Middle East

Perhaps after intervening every single day in the past week (remember that FT piece saying the PBOC would no longer directly buy stocks... good times) in either the stock or the FX (both on and offshore) market, China needed a day off; perhaps even the algos got tired of constantly spoofing the E-mini and inciting momentum ignition, but for whatever reason the overnight session has been oddly uneventful, with no ES halts so far, few USDJPY surges (then again those come just before the US open), and even less violent CNY or CNH moves, leading to virtually unchanged markets in Japan (small red) and China (small green). And while the initial tone in Europe has been modestly "risk off", it is nothing in comparison to the massive gyrations that have become a stape in the past few weeks.

Don’t let anyone fool you: As we have detailed since 2013, sectarian strife in Syria has been engineered to provide cover for a war for access to oil and gas, and the power and money that come along with it.

"The fence, in part being built by prisoners along the 175-km (109-mile) border, would be completed sooner than planned, by the beginning rather than the end of October. 'This 3.5-4-metre tall fence can be adequate to protect the country, especially if policemen are patrolling on the other side,"' Minister Viktor Orban's chief of staff Janos Lazar told a weekly news conference."

The lack of leadership to tackle this clear and present danger to Europe's future is truly concerning. Both the migrants and the Europeans might be worse off as a result.

Europe's handling of its refugee crisis has led to much criticism and left even more to be desired, but until now Europe's general population was largely on the side of the misplaced migrants who are trying to reestablish their lives away from the daily horrors of the middle east, all in the name of a Qatari gas pipeline. That may soon change as Europe realizes the influx of tens of thousands of refugees will result in a dramatic surge in public costs, costs which have to be footed by someone. That someone will be the general population (with the wealthy targeted at first) courtesy of even higher taxes.

“Sooner or later, everyone sits down to a banquet of consequences..." – Robert Louis Stephenson

So if you really want to make “refugees” the election issue “du jour”, one can waste a lot of time watching the mainstream incumbent parties bicker over the “right” number of refugees to allow into Canada or how much taxpayer money to throw at aid, or even whether more Canadian “boots on the ground” should be headed over there on various “peace keeping” escapades... or, you could ask the really hard hitting questions...

As WSJ reports, "the European Union on Wednesday proposed redistributing 160,000 refugees across the bloc and speeding up procedures to send back those who don’t qualify for asylum, in a bid to improve a stuttering response to the largest wave of migration on the continent since the aftermath of World War II."

A baby boy turned to flotsam. Washed up on the shore, face down in the mud. Warmongers in government and the media are perversely but predictably trying to conscript Aylan’s corpse into their march to escalation. They are contending that Aylan died because the West has not intervened against Syria’s dictator Bashar al-Assad, and that it must do so now to spare other children the same fate. Um, no, Aylan’s family were Kurdish refugees from Kobani who had to flee that city when it was besieged, not by Assad, but by Assad’s enemy: ISIS.

The prosecution of a Swedish national accused of terrorist activities in Syria has collapsed at the Old Bailey after it became clear Britain’s security and intelligence agencies would have been deeply embarrassed had a trial gone ahead, the Guardian reported.  "The prosecution abandoned the case, apparently to avoid embarrassing the intelligence services. The defence argued that going ahead with the trial would have been an “affront to justice” when there was plenty of evidence the British state was itself providing “extensive support” to the armed Syrian opposition. That didn’t only include the “non-lethal assistance” boasted of by the government (including body armour and military vehicles), but training, logistical support and the secret supply of “arms on a massive scale”."

In hot spot after hot spot in the Middle East, U.S. and Saudi objectives and priorities diverge, even if in some loose sense they are considered to be on the same side. It ought to be astounding that a place this far removed from the liberal democratic values with which the United States likes to be associated, even without considering the aforementioned divergence of objectives elsewhere in the region, still is considered a close partner of the United States. The usual, and to a large degree valid, explanation is that, as Friedman puts it, “we’re addicted to their oil and addicts never tell the truth to their pushers.”

"We’re exhausted by your antics and empty promises. If we so much as sniff continued nuclear development, we are going to covertly and overtly stop you, even if that means military action and pre-emptive strikes on your nuclear facilities."

Today the US made a dramatic diplomatic escalation ahead of what is now assured to be the second major showdown between the US and Russia in Syria, over a Qatari gas pipeline no less, when according to Reuters, it asked Greece to deny Russia the use of its airspace for supply flights to Syria, a Greek official said on Monday, after Washington told Moscow it was deeply concerned by reports of a Russian military build up in Syria.

While the media focuses on the human tragedy of so many people uprooted and traveling in dangerous circumstances, there is very little attention given to the events that led them to leave their countries. Certainly we all feel for the displaced people, especially the children, but let’s not forget that this is a man-made crisis and it is a government-made crisis.

Filed under 'what the f##k?', French President Francois Hollande is preparing for air strikes in Syria in a somewhat mind-numbing approach to to stem a flood of refugees from the Middle East into Europe. Using the always-ready excuse of "grappling with the threat of terrorism," Bloomberg reports Hollande's response to Europe’s biggest refugee crisis since World War II by increasing the bombing of the very place from which the refugees are fleeing...

Don’t expect to see any end to desperation and instability in MENA, but do expect new demographic crises out of other regions: Indonesia, Ukraine, Pakistan, West Africa, and Brazil, with its cratering economy. It’s not inconceivable that China might bust apart politically, with centrifugal consequences. The global economy is contracting. We have indeed attained the limits to growth. Cheap oil is bygone and the capital infrastructure we have won’t run on expensive oil — including the oil industry itself. New technology or further central bank legerdemain is not going to fix that. We’re in population overshoot and a scramble is underway to bail on the places that just can’t support the people who live there. National boundaries will be defended. Sentimentalists will have to step aside. History is not a bedtime story about bunnies and kittens.