Thursday, March 20, 2014

From Iraq to Ukraine: A Pattern of Disaster

by Justin Raimondo

Eleven years ago this week the United States invaded Iraq – an event the late General William E. Odom rightly called the biggest strategic disaster in US military history. The decade since that catastrophe proves one thing about US policymakers: they’ve changed their tactics without learning a thing.

Iraq today is a seething cauldron of religious and ethnic hatreds: a full-scale civil war is in progress, with Sunnis in open rebellion against the majority Shi’ites. As I write this, the latest news is that a car bomb exploding in Baghdad killed 19 people – in addition to another bomb north of the capital killing 2 and wounding 6. And that’s just in the past twenty-four hours: violence has escalated dramatically this year. The US is sending more arms to the government, including 100 Hellfire missiles – a government, by the way, that is staunchly pro-Iranian and which asked us politely but firmly to leave.

As George W. Bush would say: “Mission Accomplished!” But that’s only   if you’re Ahmed Chalabi, the “hero in error” who somehow persuaded   the Clinton and Bush administrations to put him on the CIA payroll and proceeded   to hornswoggle Western governments – and the complicit media – with tall tales of Iraq’s fabled-but-nonexistent nuclear weapons program.

Chalabi, it turned out, was working for Tehran – which naturally wanted its old enemy, Saddam Hussein, put out of commission so the Shi’ite majority could take power. A decade later and the leaders of Shi’ite parties who had found shelter in Tehran for decades rule the roost in Baghdad – thanks to the very same people who are now exhorting us to attack Iran. Yes, the neoconservatives whose policies led directly to the extension of Iranian influence throughout Iraq now insist the Iranian mullahs are building “weapons of mass destruction” and must be stopped.

Our enormous failure in Iraq exhausted us, not only financially but also morally and psychologically. Not that the war hawks of Washington were the least bit   deterred by their abysmal failure: it was the American people who began to wonder   if perhaps it hadn’t been worth the lives, the destruction of an entire country,   and the rise of militant anti-Americanism on a world scale. In reaction, ordinary   Americans became increasingly vocal about the need to stay out of the world’s   intractable conflicts and instead tend to business at home.

The political class didn’t pay much attention at first, only modifying their approach. Instead of simply invading, in the Bushian fashion, the strategy was to utilize proxies as a temporary expedient, while laying the groundwork for more direct overtly military intervention. Libya was supposed to be the model: this was preceded by a big propaganda campaign, in which our credulous mainstream media picked up the administration’s “imminent humanitarian disaster” talking point and ran with it. That the alleged site of this impending massacre of the rebels by Qadaffi’s men was supposed to have taken place in Benghazi underscores how and why this new strategy began backfiring from the start.

Libya began falling apart the moment we announced its “liberation,” and has gone rapidly downhill ever since. Yet the War Party achieved a nominal victory in that the scheme worked, after all. The Three Harpies of the Libyan Apocalypse – Hillary Clinton, Susan Rice, and Samantha Power – succeeded in dragging the President, not exactly kicking and screaming, into the Libyan mini-quagmire. If US troops weren’t bogged down fighting an insurgency, the administration soon found itself fending off a congressional insurgency around the attack on our “consulate” and the first assassination of an American ambassador in many years.

The same Three Harpies agitated for the aborted bombing of Syria, another “humanitarian” intervention on behalf of oppressed “moderate” Islamists. (Which is saying something when it comes to Syria, where Al Qaeda is now considered “moderate” compared to the ultra-radical ISIS.) Hillary was particularly interested in expanding the aid program which had so far only given the rebels light arms and political support. When the President vetoed stronger measures, she resigned – and although her resignation was long planned, there was a certain synchronicity in the timing.

So what or who pushed the President into the Syrian air strikes that never happened? I covered that in the run-up to the President’s announcement and his subsequent backing off in the face of popular outrage. Suffice to say here that once again the War Party had come up against what must inevitably be dubbed the “Iraq Syndrome,” after its predecessor, the “Vietnam Syndrome.”

