Abenomics Held to ‘Teach Us Something’

by Pater Tenebrarum

A Fount of Economic Fallacies

After Japan has been berated by Western economists for more than 20 years, the mad-cap flight forward by the Abe administration is suddenly held to be able to 'teach us something' about what should be done with regard to economic stagnation. It is amazing what a little rally in the stock market and a few highly suspect GDP releases can accomplish.

As the LA Times writes in a recently published article entitled “Japan's economy is bouncing back, offering a possible model for U.S.”, 'Abenomics' (i.e., the same hoary inflationism that has been tried over and over again since John Law) is where it's at. The article is interesting mainly because it is a fount of economic fallacies on a par with Shinzo Abe's policies. An excerpt:

“After two decades of economic stagnation, once-mighty Japan is beginning to revive — under policies that some experts say could offer lessons to the still-struggling economies of the United States and Europe.

While the Eurozone tries to break out of recession and the U.S. economic recovery remains anemic, Japan has begun to grow at an encouraging rate.

The shock-therapy policies of Prime Minister Shinzo Abe have helped Japan's economy expand for three straight quarters at a pace faster than that of the United States.

Its stock market has surged more than 50% in less than a year. Leading automakers and even long-struggling electronics firms such as Sony Corp., beaten down by Apple Inc. and Samsung Electronics Co., are reporting a jump in profits.

The combination of government and financial measures popularly know as Abenomics may finally be snapping Japan out of the doldrums, and that is drawing increasing attention from economists in the West.

Japan's struggles with deflation and a rapidly aging society are in many ways unique, but some of the problems that have long trapped Japan, including sagging incomes and structural weaknesses, are similar to those dogging the U.S. and Europe.

"It may have quite a lot to teach us," Joseph Stiglitz, the Nobel laureate economist, wrote recently. "If Abenomics is even half as successful as its advocates hope, it will have still more to teach us."

Japan's central bank has begun to pump more cash into its economy, lifting the nation's exports by reducing the price of Japanese products in the global marketplace.

In addition to adopting strong monetary policy, Abe has boosted government spending to put more money into the pockets of Japan's citizens. The U.S. and Europe, by contrast, have largely emphasized cutbacks, an approach economic studies suggest have slowed job creation and overall growth.”

(emphasis added)

Heaven help us if 'Western experts' think we should imitate this nonsense, especially if one of those experts is arch-Keynesian Joseph Stieglitz. Frankly, it is actually hard to see in what way Japan's policies differ from those practiced in the West; the main difference is that it is closer to its ultimate debt catastrophe.

Anyway, Japan cannot 'teach us' anything, but the above quoted LA Times article can.

The Errors Enumerated

The stock market has surged, it is true. That can easily happen when the central bank embarks, or threatens to embark,  on a hugely inflationary policy and the currency's value plunges. Of course said market remains 65% below its bubble peak attained almost 24 years ago, so it may be a bit early to celebrate its revival. In the bigger scheme of things the recent rally is but a blip on the chart, although it certainly looks promising from a technical perspective (that may actually be a very bad sign for the yen):

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The Nikkei index over the past quarter century – click to enlarge.

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It is easy to throw a party when the central bank inflates like crazy, but that doesn't mean the policy is economically sensible. We recently talked briefly about Germany's hyperinflation: in mid 1922, unemployment had fallen well below 1% (!). Surely the inflation policy was 'working'? Alas, by late 1923 the unemployment rate was at 29%. More than two decades of major economic and political upheaval followed – in the end, Germany was a pile of rubble.

There was never a 'struggle with deflation' in Japan. The Japanese money supply has grown slowly over the past two decades, but it has at no point deflated. Prices fell ever so mildly, a great boon for the citizenry. Why everybody seems to think that Japan's citizens are better off when everything becomes more expensive for them remains a great mystery. Given Japan's demographic backdrop, a policy of inflation does not even make superficial sense. The old Keynesian trick of trying to betray wage earners by lowering their real incomes via inflation in order to temporarily raise employment has never been more misguided than in Japan with its sub 4% unemployment rate and shrinking population.

The BoJ has not merely made 'Japan's products cheaper' – it has contributed to crashing the exchange value of the yen. So what are we supposed to do now, if it is true that this policy has something to 'teach us'? Not everyone can devalue their currency against all other currencies at the same time after all. Besides, the alleged gains that come from currency devaluation are 100% ephemeral. There is no lasting benefit to be had. All it means is that Japan's citizens are now forced produce far more than previously if they want to obtain the same amount of goods and services from abroad as before. The accounting profits of the fairly small coterie of exporters are temporarily rising, but eventually domestic prices will adjust to the situation and then the seeming advantage will be gone entirely. Note by the way that Japan has a trade deficit these days.

