ECB launches €1.1 trillion blitz as bond market dries up

'Our monetary policy decisions have worked,' says ECB president Mario Draghi, basking in the glow of recovery

By Ambrose Evans-Pritchard

8:32PM GMT 05 Mar 2015

Close-up of European Union Euro notes
The euro slumped yet further after Mario Draghi confirmed there would be no retreat from the original plan to buy €60bn of assets each month Photo: Alamy
The European Central Bank is to launch a €1.1 trillion blitz of bond purchases from Monday to avert deflation and revive lending, finally joining the “QE club” a full six years after the Bank of England and the US Federal Reserve.

The belated move came as the ECB sharply raised its growth forecasts to 1.5pc this year and 1.9pc next year, leaving it unclear whether such massive stimulus is still needed or even advisable.
Year-on-year retail sales jumped 3.7pc in January as the delayed effects of falling energy prices feed through to household spending.
Mario Draghi, the ECB’s president, said the radical measures first unveiled by the central bank nine months ago had restored confidence and were starting to bear fruit, alleviating credit stress across every part of the eurozone.
“Our monetary policy decisions have worked,” he said. While coy in admitting it, Mr Draghi has already achieved much of his desired effect by driving the euro down 20pc against the dollar and the Chinese yuan since last spring.
The devaluation has proved a powerful form of stimulus, even if the eurozone’s inflation rate is still languishing at -0.3pc.

The euro slumped yet further after he confirmed that there would be no retreat from the original plan to buy €60bn of assets each month, mostly sovereign bonds. It touched an 11-year low of $1.10 against the dollar.

The pound has reclaimed all the ground lost against the euro since 2007, closing at €1.38 on Thursday.

Under the scheme, each national central bank in the ECB system is responsible for buying its own bonds, reducing the level of shared liabilities to just 20pc of the total. This leaves weaker countries at risk of a bad “feedback loop” if the EMU debt crisis ever returns. They will buy bonds with yields as low as -0.2pc, and up to 33pc of each country’s public debt.

Alberto Gallo, from RBS, said the circumstances are entirely different from America’s QE. The Fed was able to gobble up a vast supply of Treasuries as Washington ran budget deficits above 10pc of GDP. “In Europe, the net supply of investment grade paper will be negative,” he said.

EMU bond yields are already at unprecedented lows, with two-year rates below zero in seven countries. German, Austrian, Dutch and Finnish yields are negative even at five-year maturities. There is a chronic shortage of assets to buy as budget deficits keeping falling.

The problem is acute in Germany, where the government ran a budget surplus of €18bn last year and is retiring debt at a record pace, leaving nothing left for investors. The Bundesbank is nevertheless still expected to come up with its 27pc share of the stimulus. Germany’s two ECB members voted against QE, insisting that deflation fears have been greatly exaggerated.

Bundesbank officials fear the bank could faces losses – at least on paper – if QE succeeds in reflating the eurozone and reigniting growth. US Treasury yields rose by as much as 100 basis points in the early rounds of QE by Fed as the market bet on recovery, overwhelming the effect of the actual bond purchases. This temporarily reduced the value of the longer-dated bonds. While that was not a major issue in the US, it would be another matter in Germany, where criticism against QE has been vehement.

“There could be some whiplash for investors,” said Gary Jenkins, at ING Capital. “Anybody buying bonds at such low yields could suffer a large loss if yields spike. Markets could get aggressive if there is any sign that the ECB might end the programme early.”

For now, the problem is the opposite. Investors are still piling into the shrinking market that remains, driving yields even lower. Spain’s 10-year yields fell eight points to 1.27pc on Thursday, while Italy’s fell nine points to 1.77pc.

Banks, pension funds and insurers are not giving up their precious treasure lightly. Many are required to retain large bond holdings to comply with regulations. Global central banks have more freedom but they usually move with glacial speed, if at all.

David Owen, at Jefferies, said the EMU bond boom is not over yet. “We think the ECB will go ‘right down the curve’ to 30-year maturities to make their numbers add up. Yields could fall a lot further,” he said.

A Fair Hearing for Sovereign Debt

Joseph E. Stiglitz, Martin Guzmán

MAR 5, 2015

Gavel world globe earth

NEW YORK – Last July, when United States federal judge Thomas Griesa ruled that Argentina had to repay in full the so-called vulture funds that had bought its sovereign debt at rock-bottom prices, the country was forced into default, or “Griesafault." The decision reverberated far and wide, affecting bonds issued in a variety of jurisdictions, suggesting that US courts held sway over contracts executed in other countries.
Ever since, lawyers and economists have tried to untangle the befuddling implications of Griesa's decision. Does the authority of US courts really extend beyond America's borders?
Now, a court in the United Kingdom has finally brought some clarity to the issue, ruling that Argentina's interest payments on bonds issued under UK law are covered by UK law, not US judicial rulings. The decision – a welcome break from a series of decisions by American judges who do not seem to understand the complexities of global financial markets – conveys some important messages.
First and foremost, the fact that the Argentine debt negotiations were preempted by an American court – which was then contradicted by a British court – is a stark reminder that market-based solutions to sovereign-debt crises have a high potential for chaos. Before the Griesafault, it was often mistakenly assumed that solutions to sovereign-debt repayment problems could be achieved through decentralized negotiations, without a strong legal framework. Even afterwards, the financial community and the International Monetary Fund hoped to establish some order in sovereign-bond markets simply by tweaking debt contracts, particularly the terms of so-called collective-action clauses (which bind all creditors to a restructuring proposal approved by a supermajority).
But simple modifications like contract amendments will not overcome the system's deficiencies. With multiple debts subject to a slew of sometimes-contradictory laws in different jurisdictions, a basic formula for adding the votes of creditors – which supporters of a market-based approach have promoted – would do little to resolve complicated bargaining problems. Nor would it establish the exchange rates to be used to value debt issued in different currencies. If these problems are left to markets to address, sheer bargaining power, not considerations of efficiency or equity, will determine the solutions.
The consequences of these deficiencies are not mere inconveniences. Delays in concluding debt restructurings can make economic recessions deeper and more persistent, as the case of Greece illustrates.
This brings us to the second lesson of the British ruling. With the stakes so high and the system so broken, debt markets have little reason to remain in the US. America has always prided itself on the strength of its “rule of law," a selling point that has made Wall Street host to the largest sovereign-debt market. But Griesa's ruling, based on a peculiar – and in our view, indefensible – interpretation of certain terms in Argentina's contract, showed that US commercial interests can dominate its courts' decisions.
The vaunted American rule of law no longer looks so robust. Perversely, it protects the strong against the weak. The Griesafault is only the latest of many decisions and legal changes that have revealed what one might call a symptom of “corruption, American-style," in which lobbying and campaign contributions compromise the entire system, even when no individual official is on the take. The US would be wise to react before the sovereign-debt market migrates from New York.
China should stand ready to pick up the slack. Its savings now far outstrip those of the US, and it is striving to make Shanghai a global financial center. That ambition has become more attainable in view of the damage to the US system's credibility in the aftermath of the 2008 financial crisis. But, if Shanghai is to emerge as a leader in sovereign lending markets, China should be aware of the shortcomings of legal frameworks elsewhere, and design a more efficient and equitable alternative.
The final, overarching message of the British court's decision is one that all countries should heed. There is an urgent need to renew the United Nations' efforts to create a multinational legal framework for sovereign-debt restructuring. Though the US is striving to undermine these efforts, the UK ruling reminds us that America's judges are not the world's judges.
That last revelation may not make Wall Street happy; but, for the many countries around the world that rely on sovereign debt, it is very good news indeed.

