A Furious Turkey Says US Is “Acting Like An Enemy,” Demands Washington Brand Kurds “Terrorists”
Zero Hedge : February 20, 2016
[…]
The problem for Turkey, Saudi Arabia, and Qatar is optics. That is, everything anyone does in Syria has to be justified by an imaginary “war on terror.” Turkey can’t say it’s intervening to keep the rebels from being defeated by the Russians, and similarly, Saudi Arabia, Qatar, the US, France and everyone else needs to preserve the narrative and pretend as though this all doesn’t boil down to the West and the Sunnis versus the Russians and the Shiites.
Here’s what we said earlier this month: somehow, Turkey and Saudi Arabia need to figure out how to spin an attack on the YPG and an effort to rescue the opposition at Aleppo as an anti-ISIS operation even though ISIS doesn’t have a large presence in the area.
Well it turns out that’s an impossible task and so, Turkey has resorted to Plan B: a possible false flag bombing and the old “blame the Kurds” strategy.
The attack on military personnel in Ankara this week was claimed by The Kurdistan Freedom Hawks (an offshoot of the PKK) in retaliation for Turkey’s aggressive campaign in Cizre (as documented here), but Erdogan has taken the opportunity to remind the world that the PKK and the YPG are largely synonymous. That is, they’re both armed groups of non-state actors and if one is a terrorist organization, then so is the other.
Erdogan’s anti-Kurd stance is complicated immeasurably by the fact that both the US and Russia support the YPG out of sheer necessity. The group has proven especially adept at battling ISIS and has secured most of the border with Turkey. As we noted way back in August, it was inevtiable that Washington and Ankara would come to blows over the YPG. After all, the US only secured access to Incirlik by acquiescing to Erdogan’s crackdown on the PKK, but some of the missions the US was flying from Turkey’s air base were in support of the YPG. The whole thing was absurd from the very beginning.
Well now, Turkey is not only set to use the fight against the YPG as an excuse to intervene in Syria on behalf of the Sunni rebels battling to beat back the Russian and Iranian advance, but Ankara is also demanding that the US recognize the YPG as a terrorist group. If Washington refuses, “measure will be taken.”
“If the Unites States is really Turkey’s friend and ally, then they should recognize the PYD — a Syrian branch of the PKK — as a terrorist organization. If a friend acts as an enemy, then measures should be taken, and they will not be limited to the Incirlik Airbase, Turkey has significant capabilities,” Erdogan advisor Seref Malkoc told Bugun newspaper.
So yeah. Turkey just threatened the US. It’s notable that Malkoc specifically said actions would go “beyond Incirlik,” because pulling access to the base would be the first thing any regional observers would expect from Ankara in the event of a spat with Washington. For Turkey to say that measures will go beyond that, opens the door for Erdogan to become openly hostile towards his NATO allies.
“The only thing we expect from our U.S. ally is to support Turkey with no ifs or buts,” PM Ahmet Davutoglu told a news conferenceon Saturday.”If 28 Turkish lives have been claimed through a terrorist attack we can only expect them to say any threat against Turkey is a threat against them.”
In other words, Turkey is explicitly asking the US to support Ankara’s push to invade Syria and not only that, Erdogan wants Washington to sanction attacks on the YPG which the US has overtly armed, trained, and funded. “The disagreement over the YPG risks driving a wedge between the NATO allies at a critical point in Syria’s civil war,” Reuters wrote on Saturday. “On Friday, a State Department spokesman told reporters Washington would continue to support organizations in Syria that it could count on in the fight against Islamic State – an apparent reference to the YPG.”
Right. “Washington will continue to support organizations in Syria that it can count on in the fight against Islamic State.” So we suppose that means the US will support Russia. And Iran. And Hezbollah. But most certainly not Turkey, who is the biggest state sponsor of the Islamic State on the face of the planet.
