$200 Oil Coming......

We have been saying it for weeks, and today even the WSJ jumped on the bandwagon: the sole reason why crude prices are surging (RIP European profit margins: with EUR Brent at a record, we can only assume the ECB will pull a 2011 and hike rates in 3-4 months even as it pumps trillions in PIIGS, banks bailout liquidity) is because global liquidity has risen by $2 trillion in a few short months, on the most epic shadow liquidity tsunami launched in history in lieu of QE3(discussed extensively here in our words, but here are JPM's).

Luckily, the market is finally waking up to this, and just as world central banks were preparing to offset deflation, they will instead have to deal with spiking inflation, because the market may have a short memory, it can remember what happened just about this time in 2011. And the problem is that when it comes to the inflation trade, the market, unlike in most other instances, can be fast - blazing fast, at anticipating what the central planning collective's next step will be, after all there is only one. 

And if Bank of America is correct, that next step could well lead to the same unprecedented economic catastrophe that we saw back in 2008, only worse: $200 oil. Note - this is completely independent of what happens in Iran, and is 100% dependent on what happens in the 3rd subbasement of the Marriner Eccles building. Throw in an Iran war and all bets are off. Needless to say, an epic deflationary shock will need to follow immediately,just as in 2008, which means that, in keeping with the tradition of being 6-9 months ahead of the market, our question today is - which bank will be 2012's sacrificial Lehman to set off the latest and greatest deflationary collapse and send crude plunging to $30 just after it hits $200.

How do we get to $200 crude? BofA's Francisco Blanch explains:

Oil could spike to $200/bbl to further slow down demand

In a supply-constrained world, however, oil is unlikely to spend much time hovering around its price floor. Rather, we believe oil prices will likely remain a key constraint on global economic growth. This suggests that prices will continue to spike over the next five years to keep on rationing demand back down to the limited available supplies. As we have highlighted before, the world economy can hardly afford to spend more than 9% of its GDP on energy (Chart 4). But central banks such as the Fed or the ECB will likely remain focused on expanding their nominal GDP values to smooth out the ongoing deleveraging cycle in the US and European economies. In a supply constrained world, increased liquidity should set oil prices on an upward path. In other words, as nominal global GDP in USD expands to $92tn through 2016, demand rationing will likely require ever higher $/bbl prices. On our estimates, occasional demand rationing episodes could result in prices occasionally spiking to $200/bbl over the next five years (Chart 5).



And for the nth time, IT IS ALL THE CENTRAL BANKERS' FAULT!

High liquidity is likely boosting Brent crude oil prices

As we have explained in previous notes, the prices of constrained real assets tend to appreciate in times of ample liquidity. Oil prices are no exception and have been supported by the environment of negative real interest rates prevalent in DM, in our view (Chart 6). Using historical data on USD real interest rates, we have previously tried to estimate the impact of negative interest rates on oil prices (Chart 7). Our conclusion is that a 100bps decrease on USD real interest rates historically increased Brent crude oil prices by more than 6% in the subsequent year.





Liquidity impacts oil prices through several mechanisms

This negative correlation between real rates and oil prices is the result of several mechanisms; some very direct and some more subtle. First, not all sectors of the economy respond in the same way to monetary policy. As a sector with severe supply constraints, oil prices should behave differently from other prices in the economy when demand is expanding (or contracting less) due to easy monetary policy measures. In addition, if easy monetary policies are to force consumers to consume and companies to invest, the impact of low real rates is likely to gear consumption towards durable goods and investment towards infrastructure, both of which are energy intensive components of GDP. Finally, oil producing nations have very little incentive to produce beyond their budgetary requirement if returns on their assets, held in international reserves or in a SWF for instance, are yielding below inflation expectations (Chart 8).

The only solution: price exhaustion, plunging margins, and a deflationary shock, yet one which is unexpected and stuns the market out of the liquidity feedback loop. Lehman 2.0 anyone?

