NightBlogger

OIL production in the Gulf of Mexico is almost completely shut down and most rigs and platforms evacuated as Hurricane Gustav churns towards the United States, US officials said. “From the operators’ reports, it is estimated that approximately 96.26 per cent of the oil production in the Gulf has been shut-in,” the Department of the Interior’s Minerals Management Service (MMS) said. It also estimated that more than 82 per cent of natural gas production in the Gulf has been halted in the face of the storm, which is on target to plow into coastal Louisiana tomorrow, potentially as a Category 4 storm with sustained winds of 242 km/h and storm surges up to 4.8 metres above normal.

The Gulf is one of the largest energy production hubs in the Americas, producing about 1.3 million barrels per day (bpd) of oil — about one quarter of total US production of five million bpd — and 7.4 billion cubic feet of gas per day, according to the MMS. It said personnel have been evacuated from 518 of the total 717 manned oil and gas production platforms in the Gulf. Personnel from 86 of the total 121 rigs operating in the waters have been evacuated as well. More

The International Forecaster
Well, it’s in. It is now official. Q2 GDP was 3.3%. And if you believe that, we will be happy to sell you that bridge in Brooklyn that we have for perpetual sale to the incredibly gullible and naive. This structural icon is a magnificent piece of US Americana and infrastructure that everyone should own. It can be yours for a cool million bucks, which is a bargain considering the tolls you could impose. And never mind that we already sold it to the people who believed the NIST’s report on Building 7 of the former World Trade Center. As you know, it is perfectly OK to sell property you don’t own. If you don’t believe us, then ask all the bullion banks who sell the gold and silver they have leased from central banks and precious metals ETF’s.

The real figure for GDP is of course negative. To be charitable, let’s call it minus 1%. The reason for the ludicrously higher GDP figure, aside from the bogus government accounting practices, which are used to calculate official GDP, is that the official GDP deflator is about one third of actual. That results directly from the fact that official inflation is one third of the actual inflation you experience when you purchase goods and services. That way our corporatist, fascist government can rip off retirees on their social security benefits and give people an excuse to remain in denial about the destruction of our economy via hyper-stagflation. Note that GDP was negative despite a 160 billion dollar stimulus package, which stimulated nothing, and despite substantially increased US exports due to the weakness of the dollar. Yes, it is that bad, and it is going to get a lot worse.

The dollar continues to bounce around between 76 and 77.5 on the USDX, as the PPT continues to put on a show for the benefit of the incumbent scum while the reprobates and sociopaths, who pass themselves off as our political leaders, cause us to puke with their corn-ball theatrical performances at the Jackass and Dumbo Follies, which some dare to call political conventions. Aside from direct collusion and intervention by central banks, dollar support has resulted from several “cutesy” moves. When the SEC decided to enforce the law against naked-shorting, albeit only for the “Magnificent 19,” this caused a huge short-squeeze that put many hedge funds under water. The troubled funds were forced to bail themselves out, and that meant selling their winners in long oil contracts, which in turn collapsed the price of oil. This sharp drop in oil prices then wiped out a huge hedge fund that was long oil big-time, causing oil prices to collapse even further.

Dollars had to be purchased to acquire the liquidated oil contracts, thus supporting the dollar, and these dollar proceeds were then used to pay down margins at big commercial and investment banks, which then used the margin-covering funds to purchase treasuries not only to make a return, but also to absorb the dollars that had been flushed out by the collapse in oil prices. More

The Oil Drum
We now have Gustav as a Category 3, however the LOOP offshore oil facility, where America uploads approximately 1.2 million barrels of imports each day, directly in the hurricane path, as well as refining and other infrastructural damage the models.

Here is the first update today from Chuck Watson at KAC/UCF:

Here’s the 06z NHC (current forecast issued at 5am). I think it’s on the hot side, but their job is evacuation, not damage prediction. The LOOP is my main concern at this stage. It’s an important piece of infrastructure, and it is right in the bullseye. A 20 mile left or right shift, and 10 or 15 knots of wind speed means the difference between days and months of repair/recovery time. NHC track is Bad for the LOOP; some tracks to the east are better (not so good for NOLA, though). I’m sticking fairly close to my probabilities from a couple days ago, minus the Mexico and Tampa side trips: 30% Cat 3/4 landfall in LA, 30% cat 2 landfall in LA, 10% to Pensacola area, 20% farther west, 10% something goofy.

Follow the thread here

Nouriel Roubini
NEW YORK – The probability is growing that the global economy – not just the United States – will experience a serious recession. Recent developments suggest that all G7 economies are already in recession or close to tipping into one. Other advanced economies or emerging markets (the rest of the euro zone; New Zealand, Iceland, Estonia, Latvia, and some Southeast European economies) are also nearing a recessionary hard landing. When they reach it, there will be a sharp slowdown in the BRICs (Brazil, Russia, India, and China) and other emerging markets.

