Thursday, May 17, 2012
Iran drills first large-scale paratroop drops for offensive action
Special operations units of the Iranian army and Revolutionary Guards (IRGC) Tuesday, May 14, began a two-day practice of offensive tactics, for the first time dropping large-scale forces from the air deep behind enemy lines. The many war games Iran has conducted until now focused on defenses of strategic and nuclear locations and repelling invaders. This drill displayed its aggressive capabilities. Codenamed Ja’far Tayyar, it was staged in remote Khorasan near the Afghan border, so as not to expose the commando tactics it employed.
In announcing the exercise, Gholam-Ali Gholamian, Dep. Commander for Operations for the IRGC Ground Forces, cagily called it another routine exercise for “maintaining the preparedness and promoting the combat capability of units stationed in the region.”
DEBKAfile’s military sources disclose that there was nothing routine about it. The units taking part were not stationed in the region but flown in especially.
Western intelligence sources observing the exercise report that its offensive nature was evident: Air transports coming in from the rest of the country dropped large numbers of paratroopers and special forces; Air Force fighter-bombers practiced intense bombardments of small targeted locations; and helicopters drilled rapid transfers of forces between points and air cover for the units reaching the ground.
Monday, the Persian Gulf rulers invited to Riyadh by Saudi King Abdullah for a summit on the Iranian threat dwelt long and hard on the exercise and concluded the threat had been exacerbated and that Tehran had more in store for them than closing the Strait of Hormuz to oil traffic in the event of war. They saw special forces being prepared by Iran to strike deep inside their countries up to and including their oil-producing regions.
The exercise also served the ongoing trade of war signals between Washington and Tehran. Staging a special forces exercise not far from the US military presence in Afghanistan was meant as a rejoinder to US-led special forces maneuver taking place in Jordan across the border with Syria with the participation of 17 nations.
Iranian and Syrian media made much of the fact that the US-led war game was named Eager Lion 12 as a deliberate insult to Bashar Assad, whose name is the Arabic for Lion.
DEBKAfile
Systemic Risk Is Everywhere
Remember our post of this:
That´s the Chase exposure, for more on that post:
The $2 billion loss of JP Morgan in derivatives trading is signaling, once again, the enormous risks big banks take with taxpayer backing. All U.S. banks are covered by the FDIC, and if a loss is big enough, it could threaten the financial system just as it did in 2008. JP Morgan has $70 trillion in total derivative exposure. The entire world has a little more than $700 trillion in derivative exposure, and one bank has 10% of all the derivative exposure on the planet! If JP Morgan gets into trouble, it alone could cause systemic failure. Today, the FBI announced an investigation into the surprise $2 billion (or more) trading loss that happened last week at the bank. Reuters reported,“The probe was seen in some quarters as necessary, given the ongoing debate in Washington about bank regulation and reform, and one expert said it raised the level of concern around what happened.
That´s the Chase exposure, for more on that post:
The $2 billion loss of JP Morgan in derivatives trading is signaling, once again, the enormous risks big banks take with taxpayer backing. All U.S. banks are covered by the FDIC, and if a loss is big enough, it could threaten the financial system just as it did in 2008. JP Morgan has $70 trillion in total derivative exposure. The entire world has a little more than $700 trillion in derivative exposure, and one bank has 10% of all the derivative exposure on the planet! If JP Morgan gets into trouble, it alone could cause systemic failure. Today, the FBI announced an investigation into the surprise $2 billion (or more) trading loss that happened last week at the bank. Reuters reported,“The probe was seen in some quarters as necessary, given the ongoing debate in Washington about bank regulation and reform, and one expert said it raised the level of concern around what happened.
‘The FBI looks for evidence of crimes and goes after people who it alleges are criminals. They want to send people to jail. The SEC pursues all sorts of wrongdoing, imposes fines and is half as scary as the FBI,’ said Erik Gordon, a professor in the law and business schools at the University of Michigan.”
