Prepare for Tribulation -- David Lankford

Anti-Israel attacks to mount in sync with Syrian war, looming strike on Iran

The tactics Iran, Syria and Hizballah have set out for escalating their terrorist attacks on Israel differentiate between “local” and high-value “strategic” targets. They have now decided to up the assaults on the latter to keep pace with the worsening war situation in Syria and the approach of an attack on Iran’s nuclear program. This is reported by DEBKAfile’s intelligence and counter-terror sources.
Iranian terror planners classify the blowing up of the Bulgarian bus Wednesday, July 18 as “local” notwithstanding its “success” in killing at least seven Israelis and wounding more than thirty.

Destroying an Israeli passenger plane in Limassol, Cyprus, or assassinating an Israeli ambassador, in which they have failed so far, would have been “strategic” as would key Israeli security figures, politicians, business executives and Israel’s Mediterranean oil and gas fields.

Just by coincidence, two major episodes occurred on the same day only hours apart – a large hole was struck in Bashar Assad’s inner circle with the deaths in Damascus of half the management of his killing machine against the Syrian opposition and, soon after, the Israeli tour bus was blown up by means still under investigation.

This chance synchronicity heralds a new period of horrific Middle East violence which will reach not only Israel, but the United States and the West as well.
This realization was uppermost in the conversation between US President Barack Obama and Israeli Prime Minister Benjamin Netanyahu Thursday morning, July 19. Neither doubted that Tehran and Damascus were hatching retribution for the assassination of top Syrian ministers.

They had information missing from media reports on the two events, including the news that straight after the deadly attack on Assad’s henchmen, Supreme Leader Ayatollah Ali Khamenei called an Iranian leadership conference which lasted most of Wednesday and was punctuated with frequent phone calls by Iranian officials to the Syrian President.

The content of those phone calls reaching reached Obama and Netanyahu showed clearly which way the wind was blowing in Damascus and Tehran: Neither intended pulling their punches.

The US and Israeli leaders agreed to work together in the investigation of the bus explosion in Bulgaria.
Our sources stress that this is just diplomaticspeak for holding off on action. Despite Netanyahu’s pledge of a “strong response” to the attack, it was decided that a proactive response to the attack by striking an Iranian or Hizballah target would exacerbate a situation which US Defense Secretary Leon Panetta described as “spinning out of control.”
Israelis have learned in the three years of Netanyahu's tenure as prime minister that expressions like “strong,” “forceful,” “determined” “we cannot tolerate” etc. mean just the opposite. Israel’s enemies also understand him to mean that he will sit tight and do nothing.

However, an escalation of attacks on Israeli “strategic targets” predicted by intelligence experts in the coming days may make this do-nothing policy untenable. After all, talking to Obama won’t deflect Iran, Syria and Hizballah from their resolve to vent their urge for revenge on Israel.
Hizballah leader Hassan Nasrallah has often managed to stay a step or two ahead of US and Israeli thinking – especially in his propaganda campaigns - ever since he surprised Israel by launching the Second Lebanon War in the summer of 2006.
A few hours after the attacks in Bulgaria and Damascus, Nasrallah had found his tongue and was crowing:

"We know what your [Israel’s] first strike will be and we promise you a big surprise."

His words were a warning to Israel and a message to Washington that anyone trying to reach the bunker in which he has been hiding since 2006 was in for a big surprise.

Israel was painfully reminded of the Iranian C-802 shore-to-ship missile fired from the Lebanese coast which surprised and crippled the unready INS Hanit missile ship exactly six years ago.


DEBKAfile

IMF urges action as eurozone enters 'critical' phase

The Fund said that attempts to stabilise the region’s economy and banks had so far failed and a determined move towards a more complete banking and fiscal union was necessary to protect the future of the single currency.

“The immediate priority for the eurozone is to establish a banking union and move toward more fiscal integration,” said Mahmood Pradhan, mission chief for the eurozone.

“These moves would help stem the decline in confidence engulfing the region, lower borrowing costs for countries facing severe market pressure, break the downward spiral between sovereigns and banks, and reduce the risk of contagion across the euro area.”

The IMF staff report said that a clear timetable for action should be laid out, to restore faith and credibility among member states.

It said the ECB must play a bigger role in attempts to preserve the monetary union by lowering borrowing rates and deploying further “unconventional measures” to relieve severe market stress.

A banking union would include a European-wide deposit guarantee scheme, with an ECB credit line in emergencies, and a greater regulatory role for the central bank.

The IMF’s blueprint to save the euro is likely to anger German policymakers, who are strongly opposed to the idea of pooling bank and sovereign debt, and reject the idea that the ECB should take on a “lender of last resort” role.

The IMF is forecasting a 0.3pc contraction in the eurozone’s economy this year, followed by 0.7pc growth in 2013.

“With many of these headwinds significantly stronger in the periphery, growth is expected to be much lower there than in the core. Germany and France are expected to post weak but positive growth in 2012.”

