today. The assassinations of Robert Kennedy, Martin Luther King Jr and Malcolm X followed. Race riots and the Vietnam War would lead to such civil unrest and turmoil that political leaders accelerated the passing of civil rights legislation and wound down the war. The era culminated in Watergate. The Church Committee, named after Senator Frank Church, would eventually be set up in order to investigate the actions of intelligence agencies and how events had spiralled so out of control. The revelations that followed of the FBI’s mass surveillance and wiretapping programme CountelPro and the CIA’s Executive Action programme (code-named ZR/RIFLE) were incendiary. The latter was the CIA’s assassination apparatus, which employed a strategy of plausible deniability in order that the executive could disavow responsibility in the event of exposure. It was directed against various foreign leaders. The Church Committee not only meticulously details the CIA’s failed plots on Castro’s life but also documents the involvement of the CIA with the Mafia in this common aim. The US public would never see their government institutions in the same way again. Faith in government began to crumble the moment those shots rang out in Dealey Plaza.

Malcolm X was probably closer to the mark than he realized when he commented on the assassination that ‘the chickens had come home to roost’. He was referring to the climate of hate in the US at the time. Actually, it is Kennedy policy in Cuba which is most pertinent. Kennedy inherited the Cuban Project from the Eisenhower-Nixon administration. The young and inexperienced President only agreed reluctantly, at the last minute, to go ahead with the Bay of Pigs fiasco, which ended in the failed coup to overthrow Castro. Publicly, Kennedy accepted responsibility but privately blamed the CIA for misleading him. The CIA conversely blamed JFK for withholding air cover critical to the success of the operation.

Many of the same CIA operatives – among them David Attlee Phillips, E Howard Hunt and David Sanchez Morales – had successfully instituted regime change elsewhere. The trio were all veterans of the Guatemala campaign of 1954. This saw a CIA-backed operation remove the democratically elected leftist leader Jacobo Árbenz, leading to 40 years of brutal military dictatorship and the estimated deaths of 200,000 Guatemalans. Similarly, in Iran, Mohammad Mosaddegh was overthrown with the aid of US and British intelligence after he had nationalized Iranian oil.

As the dust settled on the Bay of Pigs, JFK set out to make sure the CIA never embarrassed him again by returning it to its original remit of intelligence-gathering rather than covert operations. Kennedy had vowed to splinter the CIA into a thousand pieces and he was now making good on this promise. In the shake-up which ensued, JFK fired Allen Dulles, the director of the CIA, Charles Cabell, deputy director, and Richard Bissell. Intriguingly, Cabell’s brother Earle was mayor of Dallas at the time of the assassination.

Operation Mongoose emerged out of the ashes of the Bay of Pigs. This was the redesigned Cuban operation, which was officially under Edward Lansdale but really under the helm of Bobby Kennedy. It eventually grew into a monster under the guise of which thousands of Cuban exiles were recruited and trained up at US bases. Cuban exiles and CIA personnel worked alongside each other day and night to topple Castro.

The Eisenhower-Kennedy strategy in Cuba centred on fomenting internal and external strife through anti-Castro groups, subverting and undermining the regime through acts of terrorism, industrial sabotage and the works. A pipeline of arms and gun-running ran from Dallas, Texas, through New Orleans – at the time a hive of intelligence activity – down to the JM/WAVE CIA station based on the campus of Miami University. JM/WAVE was run by the psychotic and alcoholic William ‘Bill’ Harvey and employed hundreds of CIA staffers. It used Zenith Technical Enterprises as a front company to disguise covert ops. In Texas, the Zapata Oil company was another CIA front company co-owned by one George Herbert Walker Bush.

Secretary of State Dean Rusk would later comment: ‘The Kennedys were playing with fire.’ The Kennedys may have fallen out with the CIA over Cuba, but this was more a question of methodology than ideology. For both parties, the ultimate prize remained the overthrow of the Castro regime. Of course, the Bay of Pigs earned JFK the enmity of the affiliated hardcore exiles and CIA operatives. During the missile crisis, JFK refused to invade Cuba. The secret deal negotiated with Khrushchev pledged that the US would not invade again, in exchange for the removal of Soviet missiles.

However, as Richard Helms, Director of the CIA from 1966-73, later testified at the Church Committee, the Kennedy brothers were very aggressive in their pursuit of Castro. Post the missile crisis, in spite of the Khrushchev deal, JFK authorized multiple CIA ops against Cuba in 1963. True, Operation Mongoose had been disbanded and they ordered the FBI to clamp down on the more extreme groups such as Alpha 66. However, the Kennedys were merely transferring the Cuban project under their aegis. Remarkably, in the autumn of 1963 when JFK had begun exploring secret talks with Castro, Desmond Fitzgerald – a Kennedy confidante put in charge of operations in 1963 – was meeting up with AM/LASH (the cryptonym given by the CIA to the senior Cuban official, thought to be Rolando Cubela), whom it had recruited to kill Castro. It is likely that the more extreme CIA-Cuban exile elements misinterpreted JFK’s ambivalent Cuba policy as betrayal of their cause.

The OKC Bombing Cover-Up

Sat, 11/22/2014 - 02:01

John R. Schindler, a former professor of national security affairs at the U.S. Naval War College, where he taught courses on security, strategy, intelligence, terrorism, and military history, before joining the NWC faculty, spent nearly a decade with the super-secret National Security Agency as an intelligence analyst and counterintelligence officer.

He reports:

After 9/11, as a National Security Agency counterintelligence officer, I was involved in an Intelligence Community re-look at recent acts of terrorism, searching for possible links to foreigners. Oklahoma City was one of these. I quickly discovered, as Rohrabacher’s investigators did a few years later, that the FBI and DoJ had no interest in anyone peeking into the case, which they considered closed, indeed tightly shut. Even in Top Secret channels, avenues were blocked.

In a blog post he highlights the possible role of  Andreas Strassmeir:

The most troubling angle is the role of Andreas Strassmeir, a German national who had lived at Elohim City, on-and-off, beginning in 1992. He had come to America in 1989, as an ardent fan of Civil War reenacting — as a Confederate, naturally. He became close with McVeigh, the two having met at a gun show in the spring of 1993, and the latter spoke warmly of “Andy the German,” whom he phoned at Elohim City, where “Andy” was head of security, several times. Strassmeir is by any accounts an odd character. The son of a politically well connected family in Germany, Strassmair served in the German military as a junior officer, including in some intelligence capacity, before becoming immersed in far-right politics. In a pattern seldom encountered in extreme right circles, in Germany or America, Strassmeir was an ardent Zionist who spoke fluent Hebrew and, he admitted, had lived on a kibbutz in Israel.

Although Strassmeir’s connection to McVeigh was known to Federal investigators, the FBI showed a bizarre lack of interest in him or his possible ties to terrorism. As Rohrabacher’s report notes:

For nearly a year after the bombing, the FBI did not interview Strassmeir. Only when he had fled the country was he queried briefly on the phone by the FBI. The agents apparently accepted his denial of any relationship with McVeigh, and there is no evidence of any further investigation into this possible link…

Strassmeir — who seems to be the key to much of the remaining mystery surrounding OKBOMB — appeared to be an intelligence source, and possible agent provocateur, for as many as three different intelligence services, all of which are known to watch neo-Nazi activities in the United States with interest.

The investigation will have to remain there, unsatisfactorily, until somebody decides to resume it. The twentieth anniversary of the Oklahoma City atrocity will soon be upon us. It would be good if a serious re-look at OKBOMB’s many unanswered questions were established for the event. With every passing year, the chances of clearing up the case grow more difficult; eventually it will be impossible. The public deserves to know the full story of this terrible crime.

Reprinted with permission from Target Liberty.

Sell, Sell, Sell

Sat, 11/22/2014 - 02:01

The global financial system has come unglued. Everywhere the real world evidence points to cooling growth, faltering investment, slowing trade, vast excess industrial capacity, peak private debt, public fiscal exhaustion, currency wars, intensified politico-military conflict and an unprecedented disconnect between debt-saturated real economies and irrationally exuberant financial markets.

Yet overnight two central banks promised what amounts to more monetary heroin and, presto, the S&P 500 index jerked up to 2070. That is, the robo-traders inflated the PE multiple for S&P’s basket of US-based global companies to a nose bleed 20X their reported LTM earnings.

And those earnings surely embody a high water mark in a world where Japan is going down for the count, China’s house of cards is truly collapsing, Europe is plunging into a triple dip and Wall Street’s spurious claim that 3% “escape velocity” has finally arrived in the US is soon to be discredited for the 5th year running. So it goes without saying that if “price discovery” actually existed in the Wall Street casino, the capitalization rate on these blatantly engineered earnings (i.e. inflated EPS owing to massive buybacks) would be decidedly less exuberant.

In truth, nothing has changed about the precarious state of the world since yesterday. Except….. except the Great Bloviator at the ECB made another fatuous and undeliverable promise—- this time that he would do whatever he “must to raise inflation and inflation expectations as fast as possible”; and, at nearly the same hour, the desperate comrades in Beijing administered another sharp poke in the eye to China’s savers by lowering the deposit rate to by 25 bps to 2.75%.

Let’s see. Can it possibly be true that European growth is faltering because it does not have enough inflation? Or that China’s fantastic borrowing and building boom is cooling rapidly because the People Bank of China (PBOC) has been too stingy?

The answer is not on your life, of course.  So why would stocks soar based on two overnight announcements that can not possibly alleviate Europe’s slide into recession or the collapse of China’s out-of-control investment and construction bubble?

