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Few things are as misunderstood as Apple's $203 billion cash hoard, first and foremost because of this amount $168 billion is not cash at all but actual securities: treasuries, investment grade bonds, perhaps stocks and junk, something Zero Hedge first made quite clear back in 2012 when we presented "The World's Biggest Hedge Fund You Have Never Heard Of" - Braeburn Capital, Apple's asset management corporation, tasked with preserving (and enhancing) the value of Apple's biggest asset: its "cash equivalents" which are anything but cash.
As the following chart shows, with $203 billion in investable dry powder which is probably the best way of calling AAPL's cash and investments...
... the Cupertino-based company is more than $30 billion larger than what is generally accepted to be the largest hedge fund in the world, Ray Dalio's Bridgewater, which however "only" managed some $171 billion as of May 2015.
Following our report, many tried to cover up the fact that nobody really knows what is on Braeburn's books, punting to the general explanation: "it is all invested in ultra-safe securities." Other said "It says it only invests in “highly rated securities”—think government bonds from rich, stable countries, and debt issued by companies with very solid finances. The overarching objective is “minimizing the potential risk of principal loss,” which means it’s safe to assume that Apple is not operating a secret investment casino in the Nevada desert."
Only that is not exactly true.
AAPL's gargantuan securities hoard, and the fact that the company is no longer a maker of gadgets as much as a massive hedge fund, was noticed two months ago by Bloomberg who wrote that "Apple Is the New Pimco, and Tim Cook Is the New King of Bonds." This is what BBG said:
Apple Inc., Oracle Corp. and the other tech giants hoarding half a trillion dollars in cash have joined the ranks of the biggest buyers of the debt, often snapping up as much as half of some bond issues, according to five people with knowledge of the transactions.Apple, which had $193.5 billion of cash and marketable securities as of March 28, is now one of the biggest buyers of shorter-term debt sold by investment grade companies, often taking as much as $200 million of a $1 billion issue, according to four people with knowledge of the deals.I am sure asset managers like Vanguard and Pimco would prefer Apple call them and have them manage the money rather than competing with them,” said Kevin McPartland, the head of research for market structure and technology at research firm Greenwich Associates in Stamford, Connecticut.
Of course they would: just think of the asset management fees that are not being paid.
But that is precisely why AAPL is now also the world's biggest hedge fund: with an "AUM" of over $200 billion, it would much rather do its asset-management decisions in house, and specifically in this house.
Or actually, that was the house located at 730 Sandhill Road in Reno, Nevada where Braeburn was housed as Zero Hedge first revealed, until shortly after our report when it decided to disappear. Cue Apple Insider from March 2013:
... the office at that address is now in use by another firm (Randstad finance and accounting). Asked about Braeburn, the receptionist told AppleInsider that she only knew that the firm is no longer operating at that location and that she didn't know where it had relocated. A search of Apple's record filings did not turn up a new address.Apple doesn't appear keen on publicizing the address of its Reno operations ; neither Siri nor Maps offer any help in locating the Braeburn offices the way they do direct users to Apple's stores (including the one located in Reno) and its main headquarters facilities in Cupertino.
Actually that's not true. A 2 minute search reveals that Braeburn moved just down the road to a more impressive looking location at 6900 S. McCarran Blvd, Suite 3020, in Reno.
Far from the "boring, staid" buyer of ultra-safe treasuries, what is notable is that slowly but surely AAPL has become a dominant force in the corporate bond market, and has migrated into far riskier (and potentially illiquid) assets: as noted above, "[Breaburn] is now one of the biggest buyers of shorter-term debt sold by investment grade companies, often taking as much as $200 million of a $1 billion issue, according to four people with knowledge of the deals."
Which leads us to the second point about AAPL's "cash" - 90% of it is held offshore: in the latest quarter $181 billion of AAPL's cash, or about 90%, was held abroad.
It is here that Braeburn comes in, because it is funds held by Apple's offshore subs that provide the funding for Braeburn. As BBG reported a month ago, "Apple... had $171.3 billion of its cash and marketable securities in foreign subsidiaries and “generally based in U.S. dollar-denominated holdings” as of March 28, according to a regulatory filing." Make hat $182 billion as of June 30.
And just like every massive hedge fund, which prefers to operate in the shadows, Braeburn gets its share of shadow suitors seeking their share of its funds:
“We treat them as we treat Fidelity or Vanguard or any other investor,” said Curt Zuber, treasurer of Sydney-based Westpac Banking Corp., which has issued $6.1 billion of U.S. dollar-denominated bonds in the financial year started Oct. 1 and a total of $22 billion since October 2012.All four of Australia’s biggest banks, heavily reliant on offshore debt markets, have sent representatives to Reno, Nevada, where Apple’s money-management unit, Braeburn Capital Inc., is based, according to people with knowledge of the trips. Oracle’s cash managers are also based in the city known for its casinos, where hotel rooms costing as little as $69 a night provide cheaper lodgings than banker stops in New York, Boston and Newport Beach, California, where Pimco is based.
The curious secrecy surrounding AAPL's asset manager once again raises the same flag we noted 3 years ago: just what does Braeburn hold, becuase while we would be happy to take Tim Cook's word, we would be happier if we could see some AAPL 13Fs. Recall from September 2012:
Braeburn has no reporting obligations: there is no Investment Advisor Public Disclosure (IAPD) entry on Braeburn for the logical reason that it is not an investment advisor: it merely manages an ungodly amount of cash for AAPL's millions of shareholders. There is also no SEC filing 13-F filing on Braeburn's holdings. As such, not confied by the limitations of being a "long-only", it is in its full right to hold any assets it feels like, up to and including CDS on housing, puts on Samsung, or Constant Maturity Swaps that pay if the 10 Year collapses. It just doesn't have to report any of them.Nobody knows: and that's the beauty of Braeburn. It is the world's largest hedge fund that is not really a hedge fund, nobody has heard of, and nobody knows just what assets it holds.
Another reason why some may want to know just what debt AAPL is buying: in a bond market as illiquid as the one right now, should AAPL be forced to dump any of its billions in TSYs, IG, Junk paper (say because rates are rising) just what will happen to the market price in what is generally quite a bidless market?
Recall that the only reason why Bill Gross' departure and subsequent surge in redemptions from Pimco's Total Return Fund did not roil the market - as so many expected - is because as we learned laer, PIMCO sold from itself... to itself.
Which leads us to another question: just what is the fair value of AAPL's "cash" if and when the company is actually converting it to real cash, and/or the bond market locks up due to the creeping wave of illiquidity, as so many increasingly fear.
