Winds Of War: Is Russia Conducting A Massive Mobilization Of Troops For An Invasion Of Ukraine?

Russian Troops - Public DomainThe drumbeats of war are growing louder.  Fighting in eastern Ukraine between separatists and pro-government forces has risen to an intensity not seen in well over a year, and the Russians claim that they recently foiled a “Ukrainian plot” to conduct terror attacks in Crimea.  As tensions in the region have increased, the Russians have used the cover of “military drills” to move massive amounts of troops and military equipment up to the border with Ukraine.  This is something that I wrote about a couple of weeks ago, but things have intensified since then, and a huge military exercise is planned for September.  Needless to say, the Ukrainians are quite alarmed by this, and Ukrainian President Petro Poroshenko is warning that a full scale mobilization of the Ukrainian military may be needed.  If something is going to happen, it is likely to happen soon.  As you will see below, once we get into October it will become much less likely that we would see a Russian invasion of Ukraine.

We aren’t hearing much about this conflict in the U.S. media, but over in Europe this is a very big deal.  Just consider the following excerpt from an article in the Independent entitled “Russia is teetering on the brink of ‘all out war’ with Ukraine“…

Ukraine is holding a major military parade in Kiev today to mark its 25th anniversary as an independent state. But, at a time that should otherwise be a moment of national celebration, a serious crisis with Moscow is flaring up. So serious, in fact, that on Tuesday the Russian President Vladimir Putin, German Chancellor Angela Merkel and French President Francois Hollande were forced to hold a three-way phone call to try to de-escalate the situation.

Ukrainian President Petro Poroshenko has even warned that there is growing risk of a “full scale Russian invasion along all fronts,” ratcheting up what is already the bloodiest European conflict since the wars over the former Yugoslavia in the 1990s.

And the truth is that Ukrainian President Petro Poroshenko has some very good reasons to be concerned.  As the Washington Post has pointed out, the Russians have used military exercises as an excuse to stage forces for military action in the past…

As violence in the east heats up, Ukrainian officials have suggested that Russia may use the upcoming military drills, called Kavkaz (Caucasus) 2016, as cover for military action against Ukraine. The drills are the first to integrate the Crimean Peninsula, which was annexed by Russia in 2014, into the country’s military planning, and thousands of Russian troops will be brought in for air, land and sea exercises.

Ukrainian government analysts have recalled that exercises served as staging grounds for troop incursions in 2014, as did Russian military exercises held shortly before the Georgian war of 2008. Ukraine’s ambassador to the United Nations suggested that Russia may have “bad intentions,” while the West has also said it would like observers to be present.

If there is going to be a Russian invasion of Ukraine in September, Kavkaz 2016 will likely be used as cover for invasion preparations.  It is a yearly exercise, but in 2016 it looks like it will be much bigger than ever before, and some analysts have pointed out that the Russians have not conducted a mobilization on this scale since the invasion of Czechoslovakia in 1968.  Here is more on Kavkaz 2016 from the Daily Signal

In September, Russia has plans for a large-scale strategic military exercise called Kavkaz-2016. The exercise, which is an annual event, will include units deployed near the borders of Ukraine, Georgia, and Azerbaijan—including two Russian military districts in the Southern and Northern Caucasus, the Russian Black Sea Fleet (headquartered in occupied Crimea), and the Caspian Flotilla.

It is not immediately clear the exact size of this year’s exercise, but last year it comprised 95,000 troops, 7,000 vehicles, and 150 aircraft, according to a report by IHS Markit, a U.K.-based intelligence and analysis firm.

If the Russians are going to do something, they need to do it soon, because the weather turns very bad during the month of October.  Here is one how one analyst assessed the situation

“But will there be a war – we’ll see, no much time for guessing left… In this situation, the main thing for Russia is to achieve strategic and tactical surprise. And if she does not start now – then it will be too late. One would need to turn off full-scale operations in October because of the rains and the next draft to Russian army (it would mean the demobilization of current wave of conscripts and training the new ones – UT).”

A Russian invasion of Ukraine would mean that Russian relations with the U.S. and with Europe would immediately plunge to Cold War levels.  Of course some would argue that we are already there.  In any event, a Russian invasion would force the U.S. and NATO to make some very uncomfortable decisions.

Would the U.S. and NATO just stand by and do nothing while Ukraine is overrun by the Russians?

Maybe.

But if the U.S. and NATO responded with military force, that would risk a full scale nuclear confrontation with Russia.

Right now, a war with Russia is about the last thing that most Americans are thinking about, but the truth is that we are not that far away from such a scenario.

Over in Russia, the mindset is totally different.  The following is from a Newsweek article entitled “In Europe and Russia, There’s Talk of War“…

Recently, I grabbed a taxi in Moscow. When the driver asked me where I was from, I told him the United States. “I went there once,” he said, “to Chicago. I really liked it.”

“But tell me something,” he added. “When are we going to war?”

The question, put so starkly, so honestly, shocked me. “Well, I hope never,” I replied. “No one wants war.”

At the office, I ask a Russian employee about the mood in his working class Moscow neighborhood. The old people are buying salt, matches and gretchka [buckwheat], he tells me—the time-worn refuge for Russians stocking up on essentials in case of war.

In the past two months, I’ve traveled to the Baltic region, to Georgia, and to Russia. Talk of war is everywhere.

Most Americans don’t realize that Russians already view the United States more negatively than they did even during the height of the Cold War.  On Russian television they openly talk about the inevitability of a war between the United States and Russia, and the Russian military has feverishly been preparing for such a future conflict.

If we can get to October, we can probably breathe a bit of a sigh of relief because the Russians are not likely to conduct an invasion once the weather turns bad.

But for now there are very good reasons to be concerned, and we shall see what happens over the coming weeks…

Is Barack Obama Actually TRYING To Start World War III?