The eurozone crisis is already taking its toll on the global economy and Tim Geithner, the US Treasury Secretary, said yesterday that “trauma” in the region was slowing the US economy and posed the greatest risk to growth.

Meanwhile, Nouriel Roubini, the economist who famously predicted the financial crisis, said the global economy could be on course for a “perfect storm” next year.

Mr Roubini, the New York University professor dubbed “Dr Doom”, said a number of unpleasant factors could combine to derail the global economy in 2013, including an escalation of the eurozone crisis.

Other factors, he said, included further tax increases and spending cuts in the US that may drive the world’s largest economy into recession; a hard landing for China’s economy; a further slowdown in emerging markets; and war with Iran.

“Next year is the time when the can becomes too big to kick it down [the road]...then we have a global perfect storm. That could happen,” he said.

Following a flat year this year, he said US markets could be in store for sharp falls next years, with the Federal Reserve powerless to stop it.

“If the economy is weakening, that is going to put downward pressure on earnings growth,” he said.

Mr Roubini said the Federal Reserve was likely to look increasingly to unconventional measures to ease the crisis as the impact of quantitative easing diminishes over time.

Telegraph

The silent spy drone that could stay in the sky forever

A silent spy drone has been kept in the air for 48 hours using a radical new laser power system.

Military scientists from Lockheed Martin were able to wirelessly beam power to the drone to increase its flight time by 2,400 per cent.

They say the system could eventually keep military spy drones in the sky forever.

The Stalker Unmanned Aerial System (UAS) flight time to more than 48 hours. This increase in flight duration represents an improvement of 2,400 percent.

The small, silent UAS is already used by Special Operations Forces since 2006 to perform intelligence, surveillance and reconnaissance missions.

'We’re pleased with the results of this test. Laser power holds real promise in extending the capabilities of Stalker,' said Tom Koonce, Lockheed Martin Skunk Works Stalker program manager.

'A ground-to-air recharging system like this allows us to provide practically unlimited flight endurance to extend and expand the mission profiles that the Stalker vehicle can fulfill.'

The Stalker UAS was modified for the indoor flight test to incorporate the power beaming technology from LaserMotive.

It makes it possible to wirelessly transfer energy over long distances using laser light.

At the conclusion of the flight test, held in a wind tunnel, the battery on the Stalker UAS had more energy stored than it did at the beginning of the test.

The test was concluded only because the flight had already surpassed the initial endurance goals set by the team.

'This test is one of the final steps in bringing laser-powered flight to the field,' said Tom Nugent, president of LaserMotive.

'By enabling in-flight recharging, this system will ultimately extend capabilities, improve endurance and enable new missions for electric aircraft.

'The next step in proving the reality of this technology is to demonstrate it outdoors in an extended flight of the Stalker.'

Read more: http://www.dailymail.co.uk/sciencetech/article-2174976/The-silent-spy-drone-stay-sky-forever.html#ixzz214uvU3Vp

Spain’s debt crisis was deeper...

Opposition to Spain’s bailout from Holland and Finland, continued German resistance to Eurobonds, the possibilities of fiscal union out of sight and arguments growing over who owns Spain’s debt are a signal that the recent EU summit has resolved nothing, senior economists told CNBC.

Banks, bailouts and bonds are top of the agenda in Europe this week as questions remain over who is liable for Spain’s 100 billion euro ($122.9 billion) debts — the banks benefiting from the bailout package or the government, and ultimately, the taxpayer.

Senior economists speaking to CNBC’s“Squawk Box Europe”, said that they also believed that Spain’s debt crisis was deeper and that they expected the Spanish state will need a bailout, as well as its banks.

European Central Bank Head, Mario Draghi, has said that the discussion about burden-sharing of European debt held by senior bond holders is “evolving” and there have been rumors that there might be a shift in the ECB’s position towards the seniority of bond holders.

However, who should take a loss, or “haircut, on their bondholdings, and when this should happen is undecided.



CNBC

Russia says "decisive battle" underway in Syria

(Reuters) - Russia said on Wednesday that a "decisive battle" was under way in Syria.

Foreign Minister Sergei Lavrov also warned that passing U.N. Security Council sanctions against Syria would amount to direct support for rebels and could draw the country into civil war.

"The battle for the capital, the decisive fight (is under way in Syria)," Lavrov told reporters in Moscow.

"Adopting a resolution against this backdrop would amount to a direct support for the revolutionary movement. If we are talking about a revolution then the U.N. Security Council has no place in this."

Syrian President Bashar al-Assad would not freely cede power, Lavrov said, warning Western powers that their support for rebels would only lead to an escalation of the bloodshed in Syria.

"Instead of calming the opposition, some partners are fostering a further escalation," he said.

"It is a dead-end policy to support the opposition. Assad will not go on his own and our Western partners don't know what to do about that."

With violence rising, the West wants Moscow to drop its support for Assad. Along with China, Moscow has vetoed action against the president at the U.N. Security Council.

But before talks with international peace negotiator Kofi Annan in Moscow on Tuesday, Lavrov signaled no change in Moscow's position.