The Obama Administration has to be very worried about JP Morgan which has the biggest derivative exposure ($70.1 trillion) of American banks. The next 4 big U.S. banks after JP Morgan, also, have huge derivative exposure. Citibank has $52.1 trillion in total derivatives, Bank of America has $50.1 trillion, Goldman Sachs has 44.2 trillion and HSBC USA has $4.3 trillion in total derivatives. Combined, the five biggest commercial banks have $220.9 trillion in total derivative contracts. Weigh that against the combined assets of those same top five banks of just $4.8 trillion, and you get an eye popping 46 to 1 leverage! What could go wrong?
The Obama Administration has to be very worried about JP Morgan which has the biggest derivative exposure ($70.1 trillion) of American banks. The next 4 big U.S. banks after JP Morgan, also, have huge derivative exposure. Citibank has $52.1 trillion in total derivatives, Bank of America has $50.1 trillion, Goldman Sachs has 44.2 trillion and HSBC USA has $4.3 trillion in total derivatives. Combined, the five biggest commercial banks have $220.9 trillion in total derivative contracts. Weigh that against the combined assets of those same top five banks of just $4.8 trillion, and you get an eye popping 46 to 1 leverage! What could go wrong?
Please remember, in 2009, the Financial Accounting Standards Board (FASB) changed how banks value assets such as real estate and mortgage-backed securities to whatever the institution thinks they’ll fetch in the future. These “assets” are not valued at what they would sell for today. I call this “government sanctioned accounting fraud.”
The other big banks are probably making some of the same bets in risky derivative as JP Morgan. The FBI opening up an investigation now is like closing the barn doors after all the livestock has run off. There have been zero criminal prosecutions of financial elites in the wake of the 2008 meltdown. (1,000 were successfully prosecuted after the S&L crisis in the 1990’s.) That is no accident. I think it’s because of Wall Street’s political connections, but also because the government has been worried about pushing too far for fear of crashing an already fragile financial system. Now, the FBI is going to start prosecuting Wall Street. Really? Why doesn’t the FBI investigate the Halloween bankruptcy of MF Global and the $1.6 billion in missing segregated client funds?
Details are sketchy, but it has been reported that JP Morgan lost at least $2 billion in the European debt market with derivatives. The austerity in the EU is simply the banks wanting the people to cut back on everything so they get paid back. Elections in France and Greece recently have turned that pipe dream into a nightmare for the bankers. People are voting for less austerity for themselves and for more pain for the banks. Over the weekend in Spain, more than 100,000 marched in protest over harsh austerity. This quote from the New York Times sums up the mood of the crowd: “I’m here to defend the rights that we’re losing and for the young people who have it so tough,’ 57-year-old middle school teacher Roberto Alonso said. ‘They’re better educated than ever. But they don’t have work. They don’t have anything. They’re behind and they’ll stay that way.”
The European banking sector has been plagued with downgrades in nearly every major country in the European Union. The situation looks like it’s getting worse–not better. Just yesterday, 26 Italian banks got chopped. That is an ominous sign as Italy is the granddaddy of the so-called PIIGS (Portugal, Ireland, Italy, Greece and Spain). It is the 4th largest economy in the EU. Yesterday, Greek depositors withdrew nearly $1 billion (700 million euros) from local banks. Will there be bank runs coming in other countries?
On top of it all, there appears to be little growth as, at least, 8 countries are in recession in Europe. Trouble for banks in Europe and the U.S. will eventually lead to another massive bailout to save the Western financial system. Much of the bailouts will, of course, come from the Federal Reserve. Just three weeks ago, Ben Bernanke strongly hinted at more money printing which the Fed Chief calls “tools.” He said, “Those tools remained very much on the table and we would not hesitate to use them should the economy require that additional support.” It is not the economy Bernanke is worried about, it is the extremely leveraged banking system.
