Saturday, December 10, 2011

Muslim Brotherhood and Your Portfolio.

Let us take a break from the daily up down dance of the stock markets. We are so glued to the five minute charts that we are losing the sight of the bigger picture.

I have been writing for a while that I am not expecting the bottom to fall off the market anytime soon. Not in 2011, not even in 2012. Why such optimism in the face of such bad environment? When it is not sure if Europe and Euro will exist at all in its current form?  When recession is almost certain in Europe and China is preparing to cushion its landing. The answer can be found in the coordinated action of the seven CBs (Central Bank) last week. Like in Japan, the CBs of the western world will keep their TBTF Banks alive with continuous injection of liquidity. It does not matter that these banks are all Zombie banks, dead men walking.

Make no mistake. The system is broken beyond imagination. Crooks are running the show.

Bloomberg reports Paulson Gave Hedge Funds Advance Word and yet we have seen no move from the O administration to punish the guilty. And why should they. You cannot run with the hare and hunt with the hound. This is crony capitalism at best and utterly corrupt and sleazy plutocracy at worst. Their only chance of survival is to continue the status quo.  And rising stock prices at any cost guarantees them that. What surprises me is that why we have seen no public outcry against Paulson yet. Are we so dead?

That takes us to the question of social inequality in USA. 80% of the Americans own less than 15% of the national wealth.

The people who have the money to invest in stock markets are not worried about the price increase of milk or bread or filling their jumbo SUVs. But I am no political activist. All I can see is that the people in charge will not let another 2008/9 happen again. We will lurch from crisis to crisis till some external shock forces their hands. But at some point of time, things will go out of control of the CBs and they will not be able to solve the problem with more money printing.

One such event is the geo-political situation in the MENA region. (Middle East North Africa). We are reading about Arab spring but we are not yet sure what kind of animal it is. All these years, America and Europe have supported all the corrupt and despot Dictators in these regions. Now that democracy is finally rearing its head, which the western civilization so lovingly preaches, the final outcome may not be to the liking of the western civilization at all.

You are looking at the most explosive region of the world, which has the capacity to take DIJA to 5000 or below. Not the debt of the western world but the bombs of the mullahs will possibly do the damage.

In country after country, the powers are moving in the hands of the radicals. In Egypt, the Muslim Brotherhood has taken the maximum seats. So now we have one more headache in addition to Iran and Yemen and Hezbollah in Lebanon, Hamas in Palestine, and Taliban in Afghanistan. There is trouble in Bahrain, in Saudi Arabia, in Pakistan, in Syria.  All of them have one common enemy, Israel.

And Iran is not showing any sign of giving up its nuclear ambition. The rulers of all these unstable countries will try to divert the attention of their masses from their failures. And the only sure way to divert attention is to create mass hysteria and create war.

 “Washington, like all capitals, likes policies and hates political philosophy. The policies frequently fail to come to grips with reality because the policymakers don’t grasp the philosophical implications. The contradiction inherent in the human rights and the neoconservative approach is one thing, but the inability of the realists to define with rigor what the national interest is creates policy papers of monumental insignificance. Both sides create polemics as a substitute for thought.
(Read more: Egypt and the Idealist-Realist Debate in U.S. Foreign Policy | STRATFOR)

Today Israel under Benjamin Netanyahu is most isolated in the world than any time in the history.

And America does not know how one mad man in Israel is going to react to another mad man in Iran. 

(Reuters) - The Obama administration does not know Israel's intentions regarding potential military action against Iran, and the uncertainty is stoking concern in Washington. Two key U.S. senators acknowledged on Tuesday that there are gaps in U.S. knowledge about Israeli leaders' thinking and intentions.

"I don't think the administration knows what Israel is going to do. I'm not sure Israel knows what Israel is going to do ... That's why they want to keep the other guys guessing. Keep the bad guys guessing," said Democratic Senator Carl Levin, chairman of the Senate Armed Services Committee.
Senator John McCain, the senior Republican on the committee, echoed Levin's view: "I'm sure (administration officials) don't know what the Israelis are going to do. They didn't know when the Israelis hit the reactor in Syria. But the Israelis usually know what we're going to do."

More from Reuters: “The uncertainty comes amid extraordinarily sharp public warnings in the last few weeks by U.S. Defense Secretary Leon Panetta about the potential "unintended consequences" of military action against Iran.Panetta told a forum in Washington last week that an attack on Iran would risk "an escalation" that could "consume the Middle East in confrontation and conflict that we would regret."
It could disrupt the fragile economies of the United States and Europe, spark a popular backlash in Iran bolstering its rulers and put U.S. forces in the region in the firing line, he said. "The United States would obviously be blamed and we could possibly be the target of retaliation from Iran, striking our ships, striking our military bases," Panetta said.

Now, of all MSM (Main Stream Media) only Reuters seem to be preoccupied with the impending war. Again on December 8 they wrote: “The chance of a military strike on Iran has roughly tripled in the past year, the senior geopolitical risk analyst at Barclays Capital said on Thursday.” 

While I do not doubt the seriousness of the issue, I want to know what their agenda is. According to one Wikipedia report, Reuters has an anti-Israeli bias. The owners live in Europe and who know how much interest they have in pushing oil prices high. That would possibly explain their eagerness to stroke fear. I very much doubt their noble interest of honest reporting as with anybody else.

Coming back to the US policies, all these years, USA had followed a policy which has alienated the mass and it is not considered as a honest broker in that part of the world.   Coupled with crony capitalism at home, a regional war in which Russia and China will also possibly get involved and different agenda of the defense and oil industrial complex, the situation is somewhat precarious which can bring down the stock markets and casinos. Obama is no different than Dubya and America has no plan.

Otherwise it would not have wasted trillions of dollars by invading Iraq and removing Saddam. From the American national interest point of view, Saddam was the perfect foil for the mullahs in Iran. He fought with them for eight years and kept them bleeding. But the then Republic administration lied to the Americans and sold them a lemon. All because Dick Cheney and Halliburton could get their hands on the oil contracts in Iraq? Then America elected Obama! Talk about jumping from frying pan to fire.And now possibly from fire to the depth of hell again?  Also let us not forget it is the USA which created Taliban.

The CBs will not be able to handle that external shock when it comes.  The pot is boiling even while we are not giving much attention to it. While it may not happen tomorrow or even in 2012, the danger exist and you may want to reposition your portfolio judiciously with that threat in mind.

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