It can’t be a case of debatable data. Europe’s real GDP is no higher today than it was in the third quarter of 2006. Self-evidently, the temporary slowdown in consumer inflation during recent months owing to plunging oil prices and the transient impact of exchange rates cannot explain this long-standing trend of going nowhere.

Indeed, during this same period, Europe’s CPI is has risen by nearly 20%. Where is it written or proven that an average of 2% annual inflation causes economic growth to grind to a halt? There is not a shred of evidence for that proposition—so Draghi’s pledge to restore 2%/year shrinkage in the value of the wages and bank accounts of European households cannot mean more growth, more profits and more S&P market cap.

In fact, the whole clamor about “deflation” and Draghi’s overnight pledge to do whatever it takes to get inflation rising quickly has to do with a transient blip in the price index during the last 12-18 months. But this the first time that a shift in the global commodity cycle and the euro exchange rate has caused a temporary dip in short-run consumer price trends? The historic data indicate a resounding no.

In fact,the only manner in which weakening inflation could possibly impact short-run real GDP growth is if consumers sharply raised their savings rate, waiting for lower prices tomorrow. This is the hackneyed claim of the Keynesian money printers, of course, but where’s the evidence? After a temporary surge in Europe’s personal savings rate during the Great Depression, it has regressed to its recent historical average, and has remained on the flat line, even as inflation rates have decelerated since 2012.

No, the problem in Europe is not too little inflation in the short-run; it is staggering levels of taxes, public debt and interventionist dirigisme that represents a permanent, debilitating barrier to growth. Draghi already has driven deposit rates through the zero bound at the ECB deposit facility, and now its spreading rapidly through the banking system to businesses and consumers. Precisely who will finance this soaring mountain of public debt at negative real returns when the fast money is flushed out of the ECB’s now plummeting euro?

Likewise, last night”s signal from China was a warning to take cover, not get all giddy in the casino. The People’s Printing Press of China has been on a rampage for this entire century, and has expanded its balance sheet by an incredible 9X since the year 2000. Now, even its masters of red capitalism in Beijing know this has fueled fantastic levels of over-building, over-investment and mind-boggling real estate speculation throughout the land. The fact that they have had to once again open the monetary spigot is evidence that China’s addiction to the printing press is terminal, and that a hard landing is only a matter of time.

The real trajectory in China is tracked by the canary in the iron ore pit. Like almost everything else, its iron and steel industry is massively overbuilt. It has 1.1 billion tons of capacity but in the order of 600 billion tons of sustainable demand. Stated differently, China’s excess steel capacity is greater than the combined output of the US, Japan, and the EC combined. Accordingly, when its real estate and construction bubble finally collapses, the world market will be inundated with cheap steel and every manner of goods made from it, including automobiles. During the current year alone, China will export more steel than the US industry will produce.

In short, there is a tidal wave of industrial deflation coming owing to two decades of world-wide central bank financial repression. That, in turn, will trigger a race to the bottom by central banks—a race that is already underway owing to Japan’s Hollowing Massacre of the yen. Soon the rest of East Asia—and especially China— will have to join the plunge or find their export based economies hitting the shoals.

Then will come more desperate maneuvers from the ECB, as even the German export machine falters in the face of collapsing growth in China and competitive devaluation all around the world. Stated differently, last night’s central bank announcements were the starting gun for a monetary implosion that will soon shock financial markets and real production, trade, employment and incomes on a world-wide basis.

Someone should reprogram the algos. Otherwise, one of these days they will snatch a headline which says sell, sell…..sell.

Reprinted with permission from David Stockman.

How $10,000 in a Bank in 2008

Sat, 11/22/2014 - 02:01

“That’s money in the bank” is on old expression of the surety of the value of money housed inside a banking system.  But today savers are being clobbered by less than 1% interest being offered on saved money + erosion of purchasing power due to inflation.

Charles Schwab, the investment guru, speaking out in The Wall Street Journal, bemoans the low interest rates on saved money that has affected so many retirees.  Schwab is calling for the nation’s central bank (The Federal Reserve) to raise interest rates.

While Schwab estimates that the loss of interest income is $58 billion in annual income since 2008 ($348 billion total), that figure is much higher when the real inflation rate is factored.

Schwab says there is $11 trillion in short-term accounts bearing very low interest.  Schwab doesn’t reveal all of the numbers used in his calculations, but let’s say he was factoring the difference between 5% interest versus the less-than-1% now offered, for a difference of ~4%.  On a compounded basis, that would amount to a loss of ~$2.915 trillion of interest income (mercy!) over the past 6 years.

The erosion of wealth due to inflation adds to the problem.  It is economist John Williams of ShadowStats.com who shows the real rise in inflation (cost of living) is closer to 10% rather than the central bank’s target inflation rate of ~2.2% which matches the Bureau Of Labor Standards questionable inflation numbers.  (ShadowStats.com)

While Federal Reserve chairman Ben Bernanke said the economy was recovering, his bank was masterminding the robbery of trillions of dollars from American savers while bragging the Fed was keeping interest rates low that (a) created a false bubble in the real estate market; but (b) managed to keep interest on the national debt low ($400 billion on $17 trillion).

As an aside, if the Federal Reserve raises base interest rates to 5.0% on the national debt rather than the 2.3% interest rate on that borrowed money today then annual interest on the national debt would rise from $400 billion to ~$850 billion and virtually throw the nation into insolvency.

So the Federal Reserve is stuck between a rock and a hard place.  If the Fed comes to the rescue of savers it demolishes the ability of the Federal government to meet its obligations to make interest payments on its $17 of accumulate debt.

The nation generates ~$2.4 trillion tax revenues and $850 billion in interest payments would mean the country would be paying 35.4% of its revenues just in interest payments on the national debt.

But getting back to our calculations of lost income of American savers, it is John Williams at ShadowStats.com who calls attention to the chicanery of the Federal Reserve that uses sleight of hand to calculate the rate of inflation.  If inflation were calculated the way it was done in 1980 then the real rate of inflation is closer to 10% (~9.6% according to Williams.  (ShadowStats.com)

So savers not only lost income from interest payments but their money also lost purchasing power.

Schwab’s estimated $58 billion of money that savers were deprived of represents less than a 1% loss of income per year on $11 trillion (about 0.0052% or one half of 1%).  So let’s calculate that savers not only lost interest income but purchasing power as well.

Savers in the period 2008-2013 have been losing ~4% on the + side due to low yield interest rate accounts and ~9% on the – side due to inflation.

So $10,000 in the bank @5% extra interest/year X 6 years would grow that money to $12,653 over that time.  (CalculatorSoup.com) But your $10,000 of savings grew by less than 1% (let’s just round off and call it 1%), so it only grew to $10,615 over that six-year time period, for a difference of $2038 of lost income.

Additionally, the purchasing power of your banked money lost ~9% annually lost ~$5393 in purchasing power over that time. (ShadowStats.com inflation calculator)  Goods and services that cost $10,000 in 2008 amounted to $15,593 in 2013.

Your $10,000 of saved money in 2008 would have lost $2038 in income due to low yield interest rates and $5393 in purchasing power over that six-year time period.  That is a total loss of over $7000 from a starting point of $10,000.

For every $1 trillion in the bank, US savers lost $153.9 billion/year X 6 years = -$923.4 billion X 11 ($11 trillion in US bank accounts) = $5,540,000,000,000 or $5.54 trillion in purchasing power!  Additionally savers lost $1.590 trillion in low yield interest accounts.  Folks, American savers have been fleeced!  Ten thousand dollars of banked money in 2008 could have risen to $12,653 at 4% interest income but lost over half of its purchasing power over that 6-year period of time vaporized to less than $3000 by the year 2013.

The Federal Reserve chose to rob from savers to bail out the Wall Street investment class.

Another $6 trillion was lost by American homeowners over this same time period. (CNNMoney.com June 2011)

Good God, Americans have incurred unprecedented erosion in the value of their savings over this time period.

All the while, the news media, being minions for the banking class, chide Americans to save more money. (CBSNews.com) (What, and lose their shirt?)

Meanwhile, over the past decade, American wages have stagnated.  (TheEconomist.com Sept 6, 2014)

Some economists argue that the income of Americans has risen significantly when you figure for increased health benefits, vacation pay, etc.  (CNBC.com Jan 29, 2014)

But these economists use the government’s phony inflation numbers and not every American works for a company that offers these benefits, certainly not the self-employed. Because health insurance is partially paid for does not mean American families can pay the rent or buy groceries.

Over half of American wage earners today make no more than $20/hour.  (MarketWatch.com  Nov 17, 2014)

Americans earning $20/hour in 1980 ($38,400/year) would need to make $58/hour today ($111,360) to make up for inflation (US Inflation Calculator) Less than 5% of American workers make that much money per hour today.

And you wonder why the Presidential candidate Ron Paul campaigned to “end the Fed?”

Top 5 Survival Knives

Fri, 11/21/2014 - 02:01

Idaho --(Ammoland.com)- I’m not a survivalist per sae. I mean I’ve lived this long and survived but I don’t live off the land for months at a time and sneak in at night and slit the throats of my commie enemies.

But still, it doesn’t take much imagination to be able to envision what you expect in a survival knife.

Since you’ll be doing things that you probably shouldn’t with a knife you’ll want a stout bladed knife. When I say a stout knife you’ll want at least a 1 ½-inch wide blade and fairly thick so it doesn’t snap in half and constructed of hard steel.

You’ll also want to make sure that it has a good handle that is easy to grip. If you’re in a panic situation you don’t want to whip out your knife to cut yourself or your raft loose and due to a slippery handle it squirts out of your hand into the river. You want a firm grip.