This looming global recession is being fed by several factors: the collapse of housing bubbles in the US, United Kingdom, Spain, Ireland and other euro-zone members; punctured credit bubbles where money and credit was too easy for too long; the severe credit and liquidity crunch following the US mortgage crisis; the negative wealth and investment effects of falling stock markets (already down by more than 20% globally); the global effects via trade links of the recession in the US (which still counts for about 30% of global GDP); the US dollar’s weakness, which reduces American trading partners’ competitiveness; and the stagflationary effects of high oil and commodity prices, which are forcing central banks to increase interest rates to fight inflation at a time when there are severe downside risks to growth and financial stability.

Official data suggest that the US economy entered into a recession in the first quarter of this year. The economy rebounded – in a double-dip, W-shaped recession – in the second quarter, boosted by the temporary effects on consumption of $100 billion in tax rebates. But those effects will fade by late summer.

The UK, Spain, and Ireland are experiencing similar developments, with housing bubbles deflating and excessive consumer debt undercutting retail sales, thus leading to recession. Even in Italy, France, Greece, Portugal, Iceland, and the Baltic states, frothy housing markets are starting to slacken. Small wonder, then, that production, sales, and consumer and business confidence are falling throughout the euro zone.

Elsewhere, Japan is contracting, too. Japan used to grow modestly for two reasons: strong exports to the US and a weak yen. Now, exports to the US are falling while the yen has strengthened. Moreover, high oil prices in a country that imports all of its oil needs, together with falling business profitability and confidence, are pushing Japan into a recession.

The last of the G7 economies, Canada, should have benefited from high energy and commodity prices, but its GDP shrank in the first quarter, owing to the contracting US economy. Indeed, three quarters of Canada’s exports go to the US, while foreign demand accounts for a quarter of its GDP.

So every G7 economy is now headed toward recession. Other smaller economies (mostly the new members of the EU, which all have large current-account deficits) risk a sudden reversal of capital inflows; this may already be occurring in Latvia and Estonia, as well as in Iceland and New Zealand. More

Source: Russia Today
Russia will not be isolated because it protected its citizens and upheld its peacekeeping mission, the Russian Prime Minister Vladimir Putin has said. In an interview on German TV, Putin suggested that if Russia had not responded to Georgian aggression, there could have been a tragedy along the scale of what happened in the former Yugoslavia. “I think a country like Russia, that protected its citizens, and fulfilled its peacekeeping duties, won’t be held in isolation, no matter what our partners think within the limits of their bloc. Europe and the U.S. are not the whole world,” he said.

He recalled the Srebrenica massacre, when thousands were killed when Dutch peacekeepers didn’t intervene in the Balkan war. The Prime Minister insisted that the Georgian government should be held responsible for its action. “Speaking about the Georgian leadership, people who wreck the territorial integrity and national identity of their country with their actions shouldn’t be ruling that country, be it big or small. They should resign straight away,” he said.

”Of course, it’s up to them, but we all remember the precedents that we have in history. Let’s remember how U.S. troops entered Iraq, and what they did with Saddam Hussein for destroying several Shiite villages. Here, ten Ossetian villages were destroyed right out,” Putin told ARD TV.

“Aren’t you aware of what’s been going on in Georgia in the last few years? The mysterious death of Prime Mnister Zhvania, fighting with the opposition, the violent dispersal of protest demonstrations, holding a national election during a practical state of emergency, and now this criminal action in South Ossetia with many casualties. You call it a democratic country, negotiating with it, and thinking it should be admitted to NATO and the EU?” Putin said the Georgian-South Ossetian conflict should be dealt within the frame of international law.

“We don’t have any special rules of our own by which we are going to play. We want everybody to play by the same rules. These are called international law. But we don’t want anyone manipulating them - playing it one way in one region, and another way in another region, to suit their own interests. We want to have the same rules for everyone, which would take into account the interests of all members of the international community”. Putin underlined that Russia wants neighbourly relations with other countries. “Russia isn’t out to aggravate the situation, or to put pressure on anyone. We want good neighbourly relations and partnerships with everyone,” he said.

Source: Press TV
The Islamic Republic says a surprise attack on Iran is impossible as the country’s Armed Forces are fully prepared for all scenarios. The US and Israel have long threatened to launch military strikes on Iranian nuclear facilities should the country continue with its uranium enrichment program. Iran has warned that the country’s Armed Forces have fully monitored the US army’s combat methods, its weaknesses and strong points, and are therefore fully capable of countering US tactics.

“We know the strategies the enemy might employ for a surprise attack and we have also readied special tactics of our own to give the enemy a surprise response far greater than they could ever imagine,” Deputy Army Commander Brigadier General Abdul-Rahim Mousavi said Saturday. Brig. Gen. Mousavi added that all the country’s military capabilities had not been unveiled yet and said Iran has ‘important’ defensive equipment, which will significantly impact the course of events in case of an attack. The commander cautioned that the enemy must learn to differentiate between ‘having the power to attack’ and ‘willing an attack.’

The remarks came after Israeli lawmaker Ephraim Sneh said the opportunity to find a non-military solution to halt Iran’s nuclear program would cease within 18 to 24 months, adding that Israel is preparing a contingency plan to attack Iran. The Islamic Republic, a signatory to the nuclear Non-Proliferation Treaty (NPT), says that diplomacy is the only practical approach for clarifying the civilian nature of its nuclear program. Iran, however, has warned that it would not hesitate to target the heart of Israel and 32 US bases in the region should the country come under attack.

