Faber: The New Dirty WAR - Cyber Warfare, Water Supply Contamination, Hacking Defense Networks

Faber makes some excellent points in this most recent Bloomberg Interview:

1. Chinese economy may slow down meaningfully this year as the government curbs loan growth. This will hurt industrial commodity prices.


2. U.S. Fed's real exit strategy is YET MORE money printing. How else does the U.S. fund $1 trillion of annual deficits for the next 10 years?


3. U.S. government debt (including Fannie/Freddie debt, along with Medicare and Medicaid unfunded liabilities) is 600% of GDP.


4. The next WAR (which may have already begun with China) is a dirty one and will not be fought with conventional weapons but as cyber warfare, water supply contamination, electric grid failure, hacking of defense infrastructure etc. Just as we had recommended earlier, Faber too recommends owning a farm to protect not only against food price increases but also to protect against the threat of dirty wars which will target urban areas.

Watch the full interview here (CLICK ON THE VIDEO TAB at the top, next to STORY)

My Red Ink is Better Than Yours

The one paid subscription that we highly recommend is The Privateer, whose author William Buckler, is based out of Australia. He provides a succinct bi-montly insight into the U.S. and global markets. We find the reports well written, well-balanced and deeply insightful. Please note that we do not receive any compensation for recommending The Privateer. Here is an small extract from William Buckler's most recent commentary.

“Stein’s Law”:

This law is named for Mr Herbert Stein, the Chairman of the Council of Economic Advisors in the first half of the 1970s under Presidents Nixon and Ford. The law is simplicity itself and very useful when contemplating “unsustainable trends”. It goes like this: “If something cannot go on forever - it will stop”. So it will. The great global problem today is the manner in which “it” DOES stop.

My Red Ink Is Better Than Yours:

If you read the financial press, especially the US financial press, you will learn that Europe is about to implode under the fiscal strains now being placed upon Greece and other “peripheral” nations like Italy, Spain and Portugal. Looking further, you will find that Japan has passed the fiscal point of no return with huge deficits and sovereign debt which is double annual GDP and rising. China, meanwhile, is an economy trapped inside a bubble of its own making and is just waiting to quite literally “pop”.

If you paid attention to the potentates gathered at the World Economic Forum in Davos, Switzerland, you would have heard that the recent falls of the Euro against the US Dollar are due to the fact that “sovereign debt risk will continue to be a key theme”. Whose “sovereign debt risk”? Why everybody’s - except the US itself. How can there be any sovereign debt risk in the US with the government in the process of adding $US 1.9 TRILLION to its Treasury’s credit card limit?

In two hits about seven weeks apart, the US government has given itself permission to borrow and spend almost $US 2.2 TRILLION to tide themselves over the year of 2010. Any other nation which had done this would have seen their interest rates blow out and their currency plummet. Any other nation would have the IMF flying in from all directions while responsible central bankers and “money managers” everywhere fled all forms of paper investment denominated in the currency of the nation which did such a thing. But then again, the US is the only nation whose government still maintains the fiction that there is a “limit” on the amount they can “legally” borrow. They call it a debt “limit” or “ceiling” and it has grown almost continually from $US 50 to $14,294 Billion over the past seventy years.

Just over 97 percent of that debt accumulation has come since the US Dollar became a paper currency backed by nothing but debt in 1971. Nearly half of it has come since the “limit” was raised to $US 7,384 Billion in May 2003. Clearly (with apologies to George Orwell) - “all debt is equal, but some debt is more equal than others.” The debt which has been the most “equal” of all ever since the end of WWII is that which is issued by the US Treasury. Why? Because it is issued in US Dollars, the world’s reserve currency since Bretton Woods.

Flying To Safety For Three Generations:

For well over 60 years (and that is three generations in anybody’s language), there have been two ultimate safe havens in the eyes of almost everyone involved in global finance. One of these was the US Dollar itself, the cash US Dollar. Unique amongst all world currencies, there are almost certainly more cash US Dollars in circulation or in private possession OUTSIDE the country of origin than there are inside it.

