The Biggest Threat To The 2012 Economy Is??? Not What Wall Street Is Telling You...

Submitted by Reggie Middleton Earlier this week I published a controversial rant on the US education system - How Inferior American Education Caused The Credit/Real Estate/Sovereign Debt Bubbles and Why It's Preventing True Recovery. This was a lengthy piece, but apparently caught the interest of many as it went semi-viral. This is part of the conclusion, attempting to show how US indoctrinated "GroupThink" prevents many (if not most) from seeing what empirically should be obvious. 

There are many analysts and pundits who outline their predictions for the new year. I don't believe in "predicting" personally, but it is very important to form an outlook for the future and back said outlook up with objective observation and prudent analysis. Several big bank analysts have outlined what they perceive to be the biggest threat to stability for 2012, and material amount of them chose the same threat...

Iran

Former CIA Chief: Iran 'Single Greatest Destabilizing' Force in 2012

Tehran will be the top threat in 2012, former CIA Director Michael Hayden predicted Wednesday as Iran dominates foreign policy debate even while national security officials appeared to dismiss the Islamic Republic's latest threat to close the Strait of Hormuz.

"It is the single greatest destabilizing element right now with regards to global security," Hayden told Fox News, adding that the outlook is not encouraging.

Don't get me wrong, I fully appreciate and agree with the assertion that Iran is a serious threat to global stability - and I'm not the only one...

Whle PIMCO didn't actually label Iran as the biggest threat, they did do a superb job of outlining the potential fallout from an Iranian oil event....

"Pimco's 4 "Iran Invasion" Oil Price Scenarios: From $140 To "Doomsday"",

 "Whenever the global economy is in a fragile state, as it is today, geopolitical concerns such as the possibility of a strike on Iran’s nuclear facilities become much more exaggerated. Although we cannot (and will not) predict whether an attack is imminent, or even likely, our experience and research tells us that any major disruption in the supply of oil from Iran could have either subtle or profound global repercussions – especially as excess capacity is virtually exhausted and we doubt that other OPEC nations would be able to compensate for a reduction in Iranian oil production."

The 4 scenarios presented by PIMCO here they are: "i)Scenario 1: Exports minimally effected. Concerns would drive initial price response; Oil could spike initially to $130 to $140 per barrel and then settle in a higher range, around $120 to $125; ii) Scenario 2: Iranian exports cut off for one month. In this case, we would expectprices could reach previous all-time highs of $145/bbl or even higher depending on issues with shipping; iii) Scenario 3: Iranian exports are lost for half a year. We think oil prices could probably rally and average $150 for the six months, with notable spikes above that level; iv)Scenario 4: Greater loss of production from around the region, either through subsequent Iranian response or due to lack of ability to move oil through Straits of Hormuz. This is the Armageddon scenario in which oil prices could soar, significantly constraining global growth. Forecasting prices in the prior scenarios is dangerous enough. So, we won’t even begin to forecast a cap or target price in this final Doomsday scenario."

Now, SocGen weighs in...

SocGen Lays It Out: "EU Iran Embargo: Brent $125-150. Straits Of Hormuz Shut: $150-200"

1) "Scenario 1: EU enacts a full ban on 0.6 Mb/d of imports of Iranian crude. In this scenario, we would expect Brent crude prices to surge into the $125-150 range." 2) "Scenario 2: Iran shuts down the Straits of Hormuz, disrupting 15 Mb/d of crude flows. In this scenario, we would expect Brent prices to spike into the $150-200 range for a limited time period."

Now, the last thing an already crippled Europe needs is a doubling of its primary transportation energy source. Alas, methinks Europe has bigger problems to with which to cause goose bumps on its booty - namely.... It's banking AND insurance system is still one step from absolute implosion! It's gotten so bad that the borrowers are actually lending to the lenders because the lenders have no effective credit in the markets!!!

European Banks Now Get Loans From Cash-Rich Firms

Blue-chip names like Johnson & Johnson, Pfizer, and Peugeot are among firms bailing out Europe's ailing banks in a reversal of the established roles of clients and lenders.
Euro bills and U.S. dollars being exchanged.One source with knowledge of the so-called repo deals, or short-term secured lending, said the two U.S. pharmaceutical groups and French car maker were the latest to sign up for them. Europe's banks are struggling to secure the cash to fund their day-to-day business and have largely stopped lending to each other for fear Europe's sovereign debt [cnbc explains] crisis could land any of their peers in trouble.