And why is all this taking place in Reno, NV instead of Park Avenue or Wall Street? Because as we reported three years ago, Apple "uses Braeburn primarily in its capacity to find legal tax loophole all around the world and avoid paying taxes" and Nevada is perhaps the best state in the US where one can do just that.
Which also brings us to a tangential point: with only $22 billion cash held domestically, at a run rate of $10 billion in quarterly stock buybacks, AAPL will have no choice but to issue anywhere between $10 and $15 billion in bonds in the coming weeks since the company appears to enjoy a floor of about $20 billion in cash held domestically. All of this will continue at least until such time as the US allows corporations to repatriate the hundreds of billions held offshore without suffering a tax hit.
Perhaps the only question is whether AAPL's asset management unit will buy the bonds issued by AAPL's operating company used to repurchase the shares of AAPL's shareholders.
Until then: sorry Bridgewater, but you are still not hedge fund #1.
Posted: July 23, 2015, 6:54 pm
Japan Inc Rocked By Massive Accounting Fraud: Toshiba CEO Quits After Admitting 7 Years Of Cooked Books
While Abenomics has been an unmitigated disaster for Japan's ordinary population, where the soaring stock market has benefited the top decile of the population while everyone has been slammed by a record 25 consecutive months of declining real wages and soaring input costs, there had been one bright spot: corporate earnings, which unlike in Europe or even the US, have been growing at a steady double-digit clip. What was surprising is that Japan was perhaps the one place where currency debasement was leading to an immediate flow through to rising EPS.
Then on Friday, a report out of Reuters caught our attention when news hit that 140 year old electronics conglomerate, and "pillar of Japan Inc",Toshiba had inflated profits by a stunning $1.2 billion for a whopping 7 years, with fabricated figures amounting to 30% of the company's "profits" since 2008!
Suddenly we saw Japan's profitability "renaissance" in a very different light as Toshiba's scandal suggested that, if endemic, Japan Inc's house of soaring profits was built on nothing more than fabricated foundations.
And while we await to see which other companies will admit they too had been cooking their books in the past few years, we will have to do it without Toshiba's CEO Hisao Tanaka, who together with five members of his senior staff, resigned earlier today.
According to the FT, "Tanaka said on Tuesday at a news conference, following a 15-second bow of contrition, that he “felt the need to carry out a major overhaul in our management team in order to build anew our company." “We have suffered what could be the biggest erosion of our brand image in our 140-year history."
Tanaka et al: "Sorry we got caught"
Of course, the only reason Mr. Tanaka apologized and resigned is not because he was actually cooking books the for an unprecedented 7 years, a period during which the CEO most certainly received tens if not hundreds of millions in equity and profit-linked compensation, but because he was caught.
We very much doubt he will have much if any of his generous bonuses clawed back even as "a panel of external lawyers and accountants said on Monday there was a “systematic” and “deliberate” attempt to inflate profit figures amid a corporate culture in which employees were afraid to speak out against bosses’ pushes for unrealistic earnings targets."
The panel said Mr Tanaka, who joined Toshiba four decades ago, and vice-chairman Norio Sasaki were aware that profits were being overstated and did not take any action to end the improper accounting.
The only action he did was bow down to suckers, aka investors, and offer a 15 second apology after which he was most likely on a one-way chartered flight out of Tokyo to some non-extradition island where his millions in ill-gotten comp will buy a lifetime supply of Mai-Tais.
As FT adds, the panel said Toshiba, which makes laptops, memory chips and nuclear reactors, "needed to revise its pre-tax profit figures by Y152bn ($1.2bn) over a seven-year period beginning in 2008, in addition to Y4.4bn in inflated profits estimated by Toshiba for three quarters of the 2014 financial year. The Y152bn accounts for nearly 30 per cent of the total pre-tax profit during the period."
Taro Aso, finance minister, said the scandal highlighted the need for corporate governance reform in corporate Japan. “We could lose trust in Japanese markets and the Tokyo Stock Exchange unless true corporate governance is in place,” he told reporters.
This is not the first massive accounting scandal involving a Japanese corporations: "the government has been seeking to improve investor confidence in Japanese corporate governance since 2011 when Michael Woodford, then Olympus chief executive, blew the whistle on Y117.7bn of covered up losses at the company dating back to the 1990s."
It won't be the last. In the meantime, investors are cautioned to take any numbers out of a country where cooking the books appears to be a daily occurrence with a huge grain of radioactive salt. Take the following example example of "dubious practices" as the company: during a meeting in December 2008 ahead of the third-quarter results for the financial year, the execs were told the operating profit forecast was a Y18.4bn loss, to which Mr Nishida said: “The figure is so embarrassing that we cannot announce it this coming January”. Accountants were forced to manipulate the figures to turn the forecast into a Y0.5bn profit.
The other executives who resigned are vice-presidents Hidejiro Shimomitsu, Masahiko Fukakushi, Kiyoshi Kobayashi and Toshio Masaki, and Keizo Maeda, representative executive officer. All were board members.
Yet despite the changes at the top nothing will change as the same culture of fraud and corruption that tainted the current executive team will persist in the future. The only question is who is next to admit that the only "working" aspect of Abenomics has also been a total fabrication.
Posted: July 21, 2015, 5:07 pm
"The evidence suggests that conventional QE is an unreliable tool for boosting GDP or employment. Bank of England research shows that it benefits the well-off, who gain from increasing asset prices, much more than the poorest."
As is often the case with these things, they go on to propose something even worse than what's already being implemented:
"Rather than being injected into the financial markets, the new money created by eurozone central banks could be used to finance government spending"
Government spending already benefits from QE at the moment. Since Draghi's announcement, Italian and German borrowing costs have dropped. And then we haven't even discussed all the other ways the ECB has found to prop up sovereigns, such as the cheap LTRO loans to banks, who channeled the money through to governments, especially in Spain and Italy. This is so well-known that it was called the "Sarkozy trade" - a term adopted by markets after the French president suggested that governments urge banks flush with ECB cash to buy their bonds. So why try more of the same?
Those calling for a "political Europe" should take notice that large-scale transfers have already been implemented within the Eurozone since 2010, through the EFSF, ESM and primarily (German economist Hans-Werner Sinn estimates to the tune of 75%) through the ECB. When one receives a loan with an interest rate which is lower than the market level, one receives a gift, in economic terms.
The economists argue that "mixing monetary and fiscal policy" isn't a problem because "traditional monetary policy no longer works".
They must have missed the alternative of Austrian economics. Post-World War II Germany and its relatively strict hard money policies can perhaps be instructive for a model that has been tested. Japan has been trying excessively loose Keynesian monetary policies after its bust around 1990, withnegative results. But the authors seem to prefer to apply the principle "When in trouble, double".
