Archive for July, 2015

China Stock Market Continues To Tumble

July 28th, 2015 Comments off

Monday, July 27 witnessed the largest fall in share prices in major Chinese stock markets, especially the Shanghai Composite Index, in a decade. The fall of more than eight percent was followed on July 28 by a further drop in China’s stock market by 1.6 percent. These declines come after the massive intervention in the stock market by Beijing, following significant losses in equity values a few weeks ago.

Having frozen much of the market, and injected massive cash allotments into listed shares, amplified by the China authorities compelling companies to purchases stocks, while forbidding the sell-off of shares in many cases, Beijing had thought the problem had been solved. As the past days show, however, central government intervention in the equity markets only temporarily stalled the deflating of this large Chinese asset bubble.

The volatility now existing in China’s stock markets illustrates the overall fragility of much of the Chinese economic model and its opaque financial underpinnings.




Barack Obama Meets Neville Chamberlain And Joseph Stalin? Unsettling Parallels With The Infamous Munich Agreement of 1938 And Its Aftermath

July 15th, 2015 Comments off

President Obama has made America’s worst strategic blunder by empowering the anti-American regime in Iran, acquiescing in its burgeoning hegemonic role in the Middle East, while legitimating its status as a nuclear threshold power. In all probability, this will mean the attainment of full nuclear weapons capability in a decade, if not sooner, by the theocratic dictatorship in Iran, unless a power other than Washington decides to stop them.

In the wake of the nuclear deal with Iran consummated officially by the P5 plus 1, but in reality between Secretary of State John Kerry and his Iranian counterpart, Javad Zarif, political adversaries in Washington are weighing in on the nuclear treaty, their positions largely pre-determined by their partisan politics and ideologies rather than by a cogent analysis. This applies to those supporting and opposing Obama’s Iran deal. What is being ignored is the true basis for President’s Obama’s historic gamble on Iran and its implacably anti-American regime.

In a private meeting with leftwing progressive activists in the Democratic Party held in January 2014, Obama’s Deputy National Security Advisor, Ben Rhodes, spelled out the administration’s intentions. Unknown to Rhodes, his confidential briefing was secretly recorded, and details would subsequently leak out ( The core of what he had to say about the negotiations with Iran:

“So no small opportunity, it’s a big deal. This is probably the biggest thing President Obama will do in his second term on foreign policy. This is healthcare for us, just to put it in context.” He went on to say, “We’re already kind of thinking through, how do we structure a deal so we don’t necessarily require legislative action right away. And there are ways to do that.”

Largely in secret, and based on a belief that the American people lacked the sophistication to fully understand the Iran issue as thoroughly as President Obama and his expert advisors, a policy decision was apparently made to engage in a grand act of appeasement, allowing Iran to maintain intact its illicit nuclear infrastructure designed solely to fabricate fissile materials suitable for ultimately only one purpose–manufacturing nuclear weapons. A fig leaf of a 10-year moratorium on full-scale use of that capacity by Iran, with a supposedly strict inspection regime that is obfuscated by a complex treaty that is so arcane, it allows Iran numerous opportunities to thwart its intent and cheat successfully, has been presented as largely a public relations exercise. The real intent of the Iran deal, as Ben Rhodes suggested 18-months ago, is to transform Iran from an adversary to a regional ally of America’s and serve as the Middle East policeman, allowing the United States to finally extricate itself from military involvement in that region.

This is where parallels with the Munich agreement of 1938 resonate most strongly, for reasons largely forgotten. Neville Chamberlain signed an agreement with Adolf Hitler, sacrificing Czechoslovakia in a grand act of appeasement, not solely to achieve “peace in our time.” The British political establishment of that era viewed communism and Soviet Russia as a far greater menace than Nazi Germany. It was their hope that the Munich agreement would focus Hitler’s attention towards the East, and use Nazi Germany’s military power against Stalin’s Russia.

