The Peanut Gallery

Statements, comments and forecasts that have no substance, but just might turn out to be relevant.

1.In his annual address to the nation on Thursday, Russian President Vladimir Putin announced that the country's reserve funds, usually earmarked for investment in state projects, should be used to bail out troubled Russian banks. In doing so he revealed just how grim the prospects for financial institutions have become following the rouble's collapse. The Russian private sector appears to be on state-funded life support.

Comment: The price of oil! How the mighty are falling. A word of warning...a wounded animal is at its most dangerous when cornered. A shaky Russian banking system in a global economy, is worse than a shaky Greek economy. 

Read more:http://www.businessinsider.com/putin-russia-emergency-funds-bank-bailout-dollar-2014-12

2.China has toppled America to become the biggest economy in the world, according to figures from the International Monetary Fund. For the first time in 142 years, the US has been overtaken as the worlds largest economy. Valued at $17.6 trillion, the IMF expects China to  surge to $27 trillion in the next five years. After moving sideways for five years, (and while most stock markets jumped 2-300 percent), the Shanghai Stock index has spurted by 37% since July of this year. 

Comment: The price of oil! The fall in prices will benefit China immensely.

Read more: http://www.dailymail.co.uk/news/article-2785905/China-overtakes-U-S-world-s-largest-economy-IMF-says-economy-worth-17-6trillion-America-falls-second-place-time-1872.html

3. Jihadist rebels have shot their way into the heavily fortified Chechen capital, Grozny, in a night-time attack which left as many as 20 people dead. This is the first attack in many years. 

Comment: Do the Jihadists sense the economic weakness in Russia and feel the time has come to make a move?  

Read more:http://www.bbc.com/news/world-europe-30323751

4.George Friedman: In politics as in economics, the decision-makers usually do things that have unintended consequences, don't understand fully what they are doing, but are caught within impersonal forces that move them in a certain direction. It is interesting watching Obama. Obama had a very different vision for his presidency. History didn’t care. He was going to be dealing with the Middle East, he was going to have bad relations with the Russians, his idea that because he had a marvellous personality he was going to charm for a miracle, all of these went away. The similarities between the presidency of Barack Obama and the presidency of George Bush is startling, and what's interesting to see is he genuinely didn’t think it would be this way. It shows you the limits of power.

5.Stratfor: The Mexican drug cartels have sought to diversify their operations beyond drug trafficking, expanding into fuel theft. Crime groups have the capacity to organize hydrocarbon theft on a massive scale across multiple regions with a high level of efficiency. Although these fuel theft operations are ongoing along virtually every pipeline route, the territories in the east have seen the greatest uptick since 2010.

Comment: Drugs and fuel. Easy money....

Read more: http://www.stratfor.com/weekly/amid-mexicos-energy-reform-fuel-theft-poses-risks#axzz3Kys2CPS2

6.The fear of genetically modified (GM) crops, whipped up by environmentalist hysteria in Europe and America, has prompted many African countries to ban ALL U.S. food aid because it may contain GM corn. This occurs even as desperate Zambians and Angolans break into government silos to “steal” donated GM food that is being denied them. There are no restrictions on these foods in industrialized nations, yet people too poor to buy their next meal are denied the same foods even when it’s free. They could realistically starve without it, yet Greenpeace prides itself on stopping shipments of GM food to starving people.  The policy borders on genocide. Penn Jillette (always good for a quote) sums it up nicely: “Unless you and yours are starving, you need to SHUT THE $#@! UP.”

“Beware the fury of a patient man.” - John Dryden

Follow The Money

The price of Brent crude has collapsed from $115 to $70 dollars a barrel. US light crude to $66 a barrel, all in a very short time. The US dollar has risen by 10-15% against most currencies. The US has ended QE (Quantitave Easing = money creation) and has now been replaced by zero growth Japan, soon to be joined QE in zero growth Europe. After many years of high interest rates in China, they have now initiated lower rates resulting in a 40% jump in the Shanghai Index. And what of Russia and Putin? Goodness, so much is happening...how to make sense of all this?