In fact, Japan's policy makers should probably be concerned about the possibility that a currency crisis may engulf Japan sooner or later unless they step back from their schemes. This is one reason why the bullish looking Nikkei chart is actually slightly worrisome – in a currency crisis, the stock market would probably soar in nominal terms (although it would likely become quite worthless in real terms if history is any guide).

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A daily chart of the September yen futures contract. The yen has just broken down again from a triangle formation – click to enlarge.

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Finally, the assertion that “Abe has boosted government spending to put more money into the pockets of Japan's citizens.” is utterly ludicrous. Every single yen Japan's government is 'putting into the pockets of its citizens' it must first take out of their pockets, whether by taxation, borrowing or inflation.

The government possesses no secret stash of resources it can distribute when needed. Every yen by which government spending increases is a yen Japan's citizens can no longer spend. The difference is only that the spending decisions are made by bureaucrats now instead of by private citizens. Since bureaucrats have no possibility to conceive of the categories profit and loss and cannot ascertain the opportunity costs associated with their spending, most of it will turn out to be wasteful (Japan already has countless 'bridges to nowhere' that are testament to this fact).

It certainly is a great way to hasten the consumption of capital, but that is all there is to it. The fact that government spending counts as a positive factor in the calculation of GDP does not make Japan one iota richer. On the contrary, it will help to mask its coming impoverishment.

Furthermore, with the government's debt about to surge to 240% of GDP this year and debt service costs alone devouring 25% of tax revenues, a sovereign debt crisis is highly likely to erupt at some point. At this stage, JGB yields remain at a very low 78 basis points, as market participants do not yet believe the inflationary policy will 'succeed' (they are so far correct, as Japan's money supply has actually continued to grow very slowly – the yen has crashed on perception alone, and because some of the euro area crisis related 'risk premium' was priced out of it). Should they change their mind, the enormous JGB market could easily collapse in a panic. This would not only render the government insolvent, but also the country's banks.

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A daily chart of the ten year JGB yield – it continues to look bullish to us. Stay away from JGBs – click to enlarge.

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Conclusion:

Abenomics has nothing to 'teach us', in spite of the fact that it is currently politically popular. All the lessons that could possibly be learned from it have been taught on numerous past occasions already.

Neither mercantilism nor inflationism are economic policies worth emulating. Sound economic theory has exposed the fallacies of these policies long ago. The fact that a number of Western economists endorse them is not a reason to believe that such policies have magically become better since they were last tried. On the contrary, endorsement by Western mainstream economists is actually a grave warning sign. It is of course quite likely that an educationally valuable moment will happen down the road, namely in the form of a major currency and debt crisis. It is deplorable that all the lessons we should have learned ages ago apparently have to be retaught over and over again.

See the original article >>

Hog, cattle markets need context to judge supply numbers

By Rich Nelson

Hogs: Another day of lower-than-last-year kills makes it appear as though we have a surprising shortfall in market-ready numbers. Tuesday’s kill was 12,000 head lower than last year. Today’s run was 4,000 head smaller.

Though this sounds exciting, we have to keep in mind last year at this time producers were scrambling to move anything near market ready. Between mid August and mid September in 2012 you were looking at slaughter levels from 3% to 7% over 2011. As you may remember, with this incredible effort to move those animals at any cost, cash hog prices were sharply lower. The lean hog index on Sept. 4 was 77.29!

In the big picture, it must be pointed out these are some pretty stout supplies. Last week’s pork production was actually 5% over two years ago. We need a proper context for this bounce seen in cash and futures right now. There is nothing wrong with cash and futures posting higher trade in the “right now” time frame. Buying for next month’s features typically gives the trade something to talk about right now. The problem comes if you expect this market to last.

The lean hog index is about $92. October futures are at $89. By the time futures expire, on Oct. 14, you are looking at a very different (lower priced) environment here. However, after mid-September, you have trouble making a bullish argument. This market could certainly push past our stop level for the speculative trade, but we can’t suggest this is a new paradigm in pricing.

Cattle: There’s been a few more questions from research subscribers about how long this “slump” in futures can last. We had a good rally off those June lows, a moderate slump, then a quick rally into mid-August.

In addition to full fundamental analysis and technical factors (trends, chart formations, etc.), we also monitor simple behavior. Today makes it 19 days off the Aug. 16 high for October fat futures. The July to August slump lasted 24 days. For price action this makes it a 2.7% correction off the August highs. The July to early August slump was only 2.2%.

A quick and dirty look at market behavior would suggest this slump has about run its course. This also coincides with the market hitting the uptrend line on the charts drawn from the June to early August lows. Both of these issues would suggest it is getting time to buy this market.