As a result a group of well-known, cash-rich companies with solid cash flows has stepped in the repo market, which provides a form of lending so far almost exclusively in use between banks, and between banks and central banks. One market participant said in one key area of lending companies now accounted for 25 percent of these deals. Repos provide the new financiers with the strict guarantees they need before parting with their cash, answering worries that the crisis has weakened Europe's banks to the extent that they might not be able to pay the money back.
"Companies in the past were ... happy to deposit cash on an unsecured basis to a bank for an interest payment," said Frank Reiss, who oversees some of the repo business at Euroclear, the Brussels-based settlement house owned by a group of banks. "Now following the crisis, we have seen that companies are engaging in repos secured with collateral against the cash they are lending," said Reiss. Euroclear is the largest administrator of repo trades in Europe. At the moment the European Central Bank provides the main lifeline for banks and has pumped hundreds of billions of euros of cash into the market. But the banks are parking most of the money they borrow back at the ECB [cnbc explains] rather than trusting to lend to each other.

Yes, this appears to be the fact...Deposits at ECB Hit New High

Commercial banks' overnight deposits at the European Central Bank hit a new record high of 464 billion euros, data showed on Monday, and traders said they could hit half a trillion euros by next week. High deposits indicate banks prefer the safety of the central bank for their funds to higher rates they could get by lending to each other.

Banks are awash with cash after taking an unprecedented 489 billion euros in the ECB's [cnbc explains] first-ever three-year liquidity operation late last month, and are mulling what to do with the money in the longer term. The liquidity operation was designed to underpin banks' finances and hopefully repair some confidence in the sector, but the sovereign debt crisis means many institutions still lack enough trust to lend to each other and prefer to stash their money at the ECB.

"The market is more or less closed, all the over-liquidity is going back to ECB," the trader said. "Slowly people are getting some longer funding, but there is no easing in the short end."

Now, Germany has acted as stalwart stopgap in the sovereign debt carnage of the EU nations. It's perceived as the strongest, most stable and most disciplined economy. As such, there has been a massive flight to quality trade that has pushed German bunds to negative yields. That's right! As in the US, you literally have to pay Germany for the privilege of lending it your hard earned money.

• German Note Yields Fall to Record Low Following Merkel, Sarkozy Meeting

• Germany Issues Bills With Negative Yields As Economists Agree the nation is in recession.

Right here and now, the more astute should see there's something wrong here, but we shall move on. Wait a minute! This net export nation (that means its livlihood is based on selling goods to others) whose major trading partners suffer from a myriad of maladies ranging from hard landing to near depression is in economic recession, yet there's enough demand to lend it money that lenders have to pay for the privilege???

1. Latest Numbers from Germany Confirm Recession The New American-The announcement from the German Economy Ministry over the weekend confirmed that the long-awaited European recession has officially begun: German factory ...
2. Germany in recession - The Daily Economist- Entering the new year, we can now add Germany to the growing list of countries in recession, as noted by more than a dozen economists who have come to this ...
3. Economists: Germany in a recession now - The Local - As European leaders struggle to stave off a looming recession this year,Germany – the continent's biggest and healthiest economy – is probably already in one,...
4. Survey shows Germany already in recession: report - MarketWatch- BERLIN -The German economy is already in recession, Die Welt newspaper reported Monday, citing its survey of 14 bank economists.

I believe Germany poses the biggest threat to global harmony for 2012. Here's why... Read on/source/full story

Monsanto's Ties to Big Government

Mike Adams about Monsanto. Mike is the founder of NaturalNews.com, an online news source covering all areas of personal and planetary wellness from nutrition to renewable energy. Source

How Inferior American Education Caused The Credit/Real Estate/Sovereign Debt Bubbles and Why It's Preventing True Recovery

This is a lengthy, highly provovative article illustrating in explicit detail my thoughts on how America's inferior education system made the Great Recession not only a foregone conclusion of indoctrinated GroupThink, but prevents a true recovery from recovery due to the abject fear of price clearing. You may need to put your thinking caps on and exercise some patience and restraint with this one. I am going to follow it up with an explcit example of said groupthink by going against the conventional grain (yet again) and pointing out what many in the mainstream consider to be the most likely threat to economic prosperity in 2012 (and no, Iran is not even in the running on this one). I blame indoctrinated GroupThink for the inability of Wall Street to see the excessive coniferous expanse due to treebark blindness! Until the next post, though...

