Syrian-Iraq war spilled across the boarder into Turkey

Since the US coerces Turkey to participate in the Syrian war in July, the Syrian-Iraqi war has spilled across the boarder into Turkey. Our team tracks daily acts of war in Turkey. According to our first estimate, around one thousand people perished last month in eastern Turkey and Northern Iraq, as a consequence of the armed conflict between the Turkish army and Kurdish insurgents. Given the number of incidents, the daily attacks by Kurdish fighters in Turkey and the arming of Kurdish fighters in Iraq by the US, Germany and other Western countries, we expect the situation to deteriorate even further. We will come with more exact numbers in the coming weeks. It is no coincidence that the refugee crisis moved into Europe at the same time that Turkey became the next victim of a mix of reckless US-Europe foreign policies, ethnic conflicts, religious fanatics and scruples political ambitions.

Street fights in Turkey Friday. A Kurdistan Workers’ Party (PKK) fighter was killed and another was wounded in Turkey’s eastern Tunceli province after an exchange of fire with security forces Friday, local authorities said. Continue reading →

Forget China: Oil price main driver for market turmoil.

Commentators are linking the current market turmoil to problems in China. Our team sees the oil price as the main driver behind the market route. Low oil prices are positive for consumers and it will lower production costs for numerous industries. However it will also lower the investments in energy such as sustainable energy and oil producers will see their high profits turn into losses. Low oil prices have devastating effects on the financial sector that is involved in lending to the oil industry and in the trade of oil related derivatives. World oil production is about 90 million barrels a day, representing a cash flow of about nine billion dollars a day which comes down to three trillion dollars a year. With the oil price 40 to 50% lower, this flow is also cut by 40 to 50%. This amounts to 10% US GDP. Compare it with the 0.5% growth we are now missing in China, we prefer to keep our eyes on the oil price. These extreme moves can not be without consequence.

Many oil producers receive a fixed price for their oil as they covered their production with price insurance in the form of derivatives. With the current oil price, we just guess insurance providers paid out about 35 dollars a barrel to compensate the losses of the producers. Only for the US shale production this amounts roughly to 120 Million dollars a day. Somehow the financial sector has to cover these loses.

The US Energy Information Administration (EIA) stated in 2014 that most shale producers revenue has covered 75% of the production costs including initial investments, back then the oil price was about $95 a barrel. Even in 2014 this cast doubt on the profitability of US shale producers. Producers now claim they have lowered the production costs and are more efficient to reassure investors. But it is hard to believe they are now able to produce 50% cheaper. As investors are not buying this and start to flee the market, shale producers borrowing cost are starting to sky rocket, adding more pressure on the industry. Investors fear have already resulted in a spike in US junk bond rates. The energy sector accounts for about 15 percent of junk bond issuance. KKR has amortized 5 billion on two energy related bankruptcies. Restructuring of production companies will be inevitable.
Continue reading →

NATO: mismanagement without accountability

In the heyday of NATO between 1949 and 1995, the NATO’s credo was clear: an armed attack against anyone in Europe or North America would be considered an attack against all. For NATO members this was not a superficial contract between politicians, but a contract between the populations of the member nations. NATO countries had a standing army with conscripts prepared for war. There was opposition to the organization but everyone knew the purpose and scope of the organization.

In 1999 the NATO was enlarged with Hungary, the Czech Republic, and Poland under the same mandate: an armed attack against any one in Europe or North America would be considered an attack against all. The 1999 enlargement annoyed Russia but did not change the spirit of the organization nor the population it relies on and has to protect.

During the 2002 Prague summit, NATO invited former Soviet republics as Estonia, Latvia and Lithuania without consulting the population of its member states. While the NATO management assured these countries that they apply under the same security credo as all countries, the political reality is completely different. The willingness in Europe to fight in an ethnic border conflict in one of the former Soviet republics is very low. NATO Management has steered the organization on a slippery road, creating an organization that is not able to fulfill its promises. With the Baltic states as new member countries the NATO organization could still pretend that the emperor is not naked, but with the expansion including Georgia and Ukraine, things can unravel very rapidly.

With this expansion, Europe and the US could be sucked into a Caucasus conflict most Europeans never heard of and in countries they probably are not able to find on the map. There are no politicians in Europe who would send out their army on behalf of NATO into the Panski Gorge in case of a Russian invasion into this part of Georgia as they are chasing Chechen Jihadist. Continue reading →

The world should prepare for Mr. Trump as the next president of the USA

It is very hard to predict who in the end will be the next president of the USA. But the world should realize Donald Trump is a very serious established GOP candidate who has a very high chance of winning the 2016 elections. Especially outside the US this prospect is not taken seriously yet. Our conclusion is the opposite: one better be prepared for Donald Trump as the next president of the USA.