World War 3 - Public DomainWhy has Barack Obama airdropped 50 tons of ammunition into areas that “moderate rebels” in Syria supposedly control?  This is essentially the equivalent of poking the Russians directly in the eyes.  Much of this ammunition will end up in the hands of those that the Russians are attempting to bomb into oblivion, and so to Russia it appears that we are attempting to make their job much harder.  And of course the truth is that there aren’t really any “moderate rebels” in Syria at all.  Nearly all of the groups that are fighting are made up primarily of radical jihadists and/or hired mercenaries.  Personally, I don’t see anyone over there that you could call “the good guys”.  At the end of the day, the U.S. supports just about anyone that wants to get rid of the Assad regime, and the Russians are working very hard to keep Assad in power.  Just like the civil war in Ukraine, the conflict in Syria is in great danger of being transformed into a proxy war between the United States and Russia, and many fear that these conflicts could eventually be setting the stage for World War III.

The ferocity of Russian airstrikes in Syria has surprised observers all over the planet, and over the past couple of days these airstrikes have been extended to include some new areas

Russian Air Forces have extended the range of their airstrikes on Islamic State positions in Syria to four provinces, focusing primarily on demolishing fortified installations and eliminating supply bases and the terrorists’ infrastructure.

Over the last 24 hours Russian aircraft have attacked terrorist positions in the Hama, Idlib, Latakia and Raqqa provinces of Syria. In total, 64 sorties targeted 63 Islamic State installations, among them 53 fortified zones, 7 arms depots, 4 training camps and a command post.

When I read reports like this, I am deeply troubled.  The Obama administration claims that it has been bombing ISIS positions in Syria for over a year.  So why in the world do these targets still exist?

Was the U.S. military incapable of finding these installations?

That doesn’t seem likely.

So why weren’t they destroyed long ago?

Did the Obama administration not want them destroyed for some reason?

What seems abundantly clear is that the Russians are doing what the Obama administration was either unwilling or unable to do.  There is now mass panic among ISIS fighters, and thousands of them are fleeing the country

An estimated 3,000 Islamic State fighters as well as militants from other extremist groups have fled Syria for Jordan fearing a renewed offensive by the Syrian army in addition to Russian airstrikes, a military official has told RIA news agency.

“At least 3,000 militants from Islamic State (IS, formerly ISIS/ISIL), al-Nusra and Jaish al-Yarmouk have fled to Jordan. They are afraid of the Syrian army having stepped up activities on all fronts and of Russian airstrikes,” the RIA source said.

The mainstream media in the United States is not talking much about this, are they?

But the U.S. media is reporting on this latest airdrop of ammunition to rebel groups in Syria.  For example, the following comes from CNN

U.S. military cargo planes gave 50 tons of ammunition to rebel groups overnight in northern Syria, using an air drop of 112 pallets as the first step in the Obama Administration’s urgent effort to find new ways to support those groups.

Details of the air mission over Syria were confirmed by a U.S. official not authorized to speak publicly because the details have not yet been formally announced.

C-17s, accompanied by fighter escort aircraft, dropped small arms ammunition and other items like hand grenades in Hasakah province in northern Syria to a coalition of rebels groups vetted by the US, known as the Syrian Arab Coalition.

If you were the Russians, how would you feel about this?

I know how I would feel.

And just as Joe Biden has previously admitted, the “moderate middle” in Syria simply does not exist.  The following is an extended excerpt from a piece that was originally written by investigative journalist Nafeez Ahmed

The first Russian airstrikes hit the rebel-held town of Talbisah north of Homs City, home to al-Qaeda’s official Syrian arm, Jabhat al-Nusra, and the pro-al-Qaeda Ahrar al-Sham, among other local rebel groups. Both al-Nusra and the Islamic State have claimed responsibility for vehicle-borne IEDs (VBIEDs) in Homs City, which is 12 kilometers south of Talbisah.

The Institute for the Study of War (ISW) reports that as part of “US and Turkish efforts to establish an ISIS ‘free zone’ in the northern Aleppo countryside,” al-Nusra “withdrew from the border and reportedly reinforced positions in this rebel-held pocket north of Homs city”.

In other words, the US and Turkey are actively sponsoring “moderate” Syrian rebels in the form of al-Qaeda, which Washington DC-based risk analysis firm Valen Globals forecasts will be “a bigger threat to global security” than IS in coming years.

Last October, Vice President Joe Biden conceded that there is “no moderate middle” among the Syrian opposition. Turkey and the Gulf powers armed and funded “anyone who would fight against Assad,” including “al-Nusra,” “al-Qaeda in Iraq (AQI),” and the “extremist elements of jihadis who were coming from other parts of the world”.

In other words, the CIA-backed rebels targeted by Russia are not moderates. They represent the same melting pot of al-Qaeda affiliated networks that spawned the Islamic State in the first place.

It has been well documented that many of these so-called “moderate rebel groups” in Syria have fought alongside ISIS and have sold weapons to them.  So this false dichotomy that Barack Obama keeps trying to sell us on is just a giant fraud.  The following comes from a recent Infowars report

In September, 2014 a commander with the FSA admitted cooperating with ISIS and the al-Nusra Front.

“We are collaborating with the Islamic State and the Nusra Front by attacking the Syrian Army’s gatherings in … Qalamoun,” Bassel Idriss said. “Let’s face it: The Nusra Front is the biggest power present right now in Qalamoun and we as FSA would collaborate on any mission they launch as long as it coincides with our values.”

In July of 2014 a report in Stars and Stripes documented how the 1,000 strong Dawud Brigade, which had previously fought alongside the FSA against al-Assad, had defected in its entirety to join ISIS.

The same month factions within the FSA — including Ahl Al Athar and Ibin al-Qa’im — pledged services to the Islamic State.

Members of the Islamic State claim to cooperate with the FSA and buy weapons provided by the U.S.

“We are buying weapons from the FSA. We bought 200 anti-aircraft missiles and Koncourse anti tank weapons,” ISIS member Abu Atheer told al-Jazeera. “We have good relations with our brothers in the FSA. For us, the infidels are those who cooperate with the West to fight Islam.”

U.S. anti-tank weapons are playing a critical role in the Syrian conflict.  As reported by the Washington Post, U.S.-made anti-tank missiles are being used by the rebels to destroy lots of Russian-made tanks that are being used by the Syrian army…

So successful have they been in driving rebel gains in northwestern Syria that rebels call the missile the “Assad Tamer,” a play on the word Assad, which means lion. And in recent days they have been used with great success to slow the Russian-backed offensive aimed at recapturing ground from the rebels.