Cash US Dollars are the “safe haven” of choice in two areas. One is in the area beyond the law of the land where the cash ends up. The other is in the area of the very small holding. For decades, the ultimate form of “savings” in much of the “undeveloped” world has been a $US 10 (or 20 or 50 or even 100) bill hidden under a rock in the back yard. And the more impoverished and politically degraded the nation, the more coveted these cash US Dollars have been.

The other “safe haven”, and the one most often meant when the term “safe haven” appears in the world’s financial press, is US Treasury debt or other forms of debt denominated in US Dollars. This is the form of financial paper which has been the destination of every “flight to quality” which has roiled global finance since the end of WWII. Very few people alive today remember a world where this didn’t happen.

And for that precise reason, very few people in the world today can imagine a world where it DOESN’T happen. That is the only reason left why President Obama can blithely talk about the need to stop treating the US Dollar like “Monopoly money” one day - while signing into law permission for the Treasury to borrow another $US 2 TRILLION the next. The US is obsessively clinging to the belief that “it can’t happen here”. But Stein’s law is inexorable and it applies to everyone, even the USA.

Bernanke Blows Smoke in His Attempt to Blow More Bubbles

Author: The Golden Truth Blog

Banana Ben Bernanke released a transcript of his scheduled testimony to Congress regarding his plans for removing the trillions he's printed and injected into the system (the appearance was cancelled due to the blizzard hitting DC). In his remarks, Bernanke outlines a few policy tools he plans on rolling out if and when he decides monetary policy needs to be tightened. Since he missed forecasting the housing bubble and the ensuing economic collapse, I'm not sure why anyone would trust him to determine the appropriate time to drain the system in order to prevent hyperinflation. Here's a link to the Bloomberg article on Bernanke's remarks: LINK

Bernanke's first proposal would be to raise the discount rate. The discount rate is the rate charged by the Fed when banks borrow directly from the Fed. Raising the discount rate is meaningless right now as a tool to regulate systemic liquidity because the banks have plenty of money to lend out in the form of excess reserves. Excess reserves are bank deposits kept at the Fed in excess of reserve requirements. As of 12/31/09, banks had around $1.1 trillion in excess reserves. Here is a graphic portrayal of the amount of excess reserves being kept at the Fed right now: Excess Reserves. The banks thus have no need to borrow money from the Fed. As of Feb 3, Discount Window loans were an insignificant $14.7 billion. As you can see, the discount window is not even a source of bank liquidity in comparison to the liquidity the banks already have on deposit at the Fed. Raising the discount rate would be about as useful as taking away ice machines in Antartica. In Banana Ben's own words today: raising the discount rate is “not expected to lead to tighter financial conditions for households and businesses and should not be interpreted as signaling any change in the outlook for monetary policy." So why even bother mentioning this unless Banana Ben's intent is to remain consistent with his unstated policy of blowing smoke?

Read more here

The US Military: An Undemocratic Institution with a Mindset of Barbarism (Part 1 of 2)

Author: Dahr Jamail in Truthout

On December 27, in the eastern Kunar region of Afghanistan, ten Afghans, eight of whom were schoolchildren, were dragged from their beds and shot by US forces during a nighttime raid. Afghan government investigators said the eight students were aged from 11 to 17 years.

This incident is but one example of countless atrocities US military personnel have carried out in the occupation of Iraq and Afghanistan. In Iraq, US military personnel torturing detainees in Abu Ghraib, Iraqi civilians suffering the violence meted out by US forces, or US forces detaining schoolchildren in Baghdad, the list of atrocities is seemingly endless.

Dr. Stjepan Mestrovic, a professor of sociology at Texas A&M University, has written three books on US misconduct in Iraq: "The Trials of Abu Ghraib: An Expert Witness Account of Shame and Honor," "Rules of Engagement?: Operation Iron Triangle, Iraq," and "The 'Good Soldier' on Trial: A Sociological Study of Misconduct by the US Military Pertaining to Operation Iron Triangle, Iraq." He has three degrees from Harvard University, including a Master's degree in clinical psychology, and has been an expert witness in psychology and sociology at several Article 32 hearings, courts-martial, and clemency hearings involving US soldiers accused of committing crimes of war in Iraq, including the trials of prison guards involved in the Abu Ghraib scandal.

