Saturday, September 29, 2012

Why An Islamic Revolution In Saudi Arabia Is A Surefire Way To Send Oil To $300 A Barrel...

Marin Katusa picture
Marin Katusa, who works with Casey Research (, is an accomplished investment analyst who specializes in the junior resource sector. He left a successful teaching career to pursue analyzing and investing in junior resource companies. In addition, he is a member of… More
There is little that would rock the oil world more than a revolution in ZIOCONNED Saudi Arabia...the Den of Wahhabism, a False Religious doctrine from inception.
But with a coming leadership crisis, it is becoming all too likely.
Saudi is facing major economic challenges as dramatic increases in social spending and domestic fuel consumption eat through the kingdom’s all-important oil revenues.
Saudi Arabia is smack in the middle of the Middle East, an ever-tumultuous region currently rocking and rolling more than usual as the Arab Spring challenges longstanding autocratic assumptions, while war-torn Syria and defiant Iran tip the delicate Sunni-Shia religious balance in the world’s most important oil region.
While the House of Saud might present itself as a stable, strong, and cohesive royal family, in truth the king and his successors are growing old and incapacitated in a throne room full of competing contenders. Meanwhile, the only other organized social group in the country – the Islamists – are waiting just outside the door.
Want to see oil at $300 a barrel?
To see $300/bbl oil, or to watch the news as Saudi troops attack Tehran, or to see a stranglehold on US oil imports, watch what a failed succession battle in the House of Saud that ends up destroying the whole family and ushering in an Islamist age in Saudi Arabia would do to the price of oil.
It could happen sooner than you think.
A Shaky House of Saud
The king of Saudi Arabia, Abdullah Aziz bin Saud, is almost 90 years old. In Saudi Arabia’s royal system, the throne passes not from father to son but from brother to brother. The problem with the system is that none of King Abdullah’s brothers are exactly young and full of vigor.
Crown Prince Salman, next in line to the throne, is already 76. He got the Crown Prince nod after two of his elder brothers died. The remaining brothers now average 80 years of age.
A king who ascends the throne in his seventh or eighth decade is unlikely to have the energy or even the time to enact significant reforms. And reforms are needed. I’m not pushing democracy – Saudis don’t generally want democracy. What I’m talking about are the endemic problems that are battering the world’s biggest oil producer: high unemployment, a corrupt bureaucracy, a crippled economy, a weak education system, and a society full of frustrated youth.
While the country crumbles, the three pillars that have long supported the royal family are also weakening. Massive oil revenues, which have long been used to buy public support, are being squeezed by sharply increased domestic demand. The Wahhabi Islamic establishment that supported the House of Saud is increasingly fractious and is losing credibility. And the royal family itself is struggling to maintain its rock-solid façade after losing two crown princes to old age in just a few years.
The country’s foreign relations are little better. The Middle East is in turmoil, and Saudi Arabia’s longstanding alliance with the United States is in distress.
Alongside these tangible problems is a multitude of intangible challenges that are revolutionizing the country. The regime used to control the population by controlling access to information, but of course that age is now almost over. The Internet has connected young Saudis with the rest of the world, and that worldview is prompting them to question some of the rules of their society.
Even the religious establishment in Saudi Arabia is seeing its power eroded. Young Saudis are increasingly independent, using the Koran to guide their decisions without following specific decrees from a particular religious leader.
The fact is, Saudi society today bears little resemblance to the passive masses of just a decade ago, and a decade from now the difference will be even bigger.
Trying to lead his country through these modern challenges is a 90-year-old king, backed by a 76-year-old crown prince and their octogenarian brothers.
Not surprisingly, it’s not working very well.
New Battles, Old Tactics
When the Arab Spring in Tunisia and Egypt sparked protests in Saudi Arabia, the protesters were not demanding democracy or trying to oust the royal family. No, the young Saudis who filled those streets had more basic demands.
At the top of the list is jobs – 60% of Saudi’s citizens are under the age of 20, and the unemployment rate for young adults is nearly 40%. These young people want to be given the opportunity to better themselves and their country, but instead they cannot find work and live on government handouts.
Adding fuel to the fire, those handouts have been shrinking. Saudi Arabia’s population has skyrocketed in the last half century. In 1972 the country had 6 million inhabitants; by 1992 that number had climbed to 17 million; and today there are 28 million Saudi Arabians. Oil incomes have climbed too, but not nearly apace. As such the government has been struggling to keep the population appeased with fewer dollars per head every year.
The population keeps growing, and each person in the kingdom keeps using more oil. The result: shrinking oil revenues have to go further. It’s not a recipe for success, but when you’re 89 years old, you go with what has worked in the past.
And that is precisely what happened in the wake of the Arab Spring: King Abdullah drowned the protestors in money – a $130-billion social-spending package that built new housing, increased payrolls, and boosted unemployment payouts. Saudi Arabia’s entire annual budget is just $180 billion, so the king almost doubled spending to appease the protestors.
This tactic cannot work forever. Even in Saudi Arabia there is only so much oil money. The Saudi royals already need an oil price of at least $80 a barrel to support all their social programs, and with domestic oil consumption rocketing upward, that baseline price will keep climbing.
But the unrest continues.
The Summer of Saudi Discontent
After King Abdullah offered billions of dollars in social spending, many protestors went home… except in the country’s oil-rich eastern provinces, where the protests never stopped.
For the last 18 months, Saudis in the eastern Qatif region have been demonstrating regularly, demanding the release of all political prisoners, freedom of expression, and an end to ethnic and religious discrimination. When Saudi security forces turned on the demonstrators last November, killing five, the protests took on a distinctly anti-Saud tone.
In June, King Abdullah ordered the country’s security forces to go on a state of high alert due to what he called a “turbulent situation” in the eastern region.
The unspoken side to the situation is that the turbulence is distinctly religious.
Most Saudis are Sunni Muslims, and Sunni Islam is the only allowed religion in the country. However, 15% of the country’s inhabitants are Shia, and they have faced direct and indirect persecution for decades.
Guess where the Shia live? In those turbulent, oil-rich eastern provinces.
That is one aspect of Saudi discontent. But there are more.
For example, last week Saudi security forces raided al Qaida cells in Jeddah and Riyadh. Evidence recovered during the raids supports the suspicion that a new branch in the Arabian Peninsula is gathering momentum for a wave of attacks. The royal family is at the top of their list of targets. Toppling the House of Saud would be a major victory for al Qaida, simply because of the instability that would ensue.
All told, between external threats, internal divisions, and domestic struggles, the Saudi royal family looks very unstable indeed. So what would happen if the House of Saud crumbled?
Remember, religion is the only social structure in Saudi Arabia. There are no political parties, unions, or social organizations, aside from a few charities run by members of the royal family. Were the House of Saud to fail, the only candidates ready to step up would be the Islamists.
The shift to Islamist rule in Egypt has made the world pretty nervous. Longstanding allegiances are in limbo, and long-term relationships are changing.
Imagine if it happened in Saudi Arabia.
Islamist leadership in Saudi would not be the moderate, democratic version we’re seeing in Egypt. The Islamists in Saudi Arabia are Wahhabi Muslims, who practice the strictest and most conservative version of the religion. I can see these imams making several moves.
First, a Saudi Arabia led by Wahhabi Islamists would not stay at peace with the Shia Islamic Republic of Iran. Both branches of Islam believe the other has strayed so far from the path that its followers are infidels. Odds of open war between Saudi Arabia and Iran would shoot sky-high the moment Islamists took power in Saudi Arabia.
Even worse, a Wahhabi Islamist Saudi Arabia might well turn its strongest weapon against the infidels of the West – by turning off the oil taps. It would be the 1973 oil crisis all over again, but in an even more oil-dependent world.
The price of oil shot up 300% in six months during the oil crisis. Today, that would mean an oil price of $300 per barrel.
It would also mean the end of the era of friendly US-Saudi relations… and the demise of the petrodollar. That is a story in itself – one of great significance to anyone who owns US dollars. I have discussed previously how a US-Saudi deal to only use dollars to trade oil created a deep pool of support for the US currency - and what will happen if the petrodollar dies. The short version is that as the global oil trade moves away from US dollars into yuan, yen, rubles, and pesos, the world would have yet another reason to devalue the dollar.
Expensive oil, open Sunni-Shia war in the Middle East, the loss of one of the world’s biggest oil producers as a stalwart ally, and an inevitable increase in religious politics across the Arabian Peninsula – such are the likely outcomes if the House of Saud comes tumbling down.
It is not inevitable. There are 7,000 princes in the Saud royal family, the result of multiple wives and lots of progeny. In that mix, there is undoubtedly a prince with the right mix of progressive thought and religious reverence to lead Saudi Arabia through its succession and into the future.
But whenever a throne room is that crowded, it is very easy for a brawl to break out, depriving that perfect prince of his chance and giving the Islamists their opening.
Either way, oil investors with the right picks in their portfolio will prosper, and the Casey Research energy team will be available to guide you along the way...

