300 trillon in derivatives losses

Today Egon von Greyerz warned King World News that the global derivatives market has already suffered a staggering $300 trillion of losses. These massive derivatives losses, which are being hidden from the public, will help lead the rebound in gold as it begins the next leg of its bull market. Below is what Greyerz, who is founder of Matterhorn Asset Management out of Switzerland, had to say in this powerful interview.

King world news

Lindsey Williams new info

Horrific video of beheading raises questions of arms supply to Syria revels

Canadian Mounties Exploit Flood to Confiscate Firearms from Citizens

Canada’s Royal Mounted Police exploited rising flood waters in the town of High River in Calgary as they seized firearms from the homes of evacuated residents. The floods were the result of extremely heavy rain.

On Thursday, according to the Calgary Herald, the RCMP confiscated a “substantial amount” of firearms under the pretext of controlling the weapons and storing them for safekeeping.

“We just want to make sure that all of those things are in a spot that we control, simply because of what they are,” said Sgt. Brian Topham told the newspaper.

Residents are outraged by the high-handed measure.

“I find that absolutely incredible that they have the right to go into a person’s belongings out of their home,” said resident Brenda Lackey. “When people find out about this there’s going to be untold hell to pay.”

“It’s just like Nazi Germany, just taking orders,” another resident yelled as the Mounties prevented residents from entering the town south of Calgary.

“This is the reason the U.S. has the right to bear arms,” another resident, Charles Timpano, said as he pointed at a group of Mounties blockading the town.

The move by the Canadian police is reminiscent of the brazen act of gun confiscation occurring in New Orleans following Hurricane Katrina in 2005. On September 8, New Orleans Police Superintendent Eddie Compass ordered local police, U.S. Army National Guard soldiers, and Deputy U.S. Marshals to confiscate all civilian-held firearms.

“No one will be able to be armed,” Compass declared. “Guns will be taken. Only law enforcement will be allowed to have guns.” Confiscation occurred without court-issued warrants and often with excessive force by police.

One instance of police brutality was captured on video when 58-year old New Orleans resident Patricia Konie was physically assaulted and arrested for refusing to surrender an old revolver to police who had entered her home in violation of the Fourth Amendment. The woman’s shoulder was fractured by police in the incident.

Government is predictably inimical to the concept of natural rights, especially in regard to the Second Amendment and firearms. It will invariably exploit a crisis to disarm the populace, as the incident in Canada once again demonstrates.

Infowars

Iran intercontinental ballistic missile Advances

U.S. intelligence agencies recently detected Iran conducting a static ground test of a large rocket motor that could be used for a future intercontinental ballistic missile (ICBM), according to U.S. officials.

Disclosure of the recent rocket engine test comes as Congress is prodding the Obama administration to deploy a third ground-based missile defense interceptor base on the U.S. East Coast.

“This engine could be used for an ICBM,” said one official familiar with the intelligence reports of the test.

However, the Pentagon and civilian U.S. intelligence agencies have been closely tracking the Iranian missile program and are concerned with Tehran’s drive for a missile capable of reaching the United States.

The Pentagon’s annual report to Congress on the Iranian military said the Iranians are continuing to build missiles that can reach Israel and Eastern Europe.

“Iran may be technically capable of flight testing an intercontinental ballistic missile by 2015,” the report said.

It also stated that Iran’s development of space launchers would assist in building ICBMs.

“Since 2008, Iran has launched multistage space launch vehicles that could serve as a test bed for developing long-range ballistic missile technologies,” the report said.

The Pentagon recently canceled its planned Phase 4 of European-based missile defenses that included a SM-3 interceptor variant capable of hitting Iranian missiles fired at the United States. The plan was canceled amid pressure from Moscow to restrict U.S. missile defenses in Europe.

A group of Republican House members, led by Rep. Howard “Buck” McKeon (R., Calif.), wrote to Defense Secretary Chuck Hagel in March that the cancelation of a European-based missile defense interceptor “creates a large capability gap to defend the United States from Iran.”

The lawmakers said “it appears Iran could flight test an ICBM this year.”

“Yet, with the cancelation of the SM-3IIB missile, even with the deployment of 44 [ground based interceptors] in Alaska and California … there is a large gap in the missile defense of the United States against the Iranian threat,” the 19 House members stated.

