Posted at 2:54 PM (CST) by & filed under In The News.

Ukraine’s putsch regime will be a burden to EU – expert

Discussing the impact of the free-trade agreements signed by the EU outgoing leaders with Ukraine, Georgia and Moldova at the EU summit in Brussels last Friday. Who stands to gain and who stands to lose from the step hailed as an outstanding achievement by the parties to the agreements? Jurgen Elsässer, political analyst and Editor-in-Chief of the monthly Compact, based in Germany shared his opinion on the issue with the Voice of Russia.

It is an achievement in a way that they could convince the leaders of these countries to sign a treaty, which will be a kind of suicide for these countries, because the economies of these three countries are too weak to resist the onflow of the heavy economies of the Central and Western Europe. But on the other side, it is a failure of the European diplomacy, because it will deteriorate the situations in these countries and this can be a burden for the foreign policy and for the neighbourhood in the east periphery of the EU.

But what kind of obligations does the EU take on under these agreements?

The EU has to open its market for the export of these countries. But at the same time, the agreement will allow the EU observers to interfere in the internal affairs, in the legislation of these countries and, therefore, erect the kind of soft dictatorship in the economic affairs and legislation in these countries.

And this is irreversible, as far as I understand, isn’t it?

As the examples of other countries in the Balkans and elsewhere have shown, this cannot be reversed. So, the sovereignty of these countries is undermined by the EU soft power.

As you’ve mentioned the Balkans, I remember that when the issue of Serbia closing a similar kind of agreement was on the agenda, the EU made a condition for Belgrade to put its domestic situation into order. So, how come they have signed this kind of agreement with Ukraine, a country where civil war is under way?

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Fighting steps up after Ukraine calls end to truce
Forces use artillery against pro-Russia rebels
By Gregory L. White
July 1, 2014, 7:24 a.m. EDT

MOSCOW — Ukrainian forces used aircraft and artillery against pro-Russian separatists in the east of the country early Tuesday, as fighting intensified after President Petro Poroshenko declared an end to a 10-day unilateral cease-fire that had failed to stop the violence in the region.

“The active phase of the antiterrorist operation resumed this morning,” Parliament Speaker Oleksandr Turchynov told legislators in Kiev on Tuesday. “Our armed forces are striking the bases and staging areas of the terrorists.”

The decision to use the army represents a gamble by Poroshenko that Russia won’t send in its troops, massed for months on the other side of the border, and that Kiev’s ragtag forces can oust the increasingly well-armed militants.

Fighting was reported in several areas across the region, including at posts along the Russian border that Ukrainian forces had lost to separatists in recent weeks, as well as near the international airport in Donetsk, the region’s largest city. Separatist officials also confirmed the fighting had picked up across the region.

Four civilians were killed and five wounded in the city of Kramatorsk, near the rebel stronghold of Slovyansk, when a bus was hit by shell fire early Tuesday, officials from the regional government in Donetsk said, according to the Interfax news agency. It wasn’t clear which side fired the shots. A military spokesman said one serviceman had been killed and 17 wounded in the last 24 hours in the region, Interfax reported. Shelling overnight also brought down the television tower near Slovyansk, officials said.

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Bodies of Missing Israeli Teens Found in West Bank Field
Karl Vick/Tel Aviv

After 18 days of searching, Israeli soldiers find the remains of the three kidnapped youths, not far from where they were last seen

The bodies of three Israeli teenagers kidnapped while hitchhiking this month were found on Monday afternoon in a field a few miles south of where they were last seen, the Israeli military said.

The discovery brought to a tragic close the intense search and nationwide vigil for Eyal Yifrach, 19; Naftali Fraenkel and Gilad Shaer, both 16, all students at Jewish religious schools located on the occupied West Bank. It also shifted to the foreground the question of how Israel will respond to the deaths, which Prime Minister Benjamin Netanyahu blames on Hamas, the militant Islamist group. After news that the bodies had been found in an open field north of Hebron, Netanyahu summoned senior ministers to an emergency meeting of the so-called security cabinet.

Netanyahu made some brief remarks at the beginning of the meeting. “They were kidnapped and murdered in cold blood by animals,” he said, according to Haaretz. “In the name of the whole of Israel, I ask to tell the dear families — to the mothers, the fathers, the grandmothers and the grandfathers, the brothers and sisters — our hearts are bleeding, the whole nation is crying with them. We will bring the boys to be buried according to Jewish rites.”

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Jim Sinclair’s Commentary

Retirement account holders take notice.

Wyden Targets Tax Changes for $9 Billion Highway Infusion
By Laura Litvan and Richard Rubin  Jun 24, 2014 3:27 PM ET

The Senate Finance Committee this week will begin consideration of a $9 billion infusion to keep the U.S. Highway Trust Fund running through the end of the year.

The legislation by Senate Finance Committee Chairman Ron Wyden, an Oregon Democrat, will pay for the proposal by raising a heavy-vehicle use tax and making other tax and compliance changes related to retirement accounts and mortgage interest. He plans to bring the bill before his committee on June 26.

Current funding expires at the end of September. The Department of Transportation is projecting the part of the Highway Trust Fund that pays for road and bridge projects will run short of cash in July or August as fuel taxes haven’t kept pace with construction needs. Wyden said he’s trying to avoid the transportation equivalent of a government shutdown.

“In a fragile economy, I don’t want to take that risk,” he told reporters.

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Thumbing Its Nose at U.S., Russia Sends Military Experts to Iraq
The Atlantic Wire
By Adam Chandler June 29, 2014 11:51 AM

After the United States delayed a sale of fighter jets to Iraq, Russia sold planes to the Iraqi government. Now they’ve sent military experts to Baghdad.

Gen. Anwar Hama Ameen, who heads the Iraqi air force, explained that the secondhand jets would quickly be deployed in the government’s fight against the Sunni extremist group ISIS.

In the coming three or four days the aircraft will be in service to support our forces in the fight.”

Ameen also said that the presence of Russian military experts would be short-lived. Nevertheless, here’s how Rod Nordland characterized the development:

The move was at least an implicit rebuke to the United States, where concerns in Congress about the political viability of Prime Minister Nuri Kamal al-Maliki’s government have stalled sales of advanced jet and helicopter combat planes to Iraq."

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Jim Sinclair’s Commentary

The Yuan internationalizes.

China to Set Yuan Clearing Banks in Luxembourg, Paris
By Dow Jones Business News, June 29, 2014, 11:55:00 PM EDT

In its continued push to make the yuan a global currency, China’s central bank said Sunday it plans to designate clearing banks for its currency in Paris and Luxembourg, as the two financial centers battle with London to become the leading European offshore yuan-trading city.

The People’s Bank of China announced the move in two separate statements Sunday. It didn’t say when it would designate the clearing banks.

The French and Luxembourg central banks said Sunday they had signed agreements with PBOC allowing for greater cooperation in the oversight of their domestic yuan market.

The weekend moves are the latest salvos in the race to win a major share of business in cross-border transactions in the Chinese currency. Singapore and Sydney are also vying for a significant share of the global yuan market, which is expected to expand rapidly along with China’s fast-growing economy.

On June 18, the PBOC appointed China Construction Bank Co., one of the country’s top-four state-owned banks, to clear yuan-related transactions in London. It became the first yuan clearing bank in a European country.

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Posted at 1:00 PM (CST) by & filed under In The News.

Italian government explains how we can all become $250,000 richer
by Simon Black on June 30, 2014
Rome, Italy

As of today, I am $250,000 richer than I was last week. And thanks to the magic of economics, I didn’t even have to do anything.

You see, following the lead of the Italian and British governments, I’ve taken the liberty of ‘rebasing’ my net worth.

In their case they decided to include proceeds from hookers, coke addicts, and meth heads in their GDP calculations, thereby increasing the sizes of their economies overnight.

So the other day in Singapore as I was filling out an application for a new account at a private bank, there was a box where they wanted me to write in my net worth.

I decided that I would include the "street value" of some of my vital organs; after all, a kidney in a wealthy country like Singapore can fetch over $250,000.

(There was actually a case back in 2008 of a retail tycoon in Singapore who was arrested for trying to buy a kidney for roughly USD $250,000…)

The banker didn’t find my logic particularly convincing, something about ‘not being able to get that past compliance…’ Yet amazingly the market has given these bankrupt European countries a pass on their equally ridiculous idea.