DEBKAfile —
A Dutch AIVD Secret Service ultra-secret operation underway in Iran in recent years has been halted and an agent recalled in view of “impending US plans to attack Iran,” within weeks, writes Joost de Haas in the Dutch newspaper De Telegraaf. According to intelligence sources in the Netherlands, the US [or Israel] would decide within weeks to attack nuclear plants with unmanned aircraft to avoid endangering air crews. The Israeli air force would be held back to defend Israel against retaliation. More

creditwritedowns.com
Up until two days ago oil was crashing down toward $110 a barrel as demand growth estimates have been clipped. So what happened to peak oil? Nothing happened; peak oil should still be a concern.

For a larger context on peak oil, see my June post ‘Peak oil: are we there yet?’ From where I sit, I see oil as having played a major role in creating the downturn we are now experiencing. Basically, oil prices rose to the point where we cried uncle, reduced our consumption accordingly, and the economy suffered as a result. Before 1973, the world had never see an oil shock. But, this is the 4th such oil shock since the end of Bretton Woods in 1971 when Nixon ended the U.S. dollar peg to gold and ushered in an era of floating currencies. Methinks I see a connection.

Now, the real point of peak oil here is not that oil supplies are running out, the sky is falling and the world is coming to an end. Rather, it is an understanding that there will come a time when the ever-increasing global demand for oil will permanently outstrip the supply. What does that mean? Well for starters, it means that oil shocks will not be the result of supplies being artificially constrained by some monopoly like the Seven Sisters, the Texas Railroad Commission or OPEC. Peak oil means that oil producers will simply not be able to cost-effectively pump enough oil out of the ground rapidly enough to meet the rising oil demand.

And oil demand is price inelastic. Translation: we need the stuff — we need the stuff a lot. We use it to heat our homes, drive our cars, make plastic containers, pave the roads — oil is ubiquitous. It just won’t do to have it in short supply. The result is that, with peak oil, oil prices must rise exponentially before the necessary demand destruction is created to bring supply and demand into balance. That’s what has just happened.

So, what happens when demand destruction sets in? Economics would tell you that the price collapses again but to a new higher equilibrium level. And then the whole pattern reasserts itself again. That means higher lows and higher highs for the price of oil as we go through each business cycle. Obviously, this is a recipe for global economic instability and that leads to war, famine, revolution and some other pretty nasty stuff. More
Also See: Life After The Oil Crash

(IsraelNN.com)
Israel’s leadership resolved, in top-level strategic discussions three months ago, to do whatever it takes to prevent Iran from having nuclear bombs. This is Maariv’s front-page headline on Friday. Maariv’s veteran political reporter Ben Caspit stops short of detailing the precise solution Israel will implement to put an end to Iran’s nuclear program, but writes, “Preparations for an Israeli military option intended to stop Iran’s nuclear program are underway.” The results of the series of highest-level discussions are thus clear: “The debate between those who believe in doing everything, including a military operation, to prevent Iran from getting a nuclear bomb, and those who think we can live with Iranian nukes, has been settled.” Not only that, but “if the ayatollahs’ regime does not fall in the next year, if the Americans do not strike militarily, and if the international sanctions do not break the Iranian nuclear plan, Israel will have to act forcefully.” More

Security for Hurricane Gustav
Blackwater is compiling a list of qualified security personnel for possible deployment into areas affected by Hurricane Gustav. Applicants must meet all items listed under the respective Officer posting and be US citizens. Contract length is TBD. More

LA Times
MEXICO CITY — The sickening discovery this week of 11 headless bodies heaped like broken dolls near the colonial city of Merida underscored a bitter lesson for Mexico: The battle to control the multibillion-dollar drug trade knows no boundaries.

The bodies are piling up nationwide, even in normally tranquil and touristy spots such as Merida, not far from the Maya ruins of Chichen Itza. During a seven-day period ended Friday, more than 130 people died violently throughout the country. Headless bodies turned up in four states, including Baja California.

The Yucatan peninsula, strategically close to smuggling routes through Central America, tallied 12, after another decapitated body was found a few hours later Thursday about 80 miles east of the carnage near Merida.

Mexico’s drug wars used to play out mainly in smuggling battlegrounds along the U.S. border, such as Tijuana and Ciudad Juarez. But a crackdown launched 21 months ago by President Felipe Calderon has exacerbated feuding among drug traffickers for control of smuggling routes.

As a result, the country convulses with daily violence that shows a new and disturbing geographic reach and viciousness.

“The bottom line is you’ve got a major internecine battle, a kind of civil war among drug cartels,” said Bruce Bagley, a security and drug-trafficking expert at the University of Miami. “It has intensified because the stakes are high. There’s a great deal of money to be made.”

But traffickers are keenly aware of the psychological effect on enemies and ordinary Mexicans when they chop off rivals’ heads and leave threatening notes with the remains.

Some analysts say tactics such as beheadings, once unheard of in Mexico’s drug underworld, are akin to terrorism because part of the goal is to scare civilians so that they will press the government to back off. Calderon has sent 40,000 troops and 5,000 federal police officers into the streets as part of the campaign against organized crime.

