Posts Tagged ‘Iran’
Interview by James Turk
The Gold Report
November 7, 2011
A war-mongering U.S. government could be less than 18 months away from decimating the last 5% of value left in the dollar, says Richard Maybury, the author of the U.S. & World Early Warning Report. Until some new exchange-traded-fund-like basket of natural resources provides a store of value, this “juris naturalist” has some advice about how to protect your wealth during the coming collapse.
The Gold Report: Richard, last month, you made a presentation at the Casey Research/Sprott Inc. “When Money Dies” Summit entitled “The War that Will Kill the Dollar.” You explained that the corrupting influence of power had sent our country’s leaders shopping for war, disregarding Westphalian respect for sovereignty and hastening the collapse of society. What are the signs that we are reaching a critical point? And, is there any way we can change course?
Richard Maybury: You can see the signs very clearly in the Middle East and North Africa. The Federal government is involved in several wars there that have nothing to do with America. One of the best examples is Libya. U.S. officials are taking credit for Moammar Gadhafi’s death just a year after they were bragging about having tamed the threat. Now Libya is a mess. It will very likely be taken over by some sort of Islamic government that isn’t going to be very friendly to America.
TGR: Why do we, as a country, do this? If it’s not going to end well for us, what’s the economic or political reason to get involved?
RM: The U.S. government gets into wars in far corners of the world that have nothing to do with America because the leaders like getting into wars. That is how presidents achieve greatness in the history books. A president has no prayer of going down in history as great unless he has won a war. Look at Mount Rushmore. All four presidents featured there won wars. That seems to be the number one criteria historians use for deciding whether someone is a great president. It constitutes an automatic incentive to go out looking for wars.
TGR: What is the incentive for the American people to go war shopping?
RM: Nothing. It’s absurd. During the First Gulf War, people had a tremendous good feeling about going to war with Iraq. They would come home from work, order a pizza, sit in front of their TV sets and watch the war like it was a football game. War became a form of entertainment.
TGR: Is there anything we could do to incentivize our presidents to act peacefully?
RM: I doubt it very much. People go into politics because they seek political power. Once they get the power, they naturally want to use it on somebody. What is the point of having power if you can’t use it? So, no matter what kinds of controls you put on, future presidents will find a way around it.
The ideal situation would be one where war is used as a last resort. Westphalian sovereignty, a set of agreements dating back in the 1600s, established the precedent that the European powers would only go to war in self-defense. You had to have a clear and present danger before you could go to war. And, even then, it was supposed to be the last resort. That was the basis of international law up until this year. That isn’t to say that the Westphalia treaties weren’t violated a lot of times, but they helped. After Iraq, Serbia and now Libya, it is pretty clear that the policy is we can just go out and hit anybody we want for any reason we want as long as we believe the other guy is up to no good.
TGR: If this is the new reality, then let’s talk about some of the economics around it. War is expensive. You have pointed out that since the Federal Reserve was created in 1913, the dollar has lost 95% of its buying power. You said, “War destroys currencies.” It usually leads to governments printing more dollars to pay for guns and tanks. How much debt and overprinting can the country take before the velocity of economics, which is something that you also talked about in association with how quickly dollars are exchanged, catches up with reality and the dollar loses that last 5% of its value?
RM: Velocity refers to the speed at which money changes hands, and it is a measure of money demand. When people don’t really want the money, they start trading it away faster, trying to get their hands on things they do want, things that have value that they trust. The cost of this war in the Islamic world will continue going up. At some point, it’s going to be a major contributor to people losing what confidence is left in the dollar and people all over the world will start dumping it. This is a psychological thing. It’s about emotions, so it is hard to pinpoint when they will lose all confidence in the dollar.
TGR: What would it look like if that last 5% were gone? Are we talking about hyperinflation? Are we talking about banks collapsing? Are we talking about bartering? What would it look like?
RM: We are talking about all of that. It would be chaos. We saw it in Zimbabwe when the Zimbabwean dollar became worthless because the government printed so many that people wouldn’t accept them anymore. The country experienced enormous runaway inflation where prices were rising 50% a day before the Zimbabwe dollar collapsed.
It would probably start with someone somewhere in the world selling off his dollars and begin trading them for whatever it was he had confidence in. The foreign exchange value of the dollar would fall. Other people would notice; they would get scared and start selling their dollars. The foreign exchange value of the dollar would drop more. This process would continue until you have panic around the world to get out of dollars. Americans would be the last ones to get involved. We are always the last to know what is happening to America. Suddenly Americans would wake up one morning and find that a gallon of milk that cost $4 the day before costs $6 today. The next day they would find that it costs $12. And the next day they would find that it costs $36. That is when Americans would realize that they are in deep trouble; their dollars are about to become worthless.