One of my buddies had two moose in a raft he was pulling behind the raft that he was in as he floated out on a river in Alaska. He rounded a corner and ran into a brush pile. He had to hurry and cut himself free from the tow raft in order to save their lives.

Everyone has a different sized hand so make sure it fits your hand well before you buy it. What works well for me may not work for you.

You may also end up cutting brush to build a shelter with this knife so you’ll want it to be a little heavier than your everyday hunting knife. A heavier 8-10-inch blade would work well for this task. It may also be called upon to be strapped to a staff and used as a spear for killing hogs or fishing, another reason for it to be stoutly made.

Over the years I’ve grown fond of the hard plastic scabbards on my survival knives. They allow your knife to be readily accessible and yet they still hold it firmly in place until you need it. You can also strap them to your pack for easy access.

Many survival knives will have a compass as well as a sharpening stone on the side of the scabbard. Browning makes a cool one that the handle can be removed with a coin to reveal some basic survival gear.

In the old days no survival knives had a serrated blade, in fact, I don’t even remember ever seeing an outdoor type knife with a serrated edge until the last 10-15 years. Now they are really popular. So with that said it might not hurt to have 1 ¼-inch serration if so desired.

So with the above said, here are my Top Five Knives (in no particular order) that I would feel comfortable carrying in survival type situations:

DIAMOND BLADE Meridian Knife: ( tiny.cc/boblpx ) . This knife won the 2013 “Best of the Best” Knife Category Award with Field & Stream Magazine.

“ultramodern technology creates blades with strength and edge-holding ability that is certainly unsurpassed, and probably unequaled…not hype, it is for real.” – Field & Stream Magazine, award selection committee.

Says Diamond Blade :” Each knife is given special attention giving you a product as close to custom as possible and ensuring you receive the finest cutting edge in the world.”


DIAMOND BLADE Meridian Knife

PUMA (SGB) XP FOREVER KNIFE: ( tiny.cc/y0blpx )  It also has a fire starter with it. PUMA XP Forever Fixed Blade Knife. 4 3/4″ clip-point 440 stainless steel blade; Co-molded, contoured scales; Full-tang construction. 9 1/2″l. overall, 8 ozs.


PUMA XP Forever Fixed Blade Knife: http://tiny.cc/y0blpx

Puma Knives Bigcat 12 Clip Black Fixed Blade Knife: ( http://amzn.to/1xEjeOs ) 6.7in Blade, Black G10 w/ Kydex Sheath 6612004. This is a nice heavy duty survival type of knife.

From Puma: “If you are hunting for an amazing looking , extremely reliable knife made using high end blade steels, then you’ll be impressed with the Puma Knives Bigcat 12 Fixed Blade Knife, 6.7in Bladeimage. Founded in 1769, the first rule of Puma was and still is today, first class quality which is found in their hunting, sporting and outdoor knives. For an extremely long time it has been part of the PUMA philosophy to create products worthy of the magic name and the high demand of the city of Solingen. For more than 240 years Knives from the experts at Puma are made with extraordinary quality and workmannship, and the Puma Knives Bigcat 12 Pocket Knife is the direct result of their efforts. This has been achieved through a combination of traditional craftsmannship and the use of highly technological machinery and know how. Puma Knives offer a full line up of various steel types, that have been designed to retain their edges for longer periods of time over knives made using inferior steels. For a great way to make quick work of any cutting assignment , choose the Puma Knives Bigcat 12 Fixed Blade Knife!”


Puma Knives Bigcat 12 Clip Black Fixed Blade Knife

KNIVES OF ALASKA: http://amzn.to/1BOeWH0 )  This will not necessarily fit into the one knife scenario but they have some cool kits. I own the Knives Of Alaska Super Pro Knife Pack ( http://amzn.to/1uylYcg ) with the wood saw which has a hatchet, camp knife, saw knife, caping knife and a small Muskrat skinner knife. This kit was designed to handle a moose when you drop one in an alder thicket. With the hatchet and saw you can cut down brush so you can roll the moose around to properly process it but it’d be a great survival kit as well.


Knives Of Alaska Super Pro Knife Pack: http://amzn.to/1uylYcg

Pro Tool Industries J. Wayne Fears Survival Knife with Nylon Sheath: ( http://amzn.to/14NPq5W ) This super strong full tang knife is made from powder-coated, easy-to-sharpen 1095 high carbon steel, has a man-size 4 ¾-inch non-slip ergonomically designed G-10 plastic handle, and an all-purpose 5-inch clip blade. The handle is orange in color for easy location.

The knife comes with a tough black nylon sheath, with safety insert.


Pro Tool Industries J. Wayne Fears Survival Knife with Nylon Sheath: http://amzn.to/14NPq5W

When you’re looking for your survival knife envision rough conditions and scrambling to stay alive.

You don’t want some dainty thin bladed knife. Choose wisely or the guy who finds your body will laugh when he sees the little letter opening looking knife clenched in your dead fingers.

Reprinted with permission from AmmoLand.

Perpetual Lies About Freedom and Democracy

Fri, 11/21/2014 - 02:01

When U.S. governments take Americans into war, we hear them justify it as a fight for freedom. Often they rationalize it as an anti-tyranny fight, a pro-peace fight and a pro-democracy fight.

Freedom appeals to Americans. It is a core American value, even if it’s not honored in practice here at home.

When politicians use freedom to justify war, they are making an emotional, not a reasoned, appeal. Why? It’s because freedom, while a good thing, is never alone a sufficient reason for the government to commit Americans to a fight for freedom in some foreign land. The war may cost Americans more than they benefit, and America’s wars have. American interventions may cost foreigners more than they gain, and America’s interventions have.

To justify American interventions on grounds of reason or rational interest, the government needs to present arguments. Costs and benefits have to enter the picture. Leaders are reluctant to make such arguments for fear of exposing their war policies as lacking justification from the point of view of American welfare. When they do present their arguments, they are invariably faulty, weak, deficient, exaggerated, illogical and mistaken. They are nonsense. Leaders cannot tell Americans what their real reasons for intervention are, if indeed they themselves are aware of them.

President Truman addressed the nation several times about American intervention in South Korea, such as on July 19, 1950 and September 1, 1950. He made the case for sending American armed forces to Korea. Consequently, between 1950 and 1953, Americans lost 33,686 dead and suffered 92,134 wounded.

The July address made a domino theory argument:

“This attack has made it clear, beyond all doubt, that the international Communist movement is willing to use armed invasion to conquer independent nations. An act of aggression such as this creates a very real danger to the security of all free nations.”

We now know that great doubt surrounded the meaning of the North Korean attack and its motivation. We now know that there was no monolithic international Communist movement, and that this imagined entity was not on any march to conquer independent nations of which South Korea was the first. There was no “very real danger” to America’s national security or other free nations far from Korea.

Truman went on with a freedom appeal: “This [attack] is a direct challenge to the efforts of the free nations to build the kind of world in which men can live in freedom and peace.”

The assertion he made is that war in Korea somehow undermined the work of other nations to live in freedom and peace. Somehow a war anywhere challenges peace everywhere. This linkage makes no obvious sense unless the war in question is the work of an incipient or active empire that has the intent of territorial expansion. Regional wars do not routinely meet that condition. North Korea was not such a power.

However, despite the limited nature of the war, Truman argued a second domino theory version:

“The free nations have learned the fateful lesson of the 1930′s. That lesson is that aggression must be met firmly. Appeasement leads only to further aggression and ultimately to war.”

The lessons of the 1930s are that America should not have entered World War I, should not have created a monetary system that led to inflation and a Great Depression, and should have stayed out of Europe’s wars. The victors in World War I should not have imposed a draconian peace at Versailles. Not all aggressions must be met by American force. Not all neutrality is appeasement. Not all aggression creates further aggression. Not all situations parallel those in the 1930s. Not all dictators are Hitlers. Truman’s domino theory of appeasement did not justify American intervention in Korea.

Truman’s September address deepened his appeals. He added that the war was for the sake of peace, and he embedded the freedom appeal in the millennia of history:

“These men of ours are engaged once more in the age-old struggle for human liberty. Our men, and the men of other free nations, are defending with their lives the cause of freedom in the world. They are fighting for the proposition that peace shall be the law of this earth.”

This passage includes an appeal to universal, earth-wide law and order, brought about by American soldiers in Korea.

Truman appealed again to a third domino theory: “If the rule of law is not upheld we can look forward only to the horror of another war and ultimate chaos.” The argument is that without someone like America upholding the international rule of law of the UN, war and chaos will result.

This theory is false. Not only have U.S. interventions created war and chaos, but many wars have been launched after 1950 despite the fact that the U.S. government chose to intervene in Korea, Vietnam and other places, with or without international approval.

Such welcome peace as there has been as compared with the two world wars has causes far afield from the U.S. intervening to keep the peace or intervening in places like Korea, Vietnam, Yugoslavia, Iraq, Libya, Syria, Mali, Yemen, Afghanistan, and Ukraine.

The upholding of international law by American force, a pax Americana, is imaginary. This is neither a necessary condition for peace nor a sufficient condition for peace.

To gain domestic support for an unpopular war, Truman raised the ante in his freedom appeal:

“It is your liberty and mine which is involved. What is at stake is the free way of life–the right to worship as we please, the right to express our opinions, the right to raise our children in our own way, the right to choose our jobs, the fight to plan our future and to live without fear. All these are bound up in the present action of the United Nations to put down aggression in Korea.

“We cannot hope to maintain our own freedom if freedom elsewhere is wiped out. That is why the American people are united in support of our part in this task.”