Economics and political power go hand in hand, though by watching news media, one would probably not notice this (Ferguson and the racist colour of Black Friday seem to be the rage). What are the consequences of the collapse in energy prices? logically most oil producing nations will find themselves in a spot of bother. OPEC are no longer the political or economic power they were in the previous decades. The interesting part of this conundrum  is that both Saudi Arabia and the Emirates voted against reducing supply to shore up prices and the question is why? Texas, Colorado and North Dakota shale-drilling has increased U.S. production by nearly three million barrels a day since 2011. arguably, the break even for shale is around $70 a barrel. The conclusion is that the Saudis are fighting for market share.

Importantly, the Saudis have foreign currency reserves of $800 billion which gives them breathing room to take it easy for a year. Who does not have that breathing room? Iran, the venomous Saudi rival is in big trouble from this turn of events which could be termed as a crushing blow to Iran's oil exports and therefore, to its budget. Another victim of this crisis is Russia. The majority of Russia's income is from energy exports. The Russian budget next year is based on $100 a barrel oil, creating quite the income shortfall. The obvious way for Putin to to avert attention from the economic malaise, is to focus on military undertakings like the Ukraine, Crimea and Afkhazia (in Georgia), and then blame the West.

World economic policy, since 2008 is to create inflation. The opposite of inflation, being deflation (another word for recession or depression). Imagine economies who have close to zero inflation and positive interest rates, of say 1%. With the fall of oil prices, many country's inflation rates will fall into negative territory. With positive, or even zero interest rates, the real interest rates will rise, making expansion more difficult. Japan is one of those countries, and thus announced a QE program and allowed its currency to fall.

The US dollar strength is also creating anxiety everywhere. The USD is the world's reserve currency, so nearly all international debt is in USD. A rise of 10-15% in the USD has automatically increased all international debt (except for the US) by that amount. Which countries are best placed to handle this situation? China and India. Both have cash in the bank and both benefit tremendously from the fall in oil prices. Further, with their manufacturing and export capacity, they can take advantage of the US dollar strength to increase income.

Are we seeing a change in world order, with China and India beginning to flex their economic muscles? Is a desperate Russia flexing its military muscle? Interesting world. How will the markets react to these developments....any ideas?

Islam Imploding

A few years ago I wrote that about the population explosion on planet Earth. At the beginning of the twentieth century, world population stood at one billion. Today we are well over seven (7) billion.The logical conclusion was that at some point the competition over raw materials, water and food between different players would be fierce and not all would survive. My belief was that Islam and specifically arab Islam (but not only), would implode.

This conclusion was arrived at for different reasons. The main reason was that Islam as a religion would not be able to adapt to an economical environment on the same footing as others. Extreme Islam spreads amongst poor and extremely poor folk. It does not thrive in an atmosphere of prosperity or in a system of democracy. It is uncompetitive simply because the majority of the population do not work (the women). Until recently they used the leverage created by energy to maintain their importance to the economically developed communities. This however has been greatly negated by the huge discoveries of LNG (liquid natural gas) in many places on the globe. As the economic deterioration continues the split in Islamic society is becoming more evident.

The Sunni Muslims have split into controlling sects of extreme religious (ISIS, Al Qaeda, Boko Harem, Muslim Brotherhood and Hamas), religious (Saudi Arabia, Qatar, Turkey and Jordan) and secular Militarists (Egypt, Palestinian Authority, Emirates). The Shiites appear to be united but all on the extreme polarity (Iran, Syria, Hizbullah and parts of Lebanon). The confrontation between the different groups appears to have created some strange bedfellows. Clearly Israel is militarily aligned with Egypt, Jordan, PA, Emirates and believe it or not, Saudi Arabia.

