The year 2012 has started out in strange ways. While celestial forces augur for rare tail events, the assurance of man-made events that stretch far into the extreme tail of probability are not only very likely but will be of a type to reflect the change in the global balance of financial power. The Paradigm Shift mentioned over the course of the last two to three years is at work, having moved into a higher gear. The gold is moving from the West to the East, along with the power. We will not see the process reverse in our lifetime. The sanctions set against Iran have been devised by a former global leader nation that is beset by insolvency, fraud, and lost integrity. The backfire has consolidated forces into a more fortified position against the USDollar. Trade increasingly is not being settled in US$ terms. The icons of the day are mere apologist public address systems attempting to rationalize and justify the deep insolvency and wrecked systems. The new normal is of a caravan file of broken cars and trucks sputtering down the road, using the false fuel of hyper monetary inflation and the offensive paint of phony financial accounting, the tell-tale sign being the ugly rancid smoke out of their tailpipes. The last insult is of the US Presidential election process, which is badly marred by obvious inconsistencies and anomalies. The vote count for the candidate that attracts the biggest crowds, attracts the biggest donations from corporations, and defies the financially teetering system does not match the final official tallies.
Prepare for Rare Damage of Tail Events
In the probability world, a tail event is described as an occurrence far out in the small numbers of probability, extended on the tail of the curve of likelihood. In the quality control domain, the battle cry used to be Six Sigma, meaning the tolerated defect rate goal would be six standard errors, a rate in no way achievable. A quick check of the probability tables unmasks the lofty goal as one defect part off the assembly line in every 1.013 billion items. That is Six Sigma on the normal bell-shaped curve. However, in the world of phony finagled finance, such rare events are indeed occurring. The modern world has never seen such grotesque charred ramparts posing as financial structures, badly beset by the insolvency caused by the natural sequence of broken asset bubbles, aggravated by absent industry. In fact, the entire fiat currency system, where money is nothing but redefined debt, is an abomination destined for the ruin we see on such a tragic widespread level. The modern world has never seen such grotesque housing disasters, the dream of home ownership turned upside down, one quarter of American households owing more than the value of their homes. In fact, the entire housing dependence devised by Greenspan, where the USEconomy would lean not on industry but on rising home equity, serves as the calling card of central bank heresy. The heresy continues with the high priest ZIRP and bishop QE. Of course it ended in tears. The modern world has never seen such grotesque quicksand in sovereign debt for so many major nations. This goes far beyond Greece, Ireland, and Portugal, the symbols of small fry nations that few nations will make deep sacrifice for. In fact, as the sovereign debt spreads, it has become clear that Italy, Spain, France, and many other nations suffer from the sinking pressures that national securitized debt brings. As the sovereign debt loses value, the banking system sheds reserves valuation and goes insolvent, the credit engines stall, the economy falls into recession, the labor force loses jobs, the spending patterns falter, and the nation goes into a failure mode. See the Cauchy distribution in the graphic, which when the degrees of freedom grow unbounded, approaches the Gaussian normal.
Some important tail events of rare type are coming. Any attempts to control a Greek Govt Bond default will be fraught with high risk and deep peril. The equal necessity to control a default for Ireland and Portugal will be made obvious. The extension to Italian and Spanish Govt Bond losses in collateral damage will be obvious. The implications to Credit Default Swaps must also be handled, not possible in the same fraudulent manner as before with redefinitions and denied insurance awards. The contagion of vanished equity in the banking system will spread to London, New York, and Germany, in whose nations numerous banks will fail. It will be extremely difficult for the USDollar to ward off such powerful storm damage, and remain as the global reserve currency. Some distant maritime voices might regard my claims as premature and far-fetched, but their preoccupation with gold basis has left their voices mere reverberant richochets in the hinterland. The academic voices seem out of touch with trends, the loud laps on the rocks from waves of inflation hardly recognized for their damage from the remote seacoast. They seem unable to foresee the new found land that is forming in the East, divorced from the USDollar.