None of these exaggerations were true in 1950. None are true in 2014. They are no more true than the recent false idea that jihadists are intent on wiping out American freedoms.

Lyndon Baines Johnson continued the same rhetoric in his message to Congress of August 5, 1964:

“1. America keeps her word. Here as elsewhere, we must and shall honor our commitments.

“2. The issue is the future of southeast Asia as a whole. A threat to any nation in that region is a threat to all, and a threat to us.

“3. Our purpose is peace.. We have no military, political, or territorial ambitions in the area.

“4. This is not just a jungle war, but a struggle for freedom on every front of human activity.”

His point #1 adds a new rationale, which is the circular rationale that we will fight to maintain our credibility, having earlier made a statement or signed a treaty that we would fight. This is not an independent justification.

#2 is a domino theory, and #4 is Truman’s grandiose idea that this particular war is a much larger war to defend freedom. Truman’s idea no doubt has earlier roots too. #3 is an argument that we can go into this war because we have no ambitions but the noble one of peace. This argument is as false as the others. There are always other ambitions that may be called imperial.

Bill Clinton’s rhetoric on intervention in Kosovo is like that of his predecessors. He invoked the appeasement theory, once again referring to the irrelevant Hitler analogy. He provided a twist on a domino theory by worrying about the conflict spreading to neighboring lands. (This argument hasn’t bothered Bush or Obama In the Middle East.)

And Clinton added a new argument that American prosperity depended on Europe being “safe, secure, free, united, a good partner”. Whew! War for international bankers and international companies! Kosovo matters!

This argument is highly implausible, and it never explains why Europeans cannot intervene on their own if Kosovo’s so important. Now, just extend Clinton’s argument to all the rest of the world in which Americans have trade and investment relations and you have the makings of interventions anywhere on the planet.

The question arises as to whether the U.S. government exists to further American economic relations with the rest of the world, using war as one means. This is hardly what is meant by keeping the peace or defending the nation.

As for Bush, let us note one phrase in his Iraq speech that echoes Truman:

“Intelligence gathered by this and other governments leaves no doubt that the Iraq regime continues to possess and conceal some of the most lethal weapons ever devised.”

Bush’s phrase “leaves no doubt” eerily matches Truman’s “beyond all doubt”. Bush was totally wrong on this score, as wrong as was Truman in his day. Presidents have to make big and unproven claims because they are taking America into war, and war is big. They do not have to be false claims. Why then are they false? After all, in his speech, LBJ lied about the Gulf of Tonkin, as the U.S. Navy detailed account now admits:

“Questions about the Gulf of Tonkin incidents have persisted for more than 40 years. But once-classified documents and tapes released in the past several years, combined with previously uncovered facts, make clear that high government officials distorted facts and deceived the American public about events that led to full U.S. involvement in the Vietnam War.”

This rhetoric, this emotional appeal to intervene militarily in some remote land for the preservation of freedom in America, continues to this day. This is Hillary Clinton:

“There really is no viable alternative. No other nation can bring together the necessary coalitions and provide the necessary capabilities to meet today’s complex global threats.”

“The things that make us who we are as a nation — our diverse and open society, our devotion to human rights and democratic values — give us a singular advantage in building a future in which the forces of freedom and cooperation prevail over those of division, dictatorship and destruction.”

Like Truman, Hillary still wrongly thinks that American forces are necessary and sufficient to produce peace. Additionally, she adds that only America is capable of this task, i.e., America is the indispensable nation in keeping the peace. Icing on the cake is her belief  that America has a comparative advantage in understanding and therefore implementing freedom and cooperation.

Wow! Aren’t we Americans great?!

Hillary’s rhetoric is unanchored to reality. She sweeps under the rug the long list of U.S. foreign policy debacles while grossly impugning and insulting the peoples of other lands.

It is easy for war advocates to speak of spreading freedom and democracy or defending them. This is a justification for possibly making war that is altogether too vague and too broad. This justification can never suffice for such legislation because a multitude of foreign situations fall into these categories or can be construed as falling into these categories. Specific interference by the U.S. needs specific justification, but when has that justification been accurate? Not in the case of Vietnam, not in Iraq, not in Serbia, not in Afghanistan, not in Korea, and not even in World War I. The U.S. interference that led to Pearl Harbor is another instance.

Is it the policy of the U.S. government to assure freedom and democracy in every land on earth and for all of its peoples? This is a practical impossibility that results in continual war. If it ever succeeded, the result would be global tyranny. Have Americans appointed themselves the unilateral and universal crusaders and administrators of freedom and democracy? This role is impossible too. It runs up against the individual developments in one nation after another. It runs aground on the ambiguities of what freedom means, what democracy means, and the flaws of democracy. It runs aground on the self-interests and imperial interests of those who control the U.S. government. This too is why freedom and democracy are not sufficient arguments for interventions.

Those who want to justify U.S. interference in Ukraine or Syria or anywhere else cannot use freedom and democracy as justification. They do not hold up. Being invited in doesn’t hold up. Stopping an aggression doesn’t hold up. A supposed foreign need doesn’t hold up. Upholding a mutual defense treaty doesn’t hold up, for these are really guarantees of the protection of a U.S. military umbrella.

Freedom and democracy are invoked by American leaders in favor of interventions overseas as if they were arguments, when they are nothing more than emotional appeals. America has declared itself a god, indispensable and uniquely qualified. Americans collectively are the god. Americans will enforce freedom and democracy everywhere. America goes to war under the banner of peace, freedom and democracy. Heathens shall be converted by the sword if need be. The freedom appeal is religious. Just as people fall away from religions, they fall away from allegiance to endless wars. The preachers stir them back up and incite them with new enemies and new fears. Your freedoms are under attack. You must fight or chaos will follow.

One president after another uses the rhetoric of freedom and democracy to bolster the appeal of their wars and interventions. They use them by themselves and linked to actual arguments. The linked arguments are typically domino theories or appeasement theories. These are either known to be false at the time or shown to be false later. Presidents assert certainties and absence of doubts when in fact the circumstances surrounding events are clouded and much more complex than they allege.

Should Americans believe what their presidents tell them when they make important war messages? The general answer seems to be that they should not. Do presidents systematically lie in their war messages? The answer is not clear. It is hard to assess this without deeper study of the circumstances surrounding their speeches. But because the messages are so faulty and mistaken as a rule, it appears that either presidents lie or else they intentionally exaggerate or else they believe in their own largely false rhetoric or else their information is poor. No matter what’s going on, the fact remains that if history is any guide, Americans should not believe what their presidents tell them when they ask them to go to war.

Common sense should tell Americans the same thing, not to believe these war messages, because most of the wars involve no direct attacks on America anyway. Germany didn’t attack the U.S. in either world war. Russia never attacked the U.S. during the Cold War. North Korea didn’t attack the U.S., and neither did Serbia, Vietnam, Iraq, Yemen, Pakistan, Afghanistan, Grenada, Libya, Panama, Haiti or Syria, all places in which the U.S. has intervened, usually accompanied by some sort of justifications coming out of the White House.

Will Putin Play His Gold Card?

Fri, 11/21/2014 - 02:01

The topic of ‘currency war’ has been bantered about in financial circles since at least the term was first used by Brazilian Finance Minister Guido Mantega in September 2010. Recently, the currency war has escalated, and a ‘sanctions war’ against Russia has broken out. History suggests that financial assets are highly unlikely to preserve investors’ real purchasing power in this inhospitable international environment, due in part to the associated currency crises, which will catalyse at least a partial international remonetisation of gold. Vladimir Putin, under pressure from economic sanctions, may calculate that now is the time to play his ‘gold card’.

A BRIEF HISTORY OF THE CURRENCY WAR

“We’re in the midst of an international currency war. This threatens us because it takes away our competitiveness.” Brazilian Finance Minister Mantega uttered these words in September 2010, about two years after the spectacular global financial crisis of late 2008. During and following the crisis, the euro declined by around 25% versus the dollar. The pound sterling declined by nearly 30%. And while the Brazilian real also declined initially, it subsequently regained these losses in less than a year, unlike either the euro or pound. Dramatic swings in currency values can have a material impact on relative rates of economic growth. And when global economic growth is weak, the temptation to devalue and take some global market share from competitors is strong. “The advanced countries are seeking to devalue their currencies,” claimed Mantega.[1]

The decline in the value of the euro in 2008-11 was of special importance because it exposed a key fault-line across the euro-area: That between the competitive exporters of the North, such as Germany, Poland and the Czech and Slovak Republics; and the less competitive importers of the South, such as Italy, Spain, Portugal and Greece. With the euro weaker, the exporters’ economies were booming. Yet the fallout from the financial crisis fell hardest on the least competitive euro members, threatening the solvency of their banks and, by extension, the sustainability of their governments’ finances.

Thus there emerged a ‘civil currency war’ in the euro-area, which is still being fought at the ECB in Frankfurt and in the national capitals. The South is facing default and multiple countries have considered withdrawing from the euro, threatening the entire project. The North remains reluctant to provide bail-outs without a substantial quid-pro-quo in the form of a meaningful restructuring of the chronically uncompetitive southern economies.

Although the crisis remains unresolved to this day, various compromises were reached in 2012 that have bought an unknown amount of time. Whether that time has been used wisely is highly debatable, and one or more rounds of bail-outs and possibly another acute crisis (or multiple crises) lies ahead.

A dramatic escalation in the global currency war took place in Japan in 2012, following the election of Prime Minister Shinzo Abe, who campaigned on a platform of proposed radical measures to get the Japanese economy moving again. Thus he wasted no time in deploying the most obvious weapon: currency devaluation. From October 2012 to February 2013, the yen devalued by some 25%.