TGR: Of course the Fed wants to avoid that scenario. You describe yourself as a follower of Austrian economics made famous by the Nobel laureates Friedrich Hayek and Ludwig von Mises. They describe financial systems as complex processes run by billions of constantly changing individuals rather than something that can be manipulated from a central point, which seems to be what is being attempted right now. If that is the case, what will be the outcome if the central government tries to force a more Keynesian control of the flow of money?
RM: They will mess it up even worse than they already have. The world has been living under Keynesian economics since 1971 when Nixon took the dollar off the gold standard. John Maynard Keynes was a semi-socialist. He believed that the way to fix the economy was to print a whole bunch of dollars and dump them out there. This has been standard procedure for the past 40 years. All currencies have been dropping in value during that time. Another round of quantitative easing (QE) could further speed the rate at which the money circulates, something that has the same effect as increasing the supply of dollars, creating a larger demand for goods and services and having an inflationary effect. I think Fed officials are dropping hints about the next QE because they are trying to cause velocity to rise, a secret QE if you will.
TGR: What if the stealth QE campaign doesn’t work? What form might a real QE3 take?
RM: It is hard to tell what they will do. One of the myths that everyone is taught is that the government has some sort of tremendous understanding of economics and the ability to make adjustments to economic activity. The term fine-tuning is used sometimes. Actually, we are talking about a group of human beings who don’t know much more about real economics than anybody else. They think they do, but they don’t. They just bounce around from one attempt to control things to the next, making a mess of the country. The economy is not a machine. It is people, human beings. It is a biological system, not a mechanical system. But, the government treats it like a mechanical system, so they are always making mistakes.
TGR: If war and hyperinflation are the inevitable future, how can investors survive or maybe even thrive during a time like this? What are the opportunities? Natural resources? Commodity equities? Where can we be safe other than putting that $100 bill under the bed?
RM: Well, I wouldn’t put $100 under the mattress, at least not for very long, because it will soon become worthless. But commodities, stocks of raw materials firms, gold and silver and platinum coins have value. Generally, I try to see the world in terms of two kinds of investments: dollars and non-dollars. You definitely want non-dollars, things that do not have their value tied to the value of the dollar. An example of a dollar asset is something like a bond or bank CD. Their values are tied directly to the value of the dollar. If the dollar falls, then their values fall.
Gold is a non-dollar asset. When the dollar falls, usually gold rises. The same is true with silver and oil. All of these things have values that are not tied to the dollar. My advice is to invest in non-dollar assets. Gold would be at the top of the list, silver and platinum and then oil.
TGR: In your Early Warning Report Newsletter, you predicted that gold will top $3,000/ounce (oz), silver will hit $50/oz and oil will exceed $300/barrel. Gasoline will go to $9/gallon. When will we see these rises? And what will be the catalysts that take them there?
RM: The next QE, which I expect to come along no later than March, could set off a flight from dollars. Then we could see those predictions realized within 18 months.
TGR: You said that once we have had this loss of the entire value of the dollar and people are looking for another way to trade, money could be based on some collection of metals with currency acting as a receipt for the tangible gold, silver, platinum and whatever else happens to be in that basket. What would that transition look like? How painful would that be? How would it be orchestrated?
RM: It doesn’t have to be painful. The markets are moving in that direction. People trade exchange-traded funds (ETFs) for practically everything now. I can envision a mutual fund or an ETF that is a collection of various things. It could be gold, silver and platinum. It could have oil in there. It might include Swiss francs. It could even have various patches of real estate. The ETF itself would then become a currency, not because anybody has it planned that way, but because the markets will see that there will be a demand for something that is a non-dollar asset that is easily tradable and seen as a store of value. There would probably be hundreds of these baskets of assets at the start. Some would work better than others would; the less workable ones would shake out. You might wind up with maybe a half dozen ETFs or mutual funds that are baskets of various assets circulating in the world. They would essentially become the currencies.
TGR: Would investing in ETFs now be a good way to prepare?
RM: No. I don’t know of any that are arranged that way. It may be a while until somebody catches the idea and decides to give it a try.
TGR: What about the precious metal equities? Would that be a good way to prepare?