This conflicts with our fundamental analysis, though. Even with October now at $126, we just are not too excited. With the normal basis at the end of October at +$1.00, this market is pricing in $127 cash. Yes, cash will continue its general rally from summer lows to winter highs. But a $4 rally over the next two months sounds about right, not too low. For the short-term cash market, some are also noting packers may be offered a few extra of the Zilmax cattle before Tyson stops buying those numbers this week. We can make many sound arguments for the winter contracts, but just are not too excited here over the short-term market.

See the original article >>

China’s record drop in credit growth puts momentum at risk

By Bloomberg News

Credit measure down for fourth straight month

China’s leaders are extending a clampdown on credit, prompting analysts from JPMorgan Chase & Co. to Societe Generale SA to caution that the economy is vulnerable to weakening after the pickup so far this quarter.

New yuan loans were probably little changed in August, after aggregate financing, the broadest measure of credit, posted a fourth straight drop in July, the longest streak in 11 years of data. Analysts’ median estimates point to the fastest industrial-output gain since December and the slowest producer- price decline in six months.

The moderation in credit after a record first-quarter financing boom stands to cap an economic rebound being driven by a recovery in confidence and Premier Li Keqiang’s support measures, such as faster spending on railways. Overcapacity and pressure to clean up debt loom as challenges, according to JPMorgan, which sees growth slowing to 7.2 percent in 2014 from 7.6 percent this year.

“There is less risk in the near term,” said Zhu Haibin, JPMorgan chief China economist in Hong Kong, who has worked at the Bank for International Settlements. “But this round of recovery will not be a strong one and won’t last long.”

Analysts surveyed by Bloomberg News last month see growth slowing to 7.3 percent in the fourth quarter, the weakest in more than four years, after 7.5 percent in the July-September period, based on median estimates.

China’s benchmark Shanghai Composite Index fell 0.3 percent as of 11:13 a.m. local time.

‘Not Sustainable’

“The recovery is not sustainable because of one very simple reason: insufficient credit,” said Yao Wei, China economist at Societe Generale in Hong Kong. Regulators are keeping a close watch on lending to local governments and banks can’t pump funds into the economy to support investment, making non-bank financing “very important for growth.”

“We may see growth picking up for one or two quarters, but it’s hard to sustain,” Yao said.

The nation’s leaders are signaling that limits on the pace of growth are part of revamping the economy. President Xi Jinping said China would “rather bring down the growth rate to a certain extent in order to solve the fundamental problems” hindering long-run development, according to written comments published Sept. 3 by the official Xinhua News Agency.

Premier Li said the same day that “we are able to and have conditions to meet China’s major economic and social development tasks this year.”

Recovery Signs

The comments build on signs of a recovery that contrast with emerging markets from India to Indonesia suffering from capital flight and growth slowdowns. China’s official manufacturing Purchasing Managers’ Index jumped to a 16-month high in August and a separate PMI released by HSBC Holdings Plc and Markit Economics showed the largest gain since 2010.

Economists see gains in July trade carrying over to August. Exports probably rose 5.3 percent last month from a year earlier after July’s 5.1 percent, while import gains may have topped 10 percent for a second month, based on median estimates of analysts surveyed by Bloomberg News through yesterday ahead of customs data due Sept. 8.

National Bureau of Statistics figures due the following day may show producer prices fell 1.7 percent, compared with a 2.3 percent drop in July, according to estimates. Industrial production may have gained 9.9 percent in NBS data out Sept. 10, the most this year outside of months distorted by the Chinese New Year holiday and up from July’s unexpectedly high 9.7 percent.

Credit Gains

Lending and credit aren’t rebounding to a similar degree. New yuan loans were probably 710 billion yuan ($116 billion) in August, little changed from both July and the previous August.

Estimates of seven analysts for August aggregate financing range from 900 billion yuan to 1.07 trillion yuan, compared with July’s 21-month low of 808.8 billion yuan and August 2012’s 1.25 trillion yuan. The People’s Bank of China will publish the data by Sept. 15.

Aggregate financing averaged 2.06 trillion yuan in the first three months of 2013.

Hu Yifan, Hong Kong-based chief economist at Haitong International Securities Group, said financing “is not a serious problem for growth” and sees a bigger pickup to 8 percent growth in 2014 from 2013 this year. “It’s true the recovery looks fragile, but with continuous policy aid, China’s growth can keep recovering,” Hu said.

Estimate Range

Estimates for growth next year from 45 economists last month ranged from 6.7 percent to 8.5 percent, with a median of 7.5 percent.

Government efforts to clean up local debt will improve balance sheets, while the U.S. Federal Reserve’s tapering of bond purchases may spur capital outflows from other emerging markets and inflows to China because of its stable expansion, Hu said.

Chang Jian, China economist at Barclays Plc in Hong Kong, said Li may set a growth target of 7 percent for next year, down from 2013’s 7.5 percent, to deliver a clearer message of slowdown tolerance. She projects 7.4 percent expansion in 2014 with “downside risks” from overcapacity, financial dangers and demographic changes.