Read more here

The US Military: An Undemocratic Institution with a Mindset of Barbarism (Part 2 of 2)

Author: Dahr Jamail in Truthout

Yesterday, Truthout ran the first part of an interview with Dr. Stjepan Mestrovic, a Professor of Sociology at Texas A&M University who has written three books on US misconduct in Iraq: "The Trials of Abu Ghraib: An Expert Witness Account of Shame and Honor," "Rules of Engagement?: Operation Iron Triangle, Iraq" and "The 'Good Soldier' on Trial: A Sociological Study of Misconduct by the US Military Pertaining to Operation Iron Triangle, Iraq." He has three degrees from Harvard University, including a Master's degree in clinical psychology, and has been an expert witness in psychology and sociology at several Article 32 hearings, courts-martial and clemency hearings involving US soldiers accused of committing crimes of war in Iraq, including the trials of prison guards involved in the Abu Ghraib scandal.

Read more of Part 2 of the interview here

55% of Chinese Believe a COLD WAR is Breaking Out Between the U.S. and China

As we have pointed out before, U.S. China hostilities are hitting a new crescendo, setting stage for a new and infinitely more dangerous war frontier. According to the London Times: China Hawks have been demanding a Cold War with the U.S.

More than half of Chinese people questioned in a poll believe China and America are heading for a new “cold war”. The finding came after battles over Taiwan, Tibet, trade, climate change, Internet freedom and human rights which have poisoned relations in the three months since President Barack Obama made a fruitless visit to Beijing.

In China’s eyes, the American response — which includes a pledge by Obama to get tougher on trade — is a reaction against its rising power.

An independent survey of Chinese-language media for The Sunday Times has found army and navy officers predicting a military showdown and political leaders calling for China to sell more arms to America’s foes. The trigger for their fury was Obama’s decision to sell $6.4 billion (£4 billion) worth of weapons to Taiwan, the thriving democratic island that has ruled itself since 1949.

“We should retaliate with an eye for an eye and sell arms to Iran, North Korea, Syria, Cuba and Venezuela,” declared Liu Menxiong, a member of the Chinese people’s political consultative conference.

He added: “We have nothing to be afraid of. The North Koreans have stood up to America and has anything happened to them? No. Iran stands up to America and does disaster befall it? No.” Officially, China has reacted by threatening sanctions against American companies selling arms to Taiwan and cancelling military visits.

But Chinese analysts think the leadership, riding a wave of patriotism as the year of the tiger dawns, may go further. “This time China must punish the US,” said Major-General Yang Yi, a naval officer. “We must make them hurt.” A major-general in the People’s Liberation Army (PLA), Luo Yuan, told a television audience that more missiles would be deployed against Taiwan. And a PLA strategist, Colonel Meng Xianging, said China would “qualitatively upgrade” its military over the next 10 years to force a showdown “when we’re strong enough for a hand-to-hand fight with the US”.

Chinese indignation was compounded when the White House said Obama would meet the Dalai Lama, the exiled spiritual leader of Tibet, in the next few weeks.

“When someone spits on you, you have to get back,” said Huang Xiangyang, a commentator in the China Daily newspaper, usually seen as a showcase for moderate opinion.

An internal publication at the elite Qinghua University last week predicted the strains would get worse because “core interests” were at risk. It said battles over exports, technology transfer, copyright piracy and the value of China’s currency, the yuan, would be fierce.

President Hu Jintao refused to give an inch on Obama’s plea to raise the value of the Chinese currency...Diplomats say they have been told that there was “frigid” personal chemistry between Obama and the Chinese president, with none of the superficial friendship struck up by previous leaders of the two nations.

Then came Copenhagen, where Obama virtually had to force his way with his bodyguards into a conference room where the urbane Chinese premier, Wen Jiabao, was trying to strike a deal behind his back.

