Monday, November 28, 2011
Iranian Defense Minister Brigadier General Ahmad Vahidi said that Iran has up to 150,000 missiles pointed at Israel, according to the semi-official Iranian FARS news agency.
According to the report, Vahidi questioned threats against the Islamic Republic from the Jewish State, asking "How many missiles have they prepared themselves for? 10,000? 20,000? 50,000? 100,000, 150,000 or more?"
The Iranian defense minister also warned against an offensive by the United States, saying it would meet a hard defensive line were it to attack Iran.
"The US and its allies should know that Iran is so powerful that its battling will teach the US how to fight and what war and warrior mean," Vahidi told a crowd of 50,000 volunteer soldiers in Bushehr, a city where one of the country's nuclear power plants is located.
Iran claims the country's nuclear program is for peaceful purposes, but an incriminating International Atomic Energy Agency report said that Tehran has continued to covertly develop nuclear-weapons technology.
Since the release of that report, Western nations have called for international pressure on the regime in Tehran to halt their nuclear program.
The United States, the United Kingdom and Canada cast stringent sanctions on Iran's energy and financial sectors, a move which pushed Iran to expel the British ambassador.
France and the Netherlands have called for similar action against the Islamic Republic.
On Saturday, Tehran made a rare threat against Turkey, saying it could target the recently installed NATO anti-missile shield in any future conflict.
"We are ready to attackNATO's missile shield in Turkey if we face a threat and then we will follow other aims," the semi-official Mehr news agency quoted Amir Ali Hajizadeh, head of the Revolutionary Guards' aerospace division, as saying.
Reporting from Colorado Springs, Colo. — In the still of a cold November evening, a small gathering of pagans, led by two witches, begins preparations for the coming winter solstice. But these are not just any pagans, and this is not just any setting. They are future officers of the United States Air Force practicing their faith in the basement of the Air Force Academy's cadet chapel.
Their ranks are slim. According to the academy's enrollment records, only three of 4,300 cadets identified themselves as pagans, followers of an ancient religion that generally does not worship a single god and considers all things in nature interconnected.
Still, the academy this year dedicated an $80,000 outdoor worship center — a small Stonehenge-like circle of boulders with propane fire pit — high on a hill for the handful of current or future cadets whose religions fall under the broad category of "Earth-based." Those include pagans, Wiccans, druids, witches and followers of Native American faiths.
Witches in the Air Force? Chaplain Maj. Darren Duncan, branch chief of cadet faith communities at the academy, sighs. A punch line waiting to happen, and he's heard all the broom jokes.
For the record, there are no witches among the cadets this year. But the two spiritual leaders for all Earth-based religions — one a civilian, one an Air Force reservist — are witches and regularly cast spells, which they say is not so different from offering prayer. There also are no druids this year. But there could be next year.
"We're here to accommodate all religions, period," Duncan says. The building of the Cadet Chapel Falcon Circle on the hilltop, he says, is no different from the past conversion of chapel rooms into worship spaces that serve this year's 11 Muslim, 16 Buddhist and 10 Hindu cadets. There are also 43 self-identified atheist cadets whose beliefs, or lack of them, Duncan says are also to be respected.
"It is very nice to have our own space," says Cadet 1st Class Nicole Johnson, a 21-year-old senior from Florida who became a pagan after entering the academy.
This is not about religious tolerance — a phrase Duncan, a Christian, rejects as implying that the majority religion is simply putting up with the minority. He calls it a 1st Amendment issue. If the military is to defend the Constitution, it should also be upholding its guarantee of religious freedom. "We think we are setting the standard," Duncan says.
In addition to providing worship space, new policy dictates that all cadets take courses in understanding the religions of those who may someday fall under their command. Recently he's fielded calls from West Point and Annapolis about replicating the Air Force's efforts.
In 2005, the Air Force — still reeling from accusations of sexual assaults against female cadets at the academy — was accused in a lawsuit of allowing aggressive proselytizing toward non-Christians. The suit, ultimately dismissed, was brought by an attorney and academy graduate, Michael Weinstein, who founded the Military Religious Freedom Foundation and has continued to fight what he calls aclimate of religious oppression at the academy.
Los Angeles Times
When discussing gold investing, the first thing that comes to mind is 1980, the last year of a major and historic run up in the price of gold. From 1971 to 1980, gold went from 35 dollars per ounce to 850 dollars per ounce, up over 2,300%. This really puts into perspective the current run up in gold. Since 1999, gold is up a healthy 580%, but in order to match 1980 it would have to eventually rise to over 6,000 dollars an ounce.