Iran Sanctions Backfire into Isolation
In the last two weekly articles, the backfire was described regarding Iran sanctions, the response from the emerging economies, and the harmful effects of foreign nations grappling with defense from the uncontrollable unbridled unending printing of phony money. The USGovt actions have galvanized a response, led not by Iran but by China. The raft of bilateral accords juiced by currency swap agreements has provided a significant buoyancy in the global trade framework, a highly complex system. It dictates the flow of USDollars in obvious ways, but it also dictates the formation of reserve banking systems in more subtle ways. In 2007, when Brazil and China announced a swap facility to bypass the USDollar in trade settlement, the Jackass took notice like a prairie dog raising his head with erect spine. In 2010, when Russia and China announced a swap facility to bypass the USDollar in trade settlement, the Jackass took notice again. The big trade winds were changing direction. The extreme importance of trade and banking interwoven should not be overlooked, as often done by the clueless cast of US economists. So when in the last month, Japan and China announced a swap facility to bypass the USDollar in trade settlement, the Jackass concluded that the end was near for the waterlogged American financial fortress. These are two primary Asian powerhouses, who with South Korea form the core strength of the entire East.
The USDollar might not be attacked on several front with harsh assaults so much as it will be relegated into irrelevance, as the USDollar will be ignored and left to defend itself in the open fields where wolves and dragons roam wild. Note the parallel to the COMEX, which as a market will also be relegated into irrelevance, as the precious metals will be traded elsewhere, in markets where private accounts are not stolen. Entire Compliance Departments have forbidden usage of the COMEX as of January, due to outlaws overrunning the floors. As the USEconomy is isolated, it will be compelled to bid up whatever foreign currency is required to purchase commodities and finished products. In reaction, the USDollar will fall in value.
In April 2010, a conference took place in the United Arab Emirates among a couple hundred billionaires, sheiks, and other royalty. They decided to embrace the Chinese Protectorate plan for the Persian Gulf, and to accept Russian oversight in the region. Without the Asian offset to the American aggression, no stability is remotely achievable. That event served as a clear signal that the sunset shadows for the USDollar were soon to encounter reality. The process would clearly require a couple years, but the writing was on the wall. Much critical structural work would be required to complete, as trade, banking, currency, and gold management has become far more complex and integrated for the array of professors to comprehend. Not sure such developments are detectable in the maritimes, especially in academic outhouses or local taverns. Furthermore, the actual Dollar Kill Switch had to be devised, with confirmed connection to the OPEC oil trade. My source has informed me that the switch is finally in place and ready. Recent events show the East walking toward the switch. The numerous defiant gestures by China, Iran, Russia, India, and Japan paint the billboard in big bold letters. The workaround of the USDollar is moving fast apace. A confirmation occurred just last week when the Saudis and Chinese announced a joint project for a refinery to be built on the Red Sea. The Saudis in effect were tipping their hat to the Chinese, and again were turning their backs on the Untied States. The signals are abundantly clear. What we are witnessing is the end of the Petro-Dollar in slow steps. The steps are unmistakable to those who study the interwoven nature of global finance. They are easily overlooked by those who operate within the dome of perceptions controlled by the American apparatus, and are locked in mental gibberish ensconced in gold basis. The crowning blow might have been announced this week, as India will pay for Iranian oil in gold bullion.The news invites many questions. Apparently, the Turkish intermediary will not be needed. Gold for oil sounds like a historical point in time.
Backfire extends to Europe, where the absence of Iranian oil supply will cause some extreme problems. The shortages are soon to be acute, word coming from a German source with great contacts in the middle of the mix. He wrote this morning, "The Persians are cutting off oil shipments to Europe, effective immediately, which will kill Greece, Italy, and the other Club Med deadbeats. The West with their sanctions led by the Americans screwed itself royally. The Asians and others are dis-engaging from the Western banks as fast as they can. Expect to see more wild fluctuations in the Gold and Silver prices continue. Until this week, the Gold forces did not know how weak the Anglos already are. They have hardly any firepower left." Difficult decisions will be made toward the USGovt leadership. It is shaky. It is lacking integrity. The nation is smeared by the splatter of fraud. Its markets are propped by the heavy hand of daily interventions. Its economic data is laughed at as a fantasy. Its elite are given huge grants without global approval. Its central bank makes decisions unilaterally, without conferring with USGovt creditors. The foreign anger is ripe. The motive to seek alternatives is at high pitch. Big changes are in progress, pushed along ironically by the USGovt itself. If their spokesmen insists on the many major global trade participants to take sides, the crew in WashingtonDC might be in for a shock, colored by isolation. The real loser will eventually be the USDollar, whose Petro-Dollar defacto standard is being washed away by central bank liquidity and leadership arrogance. The US financial body resembles a pig adorned with lipstick with each passing day.
