The inmates think they are running the asylum

The deadly Israeli and the mad Turk

By Pepe Escobar 

Tel Aviv may be inches away from turning the already declared economic war on Iran into a hot war. 

Take a look at this madness: [1] The Bibi-Barak warmongering duo (Prime Minister Bibi Netanyahu and Defense Minister Ehud Barak) may be about to go for broke on an Iran strike - against the advice of Israel's top defense and intelligence experts. Barak may even have had access to secret US intel. He said, "there probably really is such an American intelligence report - I don't know if it is an NIE [National Intelligence Estimate] one - making its way around senior offices [in Washington]." 

"Probably?" "Really?" "I don't know?" And this forest of hypotheticals is a justification for hot war? 

Then Barak added; "As far as we know it brings the American assessment much closer to ours". 

Not really. Here's the response by a White House National Security Council spokesman; the US intelligence assessment remains the same. That is; Iran is not conducting a nuclear weapons program. 

And if any extra confirmation was needed, Washington seems to have a pretty clear picture of Iran's nuclear progress. [2] 

According to White House spokesman Jay Carney, "We would know if and when Iran made what's called a breakout move towards acquiring a weapon." 

The Iran-India-Afghanistan riddle

Can Trade Ease Asia's Political Tensions?

By Vijay Prashad

At the sidelines of the 16th Non-Aligned Movement (NAM) Summit in Tehran, Iran, the governments of Afghanistan, India and Iran will hold a small conclave. Commercial issues are at the top of the agenda. Not far down the list, however, are significant political matters. These are of great interest as the Israelis and the United States power up their aircraft for a bombing raid on Iran’s Fordo nuclear bunker, and as the US and North Atlantic Treaty Organization (NATO) begin their obligatory withdrawal from more than a decade-long occupation in Afghanistan.

Geography is one of the greatest reasons for the trade between these countries. In May, Afghanistan's Commerce and Industries Minister Anwar al-Haq Ahady and Iran's Ambassador to

Afghanistan Abolfazl Zohrevand signed an agreement to deepen the trade ties between these countries. The main issue before them was use of the Chabahar port in southeastern Iran. About 50 hectares of land beside the port have been set aside for the construction of a hub for Afghan traders. 

Few people paid any attention to this pact, although it has much broader implications than for these Afghan traders. For the past 10 years, the Indian government has been working with the Iranians to upgrade the Chabahar port, with the expectation that eventually Indian ships will dock there and unload cargo destined not only for the Iranian market, but crucially for the Afghan and Central Asian markets.

Angela Merkel Just Revealed the Real Situation in Europe

You couldn’t make this stuff up if you tried

By Graham Summers

For several months now, I’ve been stating that the world’s central banks are in a bind. That bind is that their monetary policies are becoming less and less effective at placating the markets while the consequences of said policies (higher costs of living, the targeting of troubled banks in the credit market, etc.) are increasing.

As a result of this, central banks have begun resorting to more and more “verbal intervention” or promises to “act” without ever acting.

We received confirmation of this over the weekend when Angela Merkel chastised Germany Bundesbank Head Jens Weidmann for stating that an ECB policy of buying bond was like a dangerous drug.

Angela Merkel tried to calm a growing storm over euro zone crisis strategy on Sunday after the Bundesbank likened ECB bond-buying plans to a dangerous drug and a conservative ally of the German leader said Greece should leave the currency bloc by next year.

North Korea on the Nile

Egypt is a lost cause where Washington is concerned

by Spengler

Reports that Egypt's oil suppliers are cutting shipments to the nearly-bankrupt nation coincide with a dramatic diplomatic shift towards Iran by President Mohammed Morsi. Morsi's attendance at the Non-Aligned Summit in Teheran today denotes the end of Iran's diplomatic isolation in the Sunni Arab world.

