A Hidden War with Russia?

February 7, 2012

• Syrian uprising: A proxy war between the U.S. and Iran... or the U.S. and Russia?
• Who’s really suffering from economic sanctions against Iran... and why it creates a window of danger for the next 3½ weeks
• More reasons the unemployment numbers don’t add up... a “second Great Depression”... and the “screwed generation” coming of age
• Byron King on two factors propelling gold... and Frank Holmes with two more
• Statins and CRP: Reader asks what’s the big deal with Patrick Cox’s favorite “nutraceutical”

For a Middle Eastern country that doesn’t sit on much oil, Syria is certainly getting a lot of attention from the U.S. government these days.

“[W]e have to redouble our efforts outside of the United Nations,” says Secretary of State Hillary Clinton, “with those allies and partners who support the Syrian people’s right to have a better future.”

Hmmm... Covert action for regime change, now that China and Russia have nixed the idea in the U.N. Security Council?

The reason Washington takes such an interest in Syria is that it’s led by Shia Muslims and it’s the only government in the region that’s still friendly with Shia Iran.

Well, aside from the Shias in Iraq who were put in power by the United States. Boy, this stuff can make your head hurt.

While the rest of the world eyes how events in Syria might impact events in Iran, consider this: Syria is shaping up as another front in a new conflict between the Western nations and the Gulf sheikhdoms on one hand and the BRIC countries on the other.

The first came last year in Libya... when all four BRICs stood on the sidelines, abstaining from a U.N. Security Council vote authorizing force.

In the vote last weekend over Syria, Russia and China exercised their veto power... leaving the mouths of diplomats agape. Typically, it’s the United States that invokes a veto.

Russia’s motives are pretty clear: It sells the Syrians a lot of arms. It has a naval base on Syria’s Mediterranean coast. That would be at risk in the event of regime change.

“As we hear more calls in the U.S. and Europe to support anti-regime forces,” writes Daniel Larison at The Week, “Western governments and Syria’s Russian and Iranian patrons are on a path to make Syria’s internal conflict into a proxy war.”

No matter to hawks like Sen. Joe Lieberman: “I hope the international community and the U.S. will provide assistance to the Syrian Free Army in the various ways we can.”

And what of Iran?

“Western sanctions are doomed from the very outset,” declares a top Iranian official in response to the latest attempt to squeeze the mullahs.

Under the sanctions, Iran can no longer sell oil to Europe. But that’s a good thing in the eyes of Brig. Gen. Mohammad-Reza Naqdi, commander of Iran’s Basij force. Europe bought 18% of Iran’s oil. He says Iran is happy to hold onto it and sell the other 82% at a higher price.

The sanctions, says the general, will “reduce Iran’s imports, encouraging the people to turn to economical products, and because 200,000 new jobs will be created with every $1 billion reduction in imports, the country will witness a significant fall in unemployment.”

That smacks of a government trying to keep a restive public quiet. Still, “sanctions on Iranian oil... are bound to fail,” says the Independent Institute’s Ivan Eland, “because rapidly growing countries in the developing world, such as China and India, care less about Iran’s nuclear program than about getting cheap oil.”

“Iran probably will oblige them by selling its oil at a discount, thus allowing it to recoup otherwise lost sales.”

“Iran’s economy has always been sick, but now it seems worse than ever,” an employee at an Iranian bank ventured to tell The New York Times.

“Ordinary Iranians,” the paper reports, “complain that the sanctions are hurting them, while those at the top are unscathed, or even benefit.” You’d think American leaders would have figured this out with Fidel Castro still alive and kicking and writing newspaper columns 50 years after the Cuban embargo, but no.

So in Iran — even before the European oil embargo takes effect — confidence in the currency is vanishing so quickly, a vigorous black market has popped up, trading in U.S. dollars. “Food prices are going up, and my salary is not enough,” says a construction engineer, fearing an empty belly more than a police crackdown.

If the objective is to encourage Iranians to rise up against their government, it’s not working — any more than it did in Cuba. “We know they want to pressure us so we rise against our government, but we are not in a position to do that,” says a waiter at a tea shop.

Still, the restiveness of the middle class is taking its toll on the government.

It was never as monolithic as portrayed in Western media, but now the divisions are out in the open, the Times describing “a rift between the president and [Ayatollah Khamenei] that is helping to define the parliamentary elections, which are scheduled for March 2.”

The 3½ weeks between now and then are a window of danger. Leaders who find themselves under siege look for an external enemy to channel public anger. “The Iranian nuclear program,” Mr. Eland writes, “appears to have widespread public support across the Iranian political spectrum because it is seen as an issue of national prestige.”

“Also, Iran has hostile neighbors such as Israel, which likely has hundreds of nuclear weapons, and Saudi Arabia, which may have a secret nuclear program. So the Iranian government is not likely to abandon its nuclear program.”

If you haven’t reviewed Byron King’s “New War” scenario for the Persian Gulf — and how it could drive oil to $220 a barrel, and gasoline to $8 a gallon — it’s worth a look... before it becomes old news.

“The headline numbers... simply were not believable,” says John Williams of ShadowStats.com, evaluating Friday’s unemployment figures from the Bureau of Labor Statistics.

He’s been chewing over the annual “benchmark revisions” that account for everything the statisticians missed during the previous year. “Whenever there is a major systemic change to an economic series, and the data overtly are massaged so as to prevent distortions, unusually large changes in the resulting near-term reporting automatically are suspect as to accuracy.”