(read the full article at zero hedge)
Roberta Rampton and Ben Hirschler
Reuters : February 8, 2016
Barack Obama will ask the U.S. Congress for more than $1.8 billion in emergency funds to fight Zika at home and abroad and pursue a vaccine, the White House said on Monday, but the president also said there is no reason to panic over the mosquito-borne virus.
Zika, spreading rapidly in South and Central America and the Caribbean, has been linked to severe birth defects in Brazil and public health officials’ concern is focused on pregnant women and woman who may become pregnant.
Obama’s request to Congress includes $200 million for research, development and commercialization of new vaccines and diagnostic tests for the virus.
In addition, the London-based European Medicines Agency (EMA), Europe’s drugs regulator, said it has formed an expert task force on Zika to advise companies working on vaccines and medicines against the virus.
There are no vaccines or treatment for Zika and none even undergoing clinical studies, as the disease had previously been viewed as relatively benign. Most infected people develop either no symptoms or mild ones like a fever and skin rashes.
(read the full article at The Globe & Mail
RELATED:
Zika Outbreak Epicenter in Same Area Where GM Mosquitoes Were Released in 2015
Zero Hedge : February 6, 2016
Two years after being fined for falsifying safety records, nine months after a transformer exploded at the Indian Point Nuclear Reactor just 37 miles from midtown Manhattan, and two months after Entergy – the plant’s operator – shut down the Unit 2 reactor after a major power outage cut power to several control rods (when the company assured that no radioactivity was released into the environment), this afternoon NY Governor Andrew Cuomo said he learned that “radioactive tritium-contaminated water” had leaked into the groundwater at the nuclear facility in Westchester County.
Cuomo, in a letter Saturday to the state Health Department and the Department of Environmental Conservation, called for the probe into the Indian Point NPP after he said Entergy, the plant’s owner, reported “alarming levels of radioactivity” at three monitoring wells, with one well’s radioactivity increasing nearly 65,000 percent.
It is unclear if the facility was taking a page out of the Fukushima “crisis response” book, or was being honest when it said that the contamination has not migrated off site “and as such does not pose an immediate threat to public health.” For the sake of millions of downriver New Yorkers, we hope it was the latter.
From Cuomo’s statement:
“Yesterday I learned that radioactive tritium-contaminated water leaked into the groundwater at the Indian Point Nuclear facility. The company reported alarming levels of radioactivity at three monitoring wells, with one well’s radioactivity increasing nearly 65,000 percent. The facility reports that the contamination has not migrated off site and as such does not pose an immediate threat to public health.
“Our first concern is for the health and safety of the residents close to the facility and ensuring the groundwater leak does not pose a threat.
“This latest failure at Indian Point is unacceptable and I have directed Department of Environmental Conservation Acting Commissioner Basil Seggos and Department of Health Commissioner Howard Zucker to fully investigate this incident and employ all available measures, including working with Nuclear Regulatory Commission, to determine the extent of the release, its likely duration, cause and potential impacts to the environment and public health.”
The Governor’s letter directing Acting Commissioner Seggos and Commissioner Zucker to their begin investigation can be viewed here. The text of that letter is also available below:
Despite Indian Point’s denial that the contamination has migrated off site, Cuomo said that the incident requires a full investigation.
There was no immediate comment from Indian Point on the situation, Lohud reported.
The plant, located in Buchanan, NY which supplies about 30 percent of the energy to New York City, has been under increased scrutiny from Cuomo’s office, and the Democratic governor supports closing the plant, even as he supports keeping open two other upstate nuclear facilities.
In December, Cuomo ordered an investigation into Indian Point after a series of unplanned shutdowns, citing its risks being just outside the city and in the populated suburbs.
(read the full article at zero hedge)
RECENT ARTICLES ABOUT RADIATION:
Peer Reviewed Research Exposes Fukushima Cover-up By Japan’s Nuclear Safety Authority
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AlternativeFreePress.com
what is happening is quite simple:
Chinese investors smuggled out millions in embezzled cash, hot money or perfectly legal funds, bypassing the $50,000/year limit in legal capital outflows.
