Why Another Financial Crash is Certain
© Mike Whitney
February 8, 2011
On August 9, 2007, an incident took place at a bank in France that touched-off a financial crisis that that would eventually wipe out more than $30 trillion in capital and thrust the world into the deepest slump since the Great Depression. The event was recounted in a speech by Pimco’s managing director Paul McCulley, at the 19th Annual Hyman Minsky Conference on the State of the U.S. and World Economies. Here’s an excerpt from McCulley’s speech:
If you have to pick a day for the Minsky Moment, it was August 9. And, actually, it didn’t happen here in the United States. It happened in France, when Paribas Bank (BNP) said that it could not value the toxic mortgage assets in three of its off-balance sheet vehicles, and that, therefore, the liability holders, who thought they could get out at any time, were frozen. I remember the day like my son’s birthday. And that happens every year. Because the unraveling started on that day. In fact, it was later that month that I actually coined the term “Shadow Banking System” at the Fed’s annual symposium in Jackson Hole.
It was only my second year there. And I was in awe, and mainly listened for most of the three days. At the end… I stood up and (paraphrasing) said, ‘What’s going on is really simple. We’re having a run on the Shadow Banking System and the only question is how intensely it will self-feed as its assets and liabilities are put back onto the balance sheet of the conventional banking system.’
BNP had been involved in credit intermediation, that is, it was exchanging bonds made up of mortgage-backed securities (MBS) for short-term loans in the repo market. It all sounds very complex, but it’s no different than what banks do when they take deposits from customers and then invest the money in long-term assets. (aka – “maturity transformation”) The only difference here was that these activities were not regulated, so no government agency was involved in determining the quality of the loans or making sure that the various financial institutions were sufficiently capitalized to cover potential losses. This lack of regulation turned out to have dire consequences for the global economy.
It took nearly a year from the time that sub-prime mortgages began to default en masse, until the secondary market (where these “toxic” bonds were traded) went into a nosedive. The problem was simple: No one knew whether the underlying mortgages were any good or not, so it became impossible to price the assets (MBS). This created, what Yale Professor Gary Gorton calls, the e coli problem. In other words, if even a small amount of meat is contaminated, millions of pounds of hamburger has to be recalled. That same rule applies to mortgage-backed securities. No one knew which MBS contained the bad loans, so the entire market froze and trillions of dollars in collateral began to fall in value.
Sub-prime was the spark that lit the fuse, but sub-prime wasn’t big enough to bring down the whole financial system. That would take bigger ructions in the shadow banking system. Here’s an excerpt from an article by Nomi Prins which explains how much money was involved:
Between 2002 and early 2008, roughly $1.4 trillion worth of sub-prime loans were originated by now-fallen lenders like New Century Financial. If such loans were our only problem, the theoretical solution would have involved the government subsidizing these mortgages for the maximum cost of $1.4 trillion. However, according to Thomson Reuters, nearly $14 trillion worth of complex-securitized products were created, predominantly on top of them, precisely because leveraged funds abetted every step of their production and dispersion. Thus, at the height of federal payouts in July 2009, the government had put up $17.5 trillion to support Wall Street’s pyramid Ponzi system, not $1.4 trillion.” (“Shadow Banking”, Nomi Prins, The American Prospect)
Shadow banking emerged so that large cash-heavy financial institutions would have a place to park their money short-term and get the best possible return. For example, let’s say Intel is sitting on $25 billion in cash. It can deposit the money with a financial intermediary, such as Morgan Stanley, in exchange for collateral (aka MBS or ABS), and earn a decent return on its money. But if a problem arises and the quality of the collateral is called into question, then the banks (Morgan Stanley, in this case) are forced to take bigger and bigger haircuts which can send the system into a nosedive. That’s what happened in the summer of 2007. Investors discovered that many of the sub-primes were based on fraud, so billions of dollars were quickly withdrawn from money markets and commercial paper, and the Fed had to step in to keep the system from collapsing.
Regulations are put in place to see that the system runs smoothly and to protect the public from fraud. But banking without rules is more profitable, so industry leaders and lobbyists have tried to block the efforts at reform. And, they have largely succeeded. Dodd-Frank – the financial reform act – is riddled with loopholes and doesn’t really resolve the central issues of loan quality, additional capital, or risk retention. Banks are still free to issue bogus mortgages to unemployed applicants with bad credit, just as they were before the meltdown. And, they can still produce securitized debt instruments without retaining even a meager 5 per cent of the loan’s value. (This issue is still being contested) Also, government agencies cannot force financial institutions to increase their capital even though a slight downturn in the market could wipe them out and cause severe damage to the rest of the system. Wall Street has prevailed on all counts and now the window for re-regulating the system has passed.
President Barack Obama understands the basic problem, but he also knows that he won’t be reelected without Wall Street’s help. That’s why he promised to further reduce “burdensome” regulations in the Wall Street Journal just two weeks ago. His op-ed was intended to preempt the release of the Financial Crisis Inquiry Commission’s (FCIC) report, which was expected to make recommendations for strengthening existing regulations. Obama torpedoed that effort by coming down on the side of big finance. Now, it’s only a matter of time before another crash.
