THE DOT - if this turns orange or red be alert

Friday, May 21, 2010

Friday brainstorming - part 1

1. Obama preparing for war with Iran


US Begins Massive Military Build Up Around Iran, Sending Up To 4 New Carrier Groups In Region

As if uncontrollable economic contagion was not enough for the administration, Obama is now willing to add geopolitical risk to the current extremely precarious economic and financial situation. Over at Debkafile we read that the president has decided to "boost US military strength in the Mediterranean and Persian Gulf regions in the short term with an extra air and naval strike forces and 6,000 Marine and sea combatants." With just one aircraft carrier in proximity to Iran, the Nobel peace prize winner has decided to send a clear message that peace will no longer be tolerated, and has decided to increase the US aircraft carrier presence in the region by a 400-500% CAGR.

From Debka:

Carrier Strike Group 10, headed by the USS Harry S. Truman aircraft carrier, sails out of the US Navy base at Norfolk, Virginia Friday, May 21. On arrival, it will raise the number of US carriers off Iranian shores to two. Up until now, President Barack Obama kept just one aircraft carrier stationed off the coast of Iran, the USS Dwight D. Eisenhower in the Arabian Sea, in pursuit of his policy of diplomatic engagement with Tehran.

For the first time, too, the US force opposite Iran will be joined by a German warship, the frigate FGS Hessen, operating under American command.

It is also the first time that Obama, since taking office 14 months ago, is sending military reinforcements to the Persian Gulf. Our military sources have learned that the USS Truman is just the first element of the new buildup of US resources around Iran. It will take place over the next three months, reaching peak level in late July and early August. By then, the Pentagon plans to have at least 4 or 5 US aircraft carriers visible from Iranian shores.

The USS Truman's accompanying Strike Group includes Carrier Air Wing Three (Battle Axe) - which has 7 squadrons - 4 of F/A-18 Super Hornet and F/A-18 Hornet bomber jets, as well as spy planes and early warning E-2 Hawkeyes that can operate in all weather conditions; the Electronic Attack Squadron 130 for disrupting enemy radar systems; and Squadron 7 of helicopters for anti-submarine combat (In its big naval exercise last week, Iran exhibited the Velayat 89 long-range missile for striking US aircraft carriers and Israel warships from Iranian submarines.)

Another four US warships will be making their way to the region to join the USS Truman and its Strike Group. They are the guided-missile cruiser USS Normandy and guided missile destroyers USS Winston S. Churchill, USS Oscar Austin and USS Ross.

We can't wait for Iran to feel completely unthreatened by this escalation and to decide to take no action whatsoever as the Nobelists push it even more into a corner from which the only escape, to a rational player, would be outright aggression... Which begs the question just how an irrational player would react.

2. I had written months ago that DC would even welcome a crisis of some degree that helps to sell its huge net new issues of 2 tril. debt and back then the word on the street was the Dollar would ultimately collapse by the same pundits who claim that now for the Euro. therefor this Euro crisis is very welcome event temporarily but comes with a high price tag for those who buy the bubble bond prices - if I were China I sell bonds and dollars right now and ask them once again how much they want the Yuan to rise. The question is rather is there any more to it as the struggling EU goes the exact opposite path of DC now and starts an austerity program while DC is still on the wild spending spree. Though both system have one thing in common all the goodies are for the banks who pay themselves record bonus pools with stolen money from taxpayers or rather Mainstreet. The austerity measures will hit mainly Mainstreet and on top they even can expect higher taxes to take even more money out of their pockets.

excerpt 1

Former Central Bank Head Karl Otto Pöhl

Bailout Plan Is All About 'Rescuing Banks and Rich Greeks'

excerpt 2

Geithner to Confer With German, U.K. Officials on Debt Crisis

By Christopher Wellisz

May 21 (Bloomberg) -- Treasury Secretary Timothy F. Geithner will visit Germany and the U.K. next week to discuss the European debt crisis after a slide in stocks worldwide posed dangers to the global economic recovery.

“Geithner will meet with European officials to discuss the economic situation in the region and the measures being taken to restore global confidence and financial stability,” the Treasury Department said in a statement yesterday in Washington.

The Treasury announcement came after the biggest slide in the benchmark U.S. Standard & Poor’s 500 Stock Index in a year and a tumble in the euro this week to a four-year low against the dollar. The currency shared by 16 European Union members advanced today on speculation EU officials will discuss further measures to counter the spreading crisis.

Geithner’s trip to Europe will follow his visit to Beijing for the U.S.-China Strategic and Economic Dialogue, the Treasury said. On May 26, he will meet with U.K. Chancellor of the Exchequer George Osborne in London and then travel to Frankfurt to see European Central Bank President Jean-Claude Trichet. The next day, he will meet with German Finance Minister Wolfgang Schaeuble in Berlin.

Schaeuble will present a nine-point plan to his euro-area counterparts aimed at avoiding a repeat of the fiscal crisis touched off by Greece’s budget deficit. The plan includes calls for faster budget cuts, tougher penalties for countries that flout the rules and the option of an “orderly state insolvency” for euro countries.

Euro, Yen

The euro rose to $1.2641 at 1:18 p.m. in Tokyo from as low as $1.2144 earlier this week. Against the yen, it jumped 1.9 percent to 114.16. The yen surged as much as 3.9 percent against the euro to the highest since November 2001 yesterday as concern that Europe’s debt crisis will hamper global growth spurred demand for Japan’s currency as a refuge.

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