To consider the [Supreme Court] as the ultimate arbiters of all constitutional questions is a very dangerous doctrine, placing us under the despotism of an oligarchy. Our judges are as honest as other men…and not more so, with the same passions for party, power, and privilege. Their power is extremely dangerous, as they are in office for life and not responsible, as the other functionaries are, to elective control.
– Thomas Jefferson.
Angela Merkel heads to Kiev as some Russian aid trucks begin to leave Ukraine
First lorries from Moscow’s controversial aid convoy to rebel-held parts of Ukraine begin returning to Russia, reporters and OSCE monitors say
5:34PM BST 23 Aug 2014
A total of 184 vehicles from the Russian aid convoy which crossed into Ukraine on Friday without permission returned to Russia, a Ukrainian military spokesman said.
"According to our information as of 1pm (10.00 GMT), the departure from the territory of Ukraine by 184 Russian vehicles has been confirmed," the spokesman, Andriy Lysenko, told Reuters.
He said they had left through the same crossing point by which they had entered via the Ukrainian border settlement of Izvaryne. No checks by Ukrainian border guards or customs officers had taken place.
Asked how many Russian vehicles still remained in Ukraine, he replied: "I don’t know."
It comes after several countries rebuked Russia in that closed-door emergency meeting at the UN for "what many called an illegal and unilateral action by the Russian federation," British ambassador Mark Lyall Grant, the council president, told reporters.
Isil besieges town of Amerli amid fears of repeat of Sinjar massacre
Hardline Islamists are surrounding the town of Amerli – sparking concern for the safety of the 18,000 Shia Turkmen residents, and fears of a repeat of the Mount Sinjar massacre
By Harriet Alexander, and Ruth Sherlock in Beirut
11:33AM BST 23 Aug 2014
The United Nations has called for a concerted effort to end the siege of Amerli, a town 110 miles north of Baghdad, which is home to 18,000 Shia Turkmen.
The town has been encircled by jihadists from the Islamic State of Iraq and the Levant (Isil) for the past two months. The majority of the residents of Amerli are part of the Turkmen ethnic group, who are descendants of Ottoman Turks and make up roughly four per cent of Iraq’s population. As Shia, they are directly targeted by Isil, who consider them apostates.
Nickolay Mladenov, special representative of the United Nations secretary-general for Iraq, called on the international community to halt “the unspeakable suffering of Amerli’s inhabitants” – who are left with little medicine and dwindling supplies of food, water and electricity.
“The situation of the people in Amerli is desperate and demands immediate action to prevent the possible massacre of its citizens,” he said.
“The town is besieged by Isil and reports confirm that people are surviving in desperate conditions. I urge the Iraqi government to do all it can to relieve the siege and to ensure that the residents receive lifesaving humanitarian assistance or are evacuated in a dignified manner.
Isis gains in Syria put pressure on west to deliver more robust response
US looks at options for action in Iraq as Islamic State ramps up attacks while senior Tories call for UK to join in air strikes
Spencer Ackerman in New York, Andrew Sparrow and Martin Chulov
The Guardian, Friday 22 August 2014 15.48 EDT
Western powers are coming under mounting pressure to do more to confront Islamic State (Isis) in its stronghold in Syria, as the heavily armed militants edged closer to taking an important air base that would cement their domination over a swath of the country’s north.
As US aircraft continued to pound the Islamist militants in northern Iraq, the Obama administration was studying a range of options for pressuring Isis in Syria, primarily through training "moderate" Syrian rebels as a proxy force, with air strikes as a possible backup.
Leaders in Washington and London are adamant they will not collaborate with the regime of Bashar al-Assad in tackling their common enemy, and on Friday the Pentagon insisted that it had yet to decide on whether to expand the US air war into Syria.
But Isis has demonstrated its rampant authority in northern Syria in recent days, with the brazen murder of the US hostage James Foley and a series of attacks on towns and villages in the north, including the vital airbase at Taqba, where it has surrounded a detachment of Syrian army soldiers. It now holds a swath of territory in Syria and Iraq that is larger than the UK and home to at least four million people.