Are we saying that this is 1980 all over again? No, comparing the two run ups in the price of gold is like comparing the moon landing to fly fishing, there is no comparison. First off, in 1971 President Nixon closed the gold window essentially taking the dollar off the gold standard. Shortly there after, in 1974, Americans were allowed to officially purchase gold bullion allowing Americans to enter the gold market for the first time since FDR made it illegal to own investment gold. From 1933-1974, Americans were legally allowed to own gold jewelry and collectible coins, not gold bullion. With inflation on the rise from Vietnam and new entitlement spending, gold buyers in the mid 1970's found themselves in the perfect storm. Gold rallied until it reached bubble mania, average everyday people purchased gold in order to make a profit. Just like all bubbles, everyone wanted in as they saw an easy profit.
With public participation, the bull market of the 1970's turned into bubble mania with gold rising 268% in 1980. Imagine if cable reality TV shows would have been around back then, we would have had shows about gold flippers and real life treasure hunters. By the 1980's inflation was soaring and the Federal Reserve was using everything it had to tame it, key lending rates were set in the teens. After the bubble burst in the gold price, gold officially fell off of everyone's radar and for the first time in human history, the world didn't care about gold. Gold was no longer money, the fiat world of constant credit expansion and money printing had replaced absolute value with perceived value. Currencies were no longer held up to a gold standard, instead fiat currencies were valued against other fiat currencies, a race to the bottom so to speak, yet graded on a curve. Looking at price inflation from 1800 to 1971, with the exception of war time, prices were stable. However, from 1971 to 2010, with government and bankers allowed to create as much money as they wanted, we have seen a 500% increase in price inflation.
So, here we are 40 years later (from 1971) and we find ourselves in a crisis of confidence. After seeing the largest credit and monetary expansion in history, the world finds itself doubting not only government and stock markets, but even the fiat currencies that were supposed to be as good as gold. Which leads us to one of the most striking differences between 1980 and today.
During the late 1970's gold mania broke out because people wanted to make a profit, hedging against inflation was certainly a component, but that's not what creates bubbles. Today, people are buying gold not because they are focused on making a profit, but because they are focused on not losing. Though most investors don't understand gold or own any of it themselves, the few that are buying it, are buying it for protection. Again, a hedge against inflation is a catalyst for many, but the deflationist out there are buying gold too. Gold is money, so whether you believe in deflation, inflation, or stagflation, gold is the alternative to the entire forex. With the exception of the last 40 years, gold has been money, a medium of exchange, a constant unit of account. Relative to the price of everyday goods and services gold has held its purchasing power.
So, could gold become a currency again? FutureMoneyTrends.com believes the real question is not could gold become a currency again, but when? If you look at the trends, China, Russia, and other middle eastern nations are already talking about having a future reserve currency with some sort of gold backing, perhaps a mix between gold, commodities, and fiat currencies. Last year in Malaysia, an Islamic currency was introduced as an alternative to fiat currencies. Gold and silver Dirhmas, about 625,000 dollars worth, had been introduced to the public for everyday transactions. The Dinar coins are set to Islamic law, 4.25 grams of gold and 3.0 grams of silver. Though they are not considered legal tender by the Malaysian government, when given the choice, business owners, taxi cab drivers, and others are choosing the gold and silver coins. This doesn't sound like 1980 if you ask us. In fact, it's just the opposite, in 1980 gold had just been forced into retirement. In 2010, people have seen the result of our 40 year experiment and are starting to demand gold. India, China, and Russia are emerging as the next big players in the financial world and they are also some of the world's biggest buyers of gold. Gold for the last 40 years has been a decoration, but the current trend is decoration no more.
1980 Vs. Today
- The Federal Reserve's key lending rate was in the teens, today it's around zero percent.
- Gold had just been retired as a currency. Today, gold is being accumulated by nations as a currency diversification.
- By 1980, bubble mania had set in and gold was being purchased to profit. Today, it still isn't understood or held by most investors. Those that are buying, are buying not to lose.
- The U.S. government was trying to tame inflation. Today, economist are worried about deflation and are advocating for more inflation.
- Paul Volcker was in charge at the Federal Reserve and today, it's "Helicopter Ben," need we say more.
- By the early 1980's, after 204 years, the United States had an official deficit of around 1 trillion dollars. The last trillion added to the deficit only took 7 months.
- In 1980 there are stories of gold shops that had lines that stretched outside the doors. Today, Americans are lined up outside "We Buy Gold" stores to sell gold. Sure there are gold commercials on news stations, but the massive public participation needed to fuel a bubble isn't there. When "Cash for Gold" is running ads on Super Bowl Sunday, that's a sign that the public is completely ignorant of the gold bull market, remember Cash for Gold is a company that buys gold from the public. In fact, CBS did a report recently that showed the public not only selling gold, but selling it for 10 cents on the dollar to companies like Cash for Gold.
