by Pepe Escobar, AsiaTimes

Here’s a crash course on how to further wreck the global economy.

A key amendment to the National Defense Authorization Act signed by United States President Barack Obama on the last day of 2011 – when no one was paying attention – imposes sanctions on any countries or companies that buy Iranian oil and pay for it through Iran’s central bank. Starting this summer, anybody who does it is prevented from doing business with the US.

This amendment – for all practical purposes a declaration of economic war – was brought to you by the American Israel Public Affairs Committee (AIPAC), on direct orders of the Israeli government under Prime Minister Benjamin “Bibi” Netanyahu.

Torrents of spin have tried to rationalize it as the Obama administration’s plan B as opposed to letting the Israeli dogs of war conduct an unilateral attack on Iran over its supposed nuclear weapons program.

Yet the original Israeli strategy was in fact even more hysterical – as in effectively preventing any country or company from paying for imported Iranian oil, with the possible exceptions of China and India. On top of it, American Israel-firsters were trying to convince anyone this would not result in relentless oil price hikes.

Once again displaying a matchless capacity to shoot themselves in their Ferragamo-clad feet, governments in the European Union (EU) are debating whether or not to buy oil from Iran anymore. The existential doubt is should we start now or wait for a few months. Inevitably, like death and taxes, the result has been – what else – oil prices soaring. Brent crude is now hovering around $114, and the only way is up.

Full article here

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Israel’s assassination of Iranian nuclear scientists is intended to provoke a belligerent response that would cause the US to make war on Iran, as pointed out by a segment in  mainstream Chris Matthews’ “Hardball” TV program–especially  comments of former CIA officer Robert Baer.

by Corey Pein, WarIsBusiness

The perpetually postponed U.S. withdrawal from Afghanistan tracks a little too closely with timelines for another fubarproject, the Turkmenistan-Afghanistan-Pakistan-India gas pipeline.

TAPI, as the pipeline is known, ought to be called TBD. It’s been a Big Oil dream since the mid-1990s, and a decade’s-long American military presence in the region has brought it no closer to reality. The Afghan news outfit Killid Media reportedyesterday that “Little has happened on the TAPI natural gas project involving four countries a year after [an] agreement was signed by the governments.”

Planners are promising the project could be in operation by 2016. … Work which was delayed by security concerns will start from early 2012 and finish in two years…

Are the pipeline planners scheduling based on the projected 2014 timeline for U.S. withdrawal from Afghanistan, or vice-versa? Does it matter? Either way, there are signs that the U.S. government is doubling down on the project as Pakistani leaders have indicated they might prefer a competing pipeline proposed to connect Pakistan and a U.S. adversary, Iran.

Pakistan’s Express Tribune reports:

Addressing students of Lahore University of Management Sciences…US ambassador to Pakistan Cameron Munter had termed Pakistan-Iran gas pipeline deal unfeasible. A viable alternative, in his view, was the Turkmenistan-Afghanistan- Pakistan-India (TAPI) pipeline project via Afghanistan. …

Sources inform The Express Tribune that the Export-Import Bank (EIB) of the United States as well as the Overseas Private Investment Corporation (OPIC), an “independent” US agency, have offered Pakistan financing for TAPI.

The U.S. is also the key shareholder in the Asian Development Bank, another financing agency for TAPI, as W.I.B. noted previously.

But promises of more American dollars may ring hollow, as the following letter in a prominent English-language Pakistani newspaper about the competing pipeline projects suggests.

“Pakistan,” the letter begins, will “not take any dictation from anyone.”

The gas pipeline project with Iran is a lifeline for us for overcoming the energy crisis. The US energy team…came up with a strange demand that Pakistan should abandon this project and instead offered assistance for the Turkmenistan-Afghanistan-Pakistan-India gas pipeline project (TAPI) as an alternative option. …

Washington has already successfully persuaded India to jump out of the deal, leaving Iran and Pakistan to implement the project. It is an undeniable fact that Pakistan has no cheaper and safer option than getting the Iranian gas. The laying of the pipeline on our side of the border must be taken up immediately, since Iran has already constructed their part of the pipeline up to Pakistani border. Any effort to undo this vital project would be a criminal act against national interests.

Catch that? While the American-backed pipeline might be done in two years’ time, the Iranian-backed pipeline is already built up to the border with Pakistan, just waiting for the hookup.

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ZeroHedge

Iceland fared better by letting banks fail

by Thomas Molloy of Irish Independent:

Iceland pursued better policies than Ireland or Latvia when the three countries’ economies collapsed in 2007 because the Reykjavik government allowed banks to fail, according to a new report by the influential Bruegel think tank.

The report by economist Zsolt Darvas looked at the response of the three small and open economies. The three countries all initially allowed the credit boom to fuel property speculation and investment imbalances. As the crisis began, property prices fell, banks went bust and all three countries had to turn to the International Monetary Fund (IMF) for help.

The governments then introduced fiscal austerity programmes, structural reforms and reforms of the banking system. These similarities allow economists to compare the different responses in an attempt to determine what worked best.

“The experience with the collapse of the gigantic Icelandic banking system suggests that letting banks fail when they had a faulty business model can be the right choice,” the report notes.

“The banking sector suffered meltdown in Iceland and foreign lenders to banks suffered massive losses. Yet, the crisis impact was much more benign in Iceland than Latvia.”

Mr. Darvas notes that it was the last Fianna Fail-led government’s decision to issue a bank guarantee to Irish-based banks [that led to the crisis deepening] but adds that Ireland then came under pressure from the European Central Bank to keep the guarantee in place.

“While socialising bank losses in Ireland was initially an Irish decision, later, when the Irish government wanted to change course, European institutions barred it primarily in the name of financial stability in the euro area and beyond,” he writes.

The report is sceptical that a collapse in the Irish banking sector would have harmed the rest of the eurozone.

“Little is known about what would have happened to financial stability outside Ireland in the event of letting Irish banks default, but one thing is clear: other countries have benefited from the Irish socialisation of a large share of bank losses, which has significantly contributed to the explosion of Irish public debt,” it adds.

Regulation

The only way to avoid potential cross-country spillovers of national bank collapses would be to centralise the regulation and supervision of European banking along with the system for bailing out insolvent lenders, the report concludes.

“There is a strong case for a banking federation,” states the report.

Iceland has suffered least among the three countries. Latvia has suffered most since the economic crisis began — seeing a bigger collapse in output than any other country in the world, the report notes.

Ireland has endured the fifth worst economic contraction, while Iceland’s was the seventh worst. Latvia has also suffered the worst declines in employment. Iceland came out from the crisis with the smallest drop in employment .

The good news for all three countries is that recovery has begun in each economy. Latvia is seeing the fastest improvements, although this has not yet generated many jobs. Both Latvia and Iceland have returned to the bond markets.

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