Reuters

Netanyahu vows to react ‘forcefully to Iran’s terror’ after bomb kills seven Israelis in Bulgaria

SOFIA, Bulgaria — Israel vowed to strike back at Iran for a brazen daylight bombing Wednesday that killed at least seven people on a bus full of Israeli tourists in Bulgaria.

The bombing was the latest in a series of attacks attributed to Iran that have targeted Israelis and Jews overseas and threatened to escalate a shadow war between the two arch-enemies. Iran has denied involvement in the past but did not comment on Wednesday’s attack.

President Barack Obama termed it a “barbaric terrorist attack” and called Israeli Prime Minister Benjamin Netanyahu to pledge U.S. help in finding the perpetrators.

The blast gutted the bus at the airport in the quiet Black Sea resort city of Burgas, some 400 kilometres east of the capital, Sofia, where the Israelis had just arrived on a charter flight from Tel Aviv carrying 154 people, including eight children.

Black smoke billowed into the sky from the stricken bus after the bomb exploded. Young Israelis said they were just boarding when the blast ripped through the white vehicle in the airport parking lot. Israeli Foreign Minister Avigdor Lieberman said at least seven people were killed.

“We were at the entrance of the bus and in a few seconds we heard a huge boom,” said Gal Malka, an Israeli teenager who was slightly wounded.

The resort town has become a popular travel destination in recent years for Israelis, particularly for recent high school graduates before they are drafted for mandatory military service.

No group immediately claimed responsibility for the attack, which wounded 30 others. But suspicion immediately fell upon Iran and its Lebanese proxy, the Hezbollah guerrilla group.

“All signs point to Iran,” Netanyahu said. “Just in the past few months, we have seen attempts by Iran to harm Israelis in Thailand, India, Georgia, Kenya, Cyprus and more. This is an Iranian terror attack that is spreading across the world. Israel will react forcefully to Iran’s terror.”

National Post

Lew Rockwell Pins the Tail on Ben Bernanke and the Rest of Washington's Donkeys!

Let's change the face of British politics - Nigel Farage in Dudley

Missile shield may spark China nuclear upgrade

(Reuters) - China may need to modernize its nuclear arsenal to respond to the destabilizing effect of a planned U.S.-backed missile defense system, a senior Chinese military officer said on Wednesday.

"It undermines the strategic stability," said Major General Zhu Chenghu of China's National Defense University about the U.S.-led development of a missile shield, which has also alarmed Russia.

"We have to maintain the credibility of deterrence," he told Reuters on the sidelines of a panel discussion on nuclear disarmament, referring to the military doctrine that an enemy will be deterred from using atomic arms as long as he can be destroyed as a consequence.

The United States is spending about $10 billion a year to develop, test and deploy missile defenses, which would include a European shield as part of a layered system.

The defenses would also include ship-based interceptors that could be deployed in the Middle East and Asia-Pacific - for instance as a hedge against North Korea - plus ground-based missile interceptors in silos in Alaska and California.

The United States says the system in Europe - which is to be deployed in four phases by about 2020 - is intended to counter a potential threat fromIran and poses no risk to Russia.

But Moscow says the interceptors that the United States and NATO are deploying will be able to destroy its own warheads in flight by about 2018, upsetting the post-Cold War balance of power.

The comments by Zhu - who stirred controversy in 2005 by suggesting China could use nuclear weapons if the United States intervened militarily in a conflict over Taiwan - indicated this is an argument that also resonates in China.

FIRST STRIKE

China "will have to modernize its nuclear arsenal" because the deployment of a missile defense system "may reduce the credibility of its nuclear deterrence," Zhu told the seminar.

"Therefore Beijing will have to improve its capabilities of survival, penetration ... otherwise it is very difficult for us to maintain the credibility of nuclear deterrence."

Joseph Cirincione, president of the Ploughshares Fund, a global security foundation, said any American military planner in Zhu's position would say the same.

Planned anti-missile systems and other advanced weapons in the future could "make it theoretically possible for the U.S. to launch a first strike on China, knock out most of its 40 or so long-range missiles, and intercept any left that were launched in response," he said.

"Missile defenses, however benign they appear to the side building them, always force others nations to improve and increase their offensive weapons," Cirincione, who also took part in Wednesday's discussion in Vienna, said in an e-mail.

The European system is to include interceptor missile installations in Poland and Romania and a radar in Turkey as well as interceptors and radars on ships based in the Mediterranean Sea.

The United States and Russia hold the vast majority of the world's nuclear weapons. China,France and Britain are the three other officially recognized nuclear-armed countries, but their arsenals are much smaller.

China closely guards information about its nuclear weapons. However, the U.S. Department of Defense has said that China has about 130-195 deployed nuclear-capable ballistic missiles.

Reuters

Hezbollah is preparing 'a big surprise' for Israel, Nasrallah says

In speech to supporters, Hezbollah leader Hassan Nasrallah reveals Syria has armed his organization and other terrorist groups in Gaza with long-range missiles.