While this did have the result of providing some short-term stimulus, the overall effect was smaller and shorter-lived than hoped. Thus the Bank of Japan took additional measures recently to weaken the yen further. As of this writing, the yen has fallen by a further 15%. And that’s not all: Abe is now promising to halt a planned increase in sales tax and has called a snap election as a de facto referendum on his radical economic policies. Further yen weakness following this announcement suggests that the financial markets expect that Abe will prevail and follow-through accordingly.

This large cumulative yen devaluation is an attack on Japan’s competitors in the global export markets, in particular those for technologically advanced manufactured goods. Germany, Poland, South Korea, Taiwan and Brazil are in this group and no doubt the weaker yen is one reason why growth in these countries has been slowing of late.

Germany and Poland, however, now find they are fighting a three-front currency war: Versus Japan for export market share; versus the US, EU and NATO over the issue of economic sanctions against Russia; and on the continuing front within the euro-area itself, where recently both countries dissented from a recent ECB quantitative easing (QE) initiative to purchase asset-backed securities.[2] How Germany, Poland and other countries caught in the crossfire of the currency and sanctions wars react will in turn have an impact on their trading partners, and so on. The associated negative consequences for global financial markets could be substantial.

RUSSIA, NATO AND THE ‘SANCTIONS WAR’

In recent years, there has been a series of increasingly serious confrontations between US allies and Russia, beginning with the Georgian war of 2008, continuing with the Syrian crisis of 2013 and then, most recently, in Ukraine. While each of these crises has been serious in its own way, not until now have they had an overt international economic dimension. This is because the Ukraine crisis has unleashed a ‘sanctions war’ that has escalated to the point of doing real economic damage not only to Russia, but to Germany and Poland, two of Russia’s largest trading partners.

So far, the Russian economy has held up reasonably well, but recent developments suggest that a deep recession is on the way. Lower prices for oil—Russia is a huge exporter—will hit the Russian economy hard. Moreover, with the Russian currency plunging by over 30% in recent months, consumer price inflation is going to rise sharply.

So what is Russia to do? Putin is rumoured to be preparing a major programme to reduce corruption and improve economic efficiency, but even if this is successful, it is going to take time, and it can’t be expected to fully offset the effect of sanctions. Unless they are lifted soon, Russia is facing a period of economic misery.[3]

For the US and NATO, Russian economic misery is precisely what the sanctions war is all about: Cause enough pain, so the thinking goes, and Putin will allow Ukraine to crush the rebellion in the eastern part of the country and possibly re-annex the Crimea. While I am not an expert in these matters, it strikes me as highly unlikely that Putin will give in under the pressure. He is popular in Russia, not only because, up to now, he has overseen a prolonged period of strong economic growth but also because he is regarded by Russians as a strong leader standing up for Russia’s national interests. Ordinary Russians support their ethnic bretheren in eastern Ukraine and Crimea. They would be horrified if Russia allowed Ukraine to crush the rebels. Also, because of the sanctions, Russians will blame the US and NATO for the coming economic downturn, not Putin.

If I’m right that Putin stands his ground in Ukraine and remains highly popular notwithstanding the inevitable recession, then what does this imply for the currency wars generally? First, it implies that Germany, Poland, Slovakia and most other Russian trading partners are going to face a sharp economic deterioration as well. In all cases, this is going to have some political effects. In those countries with weak governments and unpopular leaders, the opposition may support ending the sanctions as an expedient way of gaining power. Indeed, in Slovakia the government has already voiced opposition to further sanctions.[4]

Second, it implies that, rather than just sit back and take the pain, Russia is going to seek to reduce its economic dependence on the West. This is already in evidence, with Putin having signed major deals in the energy and defense industries with China and India, among other countries. Stronger Russian ties with the other BRICS, or other countries for that matter, may be of some concern to the US, but in most cases there isn’t much the US can do about it.

One crucial aspect of Russia’s dependence on the West is the global use of the US dollar as the primary international transaction and reserve currency. It is thus no surprise that the recent Russian energy deal with China—involving the construction of a large gas pipeline between the two countries—is to be financed and transacted in the Chinese yuan rather than the dollar.

Not only Russia, but the BRICS in general have regularly expressed their dissatisfaction with the dollar-centric global monetary conventions, including the Bretton-Woods legacy institutions of the IMF and the World Bank.[5] Hence the BRICS have set about building their own parallel institutions and have signed a number of bilateral currency-swap deals with each other and non-BRICS trading partners in order to reduce dollar dependence. While all these initiatives nudge the BRICS and, by implication, the global economy generally, away from the dollar, the process is slow and, absent an international monetary crisis, is likely to take years.

For Russia, however, the need to shore up the economy and the currency is exigent. It cannot wait for the gradual evolution of the international monetary system to reduce the impact of sanctions. So what else might Russia do in the near-term?

A GOLDEN ROUBLE?

One intriguing possibility is one which Russia has, in fact, contemplated before: Backing the currency with Russia’s gold reserves.[6] In the late 1980s, as the Soviet Union was breaking up, the rouble was in free-fall and inflation was soaring. Russia had essentially zero access to global capital markets and relied on oil exports for hard currency with which to trade with other nations. In 1989, Premier Gorbachev invited two prominent US economists to Russia, where they met with senior economic policy officials and recommended precisely this as the best way to stabilise the rouble. One of the two was former Fed governor Wayne Angell; the other, Jude Wanniski of ‘supply-side’ economic fame. In 1998, Mr Wanniski wrote that he “became alarmed about the financial collapse in Russia,” and decided to “write a piece on how to fix Russia right away, before it was in complete chaos.” In the Wall Street Journal editorial that followed, Mr Wanniski explained the longer history of the gold-backed rouble idea:

In September 1989, the Soviet government of Mikhail Gorbachev invited me to Moscow for nine days to discuss my unorthodox views on how the U.S.S.R. could make the conversion to a market economy. I’d been arguing that the process had to begin by fixing the ruble price of gold at a credible rate of exchange, which I believed then would be a relatively easy thing to do. I still believe that.

Last week, the former U.S. vice-presidential candidate for the Republican Party, Jack Kemp, wrote a letter to President Bill Clinton. In it he urged him to ask Mr. Yeltsin and his prime-minister nominee, Viktor Chernomyrdin, to consider the gold solution as the quickest and easiest way to end the financial crisis without more suffering by the Russian people.

But gold is preferable in this situation because the Russian government could announce that it will defend the ruble in terms of gold at a rate of 2,000 rubles per ounce and because it has control of the ruble but not the foreign currencies of a currency board. That is, Russia need not have gold ingots backing every last ruble in circulation in order to keep the gold-ruble price stable. It can do so by managing the supply of ruble liquidity, which the government can do easily by buying and selling ruble interest-bearing bonds to Russian banks. It should also make an unlimited amount of the gold-ruble bonds available to ordinary people.

This is how Alexander Hamilton solved the financial crisis that faced the administration of George Washington in 1791. America’s first Treasury Secretary fixed the dollar to gold and promised creditors they would be paid all they were owed at par, with interest. In 1947, West German Finance Minister Ludwig Erhard ended a similar financial crisis by pegging the Deutsche mark to gold. At these times, neither the U.S. nor the German government had any gold. The gold promise worked because their own people understood that their governments were not insolvent, but simply faced a short-term cash crisis. In the same way, the Russian state today has small liabilities, perhaps $200 billion, compared to the assets it possesses, which easily amount to $10 trillion. The state, after all, owns almost everything in 11 time zones, which it acquired in the 1917 revolution. All of these assets can be used to back up the exchange rate by converting them at the ruble price of gold.

On hearing that their government promises to pay ruble debt at a 2,000-to-one gold price — which implies a dollar/gold rate of 7 to 1 at the moment — the Russian people would have to decide if the promise was credible. Would they rather have a gold-ruble bond paying interest at a hard rate of 7 to 1, or a ruble note paying no interest at a collapsing rate of 17 to 1? The question suggests the people would rush to convert ruble notes into ruble bonds.

As it is, the Russian people are transacting among themselves using $40 billion in U.S. currency, while the value of the ruble money supply implodes toward zero. A government gold/ruble peg would quickly bring the people to their banks with dollars, asking for the now more valuable rubles. In short order, the government would have enough dollars to pay Western banks the interest they are owed. As the Russian government creates new ruble liquidity to meet increased demand, the problems with insolvency at Russian banks also are resolved. And as domestic commerce now would flow through ruble tax gates instead of dollar barter, Mr. Yeltsin would be able to pay all back wages in tax rubles instead of fiat money. By fixing to gold instead of a currency-board basket, Russia would be able to collect a bonanza in seigniorage.

If President Clinton wished to follow through on his promise to help President Yeltsin, he could ask his Treasury department to buy $3 billion to $4 billion of the gold-ruble bonds from its Exchange Stabilization Fund. If this happened tomorrow, Russia could meet its dollar obligations this week. If there were any further doubts among Russians about the credibility of a gold ruble, they would dissolve upon seeing the U.S. government actually buying their sovereign ruble debt.

The Russian government would soon be able to hasten an economic expansion through supply-side tax reforms. But first things first. A ruble as good as gold is what Dr. Angell ordered in 1989 and it is what the doctor orders now.[7]

The situation back in 1989 or 1998 was, thus, similar to if even more serious than that faced by Russia today. But if the sanctions war escalates? Things could get worse. Is Mr Putin or his senior advisers aware of what was contemplated above? That gold could provide a workable solution to stabilise the currency and economy? A distinct possibility. How likely is it that they will make this move?