Michael Elleman, a former U.N. weapons inspector and author of the bookIran’s Ballistic Missile Capabilities, stated in a recent article that the Iranian space program is critical in building powerful booster rockets and other skills that could be used in developing longer range missiles, including ICBMs.

The main space launcher is the Safir that in 2009 launched an Iranian satellite into space. “It demonstrated a new sophistication in multistage separation and propulsion systems,” Elleman stated in an article published by the U.S. Institute of Peace.

Another space launcher is called Simorgh and it was displayed for the first time in 2010.

The Simorgh uses four short-range missile engines that are clustered to create a booster stage.

Classified U.S. assessments of Iran’s missile program were disclosed by Wikileaks, which posted several State Department cables prepared for the international forum on the Missile Technology Control Regime, an export control group that seeks to prevent missile proliferation to rogue states.

A Sept. 23, 2009, cable said “Iran has established an SLV [space launch vehicle] program that complements and advances its missile development,” the cable, labeled “secret,” stated.

“Although currently the Safir is restricted to very small payloads, Iran’s ability to place a satellite into orbit has demonstrated several technical capabilities applicable to longer-range ballistic missile systems, including staging, clustering small engines, and using gimbaled engines for control of the Safir’s second stage,” the cable said. “As such, Iran’s SLV program remains a key concern, as many technologies required for this program will directly benefit Iran’s long-range ballistic missile development efforts.”

A National Research Council study made public last year on U.S. missile defense efforts stated that an Iranian ICBM with a liquid fuel rocket motor launched from central Iran to the U.S. East Coast would burn for about 250 seconds during its initial “boost-phase” and a total flight time is about 40 minutes.

A solid-fuel Iranian ICBM launched from the same location would burn for 180 seconds during boost phase.

The report recommended building an additional missile defense interceptor site in the continental United States to counter the missile threat likely to emerge from North Korea or Iran over the next several decades.

A 2008 State Department cable said: “Tehran could attempt to develop and test much of this [long-range] missile technology under the guise of a space program.”

A third cable said North Korea has provided assistance to Iran’s space launcher program, a fact U.S. intelligence said “suggests that North Korea and Iran may also be cooperating on the development of long-range ballistic missiles.”

Washington Free Beacon

The Fed Is Now Taking Over The Entire Treasury Market

Yesterday the Fed released its latest balance sheet data: at $3,478,672,000,000, the Fed's assets reached a new all time high of course, up $8 billion from the prior week and up $615 billion from last year - after all with 4 years almost in a row of debt monetization or maturity transformation, either the total holdings or the 10 Year equivalency of Bernanke's hedge fund rise to new record highs week after week.

But that's not the bad news: the bad news, at least for Bernanke, and why the Fed has no choice but to taper is monetizations (however briefly as following the next market crash Bernanke or his replacement Larry "Mr. Burns" Summers will be right back in) is that since the Treasury is about to print less paper (recall: lower budget deficit, if only briefly), and the Fed is monetizing the same relative amount of paper, the Treasurys in the private circulation book get less and less, as more high quality collateral is withdrawn by the Fed.

This is precisely what the Treasury Borrowing Advisory Committee warned against in May. This is also precisely why the Fed's "data-dependent" taper announcement is pure and total hogwash: the Fed knows it can't delay the delay (pardon the pun) of Treasury monetization as doing so only risks even further bond market volatility as less Treasury collateral remains in marketable circulation, and as liquidity evaporates with every incremental dollar purchased by the Fed instead of by the private sector.

So just how bad is the situation? Quite bad. As as of last night, courtesy of SMRA, we know that the amount of ten-year equivalents held by the Fed increased to $1.608 trillion from $1.606 trillion in the prior week, which reduces the amount available to the private sector to $3.603 trillion from $3.636 trillion in the prior week. There were $5.211 trillion ten-year equivalents outstanding, down from $5.242 trillion in the prior week.

After the Treasury issuance, maturing securities, rising interest rates, and Fed operations during the week, the Fed owned about 30.86% of the total outstanding ten year equivalents. This is above the 30.63% from the prior week, and the percentage of ten-year equivalents available to the private sector decreased to 69.14% from 69.37% in the prior week.