“You’re sending a signal to the Calderon government, to the police, that you mean business,” said Fred Burton, vice president for counter-terrorism at Stratfor, an Austin, Texas-based intelligence firm. ” ‘This is the result when you don’t play ball with us.’ ”

Last week, the Calderon government announced a broad new blueprint for fighting crime, including better coordination between federal and local authorities, new federal prisons, improved tracking of cellphones and tougher steps against money laundering.

Calderon administration officials said Thursday night that the Yucatan beheadings and other spectacular displays of violence show that arrests and drug seizures have hurt the cartels, prompting them to lash out with increasing savagery.

“They have to respond in a symbolic way that creates uncertainty in the public — this is what they have been doing during the last months,” Atty. Gen. Eduardo Medina Mora said late Thursday during an interview on Mexican television.

Since Saturday, Mexico has tallied at least 136 killings across 18 of its 31 states, according to Mexican news media accounts. They included especially brazen attacks:

* On Thursday, the day the headless bodies were found near Merida, gunmen stormed a house in the Pacific state of Guerrero, killing two women and two girls, ages 8 and 12. Two police officers were ambushed and slain in a gun battle as they raced to the home.

* An armed group battled Mexican troops Wednesday in the central state of Guanajuato. Four gunmen died and two soldiers were wounded.

* Four decapitated bodies turned up Tuesday in Tijuana. Those killings appeared to be linked to a power struggle between drug traffickers who once collaborated as part of the Arellano Felix gang. Headless bodies also were found in Sinaloa and the northern state of Durango.

Two weeks ago, a hit squad killed 13 people, including a 16-month-old boy, at a family gathering in the northern town of Creel, a tourist gateway to the scenic Copper Canyon region.

Hardly a day goes by without new accounts of violence. Unofficial tallies by Mexican news outlets put the death toll from drug violence this year at more than 2,600. By some counts, it has already exceeded the total for 2007, which set a record.

Police officers have died at an alarming rate. The daily Milenio newspaper reported Friday that 71 officers had been slain nationwide in August — the highest monthly toll since Calderon launched his crime offensive in December 2006. More

Thomas Black
(Bloomberg) — Thousands of Mexicans plan to march in more than 60 cities across the country this evening to demand government action against a wave of violence that has claimed almost 3,000 lives this year. The protest has been spurred by incidents including the kidnapping and killing of Fernando Marti, the 14-year-old son of a Mexico City businessman, the discovery of 12 decapitated bodies in the state of Yucatan and the arrests of police officers accused of running kidnapping gangs. “It’s incredibly bloody out there,” said Federico Estevez, a professor of political science at the Autonomous Institute of Technology of Mexico. More

Hiedeh Farmani in Tehran
Source: couriermail
A SENIOR military commander warned today that any attack on Iran would start a new world war, as Tehran pressed on with its controversial nuclear drive despite the risk of further UN sanctions. “Any aggression against Iran will start a world war,” deputy chief of staff for defence publicity, Brigadier General Masoud Jazayeri, said in a statement carried by the state news agency IRNA.

Iran is under international pressure to halt uranium enrichment, a process which lies at the core of fears about Iran’s nuclear program as it can make nuclear fuel as well as the fissile core of an atom bomb. “The unrestrained greed of the US leadership and global Zionism… is gradually leading the world to the edge of a precipice,” Brig Jazayeri said, citing the unrest in Afghanistan, Iraq, Sudan and Georgia. “It is evident that if such a challenge occurs, the fake and artificial regimes will be eliminated before anything.” Iran does not recognise Israel, which is often described by officials in Tehran as a “fake regime” and President Mahmoud Ahmadinejad has provoked international outrage saying it should be wiped off the map.

The US and its staunch ally Israel, the region’s sole if undeclared nuclear-armed nation, accuse Iran of seeking atomic weapons under the guise of a civilian nuclear program.

Iran, a leading OPEC member, has vehemently denied the allegations, insisting its only wants to provide electricity for a growing population when its reserves of fossil fuels run out. The US has never ruled out military action against Iran over its defiance of international demands for an enrichment freeze, but so far is pursuing the diplomatic route. Iran has repeatedly vowed a crushing response to any attacks and has flexed military muscles in recent years by holding war games and showing off an array of home-grown weaponry including ballistic missiles. Another top military commander said Iran was prepared to “take the enemies off-guard” and would unveil more weapons in case of an attack.

“Some of the equipment of our armed forces have been announced but there are important things hidden whose effect would be shown on the day (of any attack),” deputy army commander Abdolrahim Mousavi told Fars news agency. “Offensives are part of the strategy of defence and if a country confines itself to its borders it has set a limit and eliminated part of its capability.” During war games in July which stoked international concern, aides to the supreme leader Ayatollah Ali Khamenei warned that Iran would target US bases and US ships in the Gulf as well as Israel if it was attacked. Iran also test-fired its Shahab-3 missile which it says puts Israel within range.

In recent months, several Israeli politicians have talked of the possibility of a pre-emptive military strike against Iranian nuclear facilities to avoid any possibility of Tehran acquiring an atomic weapon. Iran has repeatedly said it has no intention of halting enrichment despite three sets of UN Security Council sanctions and US and EU sanctions on its banking system. Iran insists it has a right to enrich uranium for nuclear fuel as a signatory to the Non-Proliferation Treaty. It is currently operating about 4000 uranium enrichment centrifuges and installing several thousand more.