When looking at ways to purchase gold, we believe all investors should hold some physical gold. Having money in your possession is always smart in case of an emergency. When it comes to seeking more than just safety, it is wise to look at history before making any decisions. We here at FutureMoneyTrends.combelieve the fundamentals for mining stocks are out of this world. The last time gold was recognized as real money in a modern society, mining shares and gold were on average about 25% of global financial assets. Today, they are just 0.9% of global financial assets held. So, if you believe like we do that gold is coming out of retirement, then mining shares is where you want to be. Positioning yourself not only to benefit from a rising price in gold, but an exploding global demand for the precious metal of choice. Just to give you an idea on how big this could be, in today's dollars, if the demand for gold went up to that modern day historical average of 25% of all financial assets, gold would need to be around 31,000 dollars an ounce. We are not making any price predictions today, but certainly the math is there for not only protection, but the opportunity to make a huge profit by getting in front of this smart money trend.
BEIJING - China said Monday it was "deeply shocked" by NATO air strikes that left 24 Pakistani soldiers dead, and demanded an investigation into the incident.
"China is deeply shocked at the incident and expresses strong concerns and deep condolences to the victims in Pakistan," foreign ministry spokesman Hong Lei told a regular news briefing.
"China believes that Pakistan's independent sovereignty and territory should be respected and that this incident should be earnestly investigated and handled in a serious manner."
Close China ally Pakistan has denied provoking the strike on Saturday that left 24 of its soldiers dead, raising tensions between Islamabad and Washington.
NATO and the United States have sought to limit the fallout from the attack, which has seen Pakistan close a vital lifeline to the 140,000 foreign troops serving in Afghanistan and order a review of its US alliance.
Washington has backed a full inquiry and expressed condolences. NATO chief Anders Fogh Rasmussen has spoken of regret over the "tragic, unintended" killings, but stopped short Sunday of issuing a full apology.
Iranian state TV said the country has added three more domestically-built submarines to its naval fleet.
The report on Sunday said the vessels were delivered to the Iranian navy in southern port of Bandar Abbas.
The Iranian warship Alvand docked in the Persian Gulf in 2009.
|Photo by: AFP|
It said the submarines were from the Ghadir class, of which Iran already has four.
This class of submarine can fire missiles and torpedoes and operate in the Gulf's shallow waters.
The move is seen as part of Iran's effort to upgrade its defense capabilities amid escalating tension over its nuclear program.
More than 900 people have called for emergency help and 29 people were rescued from the floodwaters, which on Saturday claimed the life of a three-year-old boy who was swept into a surging storm-water drain.
Officials said the northern New South Wales town of Wee Waa would be cut off for up to one week by the flooding which has reached a deph of seven metres in some parts, after several rivers in the state burst their banks during heavy rains.
The township of 1,800 will only be accessible by boat and helicopter and state emergency authorities said they were working to replenish food supplies.
Evacuations were also underway at nearby Moree, where 60 homes were expected to be cut off as floodwaters reached their peak, while some 150 rural properties in the region were already isolated.
The village of Garah, on the outskirts of Moree, was completely surrounded by water after a levy broke.
The Euribor/OIS spread or`fear gauge’ is flashing red warning signals. Dollar funding costs in Europe have spiked to Lehman-crisis levels, leaving lenders struggling frantically to cover their $2 trillion (£1.3 trillion) funding gap.
America’s money markets are no longer willing to lend to over-leveraged Euroland banks, or only on drastically short maturities below seven days. Exposure to French banks has been slashed by 69pc since May.
Italy faces a “sudden stop” in funding, forced to pay 6.5pc on Friday for six-month money, despite the technocrat take-over in Rome.
German Bund yields have risen to 59 basis points above Swedish bonds since Wednesday’s failed auction. German debt has been relegated suddenly against Swiss, Nordic, Japanese, and US debt. As theTelegraph reported two weeks ago, Asian central banks and sovereign wealth funds are spurning all EMU bonds because they have lost confidence in a monetary system with no lender of last resort, coherent form of government, or respect for the rule of law.
Even if EU leaders could agree on fiscal union and joint debt issuance – which they can’t – such long-range changes cannot solve the immediate crisis at hand. The push for treaty changes has become a vast distraction.
Unless Germany agrees to the full mobilization of the European Central Bank very fast, the eurozone will spiral out of control. As The Economistput it, “The risk that the currency disintegrates within weeks is alarmingly high.”
Theoretically, EMU can limp on though the Winter until the Italian debt auctions of €33bn in the last week of January, and €48bn in the last week of February. The reality is that sovereign contagion to the financial system may well bring matters to a head more swiftly.
If break-up occurs in a disorderly fashion, with Club Med states and Ireland spun into oblivion one by one, the chain reaction will cause an implosion of Europe’s €31 trillion banking nexus (S&P estimate), the world’s biggest and most leveraged. This in turn risks an almighty global crash – first class passengers included.
So the question arises, should the rest of the world take over management of Europe to prevent or mitigate disaster? Specifically, should the US Federal Reserve assume leadership as a monetary superpower and impose policy on a paralyzed ECB, acting as a global lender of last resort?