Many European and Asian analysts see Donald Trump as part of the USA media-show frenzy but hardly regard him as a serious contester for the US presidency. Mr. Trump is framed as an outsider who threatens the status quo, but this couldn’t be further from the truth.

According to our analysis, Mr. Trump is the most established GOP candidate with support from all over the US political elite and media establishment. He has full support from the GOP and media establishment. The McCain remark by Mr. Trump: “McCain is not a Hero” is supported by many veterans. Some GOP leaders will be sacrificed for the show, and some will despise Mr. Trump for his aggressive remarks, but cross the board he is admired and a well- respected GOP member and acknowledged by the US political elite across the political spectrum. He is not an outsider as he likes to frame himself.

The US media scrutinize Trump on some nonissues. The so-called critical media interviews were unconvincing; they were executed by journalists who were no match for him. It had nothing to do with serious politics. In fact, the US corporate media is launching Trump as the new GOP Brand. Trump is not Mrs. Palin who stunned Europe and Asia as the running mate for McCain during the 2008 elections. Mrs. Palin was despised by the media elite while Trump is being admired. Mrs. Palin is as simple minded as her supporters while Trump is far more clever than his audience, he knows that he is lying to them. He is a calculated businessman that plays with his victims, the ideal candidate for the US corporate establishment the ideal candidate for Wall Street.

Compare the media hype around Donald Trump with the 2012 maverick: Ron Paul. Ron Paul received zero media attention. Continue reading →

Europe has to say goodbye to Turkey

Europe’s Turkey policy has been derailed since a couple of years. In 2004 the famous far-right politician, Geert Wilders was expelled from the decent Dutch Liberal Party (VVD) because he refused to endorse Turkey as a European Member state. The European establishment cross the board pursued the ideal of a large European Union including Turkey, disregarding the opinion of the European population at large.
Since then, much has been changed. After the Gezi protests and the closure of Twitter and YouTube in Turkey, the European mood switched completely. Given the current political situation in Turkey, EU’s leadership, Mr. Junker and Mr. Schulz do not want Turkey to join the EU anymore. Only the UK is a staunch supporter of Turkey’s EU membership, an other sign that London wants to crumble the EU from within.

The elections in Turkey in June revived some hope in Brussels. Brussels elite saw the entrance of the the Kurdish HDP as a positive sign that the Turkey democratization process will be restored. HDP leader Demirtas was already dubbed the Turkish Obama by the European press. Federica Mogherini, High Representative of the EU for Foreign Affairs and Johannes Hahn, Commissioner for European Enlargement, saw the fact that the election took place with a record 86 percent turnout as “clear sign of strength of the Turkish democracy.” Continue reading →

Did Microsoft throw its credibility under the bus by investing in UBER?

Microsoft is investing heavily in its clouds services. Companies and governments have to hand over their most valuable and sensitive assets to Microsoft. For organisations, it is not only important to know in which jurisdiction Microsoft cloud services operate, but it is also important to know Microsoft’s corporate values in regard to local rules and laws with respect to privacy and confidentiality. Microsoft’s 100 million investment in UBER shows Microsoft’s contempt for the rule of law and local regulations. Something one could not ignore when considering the use of Microsoft cloud services.

There has been a lot of discussion about the disruptive company UBER. The image of the company is carefully framed as a rebellious start up from California. With 9 billion in cash investments, the company is part of the big US corporate family. UBER is definitely not a small rebellious startup.
It is naive to believe that the company started a disruptive service without realising, it will run into problems with local law enforcement. Before 9 billion cash is invested, investors know the business model, including the legal challenges and implications. The UBER business model is based on deliberately undermining the rule of law and tax evasion, investors and business owners are absolutely aware of this before they pour 9 billion into the company.
The company proclaimed that it has a very efficient model of ride sharing, we used to call hitch hiking. In reality the company exploits a world wide network of illegal taxi services, based on tax and local transportation law dodging. Continue reading →

Euro area unemployment rate at 11.1%

Unemployment in the single currency area differ sharply between member countries. According to Eurostat, Spain, Italy, Greece and Portugal have a youth unemployment rate between 30% and 50%, while countries like Germany, the Netherlands and Austria have a youth unemployment rate below 15%. There is some labor mobility in the Euro area but language, cultural differences and differences in insurance are still a barrier.

The overall unemployment rate in the Euro area is 11.1%. The euro area lacks a common fiscal policy, it also lacks a common unemployment insurance program and a common economic policy to address regional differences. A whole generation of Europeans will be wasted as a result of the high youth unemployment.

A common policy to address the current problems, implies a common European budget with a separate European Parliament that is solely dedicated to the euro area.