Dubois Speaks Through Me

The problem is plain before you. Here is a situation transplanted through the criminal foolishness of those gifted and/or empowered with the productive assets created and cultivated by our fathers. Whether you like it or not this country constitutes hundreds of millions of the diverse plethora that is America. They are already here, and here they will remain. If you do not enable the mechanisms that allow them to lift themselves up (versus the socialistic path of trying to lift all up), they will simply pull you down. Access to (and not the socialistic gifting of) productive assets (wealth) and knowledge, combined with the teaching of individuals to build strength of character are the means to which accomplish this.

Physical and/or mental labor (the staple of the working class) alone will not do it unless inspired by the right ideals and guided by intelligence and knowledge. Academic education alone will do little, for look at many of our brothers and sisters who are highly degreed, yet have a lower standard of living, lower general level of happiness and less inflation adjusted net wealth than their parents despite living in a age that fosters greater access to technology and resources. Successful education must not simply teach work, or instruct one on how to labor for the capitalist oligarchy — it must teach Life.

The Truly Talented of this country who are not extant members of the oligarchy must be made leaders of thought and missionaries of culture. No others can (or will honestly) do this work. We must train agents for in the education system – for the existing oligarchy not only benefits from the teaching of labor/work as the embodiment of success, but cannot truly exist without such for it is cheap labor that enables the oligarchy to amass disproportionate wealth at the expense of the working class - literally profiting off of the backs of others. To be honest, this is the way of capitalism. It is understandable and acceptable, but only to the point to which those laborers willingly accept their position. Once it comes to the point of attempting to force said laborers into their laborious positions through duplicity and guile, we not only foster the misallocation of valuable American resources (human, social and economic) but we squander what could be sown and fostered to make America a better and more competitive country, thus putting the great empire at risk of collapse for the betterment of the very few. America, like all great establishments, was created, and is going to be saved by its exceptional heroes – or collapsed due to the lack thereof! W.E.B. Du Bois, 1903 channeled through Reggie Middleton 2012. Source/much more/full story

FUTURE..WHAT FUTURE - FKN Newz

Wild as ever, it includes the US marine pissing incident. Irreverent? Yes. A fairer than main stream news take on today? Most of the time, in our opinion, yes.

Do Americans Want To Attack Iran?

Alex covers the fallout over the assassination of an Iranian nuclear scientist as the U.S. announces more warships will patrol the Persian Gulf after Iran threatened to close down the Strait of Hormuz in response to a proposed embargo of its oil exports. Source

Jon Stewart on MSNBC on New Hampshire Ron Paul 2nd

"Only question, who would be the first pundit to dismiss Ron Paul's second place?"

Judge Napolitano: What if they're lying to you about Ron Paul?

"What if the two party system was actually a mechanism used to limit so called public opinion... What if there were more than two sides to every issue... What if Ron Paul is being ignored by the media not because he is unappealing or unelectable but because he does not fit into the pre manufactured public opinion mould used by the establishment to pigeonhole the electorate and create the so called narrative that drives media coverage of elections?"

Obama Sends Request To Congress For $1.2 Trillion Debt Ceiling Increase

Submitted by Tyler Durden - Update:

• HOUSE TO VOTE JAN. 18 ON OBAMA'S DEBT-LIMIT INCREASE REQUEST

Two days ago we wondered how long it would take for Obama to restart the debt ceiling theatre. Not that long it turns out.

• OBAMA SENDS CONGRESS REQUEST TO RAISE DEBT CEILING
• OBAMA NOTIFICATION STARTS 15-DAY CLOCK FOR CONGRESS TO VOTE

So with Congress in recess, will Obama succeed in passing another automatic vote using base trickery? The same Obama, who as recently as 3 hours ago warned Congress that any attempts to pass approval on the Keystone Pipeline without his involvement are "counterproductive"... In other news, America' new debt ceiling of $16.3 trillion, or 107% of GDP is now just a formality, about to be interrupted by a little circus clowning.

From Bloomberg:

President Barack Obama formally notified Congress today that that the government needs more borrowing authority.

The written certification to raise the debt ceiling to $16.394 trillion starts a 15-day clock for Congress to consider and vote on a joint resolution disapproving of the increase.

Under legislation passed Aug. 2 after months of wrangling between the
administration and Republican lawmakers, the president is given the
power to veto any disapproval resolution that clears both chambers of
Congress.

The law calls for Obama to notify Congress when the debt came within $100 billion of the current $15.194 trillion limit.

While the threshold was reached Dec. 30, when the president was in
Hawaii and Congress was on holiday break, Obama agreed to a request from
congressional leaders to delay the notification request, ensuring the
deadline for congressional action didn’t lapse before lawmakers returned
to Washington.