This is the way our political class talks about the rumblings of rebellion that have occurred over the past half century or so, outbreaks of opposition to the idea of America as a world empire. Our elites view these periodic eruptions of “isolationism” as a psycho-ideological malady, which is where the Syndrome business comes into it.

Of course the real disease vector is in Washington, where the contagion of empire has unleashed an authoritarian plague eating away at the Constitution and the rule of law. A lawless regime of total surveillance has usurped the Fourth Amendment, and the bulwark of liberty, the Bill of Rights, is besieged in the name of “national security.”

It’s an old phrase with a new meaning: yesterday, which seems so long ago, “national security” meant the security of the nation, i.e. the territory of the United States. Today it means the “national interest,’ and our various and ever-changing “interests”  extend into every continent, every country, every godforsaken -and-best-forgotten corner of the globe.

Yesterday we were a country: today we are an empire, a fact our political elites   naturally glory in, but they face a major problem  –  the bigger the empire gets   the more opposition its existence arouses, at home as well as abroad. Empires   don’t come cheap, and the costs are ever-rising. In an age of austerity the   War Party has a harder sell.

One way around this is utilizing “soft power” to achieve US foreign policy objectives, and recent events in Ukraine are the first results of the War Party’s strategic shift. It is also, I might note, a geographic shift away from the Middle East, a pivot to Europe and Russia’s “near abroad” that underscores  –  and possibly prefigures  –  the Clintonian approach.

The first Clinton administration, you’ll recall, was focused on the anti-Slavic front, spending most of its foreign policy capital fighting a civilizational war against the Slavic Orthodox Russophiles of Serbia and Bosnia on behalf of the oppressed Muslim minority in the former Yugoslavia. This war will be resumed if and when the Clintons retake the White House; indeed, we are seeing the first stages of it unfold quite dramatically in the streets of Kiev.

Ukraine has been a longstanding battlefield in the on-again, off-again cold war with Vladimir Putin’s Russia, and one where the US has not always fared as well as it has more recently. The Orange Revolution, you might not remember, went sour pretty quickly, with the hero of the revolutionary hour, Viktor Yushchenko, quickly discredited and now largely forgotten.

Not to worry. Thanks to the infusion of untold millions into various NGOs and Ukrainian opposition groups, there are new “heroes of the Revolution” who have taken the stage in the Maiden – and taken power in Western Ukraine. No need to send in US troops: the muscle is provided by the black-masked cadre of “Right Sector,” football hooligans and neo-Nazi skinheads who wear the red-and-black insignia of the pro-Nazi Ukrainians who fought under SS command during World War II. Their fuehrer leader, Dmytro Yorash, is deputy chief of “national security,” i.e. the new regime’s political police.

With banker-technocrats like Arsenyi Yatsenyuk as inoffensive front man, the   real coup leaders in Kiev – a coalition of old-time oligarchs like Julia Tymoshenko and the “reformed’ neo-Nazis of the ultra-nationalist Svoboda party – are   setting the stage for a proxy war against the Russians. We have already seen   a series of low-level provocations, on the border and elsewhere, and now that    the referendum over Crimea has taken place a military clash is all too possible. As in the   case of the Syrian rebels, we’ll be providing aid to Ukraine – a cool $1 billion to start with – while our media shamelessly roots for the embattled “freedom-fighters.”

Yet there is a growing awareness – see here, here, and here – in “mainstream” quarters of the “interim” Ukrainian government’s creepiness. There really is no other word I can think of that describes a party which valorizes Stepan Bandera and the other founders of the Ukrainian SS unit that murdered 4,000 Jews in Lvov, and actively participated in the Holocaust. The Svoboda party, whose leader has denounced an alleged “Muscovite-Jewish” conspiracy against Ukraine, has no less than eight top posts in the coupist “government” in Kiev,  that is if you count the even more radical Yorash as a fellow traveler.