The monster downside to all the bailouts to prop up the system is the devaluing of the U.S. dollar and the destruction of the credit worthiness of America. There is another downside to the policy of privatizing the profits and socializing the losses, and that is the loss of confidence of the U.S. dollar as the world’s reserve currency. It will come down to the Fed choosing between the banks or the buck. It looks like the dollar will be sacrificed on an altar of insolvency. It is clear, systemic risk is everywhere.
USAWatchdog.com
The other big banks are probably making some of the same bets in risky derivative as JP Morgan. The FBI opening up an investigation now is like closing the barn doors after all the livestock has run off. There have been zero criminal prosecutions of financial elites in the wake of the 2008 meltdown. (1,000 were successfully prosecuted after the S&L crisis in the 1990’s.) That is no accident. I think it’s because of Wall Street’s political connections, but also because the government has been worried about pushing too far for fear of crashing an already fragile financial system. Now, the FBI is going to start prosecuting Wall Street. Really? Why doesn’t the FBI investigate the Halloween bankruptcy of MF Global and the $1.6 billion in missing segregated client funds?
Details are sketchy, but it has been reported that JP Morgan lost at least $2 billion in the European debt market with derivatives. The austerity in the EU is simply the banks wanting the people to cut back on everything so they get paid back. Elections in France and Greece recently have turned that pipe dream into a nightmare for the bankers. People are voting for less austerity for themselves and for more pain for the banks. Over the weekend in Spain, more than 100,000 marched in protest over harsh austerity. This quote from the New York Times sums up the mood of the crowd: “I’m here to defend the rights that we’re losing and for the young people who have it so tough,’ 57-year-old middle school teacher Roberto Alonso said. ‘They’re better educated than ever. But they don’t have work. They don’t have anything. They’re behind and they’ll stay that way.”
The European banking sector has been plagued with downgrades in nearly every major country in the European Union. The situation looks like it’s getting worse–not better. Just yesterday, 26 Italian banks got chopped. That is an ominous sign as Italy is the granddaddy of the so-called PIIGS (Portugal, Ireland, Italy, Greece and Spain). It is the 4th largest economy in the EU. Yesterday, Greek depositors withdrew nearly $1 billion (700 million euros) from local banks. Will there be bank runs coming in other countries?
On top of it all, there appears to be little growth as, at least, 8 countries are in recession in Europe. Trouble for banks in Europe and the U.S. will eventually lead to another massive bailout to save the Western financial system. Much of the bailouts will, of course, come from the Federal Reserve. Just three weeks ago, Ben Bernanke strongly hinted at more money printing which the Fed Chief calls “tools.” He said, “Those tools remained very much on the table and we would not hesitate to use them should the economy require that additional support.” It is not the economy Bernanke is worried about, it is the extremely leveraged banking system.
The monster downside to all the bailouts to prop up the system is the devaluing of the U.S. dollar and the destruction of the credit worthiness of America. There is another downside to the policy of privatizing the profits and socializing the losses, and that is the loss of confidence of the U.S. dollar as the world’s reserve currency. It will come down to the Fed choosing between the banks or the buck. It looks like the dollar will be sacrificed on an altar of insolvency. It is clear, systemic risk is everywhere.
USAWatchdog.com
Cost of Greek exit from euro put at $1tn
The British government is making urgent preparations to cope with the fallout of a possible Greek exit from the single currency, after the governor of the Bank of England, Sir Mervyn King, warned that Europe was "tearing itself apart".
Reports from Athens that massive sums of money were being spirited out of the country intensified concern in London about the impact of a splintering of the eurozone on a UK economy that is stuck in double-dip recession. One estimate put the cost to the eurozone of Greece making a disorderly exit from the currency at $1tn, 5% of output.
Officials in the United States are also nervously watching the growing crisis: Barack Obama on Wednesday described it as a "headwind" that could threaten the fragile American recovery.
In a speech in Manchester before flying to the United States for a summit of G8 leaders, the British prime minister, David Cameron, will say the eurozone "either has to make up or it is looking at a potential breakup", adding that the choice for Europe's leaders cannot be long delayed.