RM: Yes. There are lots of good precious metal stocks. I own quite a few. That is another way to protect yourself. However, be sure to deal with a broker who really knows natural resources. You have to have some skill in picking those stocks. It’s not like going down and buying a gold coin where you just walk into the coin dealer and tell him I want a handful of American Eagles or Canadian Maple Leaves. You really have to know what you are doing when you are buying gold stocks.
TGR: Any final thoughts you want to leave with The Gold Report readers?
RM: The world has changed. When you look at the news and you say to yourself, “My God, America isn’t what it was; the world isn’t what it was,” have the confidence to know you are right. We are probably not going back to what America or the world was anytime in my lifetime. Therefore, you want to start learning everything you possibly can about this new condition and adapt to it.
TGR: Thank you for sharing your thoughts.
RM: Thank you, JT. I appreciate being here.
By Mitra Amiri
TEHRAN | Wed Jul 6, 2011 8:48am EDT
“It was always a tradition to give gold coins to close family members on special occasions. This year for the first time I can not afford to do it anymore.”
Whether for wedding gifts or as a way to squirrel away savings, Iranians have a long history of buying gold coins, widely available from dealers in high street shops and bazaars. But recently, what was a steady demand has become a gold rush.
Amid global economic uncertainty, the price of gold on world markets rose steadily in the first half of 2011 and Iranian coins appreciated in line with that. Rather than cashing in their coins for a profit, Iranians continued to buy them in ever larger numbers.
“Usually, as the price of an item increases, demand will decrease. But in the case of gold, it seems that higher prices are creating more demand,” said a gold retailer in Tehran who asked not to be identified.
The Iranian gold rush was mainly driven by fears about the domestic economy, particularly the risk of soaring inflation and a wobbly currency, he said.
In addition to concerns about a global double-dip recession, the economy has been hit by sanctions as the United States leads global pressure on Tehran over a nuclear program many states say is aimed at building atomic weapons, a charge Iran denies.
“The reasons that people are drawn to these safe assets — gold coins and hard currency — are firstly a limited choice of investment opportunities, and secondly a fear from the weakness of the national currency,” said an economist who asked not to be named.
“These are results of more potential economic instability in the country.”
KING AND CLERICS
Treasured as a store of value, Iran’s gold coins, minted over centuries, are also culturally important.
They were traditionally stamped with the faces of kings. After the 1979 revolution, the Islamic Republic started to issue Bahar-e Azadi (Spring of Liberty) coins, some of which were engraved with the image of Ayatollah Ruhollah Khomeini, who led the uprising against the last shah.
Produced by the Central Bank of Iran, a standard gold coin weighs 8.133 grams. It is also sold in smaller denominations of a half coin and a quarter coin.
In June the price of a Bahar-e Azadi gold coin reached an all-time high at around 4,550,000 rials ($422), compared to a year ago when it sold for around 3,120,000 rials.
Iranian authorities have repeatedly denied that sanctions are hurting the country, saying the economy is strong.
But many Iranians are worried that keeping their wealth in rials is a risk.
“We can keep the coins at home and feel secure,” said Mohammad, a 39-year-old stock trader who said financial sanctions have made it harder for normal Iranians to transfer capital abroad, for example to buy property in Dubai or Europe.
“In the current situation there are people who can move their capital and invest in other countries, but we as ordinary people have no choice but to invest in gold coins,” he said.
INFLATION AND DEVALUATION
Saving rials is also less attractive than a few months ago after the government reduced the level of interest banks could pay on savings. Returns were slashed in April from a range of 26-28 percent to 14-17 percent, below what many Iranians believe to be the actual inflation rate.
Worries about the declining buying power of the rial and doubts over the currency’s stability are the main drivers behind the flight to gold.
While the International Monetary Fund has praised Iran for reducing inflation to 12.4 percent for 2010-11 from 25.4 percent two years earlier, the rate has been creeping back up over the last year to 14.2 percent in May. Prices have risen much faster for key items such as fuel, water and food as heavy government subsidies are phased out.
At the end of last year, President Mahmoud Ahmadinejad started winding down some $100 billion of subsidies and giving direct cash payments to families to reduce the impact of price rises. The switch, praised by the IMF, was done despite the predictions that surges in the prices of fuel, food and water could stoke wider inflation.
As well as hoarding gold, many Iranians sought to change their rials into hard currency, increasing demand for dollars so much that the Central Bank devalued the rial by almost 11 percent last month.