In short, the blowback from this foolhardy display of US-funded “soft power” could potentially rival what happened at Benghazi – if not worse. Do we really want to use a bunch of neo-Nazi skinheads as a battering ram against the Russians? In Libya, we unleashed Islamist fanatics who murdered our Ambassador. Do we know what we are unleashing in Ukraine?

The encirclement of Russia has been an ongoing project of post-cold war US   policymakers, with both Republican   and Democratic administrations doing their bit. However, Bill Clinton really   set the standard, not only with the Kosovo intervention but also in light of   his obsession with the former Soviet republics of Central Asia: Kazakhstan,   Azerbaijan, and the various ex-Soviet republics surrounding the Caspian Sea.   It was during the Clinton administration that the first shots of the new cold   war were fired.

Indeed, President Clinton set up a special office of Caspian Basin Energy Diplomacy and appointed Richard Morningstar as his Special Advisor and overseer of the new sub-agency. If the US could yank the ex-Soviet states in the region out of Russia’s “near abroad,” Western companies could reap mega-profits while the Russians were locked out – and Putin’s energy chokehold on Europe would be broken. The project was a classic case of crony capitalism and cynical geopolitics, with the US government canoodling with foreign dictators – some of them quite bizarre – in order to set up American and allied companies for the alleged coming “gold rush” in Caspian energy production.

Yet the eccentric dictators of Kazakhstan and Turkmenistan, for all their ruthlessness, come off as relatively benign compared to the gaggle of ultra-nationalists, open anti-Semites, corrupt oligarchs, and outright thugs (such as Yorash) who constitute the coup leadership in Kiev.

In Iraq we used “hard power” to install a regime that is not only tyrannical but also hostile to the US. Today in Ukraine we are deploying “soft power” to ensconce a government that will not only be a financial burden for as far as they eye can see, but which may also turn out not to be as “pro-American” as their effusive neocon cheerleaders would have us believe.

The Svoboda party claims to represent all Ukrainians in the region, and openly talks about a “Greater Ukraine” extending into parts of neighboring countries which may indeed have pockets of Ukrainians. The national-ethnic conflicts that have periodically transformed the map of south-central Europe go back a long way. Once this can of worms is opened there is no putting it back.

Quite aside from that, however, I thought I would never live to see the day when the US State Department whitewashed the neo-Nazi views and heritage of a gang of thugs who had seized power in a violent coup d’etat.

In Iraq, Libya, and Syria, US policymakers empowered radical Islamists of one sort or another. That was bad enough. Today, however, in Ukraine they are empowering the heirs of Adolf Hitler.

How is this not a scandal?

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China about to pick up speed, to the downside?

by Chris Kimble

CLICK ON CHART TO ENLARGE

Is a 30% decline for a currency in a couple of months, enough of a decline? The left chart reflects that the Chinese Yuan to the U.S. Dollar started falling two months ago and its been a hard and swift decline, to say the least. Do the currency players know something most of the world doesn't seem to know or is this just noise?

From a technical point of view, the Shanghai index is in a very vulnerable position in the right chart above. Should support break, this already weak index could get much weaker.

China represents one sixth of the worlds population. Some feel the Fed (Ben/Janet show) has been able to prop up the markets in the states. Can Janet keep things afloat in China too? Could weakness in China spill over into Europe and the United States markets and impact portfolio construction here? 

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Massive Speculative Positions and $80 Oil?

By Mike "Mish" Shedlock

With the slowdown in China, and global slowdown in general, inquiring minds may be wondering "where is the price of oil headed?" 
No one can answer that question with certainty, but Saxo Bank has an opinion worth considering.
Via email Steen Jakobsen, chief economist of Saxo Bank explains ...