Since Wednesday, when Syrian troops launched their first offensive backed by the might of Russia’s military, dozens of videos have been posted on YouTube showing rebels firing the U.S.-made missiles at Russian-made tanks and armored vehicles belonging to the Syrian army. Appearing as twirling balls of light, they zigzag across the Syrian countryside until they find and blast their target in a ball of flame.

Like I said earlier, this is looking more and more like a proxy war between the United States and Russia.

Could that be what Obama actually wants?

Obama is poking China in the eyes lately too.  CNN is reporting that U.S. warships may soon be sailing into territorial waters around the Spratly Islands.  These are islands that the Chinese government claims ownership over, but the U.S. government disputes that claim, and Obama seems determined to flex his muscles in the area…

The United States (US) may soon deploy war ships near China’s artificial islands in the South China Sea.

It wants to send a message that it does not recognize China’s territorial claims over the area.

This is according to a Financial Times report quoting a senior U.S. official who said its ships will sail within 12-nautical-mile zones that China claims as its territory around the Spratly Islands within the next two weeks.

If Obama sends warships into that area, there is a very real chance that they could get shot at.  According to  Newsweek, the Chinese are saying that they will not permit U.S. ships to violate those territorial waters under any circumstances…

We will never allow any country to violate China’s territorial waters and airspace in the Spratly Islands, in the name of protecting freedom of navigation and overflight,” Foreign Ministry spokeswoman Hua Chunying said in response to a question about possible U.S. patrols. “We urge the related parties not to take any provocative actions, and genuinely take a responsible stance on regional peace and stability.”

Such exchanges appear to be moving China and the U.S. toward a much feared, yet long expected, military confrontation. Just as unsettling, both sides seem confident they can prevail.

Over the past couple of years our relations with China have really gone downhill very rapidly, and if the trading relationship between the two largest economies on the planet breaks down, that would have massive implications for the entire global economy.

In addition to everything above, the civil war in Ukraine continues to rage on.  The United States funded, equipped, trained and organized the forces that violently overthrew the democratically-elected government in Ukraine, and then once those thugs (which actually included some neo-Nazis) took power, the Obama administration immediately recognized them as the legitimate government of Ukraine.

The Russians were absolutely infuriated by this, and they have been providing soldiers, equipment and supplies to the rebel groups that are fighting back against this new government.  Of course the Russians deny that they are doing this, but it is exceedingly obvious that they are.

The rebel groups that the Russians have been backing have been doing very well and have been steadily taking ground, and this is not how the power brokers in D.C. envisioned things playing out in Ukraine.  So in a desperate attempt to shift the momentum of the conflict, a bill is going through Congress that would provide “lethal military aid” to the government in Kiev.  Initially the bill would have provided 200 million dollars in lethal aid, but now it has been upped to 300 million dollars.  There are some that believe that the final figure will be significantly higher.

Once this bill gets passed, it will be an extremely important event.  For the Russians, it will mean crossing a red line that never should have been crossed.  You see, the truth is that Ukraine is Russia’s most important neighbor.  Just imagine how we would feel if the Russians helped overthrow Canada’s government and then start feeding weapons to the new pro-Russian government that they helped install.  That is exactly how the Russians view our meddling in Ukraine.

Earlier this year, I wrote an article in which I discussed an opinion poll that showed that 81 percent of all Russians now view the United States negatively, and only 13 percent of Russians have a positive view of this nation.  Not even during the height of the Cold War were the numbers that bad.

The stage is being set for World War III, but most Americans are completely and totally oblivious to all of this because they are so wrapped up in their own little worlds.

Most Americans still seem to assume that the Russians and the Chinese are our “friends” and that any type of conflict between major global powers is impossible.

Well, the truth is that conflict has already begun in Ukraine and Syria, and tensions are rising with each passing day.

It won’t happen next week or next month, but we are on the road to World War III.

So what will the end result be?  Please feel free to share your thoughts by posting a comment below…

You Can Add Iraq And Ukraine To The List Of Economies That Are Collapsing

Earth Blue Planet - Public DomainThe list of nations around the globe that have collapsing economies just continues to grow.  In recent weeks I have written about the ongoing saga in Greece, the stock market crash in China, the debt crisis in Puerto Rico and the economic meltdown in South America.  But there are more economic flashpoints that I have not even addressed yet.  For example, did you know that a full-blown economic collapse is happening in Iraq right now?  And did you know that the economy of Ukraine is contracting rapidly and that it cannot pay its debts?  Back in 2008, the financial crisis was primarily centered on the United States, but this time around it is turning out to be a truly global phenomenon.

When the U.S. “liberated” Iraq, the future for that nation was supposed to be incredibly bright.  But instead, things have just gone from bad to worse.  This has especially been true since we pulled our troops out and allowed ISIS to run buck wild.  At this point unemployment in Iraq is at Great Depression levels, the economy is steadily contracting and government debt is spiraling wildly out of control

But Iraq’s oil industry, and the government’s budget, is being squeezed by low oil prices. As a result, the nation’s finances are being hit hard: the market price is now half that needed to break even, expanding the budget deficit, forecast to return to balance until the rise of IS, to a projected 9% of GDP.

In the past, Iraq’s leaders approved budgets without seriously taking into account a drop in the price of oil. Now the severe revenue shortfall is forcing leaders to cut back on new investments. Russia’s Lukoil, Royal Dutch Shell, and Italy’s ENI are also cutting back, eyeing neighbouring Iran’s pending economic opening as a safer investment.

Despite improving its finances after the US troop withdrawal, the drop in oil prices and the rising costs of battling IS have pushed Iraq’s economy into a state of near-crisis. According to the IMF, the nation’s GDP shrank by 2.7% in 2014 and unemployment is estimated to be over 25%.

Things are even worse in another nation that was recently “liberated”.  The new U.S.-friendly government in Ukraine was supposed to make things much better for average Ukrainians, but instead the economy is absolutely imploding

The country’s GDP contracted by 6.8 percent last year, and is forecast to shrink by another 9 percent this year — a total loss of roughly 16 percent over two years.