However, the country’s first Russian-built nuclear power plant is yet to come online. The Islamic republic risks further sanctions for failing to give a clear response to an incentives package offered in June by six world powers in return for a halt to the sensitive work. World powers offered to start pre-negotiations with Iran during which Tehran would add no more uranium-enriching centrifuges and in return face no further sanctions. The offer by permanent Security Council members Britain, China, France, Russia and the United States plus Germany included trade incentives and help with a civilian nuclear program.

Russia remains a Black Sea power
M K Bhadrakumar
If the struggle in the Caucasus was ever over oil and the North Atlantic Treaty Organization’s (NATO’s) agenda towards Central Asia, the United States suffered a colossal setback this week. Kazakhstan, the Caspian energy powerhouse and a key Central Asian player, has decided to stand shoulder-to-shoulder with Russia over the conflict with Georgia, and Russia’s de facto control over two major Black Sea ports has been consolidated. At a meeting in the Tajik capital Dushanbe on Thursday on the sidelines of the summit meeting of the Shanghai Cooperation Organization (SCO), Kazakh President Nurusultan Nazarbayev told Russian President Dmitry Medvedev that Moscow could count on Astana’s support in the present crisis. More

MIKE WHITNEY
Michael Hudson
The economy has polarized to the point where the wealthiest 10% now own 85% of the nation’s wealth. Never before have the bottom 90% been so highly indebted, so dependent on the wealthy. From their point of view, their power has exceeded that of any time in which economic statistics have been kept.

You have to realize that what they’re trying to do is to roll back the Enlightenment, roll back the moral philosophy and social values of classical political economy and its culmination in Progressive Era legislation, as well as the New Deal institutions. They’re not trying to make the economy more equal, and they’re not trying to share power. Their greed is (as Aristotle noted) infinite. So what you find to be a violation of traditional values is a re-assertion of pre-industrial, feudal values. The economy is being set back on the road to debt peonage. The Road to Serfdom is not government sponsorship of economic progress and rising living standards; it’s the dismantling of government, the dissolution of regulatory agencies, to create a new feudal-type elite.

The former Soviet Union provides a model of what the neoliberals would like to create. Not only in Russia but also in the Baltic States and other former Soviet republics, they created local kleptocracies, Pinochet-style. In Russia, the kleptocrats founded an explicitly Pinochetista party, the Party of Right Forces (“Right” as in right-wing).

In order for the American people or any other people to assert greater control over monetary policy, they need to have a doctrine of just what a good monetary policy would be. Early in the 19th century the followers of St. Simon in France began to develop such a policy. By the end of that century, Central Europe implemented this policy, mobilizing the banking and financial system to promote industrialization, in consultation with the government (and catalyzed by military and naval spending, to be sure). But all this has disappeared from the history of economic thought, which no longer is even taught to economics students. The Chicago Boys have succeeded in censoring any alternative to their free-market rationalization of asset stripping and economic polarization.

The Fed has turned “maintaining order” into a euphemism for consolidating power by the financial sector and the FIRE sector generally (Finance, Insurance and Real Estate) over the “real” economy of production and consumption. Its leaders see their job as being to act on behalf of the commercial banking system to enable it to make money off the rest of the economy. It acts as the Board of Directors to fight regulation, to support Wall Street, to block any revival of anti-usury laws, to promote “free markets” almost indistinguishable from outright financial fraud, to decriminalize bad behavior – and most of all to inflate the price of property relative to the wages of labor and even relative to the profits of industry.

The Fed’s job is not really to impose the Washington Consensus on the rest of the world. That’s the job of the World Bank and IMF, coordinated via the Treasury (viz. Robert Rubin under Clinton most notoriously) and AID, along with the covert actions of the CIA and the National Endowment for Democracy. You don’t need monetary policy to do this – only massive bribery. Only call it “lobbying” and the promotion of democratic values – values to fight government power to regulate or control finance across the world. Financial power is inherently cosmopolitan and, as such, antagonistic to the power of national governments. More

Source: DEBKAfile
Former Russian Black Sea Fleet commander, Adm. Eduard Baltin was quoted by Moscow media as saying Friday, Aug. 29: “Despite the apparent strength of the NATO naval group in the Black Sea… a single salvo from the Moskva missile cruiser and two or three missile boats would be enough to annihilate the entire group. Within 20 minutes, the waters would be clear.” Adm. Baltin added: “We will not strike first, and they do not look like people with suicidal tendencies.”

The Russian Fleet deploys 16 warships in the Black Sea compared with 10 NATO vessels – three American, Polish, German and Spanish frigates, and four Turkish warships, soon to be augmented by another six, including the USS Mount Whitney, which is considered one of the most advanced warships in the world.

In Washington, White House spokeswoman Dana Perino rejected Russian prime minister Vladimir Putin’s assertion that US personnel were in the combat zone during the war in Georgia and “someone in the United States” provoked the conflict to help one of the candidates in the American presidential race. In his first major remark since the Georgian crisis erupted, Putin quoted information provided by the Russian military but offered no evidence. Perino called his allegations “patently false and “not rational.”