"The Islamic State is now the most capable military power in the Middle East outside Israel," a senior regional diplomat said on Friday.
Jim Sinclair’s Commentary
Rates must in time rise. What a mess that will be.
Has Yellen opened door to rise in interest rates?
US Fed chief appears to raise prospect of a rise in interest rates, despite warning on difficulty of working out whether jobs market has been permanently transformed
By Katherine Rushton
4:06PM BST 22 Aug 2014
Janet Yellen, chairman of the US Federal Reserve, appeared to open the door to an early rise in interest rates on Friday, as she warned that it was almost impossible to determine whether the labour market would ever bounce back to its state before the economic crisis.
In a speech at the annual economic conference at Jackson Hole, Wyoming, she said that the Fed has used monetary policy in order to get as many people back work as possible, but it is becoming hard to tell how long it might take to reach the central bank’s targets.
“A key challenge is to assess just how far the economy now stands from the attainment of its maximum employment goal,” she said.
“Judgments concerning the size of that gap are complicated by ongoing shifts in the structure of the labour market and the possibility that the severe recession caused persistent changes in the labour market’s functioning."
She added: "At the FOMC’s most recent meeting … the Committee reaffirmed its view ‘that it likely will be appropriate to maintain the current target range for the federal funds rate for a considerable time after our current asset purchase program ends, especially if projected inflation continues to run below the Committee’s 2pc longer-run goal, and provided that longer-term inflation expectations remain well anchored’.
Jim Sinclair’s Commentary
Draghi will do anything in words to restrain the euro
ECB’s Draghi open to easing of austerity in eurozone
Mario Draghi suggested that countries in Europe should be encouraged to increase spending within the existing rules
By Andrew Critchlow
8:22PM BST 22 Aug 2014
Mario Draghi, the European Central Bank president, has opened the door for member states to ease back on austerity to reduce unemployment and revive flagging economic growth in the region.
“The long-term cohesion of the euro area depends on each country in the union achieving a sustainably high level of employment,” Mr Draghi said in a speech delivered at the global central bankers meeting in Jackson Hole.
“And given the very high costs if the cohesion of the union is threatened, all countries should have an interest in achieving this.”
Mr Draghi suggested that countries in Europe should be encouraged to increase spending within the existing rules designed to reduce deficits and rein in debt in order to boost economic reform and create more jobs.
His remarks follow a series of worrying figures that show growth in major economies such as Germany and France stalling, while Italy has returned to recession.
Jim Sinclair’s Commentary
Makes some sense in a senseless world.
US and UK should back Assad to defeat ISIS – senior UK MP
Published time: August 22, 2014 11:30
Edited time: August 22, 2014 15:14
The US and UK must work with Bashar Assad’s Syrian regime if they are to defeat the Islamic State of Iraq and Syria (ISIS), the chairman of Britain’s intelligence and security committee warns.
Sir Malcolm Rifkind, one of the UK’s most senior MPs, told the Financial Times (FT) in an exclusive interview that the horrific murder of American journalist, James Foley, highlights the urgent need to take action against the extremist group Islamic State (IS, formerly ISIS/ISIL), whose swift rise to power in the Middle East has remained largely unchecked by Western intervention.
While the militants have annexed vast swathes of territory in northern Iraq, their central power base remains in Syria.
“ISIS need to be eliminated and we should not be squeamish about how we do it,” Rifkind told the FT on Friday.
Although he made it clear he does not support the Assad regime in principle, Rifkind reluctantly emphasized that “sometimes you have to develop relationships with people who are extremely nasty in order to get rid of people who are even nastier.”
Following a brutal civil war that has devastated and divided Syria while providing a breeding ground for the Islamic State, the Assad regime has faced isolation from myriad world powers.
Prior to Rifkind’s interview, Western states expressed no willingness to work with Damascus. On Wednesday, President Obama’s deputy national security adviser, Ben Rhodes, said Assad was “part of the problem.”