Just like in much of southern Europe, the banks are absolutely overloaded with bad loans and the entire banking system is on the verge of total collapse.  The following comes from a CNN article that was posted earlier this year…

Ukraine’s banking sector is one of the weakest parts of the economy. The key interest rates are the highest in 15 years, and experts estimate bad loans make up between one third and one half of all banking assets.

Over 40 banks have been declared bankrupt since the war began, with the country’s fourth largest lender, Delta Bank, going under earlier this week.

Just recently, the government of Ukraine declared that it could not pay its debts.  We didn’t hear much about this in the United States, because the Obama administration wants us to believe that their policies over there are a success.  But the truth is that Ukraine now needs a “debt restructuring deal” similar to what Greece has received in the past

Progress between Ukraine and its creditors on a $19 billion restructuring may be losing momentum as a proposed high-level meeting was canceled amid further disagreements over terms.

Ukraine’s $2.6 billion of 2017 notes fell the most in a month after a person familiar with negotiations said a new offer put forward by Ukraine this week would be unacceptable to bondholders. Later on Wednesday, Ukraine’s Finance Ministry said that a Franklin Templeton-led creditor group should prepare an improved offer for meetings next week.

Speaking of Greece, things just continue to unravel over there.  Earlier this week we witnessed the greatest one day stock market crash in Greek history, and there was more financial carnage on Wednesday.  The following comes from the Economic Policy Journal

For a second straight day, following the reopening of the Greek stock market, there were heavy losses in Greek banking stocks, with shares across the sector once again falling by about 30 percent, the bottom of their daily limit.

Bank of Piraeus and National Bank of Greece fell the most, falling by the daily limit of 30 percent t. Alpha Bank was 29.7 percent lower and Eurobank Ergasias lost 29.6 percent.

At this point you would have to be blind to not see what is happening.

A financial crisis is not just imminent – one is already starting to erupt all over the planet.

And none of us can say that we weren’t warned.  In a recent piece, Bill Holter included a long list of ominous financial warnings that were issued over the past two years by either the IMF or the Bank for International Settlements…

July 2014 – BIS –BIS Issues Strong Warning on “Asset Bubbles”

July 2014 – IMF –Bloomberg: IMF Warns of Potential Risks to Global Growth

October 2014 – BIS –”No One Could Foresee this Coming”

October 2014 IMF Direct Blog — What Could Make $3.8 Trillion in global bonds go up in smoke?

October 2014 IMF Report –”Heat Wave”-Rising financial risk in the U.S.

***December 2014 – BIS –BIS Issues a new warning on markets

December 2014 – BIS —BIS Warnings on the U.S. Dollar

February 2015 – IMF – Shadow Banking — Another Warning from the IMF – This Time on “Shadow Banking”

March 2015 – Former IMF Peter Doyle – Don’t expect any warning on new crisis -Former IMF Peter Doyle: Don’t Expect any Early Warning from the IMF –

*** April 2015 IMF – Liquidity Shock –IMF Tells Regulators to Brace for Liquidity Shock

May 2015 BIS – Need New “Rules of the Game” –BIS: Time to Think about New Global Rules of the Game?

June 2015 BIS Credit Risk Report –BIS: New Credit Risk Management Report

June 2015 IMF (Jose Vinals)  –IMF’s Vinals Says Central Banks May Have to be Market Makers

***BIS June 2015 (UK Telegraph) –The world is defenceless against the next financial crisis, warns BIS

July 2015 – IMF – Warns US the System is Still Vulnerable (no blog article)IMF warns U.S.: Your financial system is (still) vulnerable

July 2015 – IMF – Warns Pension Funds Could Pose Systemic Risk (no blog article) –IMF warns pension funds could pose systemic risks to the US

Overall, there are currently 24 nations that are dealing with a major financial crisis right now, and there are another 14 nations that are right on the verge of one.

But even though a global financial crisis is already unfolding right in front of our eyes, there are people that come to my website every day and leave comments telling me that everything is going to be just fine.

So what do you think?

What do you believe the rest of this year will bring?

Please feel free to share your thoughts by posting a comment below…

16 Facts About The Tremendous Financial Devastation That We Are Seeing All Over The World

Fireball - Devastation - Public DomainAs we enter the second half of 2015, financial panic has gripped most of the globe.  Stock prices are crashing in China, in Europe and in the United States.  Greece is on the verge of a historic default, and now Puerto Rico and Ukraine are both threatening to default on their debts if they do not receive concessions from their creditors.  Not since the financial crisis of 2008 has so much financial chaos been unleashed all at once.  Could it be possible that the great financial crisis of 2015 has begun?  The following are 16 facts about the tremendous financial devastation that is happening all over the world right now…

1. On Monday, the Dow fell by 350 points.  That was the biggest one day decline that we have seen in two years.

2. In Europe, stocks got absolutely smashed.  Germany’s DAX index dropped 3.6 percent, and France’s CAC 40 was down 3.7 percent.

3. After Greece, Italy is considered to be the most financially troubled nation in the eurozone, and on Monday Italian stocks were down more than 5 percent.

4. Greek stocks were down an astounding 18 percent on Monday.

5. As the week began, we witnessed the largest one day increase in European bond spreads that we have seen in seven years.

6. Chinese stocks have already met the official definition of being in a “bear market” – the Shanghai Composite is already down more than 20 percent from the high earlier this year.

7. Overall, this Chinese stock market crash is the worst that we have witnessed in 19 years.

8. On Monday, Standard & Poor’s slashed Greece’s credit rating once again and publicly stated that it believes that Greece now has a 50 percent chance of leaving the euro.

9. On Tuesday, Greece is scheduled to make a 1.6 billion euro loan repayment.  One Greek official has already stated that this is not going to happen.

10. Greek banks have been totally shut down, and a daily cash withdrawal limit of 60 euros has been established.  Nobody knows when this limit will be lifted.