In other words, in 1 week the Fed's "take over" of the bond market continued at a brisk pace of 23 bps, which is its average weekly uptake. This is roughly equivalent to 10% of total private collateral moving from private to Fed hands every year!

So basically every year that the Fed does not taper its purchases, Treasury issuance being equal (and it is declining), the Fed removes 10% of high quality collateral from the world's biggest bond market.

And that, in a nutshell, is what Tapering is all about: the realization, and then the fear, of what happens if and when the Fed continues its monetizations of public debt to the point where there is so little left, that when a trade takes place the entire curve moves by 1%, 2%, 5%, 10% or more....

Everything else is smoke and mirrors.

Zero Hedge

Popocatépetl volcano (Mexico): increasing activity

Seismic activity has picked up, suggesting that the volcano could be headed for more vigorous activity soon. SO2 emissions on NOAA recent satellite data have been relatively high as well. 

A magnitude 3.6 volcanic quake occurred on Tuesday night 23:57 local time and was located SE of the crater at 2 km depth. Over 3 hours of low frequency and short amplitude tremor were recorded. An earthquake swarms occurred yesterday as well and another one seems to have started an hour ago.

The rate of small to moderate steam and ash explosions was reported to about 2 per hour during yesterday, with ash plumes reaching up to 1-2 km height above the crater. Ashfall has been reported at Tepetlixpa and Ecatzingo.
On 25 June, with the support of the Ministry of Maritime Affairs and Navy of México, a reconnaissance flight over Popocatepetl´s crater was carried out. It could be observed that the inner crater has grown to 250 m in diameter and 60 m depth, as a result of the explosions of recent days.

Volcano discovery

Just GOD Will Protect Israel After America’s Fall....

My dear friends, we as a nation and a world are headed into the Day of the Lord at break neck speed! This world at present has fully given themselves over unto the demonic delusion and spirit of Anti Christ that we do NOT need our ETERNAL Creator and are the masters of our own “temporal” destiny (Rom. 1:18-32, 2 Thess. 2:8-12). Tyranny, lawlessness, moral relativism, political correctness and fundamental “religious” fantasies of godlessness dominate and saturate the world; and in the United States of America lawlessness, secularism and socialistic totalitarianism is squeezing its grip ever tighter on the former “Land of the Free”.

In the United States of America lawlessness, secularism and socialistic totalitarianism is squeezing its grip ever tighter on the former “Land of the Free”. 

Now that America – which was founded on the bedrock of the Bible, moral absolutes and the Laws of Nature and of Nature’s God - has fully turned her back on the sound moral and spiritual absolutes of time and ETERNITY and continually rejects correction nothing is now left to hold back the dam of global lawlessness which has been retained by the United States of America for over 200 years.

Once America’s restraining power in the world over the tyrants, thugs and fascist dictators of the world ceases to exist, what nation is there to replace her? The answer is a horrific soberly one. NONE! My dear friends this is where we are as a world today.

America NOW - as a nation - fully embraces godlessness, immorality, secularism, anti Judeo/Christian values, anti-Israeli policies, moral relativism, socialism, lawlessness and narcissistic self ambitions of lawlessness (poor, middle-class and rich).

America NOW - as a nation - fully embraces godlessness, immorality, secularism, anti Judeo/Christian values, anti-Israeli policies, moral relativism, socialism, lawlessness and narcissistic self ambitions of lawlessness (poor, middle-class and rich). After America’s collapse the nation of Israel - which America has always looked out for - will be left entirely alone in a world in which the over whelming majority of nations despise her very existence and offer hypocritical support for her. When Israel is left entirely alone in an godless anti Semitic world, who will then protect her right to exist? My friends it will not be the coming Anti Christ and his deceptive covenant with many which many prophetic scholars believe (Dan. 9:27). My dear friends it will be none other thanMoses and Elijah as Almighty God’s Word clearly testifies to (Mal. 4, Rev.11:2-6). 

My dear friends it will be none other than Moses and Elijah as Almighty God’s Word clearly testifies to.