Source

Obama: Dollar just an Illusion

In a sensational interview  President Barack Obama provided some deep insight into the monetary system: "The dollar is just an illusion" - the US currency was actually not worth anything. 

In the program "60 Minutes" of an US TV channel that is to be broadcast next sunday, the idea had actually been to put US President on the spot about the causes of the financial crisis and possible approaches to resolve it. But the assembled journalists were astonished to hear Obama tell them that the crisis was more deeply rooted than a lot of people thought.
Specifically, Obama explained that the trigger for the financial crisis - the subprime crisis - wasn't actually a US-specific problem, but was a problem of the monetary system itself. This system involved compound interest effects that caused more and more debt, which in turn made it necessary to search for ever more debtors. The logical consequence therefore was that even people who were not credit-worthy were being lent huge amounts of dollars. Literally, Obama said: "Our money is an illusion."
The group of journalists then asked him to elaborate. Obama did not hold back: "Money is nothing other than debt. The money that you carry in your pocket is other people's debt. Money only comes into existence through debt. And that is precisely the problem that we are having right now."
A senior economist amongst those present questioned this stance, asking whether this meant that paying back money would also destroy money. Obama said that that was the case.
Paying back debt destroyed money. That was also the reason why the dollar was running short and therefore increasing in value compared to other currencies: "Most loans are made in dollars. When these are paid back even in part, money is destroyed, and the dollar becomes scarce and expensive." That was the only reason why the greenback was rising against other currencies, because what was actually in people's interest was a weak dollar.
But in his view the fundamental problem was the fact that the monetary system was  reliant on ever-increasing debt levels. However, you could not take on debts without limitation. "That is precisely why we are in such a deep mess," were the US President's precise words.
"Are you saying that money doesn't really exist in its pure form?" one journalist wanted to know. Obama nodded and said that that was precisely the case. And because everybody was indebted up to their limit now, the money in your pocket was practically worthless, and that's why we were having a big problem now. However, this wasn't just a dollar-specific problem, but a problem affecting all currencies.

Another journalist wanted to know what the FED was up to, giving out billions of dollars via QE2. Obama responded to this by disclosing what was probably one of the best kept secrets: The FED actually did not have any money. It creates it out of fresh air - by the push of a button. Like a conjuror.
Obama admitted that he had spoken to the head of the central bank Bernanke on this issue beforehand. Bernanke had advised him that it would be best if he did not make the facts public. But he, Obama, represented the 'change' after all, and that therefore also meant a paradigm shift as far as money was concerned.
This prompted a reporter to respond angrily: "Are you saying that the FED creates money out of fresh air - while others have to work hard for it?"
"That's precisely the case," answered Obama. But he would do what he could to ensure that there would also be more honesty in the monetary system in future. It was just not on that banks or the central bank created money out of fresh air while others had to work hard for it.
The US President explicitly advocated a new type of monetary system, but said that one had to bear in mind that this was an extraordinarily difficult issue. The last president who tried to do this paid for it with his life. Obama: "I don't want to end up like Kennedy. I really want to make a change. We need to change the system. Yes, we can!"
Obama left the group of experts in the dark about the precise measures on the drawing board. But he suggested to the journalists to invite FED boss Bernanke next time; he was even better informed about the pitfalls of the monetary system. And he, Obama, was already looking forward to hearing what solution Bernanke would propose. Source


Angelo: OK, OK, It's a wind up.

BMW’s Rolls-Royce Posts Record Sales

FRANKFURT—BMW AG’s ultra-luxury Rolls-Royce unit said Monday it sold 3,538 cars last year, a 31% increase compared to 2010 and setting a new annual sales record for the 107-year-old car brand.

“We had an outstanding year,” Rolls-Royce brand chief Torsten Müller-Öetvös said in a statement, adding that business continues to go very well.

Its sales in the Asia-Pacific region surged 47% year-on-year in 2011, compared with a 17% rise in North America and a 23% increase in the Middle East. China and the U.S. were also the brand’s largest markets last year.