Baoshan Iron & Steel Co., China’s largest-listed steel maker, said in August that its profit in the first nine months of this year is expected to fall by more than 50 percent.

“The recovery is temporary and doesn’t change the overall trend of a slowdown,” said Chang, who formerly worked at the World Bank. “It’s still safe to say that China’s growth in 2014 will be slower than 2013.”

See the original article >>

Caution on soy prices despite waning US crop hopes

by Agrimoney.com

Brokers queued up to warn against expectations of higher soybean prices, even as hopes for the US harvest continued to come into question, with Macquarie the latest to lower its forecast for the US yield.

Macquarie cut to 40.9 bushels per acre, from 42.5 bushels per acre, its forecast for the US soybean yield, citing the setbacks to prospects from dryness in Illinois and Iowa, the top producing states.

"There still does though remain risk to the downside of our current yield estimate, with limited potential upside," Macquarie analyst Chris Gadd said.

"If we see no precipitation through the next 1-2 weeks in this region [eastern Iowa and western Illinois], we could though see the prospect of the national average yield in the US falling towards the 40-bushels-an-acre level."

The downgrade is the latest in a series from brokers, such as Lanworth, this week, with FCStone overnight pegging the yield at 41.2 bushels per acre, and an Allendale survey showing a figure of 39.0 bushels per acre, which would represent a fourth successive year of decline.

The US Department of Agriculture pegs the yield at 42.6 bushels per acre, although its estimates are up for review ahead of next week's monthly Wasde world crop supply and demand report.

'Aggressive expansion'

Nonetheless, despite the downgrade, Macquarie warned against forecasts of higher prices, flagging the role of rising prices in encouraging South American farmers to raise plantings of the oilseed, and for users to ration supplies.

US soybean yield and (production) estimates this week

FCStone: 41.2 bushels per acre, (3.146bn bushels)

Reuters poll: 41.1 bushels per acre

Macquarie: 40.9 bushels per acre, (3.104bn bushels)

Michael Cordonnier: 40.5 bushels per acre

Lanworth: 40.4 bushels per acre, (3.115bn bushels)

Allendale: 39.0 bushels per acre, (2.980bn bushels)

"The market has been too willing to price in the most pessimistic views and we would be bearish from current levels in all but the most extreme scenarios," Mr Gadd said.

Macquarie forecast Brazil's soybean output hitting a record 87.0m tonnes in 2013-14, with the recovery in price meaning farmers - for whom costs of producing and developing marginal land in Mato Grosso have fallen to $11.70 a bushel thanks to a depreciating currency – should "expand aggressively".

The Brazil harvest forecast is above that from many other commentators, including the USDA, which pegs the crop at 85.0m tonnes.

Seasonal cycle?

Caution over soybean prices was also voiced by commentators such Darrel Good, professor in the agricultural and consumer economics department at the University of Illinois, who said that the potential for another disappointing US soybean meant that futures should echo their path of last year.

"Soybean prices are expected to unfold in more of a short-crop pattern like that of last year," he said.

"Under such a pattern, prices would be expected to peak very early in the marketing year in order to discourage consumption and decline as the year progresses, particularly if the South American crop is large again in 2014."

'Treading water'

At broker RJ O'Brien, Richard Feltes said that "we believe that highs for Chicago November soybean futures for now are in.

A "broad trading range of $12.60-13.60 a bushel will define trade until actual harvest results clarify if the 2013 US soy yield is under 40 bushels per acre".

The soybean market "is treading water awaiting reliable ground truth on the 2013 US soy crop size".

See the original article >>

A War on Syria Prelude to a World War III Scenario?

By: Michel_Chossudovsky

In order to facilitate the action of liberative (sic) forces, …a special effort should be made to eliminate certain key individuals. …[to] be accomplished early in the course of the uprising and intervention, …

Once a political decision has been reached to proceed with internal disturbances in Syria, CIA is prepared, and SIS (MI6) will attempt to mount minor sabotage and coup de main (sic) incidents within Syria, working through contacts with individuals. …Incidents should not be concentrated in Damascus …

Further : a “necessary degree of fear .. frontier incidents and (staged) border clashes”, would “provide a pretext for intervention… the CIA and SIS [MI6] should use … capabilities in both psychological and action fields to augment tension.”(Joint US-UK leaked Intelligence Document, London and Washington, 1957)

Syria occupies a strategic location in the Middle East. The war on Syria is part of a roadmap of military undertakings. It is an integral part of a broader US-NATO-Israel military agenda directed not only against Iran, but also against Russia and China. Moreover, it is part of an extended military agenda which consists in establishing control over Middle East-Central Asian oil reserves as well as strategic oil and gas pipelines.

It is a component part of a broader process of war and of country level political destabilization in the Middle East, North Africa, sub-Saharan Africa and Central Asia.