It’s not my role to run Saxo’s official view on Crude. That job I leave to my expert Ole S. Hansen, who by the way is doing an excellent job.
This is how we see the rest of 2014 using our data:
Oil in US Dollars

This is “brave” call but when you consider the speculative size of the market – you get the “potential” on the downside.
Massive Speculative Positions
It's the Economy Stupid
  • Asia is driving global growth down led by China – due to the desperate need for rebalancing away from topline growth
  • Q1 and Q2 will be disappointing on growth. No, it’s not the weather – it’s the economy stupid! – this will drive demand down.
The one risk remains escalation of geopolitical risk but supply from Latin America, Africa and US/Canada/Mexico will flow more richly, Ole S Hansen even tells me that the supply/demand function should dictate lower oil prices.
We are long APR-16, 95.00 strike puts (0.55 cents vs. price of 1.25 now)
Safe travels,
Steen
Long Liquidation
I pinged my friend Pater Tenebrarum at Acting Man for his thoughts and he replied ... 
The idea that the positioning introduces a lot of downside risk? Absolutely. Last time a new record in net spec length was hit, crude had a pretty steep correction. Of course, the geopolitical risk is precisely the problem - there is lots of it right now. So it is unknowable when the positioning will matter, but eventually it will.

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Charting The Non-Recovery of U.S. Economy

By Eric Sprott

We are now in the 5th year since the “official” end of the Great Recession (the National Bureau of Economic Research (NBER), which officially dates U.S. recessions, said the recession ended in the second quarter of 2009), but it hardly feels like a recovery. Nonetheless, the media, sell-side economists, central bankers, the IMF, etc. all claim that the U.S. economy is now firmly out of the woods.

President Barack Obama said in his State of the Union speech that he believes 2014 “can be a breakthrough year” for the U.S. economy and the IMF, which raised its forecast for U.S. GDP growth in a report titled “Is the Tide Rising?”, now predicts growth of 2.8% in 2014.

However, a closer look at the data suggests that things are not improving and that the U.S. economy remains frail. Many point to the unemployment rate as a sign that things are getting better. Indeed, it has been declining steadily for many years and now stands at 6.7%. However, what many seem to forget is that the unemployment rate is declining for the wrong reasons.

Yes, the U.S. has been adding new jobs, but a large share of the decline in the unemployment rate can be explained by discouraged workers leaving the labor force. This effect can be seen in the falling participation rate. Many argue that this decline in the participation rate is structural and is caused by population aging. This explanation is superficial and misleading.

Figure 1, shows the contribution to the total participation rate for various age groups. As shown in Figure 1, since January 2005, the participation rate has fallen by 2.9% (from 65.8% to 62.9%). Of this decrease, 1.3% and 4.7% were driven by the 16-24 and 25-54 age groups, respectively. The rest was offset by a 3.1% increase in participation by the 55+ cohort.

FIGURE 1: CONTRIBUTION TO U.S. PARTICIPATION RATE (%)
maag-03-2014-T1.gif
Note: Sum of individual components adds up to total participation rate.
Source: Bloomberg, Sprott Calculations

This is reflective of a deep problem, as it suggests that baby boomers are failing to make ends meet and have to work for longer or even come out of retirement, and that the future workforce, those in their prime working years, are leaving the labour force.

Interestingly, without the “3% contribution” from the 55+ cohort, the labour force would have fallen below 60% for the first time since 1971, a period when the participation rate was starting to expand, driven mainly by women entering the workforce.

But that’s not all; many of those in their early 20s, seeing how hard it is to find a job, are staying in college for longer, amassing outrageous levels of student debt in the process. This is obviously not a sustainable solution. Delinquency rates on student loans (the bulk of them insured by the U.S. Government) are now at all-time highs (Figure 2). Most of these student loans have been securitized and sold to investors with the Government’s stamp (sound familiar?).