Well, let’s consider the international context. Were Russia to back the rouble with gold today, this would be a far more credible policy than it could ever have been back in 1989 or 1998, when Russia’s government was less stable and less popular, and Russia’s economy was less well-integrated with those of China, Germany and other major economies. Moreover, in recent years Russia has amassed a huge amount of gold reserves.[8] Indeed, at current market prices, Russia’s gold reserves would back a whopping 27% of the narrow rouble money supply! That is a high ratio, far in excess of any other major country and also in excess of the US Fed’s original stipulated gold coverage minimum. Moreover, Russia is a large net exporter, notwithstanding the sanctions, so Russia’s gold reserves, by implication, are likely to continue to grow, rather than decline.

This credibility is also reinforced by the Russian economy’s relatively low debt. Without a large debt to service, there is little temptation or need to inflate the currency. Indeed, Russian interest rates are currently around 10%, implying a generous relative return on rouble cash balances. Imagine the rouble were to be convertible into gold, AND rouble interest rates remained at 10%. This implies a nearly risk-free arbitrage of 10% between the rouble and gold. You can bet than a large number of international investors would quickly sell some gold, dollars, or other currencies, and acquire some roubles, pocketing the hefty interest rate differential. That would support the rouble, possibly leading to a large re-appreciation vis-à-vis the dollar and other currencies left unbacked by gold. Rouble interest rates could then decline, perhaps to quite low levels, where an equilibrium would eventually be reached. It could have worked in 1989, or 1998. It is far more likely to work today.

COULD A GOLDEN ROUBLE CATALYSE A GLOBAL REMONETISATION OF GOLD?

There is another aspect to consider, however, which is the possible impact this policy would have on the dollar and the international monetary system. Recall that, as the primary global reserve currency, the dollar circulates in vast quantities abroad, where it forms the bulk of the monetary reserves of central banks. This is in part what allows the US government and economy generally to finance themselves at such low interest rates. But other factors equal, if the dollar suddenly faces competition from a credible, gold-backed currency, it is likely that, at a minimum, central banks are likely to diversify at least some of their dollar reserves into interest-bearing, gold-backed roubles. Countries importing oil from Russia would have an additional incentive to do so as they would be able to pay for Russian oil imports in roubles and avoid sanctions. Speculators (or investors) anticipating an eventual internationalisation of the rouble would front-run these developments, pocketing a nice return over time.

The implied upward pressure on US interest rates would be perhaps small initially, but even a small rise in US interest rates would spell trouble for a US economy that is so highly leveraged to low rates. Growth would slow. The Fed could try to offset this by engaging in renewed QE, but that could add fuel to the fire, resulting in aggressive selling of dollars in the foreign exchange markets. In an extreme but hardly impossible scenario, the dollar could lose reserve status entirely, something that would be devastating for the US economy. While a sharply weaker dollar would help US competitiveness and exports over time, it would crush the dollar’s effective international purchasing power (eg for oil and other resources) and result in soaring consumer price inflation. The combined negative impact of higher interest rates on growth and rising consumer prices on inflation would make the stagflationary 1970s look like a picnic.

As I argue in my book, THE GOLDEN REVOLUTION, a loss of reserve status for the dollar would have vast repercussions for the international monetary system.[9] While a gold-backed rouble could challenge the dollar to a certain extent, it is unrealistic to think that an economy the size of Russia’s could back the dominant global reserve currency. No, as the dollar’s share declines, most probably multiple alternative currencies begin to serve as reserves. This is where things get interesting, however. Other factors equal, as a currency is used as a reserve, it strengthens that currency. That might be unwelcome in some economies heavily geared toward exports.

Thus dethroning the dollar does not end the currency wars but rather could escalate them further instead as one country after another tried to offset dollar weakness by weakening their own currencies. This sort of ‘race to the bottom’ was seen in the 1920s and 1930s, culminating in US President Roosevelt’s executive decision to devalue the dollar by some 60% in 1934. In that instance, however, the dollar remained backed by gold and by what was by far the largest global economy at that time.

Not so today. The global economy has become increasingly multipolar, with both the euro-area and China roughly as large as the US. Moreover, the US has a huge accumulated and external debt, implying a growing risk of debasement and devaluation in future. As it stands today, only 2.3% of the narrow US money supply is backed by gold. Thus the US is simply no longer in a position to be a ‘monetary hegemon’, providing the global reserve currency.

But as all large economies have their own debt or other financial issues with which to deal, no major currency is in a position to replace the dollar as the pre-eminent reserve. This implies that the global monetary system is highly unstable. The dollar is hardly the only currency at risk of debasement and devaluation. Game theory implies that a race to the bottom is distinct possibility and it is unclear whether the dollar would lead or follow in that race.

As I further argue in my book, this combination of economic multipolarity and the instability of the current global monetary equilibrium is highly likely to result in at least a partial if not full remonetisation of gold, with an associated, large rise in price. Gold is the ideal way for countries to settle their trade imbalances in a world in which trust in currency stability is lacking. Accumulating reserves that can be summarily devalued by trading partners in a currency war is not a rational policy. Yet something must function as a reserve asset if trade is to take place at all. Gold provides that ‘something’ as supply is stable and it cannot be arbitrarily devalued. Backing currencies by gold would thus greatly increase trust and, thereby, facilitate international trade.

Those familiar with the 1870s will note that there are now strong parallels with that important decade. Following German unification and the US recovery from the Civil War, both of these economies were catching up rapidly with Britain. Japan had begun to industrialise. Under these multipolar conditions arose spontaneously, absent formal diplomacy, the classical gold standard system that would underpin decades of arguably the fastest sustained global economic growth ever experienced in history.[10]

SO, WILL PUTIN PLAY THE ‘GOLD CARD’?

Let’s now return to Russia and leave aside a biased western perspective for the moment. Putin has arguably accomplished more for Russia than has any other contemporary leader of a major country. Yes, he may be something of an autocrat, but please show me one major developed country that has never been ruled by an autocrat. (The USA began its life under George III and borrowed the bulk of its legal code and political culture from the UK.) Under Putin’s leadership, Russia has maintained its territorial integrity, something that had been left in question following the collapse of the Soviet Union, and Russia retains a formidable military capable of defending its vast frontiers (although not capable of policing the world). The economy has grown rapidly and, while still resource-dependent, has begun to diversify in various ways. (Keep in mind the young USA was regarded by Europeans as a largely resource-dependent economy.) Russia has built strong economic and political ties not only with the BRICS but also many smaller economies in Eurasia and elsewhere around the world. Russia has only a small accumulated national debt, implying that this will not be a drag on future growth, as is likely to be the case in the US, EU and Japan. Russia also has an advantageous tax system, with a top 13% rate of income tax. Yes, Russia remains an economically unequal society, but we know what has happened to inequality throughout the developed economies in recent decades, not just following the 2008 global financial crisis.

Given these achievements, Putin is not a leader to be taken lightly and we should pay attention when he says it it his desire to end the ‘dictatorship of the dollar’, as he did just this week. [11] Perhaps he will indeed play the gold card he has hidden up his sleeve and thus kill two birds with one stone: shore up the rouble and Russian economy on the one hand; dethrone the dollar on the other. A period of international monetary and associated economic chaos might ensue, but with Russia suffering already under unwelcome sanctions and thus with relatively less to lose, Putin might calculate that now is the time to make his move. He may have already achieved his place in the Russian history books but imagine how he will be regarded in world history books if he sets in motion that which culminates ultimately in the return to some form of global gold standard.

Reprinted with the author’s permission.

The Economic Death Spiral

Fri, 11/21/2014 - 02:01

As Japanese Prime Minster Shinzo Abe has turned his country into a petri dish of Keynesian ideas, the trajectory of Japan’s economy has much to teach us about the wisdom of those policies. And although the warning sirens are blasting at the highest volumes imaginable, few economists can hear the alarm. (A longer version of this article can be found in Euro Pacific Capital’s Global Investor Newsletter.)

Data out this week shows the Japanese economy returning to recession by contracting for the second straight quarter (and three out of the last four quarters). The conclusion reached by the Keynesian apologists is that the benefits of inflation caused by the monetary stimulus have been counteracted, temporarily, by the negative effects of inflation caused by taxes. This tortured logic should be a clear indication that the policies were flawed from the start.

Although the Japanese economy has been in paralysis for more than 20 years, things have gotten worse since December 2012 when Abe began his radical surgery.. From the start, his primary goal has been to weaken the yen and create inflation. On that front, he has been a success. The yen has fallen 23% against the dollar and core inflation, which was running slightly negative in 2012, has now been “successfully” pushed up to 3.1% according to the Statistics Bureau of Japan.

But there is no great mystery or difficulty in creating inflation or cheapening currency. All that is needed is the ability to debase coined currency, print paper money or, as is the case of our modern age, create credit electronically. These “successes” should not come as a surprise when one considers the relative size of Abe’s QE program. For much of the past two years the Bank of Japan (BoJ) has purchased about 7 trillion yen per month of Japanese government bonds, which is the equivalent of about $65 billion U.S. [Forbes 9/24/14, Charles Sizemore] While this is smaller than the $85 billion per month that the Federal Reserve purchased during the 12-month peak of our QE program, it is much larger in relative terms.

The U.S. has roughly 2.5 times more people than Japan. Based on this multiplier, the Japanese QE program equates to $162.5 billion, or 91% larger than the Fed’s program at its height. But, according to IMF estimates, the U.S. GDP is 3.3 times larger than Japan. Based on that multiplier, Japanese QE equates to $214.5 billion per month, or 152% larger. And unlike the Federal Reserve, the Bank of Japan hasn’t even paid any lip service to the idea that its QE program will be scaled back any time soon, let alone wound down.