This biblical perspective might sound like a crazy fairy tale to some but it will be, for Almighty God has said that it will be?Moses and Elijah are at the door my friends and the world will soon enough know it (Rev. 11:3-7). My friends all remaining prophetic truths pertaining to Israel and the world will be made known coming up shortly  which billions have scoffed at for ages (Rev. 6-19).  To believe and see the REALITY that I just shared with you one must have complete faith in Almighty God’s precious Word and have exercised themselves in it to clearly see  that these truths will be so (John 17:17, Heb. 11:1,6). Without faith in Almighty God and His Word one will be doomed and blinded to all the REALITY which is at our very door and will continue to slave of thegod of this world and his fallen totalitarian agenda (Isa. 14:12-15, Ezek.28:13-17, 2 Cor. 4:3-4).

My friends, have faith in Almighty God and His Word and see for yourself what is to be!

The Kingdom of Heaven is at hand!

DJP I.F.

The Ignorant Fishermen Blog

Britain could create first 'three-parent baby' through IVF

Parents at high risk of having children with severe disabilities such as muscular dystrophy will be offered the controversial new IVF treatment after it was given the green light by ministers today.

It means the world's first "three-parent baby" could be born in Britain by 2015, if detailed proposals for regulating the procedure pass a public consultation and are approved by Parliament next year.

Up to 10 patients per year are expected to undergo the treatment, which involves replacing a fraction of the mother's damaged DNA with that of a healthy donor.

The process avoids the risk of the mother passing inherited defects, which can lead to a host of rare and debilitating conditions affecting the heart, muscles and brain, on to her children.

The technique is controversial because it involves "germ line" modification of the embryo's DNA, meaning the third party's genetic material would not only be passed on to the child, but also to future generations down the female line.

The Telegraph

IRAN: SYRIAN CRISIS PRELUDE TO COMING OF MAHDI

A high Iranian politician believes the Syrian revolution could be the catalyst for sparking a worldwide conflagration that will usher in an era of Muslim domination of the world.

Shiites, whose clerics rule Iran with an iron fist, believe that at the end of times, the 12th Imam, Mahdi, a 9th century prophet, will reappear with Jesus Christ at his side, kill all the infidels and raise the flag of Islam in all four corners of the world. Many analysts believe Iran is seeking nuclear capability to bring on that Armageddon.

Based on hadiths by Muhammad and his descendants, the Syrian revolution is a start to the coming of Mahdi, Hosseinian said in a speech quoted Thursday by Fars News Agency, a media outlet run by the Revolutionary Guards.

“Imam Sadegh (the Shiites’ 4th Imam) has stated, when the masters of the yellow flag (Lebanese Hezbollah) engage in a conflict with anti-Shiite elements in Damascus and Iranian forces join them, this is a sign and a prelude to the coming of his highness (Mahdi),” Hosseinian said. “We see that (now) the masters of the yellow flag are engaged with anti-Shiite groups in Damascus. Perhaps this is the event that promises the coming and that we must prepare ourselves.”

Hadiths from Ali, the Shiites’ 1st imam, also state that a sign of the coming will be the fall of the walls of Damascus. A tight-knit coalition of Syrian loyalists, Hezbollah fighters and Iranian forces is fighting against a loose coalition of Syrian rebels and al-Qaida fighters. The anti-Assad forces have brought their fight to inside Damascus.

Hosseinian told the audience that they should prepare themselves for war.

“The coming of his highness is assured … the prophet has promised that people from the east, which according to the hadith means Iran, take power and prepare for the government of Imam Mahdi.”

Become a part of the investigative reporting team uncovering the truths about Iran, and get author Reza Kahlili’s “A Time to Betray” about his life as a double agent inside Iran’s Revolutionary Guards.

Hosseinian said that because of the belief in Mahdi, many Christians have converted to Shiism, “including a French philosopher who converted to Shiism and wrote … that because of the Shiites’ belief in Mahdi and that a human being will appear to establish justice in the world … this was the reason ‘for me’ to become a Shiite.”

WND reported on June 23 that the Islamic regime’s newly elected president, Hassan Rohani, attributed his victory in the June 15 voting to the 12th Imam, showing the deep belief of regime officials of the coming of Mahdi.

“This victory and the epic saga are without a doubt due to the special kindness of the Imam Zaman (Mahdi) and the measures taken by the supreme leader (Ayatollah Ali Khamenei), especially his guidance and words. … Without his management, then it was not clear if the people of Iran would witness such a day filled with joy,” Rohani said.

