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Most Americans cannot find Syria on the map and certainly cannot connect the dots of what an Assad survival, backed by Iran, could mean for the region and the West.
Just as Obama decided to withdraw from Iraq prematurely, prematurely announce our withdrawal from Afghanistan and prematurely declared al Qaeda was dead he also is engaged in self delusion when it comes to our failed role in Syria.
When Obama began his appeasement and apology tour he helped unleash an acceleration of radicalism in the Middle East. Now we are paying the price for his failed policies and the end is not in sight but ominous clouds continue to gather.
Again, the average American does not have a clue when it comes to Obama's Middle East policy failures.
(See 1 below.)
And the disasters Obama has brought upon our nation will not end in The Middle East! They will also appear in the currency market as the financial health of America eventually is overcome by debt. (See 1a below.)
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Ollie North did what Sibelius is now accused of doing and he was vilified as was Reagan.
Republican Senators now want to examine her alleged misdeeds and I suspect the Democrats will blow it off as no big deal. (See 2 below.)
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If interest rates begin to rise because the economy is recovering thus, allowing The Fed to gradually withdraw its stimulation and this episode occur without a hitch that would be a positive sign for the stock market.
No one knows whether this will happen so stay tuned. (See 3 below.)
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Dick
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1)Assad on the March
Has Obama decided that he wants Syria's dictator to win?
Bashar Assad has a new swagger, and why not? His Syrian troops are on the march, retaking territory from rebels thanks to arms from Russia and troops and weapons from Iran and Hezbollah. The West is slowly losing in Syria to this axis of Mideast extremism, and Americans need to understand the potential consequences.
This week the European Union finally lifted its embargo against arming Syria's rebels, two years too late and many tons of firepower short. The EU delayed any arms supply until August 1, and whatever little it eventually provides won't match the aircraft and artillery deployed by Syrian forces.
Iran has sent its Revolutionary Guards to guide Syrian attacks, and its Hezbollah militia in Lebanon has joined the fight in force. "It is our battle, and we are up to it," declared Hezbollah chief Hassan Nasrallah last weekend.
Meanwhile, the Russians responded to Secretary of State John Kerry's recent visit to Moscow with plans to send advanced S-300 air defense missile batteries to Assad. This is in addition to the military advisers it has sent to Damascus, as well as its diplomatic cover at the United Nations and in persuading Mr. Kerry to agree to a Syrian peace conference in the coming weeks.
You almost have to admire the brazenness of Russian diplomacy. Responding to the EU arms decision, Deputy Foreign Minister Sergei Ryabkov called it "a reflection of double standards," while defending Moscow's arms deliveries as a "stabilizing factor" in the Middle East. Andrei Gromyko would have laughed at that one.
All of this helps to explain Assad's new military bluster. The young dictator has come out of his bunker in recent days to boast of his new support, especially his Russian air defenses, and to threaten Israel directly.
On Thursday, he promised to shoot down Israeli aircraft that entered Syrian airspace, and he mused about letting Islamist fighters loose along the border with the Israeli-held Golan Heights. "There is clear popular pressure to open the Golan front to resistance," Mr. Assad said, adding that "we have received many Arab delegations wanting to know how young people might be enrolled to come and fight Israel."
On Thursday, he promised to shoot down Israeli aircraft that entered Syrian airspace, and he mused about letting Islamist fighters loose along the border with the Israeli-held Golan Heights. "There is clear popular pressure to open the Golan front to resistance," Mr. Assad said, adding that "we have received many Arab delegations wanting to know how young people might be enrolled to come and fight Israel."
Speaking of the President, he is still sticking publicly to his line that "Assad must go," but we're beginning to wonder if he means it. The Administration offered only lukewarm support for the EU decision to lift its arms embargo and has muted talk of American arms for the moderate Free Syrian Army.
The new missile defenses will make it harder for Israel to destroy such threats as the Syrian nuclear-weapons facility its jets bombed in 2007, or the truck convoys carrying missiles to Hezbollah that it hit this year. Syria's stockpiles of chemical weapons will also be that much harder for Israel or the West to destroy or round up. Mark this as another triumph for President Obama's diplomatic "reset" with Russia.
The new missile defenses will make it harder for Israel to destroy such threats as the Syrian nuclear-weapons facility its jets bombed in 2007, or the truck convoys carrying missiles to Hezbollah that it hit this year. Syria's stockpiles of chemical weapons will also be that much harder for Israel or the West to destroy or round up. Mark this as another triumph for President Obama's diplomatic "reset" with Russia.