"Israel can be happy" about suicide bombing in Damascus that killed top Syrian defense officials, Nasrallah says. 

World leaders warn Syrian crisis is "rapidly spinning out of control," express concern over chemical weapons.

Hezbollah is preparing a "big surprise" for Israel, the Shiite organization's secretary-general, Hassan Nasrallah, said on Wednesday in a speech marking the sixth anniversary of the Second Lebanon War.

During the speech, delivered via video feed to a crowd of Hezbollah supporters in Beirut, Nasrallah proudly revealed that Syria had been arming Hezbollah, as well as groups in the Gaza Strip, with long-range missiles capable of reaching all of central Israel, including Tel Aviv.

"Syria is a big problem for the Americans and Israelis because Syria is the real supporter for the resistance and especially at the military level," Hezbollah-affiliated Al-Manar television quoted Nasrallah as saying. "Syria was not only a passageway for the resistance, but also a real military supporter of the resistance. For example, the most important missiles that fell on Haifa and central Israel [during the Second Lebanon War] were Syrian-made missiles."

The Hezbollah leader also said Syrian weapons were being used by Gaza terrorists against Israel. "The most important weapons we fought with during the July war were from Syria, not only in Lebanon but also in the Gaza Strip. The missiles delivered to Gaza managed to force more than a million settlers to stay in bunkers and frightened Tel Aviv. When the Arab regimes were barring bread and money from entering Gaza, Syria was sending weapons along with food to Gaza."

"We know that the enemy is working night and day to gather information about our rocket launchers and I call on them to draw conclusions from their mistakes. We know what your [Israel] first strike will be and we promise you a big surprise, and of course I want the Lebanese people and all the peoples to be very confident in the resistance's capabilities and to know that in this region we have the heart and will to organize, manage, fight and eventually win," Nasrallah said.

"Our fate is not defeat and failure like most Arab rulers claim. We will prevail. Just as we achieved the great victories in 2000 and 2006, we are capable of achieving a greater victory in any coming war. This is the message of the July war." Nasrallah promised a "big surprise" in any future war with Israel.

The Hezbollah leader did not comment on Wednesday's terror attack against Israeli tourists in the Bulgarian city of Burgas, which Israel believes Hezbollah may be responsible for, instead focusing on the suicide bombing in Damascus earlier in the day which left three members of Syrian President Bashar al-Assad's inner circle dead, including the Syrian defense minister and Assad's brother-in-law, the deputy defense minister.

Nasrallah said the Syrian bombing victims were "comrades" in the struggle against Israel.

"We reiterate our call for preserving Syria and the only solution is accepting dialogue. As we feel the loss of today's martyrs, we extend our condolences to their families and to the Syrian leadership. These martyr leaders were comrades-in-arms in the conflict with the Israeli enemy and we are confident that the Arab Syrian Army, which overcame the unbearable, will be able persist and crush the hopes of the enemies," he said.

"Israel has every right to be happy. Israel can be happy because pillars in the Syrian army today were targeted and killed."

Meanwhile, U.S. Defense Secretary Leon Panetta said Wednesday that the Damascus bombing demonstrated that Syria's crisis was "rapidly spinning out of control."

"It is extremely important that the international community, working with other countries that have concerns in that area ... bring maximum pressure on Assad to do what's right, to step down and to allow for that peaceful transition," Panetta said. "The violence there has only gotten worse and the loss of lives has only increased, which tells us that this is a situation that is rapidly spinning out of control."

Panetta said this was all the more reason for the international community to bring "maximum pressure" on Assad to step down and permit a stable transfer of power.

King Abdullah of Jordan warned that Syria was on the brink of a full-fledged civil war and that chemical weapons could end up in the hands of al-Qaida terrorists, French news agency AFP reported.

The Jordanian king told CNN that the bombing was a "tremendous blow" to Assad but not the final one for the regime, which was determined to stay in power.

"This was a tremendous blow to the regime but again, Damascus has shown its resilience, so I think maybe we need to keep this in perspective," King Abdullah told CNN. "Although this is a blow, I'm sure the regime will continue to show fortitude at least in the near future."

He cautioned that the threat of civil war in Syria was growing. "If it breaks down, if civil order breaks down to the point of no return, it will take years to fix Syria. I have a feeling we're seeing the signs of that. The only people that can bring us back from that brink is the president and the regime. This is the last chance they have."

He also expressed concern over Syria's chemical weapons stockpile.

"Our information is that there is a presence of al-Qaida in certain regions inside Syria, and has been there for a while," he told CNN. "One of the worst-case scenarios, as we are trying to look for political solutions, would be if some of those chemical stockpiles would fall into unfriendly hands."

French Foreign Minister Laurent Fabius also commented on the bombing Wednesday saying, "This act is of great importance ... Given this degree of violence, it means that it is necessary and urgent to find a political transition that allows the Syrian people to have a government that expresses its aspirations."

