Fed Up With The Fed

Submitted by Tyler Durden on 05/19/2016 13:07 -0400
Zerohedge.com
Submitted by Charles Hugh-Smith of OfTwoMinds blog, Destroying our ability to discover the real cost of assets, credit and risk has not just crippled the markets--it's crippled the entire economy.
Is anyone else fed up with the Federal Reserve? To paraphrase Irving Fisher's famous quote about the stock market just before it crashed in 1929, we've reached a permanently high plateau of Fed mismanagement, Fed worship and Fed failure.

The only legitimate role for a central bank is to provide emergency liquidity in financial panics to creditworthy borrowers. Once the bad debt (credit extended to failed enterprises and uncreditworthy borrowers) is written off, the system resets as asset valuations adjust to reality--how ever unpleasant that might be for the credulous participants who believed the ever-present permanently high plateau shuck and jive.
Just to state the obvious: Fed policies are not just insane, they're destructive:
-- Bringing future sales/demand forward by lowering interest rates to zero just digs a gigantic hole in future sales/demand. Funny thing, the future eventually becomes the present, and instead of a brief recession of low demand we get an extended recession of weak demand and over-indebted households and enterprises.
-- Enabling massive systemic speculation by those closest to the Fed's money spigot is insane and destructive, as capital is no longer allocated on productive returns and risk but on the speculative gains to be reaped with the Fed's free money for financiers
-- Buying assets to artificially prop up markets completely distorts the markets' ability to price assets based on real returns and real risk.
Manipulating interest rates creates a hall of mirrors economy in which nobody can possibly discover the real price and risk of borrowing money. What would mortgage rates be without the Fed and the federal housing agencies (Freddie and Fannie Mac and the FHA) pumping trillions of dollars of federally backed mortgages into the housing market?
Nobody knows, because the mortgage market in America has been effectively taken over by the central bank and state.
The Fed's entire policy boils down to obscuring the real price of assets, credit and risk with a tsunami of debt. The Fed's "solution" to the economy's structural ills is: don't worry about risk, valuation or costs--just borrow more money for whatever you want: new houses, vehicles, stock buy-backs, Brazilian bonds, worthless college degrees, it doesn't matter: there's plenty of credit for everything.
The only thing that matters is your proximity to the Fed money spigot. If you're a poor student, you get a high-cost student loan from the Fed's flood of credit. If you're a corporation or financier, well, the sky's the limit: how many billions do you want to borrow or skim for stock buybacks or speculative carry trades?
The Fed's control of the machinery of obfuscating price and risk has made us all members of the Keynesian Cargo Cult. Now we all dance around the Fed's idols, beseeching the Fed the save us from our financial sins. We study the tea leaves of the Fed's announcements, and hold our breath lest the worst happen--gasp--the Fed might push interest rates up a quarter of a percent.
This is of course totally insane.
Destroying our ability to discover the real cost of assets, credit and risk has not just crippled the markets--it's crippled the entire economy. Wake up, America, and stop worshiping the false gods of the Fed. The sooner we smash the Fed's idols and strip away their power to enrich the few at the expense of the many, the better off we'll be.

America’s & NATO’s Outrageous Behavior, Greatest Threat that Exists

Posted on May 19, 2016 by Eric Zuesse.

http://www.washingtonsblog.com/2016/05/americas-natos-outrageous-behavior-greatest-threat-exists.html

On May 18th, two top people at NATO, one being its current Secretary General — the very top person — laid out in preliminary form the case for war against Russia, which presumably will be presented in more detail at the NATO Summit to be held in Poland on 8-9 July this year.

As if that weren’t bad enough, there’s the matter reported by Bryan Cloughly at Strategic Culture, headlining on May 19th, “Surging Towards yet Another War”, where he pointed out that “The United States has no territorial rights of any sort, in the South China Sea which is 7,000 miles (11,000 kilometres) from its west coast. There is nothing in international law that justifies its unilateral military ‘challenge’ to China’s presence” there, in that area which is contested between five countries: China, Philippines, Vietnam, Malaysia, and Brunei. The American government, which has no authority to speak for the entire world regarding international law — of which the U.S. itself has been perhaps the most frequent violator during the past 16 years — isn’t “policeman of the world,” certainly not judge and jury and executioner (well, maybe executioner) of the world, but instead it’s merely an aspiring global thug: “The Pentagon declared on 10 May that China’s ‘excessive maritime claims are inconsistent with international law as reflected in the Law of the Sea Convention in that they purport to restrict the navigation rights that the United States and all states are entitled to exercise’.” Cloughly points out that the U.S. “refuses to ratify the Law of the Sea Convention — while ordering every other country to abide by it.”