At the same time we are witnessing civil wars in Syria, Iraq, Libya, Yemen and Sudan. Interestingly, all these countries water levels have fallen to or below sea level. Another addition to the water level crisis is Afghanistan. Expect a new civill war when the Americans depart. Except for Israel and to a certain extent, Turkey, the Middle East is deteriorating into a quagmire of hatred, war and destruction.

In conclusion, the vacuum created by the US in the mid-east for whatever reasons, known maybe only to US president Barack Obama, or simply as a result of his naive world view, is leading the world to the creation of a new cycle of turmoil. This, characterized by attempts by Islam to survive via  a creeping occupation of Europe, anti-semitism cloaked by anti-Israel elements, personality problems that Mr Obama has with almost all and sundry (Putin, China, Netanyahu, the Sunni world etc.). American deterrence has been neutralized worldwide and even at home (Ferguson...the Obama parasites turning on each other in a surreal comedy of culture or lack thereof). Bottom line, Gaza is just another symptom of the hypocritical cancer of political correctness imposed upon us by Intellectuals on the left. Justifying Hamas terrorism has led to ISIS and ISIS will be coming to a theatre in your vicinity soon. The bed has been made...sleep in it. Sweet dreams.

Hypocrisy is not a way of getting back to the moral high ground. Pretending you're moral, saying your moral is not the same as acting morally.
Alan Dershowitz

The Obama Legacy

Money is power and visa-versa, and the powers that be, totally get it. There is however, a sitting duck (soon to be lame) in the White House and he is quickly becoming the laughingstock of the International community. Lets take a look at the power game unfolding before us. If, after 5 years of bumbling Obama leadership and having witnessed a string of mind boggling mistakes, why look to the Iranian deal for a logical reason to describe what is basically another Obama debacle? It's not so much the decisions, but the thought process behind those decisions that is frightening. It's the arrogance of the assumption that the world are all Americans...just wearing different clothing. If it wasn't so pathetic, it would be ludicrous.

Lets take a step back and look at the history of some Obama debacles. Cheered on by the bankrupt Europeans, he kicked off his presidency with an outstretched hand of friendship to the Islamic world which quickly evolved into the new dawn of democracy known as the Arab Spring. When that part of his legacy turned sour, the champion of human rights and democracy then proceeded to draw red lines for the "Axis of Evil", namely Hizbullah, Syria and Iran. The red lines as it turns out, changed rather suddenly to a shade of yellow as our champion surrendered Syria to Assad and the Russians, Iran to the Mullahs and the rest of us to an uncertain future. In one telephone call, the man legitimized Genocide, rape, racism, terrorism, homophobia and male chauvinism.

So what is happening? Power is shifting away from the US cloaked by intellectual rhetoric, and the symphony conductor is a clown looking for a legacy. Enough of the prose. In what is clearly a calculated decision, the US has decided to abandon its Middle East interests in favour of a stronger position in the geopolitical Asian theatre. Oil is no longer an economic weapon and thus the US seeks what they would call a "balanced" role in the ME. While they either abandon or curtail their relationships with some allies, they are attempting to strengthen the relationships with Japan, South Korea and Australia amongst others. This might explain the withdrawal of forces from Iraq and Afghanistan and the bolstering of a US presence in the South China Sea. 

Sounds good. But what is wrong with this picture? There is the huge assumption that The US can do what it wants and when it wants. A show of weakness in today's dog eat dog world (and most other era's) will definitely have consequences. Obama might assume that nobody is watching, but the truth is, everybody is watching. Everybody (except maybe for Hollywood, CNN, NBC and ABC) understands that the "balance" created by this administration has led to Turkey ordering Chinese weapon systems, Egypt ordering Russian weaponry, Georgia rejecting EU participation in favour of Russia, Jihadists infiltrating war zones, Central and Eastern Europe moving towards Russia and China claiming the East China Sea as China's territorial airspace over the objections of Japan. All big power moves with enormous financial consequences.