It was the reaction of Soviet dictator Stalin to the Munich agreement that resonates with the contemporary thinking of the Obama administration on Iran. He decided to play his own game of appeasement with Hitler, signing the notorious Soviet-German non-aggression pact that enabled Hitler to launch the Second World War. Stalin was fully aware that in Nazi ideology, the Russian people were viewed on the same level as the Jews, with Hitler boasting in Mein Kampf of his future intentions to destroy Russia as a nation and conquer its lands. Stalin convinced himself that the non-aggression treaty ushered in an era of pragmatism in German policy towards Russia, and Nazi ideology had faded away. As history was to reveal, he was fatally wrong is his calculation, and the result was that his country was nearly annihilated, and escaped total destruction at the cost of tens of millions of lives.

Barack Obama, John Kerry and Ben Rhodes apparently believe in a manner similar to Stalin’s that the Ayatollahs’ vehemently anti-American hatred is not a core value of the Islamic Republic of Iran, and will be sublimated by pragmatism. Yet, even as the Iran Deal was being finalized, the Supreme Leader of Iran, Ayatollah Khamenei publicly chanted “death to America!” American flags were burning on Iranian streets as Kerry and Zarif exchanged smiles. And the regime’s most militant instrument of power, the Iranian Revolutionary Guard Corps, was staging naval exercises that involved the “sinking” of a replica of an American aircraft carrier.

President Obama has apparently convinced himself that Tehran’s hostility is only a passing phase, and that in time it will become the trustworthy guardian of the Middle East, protecting the United States from what the administration seems to regard as the unruly Sunni Arab world. Decades of alliances with the broader Arab world, and especially Saudi Arabia and the Gulf countries, along with Israel, are in the process of being abandoned, in what must be regarded as the most reckless crapshoot in American geo-strategic planning.

Unfortunately, the administration has lulled itself into sleepwalking with a hegemon whose core ideology, as the leaders of the Islamic Republic have repeatedly stated, is centered on hatred of the United States. Unless other forces can prevent what at this point seems inevitable, the ultimate outcome of the Iran deal is that Americans will one day awaken to the reality of an apocalyptic regime pointing nuclear-tipped intercontinental ballistic missiles at their shores.




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China Stock Market Crashing and Burning Before Our Eyes

July 8th, 2015 Comments off

While the world has been sidetracked by the never-ending Greek Debt Crisis, another economy with a GDP that is 40 times the size of Greece is giving signs of serious, even critical financial weakness. The world’s second largest economy, and supposedly most-powerful “communist” nation, has seen its stock market enter a downward spiral that Beijing seems helpless to retard.

As the Chinese economy slowed down over the past year, China’s equity market soared by 100 percent or more, creating the largest bubble in the Far East. Now, for the past three weeks, the Shanghai index has been witnessing a massive sell-off that has contracted its value by more than 30 percent. The government, fearing a financial panic and social instability as tens of millions of Chinese investors rush for the exits, has been trying every stratagem known to man to halt and reverse this slide, including compelling government companies to buy massive blocks of shares , cutting interest rates and temporarily halting trading in some companies. All to no avail.

As the implosion in Chinese equity markets continues, the rest of the world is starting to take notice. It should. If what is occurring in China is no mere correction but an actual financial panic, the resulting  damage to China’s economy and fiscal health will impact Chinese imports for its massive industrial sector, negatively impacting global commodity prices at an already fragile moment for the global economy. All this will only heighten the already elevated level of volatility among the world’s financial markets.

The world may be about to discover the true significance of China’s emergence as one of the two largest economies on the planet. During the past several years, many business analysts have warned of the proliferation of signs that much of China’s spectacular economic growth was based on bubbles financed by the central government. There have been numerous  accounts of new cities built with virtually no inhabitants, of vacant office complexes and condominiums. In effect, a trail of pump-priming that has artificially boosted GDP growth in an economy that is still characterized by a very low level of internal consumption, especially in comparison with Western economies, has been the primary driver of China’s economic expansion. There have been earlier signs of an unsustainable real estate bubble and a flood tide of debt by municipal governments and economic enterprises that defy rationality . What is now occurring on the Chinese stock market may be a leading indicator that all is not well with Beijing’s still highly-centralized economic model. Should things unravel beyond the capacity of the government to control, it may be that China in 2015, as with the United States in 2008, will become the primary catalyst of a severe global recession.