Thursday, September 20, 2012

A New October Surprise, Iran makes a move, oil slides...

The power behind the power in USA, i.e. the real people pulling the levers don't like being pointed out....

The Israel Lobby is just another boogie monster cooked up to serve the nasty agenda of people all too eager to sacrifice the truth on the altar of their prejudices... "

A New October Surprise, Iran makes a move, oil slides...By Chris Cook

A rapid oil price drop on Monday, September 17, took traders by surprise. [1] Who exactly dumped some 13,000 contracts of CME's West Texas Intermediate crude oil contract and 10,000 contracts of the Intercontinental Exchange's (ICE's) Brent/BFOE crude oil contract into the market cratering the price by more than US$3 per barrel?

While the identity of the seller(s) remains obscure, the Saudis lost no time in announcing to the market that they see oil as over-priced and are prepared to increase production until the price falls below $100/barrel. Grateful market pundits reported with alacrity to this hoary old chestnut.

Iran Makes a Move
A more likely reason for the price move than these Saudi Jedi mind games is now emerging. On Tuesday, Catherine Ashton, lead negotiator for the the 5+1 (the permanent members of the United Nations Security Council plus Germany) involved in talks with Iran over its nuclear policy, met Iran's Foreign Minister Saeed Jalili for "informal" discussions, which were said to be constructive, and in respect of which Lady Ashton will be reporting to her colleagues next week in New York.

What was not widely reported was firstly, the short notice of this meeting, and secondly, the fact - very significant in diplomatic terms - that for the most part it took place in the Iranian consulate, which is legally Iranian territory.

In my view, the policy deadlock in Iran has now been broken, and a pragmatic decision has been made to make nuclear concessions.

The Saudi spin machine has been going full blast ever since in order to sustain the greatest market manipulation in the history of commodity trading, which I have been documenting on these pages.

So we see stories being fed into a credulous and unquestioning financial press explaining that the Saudis are upon judicious consideration prepared to magnanimously make supplies available to a market that is in fact awash with crude oil as demand by refiners (as opposed to financial demand) plummets.

More to the point, to a hard-bitten market regulator like myself with a suspicious mind, the sell-off on Monday has all the hallmarks of trading on the basis of "asymmetric" information in respect of the upcoming meeting the next day - that is to say, it was a form of insider dealing.

But of course neither market traders nor investment banks would ever dream of doing that.

The game is afoot
If it genuinely is the case that Iran is entering into meaningful nuclear discussions, then there is literally nothing holding the oil market up and we can expect a rapid decline in the oil price, and with it the fortunes of Iran, Russia, and Venezuela among others.

This setback to US antagonists would be a timely gift for President Barack Obama, who would also be only too pleased to see the US gasoline price - which has been inflated by a shortage of refinery capacity, and an alleged market coup in New York by Glencore - decline rapidly as the price of its crude oil feedstock dives.

So the next couple of weeks should be interesting times in the oil market, which is already down 5% this week: as Sherlock Holmes put it to his trusty companion ... "The game's afoot!"

1. See Reuters report here.

Chris Cook is a former director of the International Petroleum Exchange. He is now a strategic market consultant, entrepreneur and commentator.

Tuesday, September 18, 2012

End of the Road for the utterly corrupt and criminal ZOG USA...

End of the Road for the utterly corrupt and criminal ZOG USA...

Is it just me, or are the signs of consumer collapse as clear as a Lowes parking lot on a Saturday afternoon? Sometimes I wonder if I’m just seeing the world through my pessimistic lens, skewing my point of view. My daily commute through West Philadelphia is not very enlightening, as the squalor, filth and lack of legal commerce remain consistent from year to year. This community is sustained by taxpayer subsidized low income housing, taxpayer subsidized food stamps, welfare payments, and illegal drug dealing. The dependency attitude, lifestyles of slothfulness and total lack of commerce has remained constant for decades in West Philly. It is on the weekends, cruising around a once thriving suburbia, where you perceive the persistent deterioration and decay of our debt fixated consumer spending based society.

The last two weekends I’ve needed to travel the highways of Montgomery County, PA going to a family party and purchasing a garbage disposal for my sink at my local Lowes store. Montgomery County is the typical white upper middle class suburb, with tracts of McMansions dotting the landscape. The population of 800,000 is spread over a 500 square mile area. Over 81% of the population is white, with the 9% black population confined to the urban enclaves of Norristown and Pottstown.

The median age is 38 and the median household income is $75,000, 50% above the national average. The employers are well diversified with an even distribution between education, health care, manufacturing, retail, professional services, finance and real estate. The median home price is $300,000, also 50% above the national average. The county leans Democrat, with Obama winning 60% of the vote in 2008. The 300,000 households were occupied by college educated white collar professionals. From a strictly demographic standpoint, Montgomery County appears to be a prosperous flourishing community where the residents are living lives of relative affluence. But, if you look closer and connect the dots, you see fissures in this façade of affluence that spread more expansively by the day. The cheap oil based, automobile dependent, mall centric, suburban sprawl, sanctuary of consumerism lifestyle is showing distinct signs of erosion. The clues are there for all to see and portend a bleak future for those mentally trapped in the delusions of a debt dependent suburban oasis of retail outlets, chain restaurants, office parks and enclaves of cookie cutter McMansions. An unsustainable paradigm can’t be sustained.

The first weekend had me driving along Ridge Pike, from Collegeville to Pottstown. Ridge Pike is a meandering two lane road that extends from Philadelphia, winds through Conshohocken, Plymouth Meeting, Norristown, past Ursinus College in Collegeville, to the farthest reaches of Montgomery County, at least 50 miles in length. It served as a main artery prior to the introduction of the interstates and superhighways that now connect the larger cities in eastern PA. Except for morning and evening rush hours, this road is fairly sedate. Like many primary routes in suburbia, the landscape is engulfed by strip malls, gas stations, automobile dealerships, office buildings, fast food joints, once thriving manufacturing facilities sitting vacant and older homes that preceded the proliferation of cookie cutter communities that now dominate what was once farmland.

Telltale Signs



I should probably be keeping my eyes on the road, but I can’t help but notice the telltale signs of an economic system gone haywire. As you drive along, the number of For Sale signs in front of homes stands out. When you consider how bad the housing market has been, the 40% decline in national home prices since 2007, the 30% of home dwellers underwater on their mortgage, and declining household income, you realize how desperate a home seller must be to try and unload a home in this market. The reality of the number of For Sale signs does not match the rhetoric coming from the NAR, government mouthpieces, CNBC pundits, and other housing recovery shills about record low inventory and home price increases.

