Wednesday, December 21, 2011

Bloodhound Tries To Sniffs CIA Trail

The CIA: Each paragraph represents a geopolitical event that bears CIA fingerprints.

As America has pulled troops out of Iraq, Iraqi oil production has soared. Oil contracts are very clean and well enforced. Clean contracts in the second most corrupt country in the world. Two weeks ago Al-Qaeda hit two pipelines in the south. The pipelines were fixed in record time. Oil exports were not affected. The Iraqi oil industry is a machine. It is almost up to 3 million barrels a day. this is much higher than under Saddam Hussein. As long as oil flows out of Iraq at ever increasing amounts the overall situation there is a net plus for the good guys in the Long War. For instance, if democracy were to fail in Iraq but oil exports actually accelerated, we win.

Libyan oil production is coming back ten times faster than experts predicted.

Hundreds of experienced Libyan fighters are joining the Free Syria Army. The FSA is based in Turkey and growing into a formidable military force. It is winning battles against the Syrian Army and holding ground. The territory it controls is small, just a few slivers of Syrian land, but that how it all starts. Every day we get causality numbers from the Syrian Civil War. These numbers seemed highly massaged. Mostly we just hear about civilian casualties at the hands of the Syrian Army. We aren't hearing about the hundreds of Syrian soldiers that have been killed so far by the good guys. Assad is in big trouble. If Assad is overthrown by the CIA, then Iran is toast.

The Air Force is complaining loudly that its pilots flying CIA drones are overworked. There is a mad scramble to find more drone pilots from the ranks of experienced older American fighter pilots. This means that 100 drones are aloft over the Long War battlefields at any one moment in time. They are probably making kills that we aren't hearing about in the mainstream media. This is probably why Al-Qaeda has taken up a new strategy of sowing sectarian tension between Sunni and Shiite. This is a desperate strategy: opening up a new war to win an existing one, two wars at once where before there had been only one.

The Muslim Brotherhood has so far sided with the Egyptian military, not the evil Salafist politicians as Egypt's election grinds forward. This is a volatile situation that is far from over, but so far so good. In a month or so the Salafist will take whatever seats they win in the new Egyptian parliament. The drafting of the new constitution will be the most significant Long War event in the coming year.

Thursday, December 15, 2011

Let's Talk Turkey

Long War: Assad's Syrian Army (bad guys) lost about 40 soldiers this week to the rebel FSA (good guys), this was highest number of losses yet in the Syrian Civil War for the bad guys. The rebels initiated four separate battles over the week, knocking Assad's army back hard each time with coordinated rocket propelled grenade attacks. There are now Syrian towns where Assad's soldiers cannot go. It seems the rebels are starting to hold and control territory. The Syrian rebels are proving that they might be able to beat Assad if NATO were to create a No-Fly Zone over the desert country. France floated a trial balloon for a NFZ when it spoke of opening a humanitarian corridor to besieged civilians through military force.
Of course Turkey is a NATO member and might be talking to France through back channels. Either way it is becoming increasingly clear that Turkey is not only allowing the rebels to build camps and training facilities on Turkish territory, the Turks are also supplying, training, and in fact leading the FSA.
The evidence for this is the sudden flow of cash to the rebels, flow of weapons, and the overall success they are enjoying - a level of success that speaks to outside help. Another piece of evidence is that Turkey is tightening the noose on Syria through trade sanctions that go beyond Turkish companies. Turkey was able to crush a trade deal between India and Syria two days ago.
For the sake of argument let's suppose that in a year or two Assad's government is overthrown just as Gaddafi was overthrown. This eventuality would almost guarantee that a larger war with Iran would be inevitable. And that war would be spearheaded by Turkey with the US playing a supporting role, as it did in Libya.
The most important aspect of Turkey's vision of Islamic government and society in the 21st century is that the former leader of the Ottoman Empire is a ferociously free market entity. Turkey's economy is growing as fast or faster than any other country on Earth.

Wednesday, December 14, 2011

Turkey Steps Up

Charts: The S&P 500's 200-day moving average is between 1264-1267. The 50-day is 1224. The index is currently below both moving averages and since the 50-day is below the 200-day the index is still experiencing a death cross. An honest look at the charts indicates that we are in a bear market. So we have a new set of Fibonacci retracement levels. 1210-1212 is the new 50% retracement. So far today the index is finding support at this level, which is obviously good. Volatility is still increasing. To reach the all time high set on January 9 2009 volatility will have to increase by about 30%. After the all time peak in early 2009 volatility (as measured by EV) fell from 194% to 20%. Never in the history of the stock market has there been a lengthy bull run with volatility this high. It probably needs to go higher, but then it needs to dramatically collapse. If it stabilizes at a relatively high level we will have a few more years of bear market.