A particular problem with financing governments through the printing press is that Parliaments are being bypassed, exactly the reason why politicians prefer to let Mario Draghi do the brunt of the dirty work in the euro crisis.
I hope it doesn't come as a shock to anyone, but my suggestion is the following: governments should be funded by taxes alone, democratically controlled through Parliaments. Ideally these taxes should consist in one invoice per citizen, detailing the services received. Perhaps socialists may want to add a “solidarity” invoice to rich people, raising funds which can be transferred on in a transparent way to those perceived to be in need. Clearly this system is way too transparent for the sake of any political purpose and would mean the end of a whole industry of tax advisors, but perhaps it may one day serve as a model for any future new country.
An alternative put forward by the authors which goes to the heart of their "QE for the people" - proposal is the following:
"Each eurozone citizen could be given €175 per month, for 19 months, which they could use to pay down existing debts or spend as they please. By directly boosting spending and employment, either approach would be far more effective than the ECB’s plans for conventional QE"
Why be so modest and only give €175 per month, someone may suggest? However, money shouldn’t be manipulated to support economic growth. On the contrary, manipulating its value will create uncertainty and hurt economic growth.
One could compare money to a voucher in a cloak room. If Sophie has received a voucher in exchange for storing her jacket, she wouldn't exactly like it if Mario Draghi, the manager of the cloak room, gives a voucher to his girlfriend, Angela, without asking her to put up some collateral. Whereas people would know that Sophie's voucher is backed by value (her jacket), her voucher would lose value in case the voucher-supply would be increased artificially, to the benefit of the cloak room's manager's friends.
Shall we then see hyperinflation? Warnings of hyperinflation have been wrong in the past, and some Austrian-leaning economists like Mish have beencountering warnings from their Austrian friends.
Our monetary system is still not completely controlled by governments. After a central-bank induced bubble has bust, like in 2008, when one would expect prices to go down again after they have been rising in an unsustainable way, monetary pumping still may not be sufficient to counter deflationary forces. On the other hand, even modest printing may result in hyperinflation in case citizens lose trust in currency managed by the government, or if for example a remarkably solid alternative currency emerges and becomes popular, despite the fact that one needs to use government currency for contracts and taxes (let me disclose I have my doubts whether bitcoin will ever fulfill this role, but it certainly has proven to be able to circumvent capital controls).
In other words, the proposal to give each eurozone citizen €175 per month may not unleash hyperinflation, but it may counter certain natural deflationary forces, such as those in Spain, where the euro and its easy money fueled a toxic real estate bubble which left the banking system full of bad debt after it busted. If this proposed flow of "helicopter money" would effectively be injected and prop up prices, Spanish entrepeneur Conchita may decide not to open her sandwich place after all, given how rent prices would remain too elevated.
That's not to say that in all circumstances it would be wrong for Central Banks to increase the money supply. In a system where money would be entirely private, the market may still opt for a system whereby the monetary mass increases in case value is created (after innovation, for example) and decreases in case value is destroyed (after natural disasters, investment bubbles or wars, for example). Going back to the example of the cloak room, it's obvious that more vouchers are needed when new people arrive with jackets. If the government takes over the money supply from the private sector, as it has done everywhere, it should attempt to mimic what would happen in a scenario of private money.
In the case of Spain, that apparently means allowing deflation. I have understanding for those who claim that it's just madness to allow deflation in such a highly (privately) indebted country, but if that is true, it probably means we need to look at how to best organise defaults, rather than distorting decisions regarding saving and investing through manipulation of the value of money, as the authors propose. In the case of Spain, that means restructuring the banking system, something which has been done to a certain extent, with the help of a 40 billion euro bailout, but clearly not sufficiently, given the high amount of remaining bad debt. In the case of the whole eurozone, it means looking at alternatives to the current, dysfunctional currency union.
Given the massive mistakes which were made by central banks from Weimar to Bernanke and the relentless attempts to use the printing press to finance governments (after all, the Bank of England was set up to finance the King's wars), it probably shouldn't take much to convince people of alternatives, and not more of the same, right?
Posted: July 16, 2015, 4:40 pm
The Pentagon has released its “National Military Strategy of the United States of America 2015,” June 2015.
The document announces a shift in focus from terrorists to “state actors” that “are challenging international norms.” It is important to understand what these words mean. Governments that challenge international norms are sovereign countries that pursue policies independently of Washington’s policies. These “revisionist states” are threats, not because they plan to attack the US, which the Pentagon admits neither Russia nor China intend, but because they are independent. In other words, the norm is dependence on Washington.
Be sure to grasp the point: The threat is the existence of sovereign states, whose independence of action makes them “revisionist states.” In other words, their independence is out of step with the neoconservative Uni-power doctrine that declares independence to be the right of Washington alone. Washington’s History-given hegemony precludes any other country being independent in its actions.
The Pentagon’s report defines the foremost “revisionist states” as Russia, China, North Korea, and Iran. The focus is primarily on Russia.Washington hopes to co-op China, despite the “tension to the Asia-Pacific region” that China’s defense of its sphere of influence, a defense “inconsistent with international law” (this from Washington, the great violator of international law), by turning over what remains of the American consumer market to China. It is not yet certain that Iran has escaped the fate that Washington imposed on Iraq, Afghanistan, Libya, Syria, Somalia, Yemen, Pakistan, Ukraine, and by complicity Palestine.
The Pentagon report is sufficiently audacious in its hypocrisy, as all statements from Washington are, to declare that Washington and its vassals “support the established institutions and processes dedicated to preventing conflict, respecting sovereignty, and furthering human rights.” This from the military of a government that has invaded, bombed, and overthrown 11 governments since the Clinton regime and is currently working to overthrow governments in Armenia, Kyrgyzstan, Ecuador, Venezuela, Bolivia, Brazil, and Argentina.
In the Pentagon document, Russia is under fire for not acting “in accordance with international norms,” which means Russia is not following Washington’s leadership.
In other words, this is a bullshit report written by neocons in order to foment war with Russia.
Nothing else can be said about the Pentagon report, which justifies war and more war. Without war and conquests, Americans are not safe.
Washington’s view toward Russia is the same as Cato the Elder’s view toward Carthage. Cato the Elder finished his every speech on any subject in the Roman Senate with the statement “Carthage must be destroyed.”
This report tells us that war with Russia is our future unless Russia agrees to become a vassal state like every country in Europe, and Canada, Australia, Ukraine, and Japan. Otherwise, the neoconservatives have decided that it is impossible for Americans to tolerate living with a country that makes decisions independently of Washington. If America cannot be The Uni-Power dictating to the world, better that we are all dead. At least that will show the Russians.