Here’s an excerpt from a special report on shadow banking by the Federal Reserve Bank of New York:
At the eve of the financial crisis, the volume of credit intermediated by the shadow banking system was close to $20 trillion, or nearly twice as large as the volume of credit intermediated by the traditional banking system at roughly $11 trillion. Today, the comparable figures are $16 and $13 trillion, respectively… The weak-link nature of wholesale funding providers is not surprising when little capital is held against their asset portfolios and investors have zero tolerance for credit losses.” (“Shadow Banking”, Federal Reserve Bank of New York Staff Report)
So, between $4 to $7 trillion vanished in a flash after Lehman Brothers blew up. How many millions of jobs were lost because of inadequate regulation? How much was trimmed from output, productivity, and GDP? How many people are on now food stamps or living in homeless shelters or struggling through foreclosure because unregulated financial institutions were allowed to carry out credit intermediation without government supervision or oversight?
Ironically, the New York Fed doesn’t even try to deny the source of the problem; deregulation. Here’s what they say in the report: “Regulatory arbitrage was the root motivation for many shadow banks to exist.”
What does that mean? It means that Wall Street knows that it’s easier to make money by eliminating the rules… the very rules that protect the public from the predation of avaricious speculators.
The only way to fix the system is to regulate all financial institutions that act like banks. No exceptions.
Mike Whitney lives in Washington state. He can be reached at firstname.lastname@example.org.
How will Muqtada Al-Sadr save Hezbollah and Syria from Hariri’s indictment?
© Roads to Iraq
January 16, 2011
Managed to maintain its strength among the masses, Al-Sadr employed this force to achieve political gains ahead of all the other Islamic forces, holding forty parliamentary seats, seven ministries, and the parliament Deputy-presidency, which made the leader of the Movement a major political player with the ability to influence the overall political process.This political weight would give Muqtada Al-Sadr a semi-immunity against emergency circumstances.
The real strategic secret behind Muqtada Al-Sadr’s return to Iraq is precisely calculated. We already know that Al-Sadr has a strong relation with the Syrian leadership, as well as a special “family, organizational and logistical” ties with Hassan Nasrallah and Hezbollah, not to mention his relation with Iran, which is for Iraqi Shiite politicians is the highest Shiite political reference, and a strategic ally.
The International tribunal’s decision or indictment against for the assassination of “Hariri” is very close [Monday according to the French Le Monde], especially after the failure of the initiative “Syria and Saudi Arabia” with pressure from the U.S. and France.
We already know that the indictment will accuse members of the Lebanese Hezbollah and perhaps some Syrian officials. This will put the “Lebanese-Syrian-Iranian” front in a regional declaration of war.
Since Iraq has become linked geopolitical and logistically to Lebanon and vice versa. Iraq will be affected by any development in Lebanon, and this forced Al-Sadr to return to Iraq as quick as possible, to not to leave Lebanon, Hezbollah, Syria and Iran without insurance, protection from the weak Iraqi link. At the same Hezbollah, Syria and Iran will back the Sadrist Movement within the same strategy.
Here is Iraq’s FM Zebari saying:
Iraq was following up developments of the tribunal … We are also a party in this equation. We are not absent from U.S.-Iranian relations, [Iran’s] nuclear issue, the situation in Lebanon, the tribunal’s decision or indictment and from relations with Syria.
At this point, Al-Sadr will raise the readiness of the Sadrist Movement and all its military wings to open a front against the U.S. to ease the tension on Hezbollah and Syria, if both sense the danger of U.S.-Israel military activities.
This is what the Syria newspaper Al-Watan wrote two days ago:
Washington military bases in Iraq and Afghanistan … Will collide against the Arab and Islamic forces who do not accept and resist the American military intervention.
The return of Muqtada al-Sadr is a message to the Americans in the first place to reshuffle its agenda, The U.S. tried to identify the approach adopted by al-Sadr after his return in dealing with the overall political and security situation in Iraq, circulating the the leader of the movement is less radical than before, despite his focus on “resisting the occupation” in his recent speech “peacefully“.
Timed after Biden’s visit and his talks with Sistani (lasted about 3 hours in private), Al-Sadr adopted the “Liwa’a Al-Youm Al-Maoud” “The Promised Day” militia today and promised to continue the fight against the Americans, saying:
“Liwa’a Al-Youm Al-Maoud” belongs to us and is not affiliated to any one else. They are obedient and ask God to grant them victory.
Washington considers “the Promised Day”, “Hezbollah in Iraq”, “Revenge of God” and the “League of the Righteous” are militias linked and funded by Iran.
Because the Sadrists feel that they allowed Maliki to his second term, the presence of its leader in the arena may influence the performance of the government and thus will force the prime minister to implement the U.S. withdrawal without delay according to the security agreement signed between the two sides, and that will put the Prime Minister in a very difficult position in the dramatic developments in Lebanon.
The following commentary is reprinted with permission from Global Research.