Fundamentals: The Greek economy is contracting at 5.6% (annualized) rate. The Irish economy is expanding at 1.5%. The two were the first Euro-periphery countries to get into trouble and have since then put austerity budgets in place. The Irish government also launched huge free market reforms and enjoys the broad support of voters. Greece has not put free market reforms in place and its people don't support anything the government is doing. Italy is traveling the same path as Greece, not Ireland. Meanwhile, financial markets want only one thing: ECB quantitative easing, where the European Central Bank prints money out of thin air and buys billions of dollars (euros) worth of Italian debt. If this happens without Italy taking the path of Ireland, then the long term outlook will be very dark. So the markets are wrong (long term). At this point an investor should probably not fight the markets and buy stocks whenever the ECB says QE is off the table on the belief that this is long term a good thing. If the ECB does engage in QE the results will be unpredictable in the medium term, in the short term it will be bullish. It is hard to define short term.

Long War: Obama's decision to pull all US troops out of Iraq continues to rock the world of the Long War. The threat of Israel launching an air strike against Iran has the Iranian navy practicing maneuvers to close the Strait of Hormuz and the US Navy is getting ready to counter these maneuvers; this is supporting the price of oil. With its US patron leaving Iraq unprotected, the Iraqi government is reaching out to Iran, forging the beginning of an unholy new alliance. To impress Iran, Iraq is doing what it can to help Syria, Iran's puppet. The power vacuum left by Obama's troop withdrawal is causing Turkey to step up and fill the role played by America. Turkey is hinting that it will invade Syria and/or step up its support of the Free Syrian Army. Turkey is also slapping Iraq verbally but we don't know what exactly Turkey is saying to the Iraqi government. The Iraqi Prime Minister is saying that Turkey represents the greatest threat his country faces, so whatever Turkey is saying must be pretty good. The Turkish military is the second strongest in NATO after the US. Turkey is a regional superpower and Iran's worst nightmare.

Meanwhile, Al-Qaeda is launching a new strategy: terror strikes that fan the Sunni-Shiite conflict that is always present in the Muslim world. Sunni suicide bombers are for the first time hitting Shiite targets in Afghanistan. In Iraq there have always been Sunni terror strikes against Shiites but the pace has stepped up dramatically in recent weeks. The nascent civil war in Syria is a Sunni/Shiite sectarian conflict. The good guys in Syria are Sunni. Al-Qaeda is Sunni. Al-Qaeda very much needs to gain a foothold in the Syrian war and take control of the good guys and then convert them to bad guy Sunni fanatics. Only Turkey and the CIA can prevent this.

Amazingly, Mullah Omar's Taliban is against Al-Qaeda sectarian attacks in Afghanistan. It is hard to understand exactly what this means.

Tuesday, December 6, 2011

We Give You All CIA All the Time

Charts: Today the S&P 500 advanced, hit its 200-day moving average, found resistance, and retreated in higher volume. In the last few weeks it has touched the 200-day line dozens of times and found resistance. The 200-day line is a technical battlefield. A victory or defeat after a hard fought battle like this magnifies the importance of either the victory or the defeat.

Last week's gigantic rally has not yet seen a follow through day. The current rally is therefore not a technical rally but it is a de facto rally. Probably the follow through day will come when and if the 200-day line is conquered. If resistance holds at the 200-day line, then a sharp downdraft is possible since we would never have had our follow through day.

Fundamentals: There have been 15 Euro-zone summit meetings so far over the past 2 years, all promising to solve the Euro-debt crisis. Every summit has seen a global stock rally beforehand. And every summit has seen a correction afterwards. Maybe this time will be different and the rally will continue and morph into a bull market. There is no point speculating now about whether it will or won't because we don't know what the 16th plan will be until after the summit. All we know for sure is that the 15 plans that came before all sucked. Have you ever heard the old saying 16th time is a charm?

Long War: After a lot of spade work Egyptian Intelligence created the plan for the Iraqi Sunni Awakening movement in 2007. The Egyptian spooks and probably the CIA successfully sold this plan to General Petraeus, who then sold it to President Bush, together they implemented it, and because of this brilliant plan the Iraq War was won.

Today we learn that the radical Salafist parties (jihadist bad guys) in Egypt are physically attacking the Muslim Brotherhood in small street battles despite the good showing the bad guys have made at the polls. It is likely that Egyptian Intelligence is driving a wedge between the now moderate Brotherhood and the radicals. Egyptian Intelligence would only do this if it knew the CIA had its back. A broad picture emerges of the parts of the Long War controlled by Langley as going well.

But the parts controlled by the Pentagon are going poorly. Acting like Cambodia did in the Vietnam War, Pakistan has blocked NATO fuel and ammo supply routes. NATO is airlifting in fuel, which means it costs $400 a gallon to fuel a hum-vee. Before the supply routes were closed it cost $1 million a year to supply one NATO solider in Afghanistan. The current cost is now probably double or triple that.

Now think about the parts of Afghanistan controlled by CIA strongman Afghan General Razik around Kandahar, the birthplace of the Taliban. These regions are now more peaceful than Kabul. The Taliban are actually surrendering to the good guys in Razik's territory. Razik is known as the only man on Earth that the Taliban fears. He is so brutal that NATO will not give prisoners to him any longer because said prisoners come back mutilated from his interrogation methods. How much does it cost the US to pay for Razik's police and security forces per man? Only a few thousands dollars. The same could be said about the cost of African Union troops battling Al-Shabab. Native troops like this are very inexpensive and in reality more effective than US troops. This is called more bang for your buck. A million times more bang for your buck.

