Summer Ends, Jackass Appears


In a continuance of our "holiday tradition", Jim Willie stopped by Turdville yesterday to share his thoughts on current events and where he thinks this all headed.

The Jackass was his usual self, even if a bit under the weather. In this podcast, we discuss:

  • Yesterday's announcement by Gazprom that they will begin accepting payment in rubles and yuan
  • The escalation of US and EU sanctions against Russia and how they are failing/backfiring
  • The growing isolation of the US as a economic superpower
  • The eventual emergence of a new global currency regime

This baby clocks in at slightly over 60 minutes so please try to pace yourself. You don't want to overdo it.



Aug 30, 2014 - 8:01am

Best Jim Willie Ever

Jim is always entertaining, but this was his most logical and insightful interview I have listened to yet. Thanks Jim!

Aug 30, 2014 - 12:19am

Disagreements over the EU's Ostpolitik

IN RECENT years Germany has become Poland's closest political ally and economic partner. The heads of state, heads of government and foreign ministers of the two countries are on excellent terms and see each other frequently. But in the last few months this new closeness has been put to a test as Berlin's conciliatory policy towards Russia over the escalating crisis in Ukraine is provoking increasingly loud grumbles in Warsaw.

Polish officials are concerned that Germany is too keen to end the conflict in Ukraine on Russia's terms, and is reluctant to impose tougher economic sanctions on Russia and to shift NATO forces to the east. The latest salvo comes from Roman Kuzniar, foreign-policy adviser to Bronislaw Komorowski, Poland's president. In a toughly worded column in Rzeczpospolita, a daily, Mr Kuzniar denounces western European governments for refusing to stand up to the Russian president, Vladimir Putin, accusing them of appeasement. “Putin is paralysing their freedom of action in the same way that a snake in the desert paralyses a rabbit,” he writes, before taking special care to castigate Germany. “We have to accept that, because of Berlin's specific relationship with Russia, we cannot count on Germany in matters of regional security,” he writes, adding that Germany is treating Russia “like a special needs child who has to be raised without stress”.

The tone marks a sharp break from the recent warmth between Poland and Germany. The two countries are partners in the European Union. Their economies are closely intertwined, with low-cost Polish factories making car parts, electronics and other components that power the mighty German export machine.

The foreign ministers of the two countries took the lead in negotiating an end to the bloodshed in Kiev's central square, Maidan, earlier this year. But as the scope of the Ukrainian crisis is growing, Poland and Germany are increasingly taking diverging views. Poland (and the three Baltic countries) is very alarmed about Russia's regional ambitions, fearing a return to the imperial policies that made it a Russian colony for most of the last three centuries. Germany has for years been trying to modify Russian behaviour through a policy of economic engagement. But so far the main result has been to tie German business ever more closely to Russia whereas the Kremlin's course has hardly changed. Trade between Germany and Russia amounted to €76.5 billion ($101 billion) last year, not far off the €71.5 billion of trade between Germany and Poland.

Comments like those from Mr Kuzniar are designed to send a message to Germany, says Olaf Boehnke, head of the Berlin office of the European Council on Foreign Relations. “This is an attempt by the Poles to push Germany into a stronger confrontation with Russia,” he says. But while Mr Kuzniar's grumbles may not succeed in changing Germany's policy, the increasingly brazen Russian intervention in Ukraine may, in the end, drive Berlin to take a tougher line with Moscow.

Aug 29, 2014 - 11:55pm

Saudi-Iranian thaw will take time

The interpretation that comes readily to mind regarding the visit to Riyadh by the Iranian Deputy Foreign Minister Amir Abdollahian and his talks on Tuesday with the Saudi Foreign Minister Prince Saud Al-Faisal would be that a thaw is in the offing in the ties between the two countries.

The time for a thaw may appear propitious. The surge of the Islamic State of Iraq and the Levant [ISIL] is a matter of concern to both Tehran and Riyadh and, arguably, they have a shared interest in countering the tidal wave of extremism and terrorism sweeping Iraq and Syria.

Certainly, Iran played a key role in the replacement of Iraqi Prime Minister Nouri al-Maliki, which also happened to be a long-standing Saudi demand — although Tehran had its own weighty reasons to promote the transition in Baghdad.

Most certainly, Iran is working hard for a national unity government in Baghdad, which is inclusive and would accommodate Sunni aspirations and preserve Iraq’s unity and territorial integrity, as the recent visit to Iraq by Foreign Minister Mohammad Javad Zarif to Iraq testifies. The Saudis have been clamoring for an inclusive approach in Iraqi politics.