Islamophobia and the Plight of Christian Arabs
© Nicola Nasser
Source: Global Research
January 12, 2011
Suddenly, the U. S.-European alliance is acting to protect the “existence” of the Christian Arab minority against the Muslim Arab majority whose very existence is besieged and threatened by this same alliance, drawing on a wide spread Islamophobia while at the same time exacerbating Islamophobia among western audiences whom the international financial crisis is now crushing to the extent that it does not spare them time or resources to question the real political motives of their governments, which have been preoccupied for decades now with restructuring the Arab world geographically, demographically, politically and culturally against the will of its peoples with a pronounced aim of creating a “new Middle East.”
Ironically this sudden western awakening to the plight of Christian Arabs comes at a time when all Arabs, both Muslims and Christians, are crushed by U.S. and Israeli military occupation or foreign political hegemony, but worse still when they are in the grip of a social upheaval in the very states that are by will or by coercion loyal to this alliance, where unbalanced development and an unemployment rate more than double the world average are pushing masses onto the streets to challenge the legitimacy of their own pro–west governments. Exactly at this time, when Arab masses need their “social” unity for national liberation, sovereignty, liberty and freedom, a European campaign is being waged to divide them along religious and sectarian lines.
French President Nicolas Sarkozy — who on Dec. 9, 2009 wrote in Le Monde defending a Switzerland vote banning Muslim mosques from building minarets and made a national fuss on banning less than two thousand French citizens from wearing Niqab — said on Jan. 6 that he “cannot accept” what he described as “religious cleansing” of Arab Christians. His Foreign Minister, Michele Alliot-Marie, wrote to the EU’s foreign affairs baroness, Catherine Ashton, asking for the union to draw up a plan of action in response. France took the initiative to call a meeting of the U.N. Security Council last Nov. 9 to discuss international protection of Iraqi Christians. On Dec. 22, Italy’s foreign Minister Franco Frattini said his country was presenting a resolution to the U.N. to condemn their “persecution.” Together with his French, Polish and Hungarian counterparts, Frattini wrote a joint letter to Ashton asking her to table the issue at the foreign ministers meeting on January 31 and to consider taking “concrete measures” to protect them. On Dec. 17, the German Bundestag passed a resolution defending the freedom of religion around the world, but viewed with “great concern” the resolution of the U.N. Human Rights Council on March 25 last year against the “defamation of religions” because it “undermines the existing human rights understanding.”
The European political reaction sounds excessively selective in its concern over an allegedly missing right of the freedom of religion of the Christian minority in a region where civil and human rights for the Muslim majority are missing thanks in the first place for the support the regional governing regimes, which confiscate these same rights, receive from the U.S.–European alliance, and the European selectivity allegedly in defense of the “threatened” existence of the Christian Arab minorities speaks louder when it is compared with the deafening European silence over the threatened existence of the Arab and Islamic cultural identities of the majority, let alone the European incitement against both identities, a double standard that explicitly invokes suspicious questions about the credibility and sincerity of the European “rights” concerns and about the real political goals behind these pronounced concerns. For example, more than 300 mosques were attacked, some of them of a UNESCO World Heritage Center standards, hundreds of Muslim clerics were murdered, millions of Muslims were forced either to migrate internally or immigrate externally in the U.S.–occupied Iraq, and the plight of Iraqi Christians has been and still is merely a side show of the overall destruction of the whole state there, but the European rights consciousness did not and still does not find it worth a similar call for defense and protection.
Unfortunately, this traditional European divide–and–rule policy in the Arab world, as it was the case for centuries, is today finding ample papal blessing from the Vatican to justify itself, not in the eyes of Arabs, but in the eyes of its own audiences. President Sarkozy’s whistle blower cry this January 6 that Christians in the Arab–Islamic world are victims of a planned “religious cleansing,” came on the backdrop of the Vatican’s Pope Benedict XVI repeated call on the world leaders to rise up for the protection and “defense of the Christians in the Middle East.” It is a cry fraught with the connotations of the historical precedent of the Vatican–blessed Fourth Crusade, which consisted mainly of a crusading army originating from areas within France and which was diverted from invading Egypt by sea to the sacking of Constantinople, the capital of the political and spiritual rival, the Orthodox Church, to which the overwhelming majority of Christians in the Arab–Muslim world belong, instead of “liberating” Jerusalem from Muslims.
Pope Benedict XVI’s wilful or careless indifference towards exploiting his church concerns by “secular” politicians like Sarkozy to serve their down to earth goals, or towards exacerbating Islamophobia, which in turn fuels Christianphobia, is reminiscent of how the older Sarkozy–type “Christ–abiding” and non–secular politicians concealed from the bulk of the crusading army a letter from Pope Innocent III, who made the new Fourth Crusade the goal of his pontificate, warning against the diversion of the crusade, forbidding any atrocities against “Christian neighbors” and threatening excommunication. In as much as the indifference of the crusader pope to carry out his threat had led to the demise of the Byzantine Empire, the fall of Constantinople in the hands of the Muslims less than three hundred years later and turning the crusades into a war against the rival church more than against the Muslims, the indifference of the present day Pope Benedict XVI is threatening to counterproductively achieve the demise of Christian existence in the “East,” which he has made, it seems, the goal of his pontificate.