Defiant Greece at daggers drawn with EU creditors

If Greeks are forced to choose between a restoration of their dignity or continued Troika humiliation, they will choose dignity, says the Greek prime minister

By Ambrose Evans-Pritchard

8:32PM GMT 09 Mar 2015

Relations between Greece and Europe's creditor powers are dangerously close to breaking point. Both sides have issued ultimatums, each insisting angrily on fixed positions and lashing out at each other with barely concealed animosity
Germany’s Wolfgang Schauble among others insisted on using the term “Troika” – hated in Greece, and now officially abolished – seemingly wishing to humiliate Syriza. The Slovak minister told Greece to “face the naked truth”
Relations between Greece and Europe's creditor powers are dangerously close to breaking point. Both sides have issued ultimatums, each insisting angrily on fixed positions and lashing out at each other with barely concealed animosity.
“If they decide to kick us out, the damage will be greater for them,” said Manolis Glezos, the war-time resister who ripped the Nazi flag from the Acropolis in 1941.
Mr Glezos, a Syriza MEP and the party’s venerated elder statesman, told the Daily Telegraph that his movement never wished to take Greece out of monetary union but will not shrink from doing so if EMU authorities insist on suffocating austerity. “You cannot attend the negotiating table without carrying this option along,” he said.
Far from subsiding, the defiant language from Athens is growing louder. "If Europe leaves us in crisis, we will flood it with migrants,” said Panos Kammenos, the defence minister and leader of the Independent Greeks party.
“Too bad for Berlin if there are some Jihadis from Islamic State in that wave of millions. If they strike us, we will strike them,” he told La Repubblica, vowing to give illegal migrants valid documents and open Europe’s Schengen frontiers to all comers.

“Relations have reached a new low. It’s turning into an arms race,” said Mats Persson from Open Europe. “These comments are a recipe for matters to get out of hand, and it is becoming increasingly hard for Germany to back down.”

Greek premier Alexis Tsipras is barely more diplomatic than his ministers. Over the weekend he threatened a snap vote on the terms of austerity if Eurogroup finance ministers reject Greece’s latest list of reform proposals.

"If we were to hold a referendum tomorrow with the question, 'do you want your dignity back or a continuation of these undignified policies,' then everyone would choose dignity regardless of difficulties that would come with it," he told Spiegel Magazine.

To drive home his threat, Mr Tsipras compared the eurozone to a woollen jumper. “Once it begins to unravel, you can’t stop it any more,” he said.

Yet the Eurogroup did in fact reject Greece’s reform proposals in Brussels today, and in caustic terms. "We have to stop wasting time and really start talks seriously," said Jeroen Dijsselbloem, the group’s chief.

Germany’s Wolfgang Schauble among others insisted on using the term “Troika” – hated in Greece, and now officially abolished – seemingly wishing to humiliate Syriza. The Slovak minister told Greece to “face the naked truth”.

Jean-Claude Juncker, the European Commission’s chief, warns that the EMU authorities must tread with great care. “What worries me is that not everybody in the European Union seems to have understood the seriousness of the situation in Greece,” he told Die Welt.

Mr Juncker issued a categorical guarantee that Greece will not be forced out of EMU. “There will never be a Grexit. The country is and will remain a member of monetary union. A Greek withdrawal would lead to an irreparable loss of global prestige for the whole EU.”

Such comments – and similar words by the German and French leaders – are hazardous. If Europe fails to defuse the crisis after all and precipitates an EMU break-up, any pledges to defend Portugal, Italy and Spain against contagion would be greatly devalued.

They may also embolden Mr Tsipras, since they appear to confirm his calculated gamble that the Eurogroup is bluffing and will have to yield in the end as greater geostrategic pressure is brought to bear.

Yet Mr Tsipras must equally tread with care. His popularity has slipped from 84pc to 64pc since early in February. Almost 70pc of Greeks say they want Syriza to reach an “honourable compromise” with the Eurogroup, though it is hard divine what constitutes “honourable”. A full 27pc already want a return to the drachma.

The two sides are talking past each other. Mr Tsipras warned of a fresh showdown – or “thriller” as he called it - if the European Central Bank withholds liquidity support for the Greek banking system, warning Frankfurt of the “great responsibility” it will have to carry if it pushes Greece over the edge.

This moment of decision may already be close. Last week, Greece requested a €2bn increase in emergency liquidity (ELA) ceiling in order to offset deposit flight and keep banks afloat. The ECB granted €500m. This has been exhausted.

Greek officials say that the country will have to take radical action within days unless the ECB relents. It is understood that Frankfurt will hold an emergency session to review the ELA crisis on Wednesday.

Athens is down to its final cash reserves. “We have money to pay salaries and pensions of public employees. For the rest we will see," said the finance minister Yanis Varoufakis.