The picture gets even more blurred when Americans assume that it is enough for them to declare that they are tired of war and thus the Iranian mullahs will turn their attentions elsewhere. The new American policy of "balance" (some would say "surrender") will herald a new dawn as these Americans wake up to a new reality. The war weary American will soon enough understand the mistake as fatigue turns into fear and then as human nature will have it...is replaced with anger.

So while the Whitewash House (thanks Michael) dithers, the law of unintended consequences is being fulfilled at a breathtaking pace. The vacuum created by this legacy obsessed president is being filled by everyone and anyone who is not American. In case it has not been noted, Netanyahu has visited Putin in Russia at least five times in the past three years. In fact the first country Putin visited after his election victory, was Israel. At the same time the Chinese are quietly making massive investments in Israeli Hi-tech. A wise man once said "don't listen to what they say...watch what they do." 

Hey! And guess what? I haven't even mentioned Obamacare!

You may send a message around the world in one seventh of a second, yet it may take years to force a simple idea through a quarter inch of a human skull - Charles Kettering

The Yellow Red Line

The Washington Post: "The most morally crimped speech by a president in modern times." That description of President Obama's address to the United Nations this week came not from conservative critics but from the editorial page of The Washington Post.

Anybody remember The Obama Cairo speech where he claimed that Housni Mubarak, the Egyptian people and Islam in general have much in common with the American people. At the same time the Obama administration asserted that Assad was a natural US ally, because after all he was an educated man. A doctor who had done his post graduate studies in London, loves western music (especially Chris Brown...wonder why?) and married Asma, educated in the UK with degrees in computer science and French literature. Almost a copy of Obama himself. Well we all know how that turned out...."Mubarak must go!" and then..."Assad must go!"

Lets take a look at all US Allies when the great speechmaker took office. There was the UK, Europe including France and Germany, Egypt, Jordan, Turkey, Iraq, Pakistan, India, most of South America, Africa and so on. Remember how, just a few years ago former Russian Satellites Armenia, Georgia, Belarus and the Ukraine amongst others were all potential US Allies? Thats all gone now. So whats left? US weakness has never been more emphasized than the obscene speech by Obama at the UN.

The red line? What red line? Assad is now the only legitimate leader in Syria today. Anyone (including the UN) who wants to rid Syria of chemical weapons, must talk to Assad. Anyone who believes that it is technically possible to rid the world of Syria's stockpile of chemical weapons must be as naive as Obama.  As for the Middle east, the only influential leader left is Putin. Iran of course understands that there is no longer a military option with Obama in office. They can afford to chat up the Americans. It leaves them an open highway to Nuclear weapons. Imagine the shock experienced by Saudi Arabia and the Gulf States, Turkey, Egypt and the rest of the Sunni world. Israel has never trusted Obama, so less of a shock there. Putin, Assad, Hizbullah and Khameini must be laughing all the way to the bank.

We are witnessing the greatest collapse in US foreign policy in US History, led by a man who easily is the most isolated leader in modern times. To be remembered for legitimizing mass murder, genocide, rape in all its forms, WMD's in all its forms, terrorist organizations (Hizbullah and Al Qaeda) and a world where Gay folk are systematically and brutally eradicated. All it took was one telephone call.


Nothing in the world is more dangerous than sincere ignorance and conscientious stupidity.
Martin Luther King, Jr. 

A Rock and a Hard Place

Stratfor: "If the Russian diplomatic solution to the Syrian imbroglio sounds too good to be true, that's because it is. The logistical complications alone far exceed Russia's diplomatic ambitions. Syria is believed to have 1,000 tons of chemical weapons stockpiles dispersed among 50 different sites across the country."

Watching CNN tonight one would almost believe that President Obama had won a victory over the Russians and Assad. Nothing could be further from the truth, and nothing could be louder than the sounds of the sighs of relief emanating from the White House. These sighs of relief will be temporary at best.