New Normal of Hyper Monetary Inflation
It is hard to describe fully the lost ways of the US Federal Reserve. The phrase New Normal is a transparent attempt by financial icons in the private sector to put a face of legitimacy on a system bound in the USDollar and its heavy handed management, reinforced by a daisy chain of $trillion frauds. Such cannot be done. The term was coined by Mohamed El-Erian, from the PIMCO helm. Bond fraud followed by TARP Fund fraud, followed by Financial Accounting fraud, followed by Mortgage Contract fraud, followed by unauthorized multi-$trillion fraudulent grants by the USFed, followed by the grand sequence Quantitative Easing to wash value out of the USDollar, followed by the unilateral undercut to USGovt creditors, followed by more unilateral decisions to sanction Iran for nuclear weapon development that even Defense Secretary Leon Panetta admits is not a reality, well, does not make for global leadership. It makes for a travesty. Yesterday the USFed released more directives. So the USEconomy is stuck in a weak reverse gear. The accommodation will extend until year 2014. These guys are basic liars. Even Bill Gross of PIMCO takes shots at the central bank policy or ruin. The United States will suffer financial repression (in Gross's words) if the Federal Reserve implements additional bond monetization as policy. The USFed will hold its benchmark interest rate at near 0% for at least the next three years, as a testament to central bank failure. No departure from the 0% rate can be done. The USGovt debt service requires it, demands it, and will default without it. The ZIRP and QE are worn as badges of failure and dishonor.
Remember the Green Shoots of USEconomic recovery in 2009? The Jackass dismissed it as nonsense. Remember the Exit Strategy later in 2009? The Jackass dismissed it as nonsense. Remember 0% was for just six to nine months, an emergency policy? The Jackass dismissed it as nonsense. Remember how Quantitative Easing was to be temporary in 2010? The Jackass dismissed it as nonsense. Remember how the 0% accommodation was to last until 2013, announced early this year? The Jackass dismissed it as nonsense. It is all the stuff of cows and bulls propelled from hind quarters, piling on the meadow in lumpen form. Tragically, the reality is more simple. The 0% rate (ZIRP) and the heavy hand of monetized bond purchase (QE) are permanent or else the system falls apart and collapses. Such an admission would send the USDollar, the Euro, and all major sovereign bonds to the woodshed for processing in a pit filled with excrement, where they will ultimately end up. The tragic fact from the world of economics, is that 0% and bond purchase kills capital, diminishes the economy, puts business asunder, ruins jobs, and causes federal deficits to grow. They are not stimulus, but rather financial formaldehyde.
Gold & Silver Ready Finally to Run
For the last several weeks, a theme was mentioned numerous times, that the 1650 level would be defended. It would be defended not just vigorously, but almost to the death. Enormous naked short positions are in place between 1625 and 1650, put by the gold cartel. They might be in the process of being overrun. My sources inform that in November an important team was assembled, and funded to the hilt, with a mission to trample the gold cartel, to cause a failure in their attempts to deploy naked shorting in price suppression, to force them to cover their huge short positions in retreat, to oblige outsized drainage of the COMEX, to even induce them into draining the GLD exchange traded fund of its inventory from the backdoor. The team was from the East, and not necessarily only from China. They are determined. They are motivated. They are wealthy. They are angry. They want an end to Dollar Hegemony. They see the Untied States as both weak and corrupt in visible manner. The time is now. The Iran grappling hooks seem not to find the fleshy matter of the allied fortress walls. They have been tossed aside, while new alliances form in defiance.
The US & London tagteam seems not to properly assess their adversary. These bankers who parrot the English language (but hail from fascist roots) are not the beneficent lords that they used to be. They have become syndicate captains and leaders. The events of the last few years have demonstrated allegiance to the elite and contempt for the masses. The nationalized financial firms are kept under foot so that the fraud is not exposed. One would shudder to see the toxic paper mixed among bond fraud and outright counterfeit, housed safely under USGovt roof. See Fannie Mae and AIG. The mantra of Too Big to Fail is an epitaph, not a call to remedy. The chief stanchions of toxicity and fraud are Bank of America, which would fail without the money laundering lifeline. So it is rescued in generous offerings.