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Jim Sinclair’s Commentary

The enemy of my enemy is my friend?

Israeli leader calls for independent Kurdistan
By Associated Press June 29 at 4:22 PM

TEL AVIV, Israel — Seizing on the mayhem in Iraq, Israel’s prime minister on Sunday called for the establishment of an independent Kurdistan as part of a broader alliance with moderate forces across the region, and asserted that Israel would have to maintain a long-term military presence in the West Bank to keep a jihadi juggernaut from powering its way to the outskirts of Tel Aviv.

Prime Minister Benjamin Netanyahu laid out his positions in a policy speech that marked one of the most detailed responses by a world leader to the lightning territorial gains made in recent weeks by Sunni extremists fighting in Iraq, and it underscored how profoundly events can ripple across an increasingly interlocked Middle East.

Netanyahu suggested that the territorial gains made this month by the Al Qaida-inspired jihadi group called the Islamic State in Iraq and the Levant could endanger neighboring Jordan, with which Israel has a peace agreement it considers vital to its security. The group has recently captured wide swaths of Iraq including the important cities of Mosul and Tikrit and several border crossings with Syria, and on Sunday formally declared a caliphate, or an Islam-ruled state, on territory it controls in both countries.

The offensive by the Islamic State’s militants “can be aimed toward Jordan in the shortest time,” Netanyahu warned. Without stating outright that the Western-leaning Jordanian monarchy could fall, Netanyahu suggested as much by saying that the new developments meant a need for Israel to hold on to the West Bank border with the Hashemite kingdom, along the Jordan River.

“We must be able to stop the terrorism and fundamentalism that can reach us from the east at the Jordan line, and not in the suburbs of Tel Aviv,” he said, implying that from Jordan radicals could sweep through the West Bank, whose borders reach within 20 miles (30 kilometers) of Tel Aviv. The metropolis of some 2 million is the business and cultural center of the Jewish state, and the engine of its increasing prosperity.

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Gazprom says gas transit via Ukraine may be stopped completely
June 27, 16:55

Gazprom has started pumping gas into European gas storage facilities and it plans to pump 5 billion cubic meters

MOSCOW, June 27./ITAR-TASS/.Russia’s gas giant Gazprom does not rule out gas transit via Ukraine may be stopped completely.

“What happened once is a tendency, nothing happens incidentally. In 2009, gas supplies were stopped completely — so, we know precedents,” Gazprom CEO Alexei Miller told a briefing on Friday.

Ukainian gas transportation system

Gazprom not interested in participation in Ukraine’s gas transportation system (GTS), “train has departed”, CEO said.

“The train has already departed. It seems it departed yesterday,” Miller said.

“It belongs to no one. The GTS has no owner,” he said. “The GTS of Ukraine does not belong to Naftogaz but to the Ukrainian government. Before discussing things with someone regarding modernization and cooperation, it should appear on the balance sheet of this or that economic entity.”

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Another JP Morgan Banker Dead

(Joseph P. Farrell) Surprise surprise! There’s been yet another banker death, and once again, this victim is a JP Morgan banker. On this time, rather than jumping off buildings or in front of trains, the victim, 56 year old Ohio resident Joseph Giampapa, was struck by a hit and run driver while he was bicycling. But that’s not all. Here’s the report of the Columbus Dispatch:

Notice anything peculiar about that singularly uninformative news article?

Well, you probably noticed, that since this blog is titled “Yet Another JP Morgan Banker Death”, that there was no mention of Mr. Giampapa’s connection to that bank, which is mighty strange, since there are indicators that he was a bankruptcy attorney and vice president for JP Morgan:

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Isis announces Islamic caliphate in area straddling Iraq and Syria
Jihadist group challenges al-Qaida as it changes name to Islamic State and pledges to free Palestine in video

Mark Tran and Matthew Weaver
theguardian.com, Monday 30 June 2014 06.33 EDT

Islamist militants have declared an Islamic "caliphate" in an area straddling Iraq and Syria, trumpeting the declaration in several videos.

One slick video, mostly in English, features a bearded fighter with an AK-47 on his back, explaining the new caliphate.

"This is not the first border we will break, we will break other borders," a jihadist from the Islamic State in Iraq and the Levant (Isis) warned in the video called End of Sykes-Picot, a reference to the agreement between France and Britain that divided up the Ottoman empire territories after the first world war.

Later the fighter pledges that jihadists will free Palestine. "We are not here to replace an Arab cahoot with a western cahoot. Rather our jihad is more lofty and higher. We are fighting to make the word of Allah the highest," the spokesman said.

He is filmed showing abandoned Iraqi army badges and vehicles left by fleeing soldiers. "There is no army in the world that can withstand the soldiers of Islam," he said.

The video features about a dozen men in a cell said to be captured troops and border police. A building, said to be a police station, is shown being blown up, as well as US-made Humvees captured from the border police. "Look how much America spends to fight Islam, and it ends up just being in our pockets," the spokesman taunted.

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‘Euphoric’ capital markets are out of step with reality, warns BIS
By Sam Fleming and Claire Jones
Last updated: June 29, 2014 10:05 pm

The Bank for International Settlements has warned that “euphoric” financial markets have become detached from the reality of a lingering post-crisis malaise, as it called for governments to ditch policies that risk stoking unsustainable asset booms.

While the global economy is struggling to escape the shadow of the crisis of 2007-09, capital markets are “extraordinarily buoyant”, the Basel-based bank said, in part because of the ultra-low monetary policy being pursued around the world.

Leading central banks should not fall into the trap of raising rates “too slowly and too late”, the BIS said, calling for policy makers to halt the steady rise in debt burdens around the world and embark on reforms to boost productivity.

In its annual report, the BIS also warned of the risks brewing in emerging markets, setting out early warning indicators of possible banking crises in a number of jurisdictions, including most notably China.

“Particularly for countries in the late stages of financial booms, the trade-off is now between the risk of bringing forward the downward leg of the cycle and that of suffering a bigger bust later on,” it said.

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Argentina at Brink of Default as $539 Million Payment Due
By Camila Russo Jun 30, 2014 4:10 AM MT

Argentina is poised to miss a bond payment today, putting the country on the brink of its second default in 13 years, after a U.S. court blocked the cash from being distributed until the government settles with creditors from the previous debt debacle.

The nation has a 30-day grace period after missing the $539 million debt payment to seek an accord with a group of defaulted bondholders led by billionaire Paul Singer’s NML Capital Ltd. and prevent a default on its $28.7 billion of performing global dollar bonds. Both Argentina and NML have said that they’re open to talks.

A decade-long battle between Argentina and holdout creditors from the country’s $95 billion default in 2001 is coming to a head. The U.S. Supreme Court on June 16 left intact a ruling requiring the country pay about $1.5 billion to holders of defaulted debt at the same time it makes payments on restructured bonds. Argentina last week transferred funds to its bond trustee to pay the restructured notes, only to have U.S. District Court Judge Thomas Griesa order the payment sent back while the parties negotiate.

The judge’s decision “closes Argentina’s options to finally force it to negotiate,” said Jorge Mariscal, the chief investment officer for emerging markets at UBS Wealth Management, which oversees $1 trillion. “Argentina should now stop using these delay tactics and get serious.”

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Jim Sinclair’s Commentary

The value of the dollar depends on confidence in the dollar and its leadership.

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Iraq Crisis-$150 to $200 Oil Might Seem Cheap-Chris Martenson
By Greg Hunter On June 30, 2014

Chris Martenson is an economic researcher and futurist who produced a popular video seminar called “Crash Course.”   Back in early 2008, he explained the “interconnected forces in the economy, energy and the environment.”  Now, he has produced a new “Accelerated Crash Course,” and this theme is playing out in places like Iraq.  Martenson says, “If you want to understand what is going on in Iraq, you have to understand what is going on with energy in this part of the game. . . .The U.S. media goes out of its way to pretend this is just some random thing that happened.  A bunch of crazy people came out of Syria and are causing trouble. . . . The post reconstruction effort in Iraq, if it wasn’t designed to fail, it was the biggest bungling job of all of history.  We dismantled key institutions, we dismantled their army and left the country a hollowed out shell.  Guess what, now that’s breaking.”  Martenson goes on to point out, “Here’s why it affects us.  Oil and oil infrastructure is fragile stuff.  A refinery is thousands of moving parts and miles of tubes and pipes.  One mortar lobbed in there and that whole refinery gets shut down. . . . The idea we can have full blown Sunni, Shia, Kurd conflict where they’re going to duke it out for power, and have all that oil infrastructure remain untouched, I think is a fantasy.”