Posted: July 11, 2015, 4:06 am
Many Americans have discovered that those entrusted to protect us often become the most dangerous threats. Whether it's corrupt cops, bogus journalists, or even Ponzi-scheming church elders, it's not difficult to understand why trusting ...
Posted: July 10, 2015, 10:34 pm
In the wake of Sunday’s dramatic referendum, there’s been no shortage of redenomination chatter and drachma dreaming.
Indeed, speculation has run rampant since deposed Greek FinMin Yanis Varoufakis opened the floodgates by telling a UK newspaper that the government was ready to go the “California” route with IOUs. Just yesterday Kathimerini reported that Athens was preparing to launch a parallel scrip in order to meet its obligations to pensioners and public sector employees and anecdotally, there’s some evidence to suggest that Greek businesses are in the midst of reverting to the drachma as we speak.
As a reminder, the image below was sent in by a tourist who went to a cafe in Greece where the menu prices appear to be back in Drachma:
On Thursday, Bloomberg is out with what it calls "the first sighting of the new Greek drachma," and although we'd like to think that the menu shown above (which we posted some 24 hours ago) actually qualifies as the "first" sighting, we were still very interested to see that the "NGD" has shown up on a receipt from the Hilton.
Here's Bloomberg with more:
Between June 28 and July 4 at a Hilton hotel in Athens, transactions on a Bloomberg reporter's Visa credit card issued by Citigroup Inc.were posted as being carried out in "Drachma EQ."The inexplicable notation -- bear in mind, the euro remains Greece's official currency -- flummoxed two very polite customer service representatives and spokesmen for the companies involved. It depicts a currency changeover that the Greek government and European officials have been working for over six months to avoid.Citigroup and Visa Inc. declined to comment. A Hilton Worldwide Holdings Inc. spokeswoman said that the Athens hotel had billed the customer in euros, not drachmas.
Posted: July 9, 2015, 9:26 pm
Update: In a televised address to the nation, Greek PM Alexis Tsipras assured Greeks that their deposits are safe despite an upcoming bank holiday and despite the fact that Greek stocks will not open for trading on Monday. Tsipras also said Athens has re-applied for a bailout extension and urged Greeks to "remain calm" in the face of what is sure to be a turbulent week.
- GREEK PRIME MINISTER SAYS GREEK PEOPLE SHOULD REMAIN CALM
- GREEK PM: BANK OF GREECE PROPOSED BANK TRANSACTION RESTRICTIONS
- GREEK PRIME SAID GREECE RE-APPLIED FOR BAILOUT EXTENSION
- GREEK PRIME MINISTER SAYS DEPOSITS ARE COMPLETELY SAFE
Despite the reassurances from any and all elected (and unelected) officials, given the run on bank ATMs in Greece has turned into a stampede, it is not surprising that:
- GREEK BANKS TO REMAIN CLOSED FROM MONDAY FOR A WEEK: PIRAEUS BANK CEO
- PIRAEUS BANK CEO THOMOPOULOS SPEAKS TO REPORTERS IN ATHENS
The announcement was made when Piraeus Bank CEO Anthimos Thomopoulos told reporters after a meeting of the government’s financial-stability panel on Sunday. The launch of capital controls just as the Greek summer tourism season starts, is sure to be the final crushing blow to Greece, whose entire economy will now grind to a halt.
At the same time, Finance Minister Yanis Varoufakis said an announcement would be made after a Cabinet meeting due to start imminently in Athens. Which is ironic considering just earlier today Varoufakis said he is opposed to the "very concept" of capital controls:
Banks will remain shut until at least after a July 5 referendum called by Prime Minister Alexis Tsipras on whether to accept austerity in exchange for a European bailout, Kathemerini newspaper reported, citing unnamed sources.
Reuters is also reporting that the Greek stock market will not open on Monday (leaving us wondering just what that will do to the Greek ETFs liquidity in US markets) as hedgers scramble to protect un-closable losses wherever they can.
More from Reuters, which reports that "Greece's banks, kept afloat by emergency funding from the European Central Bank, are on the front line as Athens moves towards defaulting on a 1.6 billion euros payment due to the International Monetary Fund on Tuesday."
The ECB had made it difficult for the banks to open on Monday because it decided to freeze the level of funding support it gives the banking system, rather than increasing it to cover a rise in withdrawals from worried depositors.Amid drama in Greece, where a clear majority of people want to remain inside the euro, the next few days present a major challenge to the integrity of the 16-year-old euro zone currency bloc. The consequences for markets and the wider financial system are unclear.The head of Piraeus Bank, one of Greece's top four banks, speaking after a meeting of the country's financial stability council, said banks would be shut on Monday while a financial industry source told Reuters the Athens stock exchange would not open."It is a dark hour for Europe....nevertheless from where we're sitting we have a clear conscience," Greek Finance Minister Yanis Varoufakis said earlier in an interview with the BBC.Greece's left-wing Syriza government had for months been negotiating a deal to release funding in time for its IMF payment. Then suddenly, in the early hours of Saturday, Tspiras asked for extra time to enable Greeks to vote in a referendum on the terms of the deal.Creditors turned down this request, leaving little option for Greece but to default, piling further pressure on the country's banking system.The creditors want Greece to cut pensions and raise taxes in ways that Tsipras has long argued would deepen one of the worst economic crises of modern times in a country where a quarter of the workforce is already unemployed.Pro-European Greek opposition parties have united in condemning the decision to call the referendum on the bailout terms, but people on the streets of Athens backed the decision."I want him (Tsipras) to knock his fist on the table and to say 'enough!'," said resident Evgenoula.Many leading economists have voiced sympathy with the Greek government's argument that further cuts in spending risk choking off the growth which would give Greece some prospect of servicing debts worth nearly twice its annual national income.The IMF has pressed European governments to ease Athens' debt burden, something most say they will only do when Greece first shows it is trimming its budget.Long lines formed outside many ATMs on Sunday, including some of 40 to 50 people outside some in central Athens.The Bank of Greece said it was making "huge efforts" to ensure the machines remained stocked.
The German foreign ministry said tourists heading to Greece should take plenty of cash to avoid possible problems with local banks and some tourists said they were joining the ATM queues.
"I am trying to go over to the bigger banks," said Cassandra Preston, a Canadian tourist. "I am here for another month and I would like to make sure I have some cash on me."
* * *
In other words, Greek speculators (and of course, those depositors who were dumb enough to still have money in local banks) just got CYNK'd - you can buy stocks all you want, but if the market is about to fall out of the bottom, you simply are not allowed to sell.
Which, incidentally, is coming to every centrally-planned, banana "market" near you...