In essence, the US would do for EMU what it did in military and strategic terms for the Europe in the 1990s when Washington said enough is enough after squabbling EU leaders had allowed 200,000 people to be slaughtered in the Balkans. The Pentagon settled matters swiftly with “Operation Deliberate Force”, raining Tomahawk missiles on the Serb positions. Power met greater power.
Personally, I have not made up my mind about the wisdom of a Fed rescue. It is fraught with dangers, and one might argue that resources are better deployed breaking EMU into workable halves with minimal possible damage.
However, debate is already joined – and wheels are turning in Washington policy basements – so let me throw this out for readers to chew over.
Nobel economist Myron Scholes first floated the idea over lunch at a Riksbank forum in August. "I wonder whether Bernanke might not say that `we believe in a harmonized world, that the Europeans are our friends, and we know that the ECB can't print money to buy bonds because the Germans won't let them. And since the ECB will soon run out of money, we will step in and start buying European government bonds for them'. It is something to think about," he said.
This is not as eccentric as it sounds. The Fed’s Ben Bernanke touched on the theme in a speech in November 2002 – “Deflation: making sure it doesn't happen here” – now viewed as his policy `road map' in extremis.
"The Fed can inject money into the economy in still other ways. For example, the Fed has the authority to buy foreign government debt. Potentially, this class of assets offers huge scope for Fed operations," he said.
Berkeley’s Brad DeLong said it is time for Bernanke to act on this as the world lurches straight into 1931 and a Great Depression II. “The Federal Reserve needs to buy up every single European bond owned by every single American financial institution for cash,” he said.
The Fed could buy €2 trillion of EMU debt or more, intervening with crushing power. The credible threat of such action by the world’s paramount monetary force might alone bring Italian and Spanish yields back down below 5pc, before one bent nickel is even spent.
One presumes that the Fed would purchase both the triple AAA core and Club Med in a symmetric blast of monetary stimulus across the board, avoiding the (fiscal) error of targeting semi-solvent states. In sense, the Fed would do quantitative easing for the Europeans, whether they liked it or not.
David Zervos from Jefferies has proposed an extreme variant of this, accusing Germany’s fiscal Puritans of reducing Europe’s periphery to “indentured servants” and driving the whole region into depression with combined fiscal and monetary contraction.
“We in the US need to snuff out these sado-fiscalists and fast, they are a danger to the world. The US can force monetisation at the ECB. We should back up the forklift and buy Euro area bonds. Lots of them,” he said.
Some of the purchases could be achieved by tapping the Fed’s euro account at the ECB, flush with funds as a result of currency swaps provided by Washington to help Europe shore up its banks. Ultimately mass EMU bond purchases would cause a sudden and potentially dangerous spike in the euro against the dollar. There lies the rub. If the ECB failed to loosen monetary policy drastically to offset this, the experiment could go badly wrong.
A pioneering school of “market monetarists” - perhaps the most creative in the current policy fog - says the Fed should reflate the world through a different mechanism, preferably with the Bank of Japan and a coalition of the willing.
Their strategy is to target nominal GDP (NGDP) growth in the United States and other aligned powers, restoring it to pre-crisis trend levels. The idea comes from Irving Fisher’s “compensated dollar plan” in the 1930s.
The school is not Keynesian. They are inspired by interwar economists Ralph Hawtrey and Sweden’s Gustav Cassel, as well as monetarist guru Milton Friedman. “Anybody who has studied the Great Depression should find recent European events surreal. Day-by-day history repeats itself. It is tragic,” said Lars Christensen from Danske Bank, author of a book on Friedman.
“It is possible that a dramatic shift toward monetary stimulus could rescue the euro,” said Scott Sumner, a professor at Bentley University and the group’s eminence grise. Instead, EU authorities are repeating the errors of the Slump by obsessing over inflation when (forward-looking) deflation is already the greater threat.
“I used to think people were stupid back in the 1930s. Remember Hawtrey’s famous “Crying fire, fire, in Noah’s flood”? I used to wonder how people could have failed to see the real problem. I thought that progress in macroeconomic analysis made similar policy errors unlikely today. I couldn’t have been more wrong. We’re just as stupid,” he said.
Needless to say, reflation alone will not make Euroland a workable currency area. Nor will fiscal union, Eurobonds, and debt pooling down the road.
"Even if they do two years of fiscal transfers, and the ECB buys all the bonds, and the problems are swept under the carpet, we are still going to be facing a crisis at the end of it," said professor Scholes.
None of the “cures” on offer tackle the 30pc currency misalignment between North and South, the deeper cause of this crisis. What Fed-imposed QE for Euroland can do is make a solution at least possible stoking inflation deliberately.
This means inflicting a boomlet on the German bloc, while allowing the South to take its fiscal punishment without crashing further into self-defeating debt deflation. It forces up prices in the North, compelling the neo-Calvinists to accept their share of the intra-EMU price readjustment.