FIGURE 2: STUDENT LOANS % 90+ DAYS DELINQUENT
maag-03-2014-C1.gif
Source: Bloomberg, Sprott Calculations

For all the rest (ages 25-54), the participation in the labour force has also been declining, although at a slightly slower pace. Nevertheless, the average U.S. consumer is still worse off than it was before the Great Recession. Real disposable income per capita (Figure 3) is lower than it was at the end of 2005 while, over the same period, health care costs have increased from 10.0% to 11.5% of GDP (Figure 4), thereby reducing funds available for discretionary spending.

FIGURE 3: REAL DISPOSABLE INCOME PER CAPITA
INDEX 2005 Q4 = 100
maag-03-2014-C2.gif
Source: Bloomberg, Sprott Calculations

FIGURE 4: HEALTH CARE SPENDING AS A % OF GDP
maag-03-2014-C3.gif
Source: Bloomberg, Sprott Calculations

Not surprisingly, lower disposable income and discretionary spending levels for the average American are reflected in declining retail sales growth (Figure 5 shows the year-over-year growth rate in retail and food services sales).

FIGURE 5: RETAIL AND FOOD SERVICES SALES
YEAR-OVER-YEAR GROWTH
maag-03-2014-C4.gif
Source: Bloomberg, Sprott Calculations

Moreover, since the summer of 2013, when the Federal Reserve lost control of the bond market (see our article “Have we lost control yet?”, June 2013), we have seen a clear deterioration in demand for credit dependent purchases. Since these purchases are mostly made on credit (mortgages, car loans), increases in interest rates have made them unaffordable to many customers. Thus, because of the large and sudden increase in interest rates, housing sales have slowed significantly, as can be seen in Figure 6. Similarly, car sales growth has been on a declining trend since it peaked in mid-2012 (Figure 7).

FIGURE 6: U.S. HOME SALES
YEAR-OVER-YEAR GROWTH
maag-03-2014-C5.gif
Source: Bloomberg, Sprott Calculations

FIGURE 7: US AUTO SALES
YEAR-OVER-YEAR GROWTH
maag-03-2014-C6.gif
Source: Bloomberg, Sprott Calculations

On the supply side, things do not look rosy either. The U.S. composite PMI has been more or less flat for the past 3 years (Figure 8) and has suffered a sharp decline since its August 2013 “peak”. Other indicators, such as the durable goods new orders have been growing at a declining pace (Figure 9).

FIGURE 8: ECONOMY WEIGHTED MANUFACTURING & NON-MANUFACTURING COMPOSITE PMI
maag-03-2014-C7.gif
Source: Bloomberg, Sprott Calculations

FIGURE 9: US DURABLE GOODS NEW ORDERS
YEAR-OVER-YEAR GROWTH
maag-03-2014-C8.gif
Source: Bloomberg, Sprott Calculations 

To conclude, numerous indicators of the state of the U.S. economy point to a non-recovery:

  • The participation rate is low and supported by baby boomers working more or coming out of retirement.
  • Students (the future labour force) are defaulting on their loans in record amounts.
  • Disposable income is still below its pre-recession level.
  • An ever increasing share of disposable income is being spent on health care, crippling discretionary spending.
  • Higher interest rates are further depressing discretionary spending (home and auto sales).
  • All of which is resulting in anemic business and economic activity.

Claims that the U.S. economy is suddenly rebounding have been made before. They are misleading at best and fallacious at worst. It would not be surprising to see further deterioration, which would force central planners to initiate additional unconventional intervention (i.e. Quantitative Easing).

Post-scriptum:

Wow! In a recent Bloomberg article, Andrew Gracie, an executive director at the Bank of England (BoE), was proposing that in the event of a bank failure, regulators could suspend derivatives contracts affecting the failed bank on a global basis. He further argues that “The entry of a bank into resolution should not in itself be an event of default”. In other words, the solution proposed by the BoE to deal with a bank that fails and that has entered in a mountain of derivatives contracts is to suspend the market.