Ayatollah Movahedi Kermani, in his Friday prayer speech last week congratulating Rohani for his election, said that, “Before the reappearance of Imam Zaman (Mahdi), the struggle will reach its peak … in that fight there won’t even be mercy on the womb in the mother’s belly.”

He urged Muslims to prepare the grounds for the coming of Mahdi.

Recently Gen. Hassan Firouzabadi, the Iranian military chief of staff, criticized President Obama’s decision to provide weapons to rebel factions in Syria and warned, “Obama has made his most dangerous blunder today as president of the U.S. when, with the deceit of the Israelis, he issued an order of sending weapons for terrorists in Syria. Today the shipment of arms to the Syrian terrorists won’t solve anything as the Syrian nation with its national army will force the Israeli mercenaries to retreat and escape.”

As WND reported exclusively last year, a joint war room was created among Iran, Hezbollah and Syria to defeat the opposition in Syria and respond to any possible attack by U.S. or NATO forces with a directive for an immediate response to fire a barrage of missiles from the three allies not only toward Israel but also at American assets in the region.

The British paper The Independent reported on June 16 that Iran has decided to send 4,000 troops from its Revolutionary Guards forces to Syria to assure President Bashar Assad’s survival.

Read more at http://www.wnd.com/2013/06/iran-syrian-crisis-prelude-to-coming-of-mahdi/#zRd92i5IdY3Mm86d.99

Alaska Volcano Eruptions Get Worse

Alaska volcano eruptions are entering a more powerful phase. After six weeks of Alaska volcano eruptions reaching five miles into the sky, covering nearby communities with ash and shutting down air flights, there looks to be no end.

Alaska volcano eruptions 2013 started in May at the Pavlof Volcano, which is located about 590 miles southwest of the major city Anchorage, in the Alaska Peninsula. The most powerful phase of Alaska volcano eruptions started with low-level rumblings.

According to scientists at the federal-state Alaska Volcano Observatory, the latest phase of Alaska volcano eruptions started late on Monday and continued through the night into Tuesday. The blasts emanate from the crater of a 8,261 foot volcano.

Tina Neal, an geologist at the observatory said, "For some reason we can't explain, it picked up in intensity and vigor."

In May, Alaska volcano eruptions sent a smaller ash cloud 15,000 feet into the air. The ash was visible for miles. Residents were worried that it would damage power generators.

The ash plume has so far topped of at an altitude of 28,000 feet, which is too low in the air to affect major air traffic, but high enough that small planes have to fly around it.

Missy Roberts, the vice president of PenAir, which is based in Anchorage, said the airline cancelled one flight and had to re-route other flights.

Air traffic controller John Maxwell said, “Everybody is thinking about it. Not that anybody is afraid they’re going to be like Mount Vesuvius and turn into little mummies.”

The whole region is under an ash advisory. The National Weather Service warned that people with respiratory ailments in the area could experience breathing problems. They also warned about potential damage to exposed electronic equipment.

The Alaska Volcano Observatory reported that King Cove, which is located 30 miles southwest of Pavlof and has a populationof about 900 people, has been dusted with ash. The observatory said that a second Alaska Peninsula volcano also continues to experience a low-intensity eruption. The observatory said that ash from Veniaminof Volcano, which is located 485 miles southwest of Anchorage, has been contained to the area around its 8,225-foot summit.

The scientists say the eruptions at Pavlof and Veniaminof are unrelated.
Kpopstarz

Volcano in Russia’s Kamchatka Spews Ash Up to 4.3 Miles

PETROPAVLOVSK-KAMCHATSKY, June 28 (RIA Novosti) - Russia's northernmost active volcano churned out ash to a height of up to 7,000 meters (almost 23,000 feet) in the country's Far East, local Emergencies Ministry’s department reported on Friday.

The 3,283-meter (10,771 feet) Shiveluch volcano increased activity in May 2009 and has been periodically spewing ash from three to ten kilometers.

“Considering the direction and the force of wind, the cloud of ash moved to the southwest and dissipated without having reached residential areas,” the department said in a statement.

Although the current eruption poses no immediate threat to nearby settlements, the ensuing ash fallouts could be hazardous to health and the environment.