In our report titled Google's Mysterious Threat to Pull Out of China - Is a Covert WAR Brewing Between the U.S. and China?, we had made the case that behind Google's posturing, lay a far greater threat of increasing hostilities between the two nations. At the present time these hostilities are economic, political and covert in nature. Neither country is willing to go for a full military confrontation just yet. Of course that could all change as the U.S. sinks deeper into an economic quagmire. For now the U.S. is trying to break China's back, by:

1. Increasing the "freedom of speech rhetoric" to "educate" the Chinese people to revolt against their own government. The U.S. knows that China's non-democratic set-up and autocratic communist rule is its Achilles heel, in its rise as the world's leading economy.
2. Obama has been pressing the Chinese to appreciate the yuan against the dollar, knowing full well that it would kill their global exports and lead to yet more civil unrest. Notice that a simpler less confrontational path would have been to impose higher taxes on the import of goods manufactured by U.S. corporations in China. That would have the effect of moving production back to the U.S. Instead the U.S. has launched a full scale attack on the Chinese currency, a move that would hit China much harder, by making its exports non-competitive not only in the U.S. but also globally.
3. Lastly, the U.S. is preventing the Chinese from accessing mineral, oil and gas resources they desperately needs for continued economic expansion, through increased geo-political blockages. The current crisis in the Middle East an oil rich region is a direct result of this strategy.

China for its part has stepped up economic and Internet espionage through increased cyber attacks on key U.S. infrastructures. American national security experts are currently in a state of panic over the vulnerability of stock exchanges and the U.S. currency from a purposeful attack by a rogue financial player. Just as George Soros (a very evil man in the eyes of many Asians) successfully orchestrated an attack on Asian currencies in 1998, bringing those economies to their knees, China could easily pummel the dollar or the U.S. stock market by setting up a hedge fund with unlimited funding. (A big reason why the U.S. stock market is most likely classified a national security risk). According to a report by Nathan Gardels in the Huffington Post:

Though America's cyber-vulnerability has long been a concern of the intelligence agencies, the Google episode has catapulted it to a national security priority. No one knows more about China's cyberwar capacities than Mike McConnell, who was director of National Intelligence, the supreme authority over all U.S. intelligence agencies, from Feb. 2007 to Jan. 2009, and director of the National Security Agency from 1992 to 1996.

After attacks last Spring on the Pentagon and the New York Stock Exchange, I sat down with him to discuss the chief suspect, then also China, and to get the lay of the cyberwar battlefield.

Some defense analysts say that 90 percent of the probes and scans of American defense systems as well as commercial computer networks come from China. So I asked McConnell what he thought about that estimate.

"I don't know if it is 90 percent," McConnell hedged, "but they are determined to be the best. Probably the best in the world in the cyber realm are the United States, then the Russians, the British, the Israelis and the French. The next tier is the Chinese.

"The Chinese," he continued, "are exploiting our systems for information advantage -- looking for the characteristics of a weapons system by a defense contractor or academic research on plasma physics, for example -- not in order to destroy data and do damage. But, for now, I believe they are deterred from destroying data both by the need to export to the U.S. and by the need to maintain a stable currency and stable global markets.

"But what happens if we have a war? A capability for information exploitation could quickly be used for information attack to destroy systems on which the U.S. depends."

There is no real need for such hostilities, whose flames are being fanned by the insane "sole-superpower" aspirations of the U.S. political class and China's continued brutal suppression of its people and their freedom. This decade is definitely shaping up to be the most dangerous ever. Which is why we urge people to be self-sufficient: have access to alternative modes of currency (gold and silver) in the event of a dollar collapse (real or staged by a hostile nation); try growing your own food in your back-yard or consider buying a farm; and keep excess food supply and other emergency provisions in your home. If there is a currency collapse - you will not be able to go to the grocery store to buy food.
Related Posts:
Google's Mysterious Threat to Pull Out of China - Is a Covert WAR Brewing Between the U.S. and China?
China to the US: WTF? Accuses US of Online Warfare in Iran
The Pentagon Runs Amok, Has Obama as their Wilful Puppet
China Sticks It to the U.S. on Iran - You go Girl!
China Giving U.S. Commerce Secretary a Massive Headache - May We Suggest Some Acupuncture, Followed by Soothing Herbal Tea?
Interview:The Gods of Money and the Death of the American Century

Stunning Moral Hypocrisy: Govt. & Big Media Converging to Censor Blogosphere and Control the Internet. Are we becoming like China?

