We all know that the National Defense Authorization Act (NDAA) signed by President Obama on New Year’s Eve contained a now-struck-down provision to authorise the indefinite detention of American citizens on US soil. But did you know that the NDAA also paves the way for war with Iran? From Dennis Kucinich:
Section (6) rejects any United States policy that would rely on efforts to contain a nuclear weapons-capable Iran. Section (7) urges the President to reaffirm the unacceptability of an Iran with nuclear-weapons capability and opposition to any policy that would rely on containment as an option in response to Iranian enrichment. This language represents a significant shift in U.S. policy and would guarantee that talks with Iran, currently scheduled for May 23, would fail. Current U.S. policy is that Iran cannot acquire nuclear weapons. Instead, H. Res. 568 draws the “redline” for military action at Iran achieving a nuclear weapons “capability,” a nebulous and undefined term that could include a civilian nuclear program. Indeed, it is likely that a negotiated deal to prevent a nuclear-armed Iran and to prevent war would provide for Iranian enrichment for peaceful purposes under the framework of the Non-Proliferation of Nuclear Weapons Treaty with strict safeguards and inspections. This language makes such a negotiated solution impossible. At the same time, the language lowers the threshold for attacking Iran. Countries with nuclear weapons “capability” could include many other countries like Japan or Brazil. It is an unrealistic threshold.
The notion of a “nuclear weapons capability” seems like a dangerously low standard. Let us not forget that Mossad, the CIA and the IAEA agree that Iran does not have a bomb, is not building one, has no plans to build one.
As Americans mindlessly celebrate another Memorial Day with cookouts, beer and burgers, the U.S. war machine keeps churning. As we brutally enforce our will on foreign countries, we create more people that hate us. They don’t hate us for our freedom. They hate us because we have invaded and occupied their countries. They hate us because we kill innocent people with predator drones. They hate us for our hypocrisy regarding democracy and freedom. Just when we had the opportunity to make a sensible decision by leaving Iraq and exiting the Middle East quagmire, Obama made the abysmal choice to casually sacrifice more troops in the Afghan shithole. We have thrown over $1.3 trillion down Middle East rat holes over the last 11 years with no discernible benefit to the citizens of the United States. George Bush and Barack Obama did this to prove they were true statesmen. The Soviet Union killed over 1 million Afghans, while driving another 5 million out of the country and retreated as a bankrupted and defeated shell after ten years. Young Americans continue to die, for whom and for what? Our foreign policy during the last eleven years can be summed up in one military term, SNAFU – Situation Normal All Fucked Up. These endless foreign interventions under the guise of a War on Terror are a smoke screen for what is really going on in this country. When a government has unsolvable domestic problems, they try to distract the willfully ignorant masses by proactively creating foreign conflicts based upon false pretenses. General Douglas MacArthur understood this danger to our liberty.
“I am concerned for the security of our great Nation; not so much because of any threat from without, but because of the insidious forces working from within.”
In twenty or thrity years, I expect future monetary historians looking back on this period of history to frequently misquote Ernest Hemingway:
How did the dollar die? First it died slowly — then all at once.
The slow death began with the dollar’s birth as a global reserve currency. America was creditor and manufacturer to the world, and the capitalist superpower. People around the globe transacted overwhelmingly in dollars. Above all else, people needed dollars to conduct trade, and they were willing to pay richly for them, and for dollar-denominated debt
Yesterday, when looking at recent naval developments in the Arabian Sea, we suggested that things involving Iran had gotten quiet. Too quiet. It appears that it may indeed have been the lull before the storm. Just out from Bloomberg and Reuters:
- IAEA SAYS URANIUM PARTICLES ENRICHED UP TO 27% AT FORDOW SITE, HIGHER THAN REPORTED LEVEL
- IRAN DOUBLED 20% URANIUM OUTPUT IN QUARTER, IAEA SAYS
- IAEA INSPECTORS SAY NO GUARANTEE ALL NUCLEAR MATERIAL PEACEFUL
- IRAN TELLS INSPECTORS THAT 27% URANIUM A TECHNICAL GLITCH
As a reminder, Uranium enriched over 20% is considered "Highly Enriched." The only question we have is whether the enrichment level will increase the closer we get to the November presidential election, and whether there is a threshold rating in someone's popularity, pardon, in the enrichment level, which will trigger the Iranian invasion by one or more powers, now that WTI is safely in 9X handle territory and sliding.
There was a time, late in the winter, that not a day passed without some headline announcing Israel's preparedness to attack Iran, culminating with the grotesque - a show on Israel TV detailing the actual invasion plans. All these daily updates did was guarantee one thing - that absolutely no war could possibly break out for two simple reasons:
i) you never declare war when the opponent is expecting you, instead you habituate them to news about imminent invasions which never happens, and,
ii) Brent was over $120, which would guarantee no re-election for Obama as outright war would send the energy complex soaring, gas prices surging, and the world economy, but most importantly the Russell 2000, tumbling.