With that in mind, the numbers don’t add up: “New online help-wanted advertising fell sharply in January, indications from the January purchasing managers survey were mixed and anecdotal evidence still is running to the contrary of happier numbers.”

“Accordingly, I would expect reporting in the months ahead to revise and weaken with the payrolls, and would expect deterioration in the headline unemployment rate ahead, assuming some catch-up in seasonal factors, if that is an issue.”

“America has turned into a giant confidence game,” says Jim Quinn, with his own take on the numbers.

Mr. Quinn is an interesting fellow: His passionate blog entries run counter to everything you’d expect from the director of strategic planning at an Ivy League business school.

“This fantastic news,” he writes, “was utilized by the six banks that account for 80% of the stock market trading to propel the Nasdaq to an 11-year high and the Dow Jones to a four-year high. The compliant corporate press did their part with blaring headlines of good cheer.”

“The entire sham was designed to make Joe the Plumber pull out one of his 15 credit cards and buy a new 72-inch 3-D HDTV for this weekend’s Super Bowl.”

“If the governing elite were to report the truth, the public would realize we are in the midst of a second Great Depression.”

“We are the screwed generation,” writes A.J. Dellinger at Salon.com about those reaching young adulthood in this “second Great Depression.”

“We are the generation that continues to pay into Social Security with every paycheck but suspects we may never see the benefits of it. We are the recipients of degrees that don’t mean much from educational institutions that teach less and cost more. We are the casualties of wars that have gone on for over half of the lifetime of 2012’s first-time voters.”

This goes a long way to explain why Ron Paul draws a crowd of 20-somethings wherever he goes. “His audience,” Dellinger writes, “is overwhelmingly made up of college-age kids who happily applaud at ideas like a 0% income tax, abolishing the Federal Reserve and reinstituting the gold standard (or something equivalent) that would put value behind the U.S. dollar again. Not only do they cheer, but they understand.”

It brings to mind a quotation by the German physicist Max Planck: “A new scientific truth does not triumph by convincing its opponents and making them see the light, but rather, its opponents eventually die, and a new generation grows up that is familiar with it.”

U.S. stocks are going nowhere this morning, on little news. The major indexes are all up, but barely.

Gold has recovered all its losses from Sunday night and yesterday. At last check, the bid was $1,736.

Silver is fighting back too, up to $33.88.

“I anticipate that gold, silver and platinum will all continue to rise in price,” Byron King says in a recent interview with The Gold Report.

“There are currency-driven reasons why metal prices are going to keep rising, as well as other issues with overall supply and falling production.”

“In terms of production, the gold and the platinum production spaces are very precarious. A few very bad things could happen at random and knock global production for a loop and seriously impact supply. Think in terms of a major mine accident in, say, South Africa. Supply could fall off a cliff overnight...”

“I know accidents aren’t ever supposed to happen — nuclear plants in Japan and cruise ships in Italy are fail-safe, right? We have to watch that...”

“In terms of politics and monetary issues, precious metals create an outside limit on people’s political power. Thus I expect massive amounts of manipulation as we roll along, too. The dollar value of gold, silver or platinum will tend to rise over time, but we could see price spikes up and down due to that manipulation.”

For Byron’s favorite ways to take advantage, look here.

“Together, negative real interest rates and growing global money supply power the fear trade for gold,” adds U.S. Global Investors chief and Vancouver favorite Frank Holmes.

“The pressure these two factors put on paper currencies motivates investors from baby boomers to central bankers to hold gold as an alternate currency.”

Especially central bankers, who’ve been steadily accumulating gold ever since the Fed started cutting interest rates in 2007.



“In December,” says Frank, “Russia, which has been routinely adding to the country’s gold reserves since 2005, purchased nearly 10 tons; Kazakhstan purchased 3.1 tons and Mongolia bought 1.2 tons. UBS says ‘although reported volumes are not very large, it is still an extension of the official sector accumulation trend.’”

“I am confused,” a reader writes, “about Patrick Cox’s ‘breakthrough’ with C-reactive protein.”

“I believe statins are very effective in reducing CRP. When my CRP was high a few years ago, my doctor put me on a statin and my CRP went down a lot and has stayed there. So the value of this is...?”

The 5: “This naturally occurring alkaloid,” Patrick writes — it turns up in tomatoes, peppers, even tobacco — “is more effective than the statins for lowering CRPs, while lacking their sometimes dangerous side effects.”

It’s not necessarily a substitute for statins; its effects on triglycerides, for instance, are unknown. “However,” says Patrick, “we know from cell and animal studies that other markers of inflammation, including interleukin-1 and -6 as well as tumor necrosis factor, are also reduced in a dose-dependent fashion.”

This turned up in research from Florida’s Roskamp Institute last summer. The tobacco-derived product that has Patrick so excited is on the far left.



“This tells me,” says Patrick, that the product “is not simply taking out the markers, but is actually preventing their creation by directly addressing autoimmune inflammation.”

And because inflammation accompanies nearly every disease of aging, the applications are potentially endless. “Many of the diseases caused by autoimmune inflammation will be significantly delayed, if not actually prevented. This translates into much-longer healthy life spans.”

And for early investors, it translates into life-changing gains.

Regards,

Dave Gonigam
The 5 Min. Forecast

P.S. “If the Fed were an Eastern European socialist government,” writes Laissez-Faire Books executive editor Jeffrey Tucker, “the year would be about 1987.”

That’s his provocative conclusion after debating progressive Dean Baker last Friday night in Washington, D.C. Read on to learn why the Fed’s days are numbered... and the number is low.
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