Turkey halts Iranian arms corridor to Syria, balks at nuclear Iran

Military Intelligence chief Maj.-Gen. Aviv Kochavi accused Iran and Hizballah Wednesday, Jan. 11of directly helping Bashar Assad repress the uprising against him with arms, Turkey had just taken a stand against the Iranian corridor running weapons to Syria via its territory, DEBKAfile's military sources report.
Earlier this week, Ankara reported halting five Iranian trucks loaded with weapons for Syria at the Killis Turkish-Syrian border crossing and impounding its freight. According to our intelligence sources, the Iranian convoy was not really stopped at Killis but at the eastern Turkish Dobubayazit border crossing with Iran, near Mount Ararat. This supply route for Syria had been going strong for months. Ankara's decision to suspend it has reduced its volume by 60 percent.

The Turks kept very quiet about the Dogubayazit route because disclosure would have exposed them as working two sides of the Syrian conflict – letting Tehran set up a clandestine arms route for helping the Assad regime crack down on protest, while publicly posing as the leading champions of the Syrian protest movement – even to providing the Free Syria Army with bases and training facilities.

The influx of Iranian arms supplies via Turkey gave the Syrian army a major boost in quelling the uprising especially in the restive towns of Hama, Homs and Idlib, where demonstrations have dwindled. Now Ankara is worried about the consequences. Thursday, President Abdullah Gul raised fears of the Syrian uprising mutating into civil war. Our sources report that Ankara is concerned that sectarian conflict in Syria could spill over into Turkey.

In fact, as DEBKAfile’s military and intelligence sources report exclusively, Ankara changed course against Iran after Turkish Foreign Minister Ahmet Davutoglu visited Tehran on Jan. 5. His mission was to warn Iranian leaders including President Mahmoud Ahmadinejad whom he met that Turkey will not stand for Iran acquiring a nuclear bomb and would act to disrupt its program.
Although his visit was officially presented as an effort to broker the resumption of long-stalled nuclear talks between Tehran and the five world powers plus Germany (P5+1), Davutoglu in fact informed Ahmadinejad in no-nonsense terms, “Turkey can't live between two nuclear powers, one to the north (Russia) and one to the east (Iran)." The minister warned that if Tehran goes into production of a nuclear weapon, Ankara's first step would be to open the door for NATO forces to deploy along its border with Iran.

According to DEBKAfile sources, Davutoglu gave Ahmadinejad a week to clarify the information reaching the West that Tehran had already begun assembling a nuclear weapon, so belying the persistent Iranian claim that its nuclear program is peaceful. After that, he said, Ankara would embark on progressively tougher counter-action.

And indeed, when clarifications from Tehran had not been received by Tuesday, Jan. 10, Turkey went into action to halt the Iranian weapons convoy to Syria.

Taking advantage of the new opportunities presented by the US military departure from Iraq last month, Iranian officials the next day, Wednesday, Jan. 11, ordered Iraqi Prime Minister Nouri al-Maliki to shut the Iraqi-Jordanian border to convoys carrying Turkish export goods to Persian Gulf destinations.
The following day, Thursday, Iran's Speaker of Parliament, Ali Larijani, turned up in Ankara to try and sort things out between Iran and Turkey before they got out of hand.

Greece gets closer to brink of bankruptcy

Three months of negotiations ground to a halt on Friday night, amid a wave of downgrades by ratings agency Standard & Poor’s aimed at a clutch of European countries, including France.

The unexpected breakdown in talks between Greece and its private-sector creditors has taken the country a step closer to bankruptcy after a failure to sign up lenders to a voluntary and “orderly” 50pc haircut to their holdings.

Greece’s finance minister Evangelos Venizelos said talks would resume on Wednesday to “bridge differences” but insiders remained sceptical that a deal could be stitched at such a late stage.

The clock is ticking for Greece, as a deal must be reached before March 20, when the country is due to receive a further €130bn (£107bn) bail-out tranche from the International Monetary Fund and must make a key €14.5bn bond payment.

The problem centres on the difference between lenders agreeing to a “voluntary” and orderly default – which would mean swapping into bonds with a lower value – and lenders refusing terms, which would cause a default.

This type of “credit event” would trigger billions of insurance claims through credit default swaps (CDS), insurance policies taken out to protect investors in the event of a default.