The Federal Reserve/Wall Street/U.S. Treasury charade of foreclosure delaying tactics and selling thousands of properties in bulk to their crony capitalist buddies at a discount is designed to misinform the public. My local paper lists foreclosures in the community every Monday morning. In 2009 it would extend for four full pages. Today, it still extends four full pages. The fact that Wall Street bankers have criminally forged mortgage documents, people are living in houses for two years without making mortgage payments, and the Federal Government backing 97% of all mortgages while encouraging 3.5% down financing does not constitute a true housing recovery. Show me the housing recovery in these charts.

Existing home sales are at 1998 levels, with 45 million more people living in the country today.


New single family homes under construction are below levels in 1969, when there were 112 million less people in the country.

DF NewPrivatelyOwnedHousingUnitsUnderConstruction 9 2012 ARE YOU SEEING WHAT IM SEEING?

Another observation that can be made as you cruise through this suburban mecca of malaise is the overall decay of the infrastructure, appearances and disinterest or inability to maintain properties. The roadways are potholed with fading traffic lines, utility poles leaning and rotting, and signage corroding and antiquated. Houses are missing roof tiles, siding is cracked, gutters astray, porches sagging, windows cracked, a paint brush hasn’t been utilized in decades, and yards are inundated with debris and weeds. Not every house looks this way, but far more than you would think when viewing the overall demographics for Montgomery County. You wonder how many number among the 10 million vacant houses in the country today. The number of dilapidated run down properties paints a picture of the silent, barely perceptible Depression that grips the country today. With such little sense of community in the suburbs, most people don’t even know their neighbors. With the electronic transfer of food stamps, unemployment compensation, and other welfare benefits you would never know that your neighbor is unemployed and hasn’t made the mortgage payment on his house in 30 months. The corporate fascist ruling plutocracy uses their propaganda mouthpieces in the mainstream corporate media and government agency drones to misinform and obscure the truth, but the data and anecdotal observational evidence reveal the true nature of our societal implosion.

A report by the Census Bureau this past week inadvertently reveals data that confirms my observations on the roadways of my suburban existence. Annual household income fell in 2011 for the fourth straight year, to an inflation-adjusted $50,054. The median income — meaning half earned more, half less — now stands 8.9% lower than the all-time peak of $54,932 in 1999. It is far worse than even that dreadful result. Real median household income is lower than it was in 1989. When you understand that real household income hasn’t risen in 23 years, you can connect the dots with the decay and deterioration of properties in suburbia. A vast swath of Americans cannot afford to maintain their residences. If the choice is feeding your kids and keeping the heat on versus repairing the porch, replacing the windows or getting a new roof, the only option is survival.


All races have seen their income fall, with educational achievement reflected in the much higher incomes of Whites and Asians. It is interesting to note that after a 45 year War on Poverty the median household income for black families is only up 19% since 1968.

real household income ARE YOU SEEING WHAT IM SEEING?

Now for the really bad news. Any critical thinking person should realize the Federal Government has been systematically under-reporting inflation since the early 1980’s in an effort to obscure the fact they are debasing the currency and methodically destroying the lives of middle class Americans. If inflation was calculated exactly as it was in 1980, the GDP figures would be substantially lower and inflation would be reported 5% higher than it is today. Faking the numbers does not change reality, only the perception of reality. Calculating real median household income with the true level of inflation exposes the true picture for middle class America. Real median household income is lower than it was in 1970, just prior to Nixon closing the gold window and unleashing the full fury of a Federal Reserve able to print fiat currency and politicians to promise the earth, moon and the sun to voters. With incomes not rising over the last four decades is it any wonder many of our 115 million households slowly rot and decay from within like an old diseased oak tree. The slightest gust of wind can lead to disaster.


Eliminating the last remnants of fiscal discipline on bankers and politicians in 1971 accomplished the desired result of enriching the top 0.1% while leaving the bottom 90% in debt and desolation. The Wall Street debt peddlers, Military Industrial arms dealers, and job destroying corporate goliaths have reaped the benefits of financialization (money printing) while shoveling the costs, their gambling losses, trillions of consumer debt, and relentless inflation upon the working tax paying middle class. The creation of the Federal Reserve and implementation of the individual income tax in 1913, along with leaving the gold standard has rewarded the cabal of private banking interests who have captured our economic and political systems with obscene levels of wealth, while senior citizens are left with no interest earnings ($400 billion per year has been absconded from savers and doled out to bankers since 2008 by Ben Bernanke) and the middle class has gone decades seeing their earnings stagnate and their purchasing power fall precipitously.

income disparity8 12 ARE YOU SEEING WHAT IM SEEING?

The facts exposed in the chart above didn’t happen by accident. The system has been rigged by those in power to enrich them, while impoverishing the masses. When you gain control over the issuance of currency, issuance of debt, tax system, political system and legal apparatus, you’ve essentially hijacked the country and can funnel all the benefits to yourself and costs to the math challenged, government educated, brainwashed dupes, known as the masses. But there is a problem for the .01%. Their sociopathic personalities never allow them to stop plundering and preying upon the sheep. They have left nothing but carcasses of the once proud hard working middle class across the country side. There are only so many Lear jets, estates in the Hamptons, Jaguars, and Rolexes the .01% can buy. There are only 152,000 of them. Their sociopathic looting and pillaging of the national wealth has destroyed the host. When 90% of the population can barely subsist, collapse and revolution beckon.

Extend, Pretend & Depend

As I drove further along Ridge Pike we passed the endless monuments to our spiral into the depths of materialism, consumerism, and the illusion that goods purchased on credit represented true wealth. Mile after mile of strip malls, restaurants, gas stations, and office buildings rolled by my window. Anyone who lives in the suburbs knows what I’m talking about. You can’t travel three miles in any direction without passing a Dunkin Donuts, KFC, McDonalds, Subway, 7-11, Dairy Queen, Supercuts, Jiffy Lube or Exxon Station. The proliferation of office parks to accommodate the millions of paper pushers that make our service economy hum has been unprecedented in human history. Never have so many done so little in so many places. Everyone knows what a standard American strip mall consists of – a pizza place, a Chinese takeout, beer store, a tanning, salon, a weight loss center, a nail salon, a Curves, karate studio, Gamestop, Radioshack, Dollar Store, H&R Block, and a debt counseling service. They are a reflection of who we’ve become – an obese drunken species with excessive narcissistic tendencies that prefers to play video games while texting on our iGadgets as our debt financed lifestyles ultimately require professional financial assistance.

What you can’t ignore today is the number of vacant storefronts in these strip malls and the overwhelming number of SPACE AVAILABLE, FOR LEASE, and FOR RENT signs that proliferate in front of these dying testaments to an unsustainable economic system based upon debt fueled consumer spending and infinite growth assumptions. The booming sign manufacturer is surely based in China. The officially reported national vacancy rates of 11% are already at record highs, but anyone with two eyes knows these self-reported numbers are a fraud. Vacancy rates based on my observations are closer to 30%. This is part of the extend and pretend strategy that has been implemented by Ben Bernanke, Tim Geithner, the FASB, and the Wall Street banking cabal. The fraud and false storyline of a commercial real estate recovery is evident to anyone willing to think critically. The incriminating data is provided by the Federal Reserve in their Quarterly Delinquency Report.

The last commercial real estate crisis occurred in 1991. Mall vacancy rates were at levels consistent with today.


The current reported office vacancy rates of 17.5% are only slightly below the 19% levels of 1991.