High prices will ultimately cure high prices

But oil prices cannot go up forever. Should the price differential to natural gas stay this wide or even continue to widen, large-scale substitution could come into play. Substitution out of oil has been going on for decades, but the price differential between oil and other fuels is now at record levels (Chart 9). Inevitably, ingenuity will trigger unforeseeable changes in energy demand patterns on a ten year time horizon. So even if the super-cycle in oil continues for the next five years on tight supply and demand balances, new technologies should start to reduce global oil consumption in a meaningful manner by 2016. Having said that, we believe that oil will continue to trade at a substantial premium over other fuels through the end of the decade, even if the current Brent crude oil to US natural gas price ratio of 10 to 1 seems unsustainable in the long run.



Luckily, we have seen this all play out before: liquidity surge, collapse, rinse, repeat. Only in the meantime it is only the lower and middle classes that lose. Prepare to see some astronomic numbers in crude, gold and all other commodities before the cycle is primed for repeating all over again.

Zero Hedge

A holography Analogy

China preparing for space warfare

Army Lt. Gen. Ronald L. Burgess, director of the Defense Intelligence Agency, disclosed new details of China’s space weapons programs last week, including information regarding China’s anti-satellite missiles and cyber warfare capabilities.

Burgess stated in little-noticed written testimony prepared for an appearance before the Senate Armed Services Committee that Beijing is developing missiles, electronic jammers, and lasers for use against satellites.

Much of the space warfare activity is being carried out under the guise of China’s supposedly non-military space program, he said.

“The space program, including ostensible civil projects, supports China’s growing ability to deny or degrade the space assets of potential adversaries and enhances China’s conventional military capabilities,” Burgess said.

“China operates satellites for communications, navigation, earth resources, weather, and intelligence surveillance, and reconnaissance, in addition to manned space and space exploration missions,” he said.

“China’s successfully tested a direct ascent anti-satellite weapon (ASAT) missile and is developing jammers and directed-energy weapons for ASAT missions,” he said. “A prerequisite for ASAT attacks, China’s ability to track and identify satellites is enhanced by technologies from China’s manned and lunar programs as well as technologies and methods developed to detect and track space debris.”

China’s January 2007 anti-satellite missile test involved a modified DF-21 missile that destroyed a Chinese weather satellite. The blast created a debris field in space of some 10,000 pieces of space junk that could damage both manned and unmanned spacecraft.

For the U.S. military, the successful 2007 ASAT test represented a new strategic capability for China. Analysts estimate that with as many as two-dozen ASAT missiles, China could severely disrupt U.S. military operations through attacks on satellites.

Burgess said China rarely admits that its space program has direct military uses and refers to nearly all satellite launches as scientific or civil.

Additionally, Burgess said Chinese state-run enterprises “continue to proliferate space and counter-space related capabilities,” including some with direct military applications.

For example, China’s Beidou global positioning system satellites will be available for regional users this year and globally by 2020, he said.

The satellites will provide foreign militaries with precision targeting capabilities through purchases of Chinese Beidou receivers and services.

The system will provide foreign militaries with “greater redundancy and independence in a conflict scenario that employs space assets,” he said.

The Chinese, as well as the Russians, are also developing space capabilities that interfere with or disable U.S. space-based navigation, communications, and intelligence satellites.

Moreover, North Korea has demonstrated its ability to disrupt U.S. navigational capabilities through Soviet-made electronic jammers placed on vehicles near the North-South demarcation line that, when activated, were able to disrupt U.S. Global Positioning System signals up to 62 miles away.

Washington Free Beacon

Babylon Rising Part Two

Joseph Herrin (02-14-2012)

Each day when I get up I consider what subject I should address in my writings. I have been desiring to return to the series No Apologies and finish it up. I have been experiencing what some might describe as “writer’s block” on this series. I suspect there are spiritual forces weighing in on this matter, for the entire series, although anointed, has come forth with great difficulty.

Perhaps the difficulty was in part due to the Father wanting me to pay attention to some current events at this season as well, for there have been many parables to be plumbed in a variety of national and world events, including Joe Paterno’s passing, the Costa Concordia disaster, the symbolism found in Super Bowl XLVI, and the death of Whitney Houston a few days ago. Much more could be written on these subjects, but I seek to be discerning of how much attention the Father would have me to give to each matter.