The clouds of volcanic ash could also pose threat to air traffic because the tiny particles cause problems with aircraft engine turbines.

There are more than 150 volcanoes on Kamchatka and up to 30 of them are active.

RIA Novosti

Risk of UK blackouts has tripled in a year

Ministers responded by unveiling plans for factories or large businesses to be paid to switch off their power during winter evenings to prevent households' lights going out.

Energy secretary Ed Davey admitted: "Without timely action there would be risks to security of supply."

Ofgem said that the risk of blackouts in 2015-16 had tripled from the one-in-12 it estimated in October to just one-in-four, if the same assumptions of Britain's likely energy demand were used.

The spare capacity margin - the buffer between the electricity Britain's power plants can produce and expected demand - could fall below 2pc, down from a 4pc estimate in October, as more power plants have closed.

"Our assessment suggests that the risks to electricity security of supply over the next six winters have increased since our last report in October 2012," the regulator said. "Small reductions in margins from current levels would result in a significant increase in the risks to security of supply."

Telegraph

Risk of 1937 relapse as Fed gives up fight against deflation

It has set off an emerging market shock and risks "blowback" from a fresh spasm of the eurozone debt crisis, and it is letting all this happen at the same time, before the US economy is safely out of the woods.

It has violated its own counter-deflation strategy, tightening monetary policy even though core PCE inflation has fallen to the lowest levels in living memory and below levels deemed dangerous enough in the past to warrant a blast of emergency stimulus. It is doing so even though the revival of bank lending has faded.

The entire pivot by the Federal Open Market Committee is mystifying, almost amateurish, and risks repeating the errors made by the Bank of Japan a decade ago, and perhaps repeating a mini-1937 when the Fed lost its nerve and tipped the US economy into a second leg of the Great Depression. "It’s all about tighter policy," was the lonely lament by St Louis Fed chief James Bullard.

The Fed seems to be acting in the belief that the US economy will shake off this year's fiscal tightening - 2pc to 3pc of GDP - and that a housing recovery is now entrenched. The sharp fall of Wall Street's homebuilders index would suggest caution. Unlike the surging Case-Shiller index of house prices, it looks forward, not three months backwards.

The Fed could have kept policy steady, welcoming the shake-out in frothy markets over the past month as a useful "fire-drill" for future QE exit, without pushing its point too far. It chose to escalate.

It raised the unemployment target from 6.5pc to 7pc. It concocted feeble excuses to explain why it was ignoring a plunge in 10-year TIPS that serve as a proxy of long-term inflation worries. While still pretending that the pace of QE exit would be dictated by the health of the economy, it in fact set a date that disregards the economy. "Policy actions should be undertaken to meet policy objectives, not calendar objectives," said Mr Bullard acidly in his dissent.

That the Fed should tighten even as it cut its own growth and inflation forecasts for this year is a bizarre state of affairs. "A more prudent approach would be to wait for more tangible signs that the economy was strengthening before making such an announcement. You can communicate it one way or another way, but the markets are saying that they’re pulling up the probability we’re going to withdraw from the QE program sooner than they expected, and that’s having a big influence," said Mr Bullard.

Tim Duy from Fed Watch said the bank seems to be looking for any excuse to extricate itself from QE "as soon as possible". Its reflexes have changed. It aims to press ahead with bond tapering come what may, retreating only if growth really tanks and news is shockingly bad.

This is not just a debate over whether or not to reverse QE, or whether markets have become addicted to Fed amphetamines. It is whether we still knows what on is going in the heads of those who command our destiny, those who have, with other central banks, bought up almost the entire $2 trillion issuance of AAA bonds worldwide over the past year, and therefore have become the market themselves.



The young Fed governor Ben Bernanke warned in his famous 2002 speech - entitled Deflation: Making Sure "It" Doesn't Happen Here - how corrosive it would be if America began to slither down the same slope as Japan. "Sustained deflation can be highly destructive to a modern economy and should be strongly resisted," he said.

Mr Bernanke then said that the Fed should maintain a safe "buffer zone" of 1pc to 3pc inflation to protect against shocks that could push the economy into a deflation vice. The chances of this happening are "remote indeed", he assured us, because the Fed would deploy all means to prevent it ever happening. "The US government has a technology, called a printing press [or, today, its electronic equivalent], that allows it to produce as many US dollars as it wishes at essentially no cost."