Ever since the Fourth Crusade sacked Constantinople in 1204, Arab Christians in the Muslim world have been wary of the messages and emissaries of Rome as a cultural spearhead of foreign invasion and hegemony. Even a Catholic loyal to the Vatican like the incumbent Latin Patriarch of Jerusalem, Fouad Twal, had this to tell the Israeli Haaretz exclusively four days before Benedict XVI’s “pilgrimage” to the Holy Land in September 2009: “The thing that worries me most is the speech that the pope will deliver here. One word for the Muslims and I’m in trouble; one word for the Jews and I’m in trouble. At the end of the visit the pope goes back to Rome and I stay here with the consequences.” Patriarch Twal’s fears were vindicated last week when Egypt recalled its Vatican envoy for consultations over the Pope’s remarks on Egyptian Copts: The “new statements from the Vatican” are “unacceptable interference” in Egypt’s “internal affairs,” the Egyptian foreign ministry said in a statement. Syrian analyst Sami Moubayed recently wrote that similar papal remarks were to the “fundamentalists … a blessing in disguise.”
Pope Benedict XVI since he occupied the papacy seat seems totally insensitive to the worries of his representative in Jerusalem; he doesn’t seem short of words and seems careful not to miss an opportunity to utter provocative anti-Muslim pronouncements that place both his church clergy and followers on the defensive among both their Christian as well as Muslim compatriots. However, he places them in a more critical position by his helplessness to find any words or an opportunity in his latest torrential rhetoric about the protection of Christians and their plight in Holy Land itself, where they have been victims of actual ethnic and religious cleansing for more than sixty years now since the Palestinian Nakba in 1948, when the state of Israel was declared independent on the ruins of their homes.
From a regional perspective, both Christian and Muslim, the very existence of Christians is threatened, besieged and gradually cleansed by the Israeli military occupation in the Palestinian cradle of Christianity — where Christ was born, spread the word of God, love and peace and crucified. The papal silence on this simple fact of life is much louder in the region than Pope’s pronounced appeals for the defense and protection of Christians on the peripheries of the birthplace of Christianity, in Iraq, Egypt or Lebanon for example, because when the center of Christian gravity crumbles in Jerusalem, the periphery supports would not hold for long and even the important St, Peter’s Basilica in the Vatican would be a pale substitute, and the center of Christian gravity in Jerusalem is almost totally Judaized, and is off limits to the Christians both in the Palestinian cradle of Christianity as well as to their brethren on the Arab and Muslim periphery, unless they are granted an Israeli military permit to visit, which is rare and very tightly selective.
Viewed from Christian regional perspective, the papal appeals for their protection could hardly be described other than contradictory, if not hypocrite, particularly in view of a Vatican’s document in July 2007, approved by Benedict XVI, which declared Catholicism as “the only true church of Christ” and “other Christian communities are either defective or not true churches.” So, “what” Christians Pope Benedict is appealing to defend and protect? A year earlier, Coptic Pope Shenouda III denied there was any dialogue or contacts with the Vatican although thirty three years before both sides agreed to form joint committees for bilateral dialogue. With the exception of Armenian church as a late newcomer but nonetheless an independent church, the Coptic, Orthodox, Chaldean, Assyrian, Syriac, Melkite and other Eastern communions have existed and coexisted among and with Arabs since the earliest days of Christianity, because they are Arabs either by ethnicity or by culture and they are the overwhelming majority of Christians in the Middle East and an integral part of the Arab society.
Islamophobia is warning that Muslims are “returning” to Islam, but is it not top on the agenda of Pope Benedict XVI to return Europe to Christianity? “We must reject both secularism and fundamentalism,” the Pope said in his annual address on Christmas Day, but is it not secularism that the Pope, Europe and the U.S. are preaching now to de-Arabise and de-Islamise Arabs? This double standard ironical western contradiction deprives their calls for the protection of Arab Christians of whatever credibility it might still have in the Arab eyes. Their “protection” will prove counterproductive sooner or later. Christianphobia that fuels anti – Christian blind terror is an already active byproduct.
The ‘Church of Islam’’
Commenting on the Synod of Middle East Christian leaders that convened in the Vatican last October, the spiritual leader of the Melkite “Catholics,” Patriarch of the Church of Antioch, Gregorios III, had this to say, quoted by the Lebanese Daily Star last December: “The Synod for the Middle East is a Synod for Arab countries, for Arabs, a Synod for Arab Christians in symbiosis with their Arab society. It is a Synod for the ‘Church of the Arabs’ and ‘Church of Islam’.” The adviser to the Muslim Sunni Mufti of Lebanon, Dr. Mohammad Al–Sammak, who was invited to the Synod, recognized the Arab identity of Christians in the Middle East: “I cannot live my being Arabic without the Middle Eastern Christian Arab … They are an integral part of the … formation of Islamic civilization,” he told the Synod.
Politically and religiously these Christians have been on the other side of the Vatican–blessed old or modern western conquests, and politically and religiously they have been all along protected by Arabs and Muslims, otherwise they would not have survived. Their existence is now under threat because the existence of their Arab–Islamic incubator is on the line, besieged either by direct military occupation in Palestine, Iraq and Afghanistan or by economic sanctions and political hegemony; their existence was not threatened when the Arab–Islamic state was an empire and a world power, nor was it threatened during the crusades despite the atrocities committed by their western co-religious crusaders, which would have invited a reprisal had it not been for the teachings of Islam itself.