Author: James Corbett of The Corbett Report

The rising tide of Internet censorship: Will recent successes in fighting Internet controls be enough to stave off tyranny?

The focus is back on Internet censorship this week as a pair of articles from Time Magazine and The New York Times came out almost simultaneously advocating for licences to operate web sites. These articles were skillfully skewered by Paul Joseph Watson as lame attempts to shore up a disintegrating establishment media in the face of a blogosphere that is increasingly replacing them.

The articles follow on calls by Craig Mundie—Microsoft's chief research and strategy officer—for an Internet licencing system. Introducing the idea, he said "We need a kind of World Health Organization for the Internet." Evidently unaware of the ongoing investigation into the WHO's role in manufacturing the H1N1 pandemic hoax to line the pockets of Big Pharma, Mundie added that an international Internet authority should be given the same kind of authority that the WHO has in dealing with a pandemic. "When there is a pandemic, it organizes the quarantine of cases. We are not allowed to organize the systematic quarantine of machines that are compromised." These calls are worrying because they represent only the latest instance of influential figures proposing increasingly tyrannical controls on free speech on the Internet.

Read more here

12pm, 1pm, 2pm...Houston We Have Lift Off. Plunge Protection Team's "Mission Accomplished"

After a horrible trading session on Thursday Feb 4, during which the S&P fell nearly 35 points on accounts of the sudden onset of the PIIGS (Portugal, Italy, Ireland, Greece and Spain) sovereign debt crisis, Friday started off no different. In fact overnight equity futures were deeply negative with equity markets poised to follow Thursday's downward action. But just when every short was beginning to salivate, the market staged a sudden miraculous rally beginning exactly at 2pm. This in the face of no resolution of the PIIGS crisis. As far as the S&P 500 was concerned the PIIGS crisis had dissipated just as soon as it arrived.

Aah yes, what would a bull market be without the ubiquitous Plunge Protection Team? If you guessed bear market, well done.

As we have demonstrated before in our report S&P Futures being used to Ramp Up Equity Markets, stock price action these days is anything but random. Stock prices do not always exhibit a random walk as many financial engineering professors would like you to believe. Instead on many instances there is an invisible hand conducting the stock market orchestra.

And there is good reason for this. Because stock markets have become the perception barometer of economic strength, it is now a matter of national security to keep them sufficiently buoyant. It is not just AIG that has been put in VIP category, it is the ENTIRE U.S. stock market. After the nightmare of Sept 2008, the government is simply not willing to risk another bottomless nosedive.

To understand the manipulation going on in the stock market we enclose below intraday trading profiles (Friday Feb 5) of the e-mini S&P 500 futures, the S&P 500 ETF (SPY) and representative banking, commodity and transportation stocks. Looking at the intra-day trading profiles we can conclude that:

1. On Feb 5, at exactly 2pm the E-mini S&P 500 futures began to rally. This rally was replicated across the board in almost all stocks, especially those in key sectors such as banking, commodities and transportation.
2. In any stock market one would expect the intra-day trading pattern to vary between stocks as investors buy and sell securities based on their individual stock/sector specific characteristics and demand/supply situation. In other words if we compare two stocks say Goldman Sachs and U.S. Steel their intra-day pattern should be completely different. Even if there is a sudden news item that causes the market to collectively rally, the ramp pattern should differ. In Friday's case there was no significant news that hit the tape at 2pm. But the market inexplicably reversed direction and started rallying at exactly 2pm.
3. We believe that the plunge protection team was in action from the very start on Friday. But they really kicked into gear when the market started declining after London close at 11.30am. Observe that, from 9.30am to 11.30am intra-day trading patterns show some variations as stocks still trade on their individual/sector characteristics. But from 2pm onwards the randomness is sent packing and they all start rallying in sync.
4. Another noteworthy point is that the rally was centered in bank stocks - those most affected by the PIIGS crisis. Because the financial crisis has been concentrated in the banking sector, their stocks have become the markets leading directional indicators at the present time. Bank stocks led the decline in 2008, the rally of 2009 and are continuing to dominate the market's direction in 2010. The leader of all these bank stocks being Goldman Sachs. To follow the markets direction one only needs to look at what GS does.
5. The reason such a synchronized rally is highly suspicious is that in the absence of an extraneous event (such as the fed raising rates) the only way ALL STOCKS can collectively lift off at exactly 2pm is, if someone bought a huge slug of S&P 500 futures. The amount of futures that needs to be purchased to set off a reversal in the market's direction is obviously way too large for any one institutional investor. Thus our thesis of a much larger invisible hand at play.