I was made aware of Nicki Minaj’s performance at the Grammy Awards Sunday night. Although the performance was definitely Satanically inspired, I am not inclined to spend time digging through the rubbish to discern the message at this time. Suffice it to say that we live in very dark days of which the prophet Isaiah spoke.

Isaiah 60:2

For behold, the darkness shall cover the earth, and deep darkness the people; but Yahweh will arise over you, and His glory will be seen upon you.

This world is growing increasingly dark as Satan is marshaling his forces and extending his visible control over the earth, its governments, media, finances, entertainments, and even its religions. With 2012 being the year of the Water Dragon according to the Chinese calendar, it seems timely that the adversary of all that is righteous and holy should be pouring forth rivers of deception and filth from his mouth.

Revelation 12:15-16

So the serpent spewed water out of his mouth like a flood after the woman, that he might cause her to be carried away by the flood. But the earth helped the woman, and the earth opened its mouth and swallowed up the flood which the dragon had spewed out of his mouth.

Truly the world is drinking up that which Satan pours forth. We live in an hour when many plans of the adversary will be brought to fruition. The long sought after rebuilding of Babylon upon the earth is at hand. The nations will be brought back under the government of a single ruler who will be a pawn of Satan.

I have spoken of this work of Satan in seeking to overturn the judgment of Yahweh at Babel on a number of occasions. Satan’s work goes on apace and is approaching its grand fulfillment even as we see the One World Trade Center rising to its predicted completion in the year 2013. The number 13 is Biblically significant. Satan is the first and chief rebel against Yahweh, and the number 13 is the number of rebellion.

We must go back to the first occurrence of the number thirteen [in scripture] in order to discover the key to its significance. It occurs first in Gen 14:4, where we read "Twelve years they served Chedorlaomer, and the thirteenth year they REBELLED."

Hence every occurrence of the number thirteen, and likewise of every multiple of it, stamps that with which it stands in connection with rebellion, apostasy, defection, corruption, disintegration, revolution, or some kindred idea.

[E.W. Bullinger, Number in Scripture]

Bullinger provides fascinating and overwhelming evidence that the number 13 is employed by Yahweh to denote rebellion, having clear links to both men and angels who rebelled against God.

http://philologos.org/__eb-nis/eight.htm#205

It is not to be wondered at that Madonna’s half-time show at Super Bowl XLVI was 13 minutes in length. It served as an announcement of Satan rising, as was observed in a myriad of symbols from the all-seeing eye and pyramid forms




to the final dark image of the Phoenix rising as the words “World Peace” were displayed.



Emblematically, the words “World Peace” form the fire from which the Phoenix is rising, signifying that it is through the removal of peace from the earth that Satan will establish his kingdom. Satan will bring such bloodshed, war, famine, suffering and calamity to the earth that all mankind will cry out for a savior to deliver them. Satan’s man will then be presented, offering peace to the world.

On February 17th, 1950, James Paul Warburg, son of Paul Warburg who was a driving force behind the establishment of the Federal Reserve System, spoke the following before the United States Senate:

We shall have World Government, whether or not we like it. The only question is whether World Government will be achieved by conquest or consent.

Henry Kissinger spoke at the Bilderberger Conference, Evians, France, in 1991. During his speech he stated:

Today, America would be outraged if U.N. troops entered Los Angeles to restore order [referring to the 1991 LA Riot]. Tomorrow they will be grateful! This is especially true if they were told that there were an outside threat from beyond, whether real or promulgated, that threatened our very existence. It is then that all peoples of the world will plead to deliver them from this evil. The one thing every man fears is the unknown. When presented with this scenario, individual rights will be willingly relinquished for the guarantee of their well-being granted to them by the World Government.

It must be understood by Christians that the establishment of a one world government is not the scheme of a cabal of super wealthy men and women. Satan is the author of it. He desires to unite all mankind under his rule as an act of usurpation and rebellion against Yahweh. Ever since the scattering of mankind at the Tower of Babel, the devil has been laboring to unite mankind that he might openly declare his rule over all.