Posted: June 28, 2015, 9:17 pm
Update: Greek PM Alexis Tsipras has announced a referendum in a televised speech to the nation after another day of fractious negotiations with creditors closed without a deal.
The dramatic move comes after Athens rejected a proposal from the troika aimed at delivering some €16 billion in aid to Greece as part of an extension of the country's second bailout program.
- GREECE'S TSIPRAS SAYS CREDITORS POSED ULTIMATUM TO GOVT
- GREECE'S TSIPRAS SAYS CREDITORS PROPOSALS ARE AGAINST EU RULES
- TSIPRAS SAYS CREDITORS AIM TO HUMILIATE GREEK PEOPLE
- TSIPRAS SAYS WILL CALL REFERENDUM ON GREEK DEAL WITH CREDITORS
- TSIPRAS GREEK REFERENDUM WILL BE HELD ON JULY 5
- TSIPRAS SAYS HE NOTIFIED MERKEL, DRAGHI ON REFERENDUM PLAN
- TSIPRAS SAYS GREECE IS, AND WILL STAY PART OF EUROPE
- TSIPRAS SAYS GREECE NEEDS TO SEND DEMOCRATIC RESPONSE TO EU
Protothema now says the Greek parliament will meet on Saturday and a referendum will be called as early as next week. Whether this is simply a last minute attempt to put pressure on EU finance ministers ahead of Saturday's Eurogroup meeting remains to be seen, but one thing is for sure: Tsipras is playing a dangerous game with the ECB ahead of a difficult week that could very well see the imposition of capital controls.
More from Kathimerini:
The government is considering a referendum on the substance of the agreement, according to recent reports, during the enlarged meeting taking place from Friday night at the Maximos Mansion. The referendum is expected to be held next Sunday, while the prime minister has already informed the political leaders. The prime minister after returning from Brussels convened the extraordinary Governing Council at the Maximos Mansion, which after 23:00 turned into cabinet by attendance of ministers and party executives to discuss the latest developments and next steps in view of tomorrow's Eurogroup.
Protothema is reporting that Tsipras has confided in a fellow EU official that if the country's creditors insist on sticking to pension and VAT red lines and if Friday's bailout extension proposal (which the Greek government apparently views as a patronizing stopgap) is the troika's final offer, he is prepared to call for snap elections.
Via Protothema (Google translated):
The dramatic developments of the last few hours, following the government's move to reject the proposal of the creditors may conceal preparation for use of the popular verdict, a decision which is expected to be finalized in the next few hours if the lenders do not move from its rigid positions. According secure information protothema.gr, a few hours ago he Prime Minister Alexis Tsipras European leader confided in Eurozone member country adjacent friendly in Greece that the data are up to this moment is ready even to call early elections.This revelation of thought by the Greek prime minister to the foreign leader can be interpreted in two ways: Either Mr. Tsipras is ready "plan B" if tomorrow the negotiation fails or leaked deliberately in order to exert indirect pressure on lenders to mitigate their requirements. Upon completion of the meeting Mr. Tsipras with Angela Merkel and Francois Hollande, the Greek side revealed that the Prime Minister pointed out to the leaders of Germany and France that does not understand why the institutions insist on so hard measures. The prime minister insisted his decision to reject the proposal of the creditors for a five-month extension of the existing agreement with a funding of 15.5 billion euros. "The proposal does not cover us, because the financial part of barely meets the needs for payment of installments to the lenders, not help anywhere else the economy," emphasized a close associate of Alexis Tsipras and adds: "We will not accept the proposal, as we said, we were waiting to bring us another proposal tomorrow."
Greece has rejected creditors' bailout extension proposal.
- GREECE SAID TO REJECT EU15.5B BAILOUT EXTENSION PROPOSAL: ANA
* * *
On Friday, the German press reported (and Bloomberg later confirmed) that Greece’s creditors had presented PM Alexis Tsipras with a document (essentially an outlining the following available funds that could theoretically be part of either an extension of the country’s second bailout or a third program (with the latter having been previously ruled out by the IMF and German lawmakers). The details are as follows:
- EU creditor proposal foresees EU8.7b in EFSF funds: official
- Creditor proposal foresees EU3.3b in SMP profits: EU official
- Creditor proposal foresees EU3.5b in IMF funds: EU official
As noted, if Greece receives €3.3 billion from SMP profits it will mean that the ECB has forfeited the money it made on the Greek bonds it purchased in the past, effectively allowing Athens to repay the central bank with its own money. Here's DB with some color:
There may be a more rapid disbursement option. EUR1.9bn of the EUR7.2bn stalled tranche is SMP profits. Releasing these funds might only involve a decision by finance ministers without necessarily consulting parliaments. Disbursing EFSF funds, on the other hand, requires the national approval process (e.g., the joint decision by the German Finance Minister and the Budget Committee, if not a full plenary vote). In other words, SMP profits could be disbursed at short notice. These would be sufficient to pay the EUR1.6bn owed to the IMF on Tuesday.
As for the EFSF funds, it's long been suggested that bank recap funds could be chanelled to Athens under the 'right' circumstances and apparently imminent default is as good an excuse as any. Citi has more on the EFSF funds:
The interim proposal would likely allow Greece to use part of the €10.9bn from the original Hellenic Financial Stability Fund (HFSF) designated for Greek bank recapitalization, and later transferred back to the EFSF/ESM. Various media outlets have reported on the possibility that around €9bn could be used for current expenditure, in line with our estimates of the financing needs of the Greek sovereign for 3Q. Although a unanimous agreement will be required at the ESM board level to redirect the resources away from its banking recapitalization objective, we believe that a deal is likely to be found. The release of such funds would allow an extension of the current programme for several months, while giving more time for creditors and the Greek authorities to complete the negotiations for a third aid programme. It could also convince the ECB to increase the T-bill ceiling and the SSM to raise the ceiling on the exposure of Greek banks’ to their sovereign. All this however remains conditional on the approval of the ‘interim’ package by the Greek Parliament as well as by various national parliaments (in Germany, the Netherlands and Finland among others).
German Chancellor Angela Merkel implored Tsipras to accept what she calls a “generous” offer and has been adamant that a deal must be struck by the time the market opens on Monday which effectively means that EU finance ministers will need to strike an agreement at tomorrow’s Eurogroup meeting which starts at 2 pm local time. “I spoke today about a very generous offer because we simply have moved a step toward Greece, also with respect to the February agreement,” Merkel said.