In fact, Abe’s promises to do more were spectacularly realized in a surprise move on October 31 when the BoJ, claiming “a critical moment” in its fight against deflation, announced a major expansion of its stimulus campaign. (The fact that official inflation is currently north of 3% – a multi-year high, seems to not matter at all.)

At the same time the BoJ also announced its intention to roughly triple its pace of its equity and property purchases on Japan’s stock market. According to Nikkei’s Asian Review (9/23/14), the BoJ now holds an estimated 7 trillion yen portfolio of Japanese stock and real estate ETFs. Even Janet Yellen has yet to cross that Rubicon.

And what has this financial shock and awe actually achieved, other than 3% inflation, a weaker yen, a stock market rally, and continued international praise for Abe? Well, unfortunately nothing other than a bona fide recession and a growing threat of stagflation.

The weaker yen was supposed to help Japan’s trade balance by boosting exports. That didn’t happen. In September, the country reported a trade deficit of 958 billion yen ($9 billion), the 27th consecutive month of trade deficits. The deterioration occurred despite the fact that import prices rose steeply, which should have reduced imports and boosted exports. And while some large Japanese exporters credited the weak yen for easier sales overseas, small and mid-sized Japanese businesses that primarily sell domestically have seen flat sales against rising fuel and material costs.

But price inflation is not pushing up wages as the Keynesians would have expected. In August, Japan reported real wages (adjusted for inflation) fell 2.6% from the year earlier, the 14th straight monthly decline. This simply means that Japanese consumers can buy far less than what they could have before Abenomics. This is not a recipe for happy citizens.

Japanese consumers must also deal with Abe’s highly unpopular increase of the national consumption tax from 5% to 8% (with a planned increase to 10% next year). The sales tax was largely put in place to keep the government’s debt from spiraling out of control as a result of the fiscal stimulus baked into Abenomics. And while economists agree nearly universally that the price increases that have resulted from the sales tax have caused a sharp drop in consumer spending, they fail to apply the same logic that price increases due to inflation will deliver the same result.

A bedrock Keynesian belief is that falling prices create recession by inspiring consumers to delay purchases until prices fall further. According to the theory, even a 1% annual drop in prices could be sufficient to decimate consumers’ willingness to spend. Conversely, they believe rising prices, otherwise known as inflation, will spur spending, and growth, as it inspires people to buy now before prices rise further. But if consumers have clearly been put off by rising prices due to taxation, why would they be encouraged if they were to rise for monetary reasons? Don’t look for an explanation, there isn’t any. In reality, as any store owner will tell you, shoppers shop when prices are low and stay at home when prices are high.

Despite the bleak prospects for Japan, Abe continues to bask in the love of western economists and investors. In an October 6 interview with the The Daily Princetonian, Paul Krugman, who has emerged as Abe’s chief champion and apologist, responded to a question about the European economic crisis by saying “Europe need something like Abenomics only Abenomics, I think, is falling short, so they need something really aggressive in Europe.” A Bloomberg article ran on November 18 under the headline “Abe’s $1 Trillion Gift to Stock Market Shields Recession Gloom.” So according to Bloomberg, Abenomics is not responsible for the country’s fall back into recession, which hurts everyone, but it is responsible for the surging stock market, which primarily benefits the wealthy.

One wonders how much more bad news must come out of the Japanese experiment in mega-stimulus before the Keynesians reassess their assumptions? Oh wait…I’m sorry, for a second there I thought they were susceptible to logic. But those who are not blinded by left-wing dogma should take a good look at where the road of permanent stimulus ultimately leads.

Russia Invades Ukraine

Fri, 11/21/2014 - 02:01

“Russia reinforced what Western and Ukrainian officials described as a stealth invasion on Wednesday [August 27], sending armored troops across the border as it expanded the conflict to a new section of Ukrainian territory. The latest incursion, which Ukraine’s military said included five armored personnel carriers, was at least the third movement of troops and weapons from Russia across the southeast part of the border this week.”

None of the photos accompanying this New York Times story online showed any of these Russian troops or armored vehicles.

“The Obama administration,” the story continued, “has asserted over the past week that the Russians had moved artillery, air-defense systems and armor to help the separatists in Donetsk and Luhansk. ‘These incursions indicate a Russian-directed counteroffensive is likely underway’, Jen Psaki, the State Department spokeswoman, said. At the department’s daily briefing in Washington, Ms. Psaki also criticized what she called the Russian government’s ‘unwillingness to tell the truth’ that its military had sent soldiers as deep as 30 miles inside Ukraine territory.”

Thirty miles inside Ukraine territory and not a single satellite photo, not a camera anywhere around, not even a one-minute video to show for it. “Ms. Psaki apparently [sic] was referring to videos of captured Russian soldiers, distributed by the Ukrainian government.” The Times apparently forgot to inform its readers where they could see these videos.

“The Russian aim, one Western official said, may possibly be to seize an outlet to the sea in the event that Russia tries to establish a separatist enclave in eastern Ukraine.”

This of course hasn’t taken place. So what happened to all these Russian soldiers 30 miles inside Ukraine? What happened to all the armored vehicles, weapons, and equipment?

“The United States has photographs that show the Russian artillery moved into Ukraine, American officials say. One photo dated last Thursday, shown to a New York Times reporter, shows Russian military units moving self-propelled artillery into Ukraine. Another photo, dated Saturday, shows the artillery in firing positions in Ukraine.”

Where are these photographs? And how will we know that these are Russian soldiers? And how will we know that the photos were taken in Ukraine? But most importantly, where are the fucking photographs?

Why am I so cynical? Because the Ukrainian and US governments have been feeding us these scare stories for eight months now, without clear visual or other evidence, often without even common sense. Here are a few of the many other examples, before and after the one above:

  • The Wall Street Journal (March 28) reported: “Russian troops massing near Ukraine are actively concealing their positions and establishing supply lines that could be used in a prolonged deployment, ratcheting up concerns that Moscow is preparing for another [sic] major incursion and not conducting exercises as it claims, US officials said.”
  • “The Ukrainian government charged that the Russian military was not only approaching but had actually crossed the border into rebel-held regions.” (Washington Post, November 7)
  • “U.S. Air Force Gen. Philip M. Breedlove told reporters in Bulgaria that NATO had observed Russian tanks, Russian artillery, Russian air defense systems and Russian combat troops enter Ukraine across a completely wide-open border with Russia in the previous two days.” (Washington Post, November 13)
  • “Ukraine accuses Russia of sending more soldiers and weapons to help rebels prepare for a new offensive. The Kremlin has repeatedly denied aiding the separatists.” (Reuters, November 16)

Since the February US-backed coup in Ukraine, the State Department has made one accusation after another about Russian military actions in Eastern Ukraine without presenting any kind of satellite imagery or other visual or documentary evidence; or they present something that’s very unclear and wholly inconclusive, such as unmarked vehicles, or unsourced reports, or citing “social media”; what we’re left with is often no more than just an accusation. The Ukrainian government has matched them.

On top of all this we should keep in mind that if Moscow decided to invade Ukraine they’d certainly provide air cover for their ground forces. There has been no mention of air cover.

This is all reminiscent of the numerous stories in the past three years of “Syrian planes bombing defenseless citizens”. Have you ever seen a photo or video of a Syrian government plane dropping bombs? Or of the bombs exploding? When the source of the story is mentioned, it’s almost invariably the rebels who are fighting against the Syrian government. Then there’s the “chemical weapon” attacks by the same evil Assad government. When a photo or video has accompanied the story I’ve never once seen grieving loved ones or media present; not one person can be seen wearing a gas mask. Is it only children killed or suffering? No rebels?

And then there’s the July 17 shootdown of Malaysia Flight MH17, over eastern Ukraine, taking 298 lives, which Washington would love to pin on Russia or the pro-Russian rebels. The US government – and therefore the US media, the EU, and NATO – want us all to believe it was the rebels and/or Russia behind it. The world is still waiting for any evidence. Or even a motivation. Anything at all. President Obama is not waiting. In a talk on November 15 in Australia, he spoke of “opposing Russia’s aggression against Ukraine – which is a threat to the world, as we saw in the appalling shoot-down of MH17”. Based on my reading, I’d guess that it was the Ukranian government behind the shootdown, mistaking it for Putin’s plane that reportedly was in the area.

Can it be said with certainty that all the above accusations were lies? No, but the burden of proof is on the accusers, and the world is still waiting. The accusers would like to create the impression that there are two sides to each question without actually having to supply one of them.

The United States punishing Cuba

For years American political leaders and media were fond of labeling Cuba an “international pariah”. We haven’t heard that for a very long time. Perhaps one reason is the annual vote in the United Nations General Assembly on the resolution which reads: “Necessity of ending the economic, commercial and financial embargo imposed by the United States of America against Cuba”. This is how the vote has gone (not including abstentions):

Each fall the UN vote is a welcome reminder that the world has not completely lost its senses and that the American empire does not completely control the opinion of other governments.This year Washington’s policy may be subject to even more criticism than usual due to the widespread recognition of Cuba’s response to the Ebola outbreak in Africa.

Speaking before the General Assembly before last year’s vote, Cuban Foreign Minister Bruno Rodriguez declared: “The economic damages accumulated after half a century as a result of the implementation of the blockade amount to $1.126 trillion.” He added that the blockade “has been further tightened under President Obama’s administration”, some 30 US and foreign entities being hit with $2.446 billion in fines due to their interaction with Cuba.