The phrase “E pluribus Unum” which is found on the money of America is a declaration of Satan’s plan. This Latin phrase is translated as “Out of Many, One.” Yahweh took a single race of men with one language and purpose, and divided them. He confused their languages, giving to mankind a variety of tongues, that they might scatter into families, tribes, and nations. Satan, ever the rebel, is seeking to unite the nations again.




United Nations Plaza, New York

The UN Plaza occupies an 18 acre site (6+6+6) on the East River in New York City. Its main building is 39 stories tall (13+13+13).

[Data Source: http://www.un.org/cyberschoolbus/untour/subunh.htm]

The existence of the United Nations serves as a testimony to the lateness of the hour and the closeness of the end of the age when Satan will establish his rule over a united mankind.

Revelation 13:3-8

And all the world marveled and followed the beast. So they worshiped the dragon who gave authority to the beast; and they worshiped the beast, saying, "Who is like the beast? Who is able to make war with him?" And he was given a mouth speaking great things and blasphemies, and he was given authority to continue for forty-two months. Then he opened his mouth in blasphemy against God, to blaspheme His name, His tabernacle, and those who dwell in heaven. It was granted to him to make war with the saints and to overcome them. And authority was given him over every tribe, tongue, and nation. All who dwell on the earth will worship him, whose names have not been written in the Book of Life of the Lamb slain from the foundation of the world.

It is hard for my mind to conceive that I am living in that hour when those things prophesied 2,000 years ago by the apostle John must be fulfilled. I do not doubt that your own mind grapples with the reality of these things. Yet, the signs are all being fulfilled. The world is marching toward a fulfillment of things prophesied long ago. As Christians, we need to understand the hour we live in.

A sister in Christ (Thanks Dianne) recently sent me a link to a children’s book that is in print at this hour that focuses upon President Barack Obama. Everywhere one looks they are being met with the evidence that the plans of Satan are nearing completion.



Out of Many, One (Available on Amazon)

It has been previously noted in this blog that the day the results of the election were announced for President of the United States in 2008, the Illinois Pick Three lottery came up with the winning numbers 6 - 6 - 6. Barack Obama’s campaign headquarters in Chicago had the zip code 60606. The Secret Service has nicknamed the limousine that the President rides in as “The Beast.” Such things are not Internet rumor. I have verified each item personally, and have shared links in previous posts where readers might validate the information themselves.



(Image copied from the Chicago Tribune website.)

For those who are interested in the symbolism of the other lottery results that same day, the number seven denotes fulness of time in Scripture, and the number 9 denotes judgment. America has reached its end of days as a free nation. She has been given into the hands of brutal men skilled in destruction. Tragically, much of the church goes on unaware of the hour they live in, or the terrible events that are even now at the doorstep.

Do not be swept away with the flood of deception and corruption that Satan is spewing forth. Seek Yahweh now. Surrender your life to the leading of His Spirit. Begin to experience what it is to be led of the Spirit in your daily life and every decision. Invite the Father to lead you on that narrow path that leads to life, of which Christ testified there would be few who would find it.

I would correct a statement I made in the post titled Super Bowl XLVI - Strange Flesh and Giants. I had mentioned that the stage resembled a spaceship that landed atop a pyramid in the movie Stargate. This statement inadvertently led some on a wild goose chase as they sought to provide pictures for me of the spaceship in that movie. Seeing the images, I realized I had wrongly identified the movie in which I had seen this image. The actual movie was Dune. I have provided the pictures below to show the similarity.


Emperor Shaddam’s Ship



Emperor’s Ship on its Base



Madonna Super Bowl Stage (Rays of Light form Pyramid on Floor)

In the movie Dune, the Emperor Shaddam (Satan), ruler of the known Universe, arrives in a ship that rests atop a pyramid, paralleling that image which Satan has employed to represent his rule over the world.

Maryland Senate passes gay marriage bill

I Timothy 1:8-11

Gov. Martin O'Malley's bill to legalize same-sex marriage quickly won approval in the Maryland Senate Thursday night. The measure now needs the governor's signature.

Cheers erupted in the Senate chambers after the 25-22 vote was read out loud and the group of seven gay and lesbian lawmakers from the House of Delegates rushed to the middle of the floor to embrace supportive senators.