As reported by the Federal Reserve, delinquency rates on commercial real estate loans in 1991 were 12%, leading to major losses among the banks that made those imprudent loans. Amazingly, after the greatest financial collapse in history, delinquency rates on commercial loans supposedly peaked at 8.8% in the 2nd quarter of 2010 and have now miraculously plummeted to pre-collapse levels of 4.9%. This is while residential loan delinquencies have resumed their upward trajectory, the number of employed Americans has fallen by 414,000 in the last two months, 9 million Americans have left the labor force since 2008, and vacancy rates are at or near all-time highs. This doesn’t pass the smell test. The Federal Reserve, owned and controlled by the Wall Street, instructed these banks to extend all commercial real estate loans, pretend they will be paid, and value them on their books at 100% of the original loan amount. Real estate developers pretend they are collecting rent from non-existent tenants, Wall Street banks pretend they are being paid by the developers, and their highly compensated public accounting firm pretends the loans aren’t really delinquent. Again, the purpose of this scam is to shield the Wall Street bankers from accepting the losses from their reckless behavior. Ben rewards them with risk free income on their deposits, propped up by mark to fantasy accounting, while they reward themselves with billions in bonuses for a job well done. The master plan requires an eventual real recovery that isn’t going to happen. Press releases and fake data do not change the reality on the ground.

I have two strip malls within three miles of my house that opened in 1990. When I moved to the area in 1995, they were 100% occupied and a vital part of the community. The closest center has since lost its Genuardi grocery store, Sears Hardware, Blockbuster, Donatos, Sears Optical, Hollywood Tans, hair salon, pizza pub and a local book store. It is essentially a ghost mall, with two banks, a couple chain restaurants and empty parking spaces. The other strip mall lost its grocery store anchor and sporting goods store. This has happened in an outwardly prosperous community. The reality is the apparent prosperity is a sham. The entire tottering edifice of housing, autos, and retail has been sustained by ever increasing levels of debt for the last thirty years and the American consumer has hit the wall. From 1950 through the early 1980s, when the working middle class saw their standard of living rise, personal consumption expenditures accounted for between 60% and 65% of GDP. Over the last thirty years consumption has relentlessly grown as a percentage of GDP to its current level of 71%, higher than before the 2008 collapse.


If the consumption had been driven by wage increases, then this trend would not have been a problem. But, we already know real median household income is lower than it was in 1970. The thirty years of delusion were financed with debt – peddled, hawked, marketed, and pushed by the drug dealers on Wall Street. The American people got hooked on debt and still have not kicked the habit. The decline in household debt since 2008 is solely due to the Wall Street banks writing off $800 billion of mortgage, credit card, and auto loan debt and transferring the cost to the already drowning American taxpayer.

household liabilities wages ARE YOU SEEING WHAT IM SEEING?

The powers that be are desperately attempting to keep this unsustainable, dysfunctional debt choked scheme from disintegrating by doling out more subprime auto debt, subprime student loan debt, low down payment mortgages, and good old credit card debt. It won’t work. The consumer is tapped out. Last week’s horrific retail sales report for August confirmed this fact. Declining household income and rising costs for energy, food, clothing, tuition, taxes, health insurance, and the other things needed to survive in the real world, have broken the spirit of Middle America. The protracted implosion of our consumer society has only just begun. There are thousands of retail outlets to be closed, hundreds of thousands of jobs to be eliminated, thousands of malls to be demolished, and billions of loan losses to be incurred by the criminal Wall Street banks.

The Faces of Failure & Futility

My fourteen years working in key positions for big box retailer IKEA has made me particularly observant of the hubris and foolishness of the big chain stores that dominate the retail landscape. There are 1.1 million retail establishments in the United States, but the top 25 mega-store national chains account for 25% of all the retail sales in the country. The top 100 retailers operate 243,000 stores and account for approximately $1.6 trillion in sales, or 36% of all the retail sales in the country. Their misconceived strategic plans assumed 5% same store growth for eternity, economic growth of 3% per year for eternity, a rising market share, and ignorance of the possible plans of their competitors. They believed they could saturate a market without over cannibalizing their existing stores. Wal-Mart, Target, Best Buy, Home Depot and Lowes have all hit the limits of profitable expansion. Each incremental store in a market results in lower profits.

My trip to my local Lowes last weekend gave me a glimpse into a future of failure and futility. Until 2009, I had four choices of Lowes within 15 miles of my house. There was a store 8 miles east, 12 miles west, 15 miles north, and 15 miles south of my house. In an act of supreme hubris, Lowes opened a stores smack in the middle of these four stores, four miles from my house. The Hatfield store opened in early 2009 and I wrote an article detailing how Lowes was about to ruin their profitability in Montgomery County. It just so happens that I meet a couple of my old real estate buddies from IKEA at a local pub every few months. In 2009 one of them had a real estate position with Lowes and we had a spirited discussion about the prospects for the Lowes Hatfield store. He assured me it would be a huge success. I insisted it would be a dud and would crush the profitability of the market by cannibalizing the other four stores. We met at that same pub a few months ago. Lowes had laid him off and he admitted to me the Hatfield store was a disaster.

I pulled into the Lowes parking lot at 11:30 am on a Saturday. Big Box retailers do 50% of their business on the weekend. The busiest time frame is from 11:00 am to 2:00 pm on Saturday. Big box retailers build enough parking spots to handle this peak period. The 120,000 square feet Hatfield Lowes has approximately 1,000 parking spaces. I pulled into the spot closest to the entrance during their supposed peak period. There were about 70 cars in the parking lot, with most probably owned by Lowes workers. It is a pleasure to shop in this store, with wide open aisles, and an employee to customer ratio of four to one. The store has 14 checkout lanes and at peak period on a Saturday, there was ONE checkout lane open, with no lines. This is a corporate profit disaster in the making, but the human tragedy far overrides the declining profits of this mega-retailer.

As you walk around this museum of tools and toilets you notice the looks on the faces of the workers. These aren’t the tattooed, face pierced freaks you find in many retail establishments these days. They are my neighbors. They are the beaten down middle class. They are the middle aged professionals who got cast aside by the mega-corporations in the name of efficiency, outsourcing, right sizing, stock buybacks, and executive stock options. The irony of this situation is lost on those who have gutted the American middle class. When you look into the eyes of these people, you see sadness, confusion and embarrassment. They know they can do more. They want to do more. They know they’ve been screwed, but they aren’t sure who to blame. They were once the very customers propelling Lowes’ growth, buying new kitchens, appliances, and power tools. Now they can’t afford a can of paint on their $10 per hour, no benefit retail careers. As depressing as this portrait appears, it is about to get worse.

This Lowes will be shut down and boarded up within the next two years. The parking lot will become a weed infested eyesore occupied by 14 year old skateboarders. One hundred and fifty already down on their luck neighbors will lose their jobs, the township will have a gaping hole in their tax revenue, and the CEO of Lowes will receive a $50 million bonus for his foresight in announcing the closing of 100 stores that he had opened five years before. This exact scenario will play out across suburbia, as our unsustainable system comes undone. Our future path will parallel the course of the labor participation rate. Just as the 9 million Americans who have “left” the labor force since 2008 did not willfully make that choice, the debt burdened American consumer will be dragged kicking and screaming into the new reality of a dramatically reduced standard of living.

DF LaborForceParticipationRate 9 2012(1) ARE YOU SEEING WHAT IM SEEING?

Connecting the dots between my anecdotal observations of suburbia and a critical review of the true non-manipulated data bestows me with a not optimistic outlook for the coming decade. Is what I’m seeing just the view of a pessimist, or are you seeing the same thing?

A few powerful men have hijacked our economic, financial and political structure. They aren’t socialists or capitalists. They’re criminals. They created the culture of materialism, greed and debt, sustained by prodigious levels of media propaganda. Our culture has been led to believe that debt financed consumption over morality and justice is the path to success. In reality, we’ve condemned ourselves to a slow painful death spiral of debasement and despair.