So, what happens to oil prices if Iraqi oil is taken off the market because of war?  Martenson says, “If that goes away, oil prices are set at the margin.  That 2.5 million barrels going off line brings us to $150 oil.  If something worse happens, Saudi Arabia gets involved or the Strait of Hormuz gets closed down, then we’re talking about numbers like $200 a barrel, and that might even seem cheap.  We don’t know how high oil could go if this turns into regional conflict.  That is the risk, and it’s on the table now.”

Martenson goes on to say, “Once you let this genie out of the bottle and you unleash inter-fighting and bad blood, there is no predicting what could happen.  I think it’s been a huge mistake to sow chaos and discord.  How many countries did we do this to?  We broke Libya in exactly the same way. . . . Now, that place has zero oil exports because the country is completely wrecked by sectarian violence.  The same thing has happened Egypt.  We got rid of the standing government, it’s a mess.  Syria is a mess.  Iraq, now it’s a mess.  I look at this and I see mess, mess, mess.  Maybe that is the plan, and that plan is always how we, the West, can better control the oil interests of these countries.  This is critical . . . Europe is desperately needing oil and natural gas at this point in time.  The U.S. is still a net importer of natural gas and still imports 7 million barrels of crude oil a day of the 15 that we burn.  Look at all the countries wading into the Middle East, and all of them are net oil importers . . . . So, this is a real scramble for resources.  All wars have been resource wars, and when I look at the geopolitical landscape, the Middle East and in Eastern Europe, I say this story has already started to unravel; and if you don’t understand resources, then this story won’t make a lick of sense.”

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Russia, China may reach $200 billion in trade earlier than 2020

Russia-China trade may reach $200 billion earlier than 2020, Russian Deputy Prime Minister Dmitry Rogozin said on Monday.

"We have a task set by the leaders of Russia and China to raise the volume of our trade and economic relations to $200 billion by 2020," Rogozin said at a meeting of Russian and Chinese vice-premiers with governors and business circles from both countries at the first Russia-China EXPO that had opened in Harbin.

"But I believe that if we proceed at such high rates and develop large, primarily infrastructural projects to help unite energy of Russia and China, then we believe that this figure can be achieved before that time," Rogozin said.

Cooperation between Russia’s Global Navigation Satellite System (GLONASS) and China’s Beidou was among the projects both countries had discussed at the exhibition, Rogozin said.

"GLONASS and Beidou fit together well. Owing to the specifics of our systems and the location of satellites, we have no rivals in the Northern Hemisphere, especially in northern latitudes," the Russian vice-premier said.

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Jim Sinclair’s Commentary

The Yuan is on the march to significant international status.

China signs yuan accords with France, Luxembourg

China’s central bank said it has signed agreements for yuan clearing arrangements with France and Luxembourg, with the aim of promoting greater use of its currency overseas.

The People’s Bank of China (PBoC) said it would designate Chinese banks as the yuan clearing institutions in the two European countries later, according to statements issued on Sunday.

China earlier this month named the Bank of China as the clearing bank for yuan dealings in Frankfurt, Germany, and the China Construction Bank in London. A top Australian official said last week that China will designate a clearing bank in Sydney.

The moves come as China seeks to make the yuan — also known as the renminbi — used more internationally in keeping with the country’s status as the world’s second biggest economy behind the United States.

China keeps a tight grip on the value of its currency and limits capital flows into and out of the country, but officials have pledged to make the exchange rate more flexible.

Yuan clearing in France and Luxembourg would allow companies and financial institutions to use the currency for cross-border transactions, as well as promote liberalisation of trade and investment, the PBoC said.

European countries are competing to become the dominant hub for yuan business in the continent.

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Jim Sinclair’s Commentary

Who are the players? What are the alliances?

Israeli PM Netanyahu endorses Kurdish independence citing chaos in Iraq
Published time: June 29, 2014 17:39
Edited time: June 30, 2014 12:56

Citing the “collapse” of Iraq amid the ISIS insurgency and sectarian violence, Israeli Prime Minister Benjamin Netanyahu has endorsed the de-facto independence of Iraqi Kurds. Netanyahu has also called to support the “Kurdish aspiration for independence.”

The hawkish Israeli leader said on Sunday that Kurds are “fighting people that has proved its political commitment, political moderation, and deserves political independence,” Reuters reported.

Speaking to Tel Aviv University’s INSS think-tank, Netanyahu described the situation in Iraq and the Middle East in general as a “collapse,” due to strife between Sunni and Shiite Muslims.

Amid the recent insurgency of the Islamic State in Iraq and the Levant (ISIS/ISIL) militants, Kurds have seized the opportunity to bring a long-sought independent state of Kurdistan closer to reality. Kurdish Peshmerga armed forces have been guarding their provincial borders from ISIS, but also seized the contested Iraqi city of Kirkuk, proclaiming it part of their territory.

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US, Philippines start naval drills near China-claimed waters
June 26, 2014 11:21 AM

The United States and the Philippines kicked off joint naval exercises Thursday in the South China Sea near waters claimed by Beijing, amid tense territorial rows between China and its neighbours.

Filipino military officials said the week-long manoeuvres, involving three US warships and more than a thousand servicemen, would address Manila’s "capability gaps" as well as testing its newest military vessels.

The Philippines is engaged in a bitter territorial dispute with China over parts of the South China Sea, which Beijing claims almost in its entirety.

China has increasingly asserted its claims to the sea, which are believed to harbour vast oil and gas deposits, and parts of which are also claimed by Vietnam, Malaysia, Brunei and Taiwan. Beijing placed an oil rig in disputed waters last month, sparking deadly anti-China riots in Vietnam.

Philippine officers said the annual war games, involving more than a thousand US personnel and about 400 Filipino counterparts, would test the Philippines’ two newest warships — a pair of decommissioned US coastguard cutters that were reconfigured into frigates.

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Iraqis caught in a state of fear between Isis and Shia militias
Residents of Baquba, an hour from Baghdad, are on the frontline of a sectarian showdown that is fast becoming another civil war
Martin Chulov in Baghdad
The Guardian, Sunday 29 June 2014 15.12 EDT

An hour from Baghdad where the battle lines are drawn, residents of Baquba say they’re caught between two terrifying options. Just to the north are Isis, the Sunni militant group bent on destroying Iraq and the Shias who govern it. To the south are Shia militias who have responded with vehemence and are transforming the frontlines into a sectarian showdown that pays no heed to the state.

"We have Da’ash on one side," said Abu Mustafa, a Baquba resident, using the colloquial word for Isis. "And we have Asa’ib ahl al-Haq on the other. I don’t know who to be more scared of."

Asa’ib ahl al-Haq is the most powerful Shia militia in Iraq, and perhaps the most potent in the land. A direct proxy of the Iranian general Qassem Suleimani, who has extraordinary influence across Iran’s sphere of influence, Asa’ib is untouchable in Baghdad and feared around the country.

Asa’ib, like Isis, has made Baquba and the area that surrounds it one of the most important flashpoints in Iraq. Whoever controls this lethal city will secure an approach to the capital an hour south, and a foothold in the east within striking distance of the Iranian border.

"The police are the most powerful people in this city," said Abu Mustafa. "But only because they are all militias anyway."

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King Abdullah calls up Saudi armed forces on high preparedness. Egyptian troops ready to fly to kingdom
DEBKAfile Exclusive Report June 26, 2014, 6:49 PM (IDT)

Thursday, June 26, the day before US Secretary of State John Kerry was due in Riyadh, King Abdullah summoned a National Security Council meeting “upon the current security events in the region, especially in Iraq,” and ordered “all necessary measures to protect the kingdom against terrorist threats.” This meant a general call-up of military units for a high level of preparedness.

DEBKAfile’s military sources disclose that Egypt is assembling an expeditionary commando force to fly to Saudi Arabia and bolster its border defenses.
This flurry of Saudi-Egyptian military steps comes in the wake of intelligence gathered by Saudi reconnaissance planes showing Iraqi Al Qaeda-linked Sunni fighters (ISIS) heading for the Saudi border and aiming to seize control of the Iraqi-Saudi crossing at Ar Ar (pop: 200,000).

