Thursday, December 18, 2014

Birth Pains Increasing: Economic War With Russia May Lead To "Hot War"

There is so much going on right now it is hard to keep up...I'll separate posts by topic. First up is the Russian-U.S conflict that is looming, followed by developments in the Middle-East. The usual disclaimers apply to all articles.

On 21 September, the Ambassador of the Republic of Azerbaijan in Moscow said that his country is ready for trilateral cooperation in terms of the exchange of supplies of Iranian oil in Russia and stressed that his country can negotiate on this issue with Russia and Iran. At the same time last week, in one of his articles posted in the Moscow Times, it was reported that Russia may this year start sending its goods to Iran on the basis of the contract which presupposes «the exchange of oil for goods».

On December 5, Russian Minister of Economic Development, Alexei Ulyukayev announced, “It is possible that the implementation of this agreement will begin before the end of this year”.

On the other hand, the other day the U.S. State Department spokesman, Jennifer Psaki, stressed that “Washington is aware of the negotiations between Russia and Iran, and if the United States considers that this exchange agreement violates international sanctions against Iran, the U.S. will respond as appropriate”

It is clear that the US is closely watching new Russian contracts. Therefore, the signing of 16 agreements between India and Russia did not remain unnoticed by them. And Washington has already responded to the incident, calling on all countries to refuse deals with Moscow. By the way, this statement by Psaki has already been commented on by Russian Deputy Prime Minister Dmitry Rogozin. He noted that the United States reminds us of “evil little children” who “rejoice in other people’s failure and envy other people’s success”

In the past several days, Western bankers have committed two overt acts of war against Russia, namely, the plunging of oil prices and the recent cutting off of all liquidity to Russian banks. This reminds me of the days before World War II in which the United States followed a doctrine called the eight point plan which was designed to provoke Japan into attacking America so Roosevelt could use this as the excuse to get involved in World War II. As Mark Twain once said, “history doesn’t repeat itself, but it sure does rhyme”.

Has the American public received any reasonable explanation on how oil prices have plummeted at a time of year when they historically spike in order to price gouge holiday travelers? Of course there isn’t going to be any new revelations on this point. Here is the real story behind dropping oil prices.
Zero Hedge first reported  that brokers are now advising their clients that any existing Russian Ruble positions will be terminated without any further notice because of concerns related to the lack of Russian “capital controls”. At least that is the excuse that Western banks are using to run from the Ruble. The truth of the matter is that the West has declared war on Russia and its BRICS partners for undermining the Petrodollar

Ditching the Ruble marks a shift in Western banking strategy directed at the Russians. This change was necessitated because the West’s scheme to plunge the price of oil is not having an immediate effect on Russian economic actions. Although American consumers are reveling in their recent good fate with regard to the collapse of oil prices which have resulted in cheaper prices at the pump, there are some very dire consequences attached to American consumer’s good fortune.

The strategy of dropping oil prices in order to bring the Russians to their knees, will not work says Walker Todd. In a reported conversation with my colleague, Paul Martin, Todd told Martin that the low oil prices will not make Putin immediately blink because of (1) inflation and (2) Putin has a year’s reserve of oil and cash. In other words, the fuse has been lit for World War III. Does anyone think that Putin will allow his reserves to be depleted?

The Russian financial situation is about to go critical, despite their ability to temporarily whether the storm related to falling oil prices. The WSJ is reporting, the next driver of the Russian crisis is unquestionably going to begin in the Russian banking system because as the WSJ stated “…global banks are curtailing the flow of cash to Russian entities, a response to the ruble’s sharpest selloff since the 1998 financial crisis.” In other words, Western banks are cutting off all financial liquidity to Russia. This will soon paralyze the Russian economy.  

Russia’s banks are now isolated from the Western world. This is an act of war! The only question remaining is when will Putin launch a pre-emptive nuclear strike upon the West in order to preserve its economy? Will Putin wait until 25% of his oil reserves are gone? Will he wait until 50% of his oil reserves are spent? Before you answer, keep in mind that Putin will need his oil reserves to fight World War III.

I have learned that leaves for critical military personnel have been canceled effective on January 1, 2015. The leaves are  not uniformly cacanceledcross the breadth of the military. However, I have learned that military leaves for personnel serving in the nuclear command structure and specific elements of the nuclear submarine fleet are now canceled. The implication should be obvious as to what someone as to what the Pentagon believes is coming.