“A culture that does not grasp the vital interplay between morality and power, which mistakes management techniques for wisdom, and fails to understand that the measure of a civilization is its compassion, not its speed or ability to consume, condemns itself to death.” – Chris Hedges.

There is a great documentary called End of The Road which highlights everything in this post. You can stream it on Netfix....

Wednesday, September 12, 2012

The old colonialism with a new face...

The old colonialism with a new face...
By Hossein Askari

Over the past 100 or so years, foreigners have exploited the wealth of the countries in the Persian Gulf for their own gain and at the expense of the indigenous population. In the early days, companies from Zio-Great Britain, later followed by the Zioconned United States and Zio-France, took advantage using the threat of economic boycott and isolation and military intervention - the old face of colonialism. Today, foreign individuals and corporations work hand-in-hand with the same Zio-Middle East rulers to exploit their people - the new face of colonialism. Here, we take a brief look at the face of the old colonialists and in the next article we look into the new.

The discovery of commercial oil deposits in the region began with William D'Arcy in Iran. In 1901, D'Arcy negotiated a 60-year exclusive contract for oil exploration and production covering most of Iran.The Shah received 20,000 pounds sterling, shares in D'Arcy's company and 16% of all future profits. After some setbacks and partial sale of his Iranian venture to a syndicate named Burmah Oil, D'Arcy and his partners discovered commercial oil in a major field in Masjed-e-Soleiman in May 1908.
Later in 1908, the venture sold shares in the Iranian oil find and created the Anglo-Persian Oil Company (APOC, also named the Anglo-Iranian Oil Company, or AIOC). In 1913, the huge Abadan refinery came on line, the largest "single" refinery of its the time, and Iranian oil was flowing. The British government injected more cash into APOC and became a major shareholder. APOC invested in other ventures in Iraq (more on Iraqi oil development below) and in other parts of Iran, with little visible benefit to the Iranian people.

As a result, by the early 1920s, there was widespread resentment of the British and APOC's role in Iran. The dispute with APOC was centered on a number of issues: access to APOC's books to assess profits and other operational numbers (information that is always available to stockholders), a 25% ownership in APOC, a higher dividend rate, having the royalty rate on oil lifted, a tax on profits, an end to the exclusive right of transportation of Iranian oil to APOC and the extent (area) of APOC's Iranian concession.

Negotiations made little progress, and by the early 1930s Iranian royalties were slashed to under 500,000 pounds sterling, in part because of the global economic slowdown and a global oil glut. In 1932, Reza Shah cancelled the original D'Arcy concession but then in 1933 signed a new agreement that looked good on the surface but again shortchanged Iran and the Iranian people in a new 60-year concession agreement. Iranian resentment continued to grow as AIOC exploited Iran - for example giving Iran only 15-20% of its after-tax profits after World War II and into the early 1950s - and employed Iranians in what could be classified as inhumane conditions.

In late 1950, Iranians became further incensed at the news that Saudi Arabia, to Iranians an unsophisticated newcomer, had reached a 50-50 profit sharing plan with American oil companies (more on Saudi oil development below). The British government, the major behind the scenes power in AIOC, refused to consider a similar arrangement with Iran and simply dismissed Iranian pleadings out of hand.

In 1951, what would lead to the most tragic episode in Iranian history in 1953 over the last 100 years began to unravel. The Iranian parliament nationalized AIOC and its holdings and elected an Iranian national hero, Mohammad Mossadeq, as prime minister. Britain persuaded countries to boycott Iranian oil and shut down the Abadan refinery while AIOC increased its oil output elsewhere (as discussed in an earlier article on the emergence of the Organization of the Oil Exporting Countries, or OPEC, as a power in dealing with the major and the independent oil companies in the early 1970s, the importance of diversified reserves for the companies cannot be overemphasized).

The Iranian economy, which had become so dependent on its meager oil revenues, collapsed. In 1953, the British persuaded the newly elected administration in Washington that Mossadeq was a closet communist and that Iranian oil and access to the Persian Gulf would soon pass to the Soviets. The Central Intelligence Agency and the British Secret Intelligence Service collaborated to overthrow Mossadeq in a tragic coup that in our opinion has since shaped Iranian and Persian Gulf history.

After Mossadeq's overthrow, a consortium controlled Iranian oil with the umbrella name of NIOC (the National Iranian Oil Company), with AIOC holding 40% of the shares in a 50-50 profit sharing arrangement with Iran, but still with no unfettered Iranian access to the consortium's books. While this was a much-improved arrangement for Iran, it was a humiliating treatment of a sovereign nation and, most importantly, the removal of Mossadeq would set Iran on a torturous path that continues today.

Oil activities in Iraq (then Mesopotamia and a part of the Ottoman Empire) started in 1912 under a newly formed company, the Turkish Petroleum Company (TPC). By 1914, the Anglo Persian Oil Company (APOC) had become the largest shareholder with 50% of the shares. But then with the onset of World War II, no significant activity was to take place until after the war.

In 1925, TPC got its concession in Iraq, in a loose agreement to share profits after a number of years. In 1927, oil was stuck near Kirkuk. As a result, in 1928 there was some urgency to reach a formal agreement that afforded shares of TPC (renamed the Iraq Petroleum Company - or IPC - in 1929) to British, American and French interests.

Foreigners in effect assumed total control of Iraqi oil, promising Iraq additional royalties and loans. But with the global economic slowdown and a glut of oil on the world markets, significant Iraqi oil exports did not reach world markets until just before World War II. All along, the British-installed monarchy (after World War I) in Iraq got along relatively well with IPC and negotiations for more favorable profit-sharing arrangements and higher levels of oil output were on the whole friendly and reflected terms that were similar to those afforded to Saudi Arabia.

But in 1958, friendly Iraqi-IPC relations were set to change with declining payments to Iraq, the revolution overthrowing the Hashemite monarchy and two years later with the formation of OPEC. During the 1960s, Iraqi-IPC relations were hostile. Iraq (like Iran) continued to seek more control over its oil with a higher level of ownership, higher output and higher prices for Iraqi crude.

In the case of Saudi Arabia, the government signed its first concession agreement in 1933 with the Standard Oil of California. A few years later, the Texas Oil Company, or Texaco, became a partner. It took about four years to hit oil in 1938 and oil was exported beginning the next year. In 1948, two more American oil companies joined the company that had been renamed the Arabian American Oil Company, or Aramco. In 1950, Saudi Arabia pressured Aramco and received a 50-50 profit-sharing arrangement, with the US government making tax concessions to the four US oil company partners in Aramco to make such a deal more palatable.

In sum, looking at the first 50 years of oil exploration and oil output in the Persian Gulf, country-company relations were tortuous throughout the period before World War II. The companies dictated the terms on a "take it or leave it" basis, something that was most vivid in British dealings with Iran, the country with the longest history of oil production and exports in the region.

The companies controlled oil exploration, production and the sharing of profits in these countries. The threats of oil boycott and military intervention were real, as the companies operated with the full support of their imperialist governments. By any reasonable standard, the oil-exporting countries were shortchanged and exploited. The British approach with Iran was much harsher than that of the American companies with Saudi Arabia. In fact, the participation of American companies may have been a major factor in "softening" the British a little.

Still, during most of the period before the formation of OPEC in 1960, the rulers and governments of these countries did what they could to get a fairer share for their countries. They were, however, negotiating from a position of weakness with looming economic and military threats.

All this, as we saw, was changed by market conditions - growing global demand for oil, an increasing OPEC share of world production and exports, the entry of independent oil companies with very limited sources of crude into the international markets and a strengthening of the financial position of Middle Eastern countries.

Today, as we will see, relations with the West are very different.