ISIS and its Sunni allies are still on the march after capturing Iraq’s border crossings with Syria and Jordan earlier this week.

On Wednesday, Kerry warned Mideast nations against taking new military action in Iraq that might heighten sectarian divisions.
By then, he had been overtaken by a rush of events, as DEBKAfile reported this morning.

When the first of the 300 military advisers US President Barack Obama promised the Iraqi government arrived in Baghdad Wednesday, June 25, Iranian and Saudi Arabian arms shipments were already in full flow to opposing sides in embattled Iraq, DEBKAfile’s military sources report.

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Jim Sinclair’s Commentary

Everything economic dances on the head of a pin named interest rates.

BIS Damps $2 Trillion Emerging Market Company Debt Spree
By John Glover  Jun 29, 2014 6:30 AM ET

More than $2 trillion of foreign borrowing by emerging-marketcompanies since 2008 is leaving them vulnerable to a sudden drop in funding at the first sign of trouble, according to the Bank for International Settlements.

Bond investors willing to lend generously when conditions are good can pull out in a crisis or when central banks tighten monetary policy, analysts led by Claudio Borio, head of the monetary and economic department, wrote in the BIS annual report. Emerging-market companies that lose access to external debt markets may then be forced to withdraw bank deposits, depriving domestic lenders of funding as well, they said.

Low interest rates and central bank stimulus in developed nations, combined with a retreat in global bank lending, have encouraged emerging-market borrowers to raise debt abroad, according to the Basel, Switzerland-based BIS, which hosts the Basel Committee on Banking Supervision that sets global capital standards. Demand for higher-yielding securities also helped suppress borrowing costs for riskier issuers.

“Like an elephant in a paddling pool, the huge size disparity between global investor portfolios and recipient markets can amplify distortions,” the analysts wrote. “It is far from reassuring that these flows have swelled on the back of an aggressive search for yield: strongly pro-cyclical, they surge and reverse as conditions and sentiment change.”

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Libya seeks to continue contacts with Russian oil companies
June 30, 18:04 UTC+4

MOSCOW, June 30. /ITAR-TASS/. Libya does not intend to revise contracts with Russian companies that got concessions to develop oil fields, Russian Ambassador to Libya Ivan Molotkov has said. “These are Gazprom Neft and Tatneft that worked on the Libyan oil market,” Molotkov told ITAR-TASS on Monday.

“At present, oil production has practically stopped. It reaches at least 200 million barrels per day. Major oil fields are controlled by armed groups that prevent oil production,” he said.

“The situation in Libya is similar to Iraq’s. I believe that the crisis in Libya will last for years,” Ivan Molotkov told ITAR-TASS.

“The parliamentary elections were held on June 25. We hope that they will play a stabilising role and give the country breathing room. The elections were recognised invalid. No results are available yet,” he said.

Libyans “should adopt the constitution, elect a new parliament and form a new government”, Molotkov said.

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Serbia’s South Stream section will be built on schedule — Russian diplomat
June 30, 16:59 UTC+4

MOSCOW, June 30. /ITAR-TASS/. The Serbian section of the South Stream gas pipeline is being built on schedule, Russia’s Ambassador in Belgrade Alexander Chepurin has said. “Serbia has not created any obstacles,” Chepurin told ITAR-TASS on Monday.

Russia’s Energy Minister Alexander Novak met with Serbian Minister of Energy and Mining Aleksandar Vucic in Moscow on June 20. “Serbia confirmed that it was ready to carry out the project according to schedule,” Chepurin said.

“The construction installation works will start in compliance with the results of the tender that will be announced shortly,” he said.

“Foreign investments are one of Serbia’s priorities,” Chepurin said.

At the same time, he said, “Serbia’s accession to the EU won’t solve deep problems. For 15 years Serbia has implemented two major projects: Fiat’s Italian assembly plant in Kragujevac and Russia’s Gazprom Neft’s oil refinery in Novi Sad.”

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Jim Sinclair’s Commentary

Also to trade in Yuan.

Shanghai may launch gold trading bourse in Q4
2014-06-30 08:47Shanghai DailyWeb Editor: Qin Dexing

Shanghai may launch the international trading board for gold in the city’s pilot free trade zone in the fourth quarter of the year, while gold consumption edged up 0.8 percent in China during the first quarter, local media reports said last week.

The new bullion trading board in the FTZ may attract foreign market players as China hopes to raise its influence on global gold prices. The FTZ may draw 1,000 tons of gold.

Physical gold consumption rose to 323 tons in the first quarter from a year earlier, local media reports said, citing Shanghai Gold Exchange data, the world’s biggest market for physical bullion.

Xu Luode, secretary-general of the bourse, said earlier the international board will adopt Shanghai Gold, a spot gold trading mechanism similar to the Loco London Gold.

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Italy promises to facilitate South Stream project implementation
June 30, 17:49 UTC+4

ROME, June 30. /ITAR-TASS/. Italy has always regarded the South Stream project plans to pipe Russian gas across the floor of the Black Sea to Bulgaria and then ashore for onward transit to Greece, Italy and Austria as a strategic project for Europe and will facilitate its implementation during its presidency of the European Union, Italy’s state secretary for European affairs, Sandro Gozi, said in an exclusive interview with ITAR-TASS on Monday. “The South Stream project has always been and remains most important for Italy, and we have a strong interest in implementing it, first of all, as it is one of those projects aimed to diversify transit routes,” Gozi said.

“We assume that in order to strengthen a single European energy market, it is absolutely necessary to diversify infrastructure connecting it with various suppliers,” he said. “And we believe that the same approach should be applied to everyone”.

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Iranian diplomat considers Moscow-Tehran policy towards Syria right
June 30, 18:42 UTC+4

MOSCOW, June 30./ITAR-TASS/. Iran’s top diplomat has said the policy of Moscow and Tehran towards the Syrian crisis was right. Russian and Iranian high-ranking diplomats have discussed the situation in the Middle East due to the events in Syria and Iraq. “Relations between Iran and Russia are on the good level. Despite progress in bilateral relations, the situation in the region leaves much to be desired,” Iranian Deputy Foreign Minister Hossein Amir Abdollahian said on Monday.
“Certain countries of the region support Takfirists (radical Islamists),” he said.
“These countries should take a constructive position or they will reap the rewards of their policy,” the Iranian diplomat added.
“The situation in the region develops quickly and requires intensive discussions. I believe that we’ll discuss the processes in the region in a sincere atmosphere,” Russian Deputy Foreign Minister Mikhail Bogdanov said .

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Russia Reveals "Plan B": Gazprom Says Gas Transit Via Ukraine May Be Stopped Completely

A few days ago, when we wrote our "explainer" on the need for Russia to have an alternative pathway for its gas, one which bypasses Ukraine entirely and as the current "South Stream" framework is set up, crosses the Black Sea and enters Bulgaria before passing Serbia and Hungary on the way to the Central European energy hub located in Baumgarten, Austria, we said that "one short month after Putin concluded the Holy Grail deal with Beijing, he not only managed to formalize his conquest of Europe’s energy needs with yet another pipeline, one which completely bypasses Ukraine (for numerous reasons but mostly one: call it a Plan B), but scored a massive political victory by creating a fissure in the heart of the Eurozone, after Austria openly defied its European peers and sided with Putin."

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Today we find just what said Plan B is.

As Itar-Tass reports, citing Gazprom CEO Alexei Miller, "Russia’s gas giant Gazprom does not rule out gas transit via Ukraine may be stopped completely." 
"What happened once is a tendency, nothing happens incidentally. In 2009, gas supplies were stopped completely — so, we know precedents,” Miller told a briefing on Friday.
Clearly, this is bad news for Ukraine: Gazprom not interested in participation in Ukraine’s gas transportation system (GTS), “train has departed”, CEO said.

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The USD Is Tumbling; Near 2 Month Lows
Tyler Durden on 06/30/2014 11:06 -0400

Equities have flip-flopped this morning, giving up the new normal opening-squeeze higher gains as USDJPY fades. Bonds are rallying. But it is the USD Index that is the most notable this morning as it tumbles back towards 2-month lows in a hurry… This is the biggest 2-day plunge in 3 months.