The U.S.–led world war on terror targeting mainly Arabs and Muslims is perplexing western pro–law, peace and human rights audiences by smoke–screening their governments’ military adventures and modern crusades, which is the real action that created terrorism as the only possible reaction expected by the overpowered nations. However the invading creator and the created terrorists in their bloody divide are smoke–screening also any possible resurface of the forgotten Islamic covenants that protected the indigenous two thousand–year old Arab Christians since the advent of Islam in the seventh century. In the year 628 AD, a Christian delegation from St. Catherine’s Monastery, in Egypt’s Sinai, met Prophet Mohammad and requested his protection. The Prophet granted them a protection charter.
Dr. Muqtedar Khan, Director of Islamic Studies at the University of Delaware and a fellow of the Institute for Social Policy and Understanding, wrote this about the charter: “The document is not a modern human rights treaty but even though it was penned in 628 A.D., it clearly protects the right to property, freedom of religion, freedom of work, and security of the person. A remarkable aspect of the charter is that it imposes no conditions on Christians for enjoying its privileges. It is enough that they are Christians. They are not required to alter their beliefs, they do not have to make any payments and they do not have any obligations. This is a charter of rights without any duties! The first and the final sentence of the charter are critical. They make the promise eternal and universal. By ordering Muslims to obey it until the Day of Judgment the charter again undermines any future attempts to revoke the privileges. These rights are inalienable.” In the year 631, Prophet Muhammad received a delegation of sixty Christians from Najran in the Prophet’s mosque in Medinah, allowed them to pray in the mosque, and concluded the “covenant to the Christians of Najran” treaty which granted them religious and administrative autonomy as citizens of the Islamic State. In 637, Islamic Caliph Omar ibn al–Khattab granted the similar “Covenant of Omar” to the Patriarch of Jerusalem Sophronius.
However, neither Islamophobians nor their terrorist Islamists have any interest but to dump these Islamic ideological covenants for the protection of Arab Christians. No Arab Christian fears for his life from his Muslim neighbor or his government, but he or she definitely fears these two protagonists, who are both foreign to his history and culture. No foreign protection of Arab Christians could match the protection and solidarity they received from their Muslim compatriots both in Iraq and Egypt following the bombings of a church in Baghdad on October 31 and a church in Alexandria on New Year Eve. In the latter case there were reports of Muslim human shields to protect the Christmas religious celebrations of Egyptian Christians, let alone the solidarity statements by both outlawed Al-Jamaa Al-Islamiya and the Muslim Brotherhood and the thousands of police deployed for the same purpose, in a remarkable show of national unity and historic coexistence.
The Organization of the Islamic Conference (OIC), scheduled to meet in the UAE on January 19, will discuss the situation of Christians in member states, according to Lebanon parliamentary Speaker Nabih Berri. On this background, there are also reports that Egypt will ask the Arab League economic summit this month, to discuss foreign, and in particular western, interference in Arab Affairs. European offers of protection are already backlashing.
The only real threat to the existence of Arab Christians showed for the first time when the European colonialism first, then the U.S. imperialism, self–appointed western powers as their protectors. It is noteworthy that in both the Iraqi and Egyptian cases the native Christian Arabs are now paying the heavy price of the U.S. anti–Pan–Arabism of both late Jamal Abdul Nasser and Saddam Hussein. Their plight started with the forcing of pro– U.S. regimes in both countries.
To describe the latest attacks against Christians as a plan of “religious cleansing,” as President Sarkozy has done, suggests a persecution that doesn’t exist; this is “not the case in the Middle East at the moment,” it is “not supported by the wider community,” said Fiona McCallum of the University of St. Andrews in Scotland, who is a specialist on the Christian communities in the Middle East, adding: “It’s important to also note that immigration takes place from the region from both Christians and Muslims as well.”
Nicola Nasser is a veteran Arab journalist based in Bir Zeit, West Bank of the Israeli-occupied Palestinian territories.
The following article is reprinted with permission from RIA Novosti, Moscow.
Russia’s defense ministry confirms plans to buy 2 foreign helicopter carriers
© RIA Novosti
October 31, 2010 15:44
Russia’s Defense Minister Anatoly Serdyukov on Sunday confirmed the ministry’s plans to buy two foreign helicopter carriers for the Russian Navy and eventually produce vessels of this class on Russian soil.
“We are speaking about the purchase of two helicopter carriers. Moreover, we are going to buy them with full technical documentation so that eventually we can produce them at our enterprises,” Serdyukov said in an interview with Vesti Nedeli TV program.
In early October, Russia’s Defense Ministry announced an international tender for the construction of two amphibious assault ships for the Russian Navy. Previously, Russia held negotiations with France’s DCNS on the purchase of a Mistral-class warship on a 2+2 scheme whereby Russia would buy one or two French-built Mistrals and build another two under license at home.
The negotiations were suspended until the results of the tender were announced.
The shipyards of Saint-Nazaire in France are seen as the most likely winner in a tender to build amphibious assault warships for the Russian Navy. Meanwhile, sources told RIA Novosti that Russia’s Defense Ministry had also sent invitations to the tender to ship manufactures from Spain, the Netherlands and South Korea.