The Germans will not like this. If inflation causes them rise up in revolt and leave EMU to the Latins, so much the better. That is the best solution of all.
What we know for certain is that Europe’s current policy settings must lead ineluctably to ruin and perhaps to fascism. Nothing can be worse.
(Reuters) - Germany and France are exploring radical methods of securing deeper and more rapid fiscal integration among euro zone countries, aware that getting broad backing for the necessary treaty changes may not be possible, officials say.
Germany's original plan was to try to secure agreement among all 27 EU countries for a limited treaty change by the end of 2012, making it possible to impose much tighter budget controls over the 17 euro zone countries -- a way of shoring up the region's defences against the debt crisis.
But in meetings with EU leaders in recent weeks, it has become clear to both German Chancellor Angela Merkel and French President Nicolas Sarkozy that it may not be possible to get all 27 countries on board, EU sources say.
Even if that were possible, it could take a year or more to secure the changes while market attacks on Italy, Spain and now France suggest bold measures are needed within weeks.
As a result, senior French and German civil servants have been exploring other ways of achieving the goal, one being an agreement among just the euro zone countries.
"The goal is for the member states of the common currency to create their own Stability Union and to concentrate on that," German Finance Minister Wolfgang Schaeuble told ARD television on Sunday.
Another option being explored is a separate agreement outside the EU treaty that could involve a core of around 8-10 euro zone countries, officials say.
An even more pressing decision faces euro zone finance ministers when they meet on Tuesday.
Detailed operational rules for the euro zone's bailout fund, the European Financial Stability Facility (EFSF), are ready for approval, documents obtained by Reuters showed.
The approval of the rules will clear the way for the 440 billion euro facility to attract cash from private and public investors to its co-investment funds in coming weeks, which, depending on interest, could multiply the EFSF's resources.
With Germany rigidly opposed to the idea of the ECB providing liquidity to the EFSF or acting as a lender of last resort, the euro zone needs a way of quickly calming markets, where yields on Spanish, Italian and French government benchmark bonds have all been pushed to euro lifetime highs.
Policymakers hope progress towards tougher fiscal rules will also assuage investors. Schaeuble said a Stability Union could be a decisive step to winning more confidence from the markets.
"That means that every euro zone member has to do its homework on its budget discipline. We want to ensure that through treaty changes," he said.
Reuters exclusively reported on November 9 that French and German officials were discussing plans for a radical overhaul of the European Union to establish a more fiscally integrated and possibly smaller euro zone.
"The Germans have made up their minds. They want treaty change and they are doing everything they can to push for it as rapidly as possible," one senior EU official involved in the negotiations told Reuters. "Senior German officials are on the phone at all hours of the day to every European capital."
While Germany and France are convinced that moving towards fiscal union - which could pave the way for jointly issued euro zone bonds and may provide more leeway for the European Central Bank to act forcefully - is the only way to get on top of the debt crisis, some other euro zone countries are unable or unwilling to move so rapidly towards that goal.
Not only Greece, Ireland and Portugal, which are receiving EU/IMF aid, but also Italy and Spain and some east European countries such as Slovakia, would either find it difficult under current economic conditions to meet the budget constraints Germany wants, or simply do not agree with the aim.
Consequently, the French and German negotiators are exploring at least two models for more rapid integration among a limited number of euro zone countries, with the possibility of folding that agreement into the EU treaty at a later stage.
One is based on the Pruem Convention of 2005, also known as Schengen III, a treaty signed among 7 countries outside the EU treaty but which was open to any member state to join and was later acceded to by 5 more EU states plus Norway.
Another option would be to have a purely Franco-German mini-agreement along the lines of the Elysee treaty of 1963 that other euro zone countries could also sign up to, officials say.
"The options are being actively discussed as we speak and things are moving very, very quickly," a European Commission official briefed on the discussions told Reuters.
One source said the aim was to have the outline of an agreement set out before December 9, when EU leaders will meet for their final summit of the year in Brussels.
Sarkozy, who has made two speeches in the past two weeks highlighting the need for more rapid fiscal integration in the euro zone, and has acknowledged that it may be inevitable that a 'two-speed Europe' emerges, is due to make another keynote address on December 1 which could provide a platform for laying out in more detail the ideas that he and Merkel are developing.
A senior German government official denied there were any secret Franco-German negotiations, but emphasised that both countries saw the need for treaty change as pressing and were exploring how to achieve that in the best way possible.
"Germany and France are continuing to focus on proposals for a limited treaty change that can be presented at the EU summit in December," the official said, emphasising that there was a need to act quickly to get changes in place.
The ECB has bought the bonds of euro zone strugglers in intermittent fashion when they have reached crisis point. Economists say it has to act much more radically to turn the market tide but the central bank, and Germany, has opposed any such move. Commitments to binding fiscal rules by euro zone governments may be the cover it needs to change tack.