NEXT: Foreigners - the face of new colonialism

Previous articles in this series are:
Part 1: Riddle of the sands
Part 2: The sweet and sour of oil
Part 3: The driver of oil prices
Part 4: OPEC in the driving seat
Part 5: The OPEC bogeyman
Part 6: OPEC and the sanctions highway
Part 7: Oil-price shocks lie in wait
Part 8: Whose oil is it anyway?
Part 9: The dark side of oil
Part 10: Institutions matter
Part 11: Oil-rich rulers blind to the future
Part 12: 'Arab Spring' without a bloom
Part 13: Reform - or be kicked out
Part 14: Oil's toxic partner: Guns
Part 15: Islamic tools to the rescue
Part 16: Policy package for turnaround

Hossein Askari is Professor of Business and International Affairs at the George Washington University.

Tuesday, September 11, 2012

Bankrupt Cyprus And The Russian Connection....

The Republic of Cyprus, with its 840,000 people, has been in the Eurozone for less than five years. It and its banks burned through mountains of euros faster than anyone could count. Now they need a bailout whose magnitude balloons every time someone blinks.

The financial problems came to a head last year when the markets refused to go along with the country’s profligacy. So Zio-US Pawn/Cyprus went begging to Russia and got a €2.5 billion loan last November. Which quickly evaporated. In June, banks began to crater. Bailout time. €2.3 billion would be required for the two largest ones. The bailout Troika, the despised austerity gang from the EU, the ECB, and the IMF, took a gander at the stuff the banks called “assets.” Costs jumped to €6 billion, plus €4 billion for a government bailout. Then rumors seeped out that the banks alone would need €9 billion, for a total of €13 billion...

In early August, a hullaballoo arose when it was leaked that Central Bank Governor Panicos Demetriades had told lawmakers of an even greater fiasco. He’d been appointed only on May 2, and when he opened the closet doors of the banks, he discovered the real mess: €12 billion would be needed for the banks—70% of the country’s shrinking €17 billion economy! Plus whatever the government would need. A total of €16 billion perhaps. 94% of GDP.

But plot twist: his predecessor, Athanasios Orphanides, lashed out at him. He’d been in office from January 1, 2008, when Cyprus acceded to the Eurozone, to May 2, 2012. During that time, he was also on the Governing Council of the ECB. He’d overseen the whole debacle, had let it happen, had encouraged it. So he accused his successor of an awful sin, namely shining some light on the banks, thus “creating the impression that our debt is unsustainable.”

Orphanides grew into that milieu in the cradle of financial shenanigans and bailouts. With his ivy-league education and a Ph.D. in economics from MIT, he worked as Senior Adviser at the Fed’s Board of Governors. And when the financial crisis erupted in the US, he left the Fed to become Governor of the Central Bank of Cyprus—to start all over again.

So now, with budget cuts taking their toll, the economy is shrinking faster than expected, warned Finance Minister Vassos Shiarly. But the ongoing bailout negotiations with the Troika “are in advanced stages,” he said. So perhaps by October, they might agree on a bailout memorandum that would require the usual medicine of painful structural reforms in return for bailout billions

But Cyprus needs the moolah now. It’s already raiding internal accounts and slowing disbursements to keep the lights on. And there’s hope. Apparently, the Russian government just approved a €5 billion loan—but not out of the goodness of its heart.

In October 2010, Russian President Dmitry Medvedev went to Cyprus to scratch the backs of Russian expats and the Cypriot elite. Cypriot President Dimitris Christofias, a communist, and educated in Russia, was there also. Turns out, the first half of that year, tiny Cyprus had been the largest foreign investor in Russia, ahead of the Netherlands, Luxembourg, and Germany.

It wasn’t Cypriot money flowing into Russia. It was Russian money flowing back. Russian companies have long established their headquarters in Cyprus to benefit from its status as a tax haven, a trend that picked up when Cyprus acceded to the EU and then the Eurozone. According to the Russian Embassy in Cyprus, via Kathimerini:

In the last five years alone, the Russian economy has seen Cypriot investments of over $52 billion, of which $41.7 billion was invested in the 2007-10 period, or 2.7 times more than German investments in Russia in the same period.

At the same time, Russians are investing in Cyprus, among them businessman Dmitry Rybolovlev who bought a 10% stake in Bank of Cyprus, which is getting bailed out. And the offshore natural gas resources have attracted a slew of Russian companies...

Afghanistan overdoses on Zio-US military bases...

Afghanistan overdoses on Zio-US military bases...
By Nick Turse

The size of Afghanistan, at 652,230 square kilometers, makes it slightly larger than the fledging nation of South Sudan, just smaller than the US state of Texas. The latter holds 203 military bases within its borders. That's high for a US state, but nothing compared with Afghanistan.

New figures provided by the International Security Assistance Force (ISAF) joint command suggest that Afghanistan is one of the most heavily garrisoned nations on the planet. Given its size and population, it is likely the most thoroughly militarized country in the world.

Recently, revealed there are approximately 550 ISAF combat outposts (COPs), forward operating bases (FOBs) and patrol bases in Afghanistan. Added to this are 200 more ISAF checkpoints. And when you count various logistical, administrative, and support facilities - such as ammunition storage facilities, barracks, equipment depots and training centers - the grand total of all foreign military installations, according to a military spokesman,tops out at around 1,500.

That, however, is only about one third of the story.

According to ISAF, military posts manned by the Afghan National Security Forces dwarf the number of ISAF outposts in the country. Counting COPs, FOBs, patrol bases, checkpoints and other types of logistics and support facilities, the total number of Afghan bases currently sits at about 2,700. Essentially, a country the size of Texas is home to 4,200 military installations, foreign and domestic.

All of this means that Afghanistan, the 41st largest nation in terms of area - with a population of around 30 million - is nearly as heavily garrisoned as the third-largest country, the United States, which is ten times more populous and has roughly 4,450 bases spread across 9.8 million square kilometers.

For many reasons, the value of such country-to-country comparisons is limited, not in the least due to the fact the ZOG United States government is not battling an insurgency within its borders. The number of Afghan bases does, however, call into serious question the efficacy of heavy military garrisoning.

Even with 4,200 bases set up to secure the country, along with close to 80,000 troops from the most technologically sophisticated and well-funded military on the planet (with assistance from 40,000 personnel from other powerful armies) and an allied indigenous force of around 350,000 soldiers and police, the Afghan War has dragged on for more than a decade. All that ZIOCONNED military might has been unable to decisively defeat a rag-tag, minority insurgency of limited popularity.

Military bases have clearly not been the answer to defeating Afghanistan's insurgents and yet, according to US military contracting documents examined by Asia Times Online, plans continue for constructing, expanding, and upgrading bases for the foreseeable future.

Documents released last month point to a massive building boom, including plans to construct:
  • A base for Afghan troops in Kabul Province,
  • New facilities for the ANA's 3rd Brigade, 215th Corps at Camp Shorabak in Helmand Province,
  • Barracks, warehouses and administration facilities for the ANA's 203rd Corps in Paktiya Province,
  • New infrastructure at ANA training centers at Camp Shorabak in Helmand Province and a Regional Military Training Center at Gamberi, Laghman Province,
  • Multiple border police stations west of Kabul,
  • An ANA garrison in Parwan Province,
  • New ANA facilities at Camp Hero in Kandahar Province, and
  • An unspecified number of refueling and rearming sites for the Afghan Air Force in Ghazni Province, among other projects.

    There appears to be no end to the construction boom in Afghanistan but the reasons why are vague, at best. If the current inventory of 4,200 military installations isn't enough to pacify the country, one wonders just how many outposts ISAF and the Afghan security forces believe it will take to build their way to victory.

