Iraq

Prevent WWIII  (Which Would Be Really Bad for Your Investment Portfolio, Notwithstanding Keynesian Thinking) by Learning this Little-Known Secret of History 

So what's driving these high ass oil prices? Fundamentals, paper pushing derivatives, fraud, or fear? A common sense discussion ensues...

The heightening tension between the United States government and Iran’s is based off of the fallacious notion that nuclear weapons have a legitimate purpose outside of killing enormous amounts of people.  Yet they have no other real purpose in the end.  Governments possess nuclear weaponry because there is little recourse for state-sanctioned murder.  The millions of innocent lives that stand to be vanquished off the face of the Earth have little meaning to the power-tripping political elite.  So while the Iranian government’s pursuance of nuclear weapons should be condemned, the United States government, the Israeli government, and others capable of waging nuclear war are in no place to criticize.

Gold’s seasonality is seen in the above charts which show how March, June and October are gold’s weakest months with actual losses being incurred on average in these months. Buying gold during the so-called summer doldrums has been a winning trade for most of the last 34 years. This is especially the case in the last eight years as gold averaged a gain of nearly 14% in just six months after the summer low. We tend to advise a buy and hold strategy for the majority of clients. For those who have a bit more of a risk appetite, an interesting strategy would be to buy at the start of September, sell at end of September and then buy back in on  October 31st. 

• The ESM Violates the Law And EU Treaties (Welt)
• Fears Rising, Spaniards Pull Out Their Cash and Get Out of Spain (NYT)
• RBA stays put for third straight month (SMH)
• Why PBOC will not cut rates: China’s Repo Rate Drops Most in Six Months as PBOC Injects Cash (Bloomberg)
• Manufacturing Downturn Spreads Gloom Across Asia, Europe (WSJ)
• "Sources" tell Dutch Dagblad that Weidmann is isolated in his objection to ECB monetization (Reuters, FD)
• Europe Bank Chief Hints at Bond Purchases (WSJ)
• Australia's Fortescue slashes capex as iron ore mkt drops (Reuters)
• Loan rates point to eurozone fractures (FT)
• U.S. nears deal for $1 billion in Egypt debt relief (Reuters)
• Majority of New Jobs Pay Low Wages, Study Finds (NYT)

"Everybody's going to war but we don't know what we are fighting for."

 

– Nerina Pallot, from "Everybody's Gone to War"

All sides in the coming conflict – except for the civilian populations and the soldiers maimed and killed – believe they will benefit from a limited war in the Middle East if everything goes according to plan. However, nothing ever goes according to plan in wars and this is the problem the world will face. Prolonged recession or depression, wealth and benefit confiscation throughout the EU, US and other Western democracies and the risk of a Middle East conflict spreading around the world is our fear. Who is guaranteed to win regardless of the outcome of the war and whether it can be contained? The Anglo-American financial elites and the bankers always win every conflict regardless of the military outcome. This is the history of the 20th century and we see no reason that will change now.

Saudi Arabia has gone on the offensive against Iran to protect its interests.  Their involvement in Syria is the first battle in what is going to be a long bloody conflict that will know no frontiers or limits. Ongoing Disorders in the island kingdom of Bahrain since February of 2011 have set off alarm bells in Riyadh.  The Saudis are convinced that Iran is directing the protests and fear that the problems will spill over the twenty-five kilometer long COSWAY into  oil rich Al-Qatif, where The bulk of the two million Shia in the kingdom are concentrated. The territory is likely to adopt the more fundamentalist principals of the Salafists as it serves as a stepping stone to Iran Itself.  It promises to be a bloody protracted war that will recognize no frontier and will know no limits by all of the participants.

Certified Conspiracy-Free

Military budgets are only one gauge of military power. A given financial commitment may be adequate or inadequate depending on the number and capability of a nation's adversaries, how well it spends its investment, and what it seeks to accomplish, among other factors. Nevertheless, trends in military spending do reveal something about a country's capacity for coercion. The following charts, from the Council of Foreign Relations, present historical trends in U.S. military spending and analyze the forces that may drive it lower.

NOT Because of the Attacks ...

The jury is still out whether Israel will or will not attack Iran, despite the endless and relentless (dis)information in the media from all sides, and certainly when such an attack might happen, but if it did take place, these are all the logistically possible formats what an airborne attack could look like.

Syria and Iran are, in a way, the first dominos in a long chain of terrible events.  This chain, as chaotic as it seems, leads to only one end result:  Third world status for almost every country on the planet, including the U.S., leaving the financial institutions, like monetary grim reapers, to swoop in and gather up the pieces that remain to be fashioned into a kind of Frankenstein economy.  A fiscal golem.  A global monstrosity that removes all sovereignty whether real or imagined and centralizes the decision making processes of humanity into the hands of a morally bankrupt few. The only people celebrating at the end of the calamitous hostilities will be the hyper-moneyed power addicted .01%, who will celebrate their global coup in private, laughing as the rest of the world burns itself out, and comes begging them for help.

Two days ago, historian Niall Fergsuon had the temerity to voice a personal opinion, one which happens to not exactly jive with the rest of the media's take on current events, on the cover page of Newsweek (Newsweek is still in print?) titled, succinctly enough, "Hit the road Barack: Why we need a new president." The response was fast, furious, and brutal, particularly emanating from what Ferguson has dubbed the "liberal blogosphere." Naturally in an election year, said blogosphere has much CPM-generating rumination to do (after all who knows what happens to all those ad revenues if the US corporate base implodes and all that cash on the sidelines stays there due to "policy uncertainty"), so Ferguson merely provided the chum in the water (once the time comes to pick up the calculators again after the presidential election, things will immediately quiet down but until then there is, sadly, at least two more months of ever rising cacophony). So did Ferguson back off having said his piece? Hell no. In fact, he has just made sure that the "liberal blogosphere" is will be burning the midnight oil for weeks to come engaged in completely meaningless point-counterpoint between itself and the historian, when, in reality nothing changes the simple fact that come August 2016, the US will have a simply idiotic 130%+ debt/GDP completely independent of who is in the White House, or in other words, there very well may not be another presidential election. For now, however, we have much needed bread and circuses. Below is Ferguson's just released interview from Bloomberg TV in which he responds to the salient accusations that have been leveled at him (a more essayistic version can be found here).

Why Do They Need So Much Ammunition?

The Organization of Petroleum Economies, in its August report, said Iranian crude oil production in part led to a decline in overall output from the Vienna-based cartel. OPEC said crude oil production for its members, not including Iraq, was reported at 28.1 million barrels per day in July, a decline of 270,000 bpd compared with the previous month.  The decline in OPEC oil production in part was led by Iran, which saw its export options curtailed by sanctions imposed by the U.S. and European governments. Tehran announced it still had a viable consumer base in China, however, which received about 12 percent of its oil needs from Iran. The Indian government, meanwhile, said it would circumvent EU sanctions by extending government-backed insurance to tankers carrying Iranian crude because of the "definite need" for oil.