In addition, as my Asia Times Online colleague M K Bhadrakumar noted in his Indian Punchline blog, Morsi proposed to include Iran in a four-nation contact group to resolve the Syrian crisis, along with Turkey, and Saudi Arabia. Morsi's outreach to Iran at the August 15 Organization of Islamic Coordination summit in Mecca was welcomed by Iran's Foreign Ministry. [1] [2] 

At the same time, Egypt has become a prospective threat to Israel for the first time in more than three decades. The deployment of Egyptian tanks in the Sinai, supposedly in pursuit of terrorists, violates the 33-year-old peace treaty with Israel, and persuades some Israeli analysts that Egypt might threaten Israel's southern border in the event of an Israeli strike on Iran's nuclear facilities. 

"If Netanyahu finally decides to strike Iran's nuclear sites, shouldn't he consider a possible scenario, in which Morsi (soon to visit Tehran for a conference), orders two army divisions to cross the Suez Canal into Sinai?," asks Amos Harel, the senior defense analyst at Ha'aretz. [3]

Inflation And Its Uses

Inflation is a subtle way to make you pay for the corrupting gifts you had accepted

By George Handlery

Regrettably, this column often needs to deal with the trends of the economy. Politics, especially the “getting elected” aspect of it, is being economized. As a result, and increasingly, the governors’ economic policy responds to the dictate of political concerns. The intertwining of the two areas that are meant to be separated is not accidental. Collectivists converted the framework within which societies produce their livelihood to a political matter, that is, into a something that is steered by those that hold power. This capture of economics by politics causes havoc. The consequences of the political steering of what would otherwise be a natural process, is characterized by derailments. The record confirms the ultimate failure of collectivistic approaches. This new order, within which society is organized as an association for satisfying its member’s needs through production, wobbles.

As insinuated above, with the economizing of politics, government intervention is expanding into areas in which the outcome is not optimal. This expansion is a consequence of the pursuit of short-term political interests that contradict society’s long-term purpose. Such interference involves the derailing of economic processes and the chronic deficits that this entails. The intrusion results in inflation. Inflation, as a government-induced process, is more than only a plague that hits the diligent, the frugal, the responsible that plan their retirement. Guided deficit followed by devaluation is a great way to do away with debt incurred by irresponsible overspending. 

With Vacation Over, Europe Is Back To Square Minus One

Merkel Backs Weidmann, Demands Federalist State

By Tyler Durden

Earlier today we showed for the nth time that with insanity and insolvency ravaging the old continent, at least one person has the temerity to avoid sticking his head in the sand of collectivist stupidity and denial. That person is Bundesbank head Jens Weidmann, who until now may or may not have had the backing of Germany's elected leader, Angela Merkel. Moments ago it became clear whose side Merkel, who recently came back from vacation and is set to spoil the party that the (insolvent) mice put together in her absence, is on. From Reuters, who quotes Merkel in her just released interview with German ARD: "I think it is good that Jens Weidmann warns the politicians again and again," Merkel said. "I support Jens Weidmann, and believe it is a good thing that he, as the head of the German Bundesbank, has much influence in the ECB."

Merkel also has some additional words about the Grexit.

Merkel allies, particularly the Bavarian Christian Social Union (CSU), have stepped up criticism of Greece in recent weeks, with senior CSU lawmaker Alexander Dobrindt saying at the weekend that he expected Athens to be out of the euro zone next year. 

The Tempest Has Left The Teapot

The Greasy PIIG

By Mark J. Grant

No, not some new Barbecue restaurant in Kansas City or Memphis but our old favorite haunt including and surrounding Athens. In the last few days they have trooped around Europe, Aegean Fiddler’s hat in hand, asking for more time to implement their agreed upon austerity programs. That is what they claimed of course as it was one more fabricated tact to get more money. It is nothing other than that.