The USDollar ship of sea is adrift, soon a derelict vessel. The signs are clear. The sovereign debt system that serves as foundation is a rotting corpse. The East is working feverishly to build the alternative system. Look for barter to be its backbone. By the Ides of March, it should be more clear. Any controlled demolition of PIIGS debt and bond writedowns will make for quite the event to watch. The upcoming funding needs of Italy are an order of magnitude greater than the bond market or the Euro Central Bank can manage. The game breaker events are nigh. Just this week, India and Iran announced settlement of oil trade in gold bullion. The workaround seems unique and novel, but with historical precedent. Before the USGovt unilaterally broke the Bretton Woods Accord that established the Dollar Gold Standard, settlement in gold was the norm. The world might be soon coming full circle.
The US-based silver production in October 2011 was 30% below the same month in 2010. It went from 117 metric tons to 81.4 metric tons. In contrast, the American Eagle silver coin production is on a strong upward course since 2007. The current US silver demand is 117% of the current domestic production level, in deficit. The USMint will have to import silver. They can always shut down, or impose a vacation, or ship steel coins clad in silver. If it works for tungsten and gold, it might work for steel and silver. Be sure to know that like with gold, the newly assembled Eastern team is at work in the silver market. Their objective is to cause a failure in the cartel attempts to deploy naked shorting in price suppression, to force them to cover their huge short positions in retreat, to oblige outsized drainage of the COMEX, to even induce them into draining the SLV exchange traded fund of its inventory from the backdoor. The method is simple, coming from illicit (but not illegal) shorting of the shares.
Controlled U.S. Presidential Election
The clues are clear but only to the alert observers. In year 2000, for the first time a gross inconsistency showed itself as an anomaly. The exit polls in Florida and Ohio did not match the election results at the local level. For a full generation, the correlation had been over 90%, as it should be, since people exiting a voting center reveal their votes with consistency. This is the left hand and the right hand coinciding genetically with the same human standing before the clipboard recording the exit poll. The lapdog subservient US press reported the anomaly as people changing their minds, or not admitting to the clipboard their actual voting preference. Numerous statistical studies showed the anomalies in colored form, to expose Florida and Ohio for its voting system fraud. Yet another blatant fraud has infected the American landscape. This is a far cry from legions of dead people rallying to vote for Kennedy in Chicago during the 1960 election, with the forces marshalled by Mayor Daley. History has repeated, as 1000 dead people voted in the South Carolina primary in one city alone. My guess is the dead people voted for Gingrich. The season started in Iowa, where Ron Paul had a nice steady lead for the few weeks leading into the caucus. Then suddenly Santorum came out of nowhere to share the win with Romney. Paul finished a lowly third. The Santorum crowds were small except for his victory speech. Could it be that the outsourced vote count took 10% to 12% of the Paul vote and put it in the Santorum bin? Then in New Hampshire, where vote fraud is much more difficult due to hand counted ballots, a reality check came. Santorum finished way down the line. Move on to South Carolina, where again Ron Paul shared the lead position in the polls. But on the primary day, again Paul finished again a lowly third. We are told Gingrich won, and justified by having his home state so nearby. Yet Gingrich had to cancel a couple campaign stops due to lack of attendance. Ooops! Could it be that the outsourced vote count took 10% to 12% of the Paul vote and put it in the Gingrich bin?
In a recent article, the Jackass remarked that the US presidential election process was another controlled process subject to outsourcing. The patterns of software changing votes by Diebold loyalists have matured into bolder block changes without transparency, but such thoughts might be entirely errant. The blatant maneuvering of voting process fraud will be more clear by the November confrontation. My contacts back in the states include an Afro-American lady with a big base of black business contacts. They do not favor Obama anymore, wondering aloud who he is and what benefits ever came to the black community. Busloads of urban votes from the Acorn tree might not be able to conceal what comes in the fraudulent process. Heck, vote rigging is just one more Third World characteristic, hardly unexpected. My thought in December 2008 was that Obama would fill two important cabinet positions, the rest did not matter in my view. My forecast was for Goldman Sachs to occupy the Treasury Secretary post, and for Gates to continue as Secy Defense. Control of the USDollar and US Banks was too vital to put in the hands of somebody who required on the job training. Control of the military projects was also too vital to put in civilian hands, including the critical wealth generation out of Afghanistan, whose sticky product had clearing house function in the Iraq Export Bank in Baghdad (run by JPMorgan), with lines feeding Wall Street for their cut. Both forecasts turned true. The other cabinet appointments meant little. The Secretary of State has become an important attack dog, to be sure.