Does Mr Bernanke's pledge still hold, now that he is talking down the relevance of PCE inflation at 0.7pc? Or has he taken to heart warnings from ex-governor Frederic Mishkin that the Fed itself risks becoming trapped if QE continues into 2014? Has he buckled to pressure from his own Advisory Council, who now warn that QE is doing more harm than good? Has he simply been outnumbered?

The Left-Keynesians are furious - "A grave error of policy," said Berkeley professor Brad De Long - but so too are the monetarists, usually linked to the free-market Right.

US monetarist David Glasner says the Fed risks a "reprise of 1937", an episode largely forgotten because the re-armament spending soon came to the rescue. Industrial output fell 30pc to 40pc, back to the levels of late 1933. The peak to trough contraction in GDP was 11pc. Unemployment jumped to 19pc.

The Fed Minutes of 1937 are worth reading, a window into error as it unfolded. As late as June that year the Fed still thought "there was little evidence at the present time of a recession, and that it was the general expectation that in any event recovery would be resumed by Fall [Autumn]".

But then again, the Fed Minutes in the Spring of 2008 were no better. Then too they were talking tough - enough to push up long rates by 50 basis points - even though we now know that the US was already in deep recession. Robert Hetzel from the Richmond Fed says in his bookThe Great Recession that the FOMC's refusal to respond to a collapse in the money supply led directly to the Fannie, Freddie, Lehman, AIG disaster that followed.



But if the Fed has erred again this time, it can't hold a candle to the Bank for International Settlements (BIS). This club of central bankers - now entirely in thrall to the Bundesbank, and the liquidationist doctrines of the Chicago Fed circa 1931 - demanded a halt to QE this week, as well as rate rises, yet more fiscal tightening, and an even faster pace of credit deleveraging for good measure.

The American Nobel fraternity likes to accuse our own George Osborne of holding such views. This is calumny. Britain's fiscal tightening is a calibrated 1pc of GDP each year, and it is offset by £375bn of QE. The Osborne view and the BIS view have nothing in common.

One thing is certain, if such a nihilist cocktail of BIS contraction were imposed on the world in its current condition, it would kill recovery altogether, throw millions more out of work, and probably extinguish a few democracies along the way. Hungary is half gone already.

It would cause debt trajectories to explode, and therefore prove self-defeating on its own terms. The ultimate outcome would be a chain of sovereign defaults and bank crashes. This is one way to achieve a cathartic debt jubilee and wipe the slate clean, I suppose, but by stone age methods, with stone age results. The US whittled down the debt burdens left from the Second World War (120pc) by gentler means, and so did the UK (200pc).

The BIS is, of course, right to warn that QE as currently implemented is fuelling asset bubbles, with junk bond yields falling to record lows, and a new rush into "covenant lite" debt for leveraged buy-outs. But it recoils from the awful implication of its analysis - awful for the BIS and central banks, that is - which is that other forms of QE should be found to inject stimulus directly into the veins of the economy, such as building roads or nuclear power stations.

Takahashi Korekiyo pursued just such a radical expirement in the early 1930s, turning the Bank of Japan into an arm of the treasury and forcing it to fund government spending until the economy was on its feet again. It worked like a charm. Neville Chamberlain tried a lesser variant in Britain, with success. The US Treasury took over the Fed in the 1940s.

Lord Turner, former head of the defunct Financial Services Authority, proposes such a plan today, should recovery falter. His softer version would preserve the independence of the Bank of England, allowing it to decide the right level of fiscal financing.

This is complex territory, and may prove an idle debate if the US does indeed achieve the Holy Grail of "escape velocity". But if it doesn't, and if the reason for abjuring low-inflation monetary stimulus is because it causes dangerous asset bubbles, then for goodness sake do it without causing asset bubbles. Little is beyond the wit of man. Unless you are a defeatist.

Telegraph

High war alert in Israel while Russia evacuates Tartus

Shortly after the DEBKA aired a special video on the Syrian war’s widening circle, Moscow announced Wednesday June 26, that the evacuation which had begun Friday of all military and diplomatic personnel from Syria was now complete, including the Russian naval base at Tartus.

