Monday, February 16, 2015

The Global Economy: Entering "Crack-Up" Phase, Netanyahu Urges Jews To Flee To Israel, ISIS Shows Beheadings Of Christians Taken Hostage

David Stockman: The Global Economy Has Entered The Crack-Up Phase

Few people understand the global economy and its (mis)management better than David Stockman -- former director of the OMB under President Reagan, former US Representative, best-selling author of The Great Deformation, and veteran financier.
David is now loudly warning that events have entered the crack-up phase, which he predicts will be defined by the following 4 developments:
  • Increasingly desperate moves by the world's central banks
  • Increased market volatility and losses
  • Deflation in industrial and commodity prices
  • Decreasing demand due to Peak Debt

As the crack-up phase gains momentum, he predicts an increasing number of "financial breaks" that will add to the unpredictability and instability of the environment for investors. Even 'dancing close to the door' sounds excessively risky at this point.

We’re in the crack-up phase. I think there are four big characteristics of that which are going to shape the way the economy and the markets unfold as we go forward.

You’re going to see increasing desperation and extreme central bank financial repressionbecause they have gotten themselves painted so deep into the corner that they're lost and desperate. Almost week by week, we have another central bank – this week, it was Sweden – lowering their money market rates into negative territory. 

The second thing is increasing market disorder and volatility. In the last three months, the stock market has behaved like a drunken sailor. But it’s really just a bunch of robots and day traders that have traded chart points until somebody can figure out what is happening directionally in the world. It has nothing to do with information or incoming data about the real world.One of these days, the central banks are going to falter and the market is going to reset violently to prices that reflect the true risk on all this sovereign debt and the pretty cloudy outlook that’s ahead for the world market.

And then, finally, clearly, demand has run smack up against peak debt -- I think that’s the right word for it. We had a tremendous study come out in the last week or so from McKinsey, who do a pretty good job of trying to calculate, track and total up the amount of credit outstanding, public and private, in the world. We’re now at the $200 Trillion threshold. That’s up from only about $140 Trillion at the time of the crisis. So we’ve had a $60 Trillion expansion worldwide of debt just since 2008. During that same period, though, the GDP of the world saw a little more than $15 trillion from $55 or mid-$50s, roughly, to $70 Trillion. So we’ve generated, because of central bank money printing and all of this unprecedented monetary stimulus, we’ve generated something like $60 Trillion of new debt in the world and have barely gotten $15-17 Trillion of new GDP for all of that effort. And I think that is a measure of why the fundamental era is changing. That the boom is over and the crackup is under way when you see that kind of minimal yield from the vast amount of new debt that has been generated.

Israeli Prime Minister Benjamin Netanyahu on Sunday urged European Jews to move to Israel after a Jewish man was killed in an attack outside Copenhagen's main synagogue.

"Israel is your home. We are preparing and calling for the absorption of mass immigration from Europe," Netanyahu said in a statement, repeating a similar call after attacks by jihadists in Paris last month when four Jews were among the dead.

"Extremist Islamic terrorism has struck Europe again... Jews have been murdered again on European soil only because they were Jews," Netanyahu said in the statement.

The Israeli prime minister said his government was to adopt a $45 million (39.5 million euro) plan "to encourage the absorption of immigrants from France, Belgium and Ukraine".

"To the Jews of Europe and to the Jews of the world I say that Israel is waiting for you with open arms," Netanyahu said.

The new Greek government is maintaining its stance on privatisations and the need for extra time to negotiate a 'bridge programme', ahead of crunch talks with eurozone finance ministers on Monday (16 February).

The Eurogroup of finance ministers will gather at 15.00 Brussels time and the meeting is expected to last long into the night, as views differ on how to keep Greece in the eurozone and maintain the reforms pressure.

Germany, Finland, the Netherlands and Slovakia, say Athens needs to stick to the current programme which runs out on 28 February and get an extension, but only in return for delivering on the reforms that were promised by the previous Greek government.
Greek Prime Minister Alexis Tsipras, however, wants a new programme altogether. This would take months to negotiate and be subject to parliamentary approval in Germany and several other countries.
"It is not crucial to extend the current programme, you can also agree to start discussions on a new programme. This is a distinct possibility I would not exclude," a senior eurozone official said Friday in Brussels.
The source added that the International Monetary Fund's part of the bailout continues until 2016 and downplayed expectations for a final deal on Monday.
Tsipras, for his part, told German magazine Stern that he expects "difficult negotiations", but that he remains "full of confidence".
"I promise you: Greece will then, in six months` time, be a completely different country," he added.
For his part, German finance minister Wolfgang Schaeuble on Monday told Deutschlandfunk he is "very sceptical" there will be a deal later that day. He accused the new Greek government of "acting quite irresponsibly", but ruled out a Greek exit from the eurozone.