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Pushing the USD to 2-month lows…

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Central Bankers, Worried About Bubbles, Rebuke Markets
By JACK EWINGJUNE 29, 2014

FRANKFURT — An organization representing the world’s main central banks warned on Sunday that dangerous new asset bubbles were forming even before the global economy has finished recovering from the last round of financial excess.

Investors, desperate to earn returns when official interest rates are at or near record lows, have been driving up the prices of stocks and other assets with little regard for risk, the Bank for International Settlements in Basel, Switzerland, said in its annual report published on Sunday.

Recovery from the financial crisis that began in 2007 could take several more years, Jaime Caruana, the general manager of the B.I.S., said at the organization’s annual meeting in Basel on Sunday. The recovery could be especially slow in Europe, he said, because debt levels remain high.

“During the boom, resources were misallocated on a huge scale,” Mr. Caruana said, according to a text of his speech, “and it will take time to move them to new and more productive uses.”

The B.I.S. provides financial services to national central banks and also acts as a setting where central bankers can discuss monetary policy and other issues like financial stability or bank regulation. The board of directors includes Janet L. Yellen, chairwoman of the Federal Reserve; Mario Draghi, president of the European Central Bank; and the heads of central banks from Japan, China, India and many other countries.

The organization, which reflects a widespread view among central bankers that they are bearing more than their share of the burden of fixing the global economy, often uses its annual reports to send a message to political leaders, commercial bankers and investors. But the B.I.S.’s language in the 2014 edition was unusually direct, as was its warning that the world could be hurtling toward a new crisis.

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Posted at 10:04 PM (CST) by & filed under In The News.

Iraq receives fighter jets from Russia, Belarus

Baghdad government has received the first batch of Russian-made Sukhoi fighter planes to use them against the militants from the so-called Islamic State of Iraq and the Levant (ISIL).

Iraqi army sources said on Saturday that the fighter jets are expected to be stationed at an airbase in the country’s south.

The development follows earlier reports that the country has purchased several used Sukhoi planes from Belarus and Russia.

Iraq’s Prime Minister Nouri al-Maliki had earlier said Sukhoi fighter jets will turn the tide against the ISIL and its associated militant groups within days.

The Iraqi premier has also criticized Washington for delaying the delivery of US F-16 jets purchased by Baghdad. Al-Maliki said the al-Qaeda-linked militants’ advance could have been avoided if US jets had been delivered on time.

This is while the Iraqi army continues pounding the ISIL positions after retaking the northern city of Tikrit and killing dozens of militants.

Iraqi officials have also confirmed that the town of Khalis is under full control of army forces. The town is located about 15 kilometers north of Baquba and is one of the six districts of Diyala Province.

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If Iraq collapses, entire Middle East could be destabilized – Lavrov

If Iraq collapses it could destabilize the entire Middle East and the adjacent regions, with unrest lasting for years, Russian Foreign Minister Sergei Lavrov said on Saturday. "If Iraq collapses – and considering that Libya has almost collapsed already, and someone apparently wants Syria to share a similar fate – the whole region would simply explode and unrest would become its dominant feature. And it would affect not just the Middle East and Northern Africa, but the adjacent regions as well," Lavrov said.

Lavrov also noted that during his last phone conversation with the US Secretary of State John Kerry they both talked "mostly about Iraq and the Islamic State of Iraq and Levant (ISIS) rather than about Ukraine."

Not just the US and UK, but all of the region’s countries should participate in dealing with the Iraqi crisis, Lavrov believes.

The governments of Iraq and Syria seek to contain the advance of ISIS militants who seek to establish control over a large oil-rich territory.

"We urge others to make conclusions out of what happened in Iraq, Libya and Yemen – the countries where not all of the problems were dealt with. The country’s unity is still being severely tested. It’s not London and Washington that should make the decisions, like it was in Iraq in 2003, but all of the region’s countries, all of the neighbors of Iraq," Lavrov said.

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China, Singapore vie for Asia gold pricing alternative to London
June 29, 2014
By A. Ananthalakshmi

(Reuters) – China and Singapore are vying to provide feasible gold price benchmarks in Asia, as calls grow in the top consuming region for more localized pricing of the precious metal at a time when the global benchmark is under regulatory scrutiny.

Singapore said at an industry conference on Wednesday it would launch a physical gold contract on an exchange to create a transparent form of pricing.

China, at the same conference, said it wanted to have a bigger influence on the global gold market and would like to have its own price ‘fix’.

The moves underscore rising pressure from Asia, home to the top two gold consumers – China and India – to have pricing references that better reflect the region’s market dynamics, and the growing disenchantment with prices set in the West.

The London fix, the global benchmark for spot gold prices that is determined by a group of four banks over a teleconference, is being investigated by regulators in Europe and the United States under suspicion it may have been manipulated.

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Posted at 4:12 PM (CST) by & filed under In The News.

China eyes gold market clout with new exchange
June 28, 2014

China must have a bigger influence on the global gold market being the top consumer of the precious metal, the head of state-backed Shanghai Gold Exchange (SGE) said, as the country targets establishing its own pricing benchmark. "We should have gold fixing, pricing done in China itself," SGE chairman Xu Luodetold an industry conference in Singapore on Wednesday.

"We need to use SGE’s international board to implement opening up of the gold market. We need to build China’s influence in the global gold market," Xu said. China, along with exchanges in Singapore and Hong Kong, are launching gold contracts this year in a bid to tap a market looking for a viable alternative to the metal’s global benchmark that is under regulatory scrutiny.

Xu said the Chinese government and regulatory agencies are supporting SGE’s plan for an international exchange in the free trade zone, adding that it will eventually be merged with the main SGE exchange. SGE has received good interest from foreign banks on their participation in the new international exchange, he said at the conference organised by the London Bullion Market Association.

Swiss precious metals refiner Metalor Technologies SA told Reuters on Tuesday that it will join the international bullion exchange in Shanghai. SGE is targeting launching the new exchange in late September and wants the pricing benchmark to be denominated in yuan, a source familiar with the matter told Reuters.

The price benchmark for gold is the so-called London ‘fix’, determined by a group of four banks over a teleconference. The process was under scrutiny recently after regulators in Europe and the United States began investigating benchmarks in several markets following the Libor manipulation case in 2012. A "China fix" will not be immediate, the source said, adding the exchange will be the first step towards a fix. The new international exchange will have a gold vault with storage capacity of 1,000 tonnes.

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Paul Craig Roberts – The Entire U.S. Gold Hoard Is Now Gone

Today former US Treasury official, Dr. Paul Craig Roberts, told King World News that the entire United States gold hoard, including gold supposedly held at the Fed for other countries, is now gone.  This is very bad news for Germany and other countries which have trusted the Fed to safely store their gold.  Below is what Dr. Roberts had to say in this remarkable interview.

Eric King:  “Dr. Roberts, I know you’ve seen the report on Bloomberg about Germany (all the sudden) supposedly being happy with storing their gold at the New York Fed.  It seemed to be a propaganda piece.  What was your take when you saw that?”

Dr. Roberts:  “Clearly what that means is that the United States doesn’t have the gold and cannot deliver it — and has forced Germany to come to terms with that, and to stop asking for it since it can’t be delivered….

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‘Provocation’: Moscow slams Ukraine’s shelling of Russian border checkpoint
Published time: June 28, 2014 15:02
Edited time: June 28, 2014 16:53

Mortar shells from Ukraine have again hit Russian territory, damaging a building at a border checkpoint and creating holes in the ground in two villages. The Russian Foreign Ministry has protested the “provocation,” demanding that Kiev investigate it.

At least three shells were launched over the Russian-Ukrainian border into Russia on Saturday, with one blasting a border-crossing checkpoint in the Rostov Region.

“Today, on June 28, Gukovo checkpoint came under fire. One of the shells hit a building and exploded,” a spokesman for the Federal Security Service’s (FSB) Border Guard administration in Rostov Region, Vasily Malaev, told RT.

The building was severely damaged, but, luckily, nobody was injured in the blast, Malaev said. Some 30 Ukrainian refugees were completing their documents at the checkpoint at the time of the attack and were evacuated together with border guards after the shelling started.

The Russian Foreign Ministry responded with a statement calling the incident a dangerous “provocation” and demanding that Kiev investigate it.