The failures of the US sponsored Al Qaeda insurgency in Syria (launched in March 2011) integrated by mercenary forces and supported by Turkey, Saudi Arabia, Qatar and Israel have set now the stage for a conventional theater war involving the deployment of air force as well as boots on the ground.

The US and its allies are now accusing the Syrian government, without evidence of using Sarin gas against its own population, with a view to shaping a pretext to intervene militarily in Syria.

US, British, French and Israeli officials are currently involved in a round of consultations regarding the nature and timing of this operation.

Pretext to Wage War: The Kosovo Model

Referring to the so-called “Racak massacre”, which was a staged event used as a pretext for NATO’s intervention in Yugoslavia, Washington has hinted that it may use the precedent of the Kosovo Model (1999) with a view to justifying an R2P military mandate in Syria.

It is worth noting that in Yugoslavia, NATO intervened in support of the Kosovo Liberation Army (KLA), a terrorist and criminal entity with links to both Al Qaeda and organized crime.

Ironically, while President Obama has called for military intervention, US intelligence has cast doubt on the official story, pointing to the fact that intelligence is shady and that there is no “smoking gun”:

An intercept of Syrian military officials discussing the strike was among low-level staff, with no direct evidence tying the attack back to an Assad insider or even a senior Syrian commander, the officials said.

So while Secretary of State John Kerry said Monday that links between the attack and the Assad government are “undeniable,” U.S. intelligence officials are not so certain that the suspected chemical attack was carried out on Assad’s orders, or even completely sure it was carried out by government forces, the officials said. (AP, August 29, 2013):

Escalation is an integral part of the military agenda. Were a US-NATO military operation to be launched against Syria, the broader Middle East Central Asian region extending from North Africa and the Eastern Mediterranean to the Afghanistan-Pakistan border with China would be engulfed in the turmoil of an extended regional war.

This war would inevitably spread to Lebanon and Jordan. Israel and Turkey would be actively involved both in the air campaign and the deployment of ground forces. America’s allies in the Gulf including Saudi Arabia and Qatar, which have played a key role in recruiting and training the “rebels”, are also involved in the staging of this military operation. Iran and Russia are military allies of Syria. The crucial question is whether they will choose to actively side (from a military standpoint) with Syria if and when the attack is implemented.

Recent reports suggest that a cyber-warfare operation has been launched. Allied special forces are reported to have entered Syrian territory from Jordan and Turkey. British special forces are reported to be searching for Syrian air defense systems “in readiness for Allied strikes”.

A potential state of panic spearheaded by media disinformation is unfolding in Israel. The IDF is reported to have called up Army reservists, which are being deployed on Israel’s northern border. Israel’s “missile shield system” which is integrated into the broader US-NATO air defense system has been activated. Meanwhile, thousands of Israelis are queuing up for gas masks, spurred on by fears of a Syrian reprisal to a Western attack.

Humanity is at dangerous crossroads

There are at present four distinct war theaters: Afghanistan-Pakistan, Iraq, Palestine and Libya.

An attack on Syria would lead to the integration of these separate war theaters, eventually leading towards a broader Middle East-Central Asian war.

Moreover, several other countries including Yemen, Somalia, Egypt, Mali, Niger, among others, are now strung in the midst of US sponsored “civil wars”, invariably leading to economic collapse, political instability and the demise of State institutions. In these countries, US military intervention often takes the form of counter-terrorism operations against Al Qaeda affiliated rebels (who are supported by US intelligence).

Public opinion is largely unaware of the grave implications of these war plans which could potentially lead humanity into a World War III scenario.

Moreover, an extended regional war in the Middle East and Central Asia will inevitably have repercussions in other regions of the World including South East Asia and the Far East, where the US is threatening North Korea, China as well as Russia as part of its “Pivot to Asia” strategy.

The US Sponsored Insurgency

“Mass civilian casualty events” play a central role in US military doctrine. Civilian casualties are triggered with a view to drumming up public support for war on humanitarian grounds.

What we are dealing with is a diabolical staged event of civilian deaths with a view to blaming the Syrian government and triggering a regional war.

From the very outset of the insurgency in Daraa in mid-March 2011, terrorist brigades –largely integrated by mercenaries– have been set loose inside Syria.

A pattern of media disinformation was set in motion. The deaths of civilians have consistently been blamed on the Syrian government. The mass civilian casualties and atrocities committed by so-called “revolutionaries” have been used to demonize the Syrian government of Bashar al Assad.