He said France would continue to push for this at the U.N. Security Council, which was due to vote on a resolution to impose harsher sanctions on Syria on Thursday.

British Foreign Minister William Hague echoed his French counterpart, condemning the suicide attack and saying that "all such events increase the arguments for a strong and decisive resolution from the United Nations."

"I think it is clear that situation is deteriorating rapidly," he said during an official visit to Lithuania. Syria was threatened with "chaos and collapse,” he said, urging Russia and China to support a stronger resolution in the U.N. Security Council.

German Chancellor Angela Merkel made similar comments, saying in Berlin: "This shows us that it is high time to ratify the next U.N. resolution."

"My plea to all members of the U.N. Security council is to agree on a common resolution," she said, adding that only this could help bring an end to massive human rights abuses in a country shaken by civil war.

"The peace plan proposed by Kofi Annan is the best foundation for the political transition process in Syria. It needs more support and thus credibility from all sides. We must punish violations with sanctions from the international community," Merkel said.

Conversely, Russian Foreign Minister Sergei Lavrov said, "The battle for the capital, the decisive fight [is underway in Syria]," and warned that passing U.N. Security Council sanctions against the country would amount to direct support for rebels and could draw the country into civil war.

"Adopting a resolution against this backdrop would amount to a direct support for the revolutionary movement. If we are talking about a revolution then the U.N. Security Council has no place in this."

Assad would not freely cede power, Lavrov said. “Instead of calming the opposition, some partners are fostering a further escalation," he said. “It is a dead-end policy to support the opposition. Assad will not go on his own and our Western partners don't know what to do about that."

With violence rising, the West wants Moscow to drop its support for Assad. Along with China, Moscow has repeatedly vetoed action against the Syrian president at the U.N. Security Council.

Lavrov signaled no change in Moscow's position ahead of a meeting with Annan in Moscow on Tuesday.

Israel Hayom

Euro Crisis Means More Power for European Commission

When José Manuel Barroso launches into one of his notorious PowerPoint presentations in the conference hall of the European Council building in Brussels, the mood among European Union leaders present quickly begins to resemble that of an endless vacation slide show in someone's living room. While grandpa waxes lyrical over his photos of Alpine wildflowers, the rest of the family reaches for snacks and hopes the show will soon end.

With each new slide that the Commission president pulls up on table monitors, his enthusiasm for the achievements and initiatives of his own organization grows, while the 27 heads of state and government resign themselves to their fate. The most recent Brussels summit was no different. EU leaders leaned back into their chairs, confident that Barroso's presentation would not prove particularly demanding.

This time, though, they were wrong. When some European leaders raised objections to the fiscal policy recommendations from Brussels, the Commission president fired back. He reminded those assembled that they were the ones who had given the Commission the right to set parameters for national governments. It didn't make any difference to him if they continued to play their little tactical games, he said, noting that he would prefer to stick to facts. And then Barroso said heatedly: "If the European Council doesn't sign off on these recommendations, we'll have a serious problem."

The leaders were shocked. Was this Barroso speaking? It certainly wasn't the Barroso they'd grown accustomed to.

José Manuel Durão Barroso, 56, has been the head of the most powerful EU institution for eight years. More than 32,000 people ultimately report to him, and he is part of every crisis summit. Yet he has long since proven himself to be reliably risk-averse. The head of the EU executive branch, essentially the chief executive of the union, rarely demanded things that others hadn't already demanded before.

Never Been Able to Shine

Advantageous in this approach is that Barroso hardly ever makes serious mistakes. On the other hand, however, he has never been able to shine.

Nevertheless, the Portugal native is now among the beneficiaries of the European financial crisis; it has steadily increased his power. In the last two years, politicians in almost every European capital have increasingly realized that "more Europe and not less" is essential, as German Chancellor Angela Merkel put it during Barroso's most recent visit to Berlin. This, she added, also meant that "the Commission will have more opportunities to play a controlling role." Barroso stood next to her and smiled.

With almost every step toward reform that the EU has taken since the crisis began, the jurisdiction of the European Commission has grown. The so-called European Semester entitles Barroso to set targets for national budgets. They go into effect automatically, unless the affected country organizes a majority opposing the targets in the Council of Ministers.

Barroso is currently negotiating guidelines that would force the member states to send their budget proposals to Brussels before national parliaments vote on them. That could even include empowering the European Commission to demand changes to national budget plans.

As if that weren't enough, at the summit in late June, Barroso -- together with European Council President Herman Van Rompuy, Euro Group President Jean-Claude Juncker and European Central Bank President Mario Draghi -- submitted a plan to supplement the monetary union with a "political union." The plan envisions giving the Commission extensive rights of intervention, joint bonds and a European bank regulatory agency.

During the financial crisis, Barroso came across as a secondary player, but now he is increasingly developing into an equal -- and not always to the delight of the person who helped create him, German Chancellor Angela Merkel. Merkel was instrumental in getting Barroso appointed, joining European conservatives to overcome the objection of then-Chancellor Gerhard Schröder.