 The strategy was to ask for an extension of time in sentence one and then follow up in sentence two with the argument that since they needed more time that they would need more money until the various programs were implemented. Implementation, however, is obviously not a word to be found in the Greek language or if it is then it is to be found under the heading of “old Greek legend” or “tales of brave Ulysses” or “myths of the Greek gods.”

 Merkel and Hollande both had the same retort to all of this pretense which was that they wanted Greece to remain in the Eurozone but that there would be no extensions and that Greece had to stick to the bailout agreement. Consequently no second sentence was spoken which was the purpose of the European walk about and so the mission was a failure. There will never come a time when Berlin or Paris will say anything else other than they want Greece to remain in the Eurozone; so never expect it. The showdown will come over money and whether it will be given or not which will then either be one more bundle of Euros down the rabbit hole where its value will decrease like a shrinking Alice or the end to the handout which would force the return of Greece to the Drachma.

Peak what?

Gas Production Doubles and the Shale Boom Spreads to Russia

By mark perry

1. The shale gas boom continues in Pennsylvania's Marcellus Shale region, with output doubling this year during the January-June period compared to the same period in 2011, and energy industry jobs in Pennsylvania increasing by 150% from 2009 to 2011.  Here are some details:

Despite low prices and a new tax on the industry, natural gas production in Pennsylvania has doubled in the past year. Drillers operating in Pennsylvania’s expansive Marcellus Shale gas field extracted 895 billion cubic feet of gas during the first six months of 2012, according to figures released by the state Department of Environmental Protection. That’s up from about 435 billion cubic feet during the same period in 2011 (see chart above).

Who Rules America?

Class Warfare in 2012

By Paul Craig Roberts

The media are filled with stories claiming that the Obama vs. Romney race is all about class warfare. I have my doubts. Here is why.

Karl Marx and Frederick Engels, in their then-anonymous tract, The Manifesto of the Communist Party(1848), began chapter 1 with these words: "The history of all hitherto existing society is the history of class struggles."

You would be hard-pressed to find any theory of history more wrong-headed than this one.

To prove their case, they should have defined "class." They never did. In the unpublished third volume of Das Kapital, Marx wrote this: "The first question to he answered is this: What constitutes a class? – I see. The first question. This appears in Chapter 52. Three paragraphs later, the manuscript broke off.

This was written around 1865. He died in 1883. He never wrote another book. It appeared in 1895. Engels edited it. It would have helped if Marx had told us what a class is. In The Manifesto, he followed sentence one with this:

Freeman and slave, patrician and plebeian, lord and serf, guild-master and journeyman, in a word, oppressor and oppressed, stood in constant opposition to one another, carried on an uninterrupted, now hidden, now open fight, a fight that each time ended, either in a revolutionary reconstitution of society at large, or in the common ruin of the contending classes.

The FED Is skimming wealth from the productive many, transferring it to the parasitic few

The Rot Runs Deep

by Charles Hugh

Today I launch a series entitled "The Rot Runs Deep" that examines the moral and financial rot at the core of American finance, politics and culture. We have reached a unique junction of American history: the confluence of Big Lie propaganda, neofeudalism and the worship of false financial gods.

The Big Lie propaganda machine of corporate media and the Central State has perfected Orwell's nightmare vision of centralized media and a fascist centralized State which turn lies into self-serving "truth."

Since the Federal Reserve is once again expected to "save" a crumbling, exploitative Status Quo, let's use the Fed as an example. The propaganda machine would have us believe that the Federal Reserve, the privately owned central bank of the U.S., has "saved" the Status Quo from financial ruin on numerous occasions by "smoothing out" the business cycle (credit expands and contracts) and by "stimulating aggregate demand" by lowering interest rates and pumping money into the economy (quantitative easing).

Highway Robbery

Why do Mitt and Barack want to hand over so much of your money to men with guns?