“Greece faces an urgent liquidity crisis and is heading for selective default. This could create a very dangerous precedent,” said Lena Komileva from g+economics.

It is clear that the four-month interim deal agreed in February between Syriza and EMU failed to address the true nature of Greece’s crisis and is drifting towards collapse.

One Syriza MP said the government itself has no idea how this high-stakes brinkmanship will end, but emotions are hardening by the day. “The party has learned quickly over the last three weeks that Europe is not a nice place,” he said.

Gold Is On Life Support: 5 Reasons Gold Is Going Lower

  • The stronger dollar.
  • Relative weakness in platinum and silver.
  • Interest rates will move higher.
  • Lower production costs.
  • Technical weakness.
Gold had a nice run in the beginning of 2015. The active month futures price closed at $1184.10 at the end of December 2014. Gold began the New Year with a bang; it traded up to $1308.80 by January 22, 2015 -- an increase of over 10.5% in just three weeks. Since then the price of the yellow metal has moved steadily lower.

On Friday, March 6, gold traded below last year's closing price for the first time in 2015 closing at $1168.20 per ounce, which is 1.3% lower on the year. I do not like the recent action in gold -- it has failed to rally or hold price and there are five reasons why I think that the precious metal is heading lower from here.

The stronger dollar

2015 started with gold rallying in the face of a stronger U.S. dollar.

 (click to enlarge)

The U.S. dollar index was up 11.97% in 2014 and started 2015 at 90.647. It closed Friday, March 6 at 97.604 -- the highest level since September 2003. In September 2003, the price of gold was under $400 per ounce. The dollar index is up 7.7% in 2015. The accelerated pace of the dollar's ascent is even more astonishing when one considers it traded at 78.93 in May 2014 -- as of March 6, 2015 the greenback is up 23.66% since then.

Commodity prices are denominated and trade in dollars. Generally, a stronger dollar translates into lower commodity prices. When the dollar rallies, the price of commodities in other currencies move higher, therefore demand is affected. That is why a strong dollar is a commodity bulls' worst enemy. We have seen bear markets in many commodity prices including iron ore, crude oil, copper and other base metals, to name a few. Even other precious metal prices have suffered under the weight of a strong dollar.

Relative weakness in platinum and silver

Silver and platinum are industrial precious metals. The price direction of both depends on two important factors -- industrial demand, which is a function of global economic growth, and investment demand. The prices of both metals have been weak and on a relative basis, both have underperformed gold.

Platinum closed on March 6 at $1160.30 per ounce. The price is down $48.60 or just over 4% in 2015. Platinum is much rarer than gold, it has a higher production cost and it is required for the production of automobile catalytic converters. Due to its rare nature, platinum has historically fetched a premium to gold. Platinum traded at a premium of over $1200 to gold in 2008 and as low as a $200 discount to gold in 2011-2012. The normal level for the platinum-gold price differential is around a $200 premium for platinum. Therefore, at an $8 discount to gold, platinum is either too cheap or gold is too expensive at current levels.

The long-term historical norm (over the past 40 years) for the silver-gold ratio is 55:1 or 55 ounces of silver value in each ounce of gold value. Active month silver futures closed on March 6, 2015 at $15.925 per ounce. This represents a silver gold ratio of 73.36:1. Over that period, the ratio traded as low as 15.5:1 in 1979 and as high as 99:1 in 1991. Based on the current level of this relationship, either silver is too cheap or gold is too expensive on a historical basis.

Weakness in silver and platinum does not bode well for the price of gold considering action in other commodity prices. Price action in gold last week could be indicating that gold is getting ready to catch up with its precious cousins. Gold remains expensive relative to other precious metal prices.

Interest rates will move higher

Late in 2014, the U.S. Federal Reserve open market committee said that interest rates would move higher in 2015. Strength in the U.S. dollar has caused the Fed to exercise patience in terms of raising rates. However, economic conditions in the U.S. currently support increasing rates. The Fed controls short-term interest rates however long-term rates are a function of market supply and demand factors.

Recently we have seen signs of higher interest rates on the long end of the interest rate curve as bond prices have moved lower. One thing remains sure, in 2015 short-term interest rates in the United States will not move lower -- the downside is almost non-existent while the upside is explosive.

Higher interest rates are negative for the price of gold. It costs more to carry or finance gold and gold, like other assets, must compete with other financial instruments. As gold does not yield interest, higher interest rates make gold less attractive as an investment vehicle in dollars. Therefore, the prospect of rising rates is bearish for the yellow metal.

Lower production cost

Lower commodity prices are bad news for commodity producers, however, there is a silver lining in that cloud for producers. Lower energy prices actually lower the cost of production for many commodities. Oil prices are half of what they were only nine months ago -- therefore, the total cost of producing an ounce of gold has dropped.

During commodity cycles there are bull markets and bear markets. We are currently in a bear market cycle and prices tend to drop to average production cost levels. Lower energy prices have lowered the bar -- it costs less today to produce an ounce of gold than it did less than a year ago. A lower production cost opens up the downside for gold during a bear market period. Lower production costs may help certain producers to survive however; it is bearish for the price of gold.

Technical weakness

The recent failure in gold has set it up for further losses. The weekly chart for active month COMEX gold has some very ominous signs for the price of the yellow metal.

 (click to enlarge)

Momentum in gold is clearly lower. Open interest, the number of open long and short positions in COMEX gold futures, has started to rise with falling prices. This is often a bearish signal.

Relative strength indicates that at current price levels there is not an oversold condition and that there is likely more downside ahead. Weekly historical volatility has moved up to over 19%, which is high for gold.

Volatility tends to rise in gold when prices fall -- this is because gold takes the stairs up and the elevator down.

Finally, and perhaps most importantly, last week gold put in a bearish key reversal on the weekly chart. Gold traded above the previous week's high price and settled below the previous week's low price. Good volume (over 835,000 contracts) accompanied the bearish key reversal pattern in the gold futures market, which provides validation. The technical action in gold is bearish.

The bottom line...

The five factors mentioned above provide clues as to why there could be an ugly move to the downside for the price of gold very soon. Key support now lies at the November 2014 lows of $1130.40 per ounce. If that level is broken, things could get sloppy to the downside until the yellow metal finds its next bottom. Right now gold is on life-support and the price is fading fast.