The Mistral class ship is capable of transporting and deploying 16 helicopters, four landing barges, up to 70 armored vehicles including 13 battle tanks, and 450 personnel.
The following column is reprinted with permission from Stanislav Mishin, a regular contributor to Russian newspaper Pravda.
France Shuts Down, U.K. Set To Burn: The Western Catastrophe
© Stanislav Mishin
Source: Mat Rodina
October 16, 2010
What we are witnessing with the mass disorders in France is what we tasted in Greece all spring and summer and what will rock the West in greater and greater ferocity.
For those who have not been paying attention, the shut downs, the walk outs and the break downs of Greece have spread now to France. The trigger? A broke, over extended government, already straddled with suffocating high taxation decided to raise the retirement age from 60 to 62.
Instantly, millions hit the streets, shutting down business and movement. Walkouts at the airports have shut down flights, while work stoppages at oil refineries and fuel depots threaten to paralyze not only the economy but also emergency services. Panic buying and hoarding has already begun. Basically, French society is in paralysis just like Greece was for most of this year.
One poll showed that 70% believe that this will build into the same massive protests of 1995 and over half the population support this. What none are thinking about is the cost of that protest or the fact that their demands of long and easy retirement are unrealistic, always were and unsustainable.
Al Jazeera’s reporter, Jacky Rowland, was quoted as stating “French workers have campaigned long and hard for their rights and benefits, and they won’t give them up without a fight,” she said. She is right, they will fight and enjoy themselves right up to the third world economic collapse, all else be damned.
In Spain workers shut down production, freezing the country’s economy and costing billions of Euros that that broken and bankrupt government also can not afford. Transportation and such were equally shut down.
Just like Greece before them, and Romania sporadically, and England about to follow.
The real show will, of course come in England. The new pseudo conservative government in England has announced that it will cut 40% of the budget, in order to reign in the 13% deficits. Of course this will translate into mass unemployment of the public sector and no alternatives in the private sector, as there are no plans to equally remove high taxes, high regulations and non-existent outsourcing barriers to China, that would actually encourage private business and industry to open plants and absorb the cast offs of the biggest employer in the U.K.: government.
The workers of course understand that, but instead of fighting and pushing the so-called conservatives to actually free the economy, not just cut spending, they are indeed fighting for the continuation of the ruin that they all face. The U.K. is a broke 2nd world economy, rapidly economically, morally and culturally sliding into a failed state.
The government unions, first why does any government allow gov. employee unions is insane to behold, have flatly stated, they will shut the country down and set it on fire. Well t-time is coming and coming rapidly: the Spring of British Discontent. Of course, the fact that without such actions, even these imperfect actions, by summer time next year, the U.K. economy will be in absolute free fall and these same bureaucrats and workers will not be getting paid anyways, is beyond their comprehension or cognizant abilities.
Similar strikes are further breaking out in Slovakia, again in Greece, and the capital of that frankenstinian state of the E.U. was equally rocked.
The communists are ecstatic, knowing that soft socialism always leads to this. Cradle to grave care is always expensive and steady growth in taxes, along with the strangling demands of the watermelons (green activist on the outside, red Marxist on the inside) have made sure that tax revenues shrink, not grow, as business flees. This of course leads to a crushing of the cushy expectations of the masses and the mass protests and revolutions.
The Marxists, as usual, are more than happy to aid these revolutions and sacrifice the lives of tens if not hundreds of thousands of their countrymen, to establish their Marxist utopias. That every single one of these Utopias has always failed and cost the lives of millions in the process, as well as whole lost decades in economic growth, is irrelevant to the true believers, who know that this one, this time, this even will be done correctly. Simply put, there is no reasoning with such true believers.
John Monks, general secretary of the European Trades Union Confederation, which organized the events, was quoted as stating: “This is the start of the fight, not the end.”
What all of these socialists fail to answer and the cushy and spoiled workers do not dare to ask is: how do we pay for this? This of course, plays right into the hands of the Marxists.
Equally, the elites in America are setting the situation up just as well and the people are playing into it. True, there are the Tea Party movements, who have no clear agenda except to cut spending and taxes, more so taxes. If these were actual fiscal conservatives, where were they during the “good ole” days when their government under the Fascist Republicans spent in the hundreds of billions on cheap credit? Only when the Communist Democrats aintied it up a notch did they “awake”. But what do they want? Cut spending? But on what? See, no one in that movement puts forth a real agenda, because if they did then problems would appear instantly.
For example: many want no more social spending, but have no problems with wars after wars, spending trillions on the invasion of sovereign nations, especially if their kids never have to serve. Others want cuts in taxes, as long as they continue to enjoy their own retirements and get cost of living upgrades, never mind that their pension system: Social Security, is already $40 billion in the whole.
Just like their confused European cousins, they claim: I have paid into the system, I deserve it. Well yes, but how?
Equally, most of these so-called conservatives are free trade enthusiasts, because most are not in manufacturing and make cash by importing and enjoy cheap Chinese junk, never bothering to think past the price to the actual cost.