Good riddance to Geithner. Timmy the Tool is nothing but a mechanic, a diminutive figure from the Wall Street club, nothing in stature like his predecessor Paulson. If truth be told, the Chinese probably ordered him out of office, after far too many ridiculous meetings on Beijing soil. Timmy's battle cry of currency manipulation had grown tiresome. The laughter given him by university students two years ago was too much to stomach, when he claimed the US financial structures were strong and sound. Let's watch to see if the next Treasury Secretary is of Goldman Sachs pedigree. Its firm death grip on American bank rule has been evident since Rubin in 1994. Few seem to realize it is all downhill toward ruin since that fox took control of the American henhouse, jumping the pond from the London Gold desk of Goldman Sachs. The eggs are gone and the hens are sterile. All that is left is cartel droppings.
HARASTA, Syria - When Arab League observers headed to the suburbs of Damascus on Thursday, Syrian securityrefused to accompany them to most areas, because they are no longer in control there.
In some towns no more than a 15-minute drive from the capital, the governor of rural Damascus warned that gunmen were walking the streets.
But the monitors went, accompanied by journalists, to the outskirts of Irbin and Harasta, which have become hotbeds for protests and armed revolt since the 10-month uprising against Syrian President Bashar Assad began.
At a checkpoint on an intersection heading into the town of Irbin, dozens of soldiers with assault rifles were deployed in full gear and on alert. On the sidewalk near them lay the bodies of two men shot dead, one of them a soldier.
But the soldiers were fixated nervously on the anti-Assad protest just hundreds of meters away, with protesters chanting "Allahu Akbar." Most shops were closed and people gave the Arab League monitors suspicious looks.
"Some people are angry with us because of the report," one observer said.
The observer team sent a report last week on their mission to check implementation of an Arab peace plan that aims to halt bloodshed from Assad's military crackdown on the unrest that the United Nations says has killed more than 5,000 people.
Syria says the revolt is run by foreign-backed militants that have killed over 2,000 of its forces.
While the Arab League came out with a strong statement calling for Assad to step down, many in the Syrian opposition were angry at the monitors' report, which highlighted violence by Assad's adversaries as much as by the government itself.
They said monitors neglected the balance of power in the struggle between protesters and rebels against the army.
Reuters, which joined the monitors on their first observation trip since the report, is in Syria on a state-sponsored trip and is usually accompanied by a government minder.
The Arab observers watched the anti-Assad demonstration from afar, and minutes later they drove away towards a police hospital in Harasta, another flashpoint in the revolt.
The team head, Jaafar al-Kubaida, said the monitors did not enter Irbin because they were worried the "angry crowd" might harass them. "Teams are harassed sometimes, we feared they might attack the cars or throw stones at us. It has happened before."
Cars with 'Israeli bombs'
At the police hospital in Harasta, the staff said most of ruralDamascus was not controlled by the government forces and gunmen were kidnapping and killing those affiliated with the government in those areas.
"Any car plate that belongs to the government cannot drive inside Harasta, we as doctors cannot go, they hijacked one of our cars a week ago," said a doctor in the hospital.
A soldier pointed at a mosque facing the checkpoint and said, "You see that mosque? Their snipers sometimes fire at us from there."
A senior officer said that security forces were in talks with the armed men through dignitaries in the towns, hoping to convince them to hand over their weapons. He said the government had not completely lost control of the Damascuscountryside.
"No, you cannot say that they are in control of ruralDamascus, they control areas and the army control areas," he told Reuters.
When Arab observers pressed a senior officer to allow them entry into the troubled town, he said it was too dangerous.
"The coordination (team) did not get back to us, we told them you wanted to go but still no reply from them, We want you to go to them under their protection," a senior officer told the monitors.
The monitors were frustrated they could not enter, but also said they were unsure if their presence was wanted after their first report. "We would love to go, but I'm not sure we are welcomed there," one observer told Reuters.
Security officials showed monitors three cars which they said were towed from inside Harasta and Douma. They said the vehicles were confiscated from "terrorists" and loaded with Israeli bombs.
