This morning’s key headlines from GenerationalDynamics.com:
- 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 stockshare 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 premiahamper the functioning of the monetary policy transmissionchannel, they come within our mandate. Within our mandate, theECB 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 bondpanic in progress. So Draghi’s remarks were intended to stop thepanic. He was saying — actually, he was hinting — that the ECBwould “print money” and use it to purchase massive amounts of Spanishbonds, increasing demand and prices, and pushing down yields (interestrates).
The statement was an act of desperation, for two reasons.First, as we’ve already seen with Greece, big bailouts only makethings worse when the fundamentals are unchanged, and they certainlywould be in this case, since Spain would then be able to just keepborrowing more and more and spending more and more without eversolving the problem. And second, the Germans are opposed to thesemassive bailouts, because they end up affecting the German taxpayer.The Germans also like to point out that it’s illegal, according to theEU treaty, for the ECB to bail out any individual country. But let’sface it, being illegal hasn’t stopped any politician in Washington,Brussels or London from doing anything. At any rate, Draghi’sannouncement lowered Spain’s 10-year bond yields to 6.93% on Thursday,still a crisis level. Bloomberg
Raul Castro accuses U.S. of attempting Libya-like overthrow
Cuban President Raul Castro accused the United States on Thursday ofseeking an overthrow of the Cuban government similar to Arab Springcountries. He charged that government opponents on Cuba, supported bythe United States and other western countries, “were creating theconditions and aspiring to one day have happen here, what happened inLibya and what they want to happen in Syria.” Castro was attendingcelebrations in Guantánamo, Cuba, to commemorate National RebellionDay, which recalls the assault in 1953 on the Moncada and CarlosManuel de Cespedes garrisons. On July 26, 1953, on the 100th birthdayof national hero Jose Marti, the youth of the generation of thecentenary, including Raul and Fidel Castro, attacked the barracks, andlaunched the Cuban revolution that brought Fidel Castro to power in1961. Reuters and Prensa Latina (Cuba)
Turkey threatens military retaliation against Syrian Kurds
Syrian president Bashar al-Assad, fighting a growing rebel presence inthe two largest cities, Damascus and Aleppo, has turned control ofparts of northern Syria over to militant Kurds affiliated with theterrorist Kurdistan Workers’ Party (PKK). Turkey’s prime ministerRecep 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 shouldattempt to provoke us. We will not bow to provocation but rathertake whatever steps are necessary against terrorism.
Russia reconsidering ban on sale of S-300 missiles to Iran
Iran is suing Russia for $4 billion in the Court of Arbitration inGeneva for canceling a 2007 contract to sell five divisions of S-300long-range anti-aircraft missile system worth an estimated $800million to $1 billion. Russia canceled the contract after the UNSecurity Council approved sanctions on Iran on June 9, 2010. Bythreatening to win a $4 billion fine, Iran hopes to blackmail Russiainto fulfilling the contract. It was President Dmitry Medvedev whoimposed the ban in 2010, but President Vladimir Putin has beenreversing some of Medvedev’s policies and taking a harder line againstthe West. The missiles, which have both defensive and offensivecapabilities, including the ability to carry a nuclear weapon, woulddefinitely be a violation of the UN sanctions that Russia agreed to.Jamestown
Conflicting reports about fleet of Russian warships in Mediterranean
A fleet of 10 Russian warships, plus escort vessels, has entered theMediterranean Sea, carrying large numbers of Russian marines, raisingconcerns that the Russians are planning to intervene militarily inSyria, 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 ofTartus. It is carrying out military drills in theMediterranean.”
However Debka, which gets some things wrong, is quoting itsintelligence sources as saying that the Russian fleet is standingready to intervene if things start to go badly for al-Assad. Thefleet could also serve as a bargaining chip in a deal to replaceal-Assad with a new government that would remain pro-Russian.Monday’s threats by the al-Assad regime to use its chemical weaponsagainst “foreign adversaries” has substantially heightened tensionsthroughout the region, and it would not take much provocation at thispoint for someone to attack someone, possibly even by miscalculation.Ria Novosti (Moscow) and Debka
Debka: Iran’s Supreme Leader expects the Mahdi to come soon
As I’ve been reporting for years, Iran’s top leadership, led bySupreme Leader Ayatollah Ali Khamenei, are fervent believers in theMahdaviat — the Shia Muslim belief that the Mahdi (or “the 12thImam” or “the Hidden Imam”) is coming to save mankind. This belief isroughly equivalent to the Christian belief in the second coming ofChrist, or the Buddhist belief in the Maitreya — that a new Buddha isto appear on earth, and will achieve complete enlightenment (See my2009 report, “Theological split in Iran widens as opposition protests continue” for details).
Now Debka is reporting that its intelligence sources are saying thatKhamenei is predicting that the coming of the Mahdi is imminent, andthat it’s tied to the “divine achievement” of developing nuclearweapons capabilities:
However, the inner circle of Supreme Leader AyatollahAli Khamenei and the Revolutionary Guard Corp’s top command refuseto bow to fear and urge diplomatic assertiveness as the only wayto get Iran where it wants to go.
In recent weeks, our sources report, Khamenei’s messengers havebeen going around parliament and quietly assuring lawmakers thatpatience was required for enduring world sanctions.
Personnel at the Revolutionary Guards nuclear and missile unitsreceived the same assurance, and pep talks were given to raisemorale in the army. The “Coming of the Mahdi” was at hand, theywere 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 knowwhether this makes him less dangerous or more dangerous. Debka