In the wake of this morning’s news, the rhetoric from Tsipras has only hardened with the Greek PM pledging to uphold the democratic values upon which the euro was founded and to not accept “blackmail” (which of course is rather ironic, considering Merkel said precisely the same thing with regard to the Greek on Thursday):
Document of proposals presented to the Greek side by the institutions is “worse than a memorandum,” ANA reports, citing Greek govt officials in Brussels.Greek Prime Minister Alexis Tsipras says he will defend the European Union’s founding principles of “democracy, solidarity, equality, mutual respect” as he seeks an agreement with international creditors to unlock aid for the country.“These principles were not based on blackmails and ultimatum, and especially in these crucial times no one has the right to put in danger these principles,” Tsipras tells reporters in Brussels after an EU summit“The Greek government will continue decisively to give the fight in favor of these principles, to continue to give the fight on behalf of the European people and of course on behalf of the Greek people,” he says.
For reference, here's a breakdown of what Greece's fiscal situation (i.e. budget deficit) looks like going forward:
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Posted: June 27, 2015, 3:59 pm
Scared by the recent surprise CHF event that caused many Forex brokers to completely collapse, brokers are taking no chances as Greece sits on the brink. From one broker:
Dear Trader,Due to uncertainty in the markets brought about by the current situation with
Greece, margin requirements for all EUR pairs will be increased from 1% to 2%
as of 20:00 server time TODAY (June 26th) and will revert to 1% at 22:00 server
time on Sunday (June 28th).Please monitor your account prior to 20:00 today and adjust your positions (if
required) to avoid potential margin call / stop-out.As ever, if you have questions or need some assistance, our friendly live-chat
team are standing by.Regards,Customer Services
Due to the current
speculations and the ongoing Greece debt negotiations, there is potential that
an announcement over the weekend will have a significant impact on the market
open on Sunday, June 28th.With this in mind, we will require at least double the usual margin you
currently have in your account for all EUR currency pairs and for the GER30,
valid from tomorrow Friday, 26.06.2015 15:00 German time. I.e. You currently
have a leverage of 1:200 (0.5% margin requirement) for EUR currency pairs, this
will be changed to leverage 1:100 (1% margin requirement). You currently have a
leverage of 1:100 (1% margin requirement) for the GER30, this will be changed
to leverage 1:50 (2% margin requirement).For the avoidance of doubt, please ensure that you are comfortable with any
positions you hold and margins required.If you have any questions, please do not hesitate to contact your Client
Is this another part of the plan to consolidate the market into a single one world currency (ha.. ha), or just another example of broker stupidity? How many more dead bodies will rise to the surface in this next battle in the Currency Wars?
Don't let it be you! Turn off your systems this weekend, monitor the news, and wait for opportunity!
On the other hand, many of these 'last minute' situations turn out to be nothing more than a tool for politicians to gain favor with their constituents, as if they are 'doing something about the problem' thus justifying their huge salaries and lavish accomodations. Is this situation really about testing Tsipras (will he 'buy in' to the global agenda or stand up for his principles and turn Greece into a rogue state) or again a test of the "Northern Europeans" who are financially responsible and the "Southern Europeans" who are lazy and always in debt? Or again is it about cultural differences, that Greeks have another financial view of how life should be lived, compared to the Germans and the Swiss? What does history tell us about the financial overtones of Greek culture?
In 1929 the Harvard economist Charles Bullock published a magnificent essay on a monetary experiment conducted by Dionysius the Elder, ruler of the Greek city state of Syracuse from 407 BC until his death in 367. After running up vast debts to pay for his military campaigns, his lavish court and spectacles for the common people he found himself painfully short of ready cash. No one wanted to lend him any more money and taxes were drying up. So Dionysius came up with a great wheeze. On pain of death he forced his citizens to hand in all their cash. Once all the drachmas were collected he simply re-stamped each one drachma coin as two drachmas. Simple. Problem solved. Syracuse was rich again. Except, of course, it wasn’t. Bullock used it as an early example of why just minting more money out of thin air was seldom a reliable way of creating more wealth. There was, however, another lesson to be learned. When it comes to making a mess of the economy and fiddling the figures the Greeks have been at the top of their game for a very, very long time.
But should the world be surprised? Maybe they know Greeks history of non repayment of debts, and somehow want to teach Greece a lesson in German finance:
After the formation of the modern Greek state in 1829 the country went on to default on its debts in 1843, 1860 and 1893. According to calculations by the economists Carmen M. Reinhart and Kenneth S. Rogoff Greece has spent more time in default to its creditors than any other European country. It has been skipping its repayments for 50 per cent of the years since 1800, compared with a mere 39 per cent of the time for the next worst offender, Russia. Indeed, even if you moved it across to Latin America – generally regarded among bond traders as default central – it would still be among the worst offenders. Only Ecuador and Honduras have a worse record of meeting their debts.
For Forex Traders
If you have existing positions which are unhedged, especially in Euro region currencies, it would be advisable to scale back your positions or protect them with options.
If you have no positions and want to capitalize on the event risk, try a Euro straddle deep out of the money.
Call your broker to discuss their plan and how they are mitigating the potential risks (if at all).
Posted: June 26, 2015, 8:51 pm
Ex-US Intelligence Officials Confirm: Secret Pentagon Report Proves US Complicity In Creation Of ISIS
Two weeks ago, courtesy of the investigative work of Nafeez Ahmed whose deep dig through a recently declassified and formertly Pentagon documents released earlier by Judicial Watch FOIA, we learned that Western governments deliberately allied with al-Qaeda and other Islamist extremist groups to topple Syrian dictator Bashir al-Assad. In his words: "According to the newly declassified US document, the Pentagon foresaw the likely rise of the ‘Islamic State’ as a direct consequence of the strategy, but described this outcome as a strategic opportunity to “isolate the Syrian regime.”
Now, in a follow up piece to his stunning original investigative report titled "Secret Pentagon report reveals West saw ISIS as strategic asset Anti-ISIS coalition knowingly sponsored violent extremists to ‘isolate’ Assad, rollback ‘Shia expansion", Nafeez Ahmed reveals that according to leading American and British intelligence experts, the previously declassified Pentagon report confirms that the West accelerated support to extremist rebels in Syria, despite knowing full well the strategy would pave the way for the emergence of the ‘Islamic State’ (ISIS).
The experts who have spoken out include renowned government whistleblowers such as the Pentagon’s Daniel Ellsberg, the NSA’s Thomas Drake, and the FBI’s Coleen Rowley, among others.
Their remarks demonstrate the fraudulent nature of claims by two other former officials, the CIA’s Michael Morell and the NSA’s John Schindler, both of whom attempt to absolve the Obama administration of responsibility for the policy failures exposed by the DIA documents.