11. Yields on 10 year Greek government bonds have shot past 15 percent.

12. U.S. investors are far more exposed to Greece than most people realize.  The New York Times explains…

But the question of what happens when the markets do open is particularly acute for the hedge fund investors — including luminaries like David Einhorn and John Paulson — who have collectively poured more than 10 billion euros, or $11 billion, into Greek government bonds, bank stocks and a slew of other investments.

Through the weekend, Nicholas L. Papapolitis, a corporate lawyer here, was working round the clock comforting and cajoling his frantic hedge fund clients.

“People are freaking out,” said Mr. Papapolitis, 32, his eyes red and his voice hoarse. “They have made some really big bets on Greece.”

13. The Governor of Puerto Rico has announced that the debts that the small island has accumulated are “not payable“.

14. Overall, the government of Puerto Rico owes approximately 72 billion dollars to the rest of the world.  Without debt restructuring, it is inevitable that Puerto Rico will default.  In fact, CNN says that it could happen by the end of this summer.

15. Ukraine has just announced that it may “suspend debt payments” if their creditors do not agree to take a 40 percent “haircut”.

16. This week the Bank for International Settlements has just come out with a new report that says that central banks around the world are “defenseless” to stop the next major global financial crisis.

Without a doubt, we are overdue for another major financial crisis.  All over the planet, stocks are massively overvalued, and financial markets have become completely disconnected from economic reality.  And when the next crash happens, many believe that it will be even worse than what we experienced back in 2008.  For example, just consider the words of Jim Rogers

“In the United States, we have had economic slowdowns every four to seven years since the beginning of the Republic. It’s now been six or seven years since our last stock market problem. We’re overdue for another problem.”

In Rogers’ view, low interest rates caused stock prices to increase significantly. He believes many assets are priced beyond their fundamentals thanks to the ultra-easy monetary policies by the Federal Reserve. Fed supporters argue such measures are good for investors, but Rogers takes a different view.

The Fed might tell us we don’t have to worry and that a correction or crash will never happen again. That’s balderdash! When this artificial sea of liquidity ends, we’re going to pay a terrible price. When the next economic problem occurs, it will be much worse because the debt is so much higher.”

Of course Rogers is far from alone.  A recent article by Paul B. Farrell expressed similar sentiments…

America’s 95 million investors are at huge risk. Remember the $10 trillion losses in the crash and recession of 2007-2009? The $8 trillion lost after the dot-com technology crash and recession of 2000-2003? This is the third big recession of the century. Yes, America will lose trillions again.

Especially with dead-ahead predictions like Mark Cook’s 4,000-point Dow correction. And Jeremy Grantham’s warning of a 50% crash around election time, with negative stock returns through the first term of the next president, beyond 2020. Starting soon.

Why is America so vulnerable when the next recession hits? Simple: The Fed’s cheap-money giveaway is killing America. When the downturn, correction, crash hits, it will compare to the 2008 crash. The Economist warns: “the world will be in a rotten position to do much about it. Rarely have so many large economies been so ill-equipped to manage a recession,” whatever the trigger.

Things have been relatively quiet in the financial world for so long that many have been sucked into a false sense of security.

But the underlying imbalances were always there, and they have been getting worse over time.

I believe that we are heading into a global financial collapse that will make what happened in 2008 look like a Sunday picnic by the time it is all said and done.

Global debt levels are at all-time highs, big banks all over the planet have been behaving more recklessly than ever, and financial markets are absolutely primed for a huge crash.

Hopefully things will calm down a bit as the rest of this week unfolds, but I wouldn’t count on it.

We have entered uncharted territory, and what comes next is going to shock the world.

The Road To World War 3: Russia And Ukraine Are Now Engaged In A Shooting War

Russian Tanks - Photo by Yana AmelinaRussian soldiers and Ukrainian soldiers are now shooting at each other in eastern Ukraine.  Could this conflict ultimately lead us down the road to World War 3?  This week, a very robust force of “tanks, artillery and infantry” has opened up a “third front” in the Ukrainian civil war in a part of southeastern Ukraine that had not seen much fighting yet.  Exhausted Ukrainian forces are suddenly being pushed back rapidly and many outsiders are wondering how the nearly defeated rebels were able to muster such impressive military strength all of a sudden.  But it really isn’t much of a mystery.  The tanks, artillery and infantry came from inside Russia.  In recent days, Ukrainian units have captured ten Russian paratroopers and there have even been funerals for Russian paratroopers that have been killed in action back home in Russia.  Even though it has become exceedingly obvious that Russia is now conducting a stealth invasion of Ukraine, Vladimir Putin is still choosing to deny it.  But if he did publicly admit it, that would be even more dangerous.  Barack Obama would be forced into a position of either having to do something about the Russian invasion or look weak in the eyes of the public.  And as the Russians have already shown, they are more than willing to match any move that the Obama administration makes.

There has already been much written about who is to blame for all of this, and I am sure that much more will be written about who is to blame in the future.  The western world is blaming “Russian aggression” for the mess in Ukraine.    In return, the Russians point out that it was westerners that funded and organized the groups that violently overthrew the democratically-elected government of Ukraine.  To the Russians, the current government of Ukraine is made up of neo-Nazi terrorist usurpers that are attempting to brutally oppress millions of ethnic Russians in eastern Ukraine.

So the Russians seem themselves as “the good guys” in this conflict and so does the western world.  But that is how most wars start.  Both sides usually feel morally justified at the start of a conflict.

In the final analysis, however, is it really going to matter very much who was “right” and who was “wrong” if the end result is World War 3?

If the rebels in eastern Ukraine had been able to defeat the Kiev government forces on their own, Putin probably would have been content to let them do that.  But instead, they had been pushed back to two major cities and seemed on the verge of defeat.

But now it is the Ukrainian forces that are experiencing “panic and wholesale retreat”

Tanks, artillery and infantry have crossed from Russia into an unbreached part of eastern Ukraine in recent days, attacking Ukrainian forces and causing panic and wholesale retreat not only in this small border town but a wide swath of territory, in what Ukrainian and Western military officials are calling a stealth invasion.

The attacks outside this city and in an area to the north essentially have opened a new, third front in the war in eastern Ukraine between Ukrainian forces and pro-Russian separatists, along with the fighting outside the cities of Donetsk and Luhansk.