So the biggest problem we face is that the CIA is not big enough to be everywhere at once and faces huge budget cuts. Senators like to give money to the Pentagon because it creates jobs (building tanks, etc...). They don't like to give money to the CIA because no jobs are created as far as politicians can see. They can't see or don't care how many jobs are created by winning wars. As I said yesterday, keep your eye on Joe Biden, he has the CIA's back.

Monday, December 5, 2011

Welcome To The All CIA Channel

Charts: The S&P 500's 200-day moving average is 1264. The broad index is struggling with the 200-day line today. If it trades above 1264 for several days in a row, then chartists will say the summer's bear market is over. If not, we are still in a bear market.

The CIA and The Long War: Libyan oil production is ramping up ten times faster than experts predicted. The conventional war is over and there are no signs of an Islamic insurgency. This is because Qatar and the CIA are arming the Islamic militias who did the heavy fighting in the recent war. Qatar is also providing these militias with religious leadership and instruction, essentially taking them over and turning them into good bad guys. The government of Libya complains long and hard about this Qatari power base growing within their country, but to no avail. AQIM (Al-Qaeda North Africa) has abandoned Libya as too dangerous and is moving into Nigeria. Libya is becoming something like what South Korea was in the Cold War, i.e. a pro-American Pit Bull.

A couple months ago Kenya and Ethiopia sent their armies pouring over the Somali border and knocked Al-Shabab out of Mogadishu and destroyed jihadist camps near the Kenyan border. So we have Kenya, Ethiopia, and Qatar acting in concert with the CIA to clobber the bad guys in Africa without one US Marine putting his boots on the ground. This is the only way to go in the Long War.

North Sudan has almost finished conquering the disputed border regions that were left after North and South Sudan split in two. South Sudan seems to be allowing these region to be absorbed by the North. This speaks to a CIA brokered wind-down of the mini-war in Sudan.

A few months ago the CIA leaked a message to the popular press: It was getting ready to unleash another computer virus against the Iranian nuclear weapons program. Intense security measures were then undertaken by Iran to protect its nuclear facilities. Probably protection measures were relaxed at Iran's missile development program. Taking advantage of this, the CIA sent a drone or pack of drones into Iran and blew up a convoy of trucks carrying rocket fuel. This attack killed the head of Iranian missile research.

While this was going on Obama announced that all US troops would soon leave Iraq (not good). This paves the way for Israel to attack Iran. The Israeli Air Force has to fly over Turkey or Iraq or Saudi Arabia to reach Iran. To effectively bomb Iran's nuclear facilities Israel will have to make hundreds of sorties, which will take months. Any Muslim nation will launch fighters against Israel if it over-flies Muslim air space. Iraq has no real Air Force. With the US Air Force gone, Israel could easily use Iraq as a transit corridor.

Such an Israeli attack would be met by Iran's navy closing the Strait of Hormuz. The US Navy would then be forced to destroy the Iranian Navy. This would ignite a full scale war with Iran. Oil would then go to $250 a barrel and the world economy would meltdown.

So there is only one viable solution to Iran's nuke program: the CIA. Furthermore, the CIA has to convince Israel that Iran will be declawed. Israel just announced there is not an "imminent" attack on Iran, another victory for Langley.

A couple months ago Kurdish guerillas launched their biggest ever attack on the Turkish Army, killing a score of Turkish soldiers. The Kurdish attacks stopped when Turkey allowed the Free Syrian Army (FSA - good guys) to open bases in Turkey and launch attacks against Syria from these bases.

At first the FSA surgically attacked Syrian Intelligence assets. After these attacks the FSA humbly said it did not do much damage, even though it in fact did tons of damage. More recently the FSA is breaking into Syrian Army posts and snagging Sunni soldiers, who are then assimilated into the FSA (brilliant). The sudden professionalism of the FSA speaks to heavy CIA involvement.

Crippling Syria also cripples Iran and Hezbollah. This in turn gives Israel another reason not to attack Iran. By esculating one war the CIA is preventing a much larger one from occuring.

The Islamic vote in the ongoing Egyptian elections is being split between the Muslim Brotherhood and the radical Salifist parties (bad guys). All the radicals are being siphoned out of the Brotherhood and dumped into the Salifist camp. We now have to root for the Brotherhood to win and form a government just like we need to root for Islamic militias in Libya being co-opted by Qatar. As you will recall, earlier in the year I blogged that the quick rise of radical Islamic parties in Egypt was suspicious. We now see that segragating these bad guys is a good thing and paradoxically whoever "helped" the Egyptian radicals actually hurt them.

Meanwhile, the parts of the Long War controlled by the Pentagon are going poorly. So the biggest danger in the future is slashing the CIA's budget as dictated by last summer's debt deal. The biggest ally that the CIA has in DC is Joe Biden. We need to see him gain power within Team Obama and help the CIA.
 
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