International Forecaster Weekly

A Time of Uncertainty is a Call for Strategies

Davos is upon us, a chance to look at the superclass, Will the eurozone continue after the Greek disaster, the worlds oldest bank in a fresh scandal, battles in Syria, North Korea isnt done yet, French farther into Mali,

James Corbett | February 2, 2013

            Living up to the name of The International Forecaster and properly respecting the standard that the late, great Bob Chapman set for this publication requires an ability to cast a cold, hard gaze at world events and see them for what they are, rather than what we want them to be. Of course, that doesn't mean that we're all left helplessly watching these events unfold like passive objects; we all have a part to play in protecting ourselves and our loved ones from economic and societal collapse, building up our communities to resist that collapse, shaping the world around us by making the right choices day in and day out, and raising the next generation to be strong, independent, and compassionate members of the human family. I preface this week's report with this because there are significant events taking place all across the globe right now, many of them quite worrying, and it is important to keep this information in perspective. To be forearmed, we must be forewarned. And to be forewarned, we have to be willing to take a look at what is really happening, bleak as it may be.

            First we turn our attention to the Eurozone, where the world's self-proclaimed “elite” have just wrapped up the World Economic Forum in Davos, Switzerland, the first major event of the powers-that-shouldn't-be calendar year. This means that the Trilateral Commission's annual meeting is right around the corner, and after that: Bilderberg. Davos is more of a public spectacle than the significantly more secretive (and selective) meetings of the Trilateral/Bilderberg ilk, however. There is much pomp and ceremony as some of the world's most recognizable movers-and-shakers are trotted out to make speeches and participate in forums that are then dutifully dissected by the big financial institutions and regurgitated by the talking heads of the business networks. Although the spectacle of the event is mostly for show, and the real action takes place in off-the-record closed-door meetings between the members of the erstwhile “Superclass,” the event is still a good opportunity to see where the globalists and their bankster sponsors are planning to lead the global economy over the course of the coming year.

            This year, the theme song for the event may as well have been the 1988 Bobby McFerrin hit “Don't Worry, Be Happy.” The overriding message: the recovery is well under way, the economic “headwinds” are subsiding and, absent the usual twists, turns, and bumps in the road, the world economy (including the Eurozone) is back on track! Don't worry, be happy!

            Depending what data you look at, it's hard to argue with such a message. After all, the dominant question at last year's Davos was whether the Eurozone could continue after the Grexit; this year, Greece's withdrawal from the Euro isn't even on the political radar. Last year there was still uncertainty about the ECB's and the Federal Reserve's next moves, but this year Draghi's bazooka and the Bernanke's QE3 and 4 have assured the markets further trillions in funny money to cushion whatever fall might be coming in the short term. Years past saw hand-wringing about China's faltering growth and the consequences of a global downturn, but this year markets are booming, with the S&P 500 reaching highs it hasn't seen since 2007, the FTSE 100 marking its strongest January performance in nearly 25 years with a 6.4 percent gain on the month, and the Nikkei hitting 11,138.50 for the first time in 33 months on the back of its best January performance since 1998 (even after a round of last minute profit taking). “If this is the new normal,” say the giants of finance, “bring it on!”

            As always, however, there is an altogether different story to be told by investigating the data more deeply. Even the banksters' new darling, Mark Carney, alluded to this in his appearance at the annual global economic forum, joking that when he arrived in Switzerland on Thursday the consensus was that the global economic “tail risk” had been “reduced,” whereas by Friday night it had been “eliminated.” Such is the way of groupthink, even when it is not directed by an agenda.

            The darker aspects of the global structural economic decline are hiding under the glossy surface of market optimism. No matter what the FTSE 100 believes about the performance of the LSE blue chips, the UK's actual economy shrank by 0.3% last quarter. The US surprised nearly everyone Wednesday by announcing a 0.1% GDP contraction in Q4 2012 (which the usual market boosters have done their best to spin into a positive). And now, just in time for the Italian elections later this month a fresh scandal is rocking the Eurozone. This one involves Monti dei Paschi, better known as the world's oldest bank. The problem? They hid major losses from their 9 billion Euro takeover of Antonveneta in 2007 by in a series of complex derivative trades and those trades are coming back to haunt them. And it just so happens that Mario Draghi, current ECB head, was leading the Bank of Italy at the time they failed in their oversight of the bank in 2007. And just last June, bankster favorite Mario Monti granted the bank state bailout money after it failed the Eurozone stress test. The yield on the Italian 10-year bond rose 0.09% on news that a court in Rome is summoning officials from the Bank of Italy to answer for their part in the scandal.