    Nick Turse is the managing editor of and a fellow at The Nation Institute. An award-winning journalist, his work has appeared in the Los Angeles Times, the Nation, and regularly at TomDispatch and other print and on-line publications. He is the author/editor of several books, including the recently published Terminator Planet: The First History of Drone Warfare, 2001-2050 (with Tom Engelhardt). He is currently finishing his forthcoming book Kill Anything That Moves: The Real American War in Vietnam (Metropolitan Books/Henry Holt).
  • Sunday, September 9, 2012

    China, Russia sound alarm on world economy at APEC summit...

    • VLADIVOSTOK, Russia (Zio-Reuters) - China and Russia sounded the alarm about the state of the global economy at a summit on Saturday and urged Asian-Pacific countries to protect themselves by forging deeper regional economic ties....

    Chinese President Hu Jintao said Beijing would do all it could to strengthen the 21-member Asia-Pacific Economic Cooperation (APEC) and boost prospects of a global recovery by rebalancing its economy, Asia's biggest.

    Russian President Vladimir Putin said trade barriers must be smashed down. He is hosting the event on a small island linked to the Pacific port of Vladivostok by a spectacular new bridge, a symbol of Moscow's pivotal turn to Asia away from debt-stricken Europe.

    "It's important to build bridges, not walls. We must continue striving for greater integration," Putin told APEC leaders seated at a round table in a room with a view of the $1 billion cable-stayed bridge, the largest of its kind.

    "The global economic recovery is faltering. We can overcome the negative trends only by increasing the volume of trade in goods and services and enhancing the flow of capital."

    China's Hu told business leaders before the summit the world economy was being hampered by "destabilizing factors and uncertainties" and the crisis that hit in 2008-09 was far from over. Beijing would play its role, he said, in strengthening the recovery.

    "We will work to maintain the balance between keeping steady and robust growth, adjusting the economic structure and managing inflation expectations," he said.

    Hu spelled out plans for China, whose economic growth has slowed as Europe's debt crisis worsened, to pump $157 billion into infrastructure investments in agriculture, energy, railways and roads. Hu, who steps down as China's leader in the autumn after a Communist Party congress, promised continuity and stability for the economy.

    Putin, who has just begun a new six-year term as president, said on Friday Russia would be a stable energy supplier and a gateway to Europe for Asian countries, and also pledged to develop his country's transportation network.

    Gazprom, Russia's state-controlled gas export monopoly, signed an agreement with Japan to develop plans for a $7 billion liquefied natural gas plant on Russia's Pacific coast, underscoring Moscow's eastward shift.


    The relative strength of China's economy, by far the largest in Asia and second in the world to the United States, is key to Russia's decision to look to the Pacific Rim as it seeks to develop its economy and Europe battles economic problems.

    APEC, which includes the United States, Japan, South Korea, Indonesia and Canada, groups countries which account for 40 percent of the world's population, 54 percent of its economic output and 44 percent of trade.

    APEC members are broadly showing relatively strong growth, but boosting trade and growth is vital for the group as it tries to remove the trade barriers that hinder investment.

    "It is absolutely clear that the most important region for economic growth this decade - and probably the next decade - will be the Pacific," said Mexican President Felipe Calderon.

    The European Union has been at odds with both China and Russia over trade practices it regards as limiting free competition. Cooperation in APEC is also hindered by territorial and other disputes among some of the members.

    Putin, 59, limped slightly as he greeted leaders at the summit. Aides said he had merely pulled a muscle. Underlining Putin's good health, a spokesman said he had a "very active lifestyle."

    Discussions at the two-day meeting focused on food security and trade liberalization. An agreement was reached before the summit to slash import duties on technologies that can promote economic growth without endangering the environment.

    Breakthroughs are not expected on other trade issues at the meeting, from which U.S. President Barack Obama is absent. He has been attending the Democratic Party convention and Washington is represented by Secretary of State Hillary Clinton.

    Clinton said after talks with Foreign Minister Sergei Lavrov that the U.S. government was working with Congress to pass legislation needed to upgrade trade ties with Russia, which recently joined the World Trade Organisation.

    Tensions persisted between the two former Cold War foes over Iran and Syria, however, and Clinton had only a short meeting with Putin late on day one of the summit, which culminated in a lavish firework show over Vladivostok's harbor that was reported in the Russian media to have cost nearly $10 million.

    Also missing the summit was Australian Prime Minister Julia Gillard, who went home after learning her father had died.

    Pakistan announces official support for New Silk Road being built by China....

    Pakistan announces official support for New Silk Road being built by China....

    By Agha Iqrar Haroon

    Islamabad: Pakistan announces official support for News Silk Road being built by China. Pakistan’s Ambassador to China Masood Khan said that his country will be glad to see more “Silk Roads” being built in the region to ensure common development as well as peace, stability and prosperity for their people.

    According to Pakistan Foreign Office, while discussing the prospect of reviving a trade route across the vast Eurasian land, at the ongoing second China-Eurasia Expo in Urumqi, capital of the northwest China’s Xinjiang Uygur Autonomous Region, where the Silk Road once threaded through. Pakistan supports the on-going efforts to expand the silk roads.
    Seventeen state-level open ports, two international airports and extensive roads and railways link the landlocked Xinjiang, China’s westernmost region, to the country’s neighbors to the west. The second cross-border railway between China and Kazakhstan has been linked up and the China-Kyrgyzstan-Uzbekistan highway will soon be launched in full.

    China’s New Silk Road is based on three main corridors across the Eurasian continent, called the Eurasian Land Bridge, which serves as the main arteries from which offshoot rails, highways, and pipelines will be built. The first one is the existing Trans-Siberian Railway running from Vladivostok in Eastern Russia to Moscow and connecting onto Western Europe and Rotterdam; the second runs from Lianyungang port in Eastern China through Kazakhstan in Central Asia and onto Rotterdam; and the third runs from Pearl River Delta in Southeast China through South Asia to Rotterdam. This part one can call the emerging North-South corridor concept of India, Iran, and Russia, if it is materialized. China has almost entered its second main arteries by connecting it with Kazakhstan via its expressway that China is calling the New Silk Road.

    There is a major difference between the US-sponsored New Silk Road and the China project. China has totally left out Afghanistan from its project, thinking that this land will remain unstable, while the US project stands on the foundation of promoting Afghanistan and linking developments in South Asia and Central Asia through Afghanistan even at the cost of Tajikistan, Pakistan, Uzbekistan, India, and Turkmenistan. The United States is insisting Pakistan and India get natural gas from Turkmenistan through Afghanistan instead of getting natural gas from Iran through Pakistan to India. It is also insisting Pakistan get electricity from Tajikistan through Afghanistan land. For the US, all roads lead to Kabul, but China plans all roads to lead directly to Central Asia, leaving Afghanistan aside. The United States’ New Silk Road left out Iran due to obvious reasons, while the original Silk Road has Iran as its greatest component, with Afghanistan as on off shoot of original Silk Road.

    US Congress issued and updated The Silk Road Strategy Act to maintain US influence in Eurasia, while the Chinese Communist Party (CCP) released its concept of its Silk Road as an Eurasian Land Bridge connecting China to Europe across the Eurasian continent.

    In the past, representatives from 40 countries participated in a two-day Ministerial Conference on Transport, sponsored by UNESCAP. China, Indonesia, Laos, Korea, Cambodia, Russia, Turkey, Azerbaijan, Armenia, Kazakhstan, Iran, and others designed an 81,000 kilometer railway network linking 28 countries through tracks and ferry routes to boost Asia’s economic development and a direct route to European markets. The plan is to develop routes between Asian countries, then expand to its central neighbors, and unto Europe. This was actually a blueprint of the China New Silk Road.

    In January 2008, China, Mongolia, Russia, Belarus, Poland, and Germany implemented the first corridor of the Eurasian Land Bridge and agreed to create conditions to pave the way for regular container train service between Europe and Asia. A demonstration container train dubbed “The Beijing-Hamburg Container Express,” carrying a load of Chinese goods, rolled out of one of the logistics bases of the China Railway Container Transport Corp Ltd.