More so, even then the Europeans, who at least practice some protectionism of their industry. The Americans face a conundrum: if they cut spending now, forty million workers and their families will be out on the street, with hundreds of thousands joining them weekly, plus massive layoffs of state employees, which is already underway. This is a formula for revolution. If they continue spending, which means printing debt, they equally face an economic collapse, another formula for revolution.
Of course, with their import debt growing to record levels every month, sooner or later, regardless of what they do, they will be cut off at worst or face exploding costs at best, and the further impoverishment of the people: equally a formula for revolution.
Either way, no matter what happens, the West, already sagging under the weight of its own “prosperity” and easy, Christless, immoral living, is facing catastrophe. Anarchy, autocracy, tyranny are what is on the horizon. The only hope: a return to Christian Monarchy and stable sensible economic policy, and the crushing and ousting of the Marxists and socialists, once and for all, seems a long shot at best.
The following commentary is reprinted with permission from World Socialist Web Site.
France steps up military intervention in Sahel
© World Socialist Web Site
By Kumaran Ira
September 2, 2010
France has seized upon reports of the execution of a French aid worker by Al Qaeda in the Islamic Maghreb (AQIM) in July to escalate its military intervention in its former colonies in the strategic Sahel region of Western Africa.
French aid worker Michel Germaneau, 78, who was kidnapped in April while working for a children’s charity in Niger, was reportedly executed by AQIM in retaliation for a joint Franco-Mauritanian raid on July 22 on an AQIM camp in northern Mali. The raid ostensibly was an attempt to liberate him. On July 25, in a recording broadcast by the Al Jazeera TV network, AQIM said Germaneau had been killed in “revenge” for the death of its members in the raid.
Having announced the death of Germaneau on July 26, the French government declared that it would wage war in the Sahel region, an area along the south of the Sahara desert, running through Mauritania, Mali, Niger and southern Algeria.
On July 27, French Prime Minister François Fillon declared, “France is at war with Al Qaeda… Combat against terrorism, and AQIM in particular, will intensify”. He added that “roughly 400 fighters are waging a merciless struggle against the countries of the region and against our interests”.
On August 16, the government set the “Vigipirate” anti-terrorist alert system to “red” status, the second highest possible alert level.
France will increase its own military activities and its collaboration with regimes in the Sahel. Axel Poniatowski, head of a parliamentary foreign affairs commission, said, “France will provide ‘logistical support’ for military actions by Mauritania, Mali, or Niger against AQIM”.
The BBC commented, “France, as well as other European nations and the United States, have been training soldiers here for many years. This is the first time, however, they have admitted to being involved in an operation against AQIM”.
On July 26 and 27, French Foreign Minister Bernard Kouchner visited Mauritania, Mali and Niger. Speaking in Niamey, the capital of Niger, he said, “We will be alongside our Nigerien, Malian, Mauritanian friends”. Asked about the possibility of installing bases in the region, he said, “We are not going to install bases. We have very clear defence agreements”.
In fact, reports suggest French troops already treat bases in the region as their own. The news magazine Le Point writes, “France is, with the U.S. and U.K., one of the three countries with Special Forces that can carry out completely independent operations. The units, highly trained in desert warfare, have been in the Sahel for months, train regional armed forces, know the region well, and can even if needed operate clandestinely there. They have already done it, and more than once! French units know the Sahel, and the technical means at their disposal – reconnaissance satellites, planes to intercept communications, etc. – are perfectly adapted to this theatre of operations”.
Questions on the official story
Reports from Al Jazeera and British business intelligence firm Menas question the credibility of French official statements, including on how the raid took place, its location, and even whether Germaneau was in fact executed. There is also evidence of an aerial raid launched from Tessalit – an old French colonial base in north-eastern Mali near the Algerian border, also used by U.S. Special Forces – in which Algeria could have been involved. French officials denied that there were aerial operations, or that Tessalit or Algerian forces were involved.
On August 8, Al Jazeera published a report by Jeremy Keenan, an expert on the region at London’s School of Oriental and African Studies. He charged that “France, Mauritania and Algeria have gone to extreme lengths to cover up what actually happened”. He noted a July 22 AFP dispatch that cited “a foreign military source in Bamako as saying that the raid on a suspected al Qaeda base (in north-west Mali) was just a smoke screen”.
He continued, “based on the reports received from well-placed regional sources shortly after midday on July 22, there had been intense air traffic around Tessalit during the night and early morning, and that Algerians, supported by French special forces, had led an assault into the adjoining Tigharghar Mountains in an attempt to rescue Germaneau”.
Keenan wrote that French President Nicolas Sarkozy was advised by his defence council at a July 19 meeting, “in which the prime minister, foreign and interior ministry, the head of the armed services, representatives of the foreign, interior and military intelligence services and [Sarkozy’s chief of staff] Claude Guéant participated”. He added, “[T]he decision to intervene in the Sahel was not taken lightly and would certainly have involved an appreciation of the views of Algeria’s DRS”, its military intelligence service.
Guéant reportedly met with DRS chief General Mohamed Mediëne in Algiers on June 20.
Keenan questioned whether Germaneau was executed after the July 22 raid, or if he died before. He suffered from heart disease and had been denied access to critical medicine. Keenan writes, “[T]he last evidence that he was alive was received by the French authorities on May 14. Sources in the region believe that he may have died shortly after that time”.