By Rosa Brooks

In August 2003, some colleagues and I were held up by armed bandits on the highway in Fallujah, Iraq. (Don't ask why I was dumb enough to be wandering around Fallujah.) My bandit -- there were quite a few of them, but I like to think of the guy who stuck a gun in my face as my bandit -- was straight out of central casting, complete with a red kerchief around his mouth and nose to disguise his facial features.

I doubt he knew much English, but he knew enough to say the magic words. "Money, money, money!" he demanded with a guttural, heavy accent, waggling his gun unnervingly around my head.

I handed him my wallet. He took out the cash and handed the empty wallet back to me.

"Shukrun," I said, using my sole word of Arabic. "Thank you."

"You are welcome," he said, and sprinted off to wherever bandits go when they're not robbing people. (This was in the good old days of 2003, when gunmen in Fallujah just robbed you.)

In some ways, this story is a reasonable metaphor for the current debate about the defense budget. Men with weapons intone, "Money, money, money"; we hand it over and say "thank you," even though much of the time we don't really know who they are or what they plan to do with our money.

What Do the Rise and Fall of Empires Suggest?

The Sin of Hubris

By DK_Matai

The summer respite is an interesting time to read history and to reflect on the lessons to be learned from empires long gone in preparation for empires yet to come. As the British Prime Minister William Pitt, the French poet Alphonse de Lamartine, and the Baron Acton said in different ways: "All power corrupts; absolute power corrupts absolutely!" The greatest mistake, oft repeated by those in power throughout history, has been the sin of "Hubris."

The Battle of Marathon

September 21, 2012 marks the 2,503rd anniversary of the Battle of Marathon.  During the recent Olympics in London, fine athletes from around the world commemorated that "Marathon" by running 26 mile Marathon races as billions watched on television.  The Marathon runners, knowingly or unknowingly, paid tribute to men who fought for freedom so many thousands of years ago.  Marathon is, in fact, a plain that lies 26 miles -- not far -- from Athens in Greece.  After their victory, the Athenian runner Pheidippides raced that distance back to Athens to tell his fellow citizens that their army was victorious and in the process gave birth to the legend of the "Marathon Run." After the Battle-of-Marathon, the entire Greek army marched those 26 miles, despite their exhaustion from conflict, in order to prevent the Persian fleet from making a surprise assault on Athens.  On that date in 490 BC, 10,000 men of Athens and their ally Plataea defeated a Persian army three times their size. 

Universal Mediocrity

Why do Britons like their sub-par health-care system so much?

BY THEODORE DALRYMPLE

In April, the British Medical Journal published “How the NHS Measures Up to Other Health Systems,” a report about two studies conducted by the New York–based Commonwealth Fund that compared the health-care systems of 14 advanced countries. On the 20 measures of comparison, Britain’s famous (or infamous) centralized system, the National Health Service, performed well in 13, indifferently in two, and badly in five. Was this a cause for national rejoicing?

If popular satisfaction is the aim of a health-care system, the answer must be yes. According to the report, the British were the most satisfied with their health care of all the populations surveyed; they were the most confident that in the event of illness, they would receive the best and most up-to-date treatment; and they were the least anxious that their personal finances would prevent them from receiving proper treatment. One could doubtless raise objections to these measures of comparison, but let us for the sake of argument take the results at face value. Subjective satisfaction and relief of anxiety are not minor achievements. Indeed, though the free market’s ability to satisfy more needs and desires than any other system is usually cited as one of its principal advantages, here was an apparent instance of the contrary: a nonmarket health-care system that yielded the most satisfaction.

At the end of the day it all comes down to liberty

Propaganda, Politics, and the Gold Standard

By Andy Sutton 

It wouldn’t be a normal day in the life of the 24-hour news cycle if there weren’t some type of campaign against gold and its proper role as money. True to form, The Financial Times stepped to the plate to launch a rather hilarious attack on gold in the context of an article which discusses the idea that one half of our Diet Coke/Diet Pepsi political system is contemplating adding what is the equivalent of a feasibility study on returning to the gold standard to its political platform.