"I think I'm speechless," said Sen. Richard Madaleno, the only openly gay senator. "This is a remarkable day."

O'Malley, a Democrat, shook hands with activists after the vote. "This has been a difficult issue for many people," he said. "But as one Maryland we came together around the principal of human dignity. … It does feel good to have this issue resolved."

The vote makes Maryland the eighth state to approve gay nuptials — and the fourth state legislature to do so in the past 12 months.

Underscoring how the debate has put Maryland in the national spotlight, reaction came swiftly from U.S. House Democratic Leader Nancy Pelosi, who called it "an extraordinary victory," and several D.C.-based gay rights groups.

The approval in Annapolis caps years of failed attempts by gay-rights advocates to gain equal access to marriage and the legal protections that accompany the union. The governor said he plans to sign the legislation next week.

Implementation of the measure is far from certain. Even supporters concede that the law will likely be petitioned to referendum, and they expect Maryland voters to have the final say in November. The legislation has an effective date of January 2013 — well after the November election.

"We move on to the next phase," said Senate Republican leader E.J. Pipkin, who tried to defeat the bill. "There will be a robust referendum effort." Recent polls have shown that Marylanders are evenly split on the issue, so it is difficult to predict what will happen at the ballot box.

Still, supporters rejoiced. Among those who came to witness the vote from the Senate galleries — and applaud its outcome — were Katie Fitzsimmons and Coley Haywood of Annapolis, a gay couple who would like to marry.

Fitzsimmons, 32, said she was overjoyed. "I can't explain the emotion. I was smiling and then I was crying," she said.

The pair, who have been a couple for four years, said they have waited to get married until they could do so in Maryland. If the law survives the expected referendum, "we'll get married right away," Fitzsimmons said. "It's a game-changer. This changes our lives forever," she said.

"We can be equal with everyone else," said Haywood, 31. "Our friends and family can't wait."

Just three years ago, the same-sex marriage effort in Maryland seemed stalled because a key Senate committee lacked the votes needed to move a bill to the floor. That changed after the 2010 election, when the chamber picked up two more Democrats and Senate President Thomas V. Mike Miller reconfigured the membership of all committees.

Miller never supported the bill, but he allowed it to come to the floor and worked to ensure that a filibuster could be cut off if needed. He took the unusual step of explaining his red vote from the rostrum.

"I don't think this is civil rights, but this is history," he said.

"Am I on the wrong side of history?" Miller asked. "As a historian, there is no doubt about it. But I understand that and I'll deal with that in my own mind. I believe marriage is between a husband and a wife, and that is why I voted the way I did," Miller said.

Opponents were initially caught off guard last year when a same-sex marriage bill cleared the Senate, but activists — primarily from black churches and the Maryland Catholic Conference — put their forces together. The bill stalled in the House of Delegates; it was pulled from the floor when supporters realized they did not have the votes for passage.

This year, the governor put his name, and the full force of his office, behind the bill. He worked closely with a progressive coalition and House Democratic leaders to find the votes needed.




Baltimore Sun

Iran court convicts Christian pastor to death for apostasy from Islam, Any comment for this Mr. President?

Germany’s top human rights official is urging Iran to release a pastor sentenced to death for converting to Christianity.

Markus Loening said Wednesday the German government is extremely concerned about Yusuf Naderkhani’s fate amid reports of his imminent execution.

Loening urged Tehran to “release Naderkhani, lift his death sentence and grant him a fair trial.”
He says an execution also breaches international obligations guaranteeing religious freedom.

Naderkhani, who is in his early 30s, converted to Christianity when he was 19 and later became a pastor in the Iranian city of Rasht. He was convicted of apostasy in 2010.

Wintery Knight

Obama sends letter of apology for Qur'an burning

KABUL, Afghanistan — President Barack Obama apologized Thursday for the burning of copies of the Muslim holy book at a U.S. military base this week, as violent protests raging nationwide led a man dressed in an Afghan army uniform to kill two U.S. troops.

The Afghans' furious response to the Qur'an burning -- three days of riots in several cities nationwide -- reflected the anger at what they perceive as foreign forces disrespect for Afghan laws and culture.