They make “all cash” purchases, usually sight unseen, using third parties intermediaries to preserve their anonymity, or directly in person, in cities like Vancouver, New York, London or San Francisco.
The house becomes a new “Swiss bank account”, providing the promise of an anonymous store of value and retaining the cash equivalent value of the original capital outflow.
Then the owners disappear, never to be heard from or seen again.As more Chinese scramble to engage and repeat if only the first three steps, the price of local housing, which is merely a store of value to price indiscriminate foreign buyers, soars while it makes home purchases for the domestic population prohibitively expensive and virtually impossible.
These Vancouver Homes Sold For Millions In 2011 And Have Been Vacant And Rotting Since: Here’s Why
Interviews conducted by B.C. Securities Commission investigators and read into evidence in a Securities Commission fraud hearing against Ayaz Dhanani reveal a complex real estate transaction with connections to alleged fraud and organized crime players. …
NDP MLA David Eby, B.C.’s opposition housing critic, said facts gathered by The Province provide perhaps unprecedented detail and corroboration of similar allegations reported to his office concerning offshore buyers and local realtors.
“I was really troubled by the facts in your case,” Eby said in an interview. “And I’m concerned this is not a one-off situation, and this could be a systemic, regular practice. There is enough information to raise red flags for investigations.”
“It has come to light that institutions have been, I would say inadvertently, making mortgages to people whose income has been falsified,” said Jeremy Rudin, superintendent of financial institutions.
Mortgage fraud a key threat to Canada’s financial system
Vancouver Real Estate Goes Full-Retard; Average Home Price Now $1.8 Million
Properties are traded one or more times before a deal closes – legal but controversial flipping that creates opportunities for agents to make multiple commissions and investors to profit tax-free from houses that are not yet technically in their possession.
Because assignment sales are rarely listed publicly, they have created a thriving grey market that is accessible largely to investors, speculators and real estate agents who have insider information.
What’s more, the assignment market appears to reward neither the original seller nor the ultimate buyer, despite pushing prices higher and higher: Sellers receive less for their properties than what buyers are finally willing to pay at the end of the chain. And buyers – many of them foreign or backed by foreign investors – pay more than they would have to if the middlemen weren’t involved.
The resulting distortions threaten to strain the public’s trust in the real estate brokerage business, according to some in the profession, while others openly question the sustainability of a market they are heavily invested in – and helped create.
“It worries me a lot that this could all come crashing down. I worry about it all the time,” said one Re/Max agent, Khalid Hasan, who said he owns or co-owns 15 to 20 properties, all destined for resale.
“A lot of people are just assigning and flipping in this market – because they can make more money,” said Mr. Hasan, who said he’s bought several properties through assignments. “We witness assigning all the time – crazy assignments.”
The real estate technique fuelling Vancouver’s housing market
MintPress News : January 29, 2016
Activists from Fresno are alarmed after a local anti-corruption whistleblower was found dead not long after forecasting his own demise on social media.
While responding to a house fire on the afternoon of Jan. 20, firefighters found John Lang, 51, unresponsive. Later that day, he was pronounced dead at a local hospital, though it wasn’t clear whether his death was caused by the fire or by the multiple stab wounds to his back and abdomen. According to a Jan. 25 report from The Fresno Bee, “Investigators are looking into the cause of the fire,” which police described as suspicious.
The timing of Lang’s death is suspicious to local activists, who reported that Lang had predicted his demise in recent, increasingly alarmed posts online. Dylan Donnelly documented Lang’s warnings in a Jan. 26 investigation for independent media site Fresno People’s News, noting that Lang had been “a frequent poster in the Fresno People’s Media group on Facebook and acquaintance to many in the Fresno activist community.”
The series of postings began on Jan. 13, when Lang shared his belief that police were targeting him not just for being an outspoken activist, but because he was exposing a policing “scheme” that he said targeted Fresno’s most disadvantaged residents.