The U.S. has instead put all its chips on the peace conference led by the Russians, who define peace as Assad's triumph. The American position used to be that Assad's departure was a precondition for talks, but now Mr. Kerry says Assad and Iran can both attend. Assad's version of compromise this week was to assert that any peace conference outcome must be ratified in a Syrian referendum, which means voting in parts of the country he controls.
On the evidence of his actions, Mr. Obama may have decided that an Assad victory is preferable to continued civil war. The President can't say this in public without major embarrassment. But he's refused to arm the rebels, refused to organize an anti-Assad coalition outside the U.N., and refused to honor even his own promise that chemical-weapons use in Syria would be a "game-changer." Mr. Obama has actively helped Assad by doing nothing to counter Russia and Iran.
The likeliest outcomes now are either an Assad victory or continuing war that kills tens of thousands more. An Assad triumph would mean a Shiite crescent of power from Iran through Syria to Lebanon that would foment instability and violence. Russia would be the region's main political arbiter.
The Sunni Arabs who run Bahrain—the base for the U.S. Navy's Fifth Fleet—would be under increasing political pressure. Turkey, Iraq and the Gulf states would have to decide how much to accommodate this new dominant axis. Israel would be increasingly isolated and its strategic military depth eroded.
The outcome of continuing war is less predictable but the regional disruption isn't. Jordan's moderate monarchy could fall as refugees flood in from Syria. Iraq's sectarian strife would grow, fed by both Syria and Iran, and the Kurds (backed by the Turks) might try to carve out their own homeland. In the worst case, Sunnis and Shiites would start a full-scale regional war.
This may sound like an exaggerated parade of horribles, but none of our "realist" sages predicted the current mess when the Syrian rebellion began two years ago. Mr. Obama has taken their advice to abandon Middle East leadership, and the vacuum has been filled by Russians and Iranians bent on pushing the U.S. out and dominating the region. Welcome to the post-American century.
1a)
The One Thing I Got Wrong About the 'End of America'
By Porter StansberryIt's a simple question…
Do new all-time highs on the Dow Jones Industrial Average indicate that our country is no longer in danger of the End of America scenario I've outlined over the past several years?
For those of you unfamiliar with my End of America hypothesis… the idea is as simple as it was controversial. To summarize, I believe that America's mounting debts (particularly our runaway federal government's debts) will cause our creditors to abandon the U.S. dollar.
They will do so not in a deliberate effort to sink our economy, but in an effort to hedge their exposure to the inevitable inflation that must result as America prints trillions of dollars to repay its debts.
In this scenario, the U.S. dollar would lose its standing as the world's reserve currency, causing a cascade of further financial, political, and social problems, including a massive devaluation of the dollar. It is a serious question to ask what the 46 million people who depend on food stamps would do if, suddenly, a crisis left the government unable to feed them.
To many people, such questions seem radical or only meant to inspire fear. That's not why I wrote them. Nor is this scenario what I hope will occur.
Instead, as when I wrote about the inevitable bankruptcy of General Motors and the inevitable failure of Fannie Mae and Freddie Mac, I believe I am merely pointing out the obvious. What I hope is that by drawing attention to these very serious financial problems, we can avoid the worst outcomes.
Today, for the first time in human history, the entire global economy relies on a paper currency – the U.S. dollar – which is not linked or backed up by any reserve commodity (such as gold). Around the world, roughly 60% of all bank reserves are U.S. dollars. Our leaders and our bankers greatly admire the dollar's remarkable financial flexibility. Its standing as the world's reserve currency permits America's leaders to do what no other country in the world can do: legally print money to repay debts.
As long as this system remains in place, there is no limit – none whatsoever – to America's credit.
When this system was created following World War II, America's reputation was such that no one believed that we would ever become a net debtor to the world. At the time, we were the world's largest creditor (by far). It was greatly in our best interest to maintain a firm and stable value of the dollar, so that our loans would be repaid in sound money.
However… the power to rack up unlimited debts quickly corrupted our political system. In less than 50 years, we went from being the world's largest creditor… to being a net debtor… to being the world's largest debtor… to being the largest debtor in history. With access to this kind of unlimited credit, our federal government – whose total budget during peacetime had historically been well below 5% of GDP – grew like the magic beanstalk to nearly 25% of GDP.