“We’re expanding our dealership network, entering new markets such as South America and expanding our production facility in Goodwood [West Sussex, England] to meet rising demand worldwide,” Mr. Müller-Ötvös said. “We’re also planning to further develop our model lineup.” Source

Angelo: Given the global occupy movement and the depression facing most people around the world, I had to post this. "Why aren’t the masses connecting the dots?" was an apt comment I saw today somewhere obscure. The often misstated 0.01% (not as catchy as 1%) are clearly doing better than ever. Alternatively, perhaps people are just opting for quality these days. I am;)

Market Implies Greek Devaluation To 1530 Drachma Versus Euro

Submitted by Tyler Durden: On the day when Greek 1Y yields broke above 400% for the first time, a consideration of just what Greece would look like post-exit is perhaps fruitful. Looking at hypothetical forward rates (generated from covered interest rate parity between EURUSD FX and EMU sovereign interest rates), MSCI has an interesting analysis of what a decoupled Drachma (and for that matter Lira, Escudo, and Irish Pound) would look like. Given the Greeks entered the EMU in January 2001 at 340.75 Drachma to the Euro, the current market is pricing in a massive devaluation to around 1530 Drachma to the Euro. Perhaps as further evidence of the market's perspective that a devaluation is likely, from extremely high correlations just over a year ago, the implied new Greek Drachma vs Euro has dropped to almost negligible correlation against an implicit Deutschmark vs Euro. As the PSI discussions go from bad to worse (as we expected and discussed yesterday), it seems the market is increasingly expecting at best a coercive agreement (if not outright exit). Source/full story

The Signs Pointing to Israel's Role in the Assassination of an Iranian Nuclear Scientist

When 32-year-old Iranian nuclear scientist Mostafa Ahmadi-Roshan was assassinated in a car bomb attack Wednesday, Iran immediately accused Israel of carrying out the attack. At this point, it's increasingly difficult to argue to the contrary.

Without question, a number of aspects of yesterday's attack remain mysterious and warrant a skeptical review of Iran's account, which it is taking to the United Nations. For instance, how were no culprits found when the alleged motorcyclist planted a magnetic bomb under a scientist's car in broad daylight with several witnesses present? This isn't even the first time such an attack has happened amid busy, rush-hour traffic. Another thing to keep in mind: Israel isn't the only state opposed to Iran's nuclear advancement: Sunni Arab governments could have also waged the attack. And finally, some of Iran's nuclear scientists who have been assassinated had ties to opposition groups and may have been targeted by Iran's own government. The preponderance of evidence, however, suggests Israel carried out the attack, with the possible assistance of the U.S. Here's why:

A former Israeli official admits to the assassination campaign Speaking with The New York Times, a "former senior Israeli security official," tells the newspaper the assassination campaign is "part of a larger Israeli strategy to prevent all-out war." Speaking anonymously, he says “I think the cocktail of diplomacy, of sanctions, of covert activity might bring us something,” the former official said. “I think it’s the right policy while we still have time.”

Israel doesn't deny it Of course, nation states shouldn't be required to respond to every allegation but when there's a high plausibility like this, Israel's refusal to comment is a response in itself. Speaking on condition of anonymity, an Israeli official tells The Washington Post that "It is not our policy to comment on this sort of speculation when it periodically arises." By contrast, the U.S. has outspokenly denied any involvement in the attack. “The United States had absolutely nothing to do with this,” said Tommy Vietor, a spokesman for the National Security Council. In an odd move, raising more questions than answers, Israel's chief military spokesman Brig. Gen. Yoav Mordechai wrote on his Facebook page "Don’t know who settled the score with the Iranian scientist, but for sure I am not shedding a tear.” According to The Post, the comment "sparked a debate on his page, with some readers saying he should be more discreet."

Past comments In the run-up to the assassination, some of Israel's public comments also raise suspicions. The National Post's Peter Goodspeed notes, "On Tuesday, Lieutenant-General Benny Gantz, Israel’s military chief of staff, told a special parliamentary committee Iran should expect more 'unnatural' events in 2012." Additionally, "Last year, Dan Meridor, Israel’s Minister for Intelligence & Atomic Matters, told Israeli Radio, 'There are countries that impose economic sanctions and there are countries who act in other ways.'" 

Israel's history As the Times' Scott Shane points out "Israel has used assassination as a tool of statecraft since its creation in 1948, historians say, killing dozens of Palestinian and other militants and a small number of foreign scientists, military officials or people accused of being Holocaust collaborators." 

 

Expert opinion If you're not one for looking at the matter yourself, there's always the experts, scholars and think tankers. According to The Times, "experts believe" the campaign was carried out by Israel. Speaking to the paper, Patrick Clawson, director of the Iran Security Initiative at the Washington Institute for Near East Policy, says “I often get asked when Israel might attack Iran,” he said. “I say, ‘Two years ago.’” He adds: “Sabotage and assassination is the way to go, if you can do it. It doesn’t provoke a nationalist reaction in Iran, which could strengthen the regime. And it allows Iran to climb down if it decides the cost of pursuing a nuclear weapon is too high.” Source