That sudden decision did nothing to assuage Iranians’ fears about the safety of their savings.
Many economists believe the rial, which is loosely pegged to major world currencies under a “managed floating exchange rate,” has not been allowed to devalue in line with inflation and is overvalued by between 30 and 50 percent.
As international trade in rials is very limited, the change in its value has no real impact on global markets.
It sank to 12,500 to the dollar last month, compared to 10,500 earlier in the year.
Since the devaluation, Central Bank governor Mahmoud Bahmani has said he might use a raft of policies to prevent the rial falling further, including possibly restricting the activities of money traders he accuses of profiteering and speculation.
He also said Iran would reverse the bank interest rate decision. “We will curb the fake demand for foreign currency by increasing interest rates,” the daily Arman quoted Bahmani as saying in June.
Following central bank intervention, injecting hard currency and gold into the market, the price of both the dollar and of gold coins has eased.
But analysts say fundamental problems will continue to pressure both and have criticized what they say are contradictory signals from the government.
Bahmani said the rial will recover to a “market rate” of 10,000 rials and the price of gold will decline.
But such comments, immediately after a devaluation which put the official dollar rate at 11,717 rials, have only added to the uncertainty, some economists say.
“Signs of confusion over forex policymaking are very apparent. The sudden increase (in the dollar) followed by a drop and the announcement of various rates for currency by different finance officials is indicative of that,” the economic daily Abrar-e Eqtesadi, wrote on July 3.
Ordinary Iranians are far from reassured.
“During these times of instability in Iran, the safest form of investment is gold coins because no-one knows how much the rial will decline or interest rates will be,” said 30 year-old private sector employee Saba Aqabala.
Back in her apartment in northern Tehran, Grandma Molook hopes she might still find the money to buy her granddaughter the gold coins. “I’m afraid I’ll have to buy her a household appliance,” she said. “Or just give her the cash.”
Read the entire article HERE.
Secret Iran Gold Holdings Leaked: Tehran Holds Same Amount Of Gold As United Kingdom, And Is Buying More
by Tyler Durden
03/20/2011 20:41 -0400
While it will not come as a major surprise to most, according to senior BOE individuals and Wikileaks, Iran, as well as Qatar and Jordan have been actively purchasing gold well over the amount reported to and by the IMF, in an accelerated attempt to diversify their holdings away from the US dollar. “Iran has bought large amounts of gold in the international market, according to a senior Bank of England official, in a sign of how growing political pressure has driven Tehran to reduce its exposure to the US dollar. Andrew Bailey, head of banking at the Bank of England, told an American official that the central bank had observed “significant moves by Iran to purchase gold”, according to a US diplomatic cable obtained by WikiLeaks and seen by the Financial Times.” The reason for Tehran’s scramble into gold: “an attempt by Iran to protect its reserves from risk of seizure”. The misrepresentation of Iran’s holdings could be so vast that Iran could possibly be one of the largest holders of goldin the world. “Market observers believe Tehran has been one of the biggest buyers of bullion over the past decade after China, Russia and India, and is among the 20 largest holders of gold reserves… with an alleged 300 tons, big enough to challenge the UK at 310 tons, and more than Spain! ” As a reminder according to the WGC, Iran is not even disclosed as an official holder of gold. Also, Iran is not the only one: “Cables obtained by WikiLeaks cite Jordan’s prime minister as saying the central bank was “instructed to increase its holdings” of gold, and a Qatar Investment Authority official as saying the QIA was interested in buying gold and silver.” Which means that there is far more marginal demand by countries supposedly friendly to the dollar, as many more than previously expected are actively dumping linen and buying bullion. What all this means for the future price of gold, especially with geopolitical tension in the region, and QE3 imminent, is rather self-evident.
From the FT:
Andrew Bailey, head of banking at the Bank of England, told an American official that the central bank had observed “significant moves by Iran to purchase gold”, according to a US diplomatic cable obtained by WikiLeaks and seen by the Financial Times.
Mr Bailey said the gold buying “was an attempt by Iran to protect its reserves from risk of seizure”.
Market observers believe Tehran has been one of the biggest buyers of bullion over the past decade after China, Russia and India, and is among the 20 largest holders of gold reserves.
They estimate it holds more than 300 tonnes of gold, up from 168.4 tonnes in 1996, the date of the most recent International Monetary Fund data.
Ummm, according to the WGC the UK (thank you Gordon Brown) has 310 tons of gold… Iran has the same amount of gold in storage as the (formerly) biggest colonial power in the history of the world. And this is not breaking news?