How is this happening?

It is the Russians of course.

In fact, if you talk to Ukrainian soldiers, they are very clear on who they are fighting now…

“I tell you they are Russians, but this is what proof I have,” said Sgt. Aleksei Panko, holding up his thumb and index finger to form a zero. Sergeant Panko estimated about 60 armored vehicles crossed near Novoazovsk. “This is what happened: they crossed the border, took up positions and started shooting.”

The Ukrainian Vinnytsia brigade met the cross-border advance over the six miles of countryside separating Novoazovsk from the Russian border, but later retreated to the western edge of town along the Rostov-Mariupol highway, where soldiers were collapsed in exhaustion on the roadside. “This is now a war with Russia,” Sergeant Panko said.

And as I mentioned above, Ukrainian forces have even captured ten Russian paratroopers.  Rather than denying who they are, the Russian government is claiming that they wandered into Ukraine by mistake

Ten Russian soldiers were detained in the Donetsk region of eastern Ukraine, that country’s Security Service said Tuesday, as tensions simmered over the conflict between Ukrainian forces and pro-Russian rebels.

The Russian soldiers were captured with documents and weapons on them, the Security Service said.

Moscow has repeatedly denied claims by Kiev that it has sent troops and weapons over the border into Ukraine, where the Ukrainian military is fighting pro-Russian rebels.

Russia’s state-run RIA Novosti news agency cited a source in the Russian Defense Ministry as saying the soldiers had been patrolling the border and “most likely crossed by accident” at an unmarked point.

The denials that Russian forces are actively operating inside eastern Ukraine have become so absurd that even some in the Russian press are openly questioning them.  For example, just check out this excerpt from a USA Today article that was posted on Wednesday…

Vedomosti, a liberal business daily, published an editorial Wednesday on events in Ukraine under the headline, “Are We Fighting?”

It noted the recent capture of the Russian soldiers on Ukrainian territory and reports of “mysterious funerals” of Russian soldiers, some of whom are officially counted dying during training exercises.

“The number of questions that hang in the air of the dead and detained Russian troops on the territory of Ukraine has reached a critical number. Does Russia fight in Ukraine and, if so, on what grounds? If not, then who is in those freshly dug graves or giving testimony at SBU (Russian Security service) interrogations?”

A Bloomberg editorial contained some more details about the “mystery funerals” that have been taking place inside Russia…

One such burial, of two soldiers, took place in the village of Vybuty near Pskov in northwestern Russia, where an airborne division is based. Efforts to conceal the deaths produced a fiasco. Though the wife of one paratrooper had reported his death on the Vkontakte social network, when a reporter, Ilya Vasyunin of the Russian Planet website, called the wife’s phone number, a woman who answered stated that the paratrooper was alive and well. Two reporters, from Russian Planet and TV Dozhd, who visited the cemetery where the two fresh graves had been seen were immediately attacked by men in black tracksuits. Local journalists, however, succeeded in photographing the graves. According to the independent TV Dozhd, the soldiers’ names and wreaths have been removed from the graves.

There are other reports of paratrooper funerals, which are hard to conceal. Soldiers have grieving families who do not necessarily share the authorities’ desire for deception. In any case, Ukrainian troops have captured some Russian paratroopers. For the first time since the conflict began in March, they were able to record interviews with them.

Sadly, most Americans are not paying much attention to this conflict.

Most Americans are not really going to care much about a war on the other side of the planet that does not directly involve us.

But they should care.

Because things are about to escalate to a level that we rarely saw even during the darkest moments of the Cold War.  Relations between the United States and Russia are spiraling downhill, and that could end up having a huge impact on all of our lives.

For example, in my previous article entitled “Russia Is Doing It – Russia Is Actually Abandoning The Dollar“, I discussed how this tug of war over Ukraine was causing Russia to think about moving away from the petrodollar.  Well, it turns out that now the Russians are actually taking concrete steps toward abandoning the petrodollar for good…

The Russian oil company Gazprom Neft has agreed to export 80,000 tons of oil from Novoportovskoye field in the Arctic; it will accept payment in rubles, and will also deliver oil via the Eastern Siberia-Pacific Ocean pipeline (ESPO), accepting payment in Chinese yuan for the transfers, the Russian business daily Kommersant reported Wednesday.

The Russian government and several of the country’s largest exporters have widely discussed the possibility of accepting payments in rubles for oil exports.

Last week, Russia began to ship oil from the Novoportovskoye field to Europe by sea. Two oil tankers are expected to arrive in Europe in September. According to Kommersant, the payment for these shipments will be received in rubles.

That is huge news, but you probably haven’t heard a thing about it on the big mainstream news networks.

Meanwhile, one thing that you probably have heard about is how “Russian hackers” attacked JPMorgan Chase earlier this month

Russian hackers attacked the U.S. financial system in mid-August, infiltrating and stealing data from JPMorgan Chase & Co. and at least one other bank, an incident the FBI is investigating as a possible retaliation for government-sponsored sanctions, according to two people familiar with the probe.

The attack resulted in the loss of gigabytes of sensitive data, said the people, who asked not to be identified because the probe is still preliminary. Authorities are investigating whether recent infiltrations of major European banks using a similar vulnerability are also linked to the attack, one of the people said.

As relations between the United States and Russia continue to decline precipitously, both sides will be looking for ways to hurt one another.

And that won’t be good for any of us.

So let us hope that cooler heads prevail.

But ultimately, this current conflict could end up taking us to a destination that the Cold War never did.

World War 3 will probably not happen next week, next month or even next year, but right now we are on a road which could eventually lead to the unthinkable.

Let us pray that our politicians are able to find the exit ramp at some point.

New World Disorder: Emerging Division Between East And West Threatens To Plunge The Globe Into Chaos

East And West - Public DomainIn general, over the last several decades the world has experienced an unprecedented era of peace and prosperity.  The opening up of relations with China and the “end of the Cold War” resulted in an extended period of cooperation between east and west that was truly unique in the annals of history.  But now things are shifting.  The civil war in Ukraine and the crash of MH17 have created an enormous amount of tension between the United States and Russia, and many analysts believe that relations between the two superpowers are now even worse than they were during the end of the Cold War era.  In addition, the indictment of five PLA officers for cyber espionage and sharp disagreements over China’s territorial claims in the South China Sea (among other issues) have caused U.S. relations with China to dip to their lowest point since at least 1989.  So could the emerging division between the east and the west ultimately plunge us into a period of global chaos?  And what would that mean for the world economy?