But this misses the point. As usual, regulators try to patch things up instead of proposing true solutions. What they are effectively proposing is to suspend reality, yet again, and pretend that there are no problems. This is even worse than suspending mark-to-market! How ironic that the same regulators who allowed this to happen are the ones who ask the market to suspend reality.

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Estonia Next? Russia "Signals Concern" For Its Citizens In The Baltic Republic

by Tyler Durden

Amid the growing Crimea crisis, Estonia, Latvia and Lithuania - which like Ukraine were all parts of the old Soviet Union and have very significant concentrations of ethnic Russian-speaking citizens - have expressed growing apprehension over Moscow's intentions. As Reuters reports, Russia signaled concern on Wednesday at Estonia's treatment of its large ethnic Russian minority, comparing language policy in the Baltic state with what it said was a call in Ukraine to prevent the use of Russian. "Language should not be used to segregate and isolate groups," the envoy noted, referencing the same 'linguistic tensions' that supported its annexation of Crimea.

Via Reuters,

Russia signaled concern on Wednesday at Estonia's treatment of its large ethnic Russian minority, comparing language policy in the Baltic state with what it said was a call in Ukraine to prevent the use of Russian.

...

"Language should not be used to segregate and isolate groups," the diplomat was reported as saying. Russia was "concerned by steps taken in this regard in Estonia as well as in Ukraine," the Moscow envoy was said to have added.

...

Russia has defended its annexation of Ukraine's Crimea peninsula by arguing it has the right to protect Russian-speakers outside its borders, so the reference to linguistic tensions in another former Soviet republic comes at a highly sensitive moment.

Russia fully supported the protection of the rights of linguistic minorities, a Moscow diplomat told the United Nations Human Rights Council in Geneva, according to a summary of the session issued by the U.N.'s information department.

Making all the Russian border nations nervous

Amid the growing Crimea crisis, Estonia, Latvia and Lithuania - which like Ukraine were all parts of the old Soviet Union - have expressed growing apprehension over Moscow's intentions.

U.S. Vice President Joe Biden is currently in the Lithuanian capital Vilnius as part of a trip to reassure the three countries, all European Union and NATO members, of Washington's support.

But, the market knows best and stock took Putin at his word that he was done with taking Crimea... or are markets "wrong" and merely an illusory peak at the marginal flow of carry slooshing around the globe?

It is perhaps not entirely surprising that Estonia would be "next" since the concentration of ethic Russians there is the highest of all the former Soviet Republics...

As NPR adds, it's not just The Batics that are worried...

EU Borderlands

In the region roughly southeast of the Baltic states that includes Ukraine, Belarus and Moldova, all three have sizable ethnic Russian populations.

Belarus, with about 8 percent of its population Russian, enjoys warm relations with Moscow and has signed on (along with Kazakhstan) to join Russia's "Eurasian Union" trade bloc that The Guardian says Putin hopes will grow into a " 'powerful, supra-national union' of sovereign states like the European Union."

Meanwhile, Moldova's smaller Russian population (about 6 percent) is concentrated in Transnistria, an autonomous region that is trying to separate from the rest of the country. The analogy with Ukraine and Crimea couldn't be more stark, suggests The International Business Times.

Some 2,000 of the Kremlin's troops are enforcing a cease-fire in Transnistria between Russian separatists and the Moldovan government. Although the region borders Ukraine and not Russia, given the instability in Kiev and Transnistria's proximity to Crimea and the Black Sea coast, Moldova eyes it warily.

What's more, since the Crimean crisis broke out, Transnistria's local Parliament has asked Moscow to grant the breakaway region Russian citizenship and admission to the Russian Federation.

The Baltic States

Latvia and Estonia have significant ethnic Russian populations. About 27 percent of Latvia's 2 million people are Russian, as are about a quarter of Estonia's 1.3 million. According to The Telegraph, the Russians in Latvia migrated there during Soviet rule when they were able to occupy the top rungs of civil and political society.