A video released by the Islamic State appeared to show the mass beheading of a group of Egyptian Christians by fighters in a recently formed Libyan arm of the militant group.
Identical in style and details to earlier execution videos released by IS, this was the first video the group has released depicting a killing outside of its core territory in Syria and Iraq. It appeared to show much closer communication and collaboration between IS and its far-flung satellite groups than Western officials previously believed.
Concern is already growing in Libya and the West that IS might capitalise on the chaos that has engulfed the country to establish and expand a base of operations there. At least three groups of Libyan fighters have already pledged loyalty to IS, one in each of the country's three regions – Barqa in the east, Fezzan in the south, and Tripolitania in the west.

In Cairo, where the military-backed government has been working to defeat the Islamist factions in neighbouring Libya, supporters of the government cited the video released on Sunday as new evidence that those factions pose a growing threat to Egypt's own security.

Confirming that those killed in the video were Egyptian Christians taken hostage in Libya weeks ago, Egyptian President Abdel-Fattah al-Sisi announced seven days of national mourning. In a televised address, he said Egypt would chose the "necessary means and timing to avenge the criminal killings."

Egyptian warplanes struck Islamic State targets in Libya early Monday morning, hours after a video of mass killing of Christians was published on the Internet, enraging Cairo.

A spokesman for the Armed Forces General Command announced the strikes on state radio Monday, marking the first time Cairo has publicly acknowledged taking military action in neighboring Libya, where extremist groups seen as a threat to both countries have taken root in recent years.

A commander in the Libyan air force, Saqer al-Joroushi, told Egyptian state television that dozens of militants had been killed in the bombing attacks, Reuters reported.

“There are casualties among the individuals, ammunition and the communication centers belonging to them,” al-said. “The number of deaths are not less than 40 or 50 for sure.”
The statement said the warplanes targeted weapons caches and training camps before returning safely. It said the strikes were “to avenge the bloodshed and to seek retribution from the killers.
“Let those far and near know that Egyptians have a shield that protects them,” it said.
The airstrikes came hours after the jihadists posted gruesome footage of the beheadings of 21 Egyptian Christians on the Internet, sparking outrage in Egypt and demands for revenge.
Libya’s air force meanwhile announced it had launched strikes in the eastern city of Darna, which was taken over by an Islamic State affiliate last year.
A visibly angry President Abdel-Fattah el-Sissi said Egypt “reserves the right to respond in a suitable way and time” in a televised speech, and declared seven days of mourning after the video was distributed by jihadists on social media.

I warned everyone that despite the posturing by the Jordanians and Obama, that ISIS is not on the defensive…they aren’t on the run either. They are advancing and they are ratcheting up their barbarity. In a scene reminiscent of Stephen King’s The Stand, ISIS just paraded 17 Kurdish fighters in cages on the back of trucks through the Iraqi city of Kirkuk. They will meet the same fate as the Jordanian pilot in retaliation for the Kurds killing ISIS fighters and dragging them through the streets of Kirkuk earlier this month. These are the tactics of Genghis Khan – they are both lethally barbaric and effective. As ISIS approaches each new city, people flee in panic… those that can anyway.

Reuters is reporting that al-Baghdadi is under complete ISIS control. So, once again I repeat, the Pentagon and Obama are spinning propaganda trying to make it look less severe than it is and keep it out of the headlines. But 300 Marines will fight to the death if need be. They’ll either win or they will take a whole bunch of dirt bags with them. Right now, ISIS fighters number between 20,000 to 31,500 in Syria and Iraq. And that’s a conservative estimate.
ISIS is expanding beyond its base in Syria and Iraq to establish militant affiliates in Afghanistan, Algeria, Egypt and Libya, American intelligence officials assert, raising the prospect of a new global war on terror. There are less formal pledges of support from “probably at least a couple hundred extremists” in countries such as Jordan, Lebanon, Saudi Arabia, Tunisia and Yemen, according to an American counterterrorism official. I fear that with the help of Obama, all of Iraq is gone and next on the menu is Jordan and Israel.

So, while all this goes on, 17 Kurdish fighters will almost assuredly be burned to death and videotaped for the world to see in living and dying color. ISIS will keep stepping up their horrific displays of strength. Let’s pray that that does not include the deaths of Marines. Because if that piece of propaganda is given to ISIS, Obama may try and shrug it off, but America will be so outraged that he saw it coming and did nothing to prevent it, that his time in office may indeed be cut short. We will not quietly stand by and betray our 300 as Obama would certainly love to do.

Also see:


Mrs.C said...

Warning on some of the language used in the video for this article...:(

"He Walked Around Paris ‘as a Jew’ for 10 Hours — the Reality Caught on Video Is Hard to Stomach"

Scott said...

I actually had that on my list to post and just didn't get to it. Its really something