Crazed Washington Drives the World to the Final War

Paul Craig Roberts

March 5, 2015

John Pilger is the kind of well-informed, hard-hitting journalist with gobs of integrity that no longer exists in the Western mainstream media. He has the most distinguished career of all in the business. 
In the article below he brings stunning information to one of my own themes–the creation by Washington and its NATO vassals of an artificial reality consisting entirely of propaganda into which Washington has placed the entire Western world and all outside who inspire to be part of it.

Westerners live in The Matrix, and the presstitutes keep them there. The New York Times, Wall Street Journal, NPR, and the TV channels perform as agents (as in the Matrix film) actively suppressing any glimmer of factual reality.

Western people have no comprehension of the real reasons for Washington’s murderous interventions in Yugoslavia, Middle East, Afghanistan, Libya, Ukraine, Indonesia, or Latin America. The most transparent lies are fed to people too ignorant to recognize the lies. The lies have cost huge numbers of deaths and injuries and are leading directly to war with Russia and China. 
It is probably too late to stop this war. The war is inevitable because Washington’s doctrine of world hegemony does not permit the existence of other strong countries with independent foreign policies. Unless the House-of-Card US economy collapses, the only way Russia and China can avoid war is to accept Washington’s overlordship.

John Pilger himself speaks of growing up inside The Matrix as did all of us:

“I grew up on a cinematic diet of American glory, almost all of it a distortion. I had no idea that it was the Red Army that had destroyed most of the Nazi war machine.” I doubt that even the most determined of us ever become completely free of the disinformation in which we are indoctrinated. Pilger himself still shows traces of it when he assumes that Hitler started World War II by invading Europe when in fact Great Britain and France initiated World War II when they declared war on Germany. Hitler’s invasion of Europe was a response to the declaration of war on Germany. From day one the propaganda was that Germany started World War II by rolling up the British and French armies. This lie was enshrined in 1946 by the Nuremberg Tribunal when the Tribunal defined “the supreme international crime” to be “to initiate a war of aggression” and ascribed this crime to Germany.

The Clinton, George W. Bush, and Obama regimes are more guilty of “the supreme international crime” than was National Socialist Germany. Today the crazed Washington warmongers are driving toward war with Russia.

Those pathetic Americans who think that their government is so good and pure and only commits wrongs by mistake and would never “kill its own people” need to remember the response of the US high command to the report that American POWs were in Nagasaki: “Targets previously assigned for Centerboard (the atomic bomb attack) remain unchanged.” 

Washington cared no more about its own soldiers than Washington cared about the innocent civilians of a country whose government was desperately trying to surrender. If you have any doubt that the entire history of the United States is one of murder and mayhem, you need to read Howard Zinn’s A People’s History of the United States.

The Nazis have returned. They are ensconced in the governments in Washington, London, and Germany. The New Nazis have made certain that there has been war every year of this 21st century. 
Pilger tells the truth about these wars:

Why the rise of fascism is again the issue — John Pilger

26 February 2015

The recent 70th anniversary of the liberation of Auschwitz was a reminder of the great crime of fascism, whose Nazi iconography is embedded in our consciousness. Fascism is preserved as history, as flickering footage of goose-stepping blackshirts, their criminality terrible and clear. Yet in the same liberal societies, whose war-making elites urge us never to forget, the accelerating danger of a modern kind of fascism is suppressed; for it is their fascism.

“To initiate a war of aggression…,” said the Nuremberg Tribunal judges in 1946, “is not only an international crime, it is the supreme international crime, differing only from other war crimes in that it contains within itself the accumulated evil of the whole.”

Had the Nazis not invaded Europe, Auschwitz and the Holocaust would not have happened.

Had the United States and its satellites not initiated their war of aggression in Iraq in 2003, almost a million people would be alive today; and Islamic State, or ISIS, would not have us in thrall to its savagery.

They are the progeny of modern fascism, weaned by the bombs, bloodbaths and lies that are the surreal theatre known as news.

Like the fascism of the 1930s and 1940s, big lies are delivered with the precision of a metronome: thanks to an omnipresent, repetitive media and its virulent censorship by omission. Take the catastrophe in Libya.

In 2011, Nato launched 9,700 “strike sorties” against Libya, of which more than a third were aimed at civilian targets. Uranium warheads were used; the cities of Misurata and Sirte were carpet-bombed. The Red Cross identified mass graves, and Unicef reported that “most [of the children killed] were under the age of ten”.

The public sodomising of the Libyan president Muammar Gaddafi with a “rebel” bayonet was greeted by the then US Secretary of State, Hillary Clinton, with the words: “We came, we saw, he died.” His murder, like the destruction of his country, was justified with a familiar big lie; he was planning “genocide” against his own people. “We knew… that if we waited one more day,” said President Obama, “Benghazi, a city the size of Charlotte, could suffer a massacre that would have reverberated across the region and stained the conscience of the world.”

This was the fabrication of Islamist militias facing defeat by Libyan government forces. They told Reuters there would be “a real bloodbath, a massacre like we saw in Rwanda”. Reported on March 14, 2011, the lie provided the first spark for Nato’s inferno, described by David Cameron as a “humanitarian intervention”.

Secretly supplied and trained by Britain’s SAS, many of the “rebels” would become ISIS, whose latest video offering shows the beheading of 21 Coptic Christian workers seized in Sirte, the city destroyed on their behalf by Nato bombers.

For Obama, David Cameron and then French President Nicolas Sarkozy, Gaddafi’s true crime was Libya’s economic independence and his declared intention to stop selling Africa’s greatest oil reserves in US dollars. The petrodollar is a pillar of American imperial power. Gaddafi audaciously planned to underwrite a common African currency backed by gold, establish an all-Africa bank and promote economic union among poor countries with prized resources.

Whether or not this would happen, the very notion was intolerable to the US as it prepared to “enter” Africa and bribe African governments with military “partnerships”.

Following Nato’s attack under cover of a Security Council resolution, Obama, wrote Garikai Chengu, “confiscated $30 billion from Libya’s Central Bank, which Gaddafi had earmarked for the establishment of an African Central Bank and the African gold backed dinar currency”.