As a result, today, the U.S. dollar – which remains the foundation of the world's financial system – is little more than an "I.O.U. nothing." The U.S. Treasury has no realistic ability to ever repay the holders of its notes in sound money, not with total current debts that exceed the United States' GDP. And that's not including our government's unfunded liabilities, which exceed the value of every liquid asset of every country in the world.
So… what will happen next? As long as we retain our status as the world's reserve currency, we will continue to have every incentive to go further and further into debt and to finance these massive obligations with our unique printing press. I believe we will continue to exploit this system until it collapses.
Remember, the dollar is purely a paper (or a digital) abstraction. It is not tied to any firm or fixed value. There's literally nothing to prevent us from continuing to borrow trillions every year.
This unbelievable power seems like a miracle to our leaders, who undoubtedly believe that by cutting more slices into the pie, they're creating a bigger pizza. I suppose they haven't fully considered the downside to such a system, however. If confidence in the dollar were to fail, what on Earth could be used to stop the panic? There are no reserves. There is only more paper. Perhaps that's why the Department of Homeland Security is buying millions of rounds of ammo and thousands of tanks.
Since I began writing about the End of America scenario, there have been plenty of signs that I'm right and that the world is turning away from the dollar. Our two biggest economic rivals, China and Russia, have begun buying tremendous amounts of gold and other strategic commodities and assets all around the world. They're using their dollars as quickly as they can to hedge their enormous exposure to the U.S. dollar.
They've also negotiated trade agreements that allow them to exchange goods without using dollars. Dozens of other countries have done the same, reducing the use of dollars around the world.
For the first time since 1971, central banks are again net buyers of gold. This is a run on the dollar. It has already started. Credit-ratings agency Standard & Poor's downgraded U.S. debt in response to these moves and the federal government's continued runaway spending. Many major corporations have begun to use China's capital markets to sell bonds denominated in China's renminbi, rather than sell dollar-denominated bonds in New York. This reflects a growing investor interest in other, safer currencies.
Finally… there have been large (and sometimes violent) public demonstrations protesting any effort to reduce the government's spending or to cut entitlements.
In many ways, I would argue that my End of America warnings were right… and that this process is currently underway. But… in the most important way of all… my prediction has been totally wrong.
I believed that as America continued to rack up trillions in new debt – and as it continued to finance these debts by using the Central Bank to buy its notes and bonds (aka quantitative easing) – our creditors would flee the U.S. bond market, causing interest rates to soar.
That hasn't happened. Instead, the U.S. Treasury bond market has rallied, almost continuously. Whether that's because the Fed continues to buy all the excess paper or not, I've been wrong about my predictions of a bond-market collapse… at least, so far.
The real test of my hypothesis will come when the Fed stops intervening in the market and when, eventually, it must begin to sell some of the bonds it holds to reduce the inevitable inflation its vast expansion of the money supply will cause.
Today, speculators from around the globe have a nearly foolproof way to make money: They merely front-run the Fed's bond-buying operations. The same thing will be true in reverse, too. When the Fed begins to sell the trillions it holds in U.S. Treasury bonds, the world will try to sell first.
When that happens, you could see a global run on the dollar.
But if that were likely, would stocks really be trading at new highs? I would argue that the new highs in the stock market are actually part of the problem I'm describing.
You see, as the dollar loses value, it causes the nominal price of stocks and the nominal amount of earnings to go up. In short, a weaker dollar is one path to a higher stock market. But it's not the path to prosperity or wealth.
It's just a sign of more dollars in the system.
Regards,
Porter Stansberry
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2)GOP Senators Want Answers on Sebelius' Obamacare Fundraising
Republican senators are demanding answers about Health And Human Services Secretary Kathleen Sebelius' private fundraising efforts to augment finances for Obamacare, saying her actions were legally and ethically wrong.
GOP Sens. Rob Portman and Orrin Hatch, in exclusive interviews with Newsmax, both agree that Sebelius' activities were ethically suspect and likely illegal.
Since March, Sebelius has solicited donations on behalf of Enroll America, which is made up of Obama campaign loyalists seeking to boost insurance exchange enrollments, from H&R Block and the Robert Wood Johnson Foundation, which supports anti-obesity and other health outreach campaigns. H&R Block hasn't donated, but the Foundation donated a total of H&R Block has yet to respond to the appeal, but the foundation has donated a total of $14 million.
Republicans complain the fundraising drive violates the federal "anti-deficiency" act, which prohibits government agencies from accepting voluntary services or donations.
However, HHS officials say a section of the Public Service Act allows its secretary to seek donations to support health programs.