Islamic State militants seize four more foreign hostages in Syria
Jihadists flush with arms and relying on shock tactics abduct Europeans and Japanese national as US strikes continue
Martin Chulov, Middle East correspondent
The Guardian, Wednesday 20 August 2014 20.54 BST
Flush with looted weapons, buoyed by sweeping gains in Syria and eager to shock, Islamic State militants have seized four more foreign hostages near Aleppo in recent days, taking to more than 20 the number of foreigners they now hold.
The latest captives, two Italian women, a Dane and a Japanese national, were seized in or near Syria’s largest city. All held are either reporters, photographers or aid workers taken near Aleppo or Idlib. They have been subsequently moved to Raqqa, the Isis stronghold in north Syria.
The abductions have controversially proved good business for Islamic radicals. In the past six months at least 10 hostages, including a Dane, three French nationals and two Spaniards, were freed after lengthy negotiations with captors, who demanded ransoms. Some organisations have insisted on information blackouts about nationals still being held.
One former hostage said the suspected killer who appeared in the recent video, apparently murdering the US journalist James Foley, was one of three Britons who had guarded him in Raqqa. He said the man had been responsible for negotiating hostage releases, dealing with families of captives via email.
Attention will now turn to the captives still in Isis hands. Steven Sotloff, a freelancer who had contributed to Time magazine and Foreign Policy, was kidnapped a year ago near the Syrian-Turkish border. According to the video of Foley’s death, Sotloff’s fate depends on whether the US continues its aerial campaign in north Iraq, which has driven Isis fighters back from the key Mosul dam.
Isis fighters surround Syrian airbase in rapid drive to recapture lost territory
Syrian reinforcements rush to defend Tabqa but there are fears that no regional military can slow group’s momentum
Martin Chulov, Middle East correspondent
The Guardian, Friday 22 August 2014 19.22 BST
Islamic State extremists rampaging through Iraq have now turned their sights back towards Syria, where only a besieged airbase stands between the terror group and a rush for the Mediterranean coast that could split the country in two.
The attack on the Tabqa airbase in eastern Syria comes as Isis continues to move back towards areas it controlled north of Aleppo until February. Using weapons the group looted from abandoned Iraqi military bases, Isis has returned with a vengeance to the area, stunning regional powers with its rapid advances.
Less than three months after taking Iraq’s second and fourth biggest cities, much of Anbar province and the Syrian border, the group is establishing itself with extraordinary speed as a regional power that will determine the fate of both countries. There are growing fears across the Middle East that no regional military can slow the group’s momentum.
Isis now controls a swath of land slightly larger than the UK, from Aleppo to central Iraq, and holds sway over a population of at least four million people. The group’s rapid ability to organise and consolidate continues to splinter a fractured body politic in Iraq and Syria and is fast causing ramifications for the broader Middle East.
"The Islamic State is now the most capable military power in the Middle East outside Israel," a senior regional diplomat said on Friday. "They can determine outcomes in a few days that the Syrian rebels took two years to influence. Their capacity is in sharp contrast to the Syrian regime, which is only able to fight one battle at a time and has to fight hard for every success.
As South Africa Reels From Unexpected Bailout, One Bank Has A Modest Proposal: Give Us Your Gold
Submitted by Tyler Durden on 08/22/2014 13:57 -0400
In a historic first, three days ago, South Africa’s Rand Merchant Bank, a division of FirstRand Bank Limited, announced it would issue the FirstRand Gold Bond, or a bond denominated in South African Krugerrand gold coins. In other words, for the first time "holding" gold will pay a dividend (or in this case, interest). Sound odd? Maybe because it is.
Here is the statement from the Johannesburg Stock Exchange:
The Gold Bond has a term of five years and the first issue amounts to R2 billion. It requires investors to buy Krugerrands, which they then lend to FirstRand when purchasing the bond. At its expiry the value of the bond is determined by the current gold price, the Dollar/Rand exchange rate and the interest earned. This interest is calculated in terms of ounces of gold as represented by Krugerrands. Investors may take physical delivery of the Krugerrands on maturity or opt to get settled in cash.