In a letter sent to Afghan President Hamid Karzai, Obama expressed his administration's "regret and apologies over the incident in which religious materials were unintentionally mishandled," White House national security council spokesman Tommy Vietor said. He added that the letter was delivered by Ryan Crocker, the U.S. ambassador to Afghanistan, Thursday afternoon.

Karzai's office said Obama called the Qur'an burnings "inadvertent," adding that the U.S. "will take the appropriate steps to avoid any recurrence, to include holding accountable those responsible."

U.S. apologies for the desecration -- and an appeal from Karzai for calm -- have failed to temper the anger of Afghans, who staged rallies in seven provinces Thursday, sparking clashes with Afghan police and security forces that left at least five demonstrators dead. Seven protesters were killed in clashes on Wednesday.

The two NATO service members were killed in eastern Afghanistan by a man dressed in an Afghan army uniform. Both troops were Americans, according to a U.S. official, who confirmed their nationalities on condition of anonymity because he was not authorized to disclose the information.

Mohammad Hassan, an official in Nangarhar province where the shooting took place, said the two Americans were shot by an Afghan soldier after soldiers fired in the air to disperse protesters outside a U.S. base in the Khogyani district. Two protesters were also killed in the ensuing gunfire, Afghan officials said.

A rising number of Afghan security forces, or militants wearing their uniforms, have shot and killed U.S. and NATO service members.

The Taliban on Thursday called on Afghans to attack foreign troops, and their spokesman has issued a statement ordering its commanders to embrace and protect the families of any Afghan policeman or soldier who turns his gun on foreign troops. "Call them heroes," he said.

Protesters also rioted outside a U.S. base in Mehterlam, the capital of Laghman province. Police broke up a demonstration using water cannons and batons after protesters tried to storm the base.

"Hundreds of our people in Laghman province gathered because of the burning of the holy book by the Americans," said protester Mohammad Issa.

"Everyone is so emotional. The burning of the Qur'an broke our hearts and we are attacking the PRT because they are American," he said, using the acronym for the provincial reconstruction team.

In Oslo, Norwegian military spokesman Ivar Moen said a Norwegian soldier was wounded after demonstrators threw a hand grenade into a military base in Maimanah, in northwestern Faryab province where Norwegian, Latvian, Afghan and U.S. troops are deployed.

The soldier was wounded after up to 200 demonstrators hurled rocks at the base and shouted epithets. Norwegian troops responded with warning shots and tear gas. Moen said the demonstration was over, but new protests are expected tomorrow.

In the city of Baghlan in the north, clashes between police and protesters attacking the police headquarters left one person dead. Police said 10 officers were also wounded, two from gunshot wounds.

Police said another two protesters were killed and six wounded in another exchange of gunfire during a protest in southern Uruzgan province.

The riots erupted Tuesday after Afghan workers at the main American military base, Bagram Air Field, saw soldiers dumping books in a pit where garbage is burned and noticed Qurans and other religious material among the trash.

The top U.S. and NATO commander, Gen. John Allen, quickly issued an apology and telephoned Karzai and major news organizations to explain that a collection of religious materials, including Qurans, had mistakenly been sent to be incinerated. As soon as someone realized what they were burning, they stopped and retrieved what was left, Allen said.

Karzai also met Thursday with parliamentarians -- many of whom had called Wednesday for Afghans to wage a holy war against international forces. He told them that a U.S. officer responsible for the incident "didn't understand" what he was doing and the United States "accepted the mistake of its officer."

He commended the U.S. government for "acting quickly regarding this issue and apologizing." Karzai said that he was most concerned with making sure that such acts are not repeated.

Four copies of the Qur'an were burned before the incineration was halted, according to initial Afghan government reports.

NATO and Afghan investigators Wednesday visited the Parwan detention facility, where the Qurans were taken from. U.S. officials said they had been removed from the shelves of the facility's library because they contained extremist messages or inscriptions. The White House said it was an accident that they were sent to be burned.

Read more: http://www.ctv.ca/CTVNews/TopStories/20120223/obama-apology-quran-koran-burning-120223/#ixzz1nJCN8IJC