Hatch, of Utah, who is the ranking member of the Senate Finance Committee, along with two other senior GOP senators, on Thursday sent a letter to HHS Inspector Gen. Daniel R. Levinson, seeking an investigation of her activities, which ethics specialists have termed as being anywhere from a stretch legally to a shakedown of cash from companies the HHS oversees.
“These activities call into question whether appropriations and ethics laws are being followed,” said the letter, which The Washington Times reports was also signed by Tennessee Sen. Lamar Alexander, ranking member of the Senate Health, Education, Labor and Pensions Committee; and Oklahoma Sen. Tom Coburn, Oklahoma Republican and the ranking member of the Homeland Security and Government Affairs Committee.
Hatch told Newsmax on Friday that Sebelius’ actions were “ethically suspect” and maybe even illegal.
“If the secretary of any part of our government can call individual companies that do business with that part of our government and ask for money, that’s a tremendous amount of pressure they’ve put on in an inappropriate way,” the Utah Republican said.
“Those companies or foundations may feel like: ‘Well, we’ve got to give, even though we find it outrageous, or we’ll suffer the consequences — or they’ll give us a rough time in the future.’
“That’s why we shouldn’t do things this way,” Hatch said. “It may be a total violation of laws that are extremely important here.”
Republican Sen. Rob Portman also said that if it's proven Sebelius is raising money privately, she's breaking the law.
The Ohio Republican told Newsmax TV's John Bachman that the Constitution stipulates that Congress has the sole authority to determine the level of appropriations for federal programs. He argued any efforts by Sebelius to raise additional funds for Obamacare would violate one of the fundamental tenets of the Constitution.
"I am very concerned about this HHS issue which is also one we need to get to the bottom of because, in essence, it is the secretary of Health and Human Services refusing to accept the constitutional role of Congress which is the power of the purse, meaning that the federal agencies are not supposed to spend money that Congress does not appropriate," he said.
"That's the way our Founding Fathers set it up and they did it on purpose. They wanted the people's house — the House of Representatives — and the Senate to be able to approve spending. So Congress chose not to allow HHS to spend money on some of the efforts related to Obamacare and she, instead, has said, okay, well, I'm going to do it privately."
Portman said if Sebelius is raising private funds for a governmental activity, and circumventing Congress to source the additional funds, she would also be violating the "anti-deficiency law."
"The anti-deficiency law was put in place to avoid just this sort of thing. I am concerned about it. It hasn't gotten as much notice maybe because these other things are swirling around, the AP and Fox News issues and the Benghazi issue and the IRS issue, but it is one that we do need to get to the bottom of and we could ensure that we're not seeing the HHS, really, an effort to circumvent the will of the Congress," he said.
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Republicans complain the fundraising drive violates the federal "anti-deficiency" act, which prohibits government agencies from accepting voluntary services or donations.
However, HHS officials say a section of the Public Service Act allows its secretary to seek donations to support health programs.
Hatch, of Utah, who is the ranking member of the Senate Finance Committee, along with two other senior GOP senators, on Thursday sent a letter to HHS Inspector Gen. Daniel R. Levinson, seeking an investigation of her activities, which ethics specialists have termed as being anywhere from a stretch legally to a shakedown of cash from companies the HHS oversees.
“These activities call into question whether appropriations and ethics laws are being followed,” said the letter, which The Washington Times reports was also signed by Tennessee Sen. Lamar Alexander, ranking member of the Senate Health, Education, Labor and Pensions Committee; and Oklahoma Sen. Tom Coburn, Oklahoma Republican and the ranking member of the Homeland Security and Government Affairs Committee.
Hatch told Newsmax on Friday that Sebelius’ actions were “ethically suspect” and maybe even illegal.
“If the secretary of any part of our government can call individual companies that do business with that part of our government and ask for money, that’s a tremendous amount of pressure they’ve put on in an inappropriate way,” the Utah Republican said.
“Those companies or foundations may feel like: ‘Well, we’ve got to give, even though we find it outrageous, or we’ll suffer the consequences — or they’ll give us a rough time in the future.’
“That’s why we shouldn’t do things this way,” Hatch said. “It may be a total violation of laws that are extremely important here.”
Republican Sen. Rob Portman also said that if it's proven Sebelius is raising money privately, she's breaking the law.
The Ohio Republican told Newsmax TV's John Bachman that the Constitution stipulates that Congress has the sole authority to determine the level of appropriations for federal programs. He argued any efforts by Sebelius to raise additional funds for Obamacare would violate one of the fundamental tenets of the Constitution.