Singing Off Tune

It's a spring morning in Hamburg, and Barroso is eating breakfast in the elegant Hamburg Senate guesthouse on the Outer Alster Lake. His Portuguese accent, his face, his body language -- everything about him seems soft and cautious. He is wearing reading glasses and reviewing the manuscripts of speeches he is scheduled to give on this day. He thinks of Alastair Campbell, the legendary spokesman and spin-doctor of former British Prime Minister Tony Blair. Campbell provided his boss with a simple message to focus on every day, Barroso raves, and what fantastic speeches he wrote! The staff members gathered at the breakfast table adopt expressions of irritation. Oh no, Barroso is quick to say, it wasn't meant as criticism.

Still, it clearly rankles the European Commission president that he has little clout relative to Europe's most powerful leaders. He has become used to being ignored. There have been times when he felt the way he once felt in school, when the teacher already interrupted him during voice warm-ups because his singing was so off tune.

Barroso recounts the episode, and it sounds as if he had resolved, at the time, to do everything he could never to be excluded again. Perhaps that's why his speeches, including the ones he is giving on this day, come across as lists of his achievements. He has earned his reputation as a careerist.

He can, however, be convincing when he relies less on his advisers than on his gut feeling, as was the case recently at the G-20 summit in Los Cabos, Mexico. A Canadian journalist asked him why prosperous Europe, instead of helping itself, is begging the rest of the world to contribute money to the International Monetary Fund. "Frankly, we are not coming here to receive lessons in terms of democracy or in terms of how to handle the economy," Barroso snapped. Few people had seen him so upset before.

Barroso has finished his breakfast and is now talking about his mother, who died at an advanced age two years ago. Even when he had already been president of the Commission for some time, he says, she was still worried about his safety every day.

When he was in Moscow in 2008 to mediate in the conflict between Georgia and Russia, he says, she was constantly asking him how dangerous his mission was. He eventually became so unnerved that he handed the phone to then French President Nicolas Sarkozy, who had accompanied him to Russia. "Your son is OK," Sarkozy assured her.

Forced Optimism

He isn't embarrassed to reveal such anecdotes. In fact, at such moments, he conveys a sense of being completely at ease with himself. Of course, such ease usually eludes him in public.

Barroso inherited his first surname, Durão, or "the robust one," from his mother, but the name says little about his character. "I'm not a fan of macho types," he says.

Later in the day, he visits Hamburg's most controversial construction site, the Elbphilharmonie concert hall, which has since become a symbol of poor political planning and failure. He takes the elevator to the top of the half-finished building, high above the harbor, where his host explains to him how construction costs have skyrocketed and the opening date has been delayed again and again. Barroso, a man who would be undeterred by such obstacles, says: "I'm very impressed, and I'm sure you'll find solutions to the problems."

It's the same calculated optimism with which he talks about his own construction site: Europe. Barroso could certainly say a thing or two about the botched work he has experienced. Every day, he witnesses how political players in EU capitals are sabotaging Project Europe. There are countries that suddenly decide that they want to do away with borderless travel, as if this were not one of the key achievements of the community. Others, like Hungary and Romania, are suspending important constitutional guarantees out of hand. But Barroso usually shies away from publicly tangling with such member states. Instead, he prefers to express his eternal hope that these problems will somehow resolve themselves.

This has earned him the reputation of being an eternally weak Commission president, which isn't entirely his fault. The Lisbon Treaty has limited his scope and given him the Belgian politician Hermann Van Rompuy who, in his office across the Rue de le Loi, represents the leaders of the 27 member states.

In addition, Barroso has to devote much of his energy to keeping his own house in order. His 26 commissioners come from highly diverse political camps and sometimes represent the interests of their home countries ahead of Europe's.




Spiegel

11 International Agreements That Are Nails In The Coffin Of The Petrodollar

Is the petrodollar dead?  Well, not yet, but the nails are being hammered into the coffin even as you read this.  For decades, most of the nations of the world have used the U.S. dollar to buy oil and to trade with each other.  In essence, the U.S. dollar has been acting as a true global currency.  Virtually every country on the face of the earth has needed big piles of U.S. dollars for international trade.  This has ensured a huge demand for U.S. dollars and U.S. government debt.  This demand for dollars has kept prices and interest rates low, and it has given the U.S. government an incredible amount of power and leverage around the globe.  Right now, U.S. dollars make up more than 60 percentof all foreign currency reserves in the world.  But times are changing.  Over the past couple of years there has been a whole bunch of international agreements that have made the U.S. dollar less important in international trade.  The mainstream media in the United States has been strangely quiet about all of these agreements, but the truth is that they are setting the stage for a fundamental shift in the way that trade is conducted around the globe.  When the petrodollar dies, it is going to have an absolutely devastating impact on the U.S. economy.  Sadly, most Americans are totally clueless regarding what is about to happen to the dollar.

One of the reasons the Federal Reserve has been able to get away with flooding the financial system with U.S. dollars is because the rest of the world has been soaking a lot of those dollars up.  The rest of the world has needed giant piles of dollars to trade with, but what is going to happen when they don't need dollars anymore?