    The train covered 10,000 kilometers (6,200 miles) in 15 days, crossing China, Mongolia, Russia, Belarus, and Poland before arriving in Hamburg, Germany. By comparison, sea transport adds 10,000 kilometers to the journey through the Indian Ocean, and would have taken 40 days to ship goods from China to Germany – more than double the time to send trains through the Eurasian corridor. The original Silk Road also had the component of ferries, as does the New Silk Road of China.

    Source: The Kooza News desk.

    Thursday, September 6, 2012

    Debt forecast: U.S. will look like Greece by 2021...

    Tuesday, September 4, 2012

    U.S.A. lectures some other dictatorships rather than the world's largest and oldest-surviving autocracy...

    U.S.A. lectures some other dictatorships rather than the world's largest and oldest-surviving autocracy...

    The lesson: Just like the case with IRAN in the Persian Gulf...., The rise of a muscle-flexing power like CHINA, can help strengthen the relevance and role of a Zioconned power in decline....

    NEW DELHI — The U.S. strategy long has been geared against the rise of any hegemonic power in Asia and for a stable balance of power.

    Yet, as its 2006 national security strategy report acknowledges, the United States also remains committed to accommodate "the emergence of a China that is peaceful and prosperous and that cooperates with us to address common challenges and mutual interests."
    Can U.S. policy reconcile these two seemingly conflicting objectives? The short answer is yes.
    The U.S., in fact, has played a key role in China's rise. One example was the U.S. decision to turn away from trade sanctions against Beijing after the 1989 Tiananmen Square massacre and instead integrate that country with global institutions — a major decision that allowed China to rise. Yet, paradoxically, many in the world today see China as America's potential peer rival.

    Often overlooked is the fact that U.S. policy has a long tradition of following a China-friendly approach.

    In 1905, for example, President Theodore Roosevelt — who hosted the Japan-Russia peace conference in Portsmouth, New Hampshire, after the war between the two countries — argued for the return of Manchuria to Manchu-ruled China and for a balance of power in East Asia.

    The Russo-Japanese War actually ended up making the U.S. an active participant in China's affairs.

    After the Communists seized power in China in 1949, the U.S. openly viewed Chinese Communism as benign and thus distinct from Soviet Communism. In more recent decades, U.S. policy has aided the integration and then ascension of Communist China, which began as an international pariah state.
    It was the U.S. that helped turn China into the export juggernaut that it has become by outsourcing the production of cheap goods to it. Such manufacturing resulted in China accumulating massive trade surpluses and becoming the principal source of capital flows to the U.S.

    America's China policy has traversed three stages. In the first phase, America courted the Mao Zedong regime, despite its 1950-51 annexation of Tibet and its domestic witch hunts, such as the "Let a Hundred Flowers Bloom" campaign. Disappointment with courtship led to estrangement, and U.S. policy then spent much of the 1960s seeking to isolate China.

    The third phase began immediately after the 1969 Sino-Soviet bloody military clashes, as the U.S. actively sought to take advantage of the open rift between the two communist states to rope in China as an ally in its anti-Soviet strategy.

    Even though the border clashes were clearly instigated by China, as the Pentagon later acknowledged, Washington sided with Beijing. That helped lay the groundwork for the China "opening" of 1970-71 engineered by Henry Kissinger, who had no knowledge of China until then.

    Since the 1970s, the U.S. has followed a conscious policy to aid China's rise — a policy approach that remains intact today, even as Washington seeks to hedge against the risks of Chinese power sliding into arrogance. The Carter White House, in fact, sent a memo to various U.S. departments instructing them to help in China's rise.

    In the second half of the Cold War, Washington and Beijing quietly forged close intelligence and other strategic cooperation, as belief grew in both capitals that the two countries were natural allies. Such cooperation survived the end of the Cold War. Even China's 1996 firing of missiles into the Taiwan Strait did not change the U.S. policy of promoting China's rise, despite the consternation in Washington over the Chinese action.

    If anything, the U.S. has been gradually withdrawing from its close links with Taiwan, with no U.S. Cabinet member visiting Taiwan since those missile maneuvers. Indeed, U.S. policy went on to acknowledge China's "core interests" in Taiwan and Tibet in a 2009 joint communiqué with Beijing.
    In this light, China's spectacular economic success — illustrated by its emergence with the world's biggest trade surplus and largest foreign-currency reserves — owes a lot to the U.S. policy from the 1970s, including Washington's post-Tiananmen decision not to sustain trade sanctions.
    Without the significant expansion in U.S.-Chinese trade and financial relations since the 1970s, China's economic growth would have been much harder.
    From being allies of convenience in the second half of the Cold War, the U.S. and China have emerged as partners tied together by close interdependence. America depends on Chinese trade surpluses and savings to finance its supersized budget deficits, while Beijing relies on its huge exports to the U.S. both to sustain its economic growth and subsidize its military modernization.
    By plowing two-thirds of its mammoth foreign-currency reserves into U.S. dollar-denominated investments, Beijing has gained significant political leverage.

    China thus is very different from the adversaries the U.S. has had in the past, like the Soviet Union and Japan. U.S. interests now are so closely intertwined with China that they virtually preclude a policy that seeks to either isolate or confront Beijing. Even on the democracy issue, the U.S. prefers to lecture some other dictatorships rather than the world's largest and oldest-surviving autocracy.

    Yet it is also true that the U.S. views with unease China's not-too-hidden aim to dominate Asia — an objective that runs counter to U.S. security and commercial interests and to the larger U.S. goal for a balance in power in Asia.

    To help avert such dominance, the U.S. has already started building countervailing influences and partnerships, without making any attempt to contain China.

    Where its interests converge with Beijing, the U.S. will continue to work closely with it. American academic John Garver, writing in the current issue of the Orbis journal, sees a de facto bargain between Washington and Beijing in the vast South Asia-Indian Ocean Region (SA-IOR): "Beijing accepts continuing U.S. pre-eminence in the SA-IOR in exchange for U.S. acceptance of a gradual, incremental and peaceful expansion of Chinese presence and influence in that region."

    For the U.S., just like in IRAN and the Persian Gulf..., China's rising power helps to validate U.S. forward military deployments in the Asian theater, keep existing allies in Asia, and win new strategic partners. An increasingly assertive IRAN and China indeed have proven a diplomatic boon for Washington in strengthening and expanding U.S. security arrangements in Asia and the Persian Gulf....

    South Korea has tightened its military alliance with the United States, Japan has backed away from a move to get the U.S. to move a marine airbase out of Okinawa, Singapore has allowed the stationing of U.S. Navy ships, Australia is hosting U.S. Marine and other deployments, and India, Vietnam, Indonesia and the Philippines, among others, have drawn closer to the U.S.
    The lesson: The rise of a muscle-flexing power can help strengthen the relevance and role of a power in relative decline.

    Let us not forget that barely a decade ago, the U.S. was beginning to feel marginalized in Asia because of several developments, including China's "charm offensive." It was worried about being shunted aside in Asia.
    Today, America has returned firmly to the center-stage in Asia, prompting President Barack Obama to declare his much-ballyhooed "pivot" toward Asia.
    To lend strategic heft to the "pivot," the U.S. is to redirect 60 percent of its battleships to the Pacific and 40 percent to the Atlantic by 2020, compared to the 50-50 split at present.

    Despite the "pivot," the U.S. intends to stick to its two-track approach in Asia — seek to maintain a balance of power with the help of its strategic allies and partners, while continuing to accommodate a rising China, including by reaching unpublicized bargains with it on specific issues and Asian subregions.
    Brahma Chellaney is the author of "Asian Juggernaut" (HarperCollins) and "Water: Asia's New Battleground" (Georgetown University Press).