The “humanitarian war” against Libya drew on a model close to western liberal hearts, especially in the media. In 1999, Bill Clinton and Tony Blair sent Nato to bomb Serbia, because, they lied, the Serbs were committing “genocide” against ethnic Albanians in the secessionist province of Kosovo.

David Scheffer, US ambassador-at-large for war crimes [sic], claimed that as many as “225,000 ethnic Albanian men aged between 14 and 59″ might have been murdered. Both Clinton and Blair evoked the Holocaust and “the spirit of the Second World War”. The West’s heroic allies were the Kosovo Liberation Army (KLA), whose criminal record was set aside. The British Foreign Secretary, Robin Cook, told them to call him any time on his mobile phone.

With the Nato bombing over, and much of Serbia’s infrastructure in ruins, along with schools, hospitals, monasteries and the national TV station, international forensic teams descended upon Kosovo to exhume evidence of the “holocaust”. The FBI failed to find a single mass grave and went home. The Spanish forensic team did the same, its leader angrily denouncing “a semantic pirouette by the war propaganda machines”. A year later, a United Nations tribunal on Yugoslavia announced the final count of the dead in Kosovo: 2,788. This included combatants on both sides and Serbs and Roma murdered by the KLA. There was no genocide.

The “holocaust” was a lie. The Nato attack had been fraudulent.

Behind the lie, there was serious purpose. Yugoslavia was a uniquely independent, multi-ethnic federation that had stood as a political and economic bridge in the Cold War. Most of its utilities and major manufacturing was publicly owned. This was not acceptable to the expanding European Community, especially newly united Germany, which had begun a drive east to capture its “natural market” in the Yugoslav provinces of Croatia and Slovenia. By the time the Europeans met at Maastricht in 1991 to lay their plans for the disastrous eurozone, a secret deal had been struck; Germany would recognise Croatia. Yugoslavia was doomed.

In Washington, the US saw that the struggling Yugoslav economy was denied World Bank loans. Nato, then an almost defunct Cold War relic, was reinvented as imperial enforcer. At a 1999 Kosovo “peace” conference in Rambouillet, in France, the Serbs were subjected to the enforcer’s duplicitous tactics. The Rambouillet accord included a secret Annex B, which the US delegation inserted on the last day. This demanded the military occupation of the whole of Yugoslavia – a country with bitter memories of the Nazi occupation – and the implementation of a “free-market economy” and the privatisation of all government assets. No sovereign state could sign this. Punishment followed swiftly; Nato bombs fell on a defenceless country. It was the precursor to the catastrophes in Afghanistan and Iraq, Syria and Libya, and Ukraine.

Since 1945, more than a third of the membership of the United Nations – 69 countries – have suffered some or all of the following at the hands of America’s modern fascism. They have been invaded, their governments overthrown, their popular movements suppressed, their elections subverted, their people bombed and their economies stripped of all protection, their societies subjected to a crippling siege known as “sanctions”. The British historian Mark Curtis estimates the death toll in the millions. In every case, a big lie was deployed.

“Tonight, for the first time since 9/11, our combat mission in Afghanistan is over.” These were opening words of Obama’s 2015 State of the Union address. In fact, some 10,000 troops and 20,000 military contractors (mercenaries) remain in Afghanistan on indefinite assignment. “The longest war in American history is coming to a responsible conclusion,” said Obama. In fact, more civilians were killed in Afghanistan in 2014 than in any year since the UN took records. The majority have been killed – civilians and soldiers – during Obama’s time as president.

The tragedy of Afghanistan rivals the epic crime in Indochina. In his lauded and much quoted book ‘The Grand Chessboard: American Primacy and Its Geostrategic Imperatives’, Zbigniew Brzezinski, the godfather of US policies from Afghanistan to the present day, writes that if America is to control Eurasia and dominate the world, it cannot sustain a popular democracy, because “the pursuit of power is not a goal that commands popular passion… Democracy is inimical to imperial mobilisation.” He is right. As WikiLeaks and Edward Snowden have revealed, a surveillance and police state is usurping democracy. In 1976, Brzezinski, then President Carter’s National Security Advisor, demonstrated his point by dealing a death blow to Afghanistan’s first and only democracy. Who knows this vital history?

In the 1960s, a popular revolution swept Afghanistan, the poorest country on earth, eventually overthrowing the vestiges of the aristocratic regime in 1978. The People’s Democratic Party of Afghanistan (PDPA) formed a government and declared a reform programme that included the abolition of feudalism, freedom for all religions, equal rights for women and social justice for the ethnic minorities. More than 13,000 political prisoners were freed and police files publicly burned.

The new government introduced free medical care for the poorest; peonage was abolished, a mass literacy programme was launched. For women, the gains were unheard of. By the late 1980s, half the university students were women, and women made up almost half of Afghanistan’s doctors, a third of civil servants and the majority of teachers. “Every girl,” recalled Saira Noorani, a female surgeon, “could go to high school and university. We could go where we wanted and wear what we liked. We used to go to cafes and the cinema to see the latest Indian film on a Friday and listen to the latest music. It all started to go wrong when the mujaheddin started winning. They used to kill teachers and burn schools. We were terrified. It was funny and sad to think these were the people the West supported.”

The PDPA government was backed by the Soviet Union, even though, as former Secretary of State Cyrus Vance later admitted, “there was no evidence of any Soviet complicity [in the revolution]”.

Alarmed by the growing confidence of liberation movements throughout the world, Brzezinski decided that if Afghanistan was to succeed under the PDPA, its independence and progress would offer the “threat of a promising example”.

On July 3, 1979, the White House secretly authorised support for tribal “fundamentalist” groups known as the mujaheddin, a program that grew to over $500 million a year in U.S. arms and other assistance. The aim was the overthrow of Afghanistan’s first secular, reformist government. In August 1979, the US embassy in Kabul reported that “the United States’ larger interests… would be served by the demise of [the PDPA government], despite whatever setbacks this might mean for future social and economic reforms in Afghanistan.” The italics are mine.