This is Nafeez Ahmed's follow up story, originally posted in Medium
Ex-intel officials: Pentagon report proves US complicity in ISIS
Renowned government whistleblowers weigh in on debate over controversial declassified documen
As I reported on May 22nd, the US Defense Intelligence Agency (DIA) document obtained by Judicial Watch under Freedom of Information confirms that the US intelligence community foresaw the rise of ISIS three years ago, as a direct consequence of the support to extremist rebels in Syria.
The August 2012 ‘Information Intelligence Report’ (IIR) reveals that the overwhelming core of the Syrian insurgency at that time was dominated by a range of Islamist militant groups, including al-Qaeda in Iraq (AQI). It warned that the “supporting powers” to the insurgency?—?identified in the document as the West, Gulf states, and Turkey —?wanted to see the emergence of a “Salafist Principality” in eastern Syria to “isolate” the Assad regime.
The document also provided an extraordinarily prescient prediction that such an Islamist quasi-statelet, backed by the region’s Sunni states, would amplify the risk of the declaration of an “Islamic State” across Iraq and Syria. The DIA report even anticipated the fall of Mosul and Ramadi.
Divide and rule
Last week, legendary whistleblower Daniel Ellsberg, the former career Pentagon officer and US military analyst who leaked Pentagon papers exposing White House lies about the Vietnam War, described my Insurge report on the DIA document as “a very important story.”
In an extensive podcast interview, he said that the DIA document provided compelling evidence that the West’s Syria strategy created ISIS. The DIA, he said, “in 2012, was asserting that Western powers were supporting extremist Islamic groups in Syria that were opposing Assad…
“They were not only as they claimed supporting moderate groups, who were losing members to the more extremist groups, but that they were directly supporting the extremist groups. And they were predicting that this support would result in an Islamic State organization, an ISIS or ISIL… They were encouraging it, regarding it as a positive development, because it was anti-Assad, Assad being supported by Russia, but also interestingly China… and Iran… So we have China, Russia and Iran backing Assad, and the US, starting out saying Assad must go… What he [Nafeez Ahmed] is talking about, the DIA report, is extremely significant. It fits into a general framework that I’m aware of, and sounds plausible to me.”
Ellsberg also noted that “it’s pretty well known” in the intelligence community that Saudi Arabia sponsors Islamist terrorists to this day:
“It’s kind of a deal that the Saudis will support various Islamic extremists, all around the world, and the deal is that they [extremists] will not try to overthrow the corrupt, alcohol-drinking clique in Saudi Arabia.”
Ellsberg, who was a former senior analyst at RAND Corp, also agreed with the relevance of a 2008 US Army-commissioned RAND report, quoted in my Insurge story, and also examined in-depth for Middle East Eye.
The US Army-funded RAND report advocated a range of policy scenarios for the Middle East, including a “divide and rule” strategy to play off Sunni and Shi’a factions against each other, which Ellsberg describes as “standard imperial policy” for the US.
The RAND report even confirmed (p. 113) that its “divide and rule” strategy was already being executed in Iraq at the time:
“Today in Iraq such a strategy is being used a tactical level, as the United States now forms temporary alliances with nationalist insurgent groups that it had been fighting for four years… providing carrots in the form of weapons and cash. In the past, these nationalists have cooperated with al-Qaeda against US forces.”
The confirmed activation of this divide-and-rule strategy perhaps explains why the self-defeating US approach in Syria is fanning the flames of both sides: simultaneously allying with states like Turkey who have continued to covertly sponsor ISIS, while working with Assad through the Russians to fight ISIS. Ellsberg added:
“As Assad is the main opponent of ISIS, we are covertly coordinating our airstrikes against ISIS with Assad. So are we against Assad, or not? It’s ambivalent… I think that Obama and everybody around him is clear that they do not any longer as they’ve been saying want Assad to leave power. I don’t believe that that is their intention anymore, as they believe anyone who succeeds Assad would be far worse.”
If true, Ellsberg’s analysis exposes the deep-rooted hypocrisy of the previous campaign against Assad, the current campaign against ISIS, and why both appear destined for failure.
Coleen Rowley, retired FBI Special Agent described my report on the DIA document as “excellent.”
Rowley, who was selected as TIME ‘Person of the Year’ in 2002 after revealing how pre-9/11 intelligence was ignored by superiors at the FBI, said of the document:
“It’s like the mad power-hungry doctor who created Frankenstein, only to have his monster turn against him. It’s hard to feel sorry when the insane doctor gets his due. But in our case, that script is constantly repeating. The quest for ‘full spectrum dominance’ and blindness of exceptionalism seems to mean we are doomed to keep repeating the ‘Charlie Wilson’s Frankenstein War’ script… The various neocon warmongers and military industrial complex, most of them inept Peter Principles, just don’t care.”
Also commenting on the declassified Pentagon report, former NSA senior executive Thomas Drake?—?the whistleblower who inspired Edward Snowden?—?condemned “the West’s role in ISIS and threat of ‘violent extremists’, justifying surveillance and libercide at home.”
Alastair Crooke, a former senior MI6 officer who spent three decades at the agency, said yesterday that the DIA document provides clear corroboration that the US was covertly pursuing a strategy to drive an extremist Salafi “wedge” between Iran and its Arab allies.
The strategy was, Crooke confirms, standard thinking in the Western intelligence establishment for about a decade.
“The idea of breaking up the large Arab states into ethnic or sectarian enclaves is an old Ben Gurion ‘canard,’ and splitting Iraq along sectarian lines has been Vice President Biden’s recipe since the Iraq war,” wrote Crooke, who had coordinated British assistance to the Afghan mujahideen in the 1980s. After his long MI6 stint, he became Middle East advisor to the European Union’s foreign policy chief (1997–2003).
“But the idea of driving a Sunni ‘wedge’ into the landline linking Iran to Syria and to Hezbollah in Lebanon became established Western group think in the wake of the 2006 war, in which Israel failed to de-fang Hezbollah,” continued Crooke. “The response to 2006, it seemed to Western powers, was to cut off Hezbollah from its sources of weapons supply from Iran…
“… In short, the DIA assessment indicates that the ‘wedge’ concept was being given new life by the desire to pressure Assad in the wake of the 2011 insurgency launched against the Syrian state. ‘Supporting powers’ effectively wanted to inject hydraulic fracturing fluid into eastern Syria (radical Salafists) in order to fracture the bridge between Iran and its Arab allies, even at the cost of this ‘fracking’ opening fissures right down inside Iraq to Ramadi. (Intelligence assessments purpose is to provide ‘a view’?—?not to describe or prescribe policy. But it is clear that the DIA reports’ ‘warnings’ were widely circulated and would have been meshed into the policy consideration.)
