Mish's Global Economic Trend Analysis

Pakistan Tells U.S. "Drones Out of Control", Requests Withdrawal of all C.I.A. Contractors
Chicago Natural Resources Expo April 15-16; Utah Doubles Down On Gold Laws
German Finance Minister Warns on Greek Debt

Pakistan Tells U.S. "Drones Out of Control", Requests Withdrawal of all C.I.A. Contractors

Posted: 11 Apr 2011 08:32 PM PDT

Pakistan has finally had enough of US Drones firing first then apologizing later when Pakistani civilians are killed. Pakistan is also upset with how the US shares (or does not share) information about drone targets.

Please consider Pakistan Tells U.S. It Must Sharply Cut C.I.A. Activities

Pakistan has demanded that the United States steeply reduce the number of Central Intelligence Agency operatives and Special Operations forces working in Pakistan, and that it halt C.I.A. drone strikes aimed at militants in northwest Pakistan. The request was a sign of the near collapse of cooperation between the two testy allies.

Pakistani and American officials said in interviews that the demand that the United States scale back its presence was the immediate fallout from the arrest in Pakistan of Raymond A. Davis, a C.I.A. security officer who killed two men in January during what he said was an attempt to rob him.

In all, about 335 American personnel — C.I.A. officers and contractors and Special Operations forces — were being asked to leave the country, said a Pakistani official closely involved in the decision.

At the time of his arrest, Mr. Davis was involved in a covert C.I.A. effort to penetrate one militant group, Lashkar-e-Taiba, which has ties to Pakistan's military and intelligence establishment, has made deepening inroads in Afghanistan, and is perceived as a global threat.

The C.I.A. had demanded that Mr. Davis be freed immediately, on the grounds that he had diplomatic immunity. Instead, he was held for 47 days of detention and, the officials said, questioned for 14 days by ISI agents during his imprisonment in Lahore, infuriating American officials. He was finally freed after his victims' families agreed to take some $2.3 million in compensation.

In addition to the withdrawal of all C.I.A. contractors, Pakistan is demanding the removal of C.I.A. operatives involved in "unilateral" assignments like Mr. Davis's that the Pakistani intelligence agency did not know about, the Pakistani official said.

General Kayani has also told the Obama administration that its expanded drone campaign has gotten out of control, a Pakistani official said. Given the reluctance or inability of the Pakistani military to root out Qaeda and Taliban militants from the tribal areas, American officials have turned more and more to drone strikes, drastically increasing the number of attacks last year.

The drone campaign, which is immensely unpopular among the Pakistani public, had become the sole preserve of the United States, the Pakistani official said, since the Americans were no longer sharing intelligence on how they were choosing targets.

A drone attack last month, one day after Mr. Davis was released, hit Taliban fighters in North Waziristan, but also killed tribal leaders allied with the Pakistani military, infuriating General Kayani, who issued an unusually strong statement of condemnation afterward.

Collateral Damage Breaking Point

Pakistan has finally had enough of "collateral damage". My only question is what took so long?

Image the outrage if the CIA accidentally killed the Mayor of New York?

Yet, we go about blasting other countries, inadvertently killing tribal leaders who were trying to help us, and we act as if it is no big deal.

Pakistan should consider booting the US entirely. Then if Iraq, Japan, Germany, Saudi Arabia, and 140 countries where the US had troops would all do the same, the US (and the world) would be far better off.

US Cannot Afford to be World's Policeman

Financially, the US cannot afford to be the world's policeman. Philosophically, we should not try even if we could.

Please recall Bin Laden's rationale for 911: Bin Laden was upset because US troops were on sacred Arab soil.

Remember who trained Bin Laden? The answer is the CIA, and the absurd reason was to help fight Russia in Afghanistan. Russia is long gone, but sadly the US is not. Such is the success rate of US intervention in the region.

Let's declare the wars in Iraq and Afghanistan won, and leave.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Chicago Natural Resources Expo April 15-16; Utah Doubles Down On Gold Laws

Posted: 11 Apr 2011 04:36 PM PDT

Those in the greater Chicago area are welcome to attend the Chicago Natural Resources Expo on April 15-16 for a discussion about gold, silver, hard assets, inflation, currencies (or whatever else is on your mind). You also have the opportunity to meet with various natural resource company executives.

Exhibitor space in the April 2011 Expo is sold out for the first time since April of 2008.

Once again, I am pleased to announce the magic words: "It's free".

Originally known as the Chicago Natural Resource Conference and Exhibition, this is one of the oldest natural resource conferences in the United States. The conference is a semi-annual event and offers opportunities to learn about new and undervalued companies in the natural resource industry.

The event is directed by Rich Radez, who started the conference back in 1977. Rich, and his son Eric, created the unique format which focuses on resource companies and provides maximum exposure to both investors and sponsors.

There is no cost for those who pre-register to attend the conference. The Expo is held at the Rolling Meadows Holiday Inn and Convention Center in Rolling Meadows, IL. The Holiday Inn is located at 3405 Algonquin Road, Rolling Meadows, IL 60008. The hotel can be contacted at 847-259-5000. It is a two day event that starts on a Friday afternoon, and ends on Saturday afternoon.

The Exhibition Hall, featuring some of the top companies in the resource industry, opens at 4pm. A buffet which includes jumbo shrimp, and smoked sockeye salmon, is served at 5pm. Following the buffet, company presentations begin. Friday night features a Q & A Session hosted by Rich Radez and a panel of industry experts, the discussion is based on topics that are fueled by the audience's interests.