Again, make no mistake, Iran aspires to be a factor of stability in Iraq. Zarif’s consultations in Iraq displayed the spectacular reach of Iranian influence in Iraq — be it in Erbil, Baghdad, Najaf or Karbala.

Thus, it may come as no surprise that the Iranian account of Abdollahian’s consultations with Faisal is on a manifestly positive note, highlighting their commonality of interests on the grave issues buffeting regional security in the Middle East today. IRNA says the two diplomats “stressed the importance of opening new page in the political relations between the two countries.” (here).

However, there is no word in the report about the languishing invitation from Faisal in May to Zarif to visit Saudi Arabia. Zarif has been extensively touring the Gulf Cooperation Council region but has studiously sidestepped Saudi Arabia so far. (Zarif is currently in Ankara on his second visit to Turkey in, perhaps, as many months.)

Indeed, the Saudi-Iranian tango is never quite visible to the naked eye. What is extremely significant is that even as Faisal was holding Abdollahian’s hand in Riyadh, Tehran let it be known in a characteristically roundabout way quoting ’sources’ that the Israeli spy drone that Iran shot down on Monday had only flown from a Saudi air base.

A senior Iranian commander from the Revolutionary Guards claimed, here, that Tehran spotted the spy drone even as it took off but deliberately let it cross the border with a view to monitor its flight path and identify the ‘targets’ that would excite the Israeli engagement. (The prime ‘target’ turned out to be Iran’s Natanz nuclear enrichment centre.)

Of course, Tehran has threatened Israel with retaliation — but then, it has ignored Israel’s Saudi partner as unworthy of such high consideration. The Iranian reaction has been very sharp — “Our response to this aggression will not be diplomatic, we will retaliate in the battlefield, but will not necessarily announce it. The enemy will see and understand it.” (here).

What could it be? Quite possibly, Iran may now upgrade the transfer of missile technology to Hamas and bring it on par with the Hezbollah so that a kind of ’strategic parity’ is reached in Palestine, too — like on the Lebanon-israel front.

There is no suggestion in the media reports that Abdollahian had any word with Faisal specifically regarding the Saudi complicity in the affair of the ill-fated Israeli spy drone. Simply put, it is not the Iranian style to be blunt — unlike the Gulf Arabs.

The intricate pantomime playing out in Tehran and Riyadh only goes to show that an enduring ‘thaw’ is hard to achieve in a short term between the two ancient adversaries. There is a fundamental contradiction in the Saudi-Iranian relationship insofar as Iran’s rise as regional power, its normalization with the Western world, its integration with the world community, its full-fledged entry into the world energy market that is imminent, its economic and technological regeneration that will follow once the sanctions are lifted, its support of the stirrings of the ‘Arab Spring’ — all these are antithetical to Saudi interests. Put differently, Iran’s rise ‘diminishes’ Saudi Arabia — its clout as America’s number one regional ally — and Iran’s emergence as an Islamic democracy rattles the Saudi nerves.

The collaboration with Israel on a dangerous intelligence operation directed against vital Iranian nuclear installations only goes to show the Saudi intentions to try a little bit harder to ‘contain’ Iran despite the collapse of the US’s 3-decade old containment strategy as such.

So, why did Abdollahian undertake the mission to Riyadh? Clearly, yesterday’s Saudi-Iranian consultations were scheduled in advance. The curious part is that Faisal, who is reputed to be an implacable hardliner on Shi’ite Iran, would most certainly have known about the invasive flight by the Israeli spy drone into the Iranian air space on the very same day Abdollahian emplaned from Tehran to meet him in Riyadh.

Aug 29, 2014 - 11:18pm

Hundreds of thousands of Yemenis rally as crisis escalates

SANAA, Aug. 29 (Xinhua) -- Hundreds of thousands of pro- and anti-government Yemenis staged demonstrations across the country on Friday, as fresh crisis triggered by steep fuel price hike escalates in the impoverished country.

Supporters of the Shiite Houthi rebels rallied in the capital Sanaa and more than ten provinces in Yemen, demanding the government to resume fuel subsidies and resignation of the cabinet.

The protesters accused the transition government of corruption and demanded immediate resume of fuel subsidies as the government almost doubled the fuel prices at the end of last month.

Ibrahim al-Abdi who supports the Houthi group said:"We will continue the revolutionary protest until we achieved our three demands which are the dismissal of the government, resuming the fuel subsidy and implementation of the outcomes of the national reconciliation dialogue."