Schlumberger International is the largest oilfield corporation in the world employing 126,000 people in 85 countries. Recently, the son of Texas talk show host, Vinnie Pope, stated that Schlumberger has canceled all travel anywhere in the world. This travel ban began immediately after Thanksgiving. Clearly, Schlumberger is anticipating that something big is ready to happen. One could assume that whatever is coming is related to oil since this is the business of Schlumberger. It is interesting to note as an aside that  four years ago on my talk show, researcher Dianne Hunter reported the interconnections between Schlumberger to the Nature Conservancy and ultimately to the Queen of England.  These connections are worthy of further investigation which will be forthcoming

Clearly, something big is anticipated by people/corporations who are in position to know. I am hopeful that this article will shake the bushes a little bit in order to get a better grasp of the particular nature of what’s coming. One thing is for sure, Putin’s tolerance level for these sanctions will soon be exceeded.

Moscow has no doubts about Washington's involvement in deliberate and targeted efforts to create a difficult situation in the Russian economy, Deputy Foreign Minister Sergei Ryabkov said Wednesday.

"We have pointed out on numerous occasions that US officials have commented with poorly hidden satisfaction on negative trends in various segments of the Russian market lately, including the currency market," Ryabkov told reporters in Geneva

"We have no doubts that Washington, the financial and economic bloc of the US administration, has deliberately and purposely took part in efforts to create difficulties for Russian economy," Ryabkov said.
Earlier on Monday, the Russian Central Bank raised its key interest rates from 10.5 percent to 17 percent to stave off the worst collapse of theruble since the 1998 Russian financial crisis.
The rate increase failed to prevent the ruble from falling further against the dollar on Tuesday.
The ruble has lost nearly half of its value since July. The fall of the ruble has paralleled a 45 percent drop in the price of oil since July.

In articles over the past year, I have warned that the plan to dethrone the dollar and replace it with the special drawing rights basket currency system would be accelerated after it became clear that the U.S. Congress would refuse to pass the IMF reforms of 2010 proclaiming “inclusiveness” for developing economies, including the BRICS nations. The latest spending bill removed any mention of IMF reforms. The IMF, under Christine Lagarde, has insisted that if the U.S. did not approve its part of the reforms, the IMF would be forced to pursue a “Plan B” scenario. The details on this “plan B” have not been forthcoming, until now.

The Financial Times reported on the IMF shift away from the U.S. by asserting the authority to remove the veto power America has always enjoyed over the institution. This action is a stark reminder to mainstream talking heads and to those who believe the U.S. is the core economic danger to the world that the IMF is not an extension of American policy. If anything, the IMF and the U.S. are extensions of international banking policy, just as the BRICS are nothing more than puppets for the same self-serving financial oligarchy clamoring for the same IMF-controlled paradigm, as Vladimir Putin openly admitted:

On the one hand, with 40-odd USD per Petroleum Barrel, the Petrodollar is as weak as it has ever been,coupled with a US socio-economy as ill as it has ever been. On the other hand, isn’t Russia – China’s military technological backer, on the brink of collapse, for the same low Petroleum pricing, then?
Still, China might be up to dividing Russia with the USA. When the USD starts falling, its interest rate may rise- a bit like the present 17% annual rate on the ruble,producing a multiple QE effect, i.e. oligarchs’ benefits:
  1. The Big banks enjoy the interest-apartheid, maintained for now by “Cromnibus”.
  1. Money may keep on flowing in to the US from its conquests around the world like Japan & the EU,  because the Japanese socioeconomy is a zombie while the EU justifiably refuses more of its own QE.
  1. The Bonds-market bloodbath, requiring just a bit of interest rate rise, will be a wholistic Haircut: “All debts, except those of foreigners, were to be remitted.[2]” - on the now famous ‘Shemitah’ year.
       4. To the extent the USD still drops, it will be a partial-default on US loans to foreign lenders