America’s — and NATO’s — biggest danger to the world, however, is its (their) aggressions against Russia, by:

1: Violating the promise that the agents of U.S. President George Herbert Walker Bush made in 1990 to the USSR’s, and then Russia’s, President, Mikhail Gorbachev — and on the basis of which the USSR was dissolved and the Warsaw Pact terminated — that NATO would not be expanded “one inch to the east” (i.e., toward Russia), a promise that was violated by Bill Clinton (Czech Republic, Hungary, Poland), George W. Bush (Bulgaria, Estonia, Latvia, Lithuania, Romania, Slovakia, Slovenia), and Barack Obama (Albania and Croatia — with current aspirants being Bosnia, Georgia, Montenegro, Macedonia, and Ukraine). Gorbachev would have had to have been crazy to have ended the Cold War under those conditions if he had known about it — known that GHW Bush and his successor Presidents are a bunch of lying thugs. But because he trusted the word of Bush and his agents (such as James Baker, Francois Miterrand, and Helmut Kohl), Russia is now in this extremely vulnerable position, and Gorbachev himself thus has the lowest approval-rating of all Russia’s rulers since the czars: below even that of Stalin (28%) and Yeltsin (17%). Another poll, of only 20th-Century leaders of Russia (i.e., excluding Putin and Medvedev, both of whom scored atop that other poll), rated Brezhnev the best, and Gorbachev the worst. (That poll included Czar Nicholas II, who, along with Lenin and Khrushchev, rated near 50% approval. The only leader who was almost as low-rated as Gorbachev’s 20% was Yeltsin, at 22%.) Though Gorbachev was a sucker, America’s recent Presidents have been even worse than that — and the entire world is now threatened by what they did (and, under Obama, are doing, perhaps culminating).

2: Overthrowing the secular leader of Libya, who held that nation together and gave it the highest living-standard in Africa — overthrowing Muammar Gaddafi because he was friendly toward Russia — turned that country into a failed state and another festering hotbed for jihadists.

3: Scheming ever since 1949 to overthrow Syria’s secular leaders so as to enable Saudi oil to be pipelined through it into Europe so as to choke off Russia’s largest oil and gas market and hand it to the fundamentalist Saud family who own Saudi Arabia, and the fundamentalist Thani family who own Qatar — both of which families (and especially the Sauds) are top financial backers of jihadists (everywhere but in their own countries), which are America’s best foot-soldiers against the leaders of nations who are friendly to Russia (and in Chechnia were trying to get Putin overthrown). Obama even prioritizes ousting Assad over defeating Syria’s jihadists, as a consequence of which Syria has by far the world’s highest misery-index in Gallup’s polling of 140 nations, and a comprehensive article on the subject noted that “at least 18,000 Syrians have had organs removed during the war thus far” and, “All this tragic human horror only occurs because of an overly aggressive, imperialistic US-Israeli foreign policy creating a path of chaos and destruction across the Middle East and North Africa secretly supporting Islamic terrorists to fight US-Israeli proxy wars to illegally overthrow sovereign national governments like Assad’s.” Unfortunately, that commentator ignored the key fact: that the reason Obama wants Assad overthrown is that Assad supports and is supported by Russia. (Israel’s government might have different motivation on that matter, but likewise supports the jihadists — and is importantly profiting from the organ-trade.)

4: Overthrowing the democratically elected President of Ukraine in 2014 and replacing his democratic government by a barbaric fascist regime which perpetrated a massive ethnic-cleansing operation against its former Donbass region, which had voted 90% for that President. Then slapping economic sanctions against, and now even threatening invasion of, Russia, for Russia’s having protected Crimeans (who had voted 75% for that overthrown President) from their being similarly invaded, and from Obama’s intended take-over of Russia’s key naval base there at Sebastopol. (Oh, and did I mention, crashing Ukraine’s economy, and stripping it — but there’s too much misery in Ukraine now to even begin to itemize.)

5: Creating the refugee crisis in Europe, which doesn’t only produce hell for the millions of refugees from America’s coups and invasions, but which also weakens Europe — an American ‘ally,’ but an ‘ally’ which America’s Presidents don’t want to be able to overtake the U.S. so as to become the world’s top dog.

6: Now increasingly trying to do the same thing in Asia, especially to keep China down.

This is a far cry from the America of Franklin Delano Roosevelt, who would be twisting in his grave to know what his successors have been doing after the anti-communist war was won in 1991. It’s become a shameful America, which is shameless. And the American people aren’t to blame for it; the American aristocracy, which rule here, are. The American people have been conquered, too. America’s aristocracy are as guilty as sin. They’re top dog, but this dog is rabid, and it now threatens the entire world. It’s not just George W. Bush, Barack Obama, and the Kochs, and George Soros, but it’s the whole hypocritical lot of them, the entire American aristocracy, the people who don’t merely run this lunatic asylum, they’re the schemers who’ve made it go mad and are trying to sic it against the rest of the world.

So, perhaps we’ll see what happens after July 8th and 9th. Will they call off their war? Or — as expected — escalate it to the next level?