(Read the full article at MintPress News)
CoNN
ANONHQ : January 29, 2016
Hillary’s emails truly are the gifts that keep on giving. While France led the proponents of the UN Security Council Resolution that would create a no-fly zone in Libya, it claimed that its primary concern was the protection of Libyan civilians (considering the current state of affairs alone, one must rethink the authenticity of this concern). As many “conspiracy theorists” will claim, one of the real reasons to go to Libya was Gaddafi’s planned gold dinar.
One of the 3,000 Hillary Clinton emails released by the State Department on New Year’s Eve (where real news is sent to die quietly) has revealed evidence that NATO’s plot to overthrow Gaddafi was fueled by first their desire to quash the gold-backed African currency, and second the Libyan oil reserves.
The email in question was sent to Secretary of State Hillary Clinton by her unofficial adviser Sydney Blumenthal titled “France’s client and Qaddafi’s gold.”
From Foreign Policy Journal:
“The email identifies French President Nicholas Sarkozy as leading the attack on Libya with five specific purposes in mind: to obtain Libyan oil, ensure French influence in the region, increase Sarkozy’s reputation domestically, assert French military power, and to prevent Gaddafi’s influence in what is considered ‘Francophone Africa.’
“Most astounding is the lengthy section delineating the huge threat that Gaddafi’s gold and silver reserves, estimated at “143 tons of gold, and a similar amount in silver,” posed to the French franc (CFA) circulating as a prime African currency.”
And here is the section of the email proving that NATO had ulterior motives for destroying Libya:
“This gold was accumulated prior to the current rebellion and was intended to be used to establish a pan-African currency based on the Libyan golden Dinar. This plan was designed to provide the Francophone African Countries with an alternative to the French franc (CFA).
“(Source Comment: According to knowledgeable individuals this quantity of gold and silver is valued at more than $7 billion. French intelligence officers discovered this plan shortly after the current rebellion began, and this was one of the factors that influenced President Nicolas Sarkozy’s decision to commit France to the attack on Libya. According to these individuals Sarkozy’s plans are driven by the following issues:
a. A desire to gain a greater share of Libya oil production,
b. Increase French influence in North Africa,
c. Improve his internal political situation in France,
d. Provide the French military with an opportunity to reassert its position in the world,
e. Address the concern of his advisors over Qaddafi’s long term plans to supplant France as the dominant power in Francophone Africa)”
Ergo as soon as French intel discovered Gaddafi’s dinar plans, they decided to spearhead the campaign against him- having accumulated enough good reasons to take over.
Sadly, Gaddafi had earlier warned Europe (in a “prophetic” phone conversations with Blair) that his fall would prompt the rise of Islamic extremism in the West. A warning that would go unheeded; what’s a few lives in France and Libya, if the larger goal lines the pockets of politicians and the elite so much better after all?
Claire Bernish
The Anti Media : January 28, 2016
The World Health Organization announced it will convene an Emergency Committee under International Health Regulations on Monday, February 1, concerning the Zika virus ‘explosive’ spread throughout the Americas. The virus reportedly has the potential to reach pandemic proportions — possibly around the globe. But understandingwhy this outbreak happened is vital to curbing it. As the WHO statement said:
“A causal relationship between Zika virus infection and birth malformations and neurological syndromes … is strongly suspected. [These links] have rapidly changed the risk profile of Zika, from a mild threat to one of alarming proportions.
“WHO is deeply concerned about this rapidly evolving situation for 4 main reasons: the possible association of infection with birth malformations and neurological syndromes; the potential for further international spread given the wide geographical distribution of the mosquito vector; the lack of population immunity in newly affected areas; and the absence of vaccines, specific treatments, and rapid diagnostic tests […]
“The level of concern is high, as is the level of uncertainty.”