"But ever since communism's collapse, the boot has been firmly on the other foot. Latvian, not Russian, is the official language, and the country is now one of NATO's newest — and keenest — members, along with fellow Baltic states Lithuania and Estonia," the newspaper writes.

According to Reuters, Latvia and Estonia in particular "are alarmed by [Putin's] justification for Russian actions in and around Ukraine as protection for Russian speakers there.

"While all three Baltic republics have joined NATO — and Lithuania next year should be the last of the three to adopt the euro — these small countries are largely dependent on energy from Russia and have strong trade ties," Reuters writes.

"Last weekend, as pro-Russian forces were surrounding Crimea, Moscow's ambassador to [Latvia] caused further unease by saying that the Kremlin was planning to offer passports and pensions to ethnic Russians in Latvia to 'save them from poverty,' " The Telegraph says.

Central Asia

Kazakhstan, with just under a third of its population ethnic Russia, is one of the Kremlin's key allies. The BBC says it's "Moscow's strategic partner and the two countries regularly hold joint military exercises. They have close trade links as both are trying to develop a common market." The relationship, it says, is comparable to the one enjoyed between the U.S. and the U.K.

"But Russia's military action in Crimea has created unease among Kazakhs. They are worried that a 'Ukrainian scenario' could also apply to this Central Asian nation," the BBC says.

Kazakhstan's northern Kostanay region is about half ethnic Russian, and in other regions, especially to the east, "there are fewer ethnic Kazakhs than ethnic Russians," according to The Washington Post.

On Monday, Kazakhstan's pro-Russian President Nursultan Nazarbayev was said to "understand" Russia's position vis-a-vis Crimea, according to Reuters, "which struck many as a very carefully worded way of phrasing it," according to the Post.

Kyrgyzstan, with about a 12 percent ethnic Russian population, also has a Kremlin-leaning president, Almazbek Atambayev. But the country has carefully balanced East and West until now, allowing both a Russian military base and a U.S. air base on its soil. That is set to change, however.

While the Caucasus is home to only small minorities of ethnic Russians, it's a region that has suffered from the Kremlin's attentions. Chechnya has been the locus of a brutal separatist conflict with Moscow. Georgia saw its South Ossetia region cleaved by Russia's 2008 incursion.

In 1992-93, the breakaway Abkhazia region of Georgia also underwent a civil war in which ethnically Georgian militias, supported by the Georgian state, were pitted against "ethnically Abkhazian militias supported both by North Caucasus militants ... from Russia and by the Russian state itself, which provided weapons and training to the fighters and carried out airstrikes against ethnic Georgian targets."

It's clear too that the Crimea situation has raised concerns in Azerbaijan.

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Caterpillar Global Retail Sales Continue Sliding, Drop For 15th Month In A Row; LatAm Tumbles

by Tyler Durden

Any minute now...

Just like with the fabled Abenomics recovery which is said to be just around the corner, so Caterpillar, whose stock has discounted a Phoenix-like rise from the ashes, continues to disappoint month after month, with no actual pick up in sales, and as was just released moments ago, in February the heavy industrial equipment maker posted the 15th consecutive decline in global retail sales, which declined 8% from February of 2013, which in turn was a 13% decline from 2012.

The only silver lining in the data set was the tiniest of Y/Y increases for North American sales, which saw a 2% increase, up from 1% in January. However, this was more than offset by tumble in Latin American sales, which declined 16% compared to last year, far worse than the 11% drop seen in January, and the worst print for the continent since February 2010.

Finally, broken down by segment, while both Power Systems and Construction Industries machines posted global sales increases of 2% and 9%, respectively, it was the ongoing collapse in the company's bread and butter, Resource Industries, that tumbled by 37% in February, confirming the commodity glut is truly crushing CAT which is unable to increase its sell through into this all important product vertical. It also means any hopes for an Australian commodity boom and/or decoupling from China, will be very short lived indeed.

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