"If this bond run is not stopped it will really endanger the stability of the European and even the global financial system. Bold action by the ECB is definitely needed," Peter Bofinger, one of the five "wise men" who formally advise the German government on the economy, told Irish state broadcaster RTE.
Reuters reported a similar possibility on Friday, with euro zone officials saying that if much tighter fiscal integration could be achieved among euro zone states, it would give the ECB more room to manoeuvre and buy sovereign bonds.
While EU officials are clear about the determination of France and Germany to push for more rapid euro zone integration, some caution that the idea of doing so with fewer than 17 countries via a sideline agreement may be more about applying pressure on the remainder to act.
By threatening that some countries could be left behind if they don't sign up to deeper integration, it may be impossible for a country to say no, fearing that doing so could leave it even more exposed to market pressures.
"Some of this is just part of the posturing you hear -- it's pressure from Germany to go for treaty change as quickly as possible," the official involved in the negotiations said.
"To some extent you have to see these ideas as part of the bargaining chips that are being put on the table."
While tens of thousands of protesters are amassing in Cairo's Tahrir Square, the Sinai Peninsula is heating up.
Egyptian security forces on Friday raised the alert level to an unprecedented level in the al-Arish area in northern Sinai after they received information that Jihad members are planning on carrying out an attack on the local security headquarters, the Ma'an news agency reported Friday.
According to the information they received, some 2,500 Jihad and additional radical faction members were equipped with "unconventional weapons" and had gathered large quantities of ammunition. The operatives prepared a plan to attack the al-Arish security directorate, the central prison and other official buildings.
The purpose of the attack, according to the report, was vengeance on Egyptian authorities for thwarting a previous plan to attack Sinai and drive away security forces.
The reports come after saboteurs blew up a gas pipeline 60 km (37 miles) west of the Egyptian town of al-Arish in northern Sinai earlier on Friday, the latest in series of attacks, state news agency MENA reported.
The blast caused little damage and did not start a fire because little gas was flowing through the pipeline at the time due to repair work from a previous attack, MENA said.
The pipeline, which supplies gas to Egypt and Jordan, was last attacked on Nov. 10. The latest was the seventh since the revolt that ousted President Hosni Mubarak on Feb. 11, although the pipeline was first attacked a few days earlier.
No group has claimed responsibility for the sabotage.
If Greece – or any other country – were to leave the euro, it would have to be a total surprise, one probably announced on a Sunday ahead of the markets opening to stop a run on the banks.
So it could be today, or next Sunday or the one after that, but the point is that it would have to be agreed by the European Central Bank and Greece's central bankers once the markets are closed and before they open, so that no one – not the public, the corporates, or the hedge funds – has any idea that it's going.
And, according to a new study by Accenture, any talk of withdrawal or break-up of the eurozone would have to be met with complete denial by the bankers and the politicians, so it wouldn't be possible even to have a new currency printed in time.
But that doesn't mean it cannot happen – instead of printing new notes, the new Greek premier, Lucas Papademos, left, could just put new stickers on existing euro notes, or, indeed, frank them with new symbols or signs. Like all paper euros, each note has an initial which denotes the country where it was printed – Y for Greece, S for Italy, V for Spain and X for Germany – so the Greeks could also just frank all the notes in circulation with a big Y.
In a new paper – If a Country Leaves the Euro, authors Dean Jayson, James Sproule and Oliver Knight argue that the most likely way for a country to leave would be if the nation in question – say Greece – is asked to make an exit because it hasn't met the bailout requirements, such as the austerity budget which the Greeks are trying to adopt.
As it would be difficult to print new banknotes, they suggest the most likely option would be to create an electronic currency – rather like the euro between 1999 and 2001. The first instruments to be switched to the electronic currency would most likely be all payments and salaries.
But, what to do about debt? Since devaluation of the debt was the reason to adopt the euro in the first place, they say it's reasonable to assume that all public debt, savings and private debt in the domestic banks – as well the assets and liabilities held in branches of domestically registered foreign banks – would also switch to the electronic currency.
And there's lots of debt; according to the Bank for International Settlements (BIS), the outstanding domestic and international bond and debt securities in Greece last December was $556bn. While bank debt is unlikely to be called in, companies will want to align the currency of their revenues and debt payments – the BIS figures show the external loans and deposits in banks in Greece are around $115bn. And companies will want to hedge their new bank debt with foreign-exchange exposure – which Accenture estimates for Greece could be a daily average of $24bn. It would need capital controls too, to stop people fleeing with their cash, and would have to find a way of stopping foreign investors from suing for default.
While the original Maastricht Treaty does not include any measures for opt-outs, it's a painful process which many countries have been through before. In February 1993, the Czechoslovak koruna was split into the Czech koruna and the Slovak koruna, although Slovakia went on to adopt the euro. And when the Habsburg empire broke up, all the new countries printed currency with their own nation's symbols.