The cable, dated June 2006, is the first official confirmation of Tehran’s buying. Last year central banks became net buyers of bullion after 22 years of large sales, helping drive gold prices to all-time nominal highs. Trades by central banks are often kept secret.
Bankers said other Middle Eastern countries had also been quietly adding to gold holdings to diversify away from the dollar amid political tensions and volatility in currency markets.
“The totality of central bank reserves is not what is reported to the IMF,” said Philip Klapwijk, executive chairman of GFMS, a precious metals consultancy. “There’s probably another 10 per cent on top of that.”
Cables obtained by WikiLeaks cite Jordan’s prime minister as saying the central bank was “instructed to increase its holdings” of gold, and a Qatar Investment Authority official as saying the QIA was interested in buying gold and silver.
“There is no question some Middle Eastern countries are very interested in buying gold,” said George Milling-Stanley, head of government affairs at the mining industry-backed World Gold Council.
Secret undisclosed purchases of physical gold… What next: secret undisclosed selling of paper gold by such unusual suspects as JPM? Impossible.
Read the entire article HERE.
by Tom Gjelten
As governments across the Arab world look for ways to calm their angry populations, one challenge in particular stands out: how to address the spiraling cost of food.
Coincidence or not, the uprisings in Tunisia and Egypt came just as world food prices hit a record high. The World Bank reported this week that the cost of food is now at “dangerous” levels.
High prices are far more burdensome for people in the developing world because they typically spend a much higher percentage of their income on food. Many also buy raw food commodities — grain rather than packaged bread, for example — and it is those commodity prices that have increased most dramatically. Wheat prices have doubled in the past six months alone.
“Many households are buying raw rice,” notes Joseph Glauber, chief economist at the U.S. Department of Agriculture. “They’re milling it themselves. For them, a big increase in [raw] rice prices or a big increase in wheat prices is translated into a sizable increase [in food costs].”
In an interview with member station WAMU’s Diane Rehm, World Bank President Robert Zoellick described the high cost of food as an “aggravating factor” behind the unrest in the Middle East, even if it is not a primary cause.
“You had a large unemployed population and people clearly fed up with the political system,” Zoellick said. “But one of the reasons I think this is an important issue today is, those countries are going through something between transitions and revolutions. That’s where I’m most concerned about food now.”
Many governments in the Arab world subsidize the purchase of food already, but not nearly enough to counteract higher prices. If those governments now increase those food subsidies again in response to the rising discontent, they will be hard-pressed to improve delivery of other public services.
The policy challenge is complicated, but the basic economic problem is simple: The supply of food is not enough to meet the demand.
Across the world, food stocks are down in part because of unfavorable weather, ranging from drought to floods, in Russia, Pakistan, Europe, North America and Australia.
“Production of many crops was affected negatively by these unfavorable weather developments,” says Abdolreza Abbassian, the chief food and grain economist for the United Nation’s Food and Agriculture Organization. “This has led to tighter markets, and prices are reflecting that.”
The demand for food, meanwhile, has been growing, especially in big developing countries like China.
“Sixty percent of all soybeans traded in the world go to China right now,” notes the USDA’s Glauber. “Forty percent of all cotton goes to China, and … a fifth of all vegetable oil.”
This imbalance between tight supplies and growing demand inevitably pushes food prices up.
But government policies also play a role. World Bank officials intend to make that point during the current meeting in Paris of finance ministers from the Group of 20 industrialized and developing countries. Among the issues to be discussed is the imposition of food export limits, another factor in rising world prices.
In the U.S., government corn policies are part of the problem. Since 2006, the U.S. Congress has used tax credits and industry mandates to divert part of the U.S. corn crop to the production of ethanol, a biofuel.
The ethanol tax credit costs U.S. taxpayers $6 billion a year. It also drives up food prices. The more ethanol is produced, the less corn is left to feed livestock or people. The key justification for the ethanol policies is to reduce dependence on imported oil, but the policies come at a cost.
“It sets up a trade-off or conflict between the perceived national security benefits of providing a substitute for imported crude oil versus the increased food prices,” says Bruce Babcock, an agricultural economist at Iowa State University. “There is no doubt at all that expansion of the ethanol industry has increased the cost of producing meat, dairy, eggs and food around the world.”
The U.S. government now requires oil companies to blend ethanol into their gasoline products. It gives them a tax credit for each gallon of ethanol they produce, and it limits ethanol imports. According to Babcock’s calculations, the policies together push the price of corn as much as 40 percent above what it would otherwise be.