Zika seemingly exploded out of nowhere. Though it was first discovered in 1947, cases only sporadically occurred throughout Africa and southern Asia. In 2007, the first case was reported in the Pacific. In 2013, a smattering of small outbreaks and individual cases were officially documented in Africa and the western Pacific. They also began showing up in the Americas. In May 2015, Brazil reported its first case of Zika virus — and the situation changed dramatically.
Brazil is now considered the epicenter of the Zika outbreak, which coincides with at least 4,000 reports of babies born with microcephaly just since October.
When examining a rapidly expanding potential pandemic, it’s necessary to leave no stone unturned so possible solutions, as well as future prevention, will be as effective as possible. In that vein, there was another significant development in 2015.
Oxitec first unveiled its large-scale, genetically-modified mosquito farm in Brazil in July 2012, with the goal of reducing “the incidence of dengue fever,” as The Disease Daily reported. Dengue fever is spread by the same Aedes mosquitoes which spread the Zika virus — and though they “cannot fly more than 400 meters,” WHO stated, “it may inadvertently be transported by humans from one place to another.” By July 2015, shortly after the GM mosquitoes were first released into the wild in Juazeiro, Brazil, Oxitec proudly announced they had “successfully controlled the Aedes aegypti mosquito that spreads dengue fever, chikungunya and zika virus, by reducing the target population by more than 90%.”
Though that might sound like an astounding success — and, arguably, it was — there is an alarming possibility to consider.
Nature, as one Redditor keenly pointed out, finds a way — and the effort to control dengue, zika, and other viruses, appears to have backfired dramatically.
The particular strain of Oxitec GM mosquitoes, OX513A, are genetically altered so the vast majority of their offspring will die before they mature — though Dr. Ricarda Steinbrecher published concerns in a report in September 2010 that a known survival rate of 3-4 percent warranted further study before the release of the GM insects. Her concerns, which were echoed by several other scientists both at the time and since, appear to have been ignored — though they should not have been.
Those genetically-modified mosquitoes work to control wild, potentially disease-carrying populations in a very specific manner. Only the male modified Aedes mosquitoes are supposed to be released into the wild — as they will mate with their unaltered female counterparts. Once offspring are produced, the modified, scientific facet is supposed to ‘kick in’ and kill that larvae before it reaches breeding age — if tetracycline is not present during its development. But there is a problem.
According to an unclassified document from the Trade and Agriculture Directorate Committee for Agriculture dated February 2015, Brazil is the third largest in “global antimicrobial consumption in food animal production” — meaning, Brazil is third in the world for its use of tetracycline in its food animals. As a study by the American Society of Agronomy, et. al., explained, “It is estimated that approximately 75% of antibiotics are not absorbed by animals and are excreted in waste.” One of the antibiotics (or antimicrobials) specifically named in that report for its environmental persistence is tetracycline.
In fact, as a confidential internal Oxitec document divulged in 2012, that survival rate could be as high as 15% — even with low levels of tetracycline present. “Even small amounts of tetracycline can repress” the engineered lethality. Indeed, that 15% survival rate was described by Oxitec:
“After a lot of testing and comparing experimental design, it was found that [researchers] had used a cat food to feed the [OX513A] larvae and this cat food contained chicken. It is known that tetracycline is routinely used to prevent infections in chickens, especially in the cheap, mass produced, chicken used for animal food. The chicken is heat-treated before being used, but this does not remove all the tetracycline. This meant that a small amount of tetracycline was being added from the food to the larvae and repressing the [designed] lethal system.”
Even absent this tetracycline, as Steinbrecher explained, a “sub-population” of genetically-modified Aedes mosquitoes could theoretically develop and thrive, in theory, “capable of surviving and flourishing despite any further” releases of ‘pure’ GM mosquitoes which still have that gene intact. She added, “the effectiveness of the system also depends on the [genetically-designed] late onset of the lethality. If the time of onset is altered due to environmental conditions … then a 3-4% [survival rate] represents a much bigger problem…”
As the WHO stated in its press release, “conditions associated with this year’s El Nino weather pattern are expected to increase mosquito populations greatly in many areas.”