As the Italian government struggled to borrow and Spain considered seeking an international bail-out, British ministers privately warned that the break-up of the euro, once almost unthinkable, is now increasingly plausible.
Diplomats are preparing to help Britons abroad through a banking collapse and even riots arising from the debt crisis.
The Treasury confirmed earlier this month that contingency planning for a collapse is now under way.
A senior minister has now revealed the extent of the Government’s concern, saying that Britain is now planning on the basis that a euro collapse is now just a matter of time.
“It’s in our interests that they keep playing for time because that gives us more time to prepare,” the minister told the Daily Telegraph.
Recent Foreign and Commonwealth Office instructions to embassies and consulates request contingency planning for extreme scenarios including rioting and social unrest.
Greece has seen several outbreaks of civil disorder as its government struggles with its huge debts. British officials think similar scenes cannot be ruled out in other nations if the euro collapses.
Diplomats have also been told to prepare to help tens of thousands of British citizens in eurozone countries with the consequences of a financial collapse that would leave them unable to access bank accounts or even withdraw cash.
Fuelling the fears of financial markets for the euro, reports in Madrid yesterday suggested that the new Popular Party government could seek a bail-out from either the European Union rescue fund or the International Monetary Fund.
There are also growing fears for Italy, whose new government was forced to pay record interest rates on new bonds issued yesterday.
The yield on new six-month loans was 6.5 per cent, nearly double last month’s rate. And the yield on outstanding two-year loans was 7.8 per cent, well above the level considered unsustainable.
Italy’s new government will have to sell more than EURO 30 billion of new bonds by the end of January to refinance its debts. Analysts say there is no guarantee that investors will buy all of those bonds, which could force Italy to default.
The Italian government yesterday said that in talks with German Chancellor Angela Merkel and French President Nicolas Sarkozy, Prime Minister Mario Monti had agreed that an Italian collapse “would inevitably be the end of the euro.”
The EU treaties that created the euro and set its membership rules contain no provision for members to leave, meaning any break-up would be disorderly and potentially chaotic.
If eurozone governments defaulted on their debts, the European banks that hold many of their bonds would risk collapse.
Some analysts say the shock waves of such an event would risk the collapse of the entire financial system, leaving banks unable to return money to retail depositors and destroying companies dependent on bank credit.
The Financial Services Authority this week issued a public warning to British banks to bolster their contingency plans for the break-up of the single currency.
Some economists believe that at worst, the outright collapse of the euro could reduce GDP in its member-states by up to half and trigger mass unemployment.
Analysts at UBS, an investment bank earlier this year warned that the most extreme consequences of a break-up include risks to basic property rights and the threat of civil disorder.
“When the unemployment consequences are factored in, it is virtually impossible to consider a break-up scenario without some serious social consequences,” UBS said.
In an unusual step that comes on the heels of Iran's threats and warnings to the US and Israel over the consequences of a possible strike on its nuclear facilities, the official website of Iran's supreme leader, Ayatollah Ali Khamenei published an analysis written by Dr. Amir Mohebian, a senior political commentator.
The article details three possible war scenarios Iran could be faced with if Israel or the US proceed with a strike:
1. An all out war of attrition that would combine aerial and ground forces attack.
2. Limited war as a preparatory action for political proceedings. This would include hitting Iran’s control centers for the purpose of disrupting the stability of the Islamic regime. The best case scenario here would be that war leads to the regime's fall; the worst case would see Iran surrendering at the negotiating table.
3. A war on specific targets with the aim of destroying the regime's assault capabilities, especially against the "Zionist regime."
Ready for action? Netanyahu and Obama (Photo: Reuters)
For example, an attack on Bushehr could lead to harsh ecological consequences for the region. Attacking only certain nuclear sites would not lead to a complete shutdown of Iran's technological nuclear capabilities.
(Reuters) - NATO helicopters and fighter jets attacked two military outposts in northwest Pakistan Saturday, killing as many as 28 troops and plunging U.S.-Pakistan relations deeper into crisis.
Pakistan shut down NATO supply routes into Afghanistan - used for sending in nearly half of the alliance's land shipments - in retaliation for the worst such incident since Islamabad uneasily allied itself with Washington following the September 11, 2001 attacks on the United States.
Islamabad also said it had ordered the United States to vacate a drone base in the country, but a senior U.S. official said Washington had received no such request and noted that Pakistan had made similar eviction threats in the past, without following through.
NATO and U.S. officials expressed regret about the deaths of the Pakistani soldiers, indicating the attack may have been an error; but the exact circumstances remained unclear.
"Senior U.S. civilian and military officials have been in touch with their Pakistani counterparts from Islamabad, Kabul and Washington to express our condolences, our desire to work together to determine what took place, and our commitment to the U.S.-Pakistan partnership which advances our shared interests, including fighting terrorism in the region," said White House national security council spokesman Tommy Vieter.