“But this ‘view’ has exactly come about. It is fact. One might conclude then that in the policy debate, the notion of isolating Hezbollah from Iran, and of weakening and pressurizing President Assad, simply trumped the common sense judgment that when you pump highly toxic and dangerous fracturing substances into geological formations, you can never entirely know or control the consequences… So, when the GCC demanded a ‘price’ for any Iran deal (i.e. massing ‘fracking’ forces close to Aleppo), the pass had been already partially been sold by the US by 2012, when it did not object to what the ‘supporting powers’ wanted.”
Crooke’s analysis of the DIA report shows that it is irrelevant whether or not “the West” should be included in the “supporting powers” described by the report as specifically wanting a “Salafist Principality” in eastern Syria. Either way, the report groups “the West, Gulf countries and Turkey” as supporting the Syrian insurgency together?—?highlighting that the Gulf states and Turkey operated in alliance with the US, Britain, and other Western powers.
The observations of intelligence experts Ellsberg, Rowley, and Drake add further weight to Crooke’s analysis. They come in addition to comments I had previously received on the DIA document from former MI5 counter-terrorism officer, Annie Machon, and former counter-terrorism intelligence officer, Charles Shoebridge.
The comments undermine the recent claims of disgraced US national security commentator, John Schindler, a retired NSA intelligence officer, to the effect that the August 2012 DIA report is “almost incomprehensible,” “so heavily redacted that its difficult to say much meaningful about it,” “Nothing special here, not one bit,” “routine,” “a single data point,” and so on.
Schindler cites the DIA’s use of ‘Curveball’?—?the Iraqi informant who fabricated claims about Saddam Hussein’s weapons of mass destruction (WMD)?—?as evidence of the agency’s “less than stellar reputation.” But this misrepresents the fact noted by the CIA’s Valerie Plame Wilson that “it was widely known [in the intelligence community] that CURVEBALL was not a credible source and that there were serious problems with his reporting.”
As I’ve documented elsewhere, the WMD threat mythology was not the outcome of an ‘intelligence failure’, as Schindler and his ilk like to claim, but a consequence of the corruption and politicization of intelligence under the influence of dubious vested interests.
Also contrary to Schindler’s misinformation, an IIR provides raw intelligence data from human sources (HUMINT), not simply rumour, gossip or opinion. Before wider distribution, the IIR is vetted to determine whether it is worthy of dissemination to the intelligence community. IIRs then provide a source basis for evaluation, interpretation, analysis and integration with other information.
Far from justifying the dismissal of the relevance of the declassified DIA documents, this shows that urgent questions must be asked:
What happened to this raw intelligence data, described by six US UK intelligence experts as providing damning confirmation of how Western strategy led to the rise of ISIS?
And why did it not lead to a change in policy, despite DIA analysts’ clear warning of the outgrowth of an ISIS-entity from Western allies’ desire to see a ‘Salafist Principality’ in the region?—?a warning which was, in hindsight, quite accurate?
Are intel critics traitors?
Schindler previously characterized NSA whistleblower Edward Snowden as a traitor and “pawn… of America’s adversaries.”
He now declares that those who cite the DIA report as proof the intelligence community “knew more about the rise of the Islamic State than they let on” are at best “fools; at worst, they’re deceivers who have lied to the American people.”
On the contrary, six decorated former senior US and British intelligence officials, many with direct experience of IIRs and their function, agree that the DIA report provides significant insight into the kind of intelligence available to the US intelligence community at the time.
Yet for Schindler, it seems, Ellsberg, Drake, Rowley, Crooke, Machon and Shoebridge are all, effectively, traitors simply for lending their expertise to public understanding of the newly declassified documents.
As Marcy Wheeler points out in Salon, the large corpus of secret DIA documents obtained by Judicial Watch demonstrates, at the least, that:
“The Intelligence Community (IC) knew that AQI had ties to the rebels in Syria; they knew our Gulf and Turkish allies were happy to strengthen Islamic extremists in a bid to oust Assad; and CIA officers in Benghazi (at a minimum) watched as our allies armed rebels using weapons from Libya. And the IC knew that a surging AQI might lead to the collapse of Iraq. That’s not the same thing as creating ISIS. But it does amount to doing little or nothing while our allies had a hand in creating ISIS. All of which ought to raise real questions about why we’re still allied with countries willfully empowering terrorist groups then, and how seriously they plan to fight those terrorist groups now. Because while the CIA may not have deliberately created ISIS, it sure seems to have watched impassively as our allies helped to do so.”
However, Wheeler overlooks that the reliance on foreign allies is a standard proxy war strategy?—?as Ellsberg explained in his interview?—?used by the covert operations arm of the US government to guarantee ‘plausible deniability.’
As I noted in my Middle East Eye analysis of the DIA document, there is extensive evidence against which to contextualize the DIA report’s assertions. This evidence shows that the CIA did not merely watch “impassively” as the Gulf states and Turkey supported violent extremists in Syria, but actively supervised, facilitated and accelerated this policy.
The August 2012 DIA document further corroborates this by repeatedly pointing out that the support to the Syrian insurgency from its allies was itself backed by “the West”?—?despite awareness of their intent to establish an extremist Salafi political entity.
While the DIA document was, indeed, just one data-point, analyzing it in context with the other DIA reports along with incontrovertible facts in the public record, establishes that the Pentagon was complicit in its allies’ support of Islamist terrorists, despite recognizing this could create an “Islamic State” in Iraq and Syria.
These revelations show that the real traitors are not the courageous whistleblowers who sacrifice everything to speak out on behalf of the public interest, but shameless shills like Schindler and Morell who willfully sanitize a dysfunctional and dangerous ‘national security’ system from legitimate public scrutiny.
Dr Nafeez Ahmed is an investigative journalist, bestselling author and international security scholar. A former Guardian writer, he writes the ‘System Shift’ column for VICE’s Motherboard, and is also a columnist for Middle East Eye. He is the winner of a 2015 Project Censored Award, known as the ‘Alternative Pulitzer Prize’, for Outstanding Investigative Journalism for his Guardian work, and was selected in the Evening Standard’s ‘Power 1,000’ most globally influential Londoners.
Nafeez has also written for The Independent, Sydney Morning Herald, The Age, The Scotsman, Foreign Policy, The Atlantic, Quartz, Prospect, New Statesman, Le Monde diplomatique, New Internationalist, Counterpunch, Truthout, among others. He is the author of A User’s Guide to the Crisis of Civilization: And How to Save It (2010), and the scifi thriller novel ZERO POINT, among other books. His work on the root causes and covert operations linked to international terrorism officially contributed to the 9/11 Commission and the 7/7 Coroner’s Inquest.
Posted: June 20, 2015, 5:37 pm