The bottom line is that there will be no military strike, regardless of the outcome of this mismanaged crisis. Possibly Obama might get a short-lived TV victory, but the real victors are Putin and Assad.

It is clear that Putin sees the European and US trepidation over a military strike and he must be chuckling to himself as he holds out an olive branch that bears no fruit.  The French and British governments have already responded positively to the Russian proposal, meeting Russia's objective of splitting the Europeans from the United States and reducing the potential for the United States to assemble a coalition. The US Senate has postponed a vote on the issue and now who knows when or if a vote will even take place.

The only certainty is that the civil war in Syria will continue unabated while the leaderless and divided free world watch with growing unease as the wild animals in Syria continue to feast on their innocent prey.

Stratfor: "Either way, Obama is cornered. He already created a potential exit for himself by seeking authorization from Congress for a strike, and Congress is so far not convinced by his appeals. The Russians have just provided him another exit, but pursuing an impractical diplomatic solution, which would only empower Russia and Iran in a moment of U.S. weakness, will be a difficult pill for the U.S. president to swallow. Obama and his administration will likely spend this week continuing their appeals to Congress to authorize a military response, but if the votes don't add up, he may have to find a creative retreat from this crisis, with or without the Russians."

The Hardest person to awaken is the one already awake - Tagalog Saying

You may send a message around the world in one seventh of a second, yet it may take years to force a simple idea through a quarter inch of a human skull - Charles Kettering

SLOWLY BUT SURELY

From Stratfor:

"Chaos is sweeping the Arab world. Tunisia is in political disarray and can barely control its borders. Libya hardly exists: Tripoli is not the capital of a country but the weak point of arbitration for tribes and militias in far-flung desert reaches. Egypt wallows in a political stasis in which the government has trouble functioning, ideological divisions between the military and Islamists split the country and guns and vigilantism abound. The Sinai Peninsula has become a mini-Afghanistan. The government of Yemen may on a good day control half of its territory. Syria is in a full-fledged civil war with over 100,000 dead. Iraq, too, barely exists as a state and low-intensity violence there is a feature of life. Bahrain and Jordan are much weakened states compared to previous decades. Significantly, none of this anywhere will be solved anytime soon."


To all those alarmists who constantly fear catastrophe for Israel is around the corner, time for a reality check.

"Peace" negotiations with the PLO are nothing more than Israel Aligning itself with The Egyptian military and secular Palestinians (The Palestinian Authority) against Hamas and the Muslim Brotherhood. It is in Israel's interest to crush Hamas and align itself against Muslim extremism in all its forms. As for a "peace" agreement, it won't be worth the paper its written on, but will serve the purpose of implementing the above. Imagine a Hamas takeover of Judea and Samaria.

This chaos is a huge problem for the US and Europe. The turmoil has turned into a breeding ground for terrorism and will strike into the heart of democracies around the world. Israel has for decades warned the world that Islamic terrorism is not an Israeli, but an international problem. Israel has, since and before inception been fighting this war, mostly alone. I'm sure that Obama would haul Mubarak out from under the bus in a flash if he could. If "good guy" Obama is contemplating his legacy, about right now he should be a worried fellow.

More than anyone, The Russians appear to have a handle on reality. One of Russia's ultimate concerns is the spread of Islamic terrorism in the countries surrounding Mother Russia. The best way of creating a buffer is to ensure that Assad and his shiite partners stay strong against the Sunni aggressors, thus spawning a Sunni - Shiite confrontation across the Islamic world. Israel does not necessarily disagree with this stratagem.

Bottom line is that sooner or later the religion of hatred and intolerance will divide into Sunni and Shiite, religious and secular, arab and non-arab groupings prior to all camps having a full go at each other. This, while the infidel world watches and conspires how to profit from this showdown.

The road to hell is paved with good intentions - Saint Bernard of Clairvaux

or

 Hell is full of good meanings, but heaven is full of good works.