The Telegraph
Russia has successfully tested a stealth missile able to penetrate the US defence system being built in Poland. In a clear show of military strength amid rising tensions with Nato allies, Kremlin chiefs fired a Topol RS-12M rocket, which has nuclear capabilities, from their Plesetsk space centre to a target 3,700 miles across the country. The test came a week after Washington and Warsaw formally agreed a deal to host components of a US missile defence shield in Poland.

While American officials insist the shield is designed to defend against a potential attack from Iran or North Korea, Moscow has maintained that it is an unacceptable affront to its own security. The Russian Foreign Ministry last week promised “to react, and not only through diplomatic protests” to the shield’s construction. Following the test strike, Col Alexander Vovk of the Russian Strategic Rocket Forces said: “The launch was specially tasked to test the missile’s capability to avoid ground-based detection systems.” More

MOSCOW (Reuters) — Russia, the biggest market for American poultry exporters, will ban imports from 19 producers in the United States and warned on Friday that an additional 29 suppliers face a possible ban on health and safety grounds. The ban will take effect Monday and includes three plants belonging to the meat giant Tyson Foods, Russia’s animal and plant health watchdog said, a day after Prime Minister Vladimir V. Putin first spoke of the measures. Agriculture Minister Alexei Gordeyev, in a separate statement, said inspectors had more than once found an excess of arsenic, salmonella, E.coli and other dangerous bacteria in shipments of poultry to Russia. More

The UK is facing its worst economic crisis in 60 years, Chancellor Alistair Darling has admitted. He told the Guardian newspaper that the economic downturn would be more “profound and long-lasting” than most people had feared. House prices are falling at their fastest rate in 18 years, leading to fears of a wave of repossessions. Mortgage lending has slowed dramatically due to the credit crunch while key indicators have suggested that the economy could be poised to go into recession. The economy showed no growth in the second quarter of the year while building firms and retailers have laid off thousands of staff amid fears that the economy will deteriorate further. More

Aug. 29 (Bloomberg) — Integrity Bank of Alpharetta, Georgia, was closed by U.S. regulators today, the 10th bank to collapse this year amid a surge in soured real-estate loans stemming from the worst housing slump since the Great Depression. Integrity Bank, with $1.1 billion in assets and $974 million in deposits, was shuttered by the Georgia Department of Banking and Finance and the Federal Deposit Insurance Corp. Regions Financial Corp., Alabama’s biggest bank, will assume all deposits from Integrity, which was run by Integrity Bancshares Inc. The failed bank’s five offices will open on Sept. 2 as branches of Regions, the FDIC said. “Depositors will continue to be insured with Regions Bank so there is no need for customers to change their banking relationship to retain their deposit insurance,” the FDIC said.

Banks are being closed at the fastest pace in 14 years as financial companies report more than $505 billion in writedowns and credit losses since 2007. California lender IndyMac Bancorp Inc., which had $32 billion in assets, was closed July 11 in the third-largest bank seizure, contributing to a 14 percent drop in the U.S. deposit insurance fund that had $45.2 billion at the end of the in the second quarter. More

Source: Press TV
The USS Mount Whitney, considered one of the most advanced warships in the world, is expected to arrive in the Black Sea early in September. The warship will become the US’ third in the Black Sea as the guided missile destroyer USS McFaul and the USS Taylor frigate are already in the region. The USS Mount Whitney, flagship of the US 6th Fleet, “is going to swing by in Suda Bay (Crete) and pick up humanitarian supplies and will probably not arrive before some time next week,” said Pentagon spokesman Bryan Whitman, without naming where the ship is to dock. “The Dallas (a US Coast Guard ship) has completed its offloading of humanitarian relief supplies in Batumi and has departed Batumi”, Whitman added. Col. Gen. Anatoly Nogovitsyn, deputy chief of Russia’s general staff had earlier said that the arrival of US warships and those of other NATO members would escalate tensions, adding that NATO is setting up a naval force in the Black Sea under the ‘cover’ of aid deliveries to Georgia.

“Under the cover of needing to deliver humanitarian goods, NATO countries continue to boost their naval grouping,” Nogovitsyn told a news conference in Moscow last week. NATO keeps billing the measure as “conducting a pre-planned routine visit to the Black Sea region to interact and exercise with our partners Romania and Bulgaria.” A brief conflict erupted August 8 when Georgia sought to regain control over independence seeking province South Ossetia. In response, Russia moved its forces to the region where most of the population holds Russian citizenship. The conflict ended after Russian President Dmitry Medvedev signed a French-brokered ceasefire deal. Since then Moscow and Washington have been on a collision course.

9:10p ET Friday, August 28, 2008

Dear Friend of GATA and Gold:

Somehow the issue of manipulation of the gold market made its way onto CNBC Europe today as the business channel interviewed Evy Hambro, portfolio manager for BlackRock Investment Management in London, and Jill Leyland, an analyst for the World Gold Council.