Inside Harasta, the army was heavily deployed. Dozens of soldiers in full gear were deployed in a 500-metre (1,650-foot)-long street, their guns pointed up as they nervously watched the nearby houses. People peeked from their windows but few went out. The trash-littered streets was almost deserted.
"Free Syria" was written on a wall.
"Yes, it is not safe," said a veiled woman who was walking a man down the street. She looked worried and scared. "There are gunmen but we do not have the Free Syria Army here."\\
An US-based analyst says by imposing sanctions against Iran's oil sector and central bank, the Western warlords have moved another step closer to a full-blown war with the Islamic Republic.
In an article published on his personal website, Chris Floyd noted that by approving sanctions, the European Union has proven its blind obedience to the dictates of its Washington masters.
During their latest meeting in Brussels on January 23, EU foreign ministers reached an agreement to ban oil imports from Iran, freeze the Iranian Central Bank's assets within the bloc, and forbad sales of diamonds, gold and other precious metals to Iran.
“In imposing these draconian measures on a country which is not at war with any nation…and which is developing a nuclear energy program that is not only entirely legal under international law but is also subject to the most stringent international inspection regime ever seen, the EU is 'targeting the economic lifeline of the regime,' as one of its diplomats put it, with admirable candor,” he added.
The analyst said in addition to having serious, perhaps disastrous effects on many of Europe's sinking economies, including Greece, which are heavy users of Iranian oil, the embargo will be even more catastrophic for millions of innocent people in Iran.
“Already the lives of these innocent people are being diminished and degraded by the series of sanctions imposed by the United States and its pack of tail-wagging Euro puppies,” he noted.
Floyd said the West claims the aim of all these sanctions is to "force Iran back to the negotiating table" over its nuclear program.
“This is patent nonsense. Innumerable 'negotiations' -- including major concessions by Iran -- have been rejected by Washington and the puppies,” he noted.
“The aim of this endless string of sanctions, this constant tightening of the noose, is not more 'negotiations.' It is regime change, by any means necessary,” Floyd stated.
To back up his conclusion, the analyst then quoted Russian Foreign Minister Sergei Lavrov as saying that Iran sanctions have “nothing to do with a desire to strengthen the nuclear nonproliferation. They're aimed at stifling the Iranian economy and the population in an apparent hope to provoke discontent."
Floyd stated that the West perfectly knows that sanctions will not drive the Iranian regime from power, and under the cover of sanctions, they are pursuing a two-fold strategy.
“First, while long-running sanctions do not in themselves overturn a regime, they do make the entire country much weaker…making it a much softer target when you finally decide to pull the trigger on military action,” he said.
Floyd added that the second strategy, which he thinks much more relevant to this case, is the hope that ever-tightening sanctions will provoke a violent response from the victim, thereby "justifying" a war of "self-defense" against the "unprovoked" attack.
The Iranians, he said, have already threatened to close the Straits of Hormuz if the EU goes through with its embargo and this would likely be the "Pearl Harbor" moment the war-mongers are waiting for; an "unprovoked" attack aimed at "targeting the economic lifeline" of the West.
Floyd said even if the Iranians back down on that threat and this latest provocation doesn't do the trick, “rest assured there are more coming in the pipeline.”
“The bipartisan goal remains the same: 'regime change in strategic lands laden with natural resources.' And our masters have already demonstrated that they do not care how many people are ruined -- or are killed -- in pursuit of this aim,” he concluded.