The Shiite rebels also urged the formation of a new technocrat government led by an independent prime minister and a broad partnership in policy-making process.

The Yemenis have suffered mass blackout and shortage of daily necessities since political upheaval hit the country in 2011. A steep increase in fuel prices deepened the crisis as some observers said the government has transferred the sustainable financial deficit from itself to the Yemeni families' pockets.

The crisis escalated as negotiations between the government and Houthi group collapsed last week.

Government officials told Xinhua that Yemeni President Abd- Rabbu Mansour Hadi on Friday dispatched another team to resume talks with the Houthi leader in Saada province, the rebels' stronghold in northern Yemen.

Hadi has offered during the last week's talks to include Houthi members in the future cabinet and allow them in broad political partnership. The officials said both sides are willing to end the current crisis.

The protesters has set up sit-in tents around several ministries, and near a military airforce base and Sanaa International Airport in Sanaa. Meanwhile, the Houthi group also mobilized tens of thousands of armed fighters at entrances of Sanaa.

Hadi said he would defend the capital and secure the five million residents as he had ordered the army and security forces on high alert, according to the official Saba news agency.

On the same day, tens of thousands of pro-government protesters also rallied near Hadi's residence in western Sanaa, calling for national solidarity and denouncing threats of military groups.

Pro-government protester Mohamed al-Sabri said:"We called on the international community, including the U.N. Security Council and human rights organizations to punish military groups that are threatening stability in Yemen. They have to act together to stop the crisis in Yemen."

In his speech on Thursday, Hadi warned of escalating protest rallies in Sanaa and unrest caused by the Houthi group. He said that Yemen faces a critical juncture imposed by the Houthi group, warning of regional and sectarian influence behind the current crisis.

He also defended the cut of fuel subsidies which cost the country's three billion US dollars every year.

Yemen's cash-stripped government said it had been seeking to secure a loan for over a year from the International Monetary Fund, but the latter demanded an immediate cut to the fuel subsidies at first.

The Houthi group has fought against the Yemeni army in the country's northern regions for years. Last month they seized Amran province, some 50 km north of Sanaa, after nine months of sporadic fighting with the army, during which hundreds of people were killed and tens of thousands displaced.

Hadi has urged Houthis to leave Amran and promised to provide five billion Yemeni rials (23 million dollars) to rebuild the provincial capital city.

According to the United Nations agencies, up to 40,000 people have been displaced by conflict in Amran province since October, 2013, about half of whom fled their homes this May.

The Yemeni authorities accused the Houthi group of seeking to control the capital, which was denied by the rebels.

Taking advantage of the security vacuum since 2011, the Shiite Houthi group have since expanded its control over northern provinces. The group has controlled the northern Saada province since August, 2010, when it signed a ceasefire deal with the government and ended a six-year intermittent war.

Aug 29, 2014 - 10:50pm

Looks like SIlver

...Could be the thing that starts to put pressure on the cartel's paper games? We live in hope that China, in its search for physical silver, will place enormous orders on Comex and stand for delivery. That would get their attention quite quickly.....

Mr. Fix
Aug 29, 2014 - 10:45pm

Hi Dagney,

It's good to see your back on Main Street!

Safety Dan
Aug 29, 2014 - 10:34pm

To Make You All Smile Like Me

Cuz sometimes that's all you can do..

Safety Dan
Aug 29, 2014 - 10:01pm

@ Dagney

Thanks for the wonderful view. Its allows nice to see such beautiful scenery.

Good to see you back on the boards..

Aug 29, 2014 - 7:30pm
Aug 29, 2014 - 6:56pm

Whether You Love It or Hate It....

A rather interesting perspective on BitCoin:

Whether You Love It or Hate It, You’re Missing What Really Matters About Bitcoin

Paul Rosenberg, Editor, A Free Man's Take

Dear Reader,

For the past year or so, the word “Bitcoin” has worked like a Jedi mind trick. Speak it to a small group of people, and their emotional shields fall right off. The ones that like it, love it with ardor. Those that don’t, hate it with an existential revulsion. It’s a special sight to behold. But the real importance of Bitcoin has eluded all of these people.

We’ll discuss this below, but here’s a hint: What matters about Bitcoin is not the price. In fact, the price in dollars is one of the least important things about it. Actually, Bitcoin is far more important than any of the attributes that have been held up as either blessings or curses.