Incidentally, President Obama called for a massive research effort to develop a vaccine for the Zika virus, as one does not currently exist. Brazil has now called in 200,000 soldiers to somehow help combat the virus’ spread. Aedes mosquitoes have reportedly been spotted in the U.K. But perhaps the most ironic — or not — proposition was proffered on January 19, by the MIT Technology Review:
“An outbreak in the Western Hemisphere could give countries including the United States new reasons to try wiping out mosquitoes with genetic engineering.
“Yesterday, the Brazilian city of Piracicaba said it would expand the use of genetically modified mosquitoes …
“The GM mosquitoes were created by Oxitec, a British company recently purchased by Intrexon, a synthetic biology company based in Maryland. The company said it has released bugs in parts of Brazil and the Cayman Islands to battle dengue fever.”
SOURCE: The Anti Media (cc)
Masakazu Honda and Miki Aoki
THE ASAHI SHIMBUN : January 18, 2016
Radioactive substances that contaminated rice paddies here in 2013 came from the crippled Fukushima No. 1 nuclear plant, an international group of researchers said, rejecting a denial issued by Japan’s nuclear safety authority.
The researchers, led by Akio Koizumi, a professor at Kyoto University’s Graduate School of Medicine, reached the conclusion after analyzing radioactive substances and taking spot readings of radioactivity levels around Minami-Soma.
Koizumi presented the final report of the group, consisting of 11 researchers from Japan, Europe and the United States, to local farmers and other parties at a community center in Minami-Soma on Jan. 17.
“The cause of further contamination was the radioactive particles dispersed from contaminated rubble during the cleanup effort at the Fukushima No. 1 nuclear plant,” Koizumi concluded in the report.
Earlier, the agriculture ministry and the Nuclear Regulatory Authority (NRA) gave different views on the source of the contaminated rice.
In 2013, rice crops from areas of Minami-Soma were found with unexpectedly high radioactivity levels more than two years after the triple meltdown at the nuclear plant located 20 kilometers south of the city.
One theory was that highly radioactive substances were dispersed when workers were lifting and removing contaminated rubble at the Fukushima plant on Aug. 19 that year. Two workers at the plant were exposed to high doses of radiation during the cleanup process.
The Ministry of Agriculture, Forestry and Fisheries said the cause of the contaminated rice was “unknown” although it acknowledged “the possibility of the dispersal of contaminated dust.” The farm ministry discontinued its investigation without specifying the source of the contamination.
The NRA, however, said the contaminated rice was not related to the cleanup work at the nuclear plant.
The Minami-Soma city assembly expressed outrage over the NRA’s stance. Some in the city suspected the NRA of a cover-up.
Koizumi and the other researchers digitally recreated an accidental dispersal of contaminated dust from the plant in August 2013.
They used a new analysis system to estimate the amount of radioactive cesium that spread toward Minami-Soma based on radioactivity readings around the city and other factors.
The group’s cesium estimate was more than 3.6 times the amount initially estimated by the NRA.
The research group in September 2014 also collected soil samples from 10 locations around the contaminated rice paddies to determine the amount of strontium 90 in the area.
They confirmed that the ratio of strontium 90 to radioactive cesium in the soil samples was similar to the ratio that would be found near the Fukushima nuclear plant.
[…]
They also confirmed radioactive substances captured on equipment that keeps track of airborne radioactive particles around Minami-Soma. The researchers concluded that a highly irregular plume of radioactive cesium reached Minami-Soma on the third week of August 2013.
“Every single piece of data in the paper supports the fact that contamination by radioactive dust came from the debris at the nuclear plant,” Koizumi said.
Asked about the NRA’s conclusion, Koizumi said: “It seems they were blinded by their estimated amount of dispersed particles, and their choice for the analysis system was misguided. This kind of attitude would only increase the anxiety of residents in the affected areas.”