Could we see a tsunami of inflation as demand for the dollar plummets like a rock?

The power of the U.S. dollar has been one of the few things holding up our economy.  Once that leg gets kicked out from under us we are going to be in a whole lot of trouble.

The following are 11 international agreements that are nails in the coffin of the petrodollar....

#1 China And Russia

China and Russia have decided to start using their own currencies when trading with each other.  The following is from a China Daily article about this important agreement....

China and Russia have decided to renounce the US dollar and resort to using their own currencies for bilateral trade, Premier Wen Jiabao and his Russian counterpart Vladimir Putin announced late on Tuesday.

Chinese experts said the move reflected closer relations between Beijing and Moscow and is not aimed at challenging the dollar, but to protect their domestic economies.

"About trade settlement, we have decided to use our own currencies," Putin said at a joint news conference with Wen in St. Petersburg.

The two countries were accustomed to using other currencies, especially the dollar, for bilateral trade. Since the financial crisis, however, high-ranking officials on both sides began to explore other possibilities.

#2 China And Brazil

Did you know that Brazil conducts more trade with China than with anyone else?

The largest economy in South America has just agreed to a huge currency swap deal with the largest economy in Asia.  The following is from a recent BBC article....

China and Brazil have agreed a currency swap deal in a bid to safeguard against any global financial crisis and strengthen their trade ties.

It will allow their respective central banks to exchange local currencies worth up to 60bn reais or 190bn yuan ($30bn; £19bn).

The amount can be used to shore up reserves in times of crisis or put towards boosting bilateral trade.

#3 China And Australia

Did you know that Australia conducts more trade with China than with anyone else?

Australia also recently agreed to a huge currency swap deal with China.  The following is from a recent Financial Express article....

The central banks of China and Australia signed a A$30 billion ($31.2 billion) currency-swap agreement to ensure the availability of capital between the trading partners, the Reserve Bank of Australia said.

“The main purposes of the swap agreement are to support trade and investment between Australia and China, particularly in local-currency terms, and to strengthen bilateral financial cooperation,” the RBA said in a statement on its website. “The agreement reflects the increasing opportunities available to settle trade between the two countries in Chinese renminbi and to make RMB-denominated investments.”

China has been expanding currency-swap accords as it promotes the international use of the yuan, and the accord with Australia follows similar deals with nations including South Korea, Turkey and Kazakhstan. China is Australia’s biggest trading partner and accounts for about a quarter of the nation’s merchandise sales abroad.

#4 China And Japan

The second and third largest economies on the entire planet have decided that they should start moving toward using their own currencies when trading with each other.  This agreement was incredibly important but it was almost totally ignored by the U.S. media.

According to Bloomberg, it is anticipated that this agreement will strengthen ties between these two Asian giants....

Japan and China will promote direct trading of the yen and yuan without using dollars and will encourage the development of a market for companies involved in the exchanges, the Japanese government said.

Japan will also apply to buy Chinese bonds next year, allowing the investment of renminbi that leaves China during the transactions, the Japanese government said in a statement after a meeting between Prime Minister Yoshihiko Noda and Chinese Premier Wen Jiabao in Beijing yesterday. Encouraging direct yen- yuan settlement should reduce currency risks and trading costs, the Japanese and Chinese governments said.

China is Japan’s biggest trading partner with 26.5 trillion yen ($340 billion) in two-way transactions last year, from 9.2 trillion yen a decade earlier.

#5 India And Japan

It is not just China making these kinds of currency agreements.  According to Reuters, India and Japan have also agreed to a very large currency swap deal....

India and Japan have agreed to a $15 billion currency swap line, Japan's Prime Minister Yoshihiko Noda said on Wednesday, in a positive move for the troubled Indian rupee, Asia's worst-performing currency this year.

#6 "Junk For Oil": How India And China Are Buying Oil From Iran

Iran is still selling lots of oil.  They just aren't exchanging that oil for U.S. dollars as much these days.

So how is Iran selling their oil without using dollars?

A Bloomberg article recently detailed what countries such as China and India are exchanging for Iranian oil....

Iran and its leading oil buyers, China and India, are finding ways to skirt U.S. and European Union financial sanctions on the Islamic republic by agreeing to trade oil for local currencies and goods including wheat, soybean meal and consumer products.

India, the second-biggest importer of Iran’s oil, has set up a rupee account at a state-owned bank to settle as much as much as 45 percent of its bill, according to Indian officials. China, Iran’s largest oil customer, already settles some of its oil debts through barter, Mahmoud Bahmani, Iran’s central bank governor, said Feb. 28. Iran also has sought to trade oil for wheat from Pakistan and Russia, according to media reports from the two countries.

#7 Iran And Russia

According to Bloomberg, Iran and Russia have decided to discard the U.S. dollar and use their own currencies when trading with each other....