It is one more factor contributing to the spiraling cost of food around the world and causing hardship for food consumers in the Middle East and beyond.
Read the entire article HERE.
Transcript of Interview:
Heard on Morning Edition
February 18, 2011 – STEVE INSKEEP, host:
It’s MORNING EDITION from NPR News. Good morning. I’m Steve Inskeep.
People rising up in the Arab world have been demanding political rights, but the timing of these uprisings may have a lot to do with economics. We’re going to hear a lot this morning about the changes still underway in one of the most critical regions of the world. And we begin with a simple world-wide fact: the cost of food is rising.
NPR’s Tom Gjelten reports on what’s behind the increase and what nations, including the U.S., could do about it.
TOM GJELTEN: Perhaps it was a coincidence, but the uprisings in Tunisia and Egypt came just as world food prices hit a record high. Consumers here in the United States may not have noticed, but for people in the developing world, the impact has been dramatic. They spend a much higher percentage of their income on food. They also buy raw food – grains rather than packaged bread, for example – and it’s those commodity prices that have jumped the most.
Joseph Glauber is chief economist at the U.S. Department of Agriculture.
Mr. JOSEPH GLAUBER (U.S. Department of Agriculture): Many households are buying raw rice, they’re milling it themselves, so for them a big increase in rice prices or a big increase in wheat prices, you know, are translated into a sizable increase.
GJELTEN: World Bank president Robert Zoellick this week said he thinks the spiraling cost of food is an aggravating factor behind the protests in the Arab world, even if not the primary cause. Here was Zoellick discussing the unrest on NPR’s DIANE REHM SHOW.
Mr. ROBERT ZOELLICK (President, World Bank): You had a large unemployed population and people clearly fed up with the political system. But one of the reasons that I think this is an important issue today is, those countries are going through something between transitions and revolutions, and that’s where I’m most concerned about food now.
GJELTEN: With governments facing new political pressures, how they respond to rising food costs will be a key challenge. Many subsidize the purchase of food already, but not enough to counteract higher prices. And if governments now increase those food subsidies, they’ll be harder pressed to deliver on other services.
So it won’t be easy for governments to address this fundamental economic problem: the supply of food is not enough to meet the demand for food.
Abdolreza Abbassian of the UN’s Food and Agriculture Organization attributes the food shortages in part to bad weather.
Mr. ABDOLREZA ABBASSIAN (UN Food and Agriculture Organization): From Russia to Pakistan to U.S., Canada, North Europe, and before the year ended in Australia, so production of many crops were affected negatively.
GJELTEN: Meanwhile, the demand for food goes up because there are more people to feed.
Economist Joseph Glauber points to big developing countries like China.
Mr. GLAUBER: I think 60 percent of all soybeans traded go to China right now, 40 percent of all cotton goes to China, and even things like vegetable oil, about a fifth of all vegetable oil.
GJELTEN: That supply/demand imbalance pushes prices up.
But government policies are also important. World Bank officials intend to make that point when they meet this weekend in Paris with finance ministers from the planet’s top economic powers – the G-20. They will highlight the practice of limiting food exports, for example. That also drives up prices.
Here in the United States, government corn policies are part of the problem. Since 2006, through tax credits and mandates, the U.S. Congress has set aside more and more of the corn crop to make ethanol, a biofuel. The ethanol tax credit costs U.S. taxpayers $6 billion a year. Plus, the more ethanol is produced, the less corn is left to feed livestock or people.
Bruce Babcock, an agricultural economist at Iowa State University, says the justification for promoting ethanol production is that it means less dependence on foreign oil. But there is a cost.
Professor BRUCE BABCOCK (Iowa State University): It sets up basically a conflict between the perceived national security benefits of providing a substitute for imported crude oil versus the increased food prices. Because there’s no doubt at all that expansion of the ethanol industry has increased the cost of producing meat, dairy, eggs, and food around the world.
GJELTEN: The U.S. government now requires oil companies to blend ethanol into their gasoline products. It gives them a tax credit for each gallon of ethanol they produce. And it limits ethanol imports.
Economist Bruce Babcock says these policies together push the price of corn as much as 40 percent above what it would otherwise be – one more factor contributing to the spiraling cost of food around the world and causing hardship for food consumers in the Middle East and beyond.
Tom Gjelten, NPR News, Washington.
