Archive - Aug 2013

Imagine Dick Cheney in a “Saturday Night Live” skit fantasizing about Barack Obama handling the pressures of going to war...

September is likely to be dominated by a number of key event risks, in addition to ongoing uncertainty around the US growth outlook, the Fed’s reaction function and heightened EM volatility. We highlight the major events and likely market implications.

Want to know why things are falling apart? Just look at our soaring systemic debt and the diminishing returns on that debt. We are in a long-term trend where additional debt undermines the system as the positive returns on that debt turn negative.

After bringing the world to the edge of WWIII and nearly giving the first order to launch the ironically named Patriot missile, then dramatically punting in the very last second whether to invade Syria to Congress, something he should have done from the every beginning, Obama went on to do what he does best.

U.S. President Barack Obama is evidently not getting the multinational coalition his administration was expecting to share the burden of a limited strike operation against Syria. The British parliament has voted against a military intervention, and NATO has said it would not participate in a U.S.-led mission. The United States can either unilaterally fire a symbolic but ineffective shot to demonstrate action for the sake of action, wage a highly unpopular multi-month air-land attack alone or abandon the military campaign altogether.

The most likely path of collapse to take place within the U.S. includes economic destabilization caused by a loss of the dollar's world reserve status and petro-status.  This fiscal crisis event will likely not occur in the midst of a political vacuum.  The central banks and international financiers that created our ongoing and developing disaster are not going to allow the destruction of the American economy, the dollar, or global markets without a cover event designed to hide their culpability.  They need something big.  Something so big that the average citizen is overwhelmed with fear and confusion.  A smoke and mirrors magic trick so raw and soul shattering it leaves the very population of the Earth mesmerized and helpless to understand the root of the nightmare before them.  The elites need a fabricated Apocalypse. Enter Syria...

Yesterday afternoon, Russia agreed to restructure Cyprus' EUR 2.5 billion loan terms to a much more affordable 2.5% semi-annual coupon through 2016 and a principal re-payment over the following four years. While probably still out of reach for the desparate economy, it was a positive step. Of course, this 'offer' by Russia has its quid pro quo. This morning, Foreign Minister Ioannis Kasoulides has stated that Cyprus territory will not be used to launch military strikes against Syria, as "Cyprus wants to live up to its responsibility as a shelter if needed for nationals of friendly countries who evacuate from Middle East". It would appear Obama's influence is fading everywhere...

What have we done?

#TEPCO: "It can't be denied" there could be several fresh radioactive water leaks at #Fukushima-1. Doses up to 1800 mSv/hr detected on site.

— Steve Herman (@W7VOA) August 31, 2013

*OBAMA SAYS USERS OF CHEMCIAL WEAPONS MUST BE HELD TO ACCOUNT
*OBAMA SAYS `MENACE' OF SYRIA MUST BE CONFRONTED
*OBAMA SAYS U.S. MUST TAKE MILITARY ACTION AGAINST SYRIA

*OBAMA SAYS HE WILL SEEK AUTHORIZATION FROM CONGRESS ON SYRIA

While Andrea Mitchell reports that the President will not be announcing airstrikes from the Rose Garden at 115ET, his press briefing this afternoon will update the American people on his decisions about how to proceed... so with no report due from the UN on Syrian chemical arms until lab tests are done, we wait with bated breath for Obama's next steps (but not on the ground...)

"I look forward to the debate"...

Where’s Congress? That’s the question that should haunt the American people in the wake of President Obama’s apparent decision to get their country into another Mideast war. In the long history of the American experience, matters of war and peace have always been hotly debated. And those debates traditionally have been most intense and concentrated in Congress. Now we have a president who declares in word and deed that war decisions, as artificially defined by him as something short of actual war, are exclusively within his constitutional domain. And we have a Congress that shows no serious inclination to challenge that claim of prerogative and power. This is a very serious - and potentially calamitous - development in American history.

AFP: Syrian Prime Minister says Syria's army is ready for potential foreign strikes against it and has its "finger on the trigger"

— Sky News Newsdesk (@SkyNewsBreak) August 31, 2013

WWhile there may have been a verbal attempt by the Obama administration to diffuse Syrian tensions in the aftermath of Thursday's shocker out of the House of Commons, the action on the ground so far is hardly conciliatory. Or rather water, because a sixth US warship has now anchored in proximity to Syria, joining the recently arrived fifth destroyer USS Stout, which joined the warships already "breathing down Assad's neck." From AP: "Five U.S. Navy destroyers - the USS Gravely, USS Mahan, USS Barry, the USS Stout and USS Ramage - are in the eastern Mediterranean Sea waiting for the order to launch. And the USS San Antonio, an amphibious assault ship has now joined them. The USS San Antonio, which is carrying helicopters and can carry up to 800 Marines, has no cruise missiles, so it is not expected to participate in the attack. Instead, the ship's long-planned transit across the Mediterranean was interrupted so that it could remain in the area to help if needed." So in addition to a cruise missile based force, the US is now bringing in the marines? The justification that they are there "just in case" seems a little shallow in context.

The Fed is among the only major central banks not meeting next week, yet it is overshadowing the others.  The dollar's tone improved markedly in recent days.  There is still scope for the Fed to disappoint the dollar bulls.