Or they may end up with nothing if the bank is "suddenly" found to be insolvent. The marketing pitch is clear: have your gold and collect interest on it:
"The notes provide direct exposure to the rand gold price and a positive yield in the form of interest ounces payable on maturity. It offers both inflation and rand/dollar exchange rate protection while avoiding the significant storage and administration costs associated with other direct gold investment options available. Current market conditions are particularly attractive for gold investment because of rand/dollar weakness and expectations of higher inflation," says RMB Debt Capital Markets co-head Dale Wood.
Washington’s Nightmare Comes True: The Russian-Chinese Strategic Partnership Goes Global (II)
Fri, Aug 22, 2014
By Andrew KORYBKO (USA)
PART II: Geopolitical Application
It is now time to segue into the geopolitical applications of the RCSP. This section will begin with Northeast Asia and then proceed counterclockwise into exploring the dual approaches towards Central Asia, South Asia, and Southeast Asia. It will then move on to Europe before looking at the Mideast/North Africa (MENA) and Latin America. It is only in Africa where the RCSP has yet to mature, although the possibilities most certainly are there for China to invite Russia’s balancing influence into the continent in the future and to influence regional leaders to expand their trade ties with Moscow. Finally, the conclusion will unify the article and demonstrate that the RCSP is truly the most important relationship of the 21st century and the definitive vehicle for multipolarity.
The reader is recommended to keep the following in mind while perusing this section: Each hand of the RCSP is intended to wash the other and complement its counterpart in regions/states where it may be at a relative disadvantage vis-à-vis its partner, with the end-game intent of establishing true global multipolarity. With that being stated, the geopolitical examination of the RCSP begins.
The essence of the RCSP in Northeast Asia is to carefully confront the US’ “unsinkable aircraft carrier” and neutralize its lethality. Both Russia and China had existing territorial disputes with Japan prior to the commencement of the RCSP, but Japan did not begin to aggravate these tensions until the early 2010s. The Japanese problem could more accurately be viewed as an American problem due to its occupation of and mutual security with the country, so via proxy, the RCSP is effectively faced with the hurdle of American obstruction over the process of Northeast Asian pacification. Tokyo always has the ‘opt-out clause’ of a normalization of ties with Moscow (which is in the national interests of both actors), but this does not seem to be on the horizon under Abe’s administration. The US occupation is too strong and influential for the country to break free in the near future, but should a stroke of luck occur breakout and movement towards true foreign policy independence transpire, it would place Moscow in a position to play a positive role in moderating Tokyo’s actions towards Beijing.
Guest post: French, Swiss central banks swell rush to hold renminbi
Aug 20, 2014 3:58pm
By Jukka Pihlman, Standard Chartered
Adopted at pace by central banks around the world, China’s renminbi is now seen by many as a de facto reserve currency – and well on the way to becoming an official one.
Central banks have caught the renminbi fever, and are showing strong interest in investing part of their foreign-currency reserves in the Chinese currency, with more than 50 central banks now actively doing so either onshore or offshore.
Uptake is strongest in Asia, Africa and South America – regions with fast-growing trade and investment links with China – but even in Europe central banks are busy allocating reserves to the renminbi.
Earlier this year, Banque de France announced it is active in the renminbi market, and in July the Swiss National Bank received a Rmb15bn investment quota from the People’s Bank of China (PBOC), the Chinese central bank. The actions of these two large and sophisticated players are likely to reverberate in the European central-bank community, sparking others to follow.
The allocation shift by central banks is all the more remarkable, given that the renminbi does not yet qualify for official reserve-currency status. It is a powerful indicator of the great expectations in the renminbi as the currency continues on its path towards internationalisation.
Fracking Possible Cause of 20 Earthquakes in Oklahoma in One Day
MOSCOW, August 22 (RIA Novosti) – The Oklahoma Geological Survey (OGS) recorded 20 earthquakes in the state in a single day following an increase in hydraulic fracturing, or fracking, Think Progress reports.
OGS noted that 18 of the 20 earthquakes on Tuesday were below magnitudes of 3.0, but the largest registered was a 4.3 near Guthrie, where over 10,000 people live. The fracking practice that Think Progress names as a potential cause of the earthquakes is not the fuel extraction itself, but a process called “wastewater injection,” in which leftover water used to frack wells is injected into the ground, potentially adding stress to existing fault lines.