“The Russian side strongly protests such provocations of the Ukrainian side, which fragrantly violate the underlying principles of international law,” the ministry said in a statement, demanding that “a thorough investigation into what has happened” be carried out and the perpetrators be punished.

Reminding that both Russian citizens and Ukrainian refugees crossing the border could have come under harm, Moscow said the incident is “yet another link in the chain” of Ukrainian ceasefire breaches which undermine Kiev’s dialogue with eastern Ukraine and a peaceful resolution of the conflict.

Later on Saturday, Gukovo checkpoint resumed its work despite the damage.

Two more shells exploded in the villages of Vasetsky Khutor and Shakhta-24, with clearly visible shell holes reported from the scene. Footage from Gukovo village also showed locals inspecting a large hole in an iron gate in a residential area, supposedly created by a shell or its splinter.

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Posted at 4:51 PM (CST) by & filed under In The News.

China expands plans for World Bank rival
By Jamil Anderlini in Beijing
June 24, 2014 7:54 pm

China is expanding plans to establish a global financial institution to rival the World Bank and the Asian Development Bank, which Beijing fears are too influenced by the US and its allies.

In meetings with other countries, Beijing has proposed doubling the size of registered capital for the proposed bank to $100bn, according to two people familiar with the matter.

So far, 22 countries across the region, including several wealthy states in the Middle East, which China refers to as “West Asia”, have shown interest in the multilateral lender, which would be known as the Asian Infrastructure Investment Bank. It would initially focus on building a new version of the “silk road”, the ancient trade route that once connected Europe to China.

Most of the funding for the lender would come from China and be spent on infrastructure projects across the region, including a direct rail link from Beijing to Baghdad.

China’s push for a regional institution that it would control reflects Beijing’s frustration at western dominance of the multilateral bodies. Chinese leaders have demanded a greater say in institutions such as the World Bank, International Monetary Fund and Asian Development Bank for years but changes to reflect China’s increasing economic importance and power have been painfully slow.

“China feels it can’t get anything done in the World Bank or the IMF so it wants to set up its own World Bank that it can control itself,” said one person directly involved in discussions to establish the AIIB. “There is a lot of interest from across Asia but China is going to go ahead with this even if nobody else joins it.”

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Gazprom says gas transit via Ukraine may be stopped completely
June 27, 16:55 UTC+4 
Gazprom has started pumping gas into European gas storage facilities and it plans to pump 5 billion cubic meters

MOSCOW, June 27./ITAR-TASS/.Russia’s gas giant Gazprom does not rule out gas transit via Ukraine may be stopped completely.

“What happened once is a tendency, nothing happens incidentally. In 2009, gas supplies were stopped completely — so, we know precedents,” Gazprom CEO Alexei Miller told a briefing on Friday.

Ukainian gas transportation system

Gazprom not interested in participation in Ukraine’s gas transportation system (GTS), “train has departed”, CEO said.

“The train has already departed. It seems it departed yesterday,” Miller said.

“It belongs to no one. The GTS has no owner,” he said. “The GTS of Ukraine does not belong to Naftogaz but to the Ukrainian government. Before discussing things with someone regarding modernization and cooperation, it should appear on the balance sheet of this or that economic entity.”

“Property and legal issues should be resolved first,” Miller said.

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Austria’s OMV and Russia’s Gazprom have signed a deal for the Austrian section of the controversial South Stream gas pipeline that bypasses Ukraine. Austria’s president, Heinz Fischer, has rejected US and EU criticism.

Austrian energy company OMV and Russia’s Gazprom signed a contract on Tuesday for the construction of the South Stream pipeline’s Austrian section.

It came just hours before Russian President Vladimir Putin arrived in Vienna for a one-day visit.

While OMV general director Gerhard Roiss said the South Stream pipeline would "ensure energy security for Europe, particularly for Austria," the US embassy in Vienna launched a thinly veiled attack on the move.

In a statement, it said that trans-Atlantic unity had been essential in "discouraging further Russian aggression" and that the Austrians "should consider carefully whether today’s events contribute to that effort."

In a meeting with Austrian president Heinz Fischer, Putin slammed the criticism by saying that "our American friends… want to supply Europe with gas themselves. They do everything to derail this contract…"

More…

Posted at 3:23 PM (CST) by & filed under In The News.

Jim Sinclair’s Commentary

The latest from John Williams’ www.ShadowStats.com.

- Collapsing First-Quarter 2014 Economic Activity (GDP, GNP and GDI) Fell Below Third-Quarter 2013 Levels
- GDP Activity Fell, Even Before Adjusting for Slowing Inventory Growth
- Quarterly GDP Activity Contracted, Even Before Adjusting for Inflation
- Looming Second-Quarter Economic Contraction Likely to Formalize “Renewed” Recession and to Hit Markets Hard
- Durable Goods Orders Turned Down in Otherwise Stagnant Activity
- Despite Monthly Gain, Existing-Homes Sales Continued in Annual Contraction
- Neither Monthly nor Annual New-Home Sales Gain Was Statistically-Significant

"No. 637: GDP Revision, Durable Goods Orders, New- and Existing-Home Sales"
Web-page: http://www.shadowstats.com

 

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Gazprom Ready To Drop Dollar, Settle China Contracts In Yuan Or Rubles
Tyler Durden on 06/26/2014 08:08 -0400

A little over a month ago, when Russia announced the much anticipated "Holy Grail" energy deal with China, some were disappointed that despite this symbolic agreement meant to break the petrodollar’s stranglehold on the rest of the world, neither Russia nor China announced payment terms to be in anything but dollars. In doing so they admitted that while both nations are eager to move away from a US Dollar reserve currency, neither is yet able to provide an alternative. This changed rather dramatically overnight when in a little noticed statement, Gazprom’s CFO Andrey Kruglov uttered the magic words (via Bloomberg):

GAZPROM READY TO SETTLE CHINA CONTRACTS IN YUAN OR RUBLES: CFO

In other words just as the US may or may not be preparing to export crude – a step which would weaken the dollar’s reserve status as traditional US oil trading partners will need to find other import customers who pay in non-USD currencies – the world’s two other superpowers are preparing to respond. And once the bilateral trade in Rubles or Renminbi is established, the rest of the energy world will piggyback.

But wait, there’s more. Because only now does Gazprom appear to be unveiling all those "tangents" that were expected to hit the tape in May. Among Kruglov’s other revelations were that Gazprom is in talks on a Hong Kong listing and is weighing the issuance of Yuan bonds. Gazprom is also considering selling bonds in Singapore dollars, the CFO said at briefing in Moscow. Wait, you mean that by alienating and embargoing Russia from western (USD, EUR-denominated) funding markets, it has pushed the country to turn to its pivoting partner, China and thus further cementing the framework for the next Eurasian strategic alliance?

Unpossible

But wait, there’s still more, because it is  not just Gazprom. As the PBOC announced overnight,  PBOC Assistant Governor Jin Qi and Russian central bank Deputy Chairman Dmitry Skobelkin led a meeting held yesterday and today in Shanghai.  The meeting discussed cooperating on project and trade financing using local currencies. The meeting discussed cooperation in bank card, insurance and financial supervision sectors.

In other words, central bankers of China and Russia discussed how to replace the dollar with Rubles and Yuan. From the PBOC:

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China Finds $15 Billion of Loans Backed by Fake Gold Trades
By Bloomberg News Jun 26, 2014 8:13 AM MT

China’s chief auditor discovered 94.4 billion yuan ($15.2 billion) of loans backed by falsified gold transactions, adding to signs of possible fraud in commodities financing deals.

Twenty-five bullion processors in China, the biggest producer and consumer of gold, made a combined profit of more than 900 million yuan from the loans, according to a report on the National Audit Office’s website.

Public security authorities are also probing alleged fraud at Qingdao Port, where copper and aluminum stockpiles may have been pledged multiple times as collateral for loans. Steps by the Chinese government to rein in credit by raising borrowing costs in recent years created a surge in commodities financing deals that Goldman Sachs Group Inc. estimates to be worth as much as $160 billion.

“This is the first official confirmation of what many people have suspected for a long time — that gold is widely used in Chinese commodity financing deals,” said Liu Xu, a senior analyst at Capital Futures Co. in Beijing. “Any scaling back by banks of gold-backed financing deals might lead to a short-term reduction in Chinese imports and also spur some sales by companies looking to repay lenders.”