The group’s findings were published in the international academic journal Environmental Science & Technology last month after a peer review.
(Full article at THE ASAHI SHIMBUN)
More On Fukushima HERE
Doug Noland
Credit Bubble Bulletin : January 23, 2016
Global markets were too close to dislocating this week. Wednesday saw the S&P500 trade decisively below August lows. Japan’s Nikkei 225 Index sank to test November 2014 lows. Emerging stocks fell to six-year lows, with European equities at 13-month lows. Wednesday also saw WTI crude trade below $27 (sinking almost 7%), boosting y-t-d losses to 25%. Credit spreads were blowing out, and currency markets were increasingly disorderly. Early Thursday trading saw the Russian ruble down 5.3% (at a record low vs. dollar), with Brazil’s real also under intense pressure. The Hong Kong dollar peg was looking vulnerable. The VIX traded to the highest level since the August “flash crash,” while the Japanese yen traded to one-year highs (vs. $). De-risking/de-leveraging dynamics were quickly overwhelming global markets.
Something had to be done…
Bloomberg adjusted its original Friday morning headline, “Global Stocks Charmed by Draghi Effect as Oil Rallies With Ruble,” to “Global Stocks Charmed by Central Banks as Oil Jumps, Bonds Fall.” Draghi did have some help. The People’s Bank of China (PBOC) injected $61 billion of liquidity into the system, the “most in three years.” China’s Vice President assured the markets that Beijing will “look after” Chinese stock investors. There was also talk of added stimulus from the Bank of Japan (BOJ) and a much more dovish Fed. The markets interpreted a feistily dovish Draghi as evidence that global central bankers had assumed crisis-management mode.
The markets will now have six-weeks to ponder whether Draghi can deliver. Even assuming that he successful drags ECB hawks along, it’s not easy to envisage how an additional $10 billion or so of QE will have much impact on (bursting) global Bubble Dynamics. An emphatic Draghi was, however, certainly capable of reversing global risk markets that were increasingly positioned/hedged for bearish outcomes. Over the years we’ve witnessed powerful short squeezes take on lives of their own, repeatedly giving the global Bubble an extended lease on life. And while bear market rallies tend to be the most spectacular, at this point I expect nothing beyond fleeting effects on the unfolding global Bubble unwind. Draghi is a seasoned pro at punishing speculators betting against Europe.
The media fixates on “corrections,” “bottoms” and “bear markets.” Of late, there’s been some comparison of the current backdrop to previous periods, most notably 2008/09 and 2000. I have no desire to try to leapfrog other bearish commentary. My objective is always to present an analytical framework that assists in understanding the extraordinary world in which we live and operate.
Going back to 2009, I’ve referred to the “global government finance Bubble” as the “Granddaddy of All Bubbles.” I am these days more fearful than ever that this period has indeed been the terminal phase of decades of serial Bubbles. Bubble excess made it to the heart of contemporary “money” and Credit – central bank Credit and government debt. This period also saw a historic Bubble engulf the emerging markets, including China. It encompassed stocks, bonds, derivatives and financial assets generally – virtually everywhere. Central bankers “printed” Trillions out of thin air.
Today’s predicament is becoming increasingly apparent: as the current global Bubble deflates and risk aversion takes hold, there is both a lack of sources of reflationary Credit and insufficient economic growth potential necessary to inflate an even bigger reflationary global Bubble. With confidence in central banking waning and the monstrous Chinese Bubble faltering, there is confirmation in the thesis that a most prolonged period of inflationary financial Bubbles is drawing to a close.