"Either Europe has a committed, stable, successful eurozone with an effective firewall, well capitalised and regulated banks, a system of fiscal burden sharing, and supportive monetary policy across the eurozone, or we are in uncharted territory which carries huge risks for everybody.
"Whichever path is chosen, I am prepared to do whatever is necessary to protect this country and secure our economy and financial system."
Officials from the Bank, the Treasury and the Financial Services Authority are drawing up plans in the expectation that a Greek departure from monetary union – increasingly seen as inevitable by financial markets – could be as damaging to the global economy as the collapse of Lehman Brothers in September 2008.
With a second election in Greece called for 17 June, King dropped a strong hint that the Bank would take fresh steps to stimulate growth if policymakers in Europe failed to deal with the sovereign debt crisis.
"We have been through a big global financial crisis, the biggest downturn in world output since the 1930s, the biggest banking crisis in this country's history, the biggest fiscal deficit in our peacetime history and our biggest trading partner, the euro area, is tearing itself apart without any obvious solution," he said.
Doug McWilliams, of the Centre for Economic and Business Research, said a planned breakup of the single currency would cost 2% of eurozone GDP ($300bn) but a disorderly collapse would result in a 5% drop in output, a $1tn loss. "The end of the euro in its current form is a certainty," he added.
Alistair Darling, who was Chancellor of the Exchequer under the former Labour administration, said: "This has the seeds of something disastrous. It is madness. If it spreads to bigger countries, this could be really disastrous for Europe. It could consign us to years of stagnation."
Capital flight from Greece has increased since it became clear that a coalition government could not be formed after the election earlier this month. The Greek president, Karolos Papoulias, said citizens were withdrawing their money amid "great fear that could develop into panic" at the risk of a debt default and exit from the euro area, according to minutes of their meetings posted on the presidency's website. In little more than a week following the election on 6 May, €3bn was withdrawn from bank accounts. The central bank reported that €800m was taken out in a single day earlier this week.
The head of the International Institute of Finance banking lobby, Charles Dallara, said money was leaving Greece at a growing pace due to political uncertainty. "There has been a pickup of deposit flight from Greece, but I think that is stabilisable once you get a new government in place, if that government reaffirms its intention to remain in the eurozone." The damage to the rest of Europe if Greece were to leave the euro would be "somewhere between catastrophic and armageddon", he said.
The Spanish prime minister, Mariano Rajoy, told parliament that his country faced trouble financing itself as borrowing costs shoot up to "astronomic" levels. The Irish finance minister, Michael Noonan, said Dublin's plan to return to capital markets in late 2013 might not be achievable because of the uncertainty.
The first meeting between French president François Hollande and German chancellor Angela Merkel helped to calm nerves in the markets at one stage, with suggestions that Berlin might be amenable to initiatives to boost growth in Greece and the other austerity-stricken nations of the eurozone.
But the jittery mood was underlined by a fall in European shares and the single currency late in the day amid reports that the European Central Bank was cutting off its funding lifeline to Greek banks that had failed to amass enough capital to protect them from future losses.
The ECB later said it expected the Greek central bank to use part of the €130bn bailout from the EU and IMF to ensure that the country's banks were safeguarded from collapse, and that they would receive additional help from Frankfurt only once this had happened. Already delayed by the political uncertainty in Greece, €18bn is now expected to be released to recapitalise the banks.
Sony Kapoor, of the Brussels-based Re-Define thinktank, said: "The high-stakes game of chicken between Greek and other EU politicians must end now. Those saying that a Greek exit from the eurozone will not be a big deal either don't know what they are talking about, or have some ulterior motives. The social, political and economic damage to the EU from a Greek exit is potentially incalculable."
At the G8 summit, which starts on Friday, Obama will press Merkel tolean more towards a growth package for Europe, instead of pressing so hard for the austerity measures that were rejected by Greek voters.
But foreign affairs analysts said that Obama's leverage with the European leaders is minimal. Although the US has the economic muscle to help Europe out of its mess, the Obama administration has taken the strategic decision not to become involved directly.