The problem is that, of the €315bn of Greek debt outstanding, only €7.8bn is covered by Greek CDS. The vast majority of Greek debt is held by European banks, which have little insurance on their exposure. Most Greek CDS are held by hedge fund managers – accused by Germany and France of financially benefiting from sovereign woes. Some claim that hedge fund managers would benefit from a default, with Europe’s banks being the losers.

In October last year, the framework of the Greek creditor deal emerged after a late night finance ministers’ meeting. Greek officials and the nation’s creditors agreed in principle to implement a 50pc cut in the face value of Greek debt, with a goal of reducing Greece’s borrowings to 120pc of GDP by 2020.

On Friday evening, the Washington-based Institute of International Finance (IIF), which represents bondholders, said that talks had not produced a “constructive consolidated response by all parties”. The IIF had aimed to implement a swap into new bonds this month. But the two sides still have to agree on the coupon and maturity of the new bonds to determine losses for investors.

The breakdown in talks has been described as “catastrophic” by insiders, who say the repercussions of a default would be felt not just by Greece but by all of Europe.

The bond-swap deal, which aims to cut Greece’s debt pile by €100bn (£82bn), is part of the condition for freeing up €130bn of further rescue funds for the near-insolvent nation. Greece’s credit rating did not change on Friday in S&P’s review of eurozone countries, as it is already considered to be deep into “junk” status.

Lucas Papademos, the Greek prime minister, said the new aid package and bondholder talks were linked and each needed to succeed for Greece to survive. “Neither deal can stand on its own. One is a condition for the other,” he said in a speech on Friday night.

“We are fully aware of how critical the situation is. Until these negotiations are completed, we face dire economic dangers.”

However, Mr Venizelos last week insisted that the threat of a disorderly default could be averted within weeks and that bond swap negotiations could yet be salvaged.


The Telegraph

Obama Seeks New Power to Merge Agencies, Pledges Some Action ‘With or Without Congress’

President Barack Obama wants more power to reorganize the executive branch, powers he says will only be used to make government more efficient.

“This is the same sort of authority that every business owner has to make sure that his or her company keeps pace with the times,” Obama said at the White House Friday. “Let me be clear, I will only use this authority for reforms that result in more efficiency, better service, and a leaner government.”

He also said that he was elevating the Small Business Administration to a cabinet-level position, and pledged to do whatever possible even without Congress.

“So with or without Congress, I’m going to keep at it,” the president said. “I’m hopeful it’s with Congress, because this is an area where we can receive bipartisan support, because making our government more responsive, strategic and leaner should not be a partisan issue.”

The president’s first goal, if Congress approves these powers, would merge portions of the U.S. Commerce Department’s business and trade functions, the Small Business Administration; the Office of the U.S. Trade Representative; the Export-Import Bank; the Overseas Private Investment Corporation; and the Trade and Development Agency.

“With the authority I am requesting today, we could consolidate them all into one department with one website, one phone number and one mission – helping American businesses succeed,” Obama said.

Under Obama’s proposed authority, he would be allowed to propose merging federal agencies to save money, and entitle him to an up-or-down vote in Congress within 90 days.

Obama invoked the New Deal era in talking about the presidential powers to reorganize the executive branch that he said Congress granted to presidents up to Ronald Reagan in 1984.

¨Congress first granted this authority to presidents in the midst of the Great Depression, so that they could swiftly reorganize the executive branch to meet the changing needs of the American people,” Obama said.

“For the next 52 years, presidents were able to streamline or consolidate the executive branch by submitting a proposal to Congress that was guaranteed a simple up-or-down vote. But in 1984, while Ronald Reagan was president, Congress stopped granting that authority and when this process was left to follow the usual congressional pace, not surprisingly, it slowed down,” he added.

Obama insisted government has not kept pace with the rest of the world.

“Think of all that has happened since 1984. A generation of Americans has come of age,” Obama said. “Landlines have turned into smart phones. The Cold War has given way to globalization. So much has happened – and yet the government we have today is largely the government we had back then. We deserve better.”

Five different federal agencies deal with housing and more than a dozen in food safety, Obama said, stating it leads to unnecessary duplication.