As much as 1,000 metric tons of gold may have been used in lending and leasing deals in China, where commodities including metals and agricultural products are used to get credit amid lending restrictions, according to World Gold Council estimates.

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Obama won’t impose anti-Russia sanctions without Europe’s support – media

US President Barack Obama won’t impose new sanctions against Russia if European countries refuse to do so, the source of Bloomberg in the White House said.

Barack Obama understands that if he imposes sanctions without the support of his European partners, the sanctions may hurt the interests of American companies.

"President Obama understands that American companies shouldn’t find themselves in an unfavorable situation," Josh Earnest, White House Assistant to the President, said during a brief talk in Washington.

The US as well as European countries intend to impose sanctions despite the fact that yesterday Russian parliamentarians denied a decree on the use of Russian military forces in Ukraine. The corresponding suggestion was submitted by Russian President Vladimir Putin.

Moscow should take more resolute measures to settle the Ukrainian crisis, President of the European Commission José Manuel Barroso said.

The sanctions that the US and Europe are ready to impose, can affect the Russian energy sector and Russia’s access to the international market.

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Gold’s Flow East Seen for 20 Years as Incomes Increase Demand
By Glenys Sim and Jasmine Ng  Jun 26, 2014 7:51 AM ET 

The global flow of gold from west to east that helped to make China the world’s largest user will probably last for up to two decades as rising incomes spur demand, according to the China Gold Association.

China’s consumption, which increased to a record 1,176.4 metric tons in 2013, is expected to be “more or less the same” this year, Zhang Bingnan, vice-chairman and general secretary at the association, said in an interview inSingapore. China accounted for about 28 percent of global usage last year, according to the London-based World Gold Council.

Purchases in China accelerated last year after a 28 percent price slump, and the country displaced India as the biggest bullion buyer while European consumption shrank. Demand in China will rise about 25 percent in the next four years as an increasing population gets wealthier, the council said in April.

“In the next 10 to 20 years the trend probably won’t change because there is more gold in the west and less of it in the east,” said Zhang, who also addressed an industry conference in the city-state yesterday. “As incomes in the east rise, demand for gold will follow a similar trend and continue in the future whether in China or India or other developing countries, unless there’s some extraordinary event.”

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Draghi Says Unlimited Cash Through 2016 Is Rate Signal
By Jeff Black  Jun 23, 2014 4:36 AM ET

Mario Draghi indicated that the European Central Bank’s interest rates will probably remain low for at least another 2 1/2 years.

“We have prolonged banks’ access to unlimited liquidity up to the end of 2016. That is a signal,” the ECB president said in an interview published in Dutch newspaper De Telegraaf on June 21, responding to a question on how long rates will stay low. “Our program in support of bank lending to businesses will continue for four years. That shows that interest rates will remain low over a longer period. But thereafter they will increase when the recovery will firm up.”

A year after the euro area exited its longest recession, the Frankfurt-based ECB is still battling too-low inflation and attempting to reboot demand. Draghi introduced an unprecedented range of measures this month including a negative deposit rate and said quantitative easing remains an option if deflation appears.

The recovery “is still weak and unevenly distributed across the euro area,” Draghi said. “Accidents could happen in the global economy that can quickly change the situation.”

Growth in euro-area manufacturing and services slowed for a second month in June, according to purchasing managers indexes published by Markit Economics today. Manufacturing contracted for a second month in France, while expanding for a 12th month in Germany.

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Syrian warplanes reportedly strike in Iraq, killing 57 civilians
By Mohammed Tawfeeq, Holly Yan and Chelsea J. Carter, CNN
June 25, 2014 — Updated 1920 GMT (0320 HKT)

Baghdad, Iraq (CNN) — Reports that Syrian warplanes carried out a cross-border attack on Iraqi towns this week is further evidence of the blurring between the two countries’ borders as they face an offensive by Islamic extremists.

At least 57 Iraqi civilians were killed and more than 120 others were wounded by what local officials say were Syrian warplanes that struck several border areas of Anbar province Tuesday.

These border cities are among those under the control of the Islamic State in Iraq and Syria, or ISIS, which seeks to create an Islamic caliphate that encompasses portions of Iraq in Syria.

Reports of the Syrian incursion into Iraq is a reminder that the civil war in Syria and the unrest in Iraq are not isolated, but linked in ways that threaten the security of both.

Sabah Karkhout, head of Iraq’s Anbar provincial council, told CNN that Tuesday’s air attacks struck markets and fuel stations in areas such as Rutba, al-Walid and Al-Qaim.

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King Abdullah calls up Saudi armed forces on high preparedness. Egyptian troops ready to fly to kingdom
DEBKAfile Exclusive Report June 26, 2014, 6:49 PM (IDT)

Thursday, June 26, the day before US Secretary of State John Kerry was due in Riyadh, King Abdullah summoned a National Security Council meeting “upon the current security events in the region, especially in Iraq,” and ordered “all necessary measures to protect the kingdom against terrorist threats.” This meant a general call-up of military units for a high level of preparedness.

debkafile’s military sources disclose that Egypt is assembling an expeditionary commando force to fly to Saudi Arabia and bolster its border defenses.
This flurry of Saudi-Egyptian military steps comes in the wake of intelligence gathered by Saudi reconnaissance planes showing Iraqi Al Qaeda-linked Sunni fighters (ISIS) heading for the Saudi border and aiming to seize control of the Iraqi-Saudi crossing at Ar Ar (pop: 200,000).

ISIS and its Sunni allies are still on the march after capturing Iraq’s border crossings with Syria and Jordan earlier this week.

On Wednesday, Kerry warned Mideast nations against taking new military action in Iraq that might heighten sectarian divisions.
By then, he had been overtaken by a rush of events, as debkafile reported this morning.

When the first of the 300 military advisers US President Barack Obama promised the Iraqi government arrived in Baghdad Wednesday, June 25, Iranian and Saudi Arabian arms shipments were already in full flow to opposing sides in embattled Iraq, debkafile’s military sources report.

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Kerry warns Mideast nations against military action in Iraq
DEBKAfile June 26, 2014, 6:00 PM (IDT)

BAGHDAD (CBS News/CBSDC/AP) — U.S. Secretary of State John Kerry warned Mideast nations on Wednesday against taking new military action in Iraq that might heighten sectarian divisions, after Syria launched airstrikes across the border and Iran flew surveillance drones over the neighboring country.

The U.S. and a senior Iraqi military official confirmed that Syrian warplanes bombed militants’ positions Tuesday in and near the border crossing in the town of Qaim. The Iraqi official said Iraq’s other neighbors – Jordan, Kuwait, Saudi Arabia and Turkey – were all bolstering flights just inside their airspace to monitor the situation. He spoke on condition of anonymity because he was not authorized to speak to the media.

American officials said the strikes appeared to be the work of Syrian President Bashar Assad’s government. They said the target was the Islamic State of Iraq and Syria (ISIS), a Sunni extremist group that seeks to carve out a purist Islamic enclave across both sides of the Syria-Iraq border. The group is also known as Islamic State of Iraq and the Levan (ISIL).

“We’ve made it clear to everyone in the region that we don’t need anything to take place that might exacerbate sectarian divisions that are already at a heightened level of tension,” Kerry said, speaking at a meeting of diplomats from NATO nations. “It’s already important that nothing take place that contributes to the extremism or could act as a flash point with respects to the sectarian divide.”

Kerry said Baghdad needs to take steps to ensure that Iraq’s military can defend the country without relying on outside forces. The U.S. is sending 300 military advisers.

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Barclays pulls bond offering after lawsuit emerges

Barclays pulled a US$1.5bn bond offering on Wednesday after it emerged that the New York attorney general was preparing to sue the UK bank for securities fraud.

It had already amassed more than US$4.5bn in orders for the 10-year subordinated deal, market sources said, when reports of the lawsuit hit trading screens.

"Investors just baulked," one portfolio manager who had been looking at the deal told IFR.

"If something dire does come out the suit, then that could mean that the deal has to be nullified anyway – so it was just better to pull it."

Shares in Barclays traded sharply lower on Thursday morning in London, down some 4 percent in early deals.

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Posted at 3:07 PM (CST) by & filed under General Editorial.

Dear CIGAs,

We are happy to announce the next upcoming Q&A session will be held in Seattle, WA. 