For as long as most Americans can remember, the U.S. dollar and the U.S. financial system have been overwhelmingly dominant.  But now the powers of the east appear to be determined to break this monopoly.  Four of the BRICS nations (China, Russia, India and Brazil) are on the list of the top ten biggest economies on the planet, and they are starting to make moves to become much less dependent on the U.S.-centered financial system of the western world.  For example, just last week the BRICS nations established two new institutions which are intended to be alternatives to the World Bank and the IMF…

So in their summit, from July 14 to 16, the five BRICS announced two major initiatives aimed squarely at increasing their power in global finance. They announced the launch of the New Development Bank, headquartered in Shanghai, that will offer financing for development projects in the emerging world. The bank will act as an alternative to the Washington, D.C.—based World Bank. The BRICS also formed what they’re calling a Contingent Reserve Arrangement, a series of currency agreements which can be utilized to help them smooth over financial imbalances with the rest of the world. That’s something the IMF does now.

Clearly, the idea is to create institutions and processes to supplement — and perhaps eventually supplant — the functions of those managed by U.S. and Europe. And they would be resources that they could control on their own, without the annoying conditions that the World Bank and the IMF always slap on their loans and assistance.

This comes at a time when both China and Russia are seeking to emphasize their own currencies and move away from using the U.S. dollar so much.

Even in the western media, it is being admitted that China’s yuan is “a growing force in global finance“, and according to CNBC the use of Chinese currency in international trade is growing very rapidly…

Of the German companies profiled, 23 percent are using the renminbi to settle trades, up from 9 percent last year, while usage in Hong Kong rose to 58 percent from 50 percent and to 17 percent from 9 percent in the U.S.

Usage of the renminbi among French companies – a new addition to this year’s list – was high at 26 percent.

And of course Russia has been actively pursuing a “de-dollarization strategy” for months now.  Each new round of economic sanctions pushes Russia even further in the direction of independence from the U.S. dollar, and Gazprom has been working hard to get large customers to switch from paying for natural gas in dollars to paying for natural gas in euros and other currencies.  For much more on this, please see my previous article entitled “Russia Is Doing It – Russia Is Actually Abandoning The Dollar“.

At this point, it seems clear that Russia plans to permanently decouple from the U.S. economy and the U.S. financial system.  Just today we learned that Vladimir Putin plans to make Russia less dependent on U.S. companies such as IBM and Microsoft, and any future rounds of sanctions are likely to cause even more damage to U.S. firms that do business in Russia.

But potentially much more troubling for the U.S. economy is the startling deterioration in the relationship between the Obama administration and China.  Some analysts are even describing this as “a tipping point”

One day, the United States indicts five PLA officers for cybercrimes; the next, the United States claims victory in WTO disputes over car tariffs and rare earth minerals. All this is happening while the United States promises enduring support for Asian allies, and it has moved openly to challenge the legitimacy of Chinese territorial claims in the South China Sea. Meanwhile, China is busy creating facts on the ground and water. Last month, a $1 billion Chinese oil rig set up operations in territorial waters claimed by Vietnam. In the East China Sea, Chinese SU-27 fighter jets have come within 100 feet of Japanese surveillance aircraft.

This was all capped at the recent Shangri-La Asian Security dialogue in Singapore (Asia’s annual defense-ministers meeting): Defense Secretary Chuck Hagel bluntly described China’s behavior as “destabilizing, unilateral actions.” The PLA deputy chief of staff, Lt. Gen. Wang Guanzhong, accused the United States of “hegemonism.”

The mood has soured, more than the usual ups and downs of big-power relationships. The question now is not whether a “new type of relationship” is in the offing, but rather, whether U.S.-Chinese relations have reached a tipping point.

Most Americans could not care less about what China is doing in the South China Sea, but to the Chinese this is a very, very big deal.  In fact, China just sent a surveillance vessel to Hawaii as a bit of payback for what they regard as U.S. “provocations” in the region.

In the old days, China would have probably never have done such a thing.  But China is gaining confidence as the gap between the U.S. military and the Chinese military rapidly closes

Away from the Chinese military’s expanding capabilities in cyberspace and electronic warfare, Beijing is growing the size and reach of its naval fleet, advancing its air force and testing a host of new missiles, the Pentagon said Thursday.

An annual report to Congress on China’s evolving military capability concluded that the modernization was being driven in part by growing territorial disputes in the East and South China seas, as well as by Beijing’s desire to expand its presence and influence abroad.

In fact, the Chinese military has grown so powerful that we are now seeing headlines such as this one in The Week: “China thinks it can defeat America in battle”.

And the Russian military has made tremendous strides as well. Putin has been working hard to modernize the Russian nuclear arsenal, the Russians now have a “fifth generation” fighter jet that is supposedly far superior to the F-22 Raptor, and they have nuclear submarines that are so incredibly quiet that the U.S. Navy refers to them as “black holes“.

If Russia and China stay united, they are more than capable of providing a counterbalance to U.S. power around the globe.

But even if military conflict is not in our immediate future, the breakdown in relations between east and west could still have a dramatic impact on the global economy.

Over the years, the U.S. and China have developed a highly symbiotic relationship that fuels a tremendous amount of economic activity all over the planet.  Each year, we buy hundreds of billions of dollars of products from the Chinese.  Just imagine what our stores would look like if we took everything that was “made in China” out of them.  And after we send them giant piles of our money, we beg the Chinese to lend it back to us at ultra-low interest rates.  This arrangement has allowed China to become extremely wealthy and it has allowed Americans to enjoy a massively inflated standard of living fueled by ever increasing amounts of debt.

So what happens if this relationship starts breaking down?

Without a doubt, it could potentially lead to global chaos.

So keep a close eye on this emerging division between the east and the west.  It could end up being far more important than most Americans would ever dare to imagine.