Over the past 2 months two things have happened: chatter of "imminent" war with Iran has died down to barely a whisper, and WTI is now trading 20% lower than 2012 highs. Which means there is far more capacity for a run higher. So putting all that together, does it mean that the prospect of war with Iran is now gone? Below we present the latest naval update map courtesy of Stratfor, and leave readers to make their own conclusions...
Peripheral stock indices underperformed in early trade, with banks under considerable selling pressure amid renewed tensions in credit markets. Wave after wave of poor data from the European PMIs and the German IFOs placed shares under further pressure and talk of macro names selling EUR/USD weighed on the pair. As a result, in the fixed income space, the German 2/5 spread traded at levels not seen since December 2008. However as the session progressed, stocks staged a decent recovery, which coincided with unconfirmed market talk of an asset reallocation trade, together with talk of Asian real money accounts buying French OATs, which in turn prompted sharp tightening in FR/GE 10y bond yield spread. This also supported EUR/USD, which after coming close to making a test on the 1.2500 barrier is now trading little changed. In other news, the ONS reported that the UK economy shrank by 0.3% in the first three months of the year, more than previously thought. The downward revision was due to a bigger contraction in construction output than previously estimated. Despite this, FTSE in the cash has persisted, and is the strongest performing index in Europe today.
Following the morning in Europe, a generally risk-off tone is observed, with stock futures sitting just above session lows and the German Schatz auction resulting in record low yields. Some of the risk-averse moves were noted following unconfirmed market talk that a troubled Dutch housing association may be pressed towards bankruptcy, however this seems to be linked towards an article concerning the Dutch central bank probing into the sale of derivatives to the housing group Vestia. Nonetheless, the long end of the Dutch curve remains well-bid and European 10-yr government bond yield spreads are seen generally wider across the board. Releases from the UK have come under particular focus; the BoE minutes showed an alongside-expectations vote of 8-1 to keep QE on hold. With some analysts estimating more of a lean towards further asset purchases, the initial reaction was strength in the GBP currency, but countering this effect was the parallel release of UK retail sales, with the monthly reading showing the sharpest decline since January 2010. Additionally, it was noted that several members of the board saw further QE as a finely balanced decision, placing GBP/USD back on a downward trajectory and briefly below 1.5700. Elsewhere in foreign exchange, current sentiment is reflected in EUR/USD, printing multi-month lows earlier in the session of 1.2615, with the USD index at 20-month highs which in turn has weighed on commodities.
- Rajoy to ask for ECB assistance, according to reports (Sharecast)
- Bundesbank Suggests Greek Exit From Euro Would Be Manageable (Bloomberg)
- Unemployed Burn as Fed Fiddles in Debate Over Natural Rate (Bloomberg)
- Regulators, investors turn up heat over Facebook IPO (Reuters)
- China to boost private energy investment to bolster economy (Reuters)
- OECD fears euro woe to snap brittle world recovery (Reuters)
- China slowdown threatens Australia - World Bank (Herald Sun)
- Guessing game begins over next Treasury chief (Reuters)
- Italians spurn main parties in local polls (FT)
- A fragile Europe must change fast (FT)
- Spain to outline Bankia plan, may announce bailout size (Reuters)
- China Should Adjust Policy Early - Government Researcher (WSJ)
There’s been a lot of excitement in the past year over the rise of North American oil production and the promise of increased oil production across the whole of the Americas in the years to come. National security experts and other geo-political observers have waxed poetic at the thought of this emerging, hemispheric strength in energy supply. What’s less discussed, however, is the negligible effect this supply swing is having on lowering the price of oil, due to the fact that, combined with OPEC production, aggregate global production remains mostly flat. But there’s another component to this new belief in the changing global landscape for oil: the dawning awareness that OPEC’s power has finally gone into decline. You can read the celebration of OPEC’s waning in power in practically every publication from Foreign Policy to various political blogs and op-eds.
UK CPI this morning came in weaker than expected at 3.0% Y/Y in April, weighed by a fall in air fares, alcohol, clothes and sea transport, according to the ONS. The release saw aggressive selling of GBP in the currency market and has underpinned the rise in gilt futures. Alongside the 26th month low in UK CPI the IMF also issued their latest assessment on the UK economy and said further policy easing is required and that the Bank could cut its interest rate from the current 0.5% level. In other market moving news a Greek government source said that Greek banks are to receive a EUR 18bln recapitalisation down payment this Friday which initially saw the EUR and stock futures rally, however, the move was short lived as it became clear that the payment is scheduled as part of the bailout programme for Greece. Elsewhere, Fitch made a surprise announcement and downgraded the Japanese sovereign rating by two notches to A+, outlook negative. The move means Fitch has the lowest rating for Japan of the three main rating agencies so we remain vigilant for any comments from S&P and Moody’s today.