Iraq

And just like that, slowly but surely, the entire US foreign strategy vis-a-vis Iraq and its weapons of mass diversion destruction, is becoming all too clear. "The Defense Security Cooperation Agency notified Congress today of a possible Foreign Military Sale to Iraq for AH-64E APACHE LONGBOW Attack Helicopters  and associated equipment, parts, training and logistical support for an estimated cost of $4.8 billion."

The concept of the "Fed Put" is about to be tested.

China’s GDP will almost certainly soon surpass America’s in absolute terms. The end of the unipolar era will create new dangers that the world mustn’t overlook. China’s relative rise and the United States’ relative decline carries significant risks, for the rest of the world probably more so than for Americans. Odds are, the world will be worse off if China and especially others reach parity with the U.S. in the coming years. This isn’t to say America is necessarily as benign a hegemon as some in the U.S. claim it to be. Regardless of your opinion on U.S. global leadership over the last two decades, however, there is good reason to fear its relative decline compared with China and other emerging nations. To begin with, hegemonic transition periods have historically been the most destabilizing eras in history.

Nouriel Roubini, Davos Speakers, Kyle Bass, Larry Edelson, Charles Nenner, James Dines, Jim Rogers, Marc Faber, Jim Rickards and Martin Armstrong Warn of Wider War

One of the most disturbing and relentless trends over the past several years has been the redirection of war technology and equipment from the battlefield abroad toward domestic use in the USA. This has resulted in a militarization of police across the nation and has encouraged small towns to use Department of Homeland Security (DHS) grants to purchase ridiculous items such as tanks. Sadly, it appears this trend is only accelerating. With billions of dollars already spent, and failed wars abroad, the military-industrial complex needs to continue to generate cash flow. May as well just use it against the American people...

Defense contractor Raytheon last year touted an exercise in which it outfitted the aerostats planned for deployment in suburban Baltimore with one of the company’s most powerful high-altitude surveillance systems, capable of spotting individual people and vehicles from a distance of many miles.

Supporters of warfare, welfare, and Wonder Woman cheered last week as Congress passed a one trillion dollar “omnibus” appropriation bill. This legislation funds the operations of government for the remainder of the fiscal year. Wonder Woman fans can cheer that buried in the bill was a $10,000 grant for a theater program to explore the comic book heroine. That is just one of the many outrageous projects buried in this 1,582-page bill. Fortunately, in recent years more Americans have recognized that a constant defense of liberty requires opposing both war and welfare. The question facing Americans is not whether Congress will ever cut spending. The question is will the spending be reduced in an orderly manner that avoids inflecting massive harm on those depending on government programs, or will spending be slashed in response to an economic crisis caused by ever-increasing levels of deficit spending. Because politicians are followers rather than leaders, it is ultimately up to the people what course we will take. This is why it is vital that those of us who understand the dangerous path we are currently on do all we can to expand the movement for liberty, peace, and prosperity.

As much as the “Controllers” in Huxley's Brave New World were indeed in control, the human spirit still managed to bubble to the surface. To the point that the controllers had to designate certain islands for the iconoclasts which inevitably emerged from within the “Alpha” class. All of the drugs, brainwashing and conditioning couldn’t totally break the human spirit. As such, it was a much more hopeful and nuanced novel than many expect it to be. Twenty six years after its publication, Huxley wrote Brave New World Revisited, in which he takes stock of the post World War II period. His analysis is grave. He saw the world progressing toward his nightmare much faster than he anticipated. Brave New World Revisited is a brilliant work of non-fiction and filled with almost incomprehensibly prescient predictions. It also provides a great deal of advice to future generations. Advice which we must immediately heed.

China’s ongoing colonization of Africa represents yet another sad development in the continent’s tragic history, as we noted previously Africa remains the great untapped credit creation cauldron of the world (and therefore Keynesian growth). Unfortunately, Erik Prince of Blackwater infamy is now coming to town, which can only mean more pain, suffering and servitude for Africa.

If the Federal Reserve is trying to force feed us prosperity then the inevitable blowback will be adversity. If the Fed is trying to compel the most dramatic economic recovery in history, then the blowback may well be the deepest depression in history. If the Fed is trying to enforce confidence and optimism then the blowback will be fear and despair. If the Fed is trying to force consumers to spend then the blowback will be a collapse in consumer confidence.

"Sooner or later everyone sits down to a banquet of consequences." - Robert Louis Stevenson

We sincerely hope that we are completely wrong here, that we are missing something, that there is a flaw in our logic. However until we can locate such a flaw we must trust the technical case for treating this Fed force-fed rally in the stock market as something that will end badly.

The major disconnect between the rising of Brent Oil prices with global production outpacing demand on a weekly, monthly and annual basis is just an interesting feat in and of itself.

While all eyes are transfixed on US equities - do we buy the dip now... or now? The rest of the world has been a little less exuberant. From China's 6 month lows to Argentina currency collapse, it's not been pretty but Erdogan and his ongoing totalitarianisation of Turkey has seen capital flight accelerate and plunge the Lira by 10% since the Fed announced its Taper in mid-December. The Turkish Lira has tumbled 27% in the last year - Abe and Kuroda would be proud - but for Turkey this is bad 'capital flight' news.

*TURKISH LIRA WEAKENS TO RECORD AGAINST DOLLAR AT 2.2242

Will the trend continue? It's unclear as little looks to stabilize the political situation but BofAML's Macneil Curry has just cut his long (having reached profit target) and that may slow the momentum. External funding requirements remain extremely high for Turkey and as MS notes, the political outlook looks hazy.

But U.S. Is Still Calling for Regime Change ... Because the "Facts" Are Being Fixed Around the Policy

"The Fed's policies have actually led to a lot of problems around the world," Marc Faber begins his discussion with Bloomberg TV's Trish Regan, especially "people in the lower income groups [who] spend say 30% of their income on energy, transportation, and so forth, electricity and gasoline." The Gloom, Boom & Doom Report author goes on to discuss everything from how the Fed is creating a two-class system around the world, the inexorable growth of governments, buying votes, Bitcoin, interest rates, wealth taxes, and overall market valuations. "We are in a gigantic financial asset bubble," Faber explains, "everybody's bullish," but he sees a slowing global economy (as do we e.g. Baltic Dry Index); "[The bubble] could burst any day. I think we are very stretched." Faber is on fire...

With Islamic extremists raising their ominous-looking flags over Falluja and Ramadi again, it's not looking too good in Iraq (or the rest of the Middle East). Sure, Mark Firoe notes, Iraqi government forces may take back some territory they lost, but it's never a good sign when you have to shell your own country to maintain order. Confused at the proxy-wars, terrorists, statists, and just who the US is friends with? Have no fear, the following brief clip will explain it all...

These names can fall farther than investors ever think once the downside momentum kicks in......