However, the American envoy, Ronald Godard, in an appeal to other countries to oppose the resolution, said:

The international community … cannot in good conscience ignore the ease and frequency with which the Cuban regime silences critics, disrupts peaceful assembly, impedes independent journalism and, despite positive reforms, continues to prevent some Cubans from leaving or returning to the island. The Cuban government continues its tactics of politically motivated detentions, harassment and police violence against Cuban citizens.

So there you have it. That is why Cuba must be punished. One can only guess what Mr. Godard would respond if told that more than 7,000 people were arrested in the United States during the Occupy Movement’s first 8 months of protest in 2011-12  ; that many of them were physically abused by the police; and that their encampments were violently destroyed.

Does Mr. Godard have access to any news media? Hardly a day passes in America without a police officer shooting to death an unarmed person.

As to “independent journalism” – What would happen if Cuba announced that from now on anyone in the country could own any kind of media? How long would it be before CIA money – secret and unlimited CIA money financing all kinds of fronts in Cuba – would own or control most of the media worth owning or controlling?

The real reason for Washington’s eternal hostility toward Cuba has not changed since the revolution in 1959 – The fear of a good example of an alternative to the capitalist model; a fear that has been validated repeatedly over the years as many Third World countries have expressed their adulation of Cuba.

How the embargo began: On April 6, 1960, Lester D. Mallory, US Deputy Assistant Secretary of State for Inter-American Affairs, wrote in an internal memorandum: “The majority of Cubans support Castro … The only foreseeable means of alienating internal support is through disenchantment and disaffection based on economic dissatisfaction and hardship. … every possible means should be undertaken promptly to weaken the economic life of Cuba.” Mallory proposed “a line of action which … makes the greatest inroads in denying money and supplies to Cuba, to decrease monetary and real wages, to bring about hunger, desperation and overthrow of government.”

Later that year, the Eisenhower administration instituted its suffocating embargo against its everlasting enemy.

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Tired-Out Tires Are Dangerous

Fri, 11/21/2014 - 02:01

When it comes to keeping tires up to spec, NMA members are second to none. They know the safety and performance benefits of maintaining proper tire inflation, not to mention routine tire inspection, rotation and balancing.

So, we wanted to discuss an important tire safety concern that many may not be aware of: old tires being passed off as new.

As tires age, the rubber compounds dry out and break down. This increases accident risk due to tread separation. ABC News covered the serious nature of these accidents a few years back. And while the report may sensationalize aspects of the story, the overall point is an important one: You need to be careful when shopping for tires since looks can be deceiving.

An old, unused tire looks just like a new, unused tire, and some retailers have been caught selling “new” tires that are actually 8-10 years old. Tires that are exposed to UV rays break down even quicker so beware of tires that have been stored outside.

We have not seen any studies that have determined average tire shelf-life, but experts generally agree that any tire six years or older should be discarded, even if it has never been on the road. NHTSA covers the issue in some detail here, offering the following guidance:

While tire life will ultimately depend on the tires’ service conditions and the environment in which they operate, there are some general guidelines. Some vehicle manufacturers recommend that tires be replaced every six years regardless of use. In addition, a number of tire manufacturers cite 10 years as the maximum service life for tires. Check the owner’s manual for specific recommendations for your vehicle. Remember, it is always wise to err on the side of caution if you suspect your vehicle has tires that are over six years of age.

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What Really Happened in Beijing

Fri, 11/21/2014 - 02:01

By way of events on the foreign side, the past few weeks start to resemble some once-in-a-while event in the heavens when everyone is supposed to go out and watch as the sun, moon and stars align. There are lots of things happening, and if we put them all together, the way Greek shepherds imagined constellations, a picture emerges. Time to draw the picture.

The situation on the ground in Ukraine is getting messy again. Equally, events of the past year now leave Ukraine’s economy not far from sheer extinction. You have not read of this because it does not fit the approved story, but Ukraine’s heart barely beats. Further east, we hear in the financial markets that the ruble’s decline brings Russia to the brink of another financial collapse.

Let’s see. Oil prices are now below $80 a barrel. It costs me nearly $20 less to put gasoline in my car than it did a year ago, and good enough. But why has the price of crude tumbled in so short an interval? It makes little sense when you gather the facts, and — goes without saying — you get no help with that from our media.

Let’s keep on trucking. Secretary of State Kerry went to Oman for another round of talks on the Iranian nuclear question last weekend. Russia recently emerged as a potentially key part of a deal, which will be the make-or-break of Kerry’s record. In effect, he now greets Russian Foreign Minister Sergei Lavrov with one hand and punches him well below the belt with the other. Somewhere beyond our view this must make sense.

En avant! Obama went to Beijing last week for a sit-down with Xi Jinping, who makes Vladimir Putin look like George McGovern when he wants to, which is not infrequently. Still in the Chinese capital, our president then attended a meeting with other Asian leaders to push a trade agreement, one primary purpose of which is to isolate China by bringing the rest of the region into the neoliberal fold. (Or trying to. Washington will never get the overladen, overimposing Trans-Pacific Partnership off the ground, in my view.)

A big item on Xi’s agenda — he was in on the Pacific economic forum, too — was the recent launch of an Asians-only lending institution intended to rival the Asian Development Bank, the World Bank affiliate doing the West’s work in the East. Being entirely opposed to people helping themselves advance without American assistance and all that goes with it, Washington used all means possible to sink this ship. When Obama got off the plane in Beijing, the Asian Infrastructure Investment Bank had $50 billion in capital and 20 members, more to come in both categories.

Xi, meantime, had a productive encounter — another — with the formidable Vlad. My sources in attendance tell me both put in strong performances. In short order, Russia will send enough natural gas eastward to meet much of China’s demand and — miss this not — in the long run could price out American supplies in other Pacific markets, which are key to the success of the current production boom out West.

This is a lot of dots to connect. As I see it, the running themes in all this are two: There is constructive activity and there is the destructive. Readers may think this oversimplifies, but for this there is the ever-lively comment box below. I am willing to listen.

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How To Pick a Lock

Fri, 11/21/2014 - 02:01

Back in October I had the pleasure of attending the ITS Tactical Muster, during which I learned several awesome manly skills. My favorite tutorial was on lock picking.

Going into the lock picking session at the Muster, I assumed that it would be really hard to do and would take hours of practice to figure out. Yet within two minutes of getting a set of picks in my hand, I had successfully picked my first lock.

Since coming home from the Muster, I’ve been regularly practicing my lock picking skills, and from time to time I’ll be offering a primer on how to pick various locks. We’ll start by taking a look at the most common lock used on front doors across the world: the pin tumbler lock. But let’s begin by discussing why you might want to learn the art of lock picking in the first place, as well as the legal issues involved with this great hobby.

Why You Should Learn How to Pick Locks (Even If You’re Not a Criminal)

Some of you might be thinking, “Brett, why should I learn how to pick a lock if I don’t plan on breaking into people’s homes?”

Great question.

There are a few good reasons why law-abiding citizens should learn how to pick a lock:

Lock picking opens your eyes to the “illusion of security.” We all lock our doors to keep our loved ones safe at night and to secure our possessions during the day. After I picked my first lock within two minutes of learning how to do it, I realized that locks don’t really do much except provide the illusion of security. Locks make us feel safe, but if someone really wanted to get in your house,they could easily pick the lock on your front door. If they didn’t know how to do that, they could find another way in. You can’t just rely on a lock to keep you and your family safe. You need to utilize other tools and tactics and create multiple layers of security.

Realizing how little locks actually keep you and your stuff safe was both terrifying and surprisingly heartwarming. Terrifying because I saw that someone could easily enter my house and walk off with a crap-load of stuff without having to break a window; heartwarming because seeing how easy it is to pick a lock and yet how rarely people get burgled, made me realize that most people don’t break into homes because, well, most people are good people.

It makes you handy. If you’ve ever been locked out of your house or car, you know how annoying it is to be standing there like a chump, waiting for someone to show up with a key or a professional locksmith to arrive. Wouldn’t you love to be able to jimmy your way in yourself? Not only can this skill save you a lot of time and money, being able to solve a problem like that on your own is pretty dang satisfying. Plus, you can help out all your friends when they get locked out too.

Knowing how to pick a lock may even help you save a life one day. ITS Tactical has highlighted a few instances in which someone picked their way into an older parent’s home because they weren’t answering the phone, only to find their parent collapsed on the floor. Could they have kicked the door down or broken a window? Sure. But picking a lock just takes a few seconds and doesn’t leave any damage. So why wouldn’t you do that if you could?

It’s cool and fun! There’s simply a “cool” factor of knowing how to pick a lock. Of all the Jason Bourne-esque skills every man wishes he had, it’s one of the most attainable. The idea that I can surreptitiously enter most doors without a key makes me feel all-powerful, like some sort of super ninja-spy.

It’s also a fun little hobby and something I like to do when I’m taking breaks from work or hanging out with the kids while they do their kid thing on the carpet. If you get really into lock picking, you can actually go to events and contests to test your skills against other lock pickers.

The Legality of Lock Picking

There’s a common misconception that the only people who can legally own lock picking tools are first responders or licensed locksmiths. The reality is that in most states, as long as you’re not trying to illegally enter someone’s home with your lock pick set, you can legally own, carry, and use lock picking tools.

There are, however, some states that have laws that make owning lock picking tools prima facie evidence of criminal intent. If you’re caught with picks in these states and you want to avoid criminal charges, you have to prove that you didn’t plan on committing a crime.

Long story short: owning lock picking tools and learning how to pick locks is perfectly legal and ethical as long as you do so without nefarious intent. Just be a decent human being. For a summary of lock picking laws across the country, see here.

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