Chief among the ‘journalistic’ arguments against the gold standard in FT’s article are that there a) is no inflation, and that b) a return to monetary discipline will prevent the federal reserve from properly dealing with demand shocks. This is nothing more than typical Keynesian tripe and both arguments are dogs that won’t hunt when it comes to even a cursory analysis of the issues involved.

Central Banks and Inflation – Inextricably Linked

I am quite sure that the issue of inflation doesn’t need to be proven once again. It is a monetary event. A quick look at the various monetary aggregates over time demonstrates the inflation. The concomitant loss of the dollar’s purchasing power over the same period demonstrates inflation well beyond that necessary to accommodate a growing economy (hint: fractional reserve banking and America’s debt explosion). It is a pretty simple logic chain. Inflation is a monetary event. Central banks are in charge of the world’s monetary policy. Therefore, inflation is the responsibility of central banks and is NOT the by-product of a healthy economy, nor is inflation necessary to have a healthy economy.

Urban Geopolitics in a Time of Chaos

A New Global Pattern is Emerging Which Will Dictate How Strategies Are Planned

By Gregory R. Copley

Oswald Spengler gave ample warning, in The Decline of the West (which he wrote mainly during World War I), that Western civilization was even then reaching some of its natural limits. He demonstrated that Roman and later Western civilization (which emerged from the classical era of Greek culture) had pursued — as civilizations do as they emerge from cultures — a process of expansionism and materialism. It is a process which has an organic lifespan. 

Those who thought that Spengler was defining the “decline of the West” in terms of the coming few years would have missed his historical perspective. However, the process he described took the path he predicted, in which continued expansionism in material and spatial (and therefore population) terms would occur alongside the evolutionary maturing of political structures.

So, then, is “the West” now in that process of “decline” which the title of his book suggested would occur? And if so, then what are the ramifications of that in strategic terms?

Render Unto Caesar

What the history of ancient gold coins says about Europe's kingless, faceless money today...

By Adrian Ash

So when Vespasian was proclaimed Emperor by the legions in Egypt in AD 69, he hurried to strike silver and gold coins at Antioch, Tacitus tells us.

Two hundred years later, the "insane despot" Commodus would only believe that his friend Perennius was plotting to overthrow him when he was shown coins already bearing his former favorite's image. And ancient Persian kings went further, says the later Armenian chronicler Moses of Chorene, each seeing to it that "all the money in the royal treasury was recoined with his effigy" as soon as he took power.

The face on a coin mattered, in short, and mattered a lot. Not least because, as head of state, the king or caesar was also head of the army. And with armies needing to be paid if you wanted to keep them on side, coins were the most common currency – a sort of "state gazette", in the words of a much later English writer – for spreading political news to pre-literate peoples.

In the ancient world, "Coins followed – indeed accompanied – the sword," says late-20th century historian Glyn Davies, pre-empting a point which this year's Debt: The First 5,000 Years by David Graeber takes pains to stress, albeit via the 'Cartalist' theory that early governments chose to create and foster monetized markets the better to tax them.

The Bubble and Beyond

The Road from Industrial Capitalism to Finance Capitalism and Debt Peonage

By Michael Hudson

This summary of my economic theory traces how industrial capitalism has turned into finance capitalism. The finance, insurance and real estate (FIRE) sector has emerged to create “balance sheet wealth” not by new tangible investment and employment, but financially in the form of debt leveraging and rent-extraction. This rentier overhead is overpowering the economy’s ability to produce a large enough surplus to carry its debts. As in a radioactive decay process, we are passing through a short-lived and unstable phase of “casino capitalism,” which now threatens to settle into leaden austerity and debt deflation.

This situation confronts society with a choice either to write down debts to a level that can be paid (or indeed, to write them off altogether with a Clean Slate), or to permit creditors to foreclose, concentrating property in their own hands (including whatever assets are in the public domain to be privatized) and imposing a combination of financial and fiscal austerity on the population. This scenario will produce a shrinking debt-ridden and tax-ridden economy.