"I am very concerned about this HHS issue which is also one we need to get to the bottom of because, in essence, it is the secretary of Health and Human Services refusing to accept the constitutional role of Congress which is the power of the purse, meaning that the federal agencies are not supposed to spend money that Congress does not appropriate," he said.
"That's the way our Founding Fathers set it up and they did it on purpose. They wanted the people's house — the House of Representatives — and the Senate to be able to approve spending. So Congress chose not to allow HHS to spend money on some of the efforts related to Obamacare and she, instead, has said, okay, well, I'm going to do it privately."
Portman said if Sebelius is raising private funds for a governmental activity, and circumventing Congress to source the additional funds, she would also be violating the "anti-deficiency law."
"The anti-deficiency law was put in place to avoid just this sort of thing. I am concerned about it. It hasn't gotten as much notice maybe because these other things are swirling around, the AP and Fox News issues and the Benghazi issue and the IRS issue, but it is one that we do need to get to the bottom of and we could ensure that we're not seeing the HHS, really, an effort to circumvent the will of the Congress," he said.
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3)
Rising Interest Rates Are Bullish for Stocks
Durable goods are better than expected. Fewer unemployment claims. Housing starts and sales are stronger. Consumer sentiment, leading indicators, on and on. The economy is doing better and better. Old news to my readers and Wall Street, where records fall by the day.
A growing economy has increasing demand for capital. Thus, interest rates usually start to rise.
To permabears, this is somehow a disaster for stocks, and they once again are howling that a crash is around the corner. Since "sell in May and going away " has been such a disaster for short sellers, the new crash date is August, when the Federal Reserve might trim back its bond purchases.
Like most economists, they mix up cause and effect. Interest rates are rising because the economy is STRONGER. Just how is this bearish? Was the collapse in interest rates during the Great Recession bullish?
Instead of bemoaning a rise in interest rates and the end of quantitative easing, investors should be ecstatic. One of the most important distortions in financial markets over the last decade has been the Fed's persistent attempts to keep interest rates low. Not only has this denied savers and retirees of trillions of dollars, it has distorted incentives.
Easy money flowed into gold, silver and other "Chicken Little" assets, instead of technology, energy and manufacturing, which generate jobs and income.
If the theory is too much for you to handle, you can always look at the facts. In the 20th century, there were four multi-decade megatrends in interest rates. We'll use U.S. long-term treasury rates as our guide.
1) From 1900 to 1920, rates rose from 3 percent to just shy of 5 percent. Over this same period, the Dow Jones Industrial Average rose from 53 to 119.
2) From 1920 to 1940, rates fell back to 2 percent from their previous 5 percent peak. The Dow started at 119 and finished at 125. A smaller gain than the previous two decades!
3) The next four decades saw interest rates soar from 2 percent to more than 15 percent by 1981. The lessons here are instructive. From 1940 to 1966 or so, the Dow remained oblivious to higher rates, soaring from 125 to over 1,000 by 1966. In contrast, from 1966 to 1981, the Dow actually fell, from 1,000 to 776. It was in those wonderful Nixon/Carter terms the idea that "rising interest rates are bearish" took root. But this was not the case for the first 26 years. What happened?
Inflation! The great enemy of wealth and hidden tax that transfers wealth from individuals to the Federal government. Leaving aside distortions caused by World War II price controls and rationing, the rate of inflation trended downward for those first 26 years. In contrast, for the final 15 years to 1981, the inflation rate soared to levels typical of third-world nations. (Not surprising. Our redistributionist policies then were typical of third-world countries, as well). It was higher inflation, not higher interest rates, that crushed stock prices during that decade and a half.
Need more proof? Look at the final two decades of the 20th century. Interest rates fell from their 15 percent peak to 4 percent by the new millennium. Stock prices jumped from 776 to just over 10,000. A three-digit Dow became quaint! But we crushed inflation as well. I contend that is what caused this huge increase in stock prices.
The proof? From 1981 to 2000, there were numerous short-term spikes in interest rates, but stock prices rose, relentlessly. But when the Fed abandoned its commitment to low inflation — allowing it to rise steadily from 2000 to 2008, to nearly 5 percent? A lost decade for investors ... the first one since the mid 1960s, when we also lost control of prices.
Currently, interest rates may be about to rise, but inflation — helped by cheaper fossil fuels and relentless cost cutting by retailers — remains in check. Don't expect higher interest rates or modest changes in quantitative easing by the Fed to derail this bull.
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