Eastern Europe

"It is time to accept that what we have done has worked brilliantly for twenty years but does not work anymore and move on. We are confident our process will eventually work again – for the laws of economics will never be repealed – but for now they are suspended and may be for some time; an indefinite period involving indeterminate levels of risk during which we think it would be wrong for us to be the stewards of your money."

Important pillars of the bull case evaporated throughout 2015. Global price pressures weakened, the global Credit backdrop deteriorated and the global economy decelerated. The huge bets on central bank policies left markets at high risk for abrupt reversals and trade unwinds – 2015 The Year of the Erratic Crowded Trade. Indeed, a global bear market commenced yet most remain bullish. Serious and objective analysts would view this ominously.

Each year more than one trillion dollars goes up in smoke. More accurately, it is stolen from the middle and working classes and shipped off to the one percent. We are talking about the massive yearly bill to maintain the US empire. What can we do to work for peace in 2016? First we must tune out the lying propaganda served up by the US mainstream media. We must educate ourselves so that we can help educate others.

Market-based Credit is unstable. This remains the fundamental issue – the harsh reality – that no one dares confront. Long-term stability in a Capitalistic system requires sound money and Credit (hopelessly archaic, we admit). Over the years, we've tried to differentiate traditional finance from unfettered “New Age” finance. The former, bank lending-dominated Credit, was generally contained by various mechanisms (including the gold standard, effective currency regimes, bank capital and reserve requirements, etc.). This is in stark contrast to the current-day securities market-based global financial “system” uniquely operating without restraints on either the quantity or quality of Credit created. There’s no precedence for such a globalized monetary fiasco, though there are a number of historical episodes that provide valuable insight.

101 years after the Christmas truces along the Western Front there is still no peace on earth. And the long suffering American taxpayers, who foot the massive bills generated by the War Party’s demented and destructive policies, have no clue that Imperial Washington is the principal reason.

“The SAC study includes chilling details. According to its authors, their target priorities and nuclear bombing tactics would expose nearby civilians and 'friendly forces and people' to high levels of deadly radioactive fallout. Moreover, the authors developed a plan for the 'systematic destruction' of Soviet bloc urban-industrial targets that specifically and explicitly targeted “population” in all cities, including Beijing, Moscow, Leningrad, East Berlin, and Warsaw.”

“I worry greatly that the rhetoric coming from the Republicans, particularly Donald Trump, is sending a message to Muslims here ... and ... around the world, that there is a ‘clash of civilizations.'” So said Hillary Clinton in Saturday night’s New Hampshire debate. Yet, that phrase was not popularized by Donald Trump, but by Harvard’s famed Samuel Huntington. That Clinton is unaware of the thesis, or dismisses it, does not speak well of the depth of her understanding of our world.

According to ScGen, the Fed is widely expected to start tightening policy on Wednesday and adds that "after the BoJ and ECB, we see a risk that the market will be wrong-footed for a third time, and that extreme positions built ahead of tightening will be reversed.... In particular, we are short US small cap equities vs large via being short Russell 2000 vs S&P 500.... As the Fed tightens and the market enters into a lower-liquidity environment (and higher-volatility regime), we think the premium on small caps is no longer justified."

Official Washington is awash with tough talk about Russia and the need to punish President Putin for his role in Ukraine and Syria. But this bravado ignores Russia’s genuine national interests, its “red lines,” and the risk that “tough-guy-ism” can lead to nuclear war. In short, Russia is being offered only the binary choice: to acquiesce to the “benevolent” hegemon, or to prepare for war.

Draghi’s Friday talk of a “no limit” ECB balance sheet must have Weidmann and responsible members of the ECB at their wits end. It’s the nature of monetary inflations that there’s always a need for more. Throughout history, it’s been ‘just one more round of ‘printing’’ or ‘just one more year and then we’ll rein things in’. But things spiral out of control – and there’s a lot of currency with a lot more zeros. It can end in hyperinflation, at least when monetary inflation is afflicting the real economy. Today’s strange variety is inflating securities market Bubbles. It will end with Bubbles bursting and confidence collapsing. Integral to the bursting Bubble thesis is that policymakers are losing control. Granted, such analysis has about zero credibility when markets are in melt-up mode. But perhaps the markets’ response to Draghi is a forewarning.

Turkey is the next key region in this conflict, since the only alternative gas pipeline that supplies Russia, and comes from Asia (Nabucco), passes through Turkey. Future conflicts between Turkey and Russia will be part of the Russian strategy within the region. 

Americans today are blissfully distracted by their iGadgets, plotting out their holiday shopping strategies, leasing new cars, eating out, and buying advance tickets to the new Star Wars movie. They don’t see the wicked winter squalls ahead which will try their souls. We are experiencing the lull before the storms, but the storms are surely coming. The potential for catastrophe is high and burying our heads in the sand is not a strategy.

The number of newly diagnosed HIV cases in Europe has hit an all-time high of 142,000, according to The World Health Organization. "Despite all the efforts to fight the disease," WHO officials note that the rise of the epidemic is primarily attributed to Eastern Europe, where new diagnoses have more than doubled. But it is comments from European Centre for Disease Prevention Control acting director Andrea Ammon that raised a number of witch-huntery eye-brows when she explained migrants and refugees were at a high risk of infection after they arrived in Europe, because social exclusion made them more likely to engage in risky behavior.

The successful completion of the Balkan Silk Road would lead to a significant sum of European trade being profitably redirected towards China and other booming non-Western locations like India and Ethiopia. The US fears losing its position as the EU’s top trading partner, knowing that the slippery strategic slope that could soon follow might lead to the rapid unraveling of its hegemonic control. The inevitable New Cold War clash that this represents and the extraordinarily high stakes that are involved mean that the Balkans will remain one of the main flashpoints in this dangerous proxy struggle, despite the hierarchical switch of its multipolar protagonists.