The mujaheddin were the forebears of al-Qaeda and Islamic State. They included Gulbuddin Hekmatyar, who received tens of millions of dollars in cash from the CIA. Hekmatyar’s specialty was trafficking in opium and throwing acid in the faces of women who refused to wear the veil. Invited to London, he was lauded by Prime Minister Thatcher as a “freedom fighter”.

Such fanatics might have remained in their tribal world had Brzezinski not launched an international movement to promote Islamic fundamentalism in Central Asia and so undermine secular political liberation and “destabilise” the Soviet Union, creating, as he wrote in his autobiography, “a few stirred up Muslims”. His grand plan coincided with the ambitions of the Pakistani dictator, General Zia ul-Haq, to dominate the region. In 1986, the CIA and Pakistan’s intelligence agency, the ISI, began to recruit people from around the world to join the Afghan jihad. The Saudi multi-millionaire Osama bin Laden was one of them. Operatives who would eventually join the Taliban and al-Qaeda, were recruited at an Islamic college in Brooklyn, New York, and given paramilitary training at a CIA camp in Virginia. This was called “Operation Cyclone”. Its success was celebrated in 1996 when the last PDPA president of Afghanistan, Mohammed Najibullah – who had gone before the UN General Assembly to plead for help – was hanged from a streetlight by the Taliban.

The “blowback” of Operation Cyclone and its “few stirred up Muslims” was September 11, 2001. Operation Cyclone became the “war on terror”, in which countless men, women and children would lose their lives across the Muslim world, from Afghanistan to Iraq, Yemen, Somalia and Syria. The enforcer’s message was and remains: “You are with us or against us.”

The common thread in fascism, past and present, is mass murder. The American invasion of Vietnam had its “free fire zones”, “body counts” and “collateral damage”. In the province of Quang Ngai, where I reported from, many thousands of civilians (“gooks”) were murdered by the US; yet only one massacre, at My Lai, is remembered. In Laos and Cambodia, the greatest aerial bombardment in history produced an epoch of terror marked today by the spectacle of joined-up bomb craters which, from the air, resemble monstrous necklaces. The bombing gave Cambodia its own ISIS, led by Pol Pot.

Today, the world’s greatest single campaign of terror entails the execution of entire families, guests at weddings, mourners at funerals. These are Obama’s victims. According to the New York Times, Obama makes his selection from a CIA “kill list” presented to him every Tuesday in the White House Situation Room. He then decides, without a shred of legal justification, who will live and who will die. His execution weapon is the Hellfire missile carried by a pilotless aircraft known as a drone; these roast their victims and festoon the area with their remains. Each “hit” is registered on a faraway console screen as a “bugsplat”.

“For goose-steppers,” wrote the historian Norman Pollock, “substitute the seemingly more innocuous militarisation of the total culture. And for the bombastic leader, we have the reformer manque, blithely at work, planning and executing assassination, smiling all the while.”

Uniting fascism old and new is the cult of superiority. “I believe in American exceptionalism with every fibre of my being,” said Obama, evoking declarations of national fetishism from the 1930s. As the historian Alfred W. McCoy has pointed out, it was the Hitler devotee, Carl Schmitt, who said, “The sovereign is he who decides the exception.” This sums up Americanism, the world’s dominant ideology. That it remains unrecognised as a predatory ideology is the achievement of an equally unrecognised brainwashing. Insidious, undeclared, presented wittily as enlightenment on the march, its conceit insinuates western culture. I grew up on a cinematic diet of American glory, almost all of it a distortion. I had no idea that it was the Red Army that had destroyed most of the Nazi war machine, at a cost of as many as 13 million soldiers. By contrast, US losses, including in the Pacific, were 400,000. Hollywood reversed this.

The difference now is that cinema audiences are invited to wring their hands at the “tragedy” of American psychopaths having to kill people in distant places – just as the President himself kills them. The embodiment of Hollywood’s violence, the actor and director Clint Eastwood, was nominated for an Oscar this year for his movie, ‘American Sniper’, which is about a licensed murderer and nutcase. The New York Times described it as a “patriotic, pro-family picture which broke all attendance records in its opening days”.

There are no heroic movies about America’s embrace of fascism. During the Second World War, America (and Britain) went to war against Greeks who had fought heroically against Nazism and were resisting the rise of Greek fascism. In 1967, the CIA helped bring to power a fascist military junta in Athens – as it did in Brazil and most of Latin America. Germans and east Europeans who had colluded with Nazi aggression and crimes against humanity were given safe haven in the US; many were pampered and their talents rewarded. Wernher von Braun was the “father” of both the Nazi V-2 terror bomb and the US space programme.

In the 1990s, as former Soviet republics, eastern Europe and the Balkans became military outposts of Nato, the heirs to a Nazi movement in Ukraine were given their opportunity. Responsible for the deaths of thousands of Jews, Poles and Russians during the Nazi invasion of the Soviet Union, Ukrainian fascism was rehabilitated and its “new wave” hailed by the enforcer as “nationalists”.

This reached its apogee in 2014 when the Obama administration splashed out $5 billion on a coup against the elected government. The shock troops were neo-Nazis known as the Right Sector and Svoboda. Their leaders include  Oleh Tyahnybok, who has called for a purge of the “Moscow-Jewish mafia” and “other scum”, including gays, feminists and those on the political left.

These fascists are now integrated into the Kiev coup government. The first deputy speaker of the Ukrainian parliament, Andriy Parubiy, a leader of the governing party, is co-founder of Svoboda. On February 14, Parubiy announced he was flying to Washington get “the USA to give us highly precise modern weaponry”. If he succeeds, it will be seen as an act of war by Russia.

No western leader has spoken up about the revival of fascism in the heart of Europe – with the exception of Vladimir Putin, whose people lost 22 million to a Nazi invasion that came through the borderland of Ukraine. At the recent Munich Security Conference, Obama’s Assistant Secretary of State for European and Eurasian Affairs, Victoria Nuland, ranted abuse about European leaders for opposing the US arming of the Kiev regime. She referred to the German Defence Minister as “the minister for defeatism”. It was Nuland who masterminded the coup in Kiev. The wife of Robert D. Kagan, a leading “neo-con” luminary and co-founder of the extreme right wing Project for a New American Century, she was foreign policy advisor to Dick Cheney.  