Five more earthquakes have already occurred in Oklahoma since Tuesday, three of which registered above the 3.0 mark on the Richter scale, Think Progress reported.
Some 2,500 earthquakes have occurred in Oklahoma over the past five years, the United States Geological Survey (USGS) claims.
Prior to 2008, Oklahoma recorded an average of one earthquake per year. Since the expansion of fracking operations, Oklahoma has become the most seismically-active state in the United States, with hundreds of earthquakes registered per year, Ring of Fire Radio said.
Former top general calls on Obama to wipe out Isis in wake of Foley killing
John Allen, who commanded Afghanistan war, writes op-ed amid varying US views on how to respond to journalist’s beheading
Spencer Ackerman in New York and Dan Roberts in Washington
The Guardian, Wednesday 20 August 2014
An influential retired US general has called on Barack Obama to order the destruction the militant group responsible for murdering American journalist James Foley amid conflicting views in the administration on how to respond to the atrocity.
As Obama’s foreign policy team debates expanding its renewed air war in Iraq after the killing of Foley by the Islamic State (Isis), John Allen, a retired marine general who commanded the Afghanistan war from 2011 to 2013, urged Obama to “move quickly to pressure its entire ‘nervous system’, break it up, and destroy its pieces.”
Allen’s argument, presented in an op-ed for the DefenseOne website, echoes remarks by secretary of state John Kerry and comes amid internal dispute in the Obama administration over the future course of its two-week air war in Iraq. Much diplomatic effort is said to be spent broadening and hardening a region-wide effort against Isis, something Allen endorsed, with Turkey and Qatar being a particular near-term focus for Kerry.
The debate is said to be fluid. At present, a US official anticipated more continuity than change in future military operations against Isis, but said: “It may ultimately evolve.”
On Wednesday, six new airstrikes continued to hit Isis positions near the Mosul Dam, three days after Obama declared that it was no longer under Isis control. Nearly two-thirds of the 90 US strikes since 8 August have taken place near the critical dam.
Car Repos Soar 70% As Auto Subprime Bubble Pops; "It’s Contained" Promises Fed
Submitted by Tyler Durden on 08/20/2014 23:00 -0400
While on the surface the US economy has been chugging along from GDP-crashing "snow in the winter" to GDP-cratering "warmer|cooler than expected weather in the spring|summer|fall", with bouts of GDP-boosting inventory accumulation inbetween, in recent months two very disturbing trends about that all important dynamo behind the economy, the US consumer, have emerged.
On one hand we wrote three weeks ago that a "shocking" 77 million, or one third, of Americans face debt collectors: a statistic which crushes any suggestion that US household credit is substantially improving based on trends in 30, 60, or 90-day delinquency, as it means that the real pain is not at the near-end of the default/delinquency timetable, but the far end, which incidentally has just as dire an impact on one’s credit score as a plain vanilla default (and explains why none other than Fair Issac has jumped in to "adjust" its credit methodology to artificially boost FICO scores of these millions of Americans).
On the other hand, we have been closely following the ongoing deterioration of the car subprime loan bubble: something that both Bloomberg and the Fed have both also been paying close attention to recently, yet a bubble which nobody wants to burst, because as we wrote several days ago, it is none other than the subprime car loan bubble that allowed car production to surge the most last month since Obama’s Cash for Clunkers capital misallocation program, in the process lifting overall manufacturing and Industrial Production, and thus GDP.
Earlier today Experian released its latest, Q2, metrics that tie these two very worrying trends together, namely the trend in delinquencies, defaults and repossessions.
Chair Janet Yellen says economy still needs Fed support
Investors had been anticipating any firmer sign regarding an interest rate increase in a speech Friday by Federal Reserve head Janet Yellen; she instead offered further uncertainty.
By MARTIN CRUTSINGER MATTHEW BROWN
The Associated Press
JACKSON HOLE, Wyoming — If anyone thought Janet Yellen might clarify her view of the U.S. job market in her speech here Friday, the Federal Reserve chair had a message:
The picture is still hazy.