January 26, 2012 – FIJI – A couple and their two young children are confirmed to have died in a landslide in flood-stricken Fiji. Their deaths bring to six the number killed in flooding and landslides in the west of the main island Viti Levu. Police have confirmed that the couple, in their 30s, and their their two daughters, aged three and one, were in a house in the Ba district of north western Vita Levu, the Fiji Broadcasting Corporation reports. Earlier in the week a man died in Labasa and another died in Ba. Parts of Nadi, Ba, and Rakiraki were on Thursday declared natural disaster zones. The permanent secretary of information, Sharon Smith-Johns, says the military, police and personnel from non-government organizations and the Red Cross are heading to the affected areas. Ms Smith-Johns says 3400 people are in evacuation centers and more than 100 homes may have been destroyed by the floods. A disaster response advisor for the United Nations, Peter Muller, says attempts to evaluate damage from the floods are being hampered by the remoteness of some communities and bridges which have been washed away by swollen rivers. Mr Muller says the rains have stopped for the time being and floodwaters are receding but the respite may be short lived with the rain set to return within 24 hours. Foreign Affairs Minister Murray McCully says New Zealand will give $350,000 to the Fiji Red Cross and other agencies to assist efforts in the aftermath of the flooding. –Radio New Zealand
Mansehra, PAKISTAN – Police say at least nine miners are feared dead after they were buried by a large landslide in northwest Pakistan. Local police officer Ali Zia says the phosphate miners were eating lunch Wednesday in the mountain village of Tharnawai in Khyber Pakhtunkhwa province when the accident occurred. Zia said rescue efforts have been hampered by bad weather and the inability to get heavy machinery to the site. It had been snowing and raining before the slide occurred. Eyewitness Mohammad Khurshid Awan said rescue workers were using shovels in an attempt to uncover the buried miners. Zia, the police officer, said no bodies have yet been recovered. –Dawn
Greece needs more money. That would seem to be the growing consensus in Europe as negotiations over debt relief between Athens and the private sector drag on. On Friday, Jean-Claude Juncker, who chairs meetings of euro-zone finance ministers, became the most recent European politician to sound the warning bell.
"If Greece's ability to sustain debt is proven and there is an overall understanding with the private sector, the public sector will also have to ask itself whether it will not provide help," he told the Austrian daily Der Standard in an interview published Friday.
The talks between Greece and the Institute of International Finance, which is representing the country's private creditors in the haircut negotiations, have proven difficult as the two sides have been attempting to come up with an interest rate on the new bonds that will be issued to current debt holders. European politicians have said that this rate should be as low as possible so as to give Greece a shot at meeting its goal of reducing its sovereign debt to 120 percent of its economic output by 2020. Institutional bond holders, however, are holding out for a higher rate and resisting any agreement that could push their losses beyond the 50 percent they had originally agreed to.
A successful conclusion to the negotiations is necessary before a final agreement can be reached on a second bailout package for Greece. With Greece facing €14.5 billion in bond redemptions in March, time is of the essence. The European Central Bank is also currently considering whether to accept losses on the Greek bonds it holds.
Last year, EU leaders agreed that the second bailout fund for Greece -- coming on the heels of the €110 bailout package assembled in the spring of 2010 and now all but used up -- would have to be worth €130 billion. But, with Greece's financial situation having gotten worse since then, Juncker is not the only one who thinks this figure might have to be enlarged. European Economic and Monetary Affairs Commissioner Olli Rehn said on Thursday at the World Economic Forum in Davos that, even if Greece receives the envisioned €100 billion in debt relief from its private creditors, it still wouldn't be enough. His spokesperson in Brussels added that experts were currently in the process of calculating Greece's true needs.
Germany has consistently refused to consider throwing more money at Athens, but it may back down under increasing pressure.
The EU has also made the new bailout package dependent on Greek reform efforts. Several EU leaders have expressed frustration at how announced austerity measureshave been implemented and insisted that there will be no aid without further belt-tightening.
German commentators jumped into the fray on Friday.
The center-left daily Süddeutsche Zeitung writes:
"People are increasingly wondering: 'If the Greeks don't want to help themselves, why should we?' Some in Athens are wondering the same thing. They believe that a terrible end is better than terror without end, that it's better to stop taking on more credit that the country won't be able to pay back anyway, and that the severe austerity (measures) must end. But the problem is that nobody knows what would happen were Greece to actually leave the euro zone. There is no precedent to look at, no emergency plan and no lifeboats that could be depended on."
"What has needed to happen for a long time, however, is a halfway-open discussion of the mistakes that have been made by the government in Athens and by the international actors active in Greece. The life jacket has been too small from the very beginning, and the demands on Athens too focused on austerity. That has strangled the economy. Revenues from privatization were seen as a possible lifeline even after it had become clear that Greek state-owned companies were going to be difficult to sell. The Greek tendency to look for scapegoats for their own misery has also played a role. That has been magnified by a political elite that is unwilling to look at their own past mistakes."