Nuland’s coup did not go to plan. Nato was prevented from seizing Russia’s historic, legitimate, warm-water naval base in Crimea. The mostly Russian population of Crimea – illegally annexed to Ukraine by Nikita Krushchev in 1954 – voted overwhelmingly to return to Russia, as they had done in the 1990s. The referendum was voluntary, popular and internationally observed. There was no invasion.

At the same time, the Kiev regime turned on the ethnic Russian population in the east with the ferocity of ethnic cleansing. Deploying neo-Nazi militias in the manner of the Waffen-SS, they bombed and laid to siege cities and towns. They used mass starvation as a weapon, cutting off electricity, freezing bank accounts, stopping social security and pensions. More than a million refugees fled across the border into Russia. In the western media, they became unpeople escaping “the violence” caused by the “Russian invasion”. The Nato commander, General Breedlove – whose name and actions might have been inspired by Stanley Kubrick’s Dr. Strangelove – announced that 40,000 Russian troops were “massing”. In the age of forensic satellite evidence, he offered none.

These Russian-speaking and bilingual people of Ukraine – a third of the population – have long sought a federation that reflects the country’s ethnic diversity and is both autonomous and independent of Moscow. Most are not “separatists” but citizens who want to live securely in their homeland and oppose the power grab in Kiev. Their revolt and establishment of autonomous “states” are a reaction to Kiev’s attacks on them. Little of this has been explained to western audiences.

On May 2, 2014, in Odessa, 41 ethnic Russians were burned alive in the trade union headquarters with police standing by. The Right Sector leader Dmytro Yarosh hailed the massacre as “another bright day in our national history”. In the American and British media, this was reported as a “murky tragedy” resulting from “clashes” between “nationalists” (neo-Nazis) and “separatists” (people collecting signatures for a referendum on a federal Ukraine).

The New York Times buried the story, having dismissed as Russian propaganda warnings about the fascist and anti-Semitic policies of Washington’s new clients. The Wall Street Journal damned the victims – “Deadly Ukraine Fire Likely Sparked by Rebels, Government Says”. Obama congratulated the junta for its “restraint”.

If Putin can be provoked into coming to their aid, his pre-ordained “pariah” role in the West will justify the lie that Russia is invading Ukraine. On January 29, Ukraine’s top military commander, General Viktor Muzhemko, almost inadvertently dismissed the very basis for US and EU sanctions on Russia when he told a news conference emphatically: “The Ukrainian army is not fighting with the regular units of the Russian Army”.  There were “individual citizens” who were members of “illegal armed groups”, but there was no Russian invasion. This was not news. Vadym Prystaiko, Kiev’s Deputy Foreign Minister, has called for “full scale war” with nuclear-armed Russia.

On February 21, US Senator James Inhofe, a Republican from Oklahoma, introduced a bill that would authorise American arms for the Kiev regime. In his Senate presentation, Inhofe used photographs he claimed were of Russian troops crossing into Ukraine, which have long been exposed as fakes. It was reminiscent of Ronald Reagan’s fake pictures of a Soviet installation in Nicaragua, and Colin Powell’s fake evidence to the UN of weapons of mass destruction in Iraq.

The intensity of the smear campaign against Russia and the portrayal of its president as a pantomime villain is unlike anything I have known as a reporter. Robert Parry, one of America’s most distinguished investigative journalists, who revealed the Iran-Contra scandal, wrote recently, “No European government, since Adolf Hitler’s Germany, has seen fit to dispatch Nazi storm troopers to wage war on a domestic population, but the Kiev regime has and has done so knowingly. Yet across the West’s media/political spectrum, there has been a studious effort to cover up this reality even to the point of ignoring facts that have been well established… If you wonder how the world could stumble into world war three – much as it did into world war one a century ago – all you need to do is look at the madness over Ukraine that has proved impervious to facts or reason.”

In 1946, the Nuremberg Tribunal prosecutor said of the German media: “The use made by Nazi conspirators of psychological warfare is well known. Before each major aggression, with some few exceptions based on expediency, they initiated a press campaign calculated to weaken their victims and to prepare the German people psychologically for the attack… In the propaganda system of the Hitler State it was the daily press and the radio that were the most important weapons.” In the Guardian on February 2, Timothy Garton-Ash called, in effect, for a world war. “Putin must be stopped,” said the headline. “And sometimes only guns can stop guns.” He conceded that the threat of war might “nourish a Russian paranoia of encirclement”; but that was fine. He name-checked the military equipment needed for the job and advised his readers that “America has the best kit”.

In 2003, Garton-Ash, an Oxford professor, repeated the propaganda that led to the slaughter in Iraq.

Saddam Hussein, he wrote, “has, as [Colin] Powell documented, stockpiled large quantities of horrifying chemical and biological weapons, and is hiding what remains of them. He is still trying to get nuclear ones.” He lauded Blair as a “Gladstonian, Christian liberal interventionist”. In 2006, he wrote, “Now we face the next big test of the West after Iraq: Iran.”

The outbursts – or as Garton-Ash prefers, his “tortured liberal ambivalence” – are not untypical of those in the transatlantic liberal elite who have struck a Faustian deal. The war criminal Blair is their lost leader. The Guardian, in which Garton-Ash’s piece appeared, published a full-page advertisement for an American Stealth bomber. On a menacing image of the Lockheed Martin monster were the words: “The F-35. GREAT For Britain”. This American “kit” will cost British taxpayers £1.3 billion, its F-model predecessors having slaughtered across the world.  In tune with its advertiser, a Guardian editorial has demanded an increase in military spending.

Once again, there is serious purpose. The rulers of the world want Ukraine not only as a missile base; they want its economy. Kiev’s new Finance Minister, Nataliwe Jaresko, is a former senior US State Department official in charge of US overseas “investment”. She was hurriedly given Ukrainian citizenship. They want Ukraine for its abundant gas; Vice President Joe Biden’s son is on the board of Ukraine’s biggest oil, gas and fracking company. The manufacturers of GM seeds, companies such as the infamous Monsanto, want Ukraine’s rich farming soil.