De-Dollarization: Russia Is On The Verge Of Dealing A Massive Blow To The Petrodollar

The U.S. Dollar - Photo by Pen WaggenerIs the petrodollar monopoly about to be shattered?  When U.S. politicians started slapping economic sanctions on Russia, they probably never even imagined that there might be serious consequences for the United States.  But now the Russian media is reporting that the Russian Ministry of Finance is getting ready to pull the trigger on a “de-dollarization” plan.  For decades, virtually all oil and natural gas around the world has been bought and sold for U.S. dollars.  As I will explain below, this has been a massive advantage for the U.S. economy.  In recent years, there have been rumblings by nations such as Russia and China about the need to change to a new system, but nobody has really had a big reason to upset the status quo.  However, that has now changed.  The struggle over Ukraine has caused Russia to completely reevaluate the financial relationship that it has with the United States.  If it starts trading a lot of oil and natural gas for currencies other than the U.S. dollar, that will be a massive blow for the petrodollar, and it could end up dramatically changing the global economic landscape.

The fact that the Russian government has held a meeting to discuss “getting rid of the US dollar in Russian export operations” should be front page news on every mainstream news website in the United States.  That is how big this is.  But instead, we have heard nothing from the big mainstream news networks about this so far.  Instead, we have only heard about this from Russian news sources such as the Voice of Russia

Russian press reports that the country’s Ministry of Finance is ready to greenlight a plan to radically increase the role of the Russian ruble in export operations while reducing the share of dollar-denominated transactions. Governmental sources believe that the Russian banking sector is “ready to handle the increased number of ruble-denominated transactions”.

According to the Prime news agency, on April 24th the government organized a special meeting dedicated to finding a solution for getting rid of the US dollar in Russian export operations. Top level experts from the energy sector, banks and governmental agencies were summoned and a number of measures were proposed as a response for American sanctions against Russia.

The “de-dollarization meeting” was chaired by First Deputy Prime Minister of the Russian Federation Igor Shuvalov, proving that Moscow is very serious in its intention to stop using the dollar.

So will Russia go through with this?

After all, this wouldn’t just be a slap in the face.  This would essentially be like slamming an economic fist into our nose.

You see, Russia is not just a small player when it comes to trading oil and natural gas.  The truth is that Russia is the largest exporter of natural gas and the second largest exporter of oil in the world.

If Russia starts asking for payment in currencies other than the U.S. dollar, that will essentially end the monopoly of the petrodollar.

In order to do this, Russia will need trading partners willing to go along.  In the article quoted above, the Voice of Russia listed Iran and China as two nations that would potentially be willing to make the switch…

Of course, the success of Moscow’s campaign to switch its trading to rubles or other regional currencies will depend on the willingness of its trading partners to get rid of the dollar. Sources cited by Politonline.ru mentioned two countries who would be willing to support Russia: Iran and China. Given that Vladimir Putin will visit Beijing on May 20, it can be speculated that the gas and oil contracts that are going to be signed between Russia and China will be denominated in rubles and yuan, not dollars.

And the reality of the matter is that China has seemed ready to move away from the U.S. dollar for quite some time.  In a previous article, I included a quote from a French news source that discussed how China’s official news agency has even called for a “new international reserve currency… to replace the dominant US dollar”…

For decades the US has benefited to the tune of trillions of dollars-worth of free credit from the greenback’s role as the default global reserve unit.

But as the global economy trembled before the prospect of a US default last month, only averted when Washington reached a deal to raise its debt ceiling, China’s official Xinhua news agency called for a “de-Americanised” world.

It also urged the creation of a “new international reserve currency… to replace the dominant US dollar”.

For much more on what China is thinking, please see my previous article entitled “9 Signs That China Is Making A Move Against The U.S. Dollar“.

So why is the petrodollar so important?

Well, it creates a tremendous amount of demand for the U.S. dollar all over the globe.  Since everyone has needed it to trade with one another, that has created an endless global appetite for the currency.  That has kept the value of the dollar artificially high, and it has enabled us to import trillions of dollars of super cheap products from other countries.  If other nations stopped using the dollar to trade with one another, the value of the dollar would plummet dramatically and we would have to pay much, much more for the trinkets that we buy at the dollar store and Wal-Mart.

In addition, since the U.S. dollar is essentially the de facto global currency, this has also increased demand for our debt.  Major exporting nations such as China and Saudi Arabia end up with giant piles of our dollars.  Instead of just letting them sit there and do nothing, those nations often reinvest their dollars into securities that can rapidly be changed back into dollars if needed.  One of the most popular ways to do this has been to invest those dollars in U.S. Treasuries.  This has driven down interest rates on U.S. debt over the years and has enabled the U.S. government to borrow trillions upon trillions of dollars for next to nothing.

But if the rest of the world starts moving away from the U.S. dollar, all of this could change.

In order for our current standard of living to continue, it is absolutely imperative that everyone else around the globe continues to use our currency.

So if Russia really does pull the trigger on a “de-dollarization” strategy, that would be huge – especially if the rest of the planet started following their lead.

The U.S. economy is already teetering on the brink of another major downturn, and there are a whole host of indications that big trouble is on the horizon.  For much more on this, please see the article that I posted on Monday entitled “If Economic Cycle Theorists Are Correct, 2015 To 2020 Will Be Pure Hell For The United States“.

Just about the last thing that we need right now is for our petrodollar monopoly to be threatened.

It would be nice if things would calm down in Ukraine and the relationship between the United States and Russia could go back to normal.

Sadly, that does not appear likely any time soon.

In fact, the Ukrainian government has already admitted that “we are essentially at war“, and on Tuesday six Ukrainian soldiers were killed and eight were wounded in a convoy attack in eastern Ukraine.

The regions in eastern Ukraine that have just declared independence have given the government in Kiev until Wednesday to pull their forces out of eastern Ukraine or else face war.

If a full blown civil war does erupt in Ukraine, it is going to take this crisis to a completely new level.

Unfortunately, most Americans are incredibly apathetic at this point and know very little about what is going on.

But in the end, this could have dramatic implications for all of us.