The latter is the path on which the Western nations are pursuing today. It is the opposite path that classical economists advocated and which Progressive Era writers expected to occur, given the inherent optimism of focusing on technological potential rather than on the political stratagems of the vested rentier interests fighting back against the classical idea of free markets and economic reforms to free industrial capitalism from the surviving carry-overs of medieval and even ancient privileges and essentially corrosive, anti-social behavior.

Whether you vote Republican or Democrat, the oligarchs will win

The Next Election: High Stake Outcomes Based on Non-issues

By Paul Craig Roberts

The election of the next puppet president of the “world’s only superpower” is about two and one-half months off, and what are the campaign issues? There aren’t any worthy of the name.

Romney won’t release his tax returns, despite the fact that release is a customary and expected act. Either the non-release is a strategy to suck in Democrats to make the election issue allegations that Romney is another mega-rich guy who doesn’t pay taxes, only to have the issue collapse with a late release that shows enormous taxes paid, or Romney’s tax returns, as a candidate who advocates lower taxes for the rich, don’t bear scrutiny.

What are Romney’s issues? The candidate says that his first act will be to repeal Obamacare, a program that Romney himself first enacted as governor of Massachusetts. This will cost Romney political contributions from the insurance industry, which is thankful for the 50 million new private insurance policies that Obamacare, written not by Obama but by the private insurance companies, provides at public expense. It is not to the insurance industry’s benefit to have a single payer system like other western countries.

Boomers Are Breaking the Deal

How Are You Going to Keep Them Down on the Farm?

By John Mauldin

There is something missing from this thing we are calling a recovery. For most in the US it does not feel like a recovery, and for good reason: the jobs aren’t there. But for some groups it is a recovery, and more. And that reveals an even bigger problem. Today, in a summer-shortened Thoughts from the Frontline, we look at the trends in employment as well as take note of a signpost we passed on the way to finding out that we can’t pay for all the future entitlements we have been promised. It’s a short letter but hopefully thought-provoking. At the end, I note a webinar and a few speeches I’ll be giving in the near future.

Last spring, I mentioned I was working on a book on employment with Bill Dunkelberg, the Chief Economist for the National Federation of Independent Businesses. We were hoping to get it out by this fall. In the process of researching the topic, I began to see some new patterns in the employment trends that suggest we may be going through a generational transformation, led by both demographics and technology. And while it is ultimately positive, the transition will be harder on some groups than others. In the next few months we will take some time to explore these new trends, but let me quickly lay out a few areas for discussion.

First, we may be going through a technological shift in employment not unlike that in the Industrial Revolution. My discussions recently with Dr. Woody Brock give us some insight. In 1850 the largest group of workers in the US were on farms. By 1900 the largest group was domestic workers. (Data suggest that Great Britain had twice as many domestic workers per household as the US in 1900, and Germany some 50% more.)

Understanding China's One-Child Policy

The rich can have as many babies as they want

By Massoud Hayoun 

Children in Beijing's Shunyi Orphanage.Chairman Mao Zedong famously opposed suggestions that Beijing restrict population growth, saying, “The more people there are, the stronger we are.”

Three years after Mao's death in 1976, Deng Xiaoping—the man behind China's economic development—enacted the one-child policy [3] against his predecessor's wishes. Today, more and more Chinese seem to agree with Mao.

Photos of a Chinese mother whom local officials forced to abort after seven months of pregnancy in June are still circulating widely on the Internet, fueling debate on the merits of the policy.

Feng Jianmei, age twenty-three, failed to pay a $6,300 fine to family-planning officials [4] in northwestern Shaanxi province in order to have a second child. Gruesome images of Feng lying beside her aborted fetus are still circulating widely on Chinese social-media site Sina Weibo [5].