Chris Martenson describing himself:
“First of all, I am not an economist. I am trained as a scientist, having completed both a PhD and a post-doctoral program at Duke University, where I specialized in neurotoxicology. I tell you this because my extensive training as a scientist informs and guides how I think. I gather data, I develop hypotheses, and I continually seek to accept or reject my hypotheses based on the evidence at hand. I let the data tell me the story.”
By Veteran Intelligence Professionals for Sanity
August 3, 2010
MEMORANDUM FOR: The President
FROM: Veteran Intelligence Professionals for Sanity (VIPS)
SUBJECT: War With Iran
We write to alert you to the likelihood that Israel will attack Iran as early as this month. This would likely lead to a wider war.
Israel’s leaders would calculate that once the battle is joined, it will be politically untenable for you to give anything less than unstinting support to Israel, no matter how the war started, and that U.S. troops and weaponry would flow freely. Wider war could eventually result in destruction of the state of Israel.
This can be stopped, but only if you move quickly to pre-empt an Israeli attack by publicly condemning such a move before it happens.
We believe that comments by senior American officials, you included, reflect misplaced trust in Israeli Prime Minister [Benjamin] Netanyahu.
Actually, the phrasing itself can be revealing, as when CIA Director Panetta implied cavalierly that Washington leaves it up to the Israelis to decide whether and when to attack Iran, and how much “room” to give to the diplomatic effort.
On June 27, Panetta casually told ABC’s Jake Tapper, “I think they are willing to give us the room to be able to try to change Iran diplomatically … as opposed to changing them militarily.”
Similarly, the tone you struck referring to Netanyahu and yourself in your July 7 interview with Israeli TV was distinctly out of tune with decades of unfortunate history with Israeli leaders.
“Neither of us try to surprise each other,” you said, “and that approach is one that I think Prime Minister Netanyahu is committed to.” You may wish to ask Vice President Biden to remind you of the kind of surprises he has encountered in Israel.
Blindsiding has long been an arrow in Israel’s quiver. During the emerging Middle East crisis in the spring of 1967, some of us witnessed closely a flood of Israeli surprises and deception, as Netanyahu’s predecessors feigned fear of an imminent Arab attack as justification for starting a war to seize and occupy Arab territories.
We had long since concluded that Israel had been exaggerating the Arab “threat” — well before 1982 when former Israeli Prime Minister Menachem Begin publicly confessed:
“In June 1967, we had a choice. The Egyptian army concentrations in the Sinai approaches do not prove that [Egyptian President] Nasser was really about to attack us. We must be honest with ourselves. We decided to attack him.”
Israel had, in fact, prepared well militarily and also mounted provocations against its neighbors, in order to provoke a response that could be used to justify expansion of its borders.
Given this record, one would be well advised to greet with appropriate skepticism any private assurances Netanyahu may have given you that Israel would not surprise you with an attack on Iran.
Netanyahu believes he holds the high cards, largely because of the strong support he enjoys in our Congress and our strongly pro-Israel media. He reads your reluctance even to mention in controversial bilateral issues publicly during his recent visit as affirmation that he is in the catbird seat in the relationship.
During election years in the U.S. (including mid-terms), Israeli leaders are particularly confident of the power they and the Likud Lobby enjoy on the American political scene.
This prime minister learned well from Menachem Begin and Ariel Sharon.
Netanyahu’s attitude comes through in a video taped nine years ago and shown on Israeli TV, in which he bragged about how he deceived President Clinton into believing he (Netanyahu) was helping implement the Oslo accords when he was actually destroying them.
The tape displays a contemptuous attitude toward — and wonderment at — an America so easily influenced by Israel. Netanyahu says:
“America is something that can be easily moved. Moved in the right direction. … They won’t get in our way … Eighty percent of the Americans support us. It’s absurd.”
Israeli columnist Gideon Levy wrote that the video shows Netanyahu to be “a con artist … who thinks that Washington is in his pocket and that he can pull the wool over its eyes,” adding that such behavior “does not change over the years.”
As mentioned above, Netanyahu has had instructive role models.
None other than Gen. Brent Scowcroft told the Financial Times that former Israeli Prime Minister Ariel Sharon had George W. Bush “mesmerized;” that “Sharon just has him “wrapped around his little finger.”
(Scowcroft was promptly relieved of his duties as chair of the prestigious President’s Foreign Intelligence Advisory Board and told never again to darken the White House doorstep.)