MI6, CIA and Mossad operatives as well as Western Special Forces had integrated rebel forces from the very outset. The high profile terrorist attacks were coordinated by highly trained military contractors and intelligence operatives:

”As the unrest and killings escalate in the troubled Arab state, agents from MI6 and the CIA are already in Syria assessing the situation, a security official has revealed. Special forces are also talking to Syrian dissident soldiers. They want to know about weapons and communications kit rebel forces will need if the [British] Government decides to help. “MI6 and the CIA are in Syria to infiltrate and get at the truth,” said the well-placed source. “We have SAS and SBS not far away who want to know what is happening and are finding out what kit dissident soldiers need. (Daily Star, January 1st, 2012 http://www.dailystar.co.uk/news/latest-news/227911/Syria-will-be-bloodiest-yet emphasis added)

War preparations to attack Syria and Iran have been in “an advanced state of readiness” for several years. US, NATO and Israeli military planners have outlined the contours of a “humanitarian” military campaign, in which Turkey (the second largest military force inside NATO) would play a central role.

An air campaign including a “no fly zone” directed against Syria has been envisaged since late 2011, largely in view of the failures underlying the US-NATO covert war in support of opposition rebels, integrated by trained mercenaries.

Britain’s Ministry of Defence: “This is all going like Libya but this will be bigger and bloodier”

In 2011, Britain’s Ministry of Defence in liaison with the Pentagon was involved in “drawing up secret plans for a NATO-sponsored no-fly zone” (Ibid, http://www.dailystar.co.uk/news/latest-news/227911/Syria-will-be-bloodiest-yet

British Defense authorities admit that the planned air campaign on Syria would be on a much larger scale than in Libya in 2011 and that Israel would be an integral part of the military operation. “Syria supports Hezbollah. That threatens Israel and the whole of the Middle East…. “This is all going like Libya but this will be bigger and bloodier“” (Ibid, emphasis added)

Syria has an advanced Russian S-300 air defense system. Russian technical advisers have been in Syria since November 2011 to “help the Syrians set up an array of S-300 missiles”. Reports also confirm that Syria has an advanced radar system installed in all key Syrian military and industrial installations. “The radar system also covers areas north and south of Syria, where it will be able to detect movement of troops or aircraft towards the Syrian border. The radar targets include much of Israel, as well as the Incirlik military base in Turkey, which is used by NATO.” (According to Arun Shavetz (November 24, 2011),

Naval and air force deployments have already been announced by the British Ministry of Defense. According to London’s news tabloids, quoting “authoritative” military sources; “…The escalating civil war [in Syria] made it increasingly likely that the West would be forced to step in. ” ( Daily Mail, July 24, 2012)

The Syria False Flag Chemical Weapons Attack: An Integral Part of US-NATO Military Planning

The WMD option for Syria –which has been on the drawing board of US intelligence since at least August 2012– is being carried out in the wake of the defeat of the US sponsored Al Nusrah terrorist brigades by government forces.

Modelled on previous US-NATO led “humanitarian wars”, it consists in triggering civilian deaths in a staged false flag operation and then blaming Syria for killing its own people.

The purpose is to drum up public support for a so-called “no fly zone” and provide a pretext and a justification for military intervention on humanitarian grounds.

Various stages of military intervention have been contemplated:

• The killings of innocent civilians by al Qaeda affiliated rebel force in a chemical weapons attack are deliberately carried out as part of a covert intelligence operation. The Syrian government is then blamed for the resulting atrocities.
• Media disinformation is geared towards demonizing the Syrian government. Public opinion is led into endorsing a military intervention on humanitarian grounds. Responding to public outrage, US-NATO is then “forced to step in” under a Humanitarian “Responsibility to Protect” (R2P) mandate.
• Media propaganda goes into high gear. “The International Community” comes to the rescue of the Syrian people.”
• Warships and fighter jets are then deployed to the Eastern Mediterranean.
• These actions are coordinated with logistical support to the rebels and Special forces on the ground.
• The final objective is “regime change” leading to the “break-up of the country” along sectarian lines and/or the installation of an “Islamist-dominated or influenced regime” modelled on Qatar and Saudi Arabia.
• War plans in relation to Syria are integrated with those pertaining to Iran. The road to Tehran goes through Damascus. The broader implications of US-NATO intervention are military escalation and the possible unleashing of a regional war extending from the Eastern Mediterranean to Central Asia, in which China and Russia could be directly or indirectly involved.

Preparations for a false flag chemical weapons attack started more than a year ago. According to an August 2012 Los Angeles Times report the Pentagon announced that it was sending “small teams of special operations troops” into Syria with a view to destroying Syria’s Weapons of Mass Destruction (WMD). These teams would in turn be supported by “precision air strikes”, namely air raids.

The scenario of a Syrian government chemical weapons attack on the Syrian population had already been examined by US intelligence:

Securing the sites would probably involve stealthy raids by special operations teams trained to handle such weapons, and precision air strikes to incinerate the chemicals without dispersing them in the air, the officials said. U.S. satellites and drone aircraft already maintain partial surveillance of the sites.