Two conclusions to be drawn from this are:
1) Do not short on the day after a huge market decline/correction. Your positions will be smoked out by the plunge protection team.
2) These days it is foolhardy to trade equities without keeping an eye on the futures markets. Derivative markets have long overtaken the underlying spot market in size and activity. Conventional derivatives text books teach that the derivative markets are a function of the underlying spot, i.e. the spot market is the independent variable and the derivative market derives its value and hence direction from the spot. Reality could not be farther from the truth. In fact things are exactly the opposite. Derivative markets now drive the spot market activity, i.e. S&P 500 futures drive the stocks in the S&P 500. So trading equity markets without focusing on futures market activity is a path of sheer suicide. Derivatives markets, wildly unregulated, allowing unfathomable leverage levels are now the big forest where the plunge protection team hides to smoke the shorts out.

E-mini S&P 500 Futures - Friday, Feb 5

S&P 500 ETF: SPY

Goldman Sachs: GS

JPMorgan: JPM

Bank of America: BAC

U.S. Steel: X

Potash: POT

FedEx: FDX

Disengagement From the Democratic Process Has Left the Foxes Guarding the Hen House - How to Get Democracy Back

Author: Lawrence Lessig in The Nation
If You Want Change, You Have to Change Congress
We should remember what it felt like one year ago, as the ability to recall it emotionally will pass and it is an emotional memory as much as anything else. It was a moment rare in a democracy's history. The feeling was palpable--to supporters and opponents alike--that something important had happened. America had elected, the young candidate promised, a transformational president. And wrapped in a campaign that had produced the biggest influx of new voters and small-dollar contributions in a generation, the claim seemed credible, almost intoxicating, and just in time.
We should remember what it felt like one year ago, as the ability to recall it emotionally will pass and it is an emotional memory as much as anything else. It was a moment rare in a democracy's history. The feeling was palpable--to supporters and opponents alike--that something important had happened. America had elected, the young candidate promised, a transformational president. And wrapped in a campaign that had produced the biggest influx of new voters and small-dollar contributions in a generation, the claim seemed credible, almost intoxicating, and just in time.

Read more here

Whatever Happened to the Neocons’ Grand Schemes to Control Iraq’s Oil?

Author: Michael Schwartz, professor of sociology at Stony Brook State University, in TomDispatch.com
Americans have largely stopped thinking about Iraq, even though we still have approximately 110,000 troops there, as well as the largest “embassy” on the planet (and still growing). We’ve generally chalked up our war in Iraq to the failed past, and some Americans, after the surge of 2007, even think of it as, if not a success, at least no longer a debacle. Few care to spend much time considering the catastrophe we actually brought down on the Iraqis in “liberating” them.
Remember when we used to talk about Saddam Hussein’s “killing fields”? The world of mayhem and horror that followed the U.S. invasion and occupation delivered new, even larger “killing fields” that we don’t care to discuss, or that we prefer to consider the responsibility of the Iraqis themselves. Even with violence far lower today, Baghdad certainly remains one of the more dangerous cities on the planet. The bombs continue to go off there regularly and devastatingly, while the killing, even if not of American troops who rarely patrol any longer and are largely confined to their mega-bases, has not ended, not by a long shot; nor has the anger, suspicion, and depression that go with all of this.

Read more here