Though the unemployment rate has steadily dropped, Yellen suggested that other gauges of the job market have become harder to assess and may reflect persistent weakness. These include many people jobless for more than six months, millions working part time who want full-time jobs and weak pay growth.
Yellen offered no clarity on the timing of the first interest-rate increase, which most economists still expect by mid-2015.
Investors had been anticipating any firmer sign from Yellen about whether an improving economy might prompt the Fed to act sooner than expected to start raising rates. She instead offered further uncertainty.
Damage inflicted by the Great Recession had complicated the Fed’s ability to assess the U.S. job market and made it harder to determine when to adjust rates, Yellen said.
“Uncertainty is the key word,” said Ian Shepherdson, chief economist at Pantheon Economics. “Yellen is not about to leap from the fence at the next (Fed) meeting.”
Yellen said that for now, a broad assessment of the job market suggests that the economy still needs Fed support in the form of ultra-low rates and that inflation has yet to become a concern.
“The assessment of labor-market slack is rarely simple and has been especially challenging recently,” Yellen said at the conference, which the Federal Reserve Bank of Kansas City sponsors each year at a lodge beside the Grand Tetons.
Jim Sinclair’s Commentary
There is no practical solution to the corner the Fed has painted itself into.
The Perils of the Federal Reserve’s Dual Mission: The Fed has its hands full with monetary policy, even if it backs off its fruitless efforts to improve the job market
Richard Epstein Contributor
8/22/2014 @ 7:26PM
I have just signed on with Forbes to write a regular column of issues relating to finance and regulation. The larger area (like so many others) is in turmoil today, and I hope to cast a steely-eyed view on a set of continuing problems that as yet have resisted in rational solution. It is always good news for a budding columnist to enter the market when the world is in a state of genuine disarray, for the sorry state of public affairs increases the opportunity for constructive criticism. I hope to that my own increasing involvement in the area, coupled with a general background in both law and economics and constitutional law could add a new blood to a troubled field.
The Grim Scene
It is no coincidence, I might add that the financial wizards at the Federal Reserve are meeting right now in Jackson Hole, Wyoming to thrash out a collective response to a lackluster economic scene. Unfortunately, the only point of agreement among the cognoscenti is that the view outside their window is a lot nicer than their consensus view on the state of the economy. In her remarks, Chairwoman Janet Yellin kept all her options open on the ever more urgent question of whether, and if so when, the Fed will start to move to raise interest rates.
She has good reason to be cautious, even if her caution reveals how little she knows about what to do, and not how much. Right now, a prolonged soulless recovery from the recession limps along in states of disarray as overall levels of job growth and economic remain tepid. The constant effort to jump start the economy may not have created any short-term inflation, which is all to the good. But by the same token, it has not created any economic growth either, which is all to the bad. The halting nature of the recovery is all too evident in the United States, but the international club of chronic slow growers hardly rates an exclusive membership list.
Yellen says job market makes Fed hesitant on interest rate increase
August 22, 2014 at 10:04 pm
Washington — Federal Reserve Chair Janet Yellen said Friday that the Great Recession complicated the Fed’s ability to assess the U.S. job market and made it harder to determine when to adjust interest rates.
Yellen’s remarks to an annual Fed conference offered no signal that she’s altered her view that the economy still needs Fed support from ultra-low interest rates. The timing of a Fed rate increase remains unclear, though many economists foresee an increase by mid-2015.
The Fed chair noted that while the unemployment rate has steadily declined, other gauges of the job market have been harder to evaluate and may reflect continued weakness. These include high levels of people who have been unemployed for more than six months, many people working part time who would like full-time jobs and weak pay growth.
Yellen repeated language the Fed has used at its last meeting that record-low short-term rates will likely remain appropriate for a “considerable time” after the Fed stops buying bonds to keep long-term rates down. The Fed’s bond buying is set to end this fall.
But Yellen said the Fed’s rate decisions will be dictated by how the economy performs.
“Monetary policy is not on a preset course,” she said. The Fed “will be closely monitoring incoming information on the labor market and inflation in determining the appropriate stance of monetary policy.”