The program was terribly clumsy with the facts, as the moderator announced that the U.S. Commodity Futures Trading Commission had issued a report suggesting that the gold market had been manipulated by certain banks. Actually, of course, the recent disclosures about the unprecedented concentration in short positions in gold and silver on the U.S. commodities exchanges came from GATA consultants Ted Butler and Rob Kirby, not from the CFTC, though Butler and Kirby might be glad to accept appointment to the commission. And another CNBC interviewer talked about world gold supplies of “500 million tonnes,” when the best estimate of all the gold ever mined is less than 170,000 tonnes. (The interviewer probably was thinking of the 500-tonne annual sales limit imposed on the parties to the Washington Agreement on Gold.)

But at least CNBC Europe managed to spell “gold manipulation” right, reported the shortage of U.S. gold eagle coins, and allowed Hambro to remark with British understatement that recent reversals in several markets, not just gold, were hard to explain. And Leyland’s curt assurance that nothing possibly could be wrong in the gold market might have struck impartial observers as a little smug and arrogant.

As it turned out, the manipulation issue was only raised on the program; the program did not cite a single piece of evidence, apart from the misattribution to the CFTC of the work of Butler and Kirby. But maybe the network was expecting everybody to have the wit to look for the evidence at www.GATA.org.

The CNBC Europe program is 7 1/2 minutes long and you can watch it at the CNBC site here:

http://www.cnbc.com/id/15840232?video=835874978&play=1

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

SALT LAKE CITY — The best deal on fuel in the country right now might be here in Utah, where people are waiting in lines to pay the equivalent of 87 cents a gallon. Demand is so strong at rush hour that fuel runs low, and some days people can pump only half a tank. It is not gasoline they are buying for their cars, but natural gas. By an odd confluence of public policy and private initiative, Utah has become the first state in the country to experience broad consumer interest in the idea of running cars on clean natural gas. Utahans are hunting the Internet and traveling the country to pick up used natural gas cars at auctions. They are spending thousands of dollars to transform their trucks and sport utility vehicles to run on compressed gas. Some fueling stations that sell it to the public are so busy they frequently run low on pressure, forcing drivers to return before dawn when demand is down. More

John Little
Opednews.com
There are good reasons why there is seldom more than one dominant currency. Reserve currencies have the attributes of a natural monopoly, or, in more modern parlance, a network. If it costs extra to trade with someone who uses a different currency than you, it makes sense for you to use the currency that most other people use. This makes that currency yet bigger and cheaper to use. There is a good analogy with a computer operating system. In that world, Windows is the dollar.

This networking power is why central banks store dollars in their reserves in a far greater proportion than the proportion of trade with the United States. While 30% of international trade is with the United States, 70% of central bank reserves are in dollars. It is why most commodities, like oil, copper, and coffee, are priced in dollars, wherever they are found and to whomever they are sold.

A closer look at the history of Great Britain’s demise as the world’s reserve currency in the beginning decades of the 20th Century reveals a country that was severely crippled after WWI. While Great Britain had tried its best to not get involved in the wars raging out of control on the European continent, it was nevertheless, thrust right into the First World War. This proved to be too costly for the British Empire. Although the Pound Sterling was still considered the main world currency, Britain, along with France and other allies of the war, owed millions of dollars to the United States. Great Britain found itself horribly in debt and unable to continue on the gold standard.

According to the Federal Reserve Bulletin of June, 1989, from the spring of 1925, when the gold standard was restored, to the fall of 1931, when it was abandoned, the Bank of England resisted forays on the exchange value of the pound sterling. In May 1931, a run on the Kreditanstalt, the largest Austrian bank, initiated the final defense of the gold exchange standard in Britain. From March to September 1931, the National Bank of Austria lost 55 percent of its large foreign exchange reserves as it tried to fight back capital flight. In June 1931, panic spread from Austria to Germany, and German banks scrambled to exchange sterling deposits for gold in London. From May 30 to June 30, the Reichsbank lost 34 percent of its gold and foreign exchange reserves. In July, with foreigners storming its gold reserve, the Bank of England shielded the domestic credit system by purchasing securities on the open market, by arranging a 50 million pounds credit with the Federal Reserve Bank of New York and the Bank of France, and by transferring securities from the Banking to the Issue Department to provide for new fiduciary issue. With the exchange rate below the gold export point, the Bank of England barricaded its gold reserves by raising the Bank rate from 2.5 percent to 3.5 percent on July 23 and to 4.5 percent on July 30. In spite of these protective efforts, gold reserves in the Issue Department shrank 30.9 million pounds–29 percent–from June 24 to July 29. Late in August, the Bank of England secured an additional 80 million pounds in emergency credits, but the continental and American demand for gold continued to assault the London bullion market. More

The Market Ticker

“The acceleration in real GDP growth in the second quarter primarily reflected a larger decrease in imports, an acceleration in exports, an acceleration in PCE, a smaller decrease in residential fixed investment, and an upturn in state and local government spending that were partly offset by a larger decrease in inventory investment.”

If only this was the truth.

Let’s dig in.

Buried in that release is the real outrage:

“Domestic profits of financial corporations increased $24.7 billion in the second quarter, compared with an increase of $37.3 billion in the first. Domestic profits of non-financial corporations decreased $46.9 billion in the second quarter, compared with a decrease of $32.1 billion in the first.”

Excuse me?