Read more:

My earlier arguments:

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Key Economic Events Week of 8/10

8/10 10:00 ET Job openings
8/11 8:30 ET Producer Price Idx
8/12 8:30 ET Consumer Price Idx
8/13 8:30 ET Initial jobless claims
8/13 8:30 ET Import Price Idx
8/14 8:30 ET Retail Sales
8/14 8:30 ET Productivity & Unit Labor Costs
8/14 8:30 ET Cap Ute and Ind Prod
8/14 10:00 ET Business Inventories

Key Economic Events Week of 8/3

8/3 9:45 ET Markit Manu PMI July
8/3 10:00 ET ISM Manu PMI July
8/3 10:00 ET Construction Spending
8/4 10:00 ET Factory Orders
8/5 8:15 ET ADP employment July
8/5 9:45 ET Markit Service PMI
8/5 10:00 ET ISM Service PMI
8/6 8:30 ET Initial jobless claims
8/7 8:30 ET BLSBS for July
8/7 10:00 ET Wholesale Inventories

Key Economic Events Week of 7/27

7/27 8:30 ET Durable Goods
7/28 9:00 ET Case-Shiller home prices
7/29 8:30 ET Advance trade in goods
7/29 2:00 ET FOMC Fedlines
7/29 2:30 ET CGP presser
7/30 8:30 ET Q2 GDP first guess
7/31 8:30 ET Personal Income and Spending
7/31 8:30 ET Core inflation
7/31 9:45 ET Chicago PMI

Key Economic Events Week of 7/20

7/21 8:30 ET Chicago Fed
7/21 2:00 ET Senate vote on Judy Shelton
7/22 10:00 ET Existing home sales
7/23 8:30 ET Jobless claims
7/23 10:00 ET Leading Economic Indicators
7/24 9:45 ET Markit flash PMIs for July

Key Economic Events Week of 7/13

7/13 11:30 ET Goon Williams speech
7/13 1:00 ET Goon Kaplan speech
7/14 8:30 ET CPI for June
7/14 2:30 ET Goon Bullard speech
7/15 8:30 ET Empire State and Import Price Idx
7/15 9:15 ET Cap Ute and Ind Prod
7/16 8:30 ET Retail Sales and Philly Fed
7/16 11:00 ET Goon Williams again
7/17 8:30 ET Housing Starts and Permits

Key Economic Events Week of 7/6

7/6 9:45 ET Markit Service PMI
7/6 10:00 ET ISM Service PMI
7/7 10:00 ET Job openings
7/9 8:30 ET Initial jobless claims
7/9 10:00 ET Wholesale inventories
7/10 8:30 ET PPI for June

Key Economic Events Week of 6/29

6/30 9:00 ET Case-Shiller home prices
6/30 9:45 ET Chicago PMI
6/30 10:00 ET Consumer Confidence
6/30 12:30 ET CGP and SSHW to Capitol Hill
7/1 8:15 ET ADP Employment
7/1 9:45 ET Markit Manu PMI
7/1 10:00 ET ISM Manu PMI
7/1 2:00 ET June FOMC minutes
7/2 8:30 ET BLSBS
7/2 10:00 ET Factory Orders

Key Economic Events Week of 6/22

6/22 8:30 ET Chicago Fed
6/22 10:00 ET Existing home sales
6/23 9:45 ET Markit flash PMIs for June
6/23 10:00 ET New home sales
6/25 8:30 ET Q1 GDP final guess
6/25 8:30 ET Durable Goods
6/26 8:30 ET Pers Inc and Spending
6/26 8:30 ET Core inflation

Key Economic Events Week of 6/15

6/16 8:30 ET Retail Sales
6/16 8:30 ET Cap Ute and Ind Prod
6/16 10:00 ET Chief Goon Powell US Senate
6/16 4:00 pm ET Goon Chlamydia speech
6/17 8:30 ET Housing Starts
6/17 12:00 ET Chief Goon Powell US House
6/18 8:30 ET Initial Jobless Claims
6/18 8:30 ET Philly Fed
6/19 8:30 ET Current Account Deficit
6/19 1:00 pm ET CGP and Mester conference

Key Economic Events Week of 6/8

6/9 10:00 ET Job openings
6/9 10:00 ET Wholesale inventories
6/10 8:30 ET CPI for May
6/10 2:00 ET FOMC Fedlines
6/10 2:30 ET CGP presser
6/11 8:30 ET Initial jobless claims
6/11 8:30 ET PPI for May
6/12 8:30 ET Import price index
6/12 10:00 ET Consumer sentiment

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