U.S. Secretary of State Hillary Clinton and Pakistani Foreign Minister Hina Rabbani Khar spoke by telephone, as did General Martin Dempsey, the chairman of the Joint Chiefs of Staff, and Pakistani Chief of Army Staff General Ashfaq Parvez Kayani.
The NATO-led force in Afghanistan confirmed that NATO aircraft had probably killed Pakistani soldiers in an area close to the Afghan-Pakistani border.
"Close air support was called in, in the development of the tactical situation, and it is what highly likely caused the Pakistan casualties," said General Carsten Jacobson, spokesman for the International Security Assistance Force (ISAF).
He added he could not confirm the number of casualties, but ISAF was investigating. "We are aware that Pakistani soldiers perished. We don't know the size, the magnitude," he said.
Pakistan's Prime Minister Yusuf Raza Gilani said the killings were "an attack on Pakistan's sovereignty," adding: "We will not let any harm come to Pakistan's sovereignty and solidarity."
Pakistan's Foreign Office said it would take up the matter "in the strongest terms" with NATO and the United States, while army chief Kayani said steps would be taken to respond "to this irresponsible act."
"A strong protest has been launched with NATO/ISAF in which it has been demanded that strong and urgent action be taken against those responsible for this aggression."
Two military officials said up to 28 troops had been killed and 11 wounded in the attack on the outposts, about 2.5 km (1.5 miles) from the Afghan border. The Pakistani military said 24 troops were killed and 13 wounded.
The attack took place around 2 a.m. (2100 GMT) in the Baizai area of Mohmand, where Pakistani troops are fighting Taliban militants. Across the border is Afghanistan's Kunar province, which has seen years of heavy fighting.
"Pakistani troops effectively responded immediately in self-defense to NATO/ISAF's aggression with all available weapons," the Pakistani military statement said.
The commander of NATO-led forces in Afghanistan, General John R. Allen, offered his condolences to the families of Pakistani soldiers who "may have been killed or injured."
Dempsey's spokesman, Colonel David Lapan, could not confirm the closure of the Pakistani border crossing to trucks carrying supplies for ISAF forces. However, he noted that "if true, we have alternate routes we can use, as we have in the past."
Around 40 troops were stationed at the outposts, military sources said. Two officers were reported among the dead. "They without any reasons attacked on our post and killed soldiers asleep," said a senior Pakistani officer, requesting anonymity.
The border is often poorly marked, and Afghan and Pakistani maps have differences of several kilometres in some places, military officials have said.
However, Pakistani military spokesman Major-General Athar Abbas said NATO had been given maps of the area, with Pakistani military posts identified.
"When the other side is saying there is a doubt about this, there is no doubt about it. These posts have been marked and handed over to the other side for marking on their maps and are clearly inside Pakistani territory."
The incident occurred a day after Allen met Kayani to discuss border control and enhanced cooperation.
A senior military source told Reuters that after the meeting that set out "to build confidence and trust, these kind of attacks should not have taken place."
Pakistan is a vital land route for nearly half of NATO supplies shipped overland to its troops in Afghanistan, a NATO spokesman said. Land shipments account for about two thirds of the alliance's cargo shipments into Afghanistan.
Hours after the raid, NATO supply trucks and fuel tankers bound for Afghanistan were stopped at Jamrud town in the Khyber tribal region near the city of Peshawar, officials said.
The border crossing at Chaman in southwestern Baluchistan province was also closed, Frontier Corps officials said.
A meeting of the cabinet's defense committee convened by Gilani "decided to close with immediate effect NATO/ISAF logistics supply lines," according to a statement issued by Gilani's office.
The committee decided to ask the United States to vacate, within 15 days, the Shamsi Air Base, a remote installation in Baluchistan used by U.S. forces for drone strikes which has long been at the center of a dispute between Islamabad and Washington.
The meeting also decided the government would "revisit and undertake a complete review of all programs, activities and cooperative arrangements with US/NATO/ISAF, including diplomatic, political, military and intelligence."
A similar incident on Sept 30, 2010, which killed two Pakistani service personnel, led to the closure of one of NATO's supply routes through Pakistan for 10 days. NATO apologised for that incident, which it said happened when NATO gunships mistook warning shots by Pakistani forces for a militant attack.
Relations between the United States and Pakistan were strained by the killing of al Qaeda leader Osama bin Laden by U.S. special forces in Pakistan in May, which Pakistan called a flagrant violation of sovereignty.
Pakistan's jailing of a CIA contractor and U.S. accusations that Pakistan backed a militant attack on the U.S. embassy in Kabul have added to the tensions.
"This will have a catastrophic effect on Pakistan-U.S. relations. The public in Pakistan are going to go berserk on this," said Charles Heyman, senior defense analyst at British military website Armedforces.co.uk.