The event resumes on Saturday morning. Attendees enjoy a continental breakfast, and browse the exposition hall learning about companies. In the meantime, individual company presentations begin in the presentation hall. These presentations are a great way to hear each company's story. Lunch buffet is served around noon, and accompanied by the second panel discussion. After lunch, presentations and expositions continue for the remainder of the day.

I will be on the panel Friday evening and Saturday afternoon along with Jay Taylor, Robert Ian, Clyde Harrison, and others. Saturday lunch is also free.

Utah Doubles Down On Gold Laws

As long as we are on the subject of natural resources, please consider this Wall Street Journal article from about a week ago: Utah Doubles Down On Gold Laws Amid Inflation Fears, Distrust

Populist fears about the Federal Reserve's loose money policy spurred Gov. Gary Herbert last week to sign a law that is already on the books. Utah now explicitly recognizes that gold and silver coins designated legal tender by the federal government are also legal tender in the state.

The Utah law is not only redundant (it is already law), it is also symbolic. No one in their right mind would take a $50 American Eagle gold coin and buy $50 worth of groceries with it.

The American Eagle is the U.S. Mint's most popular one-ounce gold coin.

Image: Bloomberg News, as credited by the WSJ

Although technically meaningless, the Utah legislation does bring a welcome discussion of what honest money is to the forefront. The more discussion on such matters, the better off we will all be.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

German Finance Minister Warns on Greek Debt

Posted: 11 Apr 2011 11:21 AM PDT

ECB President Jen-Claude Trichet insists Greek debt will not be restructured. However, doubts persists in Germany as Finance Minister Wolfgang Schaeuble Warns on Greek Debt.

Germany warned that deficit-scarred Greece might need more financial relief, reviving European debt concerns just as Portugal seeks an 80 billion-euro ($116 billion) aid package.

German Finance Minister Wolfgang Schaeuble said it is unclear whether Greece, the root of the year-old debt crisis, will need another cut in its bailout rate or a further extension of repayment terms to return to fiscal health.

Germany's doubts conflicted with official assertions that Greece is on the right track, defying efforts to put an end to the crisis that threatened the survival of the euro, postwar Europe's signature economic achievement. Last week's increase in European Central Bank interest rates for the first time in almost three years throws a further cloud over weaker economies.

Bond investors are charging Greece 938 basis points more than Germany to borrow for 10 years. The spread for Ireland, the second country to obtain aid, is 577 basis points. Portugal, aiming for a relief plan by mid-May, pays an extra 518 basis points.

Officials including ECB President Jean-Claude Trichet dismissed suggestions that Greece might not be able to repay its debt, saying budget cuts, tax increases and 50 billion euros in asset sales will bandage its economy.
'Solid Plan'

"We do exclude restructuring," European Union Economic and Monetary Commissioner Olli Rehn said. "We have a solid plan. It is based on a very careful analysis of debt sustainability."

The Greek government predicts that the clampdown on spending will shrink the economy by 3 percent in 2011, the third straight contraction. EU forecasts show debt peaking at 159.4 percent of gross domestic product in 2012, the year Greece is supposed to return to the markets for financing.

Greece might need more time to pay back debts to bondholders, in a "rescheduling" that would not be classified as a default, Organization for Economic Cooperation and Development Secretary-General Angel Gurria said.

"The adjustment program of a country like Greece is a very painful program, and if a rescheduling of the payments is something which is required in order to make those difficult policies work, then that is what should be done," Gurria told Bloomberg Television.

Trichet's "Solid Plan" in Question

Trichet may have a "solid plan" but the market sure does not think much of it.

Greek 10-Year Yield 12.859%

Portuguese 10-Year Yield 8.663%

Irish 10-Year Yield 9.24%

German 10-Year Yield 3.481%

Iceland's Common Sense Stance

The market does not seem to believe Jean-Claude Trichet and neither do I.

Moreover, if governments in Greece, Ireland, and Portugal were to put default to a vote, I am quite certain their voters would react as they did in Iceland.

For details please see Icelandic Voters Reject "Icesave" Again, Effectively Telling UK and Netherlands Banks "Go to Hell"; Iceland's Common Sense Stance

Icelandic voters want no part of "Icesave". Even the name "IceSave" is preposterous. Iceland was save by the fact voters rejected "Icesave". Icelanders would have been debt-slaves for decades had they accepted the original terms.

How many times do citizens have to say no? Hopefully voters give Prime Minister Johanna Sigurdardottir a well deserved boot in the next election.

Moreover, Iceland needs to rethink why it would want to be part of the Eurozone in the first place. I suggest Iceland put the Euro to another vote.

Finally, I am really disappointed in the wimps in Ireland. They should put Ireland's "reverse bailout" to a vote as well. I can guarantee the results in advance.

Banks that make stupid loans should suffer for them, not taxpayers. So far, Iceland is the only country that has taken this common-sense stance.

Trichet has his plan. However, the market seems to have a decidedly different plan.

The pertinent Eurozone issue however, is when the citizens of Greece, Ireland, Portugal, and Spain get fed up with austerity measures and bailouts of German, French, and UK banks, then demand sovereign debt haircuts or restructuring.

When that happens, and it will (timing is unknown), the arrogant "we do exclude restructuring" statement of Trichet will be meaningless.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

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Mish's Global Economic Trend Analysis

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