Above all, they want Ukraine’s mighty neighbour, Russia. They want to Balkanise or dismember Russia and exploit the greatest source of natural gas on earth. As the Arctic ice melts, they want control of the Arctic Ocean and its energy riches, and Russia’s long Arctic land border. Their man in Moscow used to be Boris Yeltsin, a drunk, who handed his country’s economy to the West. His successor, Putin, has re-established Russia as a sovereign nation; that is his crime.

The responsibility of the rest of us is clear. It is to identify and expose the reckless lies of warmongers and never to collude with them. It is to re-awaken the great popular movements that brought a fragile civilisation to modern imperial states. Most important, it is to prevent the conquest of ourselves: our minds, our humanity, our self respect. If we remain silent, victory over us is assured, and a holocaust beckons.


After a Bounce, Wage Growth Slumps to 0.1%


MARCH 6, 2015 .

City workers cutting lake ice in Winona, Minn., last month. February’s job gains exceeded economists’ expectations. Credit Andrew Link/Winona Daily News, via Associated Press                    

Employers increased their payrolls by 295,000 workers in February, exceeding expectations, and the unemployment rate fell to 5.5 percent, its lowest point since the spring of 2008. But wage gains continued to lag, rising only 0.1 percent in February for private-sector workers after a reported 0.5 increase in January.
That resulted in a mere 2 percent advance over a year earlier, washing away the encouraging jump in January.
Despite the disappointing wage numbers, the report prompted a new round of optimism about the economy’s comeback from the recession along with fresh talk on Wall Street that the Federal Reserve might raise interest rates at its June meeting rather than wait until September.
The news led to a sharp rise on Friday in the yield on 10-year bonds and a substantial drop in the stock market, where investors feared that higher interest rates would make equities less attractive and chip away at corporate profits.
“We were all on guard for signs of a February freeze-up, but this is a barnburner of a jobs report,” said Mark Hamrick, an analyst at the personal finance site “The Fed will say the pieces are coming together.”
Job growth last month was heavily concentrated in the service sector, with leisure and hospitality adding 66,000 jobs, as well as an expansion of 54,000 jobs in education and health.

Construction added 29,000 jobs in February, while manufacturing increased by a modest 8,000. Gains were also made in professional services and the trade and transport sectors.
Still, one consistently dark patch in the recovery has been the sluggish growth of wages. It suggests that the economy is still far from returning to its potential and is a big factor behind the sense among many Americans that the recovery has largely left them behind.
“Everyone knows of someone who has been laid off or has a friend or relative who has been laid off,” said Gary N. Chaison, professor of industrial relations at Clark University in Worcester, Mass. “We hear we’re on the road to recovery, but people aren’t convinced of that.

Another reason for the disenchantment is that millions of potential workers remain detached from the job market. The labor participation rate, which counts both those with jobs and those looking for them, has stabilized, but at lows last seen in the late 1970s, falling slightly in February to 62.8 percent, from 62.9 percent.

“While there’s no doubt the labor market is improving, and doing so at a faster clip than in recent years, there are still missing ingredients suggesting that the U.S. job market is not as close to full employment — a truly tight matchup between jobs and job-seekers — as the low jobless rate suggests,” Jared Bernstein, a senior fellow at the Center on Budget and Policy Priorities, wrote on his blog.

On the brighter side, the share of long-term unemployed, those who are out of work for 27 weeks or more, declined to 36.8 percent. That is still well above where it was when the recession began in late 2007, but it has fallen by almost six percentage points in the last year, said Omair Sharif, a strategist at Société Générale.

And with the economy galloping ahead, many analysts say it is only a matter of time before wages start to increase at a faster pace as payrolls expand and companies need to compete more aggressively to attract employees.
“We’re facing a turning point, and we’re going to see more pressure on wages,” said Tara Sinclair, chief economist at the job search site

For now the economy is creating some distinct winners and losers, with women gaining an edge.

The unemployment rate for adult women ages 20 and older was 4.9 percent in February, down from 5.1 percent in January, according to the National Women’s Law Center. February was the first time the adult women’s unemployment rate had been below 5 percent since July 2008.
Among women, some are doing better than others. The unemployment rate for adult white women was 4.2 percent in February, down from 4.4 percent in January.
But adult black women’s unemployment rate rose in February to 8.9 from 8.7 percent in January and 8.2 percent in December. Unemployment rates for adult Hispanic women declined slightly in February from January, to 6.1 percent from 6.2 percent, a new low for this group but still well above women’s overall unemployment rate.
Women accounted for 55 percent of the new jobs added in February, according to the law center. But 39 percent of the jobs that went to women were in retail and leisure and hospitality, which typically pay lower wages.
“February posted strong job gains and a decline in overall unemployment, but many women have yet to see a real recovery,” said Joan Entmacher, vice president for family economic security at the law center.
But even the retail sector is beginning to pay better. Last month, Walmart said it planned to raise its minimum hourly pay to $9 and lift it to $10 next year. TJX Companies, which owns Marshalls and T. J. Maxx, announced similar raises. State and local legislation in past months has helped put a higher floor under wages, raising the legal minimum in a wide variety of places.
Labor Secretary Thomas E. Perez called all those moves “a shot in the arm.”
“As we continue to have month after month of significant job growth, what we will see invariably is a tighter labor market,” Mr. Perez said in a telephone interview. “And tighter labor markets mean higher wages.”
More of the new jobs are full time. Last month, the number of workers who said they were working part time for economic reasons fell, leaving their share of all part-time workers at 25.1 percent, down from 25.6 percent in the previous month.

Labor advocates like the National Employment Law Project say retailers should also be doing more to add hours as well as lifting pay for some workers.
The group says too many people, many of them women, want full-time work but can’t find it. The number of adults who work part time but who want to work on full-time schedules is 50 percent above the number reported in 2007, according to Gary Burtless, a senior fellow in economic studies at the Brookings Institution.
Shannon Henderson, 29, works part time in customer service at a Walmart store in Sacramento, and supports two children with her $10-an-hour wages. Her hours are unpredictable, often interfering with her breast-feeding schedule for her 9-month-old.
She says that she wants to work more, but that the company did not have more full-time positions. If she tried to work a second job, she said, she might miss a shift at Walmart and jeopardize her job there. And more hours would allow her to buy a car, providing her with greater flexibility.
But for now, she said, “I don’t make enough money.”