Rep. Darrell Issa (R-Calif.), chairman of the House Oversight and Government Reform Committee, with jurisdiction over government reorganization, said Obama has not welcomed earlier proposals to streamline the government.

“I stand ready to work with President Obama on proposals to reorganize federal agencies,” Issa said. “While I have been disappointed that the White House has not embraced earlier bipartisan congressional efforts seeking collaborative engagement on proposals to reorganize government, I hope this announcement represents the beginning of a sincere and dedicated effort to enact meaningful reforms.”

CNS News

Gerald Celente on The Alex Jones TV 13 January 2012

US media first to bomb Iran

U.S. Debt Nears $15.194 Trillion Ceiling

The Treasury Department has begun maneuvers to avoid hitting the debt ceiling, as the Obama administration waits for Congress to return from the holiday break before it can raise the federal borrowing limit.

The U.S. government was just a hair below the $15.194 trillion debt ceiling on Tuesday, $25 million shy of the limit Congress set last summer. President Barack Obama sent a letter to congressional leaders Thursday, saying the U.S. debt was within $100 million of the ceiling “and that further borrowing is required to meet existing commitments.”

Raising the debt ceiling another $1.2 trillion is procedurally simple but politically it is much more complex.

Last year, as part of the White House’s deal with Republicans to avert a potential default on the U.S. debt, both sides agreed to raise the debt ceiling $2.1 trillion, but to do it in two steps. So in August, they immediately raised the debt ceiling $900 billion.

To raise the ceiling another $1.2 trillion, which is what the Treasury Department now wants to do, Congress must first have the opportunity to formally disapprove or block the increase.

The vote of disapproval is expected to fail, but they need the opportunity to vote, which is something they can’t do while they are out of town. Congress has 15 days to vote to disapprove the increase once it is formally requested by the White House.

To be sure, Treasury Department officials, led by Mary Miller and others, have learned multiple ways to buy extra time while Congress deliberates during the near-scare last year. Suspending investments in the exchange-stabilization fund, a reserve account for foreign exchange purposes, is one of several things the agency can do to buy more time. If they need to buy even more time, they can suspend contributions to certain federal pension funds, among other things.

The practical implications of failing to raise the debt ceiling are pretty severe, according to government officials and market analysts. The government can only borrow money up to the limit, and because the government spends more money than it brings in through taxes and other receipts it is constantly running up the debt.

Failing to raise the ceiling would mean the government would have to make severe cuts in spending to avoid defaulting on debt obligations.

Lawmakers are set to return later this month, though it’s unclear how soon a vote of disapproval could be held.

If the debt ceiling is raised $1.2 trillion, it would mean the government wouldn’t need to raise the debt ceiling again until late 2012 or early 2013.

WSJ

Bam! Bam! Bam! Huge Financial Bombs Just Got Dropped All Over Europe

The European debt crisis has just gone to an entirely new level.  Just when it seemed like things may be stabilizing somewhat, we get news of huge financial bombs being dropped all over Europe.  Very shortly after U.S. financial markets closed on Friday, S&P announced credit downgrades for nine European nations.  This included both France and Austria losing their cherished AAA credit ratings.  When the credit rating of a country gets slashed, that is a signal to investors that they should start demanding higher interest rates when they invest in the debt of that nation.  Over the past year it has become significantly more expensive for many European nations to borrow money, and these new credit downgrades certainly are certainly not going to help matters.  Quite a few financially troubled nations in Europe are very dependent on the ability to borrow huge piles of cheap money, and as debt becomes more expensive that is going to push many of them over the edge.    Yesterday I wrote about 22 signs that we are on the verge of a devastating global recession, and unfortunately that list just got a whole lot longer.

Over the past several months we have seen quite a few credit downgrades all over Europe, but we have never seen anything quite like what S&P just did.  Standard & Poor’s unleashed a barrage of credit downgrades on Friday....

-France was downgraded from AAA to AA+

-Austria was downgraded from AAA to AA+

-Italy was downgraded two more levels from A to BBB+

-Spain was downgraded two more levels

-Portugal was downgraded two more levels

-Cyprus was downgraded two more levels

-Malta was downgraded one level

-Slovakia was downgraded one level

-Slovenia was downgraded one level

This is really bad news for anyone that was hoping that things in Europe would start to get better.  Borrowing costs for many of these financially troubled nations are going to go even higher.