He pointed out, “The only testimony of his execution has come from a local Kidal dignitary, who has been involved in previous hostage negotiations and is a thoroughly discredited source. Moreover, the very vague nature of the demands that accompanied the threat to execute Germaneau on July 26, combined with the fact that no negotiators appear to have been mobilised within Mali, as has been the pattern with previous hostage cases, must also have alerted the French authorities to question whether Germaneau was still alive”.
Geo-strategic interests and France’s “war on terror”
The declaration of a new “war on terror” is an ominous, reactionary event, whose basic social content is now well known. Intelligence services and special forces will be given free rein to use massive violence against ex-colonial regions, while the population of their home country is to be terrorised by constant warnings from the political establishment of possible attacks.
The military escalation in the Sahel under the banner of a “war on terror” is aimed at pursuing France’s strategic and commercial interests. The 2008 French white paper on defence, which outlined France’s global geo-strategy, identified the Sahel as one of four critical regions for French imperialism. The region is a key supplier of oil, minerals, and uranium.
Uranium is one critical interest for French imperialism in the region. France’s nuclear industry – which supplies 78 percent of the country’s electricity generating capacity and makes €3 billion in yearly profits from energy exports alone – relies on Niger for 25 percent of the 12,400 tonnes of uranium oxide concentrate that it consumes yearly.
The world’s third-largest uranium producer, Niger is expected to increase its yearly uranium output from 3,500 to 10,500 metric tonnes. French state-owned nuclear company Areva has exploited these uranium reserves for 40 years. It mines the Arlit and Akouta deposits, which produced over 3,000 metric tonnes in 2008. Areva has invested €1.2 billion in the Imouraren deposit, which is expected to produce almost 5,000 metric tons per year for over 35 years.
French hegemony in the region is threatened by the growing influence of China. Beijing has emerged as a rival buyer of uranium in Niger, from the Azelik and Teguidda deposits. It has also paid $5 billion for the right to prospect for oil in the Agadem oilfield in eastern Niger. Africa Confidential writes, “China’s relatively new involvement vastly strengthens Niger’s power to bargain with France”.
France’s military intervention has the backing of Washington. Last November, U.S. Coordinator for Counterterrorism Daniel Benjamin told the U.S. Senate, “French ties in this region remain pivotal, and France has expressed a sincere desire to cooperate with the United States in this area of the world. The Paris meeting in September was the first senior-level meeting that mapped out a way forward for such cooperation. Our strategic counterterrorism priorities in this region are very similar, focusing as they do on building law enforcement, military capacity, and development”.
On July 30, the Wall Street Journal commented that “Paris’s plan to increase its involvement [in the Sahel], gives reason to hope that France is ready to retake the lead in this increasingly hot front”. It added that “predictably, not of all of France’s former colonies are welcoming the erstwhile colonial master’s return to assertiveness”.
In the face of growing competition for markets and natural resources, France’s raids in the Sahel set precedent for further military escalations. French media recently indicated that the ruling class is considering fighting major wars against Turkey, Egypt, or even China. (See: “Media demands France prepare for world war“)
A French “war on terror” in Africa will be used to legitimate France’s deeply unpopular participation in the U.S.-led “war on terror” in Afghanistan and Pakistan, to which France is deploying the aircraft carrier Charles de Gaulle. A recent poll found that 70 percent of the French population opposes the war in Afghanistan. In an August 26 speech, however, Sarkozy said France would “remain engaged in Afghanistan, with its allies, as long as is necessary”.
The following article is reprinted with permission from Russian news agency, RIA Novosti.
French warships for Russia to be armed with Ka-52 helicopters
© RIA Novosti
August 14, 2010 16:07
Mistral-class helicopter carriers, which Russia plans to buy from France, will be armed with Russian Ka-52 Alligator helicopters, Air Force Commander Colonel General Alexander Zelin told the Ekho Moskvy FM station on Saturday.
He emphasized that the Ka-52 Alligator helicopters are very advanced and are equal to best foreign models.
The Ka-52 is armed with 30-mm cannon, Vikhr (Whirlwind) laser guided missiles, rockets, including S-24s, as well as bombs.
The Ka-52 is a modification of the basic Ka-50 Hokum model. The development of the Ka-52 started in 1994 in Russia, but its serial production began only in 2008.
The helicopter is also equipped with two radars, one for ground and one for aerial targets and a Samshite nighttime-daytime thermal sighting system.
Russia is negotiating the purchase of at least one French-built Mistral-class amphibious assault ship and plans to build three more vessels of the same class in partnership with the French naval shipbuilder DCNS.
A Mistral-class ship is capable of transporting and deploying 16 helicopters, four landing barges, up to 70 armored vehicles including 13 battle tanks, and 450 personnel.
The Russian military has said it plans to use Mistral ships in its Northern and Pacific fleets.
Many Russian military and industry experts have questioned the financial and military sense of the purchase, and some believe that Russia simply wants to gain access to advanced naval technology that could be used in the future in potential conflicts with NATO and its allies.
In April, the head of the Federal Service for Military and Technical Cooperation, Mikhail Dmitriev, said the Mistral deal would be concluded by the end of the year.