The Greece That Can Say No: History’s Lessons Applied To The Greek Debt Crisis

July 6th, 2015 Comments off

The latest stage in the Greek debt crisis has the been the referendum called by Prime Minister Alexis Tsipras, whose ruling Syriza party was elected on a platform of opposition to the austerity measures imposed by the Eurozone and the International  Monetary Fund, in exchange for loans to service what almost everyone recognized are sovereign debts that Athens can never repay. With the collapse of talks between the Greek government and its creditors, Tsipras called the referendum, seeking a “no” vote  on the latest bailout terms offered by the Eurozone and IMF.  Not surprisingly, many business commentators and economists have savaged the negotiating tactic being employed by Tsipras, essentially claiming that such an approach will lead to the inevitable ejection of Greece from the Eurozone, and an even worse contraction of the already depressed Greek economy.

On the basis of cold logic, those pundits may be correct. However, the affairs of human societies are rarely played out in a purely logical manner. Those observers, and the leadership of the Eurozone and IMF, have ignored the lessons from Greek history of the last century.

In  asking Greek voters to render a vote for “Οχι” (pronounced “Ohi,” which is “no” in Greek), Tsipras was echoing one of the most important dates on the Greek national calendar, “Ohi Day,” held every October 28. “Ohi Day” commemorates an event that occurred on October 28, 1940 which has influenced the Greek national character ever since. In was on that day that the Italian ambassador to Greece handed an ultimatum to the Greek Prime Minister, Ioannis Metaxas. Mussolini, who was jealous of the military successes achieved by his Axis partner, Hitler, decided he would attempt the game of conquest as well. Despite the fact that Metaxas was a dictator, sympathetic  to both Nazi Germany  and Fascist Italy, Mussolini decided on attacking Greece for no other reason than it appearing to be a defenseless country, ripe for easy conquest. At 3.00 AM  Metaxas was informed by Rome’s ambassador that an Italian army would march  into Greece from Albania in less than 3 hours, and he must capitulate or expect war. The answer from Metaxas was “Ohi.”

That one word rallied Greek resistance to the invasion mounted by Fascist Italy. Metaxas, who was an ill man who would die within months, underwent a profound metamorphosis. He abandoned his previous empathy for fascism, and became a stalwart fighter for democracy. On the day of the Italian invasion, Metaxas issued a proclamation to the Greek people which began with these words, “The hour has come to fight for the liberty of Greece , her integrity and honor.” In a stirring radio broadcast made a month later, Metaxas told his nation, “All must know that the struggle must be hard and long, and that our road will not be strewn with flowers, but we shall overcome all difficulties, face all perils…We are fighting for values the significance of which goes beyond our own frontiers and those of the Balkan countries and extends to all humanity. Let us thank God that His will has again destined Greece  to fight for such a lofty cause.”

To the surprise of the entire world, the Greek army utterly routed the Italian invaders, and even liberated a large party of Italian-occupied Albania. It was the first time in World War II that an Axis army had been defeated in a land campaign. At a dark time in human history, the courage of the Greek nation was a rare beacon of light.

Eventually, Nazi Germany intervened in the fighting, and its massive war machine overcame Greek resistance. However, even under Nazi occupation, the Greek people continued to resist by mounting guerrilla warfare. The war brought much suffering to Greece, and an argument could have been made that accepting the Italian ultimatum might have spared the nation much material suffering. However, the cost would have been severe to the Greek people’s sense of national dignity. In 1940, they followed in the direction set by Metaxas, and established an example of national honor that inspired the world.

On July 5, 2015 the Greek people have again said “no.” As in 1940, despite the hard road mandated by their decision, the Greek people have placed national honor and dignity on a higher plane than the only other alternative on offer: an ultimatum based on collective indignity and national impoverishment .