Iran and Russia replaced the U.S. dollar with their national currencies in bilateral trade, Iran’s state-run Fars news agency reported, citing Seyed Reza Sajjadi, the Iranian ambassador in Moscow.

The proposal to switch to the ruble and the rial was raised by Russian President Dmitry Medvedev at a meeting with his Iranian counterpart, Mahmoud Ahmadinejad, in Astana, Kazakhstan, of the Shanghai Cooperation Organization, the ambassador said.

#8 China And Chile

China and Chile recently signed a new agreement that will dramatically expand trade between the two nations and that is also likely to lead to significant currency swaps between the two countries....

The following is from a recent report that described this new agreement between China and Chile....

Wen called on the two nations to expand trade in goods, promote trade in services and mutual investment, and double bilateral trade in three years.

The Chinese leader also said the two countries should enhance cooperation in mining, expand farm product trade, and promote cooperation in farm product production and processing and agricultural technology.

China would like to be actively engaged in Chile's infrastructure construction and work with Chile to promote the development of transportation networks in Latin America, said Wen.

Meanwhile, Wen suggested that the two sides launch currency swaps and expand settlement in China's renminbi.

#9 China And The United Arab Emirates

According to CNN, China and the United Arab Emirates recently agreed to a very large currency swap deal....

In January, Chinese Premier Wen Jiabao visited the United Arab Emirates and signed a $5.5 billion currency swap deal to boost trade and investments between the two countries.

#10 China And Africa

Did you know that China is now Africa's biggest trading partner?

For many years the U.S. dollar was dominant in Africa, but now that is changing.  A report from Africa’s largest bank, Standard Bank, says the following....

“We expect at least $100 billion (about R768 billion) in Sino-African trade – more than the total bilateral trade between China and Africa in 2010 – to be settled in the renminbi by 2015.”

#11 Brazil, Russia, India, China And South Africa

The BRICS (Brazil, Russia, India, China and South Africa) continue to become a larger factor in the global economy.

A recent agreement between those nations sets the stage for them to increasingly use their own national currencies when trading with each other rather than the U.S. dollar.  The following is from a news source in India....

The five major emerging economies of BRICS -- Brazil, Russia, India, China and South Africa -- are set to inject greater economic momentum into their grouping by signing two pacts for promoting intra-BRICS trade at the fourth summit of their leaders here Thursday.

The two agreements that will enable credit facility in local currency for businesses of BRICS countries will be signed in the presence of the leaders of the five countries, Sudhir Vyas, secretary (economic relations) in the external affairs ministry, told reporters here.

The pacts are expected to scale up intra-BRICS trade which has been growing at the rate of 28 percent over the last few years, but at $230 billion, remains much below the potential of the five economic powerhouses.

So what does all of this mean?

It means that the days of the U.S. dollar being the de facto reserve currency of the world are numbered.

So why is this important?

In a previous article, I quoted an outstanding article by Marin Katusa that detailed many of the important benefits that the petrodollar system has had for the U.S. economy....

The "petrodollar" system was a brilliant political and economic move. It forced the world's oil money to flow through the US Federal Reserve, creating ever-growing international demand for both US dollars and US debt, while essentially letting the US pretty much own the world's oil for free, since oil's value is denominated in a currency that America controls and prints. The petrodollar system spread beyond oil: the majority of international trade is done in US dollars. That means that from Russia to China, Brazil to South Korea, every country aims to maximize the US-dollar surplus garnered from its export trade to buy oil.

The US has reaped many rewards. As oil usage increased in the 1980s, demand for the US dollar rose with it, lifting the US economy to new heights. But even without economic success at home the US dollar would have soared, because the petrodollar system created consistent international demand for US dollars, which in turn gained in value. A strong US dollar allowed Americans to buy imported goods at a massive discount – the petrodollar system essentially creating a subsidy for US consumers at the expense of the rest of the world. Here, finally, the US hit on a downside: The availability of cheap imports hit the US manufacturing industry hard, and the disappearance of manufacturing jobs remains one of the biggest challenges in resurrecting the US economy today.

So what happens when the petrodollar dies?

The following are some of the things we are likely to see....

-Oil will cost a lot more.

-Everything will cost a lot more.

-There will be a lot less foreign demand for U.S. government debt.

-Interest rates on U.S. government debt will rise.

-Interest rates on just about everything in the U.S. economy will rise.

And that is just for starters.

As I wrote about earlier today, the Federal Reserve is not going to save us.  Ben Bernanke is not somehow going to pull a rabbit out of a hat that will magically make everything okay.  Fundamental changes to the global financial system are happening right now that are impossible for Bernanke to stop.

We should have never gone into so much debt.  Up until now we have gotten away with it, but when demand for U.S. dollars and U.S. debt dries up we are going to experience a massive amount of pain.

Keep your eyes and ears open for more news stories like the ones referenced above.  The end of the petrodollar is going to be a very significant landmark on the road toward the total collapse of the U.S. economy.

So what do you think the fate of the U.S. dollar is going to be in the years ahead?

Please feel free to post a comment with your thoughts below....