In addition, there was another really, really troubling piece of news that came out of Europe on Friday.

It was announced that negotiations between the Greek government and private holders of Greek debt have broken down.

The Institute of International Finance has been representing private bondholders in negotiations with the Greek government about the terms of a "voluntary haircut" that is supposed to be a key component of the "rescue plan" for Greece.

Greece desperately needs private bondholders to agree to accept a "voluntary haircut" of 50% or more.  Without some sort of an agreement, the finances of the Greek government will collapse very quickly.

For now, negotiations have failed.  There is hope that negotiations will resume soon, but Greece is rapidly running out of time.

The Institute of International Finance issued a statement on Friday which said the following....

"Unfortunately, despite the efforts of Greece's leadership, the proposal put forward … which involves an unprecedented 50% nominal reduction of Greece's sovereign bonds in private investors' hands and up to €100 billion of debt forgiveness — has not produced a constructive consolidated response by all parties, consistent with a voluntary exchange of Greek sovereign debt"

The IIF says that negotiations are "paused for reflection" right now, but they are hoping that they will be able to resume before too long....

"Under the circumstances, discussions with Greece and the official sector are paused for reflection on the benefits of a voluntary approach"

Something needs to be done, because Greece is experiencing a complete and total financial meltdown.

Back at the end of July, the yield on one year Greek bonds was sitting at about 40 percent.  Today, the yield on one year Greek bonds is up to an astounding396 percent.

That is how fast these things can move when confidence disappears.

Those living in the United States should keep that in mind.

Unfortunately, Greece is not the only European nation that is completely falling apart financially.

We aren't hearing much about it in the U.S. media, but Hungary is a total basket case right now.  The credit rating of Hungary was reduced to junk status some time ago, and now the IMF and the EU are threatening to withhold financial aid from Hungary if the Hungarians do not run their country exactly as they are being told to do.

In particular, the IMF and the EU are absolutely furious that Hungary is trying to take more political control over the central bank in Hungary.  The following is from an article in the Daily Mail....

The European Union has stepped up pressure on Hungary over the country's refusal to implement austerity policies and threatened legal action over its new constitution.

The warnings escalated the standoff between Budapest and the EU, as Hungary negotiates fresh financial aid from Europe and the International Monetary Fund.

Over the past months, the country's credit rating has been cut to junk by all three major rating agencies, unemployment is 10.6 percent and the country may be facing a recession.

But bailout negotiations broke down after Budapest refused to cut public spending and implemented a new constitution reasserting political control over its central bank.

Slovenia is a total mess right now as well.  The following comes from a recent article posted on EUObserver.com....

Slovenia's borrowing costs have reached 'bail-out territory' after lawmakers rejected the premier-designate, putting the euro-country on the line for further downgrades by ratings agencies.

Zoran Jankovic, the mayor of Slovenia's capital Ljubljana, fell four votes short of the 46 needed to be approved as prime minister by the parliament, with the country's president set to re-cast his name or propose someone new within two weeks.

Some time ago, I warned that 2012 was going to be a more difficult year for the global economy than 2011 was.

Well, things are certainly starting to shape up that way.

Europe is heading for some really hard times.  What is about to happen in Europe is going to shake the entire global financial system.

Those that live in the United States should take notice, because the U.S. financial system is far more fragile than most people believe.

Our banking system is a gigantic mountain of debt, leverage and risk and it could fall again at any time.

In addition, the U.S. debt problem is bigger than it has ever been before.

For example, did you know that the federal government is on a pace to borrow6.2 trillion dollars by the end of Obama's first term in office?

That is more debt than the U.S. government accumulated from the time that George Washington became president to the time that George W. Bush became president.

For now the U.S. government is still able to borrow giant piles of super cheap money, but such a situation does not last forever.

Just ask Greece.

Already there are indications that foreigners are starting to dump large amounts of U.S. debt.  If this trickle becomes a flood things could become very bad for the United States very quickly.

We are on the verge of some very bad things.  The kinds of "financial bombs" that we saw dropped today are going to become much more frequent.  As governments, banks and investors scramble to survive, we are going to see extreme amounts of volatility in the financial marketplace.

Things are not going to be "normal" again for a really, really long time.

Hold on tight, because 2012 is going to be a very interesting year.

Economic collapse