The center-right Frankfurter Allgemeine Zeitung writes:
"Europe's citizens are growing accustomed to only being told a small part of the truth. In the end, Olli Rehn's vague comments could mean that the European Central Bank will have to waive a portion of its Greek bond claims. That could, in turn, make itself felt in the budgets of euro-zone member states. European taxpayers, though, will never be told the full extent of the damage.... Even should there be debt relief for Greece, it will not put a stop to the country's thirst for borrowing. Debt relief would change nothing when it comes to the shocking inability of the Greek economy to compete internationally. Yet, without economic growth, there is no foundation for healthy state finances."
The Financial Times Deutschland focuses on the recent indications that the market for European sovereign bonds is improving and the successful bond auctions in Italy this week:
"Isn't the news wonderful? Weren't we all just exaggerating with the warnings that the refinancing of Europe's southern countries was in danger? Unfortunately not. And, unfortunately, the positive signals that have recently come from the markets are, in the best case, small indications that investor confidence is on the rise. In the worst case, however, it is merely the effect of the €500 billion that the European Central Bank recently poured into the banks and of the other fiscal-policy tricks performed by the ECB."
"Investors are also interested in preventing countries from having their economic foundation and ability to service their debt rocked by stringent austerity programs. The International Monetary Fund, for example, forecasts that the Italian economy will shrink by 2.2 percent this year. That is not a signal that encourages bond investors to purchase Italian paper."
"In addition to the pro-cyclical European crisis policies, there are several other factors that heighten unease and that will prevent us from giving the all clear for a long time -- even if the occasional bond auction goes well. These factors include bailout funds that have consistently been too small and heavily indebted countries that are wasting away and making it difficult to guess how much it will cost to save them."
Military tensions in the Persian Gulf shot up again Thursday, Jan. 26, after Dubai police commander Gen. Dhahi Khalfan said on Al Arabiya television that an imminent Gulf war cannot be ruled out and first signs are already apparent. "The world will not let Iran block Hormuz but Tehran can narrow the strait to the maximum," he said.
He echoed DEBKAfile's predictions that Iran will not shut down the Strait of Hormuz completely, but gradually cut down tanker traffic which carries 17 million barrels, or one-fifth of the world's daily consumption, through the waterway. Our Iranian sources report that the rule of thumb Tehran has devised for confront sanctions is to respond to the tightening of an oil embargo by having the Revolutionary Guards gradually narrow the tankers' shipping lanes through the strategic strait. This will progressively cut down the amount of oil reaching the markets.
Tehran will not go all the way and shut the channel down completely for fear of provoking a military showdown with the United States. But each time Washington manages to stop Iran supplying a given country, the IRGC will shut down another section of the strait. General Martin Dempsey, Chairman of the US Joint Chiefs of Staff admitted on Jan. 8 that Iran has the capacity to block the Strait of Hormuz temporarily but the US would get it reopened within a short time.
Saudi Arabia and Dubai are skeptical about the ability of the American navy and Gulf forces to keep the Strait of Hormuz open at all times in the face of continuous Iranian attacks. The prevailing view in Gulf capitals is that for the six months from February through July 1, when the European embargo on Iranian oil and the Iranian national bank freeze kick in, a war of attrition will unfold as Iran carries out sporadic strait closures, either by mining the waterway or firing missiles at tankers from unmarked speedboats.
These operations will push up the price of oil and so drum home to oil-dependent Asian and European governments the high cost to them of the alternate opening and closing of the Strait of Hormuz.
A Saudi official said Wednesday, Jan. 1, that Tehran's threats to punish Riyadh for offering to make up the shortfall incurred from the oil embargo against Iran "could be seen by Saudi Arabia as an act of war."
The Iranian threats followed the pledge made this week by Saudi Oil Minister Ali al-Naimi to raise daily production by up to 2.7 million barrels per day to supply the countries caught short of supplies from Iran.
However, the Saudi minister could not say how the oil would make its way out of the Persian Gulf to destination if the Strait of Hormuz were to be shuttered partially or fully.
DEBKAfile's military and Gulf sources report that Persian Gulf capitals are talking less these days about an outbreak of armed hostilities over Iran's nuclear program and more about the coming war over the oil shipping routes out to market.
The Dubai general's remarks Thursday about an imminent conflict referred not only to the flow of American reinforcements to the Gulf region but also to the new deployments of the armies of Gulf Cooperation Council states. They are moving into position in expectation of a military confrontation with Iran.