Do you actually expect me to believe that profits of financial corporations increased by $24.7 billion (or that they did so in the first quarter either)?

Am I smoking something or did not the financial sector report decreasing profits in the second quarter, and in fact, many reported absolutely stunning losses?

An increase on-balance? You expect me to believe that?

You must be joking.

Oh, they told the truth on the decrease in earnings from the rest of the business world in America:

Domestic profits of non-financial corporations decreased $46.9 billion in the second quarter, compared with a decrease of $32.1 billion in the first.

So we have a totally bogus “financial service profits” number which of course pumps reported GDP substantially.

If you’re interested in how Americans are doing, try this:

“Real gross domestic purchases — purchases by U.S. residents of goods and services wherever produced — increased 0.2 percent in the second quarter, compared with an increase of 0.1 percent in the first.”

Right. Including $160 billion in stimulus checks, which incidentally, is about 1% of GDP. So how much would it have fallen without spending $160 billion that we don’t have?

I’ll answer that, since the same page gives me a metric to use. 1.4 GDP points (percent) is $39.7 billion (so the BEA says); that is a 5.6% annualized “run rate” on GDP.

So GDP actually fell (using the cooked numbers) by 1.4% on an annualized basis in the second quarter, since taking $160 billion out of one hand and placing it into another didn’t actually change a thing (the government doesn’t have any money; they get it from you, so the “stimulus” should in fact be subtracted back out from any claimed “GDP” - but isn’t), and this assumes you believe the BEA’s “deflater” (inflation) number which is vastly different than the CPI reported elsewhere and that financial firms increased their profits in the second quarter! More

Sarah Louise Heath Palin (IPA: /ˈpeɪlɨn/; born February 11, 1964) is the governor of Alaska, and the presumptive Republican vice presidential nominee for the 2008 United States presidential election.

Palin was elected governor in 2006 after defeating incumbent governor Frank Murkowski in the Republican primary and former Democratic governor Tony Knowles in the general election. She was the youngest person, and the first woman, to be elected governor of Alaska. She gained attention for publicizing ethical violations by state Republican Party leaders. Before becoming governor, Palin served two terms on the Wasilla, Alaska, City Council from 1992 to 1996, was elected and re-elected mayor of Wasilla for two three-year terms in 1996 and 1999. She also ran unsuccessfully for lieutenant governor in 2002. Palin holds a bachelor’s degree in journalism from the University of Idaho.

On August 29, 2008, Republican presidential candidate John McCain chose Palin to serve as his running mate,[2][3][4] making her the first female vice presidential candidate of the Republican Party and the second female vice presidential candidate representing a major political party. She will also be the first politician from Alaska to run on a national ticket for president or vice president. More

BIRMINGHAM, Alabama (Reuters)
Alabama’s governor and Wall Street lenders bargained on Friday ahead of the expiration of a stand-still pact in a bid to avert a bankruptcy filing on $3.2 billion of debt by the state’s most populous county. A bankruptcy filing by Jefferson County over its sewer debt would be the biggest by a U.S. local government since Orange County, California, filed for protection in December 1994. The possible filing, a rarity by a local government, would also make Jefferson County the latest casualty of the global credit crunch, hit by its exposure to the auction-rate securities market. More

Deep changes are needed in the U.S. system and big Wall Street banks should not be rescued by the authorities when they run into trouble, to avoid moral hazard, [Jim] Rogers told CNBC Europe. “They’re bailing out Wall Street, because all their friends are on Wall Street,” he said. “When Ben Bernanke gets a phone call from the head Lehman, he takes the call, but if some poor school teacher in Oklahoma calls him, he doesn’t take the call. He’s dealing with his friends on Wall Street trying to save them when in fact he should let them fail. That would be the better solution, at least for 300 million Americans,” Rogers added. More

General Motors Corp. said Friday it was recalling 944,000 vehicles because of a problem with a windshield wiper fluid system that could lead to a fire. More than 850,000 sport utility vehicles, trucks and passenger cars in the United States and nearly 100,000 vehicles in Canada, Mexico and the Middle East are involved in the recall, the company said. More

John Kusumi
Falun Gong Organ Harvesting Confirmed
It’s time to review the crime, and the response – or lack of response. The crime is the forced harvesting of vital organs from prisoners of conscience – Falun Gong practitioners – in the gulags and prison system of Mainland China. These people, who shouldn’t even be in prison to begin with, lose their lives in a process of organ harvesting, and the organs are transplanted into paying customers.

They may even still be alive as the organs are removed – they are selected, as healthy specimens, for just-in-time execution. It’s diabolical. It combines theft with murder with profiteering. Capitalist types could note that it monetizes Falun Gong persecution. This is organized, systematic, machine-like evil through deliberately chosen policies of the Chinese government. The only comparable evil might be Nazi Germany’s medical experiments, performed on unwitting prisoners in World War II.

There is plenty of gravity to this matter if it sinks in that this is real – a confirmed crime against humanity that may still be in progress. And, it happens in a context that has also gone unreported – the crackdown against Falun Gong in China. To be fair, it was reported back in 1999 when it began. To be accurate, it dropped out of the news after, late in 1999, U.S. President Bill Clinton signed a “free trade” deal with China. More