Instead, Obama is to use the Camp David summit for some quiet diplomacy, hoping to sway Merkel to endorse some immediate actions to help growth.
King, speaking at the publication of the Bank of England's quarterly inflation report, said growth in Britain was weaker and inflation higher than Threadneedle Street had expected three months ago. It would take until 2014 for output to return to where it was in 2008, when Britain's deepest post-war recession began.
"What is so depressing about it is that this is a rerun of the debates in 2007/08 – these are not liquidity problems, they are solvency problems," King said. "Imbalances between countries in the euro area have created creditors and debtors and at some point the credit losses will need to be recognised and absorbed and shared around," he said.
"Until that is done, there will not be a resolution. That is why just kicking the can down the road is not an answer. The European Central Bank has performed heroically in trying to buy time but that time hasn't been used to put in place fundamental underlying solutions."
The Guardian
Wednesday, May 16, 2012
'Lost tribe' of Israel returning home
After a five-year immigration halt, Prime Minister Benjamin Netanyahu’s government has given permission to a community of Indian citizens who believe they are one of the “lost tribes” of Israel to move to the Jewish state.
“We had a major breakthrough, and thank God, the Aliya [immigration to Israel] is set to resume this summer, and we hope and pray to bring the first batch of 50 families, or about 250-300 Bnei Menashe immigrants, to Israel by the end of August,” said Michael Freund, chairman of Shavei Israel, which is behind the initiative.
Shavei, based in Jerusalem, hopes to bring to the Jewish state the remaining 7,000 Indian citizens who believe they are the Bnei Menashe, the descendants of Manasseh, one of biblical patriarch Joseph’s two sons and a grandson of Jacob.
Already Freund’s group helped facilitate the immigration of over 1,700 Bnei Menashe, with successive Israeli governments allowing and then halting the process. In 2007, Prime Minister Ehud Olmert’s administration put the kibosh on the process, which is now being reopened.
Shavei plans to bring 50 Bnei Menashe families to Israel this summer with hopes of transplanting the remaining tribe members from India to Israel in the next few years.
The original batches of Bnei Menashe to arrive here came as tourists in an agreement with Israel’s Interior Ministry. Once in Israel, the Bnei Menashe converted officially to Judaism and became citizens.
But diplomatic wrangling halted the immigration process in 2003, with officials from some Israeli ministries refusing to grant the rest of the group still in India permission to travel here.
To smooth the process, Freund at the time enlisted the help of Israel’s chief rabbinate, who flew to India in 2005 to convert members of the Bnei Menashe, a process stopped last year by India.
Freund then coordinated with the Israeli government the arrival of batches of a few hundred Bnei Menashe as tourists who would later convert, but that process was halted in July 2007.
Tribe members live in the two Indian states of Mizoram and Manipur, to which they say they were exiled from Israel more than 2,700 years ago by the Assyrian empire.
According to Bnei Menashe oral tradition, the tribe was exiled from Israel and pushed to the east, eventually settling in the border regions of China and India, where most remain today. Most kept customs similar to Jewish tradition, including observing Shabbat, keeping the laws of Kosher, practicing circumcision on the eighth day of a baby boy’s life and observing laws of family purity.
In the 1950s, several thousand Bnei Menashe say they set out on foot to Israel but were quickly halted by Indian authorities. Undeterred, many began practicing Orthodox Judaism and pledged to make it to Israel. They now attend community centers in India established by Shavei Israel to teach the Bnei Menashe Jewish tradition and modern Hebrew.
Freund sees the Bnei Menashe immigration as biblical, quoting from Isaiah 43:5, which states, “Do not be afraid, for I am with you; I will bring your children from the east and gather you from the west.”
“Those words,” Freund says, “are coming to life before our eyes.”
“I think this is a very historic project,” he added. “It is the closing of an historical circle. It is the return of a lost tribe of Israel after 27 centuries of exile, and it is a fulfillment of biblical prophecy.”
WND
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