U.S. intelligence agencies believe Syria has over the years produced or acquired hundreds of tons of sarin nerve agent and mustard gas, a blister agent, and has sought to develop VX, another powerful nerve gas. The toxicity of some chemical agents degrades significantly over time, so it is unclear how lethal the stockpiles are.

Experts say the chemical agents are stored in bunkers and other sites around the country. Four production facilities are near the cities of Aleppo, Hama and Homs, all tinderboxes in the 17-month uprising, as well as the coastal city of Latakia, an area considered a stronghold for Assad’s Alawite religious sect.

An unclassified report by the director of national intelligence this year said Syria’s chemical agents “can be delivered by aerial bombs, ballistic missiles and artillery rockets.” But Syrian rockets, including Scud missiles procured from North Korea, are notoriously inaccurate, making them ineffective for delivering a heavy concentration of toxic chemicals to a specific target. . ( U.S. has plans in place to secure Syria chemical arms – latimes.com, August 22, 2012)

These initial US sponsored WMD special team operations had established the likely scenario of a staged false flag chemical weapons attack. In all likelihood they also set the stage for the training of rebel forces in the use of chemical weapons

US Sponsored “Rebels” in Possession of Chemical Weapons

While there is absolutely no evidence of the Syrian government having used chemical weapons against its population, there is evidence that the CIA sponsored Al Qaeda affiliated rebels have chemical weapons in their possession and that they are being trained by Western special forces in the use of chemical weapons by Western special forces.

The training [in chemical weapons], which is taking place in Jordan and Turkey, involves how to monitor and secure stockpiles and handle weapons sites and materials, according to the sources. Some of the contractors are on the ground in Syria working with the rebels to monitor some of the sites, according to one of the officials.

The nationality of the trainers was not disclosed, though the officials cautioned against assuming all are American. (CNN, December 09, 2012, emphasis added

This is not a rebel training exercise in non-proliferation. What is contemplated as part of this covert operation is the possession of chemical weapons by the US-NATO sponsored terrorists, namely “by our” Al Qaeda affiliated operatives, including the Al Nusra Front.

This US sponsored training of Al Qaeda terrorists in the art of chemical warfare is in blatant violation of international law and Chapter VII of the UN Charter.

In June, it was reported that

“Turkish police had round up Al Qaeda-linked Syrian Al Nusra terrorists in raids in Istanbul and southern cities near the Syrian border, Turkey police … arrested 12 members of al Qaeda’s Syrian affiliate, Al Nusra Front. Found in their possession were four and a half pounds of sarin nerve gas, hand guns, grenades, bullets and documents for what the Turkish daily Zaman reported was a bomb attack on the Turkish town of Adana. (Debka, June 15, 2013, emphasis added)

The United Nations Independent Mission confirms that Rebel Forces Are in Possession of Sarin Nerve Gas

While Washington points its finger at president Bashar al Assad, a United Nations independent commission of inquiry confirmed in May 2013 that the rebels rather than the government have chemical weapons in their possession and are using sarin nerve against the civilian population:

U.N. human rights investigators have gathered testimony from casualties of Syria’s civil war and medical staff indicating that rebel forces have used the nerve agent sarin, one of the lead investigators said on Sunday.

The United Nations independent commission of inquiry on Syria has not yet seen evidence of government forces having used chemical weapons, which are banned under international law, said commission member Carla Del Ponte. [see image right]

“Our investigators have been in neighboring countries interviewing victims, doctors and field hospitals and, according to their report of last week which I have seen, there are strong, concrete suspicions but not yet incontrovertible proof of the use of sarin gas, from the way the victims were treated,” Del Ponte said in an interview with Swiss-Italian television.

“This was use on the part of the opposition, the rebels, not by the government authorities,” she added, speaking in Italian. (“U.N. has testimony that Syrian rebels used sarin gas: investigator,” Chicago Tribune, May, 5 2013, emphasis added)

There is also evidence that Al Nusrah forces have:

“deployed a form of sarin in a home-made shell fired on government forces in Khan al-Assal.

Russia has provided the UN with evidence to this effect and Khan al-Assal was one of the sites on the list to be visited by the UN inspection team.” See Phil Greaves, Syria: Obama’s Pretext for War? The “Rebels” are in Possession of Chemical Weapons, Global Research, August 29, 2013)

The Suppressed Daily Mail Report

In January 29, 2013, Britain’s most popular Daily Newspaper, in its online version Dailymail.co.uk published an article titled:

U.S. ‘backed plan to launch chemical weapon attack on Syria and blame it on Assad’s regime’

Archives.org has published the record of the controversial Daily Mail article pertaining to an alleged US sponsored intelligence operation to launch a chemical weapons attack on Syria and blame it on President Bashar al-Assad.