NATO Announces War Policy Against Russia

Posted on May 18, 2016 by Eric Zuesse.

http://www.washingtonsblog.com/2016/05/nato-announces-war-policy-russia.html

On May 18th, Britain’s Guardian headlined “West and Russia on course for war, says ex-Nato deputy commander” and reported that the former deputy commander of NATO, the former British general Sir Alexander Richard Shirreff (who was Supreme Allied Commander in Europe from 2011-2014), expressed outrage that Britain isn’t urgently preparing for war against Russia, and also reported that “He describes Russia as now the west’s most dangerous adversary and says Putin’s course can only be stopped if the west wakes up to the real possibility of war and takes urgent action. … In a chilling scenario, he predicts that Russia, in order to escape what it believes to be encirclement by Nato, will seize territory in eastern Ukraine.” (That’s the Donbass region, where there has been a civil war.)

This encirclement by NATO is, apparently, about to be expanded: Shirreff will now be satisfied by NATO, even if not by its member the UK, of which Shirreff happens to be a citizen. New Europe bannered the same day, “NATO lays down the cards on its Russia policy”, and reported that, “In two distinct pre-ministerial press conferences on Wednesday [May 18th], the General Secretary of NATO Jens Stoltenberg and the US Ambassador to NATO, Daglas Lute, introduced the Russia agenda to be covered. Both NATO leaders said that the Accession Protocol Montenegro is signing on Thursday is a strong affirmation of NATO’s open door policy, mentioning explicitly Georgia. ‘We will continue to defend Georgia’s right to make its own decisions,’ Stoltenberg said.” Georgia is on Russia’s southwestern flank; so, it could be yet another a nuclear-missile base right on Russia’s borders, complementing Poland and the Baltics on Russia’s northwestern flank. (The U.S. itself has around 800 military bases in foreign countries, and so even Russia’s less-populous eastern regions would be able to be obliterated virtually in an instant, if the U.S. President so decides. And President Obama is already committed to the view that Russia is by far the world’s most “aggressive” enemy, more so even than international jihadists are.)

According to the New Europe report, Stoltenberg announced that where the 1997 NATO-Russia Agreement asserts that

The member States of NATO reiterate that they have no intention, no plan and no reason to deploy nuclear weapons on the territory of new members, nor any need to change any aspect of NATO’s nuclear posture or nuclear policy — and do not foresee any future need to do so. This subsumes the fact that NATO has decided that it has no intention, no plan, and no reason to establish nuclear weapon storage sites on the territory of those members, whether through the construction of new nuclear storage facilities or the adaptation of old nuclear storage facilities. Nuclear storage sites are understood to be facilities specifically designed for the stationing of nuclear weapons, and include all types of hardened above or below ground facilities (storage bunkers or vaults) designed for storing nuclear weapons.

the agreement is effectively terminated, and, “Largely as a result of the Crimean annexation, the repeated violations of the Minsk ceasefire agreement, and the demands of eastern flank member states, boots on the ground will increase considerably in the region, if not ‘substantially’,” along Russia’s northeastern flank, in Poland and the Baltics. Furthermore, “Poland has already said that it regards this agreement ‘obsolete’.” So, General Stoltenberg is taking his lead on that from the Polish government. 

According to both Russia and the separatist Donbass eastern region of the former Ukraine, the violations of the Minsk II agreement regarding Donbass are attacks by Ukrainian government forces firing into Donbass and destroying buildings and killing residents there, however NATO and other U.S. allies ignore those allegations and just insist that all violations of the Minsk II accords are to be blamed on Russia. That is also the position advanced by Shirreff, who thinks that Russia has no right to be concerned about being surrounded by NATO forces.

Consequently, regardless of whether or not the Minsk II violations are entirely, or even mainly, or even partially, due to Ukrainian firing into Donbass, NATO appears to be gearing up for its upcoming July ministerial meeting to be an official termination of its vague promises, which NATO had made in the 1997 NATO-Russia agreement (technically called the “Founding Act on Mutual Relations, Cooperation and Security between NATO and the Russian Federation signed in Paris, France, 27 May 1997”). That document said “NATO and Russia do not consider each other as adversaries. They share the goal of overcoming the vestiges of earlier confrontation and competition and of strengthening mutual trust and cooperation.” In this regard, it was — though in public and written form, instead of merely private and verbal form — similar to the promises that the West had given to Soviet then Russian President Mikhail Gorbachev in 1990, which have already been rampantly violated by the West many times and without apology. The expectation and demand is clearly that Russia must allow itself to be surrounded by NATO, and to do this without complaint, and therefore also without taking military countermeasures, which NATO would call yet more “aggression by Russia.” Any defensive moves by Russia can thus be taken by the West to be unacceptable provocation and justification for a “pre-emptive” attack against Russia by NATO. That would be World War III, and it would be based upon the same accusation against Russia that the Republican candidate for the U.S. Presidency, Mitt Romney, had stated when he was running against Barack Obama: “This is, without question, our number one geopolitical foe.” Perhaps the West here intends the final solution of the Russian problem.

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Investigative historian Eric Zuesse is the author, most recently, of  They’re Not Even Close: The Democratic vs. Republican Economic Records, 1910-2010, and of  CHRIST’S VENTRILOQUISTS: The Event that Created Christianity.

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