This morning's key headlines from
- European investors cheer when ECB hints at a new 'big bazooka'
- Raul Castro accuses U.S. of attempting Libya-like overthrow
- Conflicting reports about fleet of Russian warships in Mediterranean
- Turkey threatens military retaliation against Syrian Kurds
- Russia reconsidering ban on sale of S-300 missiles to Iran
- Debka: Iran's Supreme Leader expects the Mahdi to come soon
European investors cheer when ECB hints at a new 'big bazooka'
It was another one of those Alice in Wonderland days.
Investors were popping champagne corks again on Thursday, when stock
share values surged, thanks to the following statement by Mario Draghi,
the head of the European Central Bank:
To the extent that the size of these sovereign premia
hamper the functioning of the monetary policy transmission
channel, they come within our mandate. Within our mandate, the
ECB is ready to do whatever it takes to preserve the euro.
Believe me, it will be enough.
Readers will recall that Spain's 10-year bond yields (interest rates) spiked as high as 7.5% on Monday, indicating a full-fledge bond
panic in progress. So Draghi's remarks were intended to stop the
panic. He was saying -- actually, he was hinting -- that the ECB
would "print money" and use it to purchase massive amounts of Spanish
bonds, increasing demand and prices, and pushing down yields (interest
The statement was an act of desperation, for two reasons.
First, as we've already seen with Greece, big bailouts only make
things worse when the fundamentals are unchanged, and they certainly
would be in this case, since Spain would then be able to just keep
borrowing more and more and spending more and more without ever
solving the problem. And second, the Germans are opposed to these
massive bailouts, because they end up affecting the German taxpayer.
The Germans also like to point out that it's illegal, according to the
EU treaty, for the ECB to bail out any individual country. But let's
face it, being illegal hasn't stopped any politician in Washington,
Brussels or London from doing anything. At any rate, Draghi's
announcement lowered Spain's 10-year bond yields to 6.93% on Thursday,
still a crisis level.
Raul Castro accuses U.S. of attempting Libya-like overthrow
Cuban President Raul Castro accused the United States on Thursday of
seeking an overthrow of the Cuban government similar to Arab Spring
countries. He charged that government opponents on Cuba, supported by
the United States and other western countries, "were creating the
conditions and aspiring to one day have happen here, what happened in
Libya and what they want to happen in Syria." Castro was attending
celebrations in Guantánamo, Cuba, to commemorate National Rebellion
Day, which recalls the assault in 1953 on the Moncada and Carlos
Manuel de Cespedes garrisons. On July 26, 1953, on the 100th birthday
of national hero Jose Marti, the youth of the generation of the
centenary, including Raul and Fidel Castro, attacked the barracks, and
launched the Cuban revolution that brought Fidel Castro to power in
Prensa Latina (Cuba)
Turkey threatens military retaliation against Syrian Kurds
Syrian president Bashar al-Assad, fighting a growing rebel presence in
the two largest cities, Damascus and Aleppo, has turned control of
parts of northern Syria over to militant Kurds affiliated with the
terrorist Kurdistan Workers' Party (PKK). Turkey's prime minister
Recep Tayyip Erdogan reacted on Thursday:
We will not let the terrorist group to set up camps
[in northern Syria] and pose a threat to us. No one should
attempt to provoke us. We will not bow to provocation but rather
take whatever steps are necessary against terrorism.
Syrian Kurds have taken control of several towns near Turkey's border
and raised PKK flags, apparently after Syrian forces were withdrawn to
fight the rebel forces.
Russia reconsidering ban on sale of S-300 missiles to Iran
Iran is suing Russia for $4 billion in the Court of Arbitration in
Geneva for canceling a 2007 contract to sell five divisions of S-300
long-range anti-aircraft missile system worth an estimated $800
million to $1 billion. Russia canceled the contract after the UN
Security Council approved sanctions on Iran on June 9, 2010. By
threatening to win a $4 billion fine, Iran hopes to blackmail Russia
into fulfilling the contract. It was President Dmitry Medvedev who
imposed the ban in 2010, but President Vladimir Putin has been
reversing some of Medvedev's policies and taking a harder line against
the West. The missiles, which have both defensive and offensive
capabilities, including the ability to carry a nuclear weapon, would
definitely be a violation of the UN sanctions that Russia agreed to.
Conflicting reports about fleet of Russian warships in Mediterranean
A fleet of 10 Russian warships, plus escort vessels, has entered the
Mediterranean Sea, carrying large numbers of Russian marines, raising
concerns that the Russians are planning to intervene militarily in
Syria, to protect their ally, Syria's president Bashar al-Assad.
Russia's only Mediterranean port is Tartus, in Syria. However,
Russia's naval chief, Vice Admiral Viktor Chirkov, said, "The joint fleet flotilla will not enter the port of
Tartus. It is carrying out military drills in the
However Debka, which gets some things wrong, is quoting its
intelligence sources as saying that the Russian fleet is standing
ready to intervene if things start to go badly for al-Assad. The
fleet could also serve as a bargaining chip in a deal to replace
al-Assad with a new government that would remain pro-Russian.
Monday's threats by the al-Assad regime to use its chemical weapons
against "foreign adversaries" has substantially heightened tensions
throughout the region, and it would not take much provocation at this
point for someone to attack someone, possibly even by miscalculation.
Ria Novosti (Moscow) and
Debka: Iran's Supreme Leader expects the Mahdi to come soon
As I've been reporting for years, Iran's top leadership, led by
Supreme Leader Ayatollah Ali Khamenei, are fervent believers in the
Mahdaviat -- the Shia Muslim belief that the Mahdi (or "the 12th
Imam" or "the Hidden Imam") is coming to save mankind. This belief is
roughly equivalent to the Christian belief in the second coming of
Christ, or the Buddhist belief in the Maitreya -- that a new Buddha is
to appear on earth, and will achieve complete enlightenment (See my
2009 report, "Theological split in Iran widens as opposition protests continue" for details).
Now Debka is reporting that its intelligence sources are saying that
Khamenei is predicting that the coming of the Mahdi is imminent, and
that it's tied to the "divine achievement" of developing nuclear
However, the inner circle of Supreme Leader Ayatollah
Ali Khamenei and the Revolutionary Guard Corp’s top command refuse
to bow to fear and urge diplomatic assertiveness as the only way
to get Iran where it wants to go.
In recent weeks, our sources report, Khamenei’s messengers have
been going around parliament and quietly assuring lawmakers that
“divine achievement” was very close and only a little more
patience was required for enduring world sanctions.
Personnel at the Revolutionary Guards nuclear and missile units
received the same assurance, and pep talks were given to raise
morale in the army. The “Coming of the Mahdi” was at hand, they
were told, a euphemism for completion of the nuclear fuel cycle,
and soon “Islamic civilization would rule the world."
Apparently Khamenei isn't playing with a full deck. I don't know
whether this makes him less dangerous or more dangerous.
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