The original article http://www.dailymail.co.uk/news/article-2270219/U-S-planned-launch-chemical-weapon-attack-Syria-blame-Assad.html

has been removed from the archives of the Daily Mail. It is nonetheless available at

http://web.archive.org/web/20130130091742/http://www.dailymail.co.uk/news/article-2270219/U-S-planned-launch-chemical-weapon-attack-Syria-blame-Assad.html

It is our understanding that the Daily Mail report was removed following a libel suit launched by Britam Defense and Intelligence, a UK based Security Company against the Daily Mail.

Staged War Pretext Event

This diabolical operation consists in the US equipping its rebels with chemical weapons and implementing a carefully staged operation which consists in killing civilians and then blaming the Syrian government for the atrocities committed on behalf of the US-NATO military alliance.

What is unfolding is a diabolical scenario –which is an integral part of military planning– namely a situation where opposition terrorists advised by Western defense contractors are actually in possession of chemical weapons.

The evidence presented above suggests that the rebels rather the Syrian government are using chemical weapons against civilians. US special forces pertaining to chemical weapons have been operating inside Syria since August 2012. This period coincides with the training of the rebels in the use of chemical weapons (confirmed by CNN) as well as the use of chemical weapons including sarin gas by rebel forces.

The West claims that it is coming to the rescue of the Syrian people, whose lives are allegedly threatened by Bashar Al Assad. The truth of the matter is that the Western military alliance is not only supporting the terrorists, including the Al Nusra Front, it is also making chemical weapons available to its proxy “opposition” rebel forces.

Media Propaganda

The media has replicated the lie. Investigative reporting has been scrapped in favor of media spin, lies and fabrications. Syndicated reports call for military intervention under the auspices of the United Nations.

The premise of the lie are set, the reports build their investigation around the lie.

In the meantime, prominent Western leftists intellectuals have expressed their support for a NATO sponsored humanitarian intervention. These are the same people who supported the 2011 NATO intervention in Libya.

They casually describe the US sponsored Al Qaeda affiliated rebels (which are on the State Department list of terrorist organizations) as “revolutionaries” comparable to the landless movement in Brazil and the Zapatistas in the Chiapas region of Mexico.

Among these self-proclaimed Leftists, the consensus is in favor of a “humanitarian war”:

“We, the undersigned, stand in solidarity with the millions of Syrians who have been struggling for dignity and freedom since March 2011. We call on people of the world to pressure the Syrian regime to end its oppression of and war on the Syrian people. We demand that Bashar al-Asad leave immediately without excuses so that Syria can begin a speedy recovery towards a democratic future.

“The revolution in Syria is a fundamental part of the North African revolutions, yet it is also an extension of the Zapatista revolt in Mexico, the landless movement in Brazil, the European and North American revolts against neoliberal exploitation, and an echo of Iranian, Russian and Chinese movements for freedom.”

https://www.change.org/petitions/solidarity-with-the-syrian-struggle-for-dignity-and-freedom

Who is waging war on the Syrian people?

The government or the US-NATO sponsored death squads, which are trained and recruited in Saudi Arabia, Qatar and Turkey.

In a bitter irony, the language and discourse of the “Progressives” while not calling for direct military action, is similar in scope and content to a Neocon Open Letter to President Barack Obama published in the Weekly Standard signed by Elliott Abrams, Paul Berman, Eliot A. Cohen, Robert Kagan, William Kristol, Bernard-Henri Levy, Karl Rove, among others.

“At a minimum, the United States, along with willing allies and partners, should use standoff weapons and airpower to target the Syrian dictatorship’s military units that were involved in the recent large-scale use of chemical weapons,…

It should also provide vetted moderate elements of Syria’s armed opposition with the military support required to identify and strike regime units armed with chemical weapons.”It is therefore time for the United States to take meaningful and decisive actions to stem the Assad regime’s relentless aggression, and help shape and influence the foundations for the post-Assad Syria that you have said is inevitable.http://www.weeklystandard.com/blogs/experts-obama-here-what-do-syria_751267.html

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Super bullish for the Dow if this gets taken out!

by Chris Kimble

CLICK ON CHART TO ENLARGE

Months ago the Power of the Pattern shared that the Dow could make it to the 16,000 level (see post here) Last month the Dow came within 350 points, less than 3% from the target.

The above chart reflects that numerous resistance lines all meet at price point (1) in the Dow. Was this heavy resistance the reason the Dow backed off around 800 points from the highs reached in the month of August?

In my 33-years in the business.... I don't know if I have seen such a cluster of resistance that happens to meet at one price point, that ties in some of the most important "Emotipoints" (key emotional highs and lows) dating back decades!!!

Observations....it would be super bullish for the Dow if it breaks above this resistance.  On the flip side a break of rising support would NOT be good for the Dow, with this cluster of heavy resistance overhead!

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