The EU will, from Saturday (20 December), ban almost all forms of business co-operation with Crimea despite doubt on the future of its sanctions regime.
The new law - agreed on Thursday and seen by EUobserver - is designed to give teeth to EU non-recognition of Russia’s annexation of the Ukrainian region in March.
The EU has a separate sanctions regime on Russian officials, companies, banks, and energy companies.
But since it says Crimea is de jure Ukraine, new sanctions are needed to stop European firms from operating in the region in de facto support of Russia’s actions.
The EU decision stops European entities from: buying real estate; acquiring extra shares or creating new joint ventures with Crimean firms; providing loans or financial services.
It prohibits them “to sell, supply, transfer, or export goods and technology” in the areas of “transport; telecommunications; energy; [and] the prospection, exploration and production of oil, gas, and mineral resources”.
It prevents “technical assistance, or brokering, construction, or engineering services directly relating to infrastructure”.
It also bans “services directly related to tourism activities ... by nationals of member states, or from the territories of member states, or using vessels or aircraft under the jurisdiction of member states”.
It says specifically that EU cruise ships cannot “enter into or call at any port situated in the Crimean peninsula”.

The ban goes much further than previous Crimea sanctions in June and July.
Given Russia’s financial crisis and the fact it has to supply Crimea by sea, it's likely to make the region, which used to survive on Ukrainian subsidies, into an economic headache.
With Crimea’s maritime zone said to hold gas reserves, the ban on gas exploration technology will slow down efforts to cash in.

Western nations want to chain “the Russian bear,” pull out its teeth and ultimately have it stuffed, Russian President Vladimir Putin warned. He said anti-Russian sanctions are the cost of being an independent nation.

Putin used the vivid metaphor of a “chained bear” during his annual Q&A session with the media in Moscow in response to a question about whether he believed that the troubles of the Russian economy were payback for the reunification with Crimea.

“It’s not payback for Crimea. It’s the cost of our natural desire to preserve Russia as a nation, a civilization and a state,” Putin said.

“They won’t leave us alone. They will always seek to chain us. And once we are chain, they’ll rip out our teeth and claws. Our nuclear deterrence, speaking in present-day terms,” Putin said.

"As soon as this [chaining the bear] happens, nobody will need it anymore. They’ll stuff it. And start to put their hands on his Taiga [Siberian forest belt] after it. We’ve heard statements from Western officials that Russia’s owning Siberia was not fair,” he exclaimed.
“Stealing Texas from Mexico – was that fair? And us having control over our own land is not fair. We should hand it out!”

The West had an anti-Russian stance long before the current crisis started, Putin said. The evidence is there, he said, ranging from“direct support of terrorism in the North Caucasus,” to the expansion of NATO and the creation of its anti-ballistic missile system in Eastern Europe, and the way the western media covered the Olympic Games in Sochi, Putin said.

Having started at noon Moscow time (4am Eastern), Putin's annual Q&A run for a massive three and a half hours, during which the Russian leader took numerous questions from the public and as expected, reiterated the key "rally around the flag" talking points that have permeated Russian rhetoric over the past few weeks as the economic situation in Russia deteriorated.

While he did acknowledge the difficult economic reality, Putin sought to reassure his countrymen that the current weakness "would last no longer than two years." Putin promptly pivoted against the west and accused the U.S. and European Union of trying to undermine his country and blaming external factors for the sharp plunge in the ruble, notably the drop in oil saying that “the economy will naturally adapt to the new conditions of low oil prices.”
As caught by the WSJ, when he was asked by a Russian television reporter about the sense that new divisions in Europe have emerged since the Ukraine crisis, Putin blamed the tensions on the West, saying “they didn’t stop building walls” after the end of the Cold War. He accused the West of building up the North Atlantic Treaty Organization toward Russia’s borders and expanding an antimissile systems.
“It’s not a matter of Crimea. We are defending our independence, our sovereignty and our right to exist, we should all understand this,” he said later in response to a question about whether the current economic troubles were “payment for Crimea.”
In tough language, Mr. Putin returned to an analogy he’d used earlier this fall, comparing Russia to a bear in the Siberian Taiga wilderness, saying it was naive to hope that the West would leave Russia alone.
“They will always try to put it in chains and once they have it in chains, they will take out its teeth and claws, which in this case means our strategic nuclear deterrent,” he said. “Once they’ve got the Taiga, they won’t need the bear,” he said, accusing Western leaders of saying publicly that Russia should be deprived of its vast natural resources.
Asked about tensions with the West, Putin struck a harsh tone, accusing it of seeking to subdue and disarm Russia. Acknowledging that Western sanctions over the country’s role in Ukraine were biting, he said the current economic troubles “are payment for our independence, our sovereignty.”

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