If further proof of American political support for Netanyahu were needed, it was manifest when Senators McCain, Lieberman, and Graham visited Israel during the second week of July.
Lieberman asserted that there is wide support in Congress for using all means to keep Iran from becoming a nuclear power, including “through military actions if we must.” Graham was equally explicit: “The Congress has Israel’s back,” he said.
More recently, 47 House Republicans have signed onto H.R. 1553 declaring “support for Israel’s right to use all means necessary to confront and eliminate nuclear threats posed by Iran … including the use of military force.”
The power of the Likud Lobby, especially in an election year, facilitates Netanyahu’s attempts to convince those few of his colleagues who need convincing that there may never be a more auspicious time to bring about “regime change” in Tehran.
And, as we hope your advisers have told you, regime change, not Iranian nuclear weapons, is Israel’s primary concern.
If Israel’s professed fear that one or two nuclear weapons in Iran’s arsenal would be a game changer, one would have expected Israeli leaders to jump up and down with glee at the possibility of seeing half of Iran’s low enriched uranium shipped abroad.
Instead, they dismissed as a “trick” the tripartite deal, brokered by Turkey and Brazil with your personal encouragement, that would ship half of Iran’s low enriched uranium outside Tehran’s control.
The National Intelligence Estimate
The Israelis have been looking on intently as the U.S. intelligence community attempts to update, in a “Memorandum to Holders,” the NIE of November 2007 on Iran’s nuclear program. It is worth recalling a couple of that Estimate’s key judgments:
“We judge with high confidence that in fall of 2003 Tehran halted its nuclear weapons program. … We assess with moderate confidence Tehran has not restarted its nuclear program as of mid-2007, but we do not know whether it currently intends to develop nuclear weapons …”
Earlier this year, public congressional testimony by former Director of National Intelligence Dennis Blair (February 1 & 2) and Defense Intelligence Agency Director Gen. Ronald Burgess with Vice Chairman of the Joint Chiefs Gen. James Cartwright (April 14) did not alter those key judgments.
Blair and others continued to underscore the intelligence community’s agnosticism on one key point: as Blair put it earlier this year, “We do not know if Iran will eventually decide to build a nuclear weapon.”
The media have reported off-the-cuff comments by Panetta and by you, with a darker appraisal — with you telling Israeli TV “… all indicators are that they [the Iranians] are in fact pursuing a nuclear weapon;” and Panetta telling ABC, “I think they continue to work on designs in that area [of weaponization].”
Panetta hastened to add, though, that in Tehran, “There is a continuing debate right now as to whether or not they ought to proceed with the bomb.”
Israel probably believes it must give more weight to the official testimony of Blair, Burgess, and Cartwright, which dovetail with the earlier NIE, and the Israelis are afraid that the long-delayed Memorandum to Holders of the 2007 NIE will essentially affirm that Estimate’s key judgments.
Our sources tell us that an honest Memorandum to Holders is likely to do precisely that, and that they suspect that the several-months-long delay means intelligence judgments are being “fixed” around the policy — as was the case before the attack on Iraq.
One War Prevented
The key judgments of the November 2007 NIE shoved an iron rod into the wheel spokes of the Dick Cheney-led juggernaut rolling toward war on Iran. The NIE infuriated Israel leaders eager to attack before President Bush and Vice President Cheney left office. This time, Netanyahu fears that issuance of an honest Memorandum might have similar effect.
Bottom line: more incentive for Israel to pre-empt such an Estimate by striking Iran sooner rather than later.
Last week’s announcement that U.S. officials will meet next month with Iranian counterparts to resume talks on ways to arrange higher enrichment of Iranian low enriched uranium for Tehran’s medical research reactor was welcome news to all but the Israeli leaders.
In addition, Iran reportedly has said it would be prepared to halt enrichment to 20 percent (the level needed for the medical research reactor), and has made it clear that it looks forward to the resumption of talks.
Again, an agreement that would send a large portion of Iran’s LEU abroad would, at a minimum, hinder progress toward nuclear weapons, should Iran decide to develop them. But it would also greatly weaken Israel’s scariest rationale for an attack on Iran.
Bottom line: with the talks on what Israel’s leaders earlier labeled a “trick” now scheduled to resume in September, incentive builds in Tel Aviv for the Israelis to attack before any such agreement can be reached.
We’ll say it again: the objective is regime change. Creating synthetic fear of Iranian nuclear weapons is simply the best way to “justify” bringing about regime change. Worked well for Iraq, no?
Read the entire article HERE.