Date:

Saturday, July 12, 2014 from 1-5pm

Where:

Hilton Seattle
1301 6th Avenue
Seattle, WA 98101

**The hotel is offering discounted parking for the event at $13.00 each

Cost:

A fee of $100.00US can be made in advance with any major credit card via the PayPal button on the webpage linked below (no PayPal account required). Please be sure to print out your transaction receipt as this will be your registration, confirmation and entry ticket to the meeting. No further confirmation will be sent.

Click here to purchase tickets…

If you prefer, you may alternatively pay $100.00US by cash, bank check or money order made payable to James Sinclair at the door. If you choose this option, you must pre-register via email with Anna Stoerzinger at [email protected]. Please be sure to note your name and number of seat(s) in your email. A confirmation will be sent to you within 5 business days to confirm this pre-registration.

We look forward to seeing you there!
Jim

Posted at 12:22 PM (CST) by & filed under In The News.

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Putin Scores Another Historic Victory: Austria Signs South Stream Pipeline Deal In Defiance Of Europe
Submitted by Tyler Durden on 06/25/2014 07:23 -0400

As the war of words between Europe and Russia has escalated, one of the outcomes that has emerged is that just like in false flag war over Syria, the Ukraine war was about the simplest possible thing, and yet so very complicate: a gas pipeline. Of course, it was never a secret that the prize in controlling Ukraine was possession of the vast pipeline infrastructure that left Russia and entered Europe, but since it was all Gazprom’s gas in the first place, it didn’t really matter if Kiev had possession of the gas as it transits to Europe, or if, as the case is now, Ukraine is merely a transit hub with all Russian gas delivered to European countries and none of it staying in the civil war torn country. After all as of this moment Ukraine can’t afford any Russian gas, and if it siphons off any of the product destined for Germany and beyond it would simply antagonize its new NATO best friends, who also happen to be Gazprom clients.

No, the pipeline that has emerged with a starring role in the Ukraine conflict has nothing to do with Ukraine, but is a pipeline that crosses several hundred kilometers south of Ukraine – the South Stream project, which leaves the Russian black sea coast south of Crimea, crosses the black sea, and traverses Bulgaria, Serbia, Hungary and ends up in the gas hub in Baumgarten, Austria from where it proceeds to all points in central Europe, mostly Germany.

The project, which was conceived in 2007, was meant explicitly to bypass Ukraine, and to be an alternative to the now mothballed Nabucco gas pipeline which, with the backing of the US and Europe, would have taken Caspian gas (mainly Azerbaijan and Turkmenistan) and traverse Turkey before emerging in Bulgaria, and then followed the European path of the South Stream into the Austrian hub and beyond.

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Not surprisingly, it was the key transit hub of the South Stream, Bulgaria, that started making problems for Putin even as he succeeded in trumping Nabucco (when in June 2013 the CEO of Austrian energy giant OMV, Gerhard Roiss, announced the project as "over" after the Turkish Shah Deniz consortium chose the Trans-Adriatic Pipieline over Nabucco as a gas export route which would supply Italy instead of Austria).

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Koos Jansen: Shanghai exchange chief confirms WGC badly underestimates gold demand
Submitted by cpowell on 05:20AM ET Wednesday, June 25, 2014. Section: Daily Dispatches
8:15a ET Wednesday, June 25, 2014

Dear Friend of GATA and Gold:

Gold researcher and GATA consultant Koos Jansen today reports confirmation from the chairman of the Shanghai Gold Exchange that offtake from the exchange exceeded 2,000 tonnes in 2013, nearly doubling the estimate of Chinese gold demand made by the World Gold Council. Jansen also reports the assertion by the chief of the precious metals department of Industrial and Commercial Bank of China, the world’s largest bank, that pricing for gold will shift from the derivatives market to the physical market.

The information comes to Jansen from an associate reporting on the proceedings of the London Bullion Market Association meeting in Singapore.

Together these assertions seem to constitute the best confirmation yet that China’s view of the gold market is GATA’s view and not the purported view of the bullion bankers in London, New York, and Washington.

Jansen’s report is posted at his Internet site, In Gold We Trust, here:

http://www.ingoldwetrust.ch/lbma-forum-singapore-sge-chairman-confirms-c…

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

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Singapore to launch gold contract
Submitted by cpowell on 07:02AM ET Wednesday, June 25, 2014. Section: Daily Dispatches
By Jeremy Grant

Financial Times, London
Wednesday, June 25, 2014

SINGAPORE — Singapore has unveiled plans for an exchange-traded gold contract, boosting its ambitions to become Southeast Asia’s gold trading hub and adding to calls for gold pricing to be influenced more by Asian trade.

At the same time the Shanghai Gold Exchange said it wanted to attract foreign bullion dealers to use China’s recently established free trade zone to store and trade gold. …

The Singapore gold contract will be a 25 "kilobar" gold future offered on SGX, the Singapore exchange, and will be settled daily for physical delivery on a six-day rolling basis, the bourse told the London Bullion Market Association’s annual forum, being held in Singapore for the first time.

Four banks — JPMorgan, Standard Chartered, Standard Bank, and Bank of Nova Scotia — have signed up as market makers. …

… For the full story:

http://www.ft.com/intl/cms/s/0/fda99222-fc44-11e3-98b8-00144feab7de.html

 

Disruption of natural gas supply would cause consequences for EU – Oettinger
Guenther Oettinger

Any disruption of the Russian natural gas supply via Ukraine would cause significant consequences for the EU, European commissioner Guenther Oettinger says.

"The issue of energy security once again became a political priority due to concerns regarding tensions between Russia and Ukraine. Russia is our main energy supplier and Ukraine is a key energy resources transit country for the EU. In this context any disruptions of supply would cause significant consequences for the EU and the whole of Europe," Mr. Oettinger said during a roundtable discussion on the EU energy policy.

Ukrainian Energy Minister to discuss reverse gas supply via Slovakia with EU’s Oettinger in Brussels

Guenther Oettinger, Europan Commmissioner for Energy, and Yury Prodan, Verkhovna Rada-appointd Ukrainian Minister of Energy and the Coal Industry, meet here on Wednesday to discuss matters concerning a reverse supply of natural gas to Ukraine via Slovakia and prospects for a resumption of three-sided talks on natural gas among Moscow, Kiev, and Brussels. The meeting will be a closed-door one and no specific decisions are expected to be made, an official in the European Commission (EC) press service said.

"The meeting will be of technical nature and will be held in a closed-door mode," the EC official pointed out.

According to to the TASS news agency, at the meeting, Ukraine expects to discuss the possibility of giving greater scope to reverse deliveries of gas from Slovakia. The European Commission intends to study the possibility of a resumption in mid-July of the three-sided talks among Russia, Ukraine, and the European Union on prices of natural gas and Kiev’s debt.

The EC reported earlier that the maximum amount of gas supplied from Slovakia in a reverse mode might be about eight billion cubic metres of gas a year. A price of reverse-supplied gas has not yet been confirmed.

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New York Attorney General Sues Barclays Over HFT
by Mark Melin

Barclays will be accused of providing HFT firms undisclosed benefits over other market participants

Bloomberg’s Keri Geiger is reporting that New York Attorney General Eric Schneiderman will announce at 4pm ET that Barclays PLC (ADR) (NYSE:BCS) (LON:BARC) will be sued over fraud allegations related to its Dark Pool’s preferential treatment of high-frequency traders.

Barclays being sued by New York Attorney General

“Barclays PLC is being sued by New York’s attorney general over allegations that the bank’s dark pool gave high-frequency traders advantages over other customers, despite saying otherwise,” Bloomberg reported, quoting a person familiar with the matter.

This will be the first criminal action related to high frequency trading since Michael Lewis released the book Flash Boys, which recently rocketed to the top ten on the best seller list and Sony Pictures announced that it was producing a major motion picture from the book.

Barclays runs the largest dark pool

Barclays PLC (ADR) (NYSE:BCS) (LON:BARC) runs one of the market’s largest dark pools where stocks are traded anonymously and exchange trade rules are not published. The primary issue could be undisclosed deals that provide special access to HFT traders not available to the general market, ValueWalk sources close to the high frequency trading world indicated. These deals enable the HFT firms to receive information and quicker trading access to the market. Sources indicate they were marketed to some HFT firms as providing a rare access to the market only available on a limited basis.

More…