“Russia decided to withdraw its personnel because of the risks from the conflict in Syria, as well as the fear of an incident involving the Russian military that could have larger consequences,” said a defense ministry official in Moscow. He stressed that a 16-ship naval task force in the eastern Mediterranean remains on post and arms shipments, including anti-air weapons, would continue to the Syrian government in keeping with former contracts.

In another sign of an impending escalation in Syria, the Israeli Golan brigade staged Wednesday an unannounced war maneuver on the Golan, attended by Prime Minister Binyamin Netanyahu and top army chiefs. In London, Prime Minister David Cameron called the government’s National Security Council into session in Downing Street on Syria. Opposition leader Ed Milliband was invited to attend the meeting, a custom observed only when issues of the highest security importance are discussed.

Earlier Wednesday, DEBKAfile carried the following report in its special video presentation under the heading: Putin and Obama cross swords on Syrian. What Next?

The sullen confrontation between Presidents Vladimir Putin and Barack Obama at the G8 Summit in Northern Ireland last week condemned Syria to five months of escalating, unresolved vicious warfare – that is until the two leaders meet again in September.

For now, tempers are heating up between Washington and Moscow on Syria and other things too, notably the elusive American fugitive Edward Snowden.
US and Israeli intelligence watchers see the Syrian crisis entering seven ominous phases:
1. A five-month bloodbath centering on the battle for Aleppo, a city of 2.2 million inhabitants.

The Syrian army plus allies and the fully-mobilized opposition will hurl all their manpower and weapons into winning the city.

Military experts don’t expect the rebels to hold out against Assad’s forces beyond late August.

2. Neither side has enough manpower or game-changing weaponry for winning the war outright.

That is, unless Presidents Obama or Putin steps in to retilt the balance.

3. The US and Russia are poised for more military intervention in the conflict up until a point just short of a military clash on Syrian soil – or elsewhere in the Middle East. US intelligence analysts have judged Putin ready to go all the way on Syria against the US - no holds barred.
The Russian president is meanwhile deliberately goading Washington and raising temperatures by playing hide-and-seek over the former NSA contractor Edward Snowden, charged with espionage for stealing and leaking classified intelligence. At home, he is considered variously as a traitor and a brave whistleblower.

For several hours Snowden vanished between Hong Kong and Moscow – until the Russian president admitted he was holed up in the transit area of Moscow airport and would not be extradited by Russia to the United States.

4. Iran, Hizballah and Iraq will likewise ratchet up their battlefield presence.

5. A violent encounter is building up between Middle East Shiites flocking to Syria to save the Assad regime alongside Russia, and the US-backed Sunni-dominated rebel forces.
It could scuttle the secret US-Iranian negotiating track on its nuclear program, which was buoyed up by the election of the pragmatic Hassan Rouhani as President of Iran.

6. The Geneva-2 Conference for a political solution for the Syrian crisis is dead in the water. Moscow and the US are divided by unbridgeable issues of principle, such whether Bashar Assad should stay or go and Iranian representation.

7. So long as the diplomatic remains stuck in the mud, the prospects of a regional war spreading out of the Syrian conflict are rising. Iran, Israel, Jordan and Lebanon may be dragged in at any moment – if they have not already, like Lebanon.

A small mistake by one of the Syrian warring parties in Syria could, for example, touch off Israeli retaliation and a wholesale spillover of violence.

DEBKAfile

Stronger eruptions at two Alaska volcanoes

Two Alaskan volcanoes that began minor eruptions weeks ago are showing their strongest seismic activity yet, emitting small amounts of lava and ash along with smoke plumes, the Alaska Volcano Observatory said Tuesday.

The observatory warned of more vigorous activity with the Pavlof and Veniaminof volcanoes, both on the Alaskan Peninsula -- though that will likely just mean more ash.

Pavlof, a snow-covered, cone-shaped mountain, has been erupting since early May. While its activity since then has waxed and waned, seismic activity increased since Tuesday morning and the volcano has started continuously shaking, said David Schneider, a geophysicist with the U.S. Geological Survey.

Some lava is flowing, and the volcano is spewing a cloud of steam and ash that has risen as high as 28,000 feet, said Schneider, at the observatory in Anchorage.

CNN