            All of this news would be worrying at the best of times, but coming as it does during a sustained structural decline after an era of “jobless recovery” during a period of geopolitical instability, the news is extremely concerning. It's as if the economic engine of the world is sputtering and the “Check Engine” light is on, but the world elite are too busy admiring the flashy rims of the global markets to notice.

            Oh, and did I mention the possible outbreak of war with Iran?

            Last Wednesday Syria confirmed it had been attacked by military jets for the first time since 2007. The Syrians say the attacks targeted a military research center near Damascus, Israel claims they struck a convoy of trucks bearing anti-aircraft missiles destined for Hezbollah in Lebanon. Whatever the case, the timing of the strike may have been as much a part of the message as the strike itself. Just two days before the attack, Tehran sent an explicit message to Tel Aviv, according to press reports: any attack on Syrian territory will be treated as an attack against Iran itself. Given the timing of that announcement, either Iran had caught wind of Israel's impending strike and sought to head it off, or Israel simply called Iran on their bluff. Perhaps both.

            We could lament the situation and point out the obvious hypocrisies, namely that if Syria had sent fighters into Turkey to strike at admitted Al Qaeda staging areas there where foreign jihadis are being equipped to carry out terror attacks in Syria it would be decried as an act of war, but when Israel does essentially the same thing it is immediately lauded by the White House and given tacit US backing. As I say, we could lament this hypocrisy, but let's not forget what I wrote at the beginning of today's report: we are here to be realistic about what is happening, not idealistic about what we wish would happen. Right now the world is bracing to see whether this will lead to the start of the full-scale theater war that many have been warning about for so long. The options include a retaliatory strike from Syria, which is exceedingly unlikely given the situation on the ground for Assad (it would be equivalent to signing his own death warrant); a retaliatory strike by Iran, which, its own warning notwithstanding, is also unlikely given Tehran's extremely delicate situation right now vis a vis its nuclear program; or some type of strike via Hezbollah in Lebanon, which remains a possibility. Sadly, the best we can hope for in terms of preventing a larger-scale war is that the Syrians/Iranians/Hezbollah will not play into the trap by responding against Israel and “justifying” a larger NATO intervention in the region.

            If all that wasn't enough, Kim Jong-un and the North Koreans aren't done rattling cages and pleading for world attention yet. Last week the UN Security Council, with the surprise backing of China, passed a resolution condemning North Korea's satellite launch last month, which is widely believed to have been a test of ballistic technology for the isolated communist nation's missile program, a worrying development for a nation that has nuclear weapons and is actively seeking the technology to miniaturize and deliver them via ICBMs. The dictatorship responded as expected: by threatening the US and South Korea with nuclear war (again). But there may be more than just bluster to the threat. At the very least, it looks like North Korea is shaping up for another nuclear test, and it might be coming sooner than expected.

            Now the Joonang Daily is reporting that despot Kim Jong-un has met with the nation's top security and defence officials and authorized preparations for a new nuclear test. Many analysts were predicting the test to occur on February 16, the birthday of former leader Kim Jong-il, or the inauguration of the new government which takes place on the 25th, but now it appears the test may come any day. The latest reports indicate that the military has been told to be ready for war, and the nation is under martial law lockdown. Similar preparations took place in March 1993, when the North first announced its withdrawal from the Nuclear Non-Proliferation Treaty. Test preparations have been corroborated by satellite images showing that the mouth of the shaft has been sealed at the testing site, and South Korean officials and Beijing-based sources are concurring that a test is imminent. Although this new test is likely little more than a response to the UN resolution and a chance for new leader Kim Jong-un to assert himself on the world stage, it certainly won't help ease tensions in East Asia, where nerves are already frayed from recent Taiwan/China/Japan tensions over disputed islands in the East China Sea. Once again, the world sits, seemingly hostage to the whims of a nuclear-armed madman. Perhaps the most helpless hostages in all of this are the North Koreans themselves. Fresh reports are leaking out of cannibalism from the country's beleaguered rural provinces.

            Add to all of this the ongoing French incursion in Mali, the continuing concerns over Algeria, the latest suicide attack on the U.S. embassy in Ankara, and a new report from a US think tank trying to whip up war frenzy by declaring Iran and Hezbollah the most significant world terror threats, and you start to get a sense of the knife edge that the world economy is balanced on right now. Any and every one of these areas has the potential to blow up into something much bigger (perhaps quite literally) and the effects on a precariously perched economy where markets are completely detached from reality are potentially disastrous.

            Luckily for readers of this publication, you will already know about the ways to brace yourself and your family for the economic storm that is coming, from precious metals to storable food and water filters to bug out bags and emergency electricity generation to alternative currencies and local exchanges. “Don't Worry, Be Happy!” may not be the most apt phrase to describe these times, but for those who are relying less on the phoney baloney markets for their future security and more on their own preparedness strategies, there's certainly less to be worried about and more to be happy about.