The collapse of the Soviet Union coupled with the Greenspan Fed’s push into activist central banking ushered in what was almost universally accepted as an epic victory for free-market capitalism. Too much of this was a quite powerful illusion. U.S. finance was becoming increasingly state-directed. The Fed manipulated interest-rates and the shape of the yield curve. The Washington-based GSEs moved to completely dominate mortgage Credit. The massive U.S. “too big to fail” financial conglomerates came to dictate securities and derivatives-based finance – and market-based finance monopolized the real economy. And each faltering Bubble ensured more aggressive central bank “activism” – lower rates, greater market intervention and increasingly outlandish talk of “helicopter money” and the government printing press.
With the bursting of the mortgage finance Bubble, the Fed and global central banks resorted to desperate measures – reckless “money” printing, manipulation and market liquidity backstops. Along the way, virtually the entire world adopted U.S.-style market-based finance and policymaking. The process culminated with communist China adopting U.S.-style finance. So long as inflating financial markets were supportive of central planner objectives, everyone could pretend it was a move toward free markets.
What began with Greenspan’s early-nineties covert bank recapitalization evolved into Bernanke’s foolish policy to openly inflate risk markets with new central bank Credit. Amazingly, U.S. inflationism took the world by storm.
The issue today goes much beyond a stock market correction, a bear market or even global financial crisis. Contemporary central banking has failed. Theories have failed. Doctrine has failed. The inability to spur self-sustaining economic recovery has been a major issue. Yet, from my perspective, the critical failure has been the incapacity to generate general price inflation. The delusion has been that central bankers would always enjoy the capacity to inflate away excessive debt levels. Bubbles needn’t be feared, not with central banks “mopping” up with reflationary monetary stimulus. And for quite a while it seemed that “enlightened” contemporary inflationist doctrine had it all figured out.
Central bankers and market-based finance are a dangerous mix. Over the years, I have referred to market-based finance as the most powerful monetary policy transmission mechanism in the history of central banking. Greenspan could inflate the markets – and the entire system – with inklings of a 25 bps rate cut. Later it took Dr. Bernanke Trillions – the dawn of “whatever it takes,” and markets rejoiced.
Central banks around the world abused their newfound power and the power of financial markets. And for seven years egregious monetary inflation has been used specifically to inflate global securities markets. And “shock and awe,” “whatever it takes,” and “push back against a tightening of financial conditions” all worked to ensure the markets that central bankers would no longer tolerate crises, recessions or even a bear market.
For seven long years, risk misperceptions and market price distortions turned progressively more severe. Inflating securities markets around the globe became, as they do, self-reinforcing. “Money” flooded into the markets – especially through ETFs and derivatives. Trillions flowed into perceived safe equities index and corporate debt instruments. With central bankers providing a competitive advantage for leveraging and professional speculation, the hedge fund industry swelled to $3.0 TN (matching the $3 TN ETF complex). Wealth effects and the loosest financial conditions imaginable boosted spending, corporate profits, incomes, investment, tax receipts and GDP – not to mention M&A, stock repurchases and financial engineering.
But this historic wealth illusion has been built on a foundation of false premises – that central bank monetization can inflate price levels and spur system inflation necessary to grow out of debt problems; that securities markets should trade at higher multiples based upon contemporary central banker capacities to spur self-reinforcing economic recovery and liquid securities markets; that 2008 was “the hundred year flood.” In reality, central bankers inflated history’s greatest divergence between global securities prices and economic prospects.
Global markets have commenced what will be an extremely arduous adjustment process. Markets must now confront the harsh reality that central bankers don’t have things under control. Risk premiums must rise significantly – which means the destabilizing self-reinforcing dynamic of lower securities prices, faltering economic growth, uncertainty, fear and even higher risk premiums. This means major issues for global derivatives markets that have inflated to hundreds of Trillion on misperceptions and specious assumptions. I’ll assume Draghi, Kuroda, Yellen, the PBOC and others resort to more QE – and perhaps they prolong the adjustment period while holding severe global crisis at bay. But the global Bubble has burst. And if QE has been largely ineffective in the past, we’ll see how well it works as confidence in central banking withers. Perhaps this helps explain why global financial stocks now trade like death.
Excerpted from credit bubble bulletin