DEBKA covers the millitary aspects. Evidently the UN sanctions permit international inspection of cargo to Iran. Sounds like a blockade to me, which it is. That’s why the US Armada is there in the Persian Gulf.
THE AMERICAN THINKER provides more details. Evidently the legislation permits the Executive to issue waivers. (The WH has always been opposed to stiff sanctions.) But the Democratic Congress didn’t want to give so much power to Obama so it is holding him accountable for every waiver issued.
Iran shocked to see American, European chokehold on Tehran’s economy
Guy Bechor, YNET
The stunned Iran cannot believe it’s happening: The worst nightmare for the Ayatollah regime is taking shape right before its eyes, in the form of a complete chokehold on Iran’s economy within a few months. Iran’s soft underbelly is in the sights – oil and gas. The arrogant Ahmadinejad thought this day shall never come, yet the “higher power” that guides him, in his view, apparently no longer works.
The US and Europe have decided to suffocate Iran’s economy, no less. This is no longer about playing games here and there or about lukewarm sanctions against Iranian companies here and there. This time, the target is the whole Iranian economy. For Israel and most Arab states, there could be no greater success: The state behind everything that destabilized the Middle East is being threatened with collapse.
At the end of June, the US Congress and Senate approved by a large majority a law banning global companies engaged in ties with Iran’s oil and gas industry from coming into the US. This is a comprehensive and strict law that will dry up Iran as it dried up Cuba. Once the law goes into effect, anyone in the most sensitive industry for the Iranians who goes into Iran will not be allowed to go into the US. (While Iran exports oil, it must import refined oil for cars and planes, and therefore its dependence on the world is high.)
This law’s effect is already being felt, and energy giants that sell fuel for Iranian cars and planes immediately announced that they’re terminating their ties with the rogue, crumbling state. For example, the French Total immediately put an end to its Iran business.
Yet there’s more, and that’s what hurts Iran the most: The European Union has also imposed a chokehold on Iran’s economy. The decision was taken in June by all EU heads of state: As of early July, new investments by European companies and states in Iran’s energy, oil, and gas industry will be banned. This is an absolute, comprehensive, and far-reaching boycott. Technical assistance and the transfer of goods and services to Iran’s oil and gas industry will also be disallowed. Every violation of this decision will be illegal.
Arrogant Iranians infuriated
We must keep in mind that the EU is Iran’s number one economic partner. About 80% of Iran’s revenues come from oil and gas, and therefore this is its soft underbelly. And why are foreign investments critical? Because Iran’s wells are growing old, and there is a constant need to renovate them, yet there is no money for it unless it comes as a foreign investment – which is now banned. Should these renovations not take place constantly, Iran will stop pumping oil and the economy will deteriorate quickly.
The arrogant and unresponsive Iranians are now infuriated with the whole world: The US and EU (the EU will be “gravely punished,” Tehran says, calling the Germans “Israel’s slaves”), the Russians who abandoned them (according to Iran, Russia is a crumbling super-power. Everyone is crumbling, except for Tehran, of course,) and the Chinese who betrayed them. Where will they go now?
The Iranian regime is left isolated in the world, and below it is an Iranian society that wishes to end the Ayatollah dictatorship, which is merely 30-years-old.
Precisely at this time, the world must not go easy on the Iranians. The offer made to Iran on the nuclear front last year, and rejected by Tehran, should not be offered yet again. The time has come to put an end to the Persian bazaar. This pressure may topple the Ayatollah regime, as officials in Tehran know, and therefore the world should not make do with anything that is less than a complete halt of the nuclear race.
In any case, a collapsing Iranian economy means less terror in the region, less radicalism and provocation, and less aid to Hezbollah and Hamas; indeed, the Middle East’s stability will only gain from this.
Understood. (smiling)
Over the years, I’ve learned never to ask that question of my sister. When she gets back, she gets back.
My best to #5, Ciao!
When will you be returning?
Monitor M3.
For M-3, that’s the highest rate of decline recorded since the Federal Reserve re-based the money supply figures in 1959. “It is believed that M-3 fell this fast in the Depression,” Bove said.
Bove reckons M-3 money supply is falling at such an alarming rate because banks are still pulling back on lending. http://blogs.marketwatch.com/marketjunkie/2010/07/01/why-richard-bove-is-frightened/
Obama has intimidated the banks into paralysis. It’s the equivalent of Smoot and the opposite of stimulus. He’s creating the impending economic implosion with his populist bully boy cocksuckery. Masterpiece and I are headed for a Santa Barbara redendezvous with #5. Ciao!
Joy, Jr. and #5 must be relieved none shot back, me too! 🙂
Thanks for your critique. It meshes pretty much with my own non professional but intuitive understanding. I gather you don’t foresee hyper inflation kicking in soon? I monitor M1,2 and without major rise in interest and increases taxation I don’t see how hyper inflation can be avoided. Deflation and hyperinflation seems to be quite the toxic mix.
I once made a nice profit by converting Israeli currencies to yen, some as a forward contract the rest in cash. My bankers laughed at me and called me Mr. Yen. What they didn’t know and I did, was that the par of yen to $ was 20%, Yen undervalued. Three weeks after I bought yen it started to close the par in three months it had more than closed that 20% I sold them before they peaked and retreated. Then bought a penthouse from a contractor who was desperate for cash, with my profits at 30% below market. Waited till the value of the property almost doubled in 5 years and sold it. I learned economics from my great grandfather who was an Indian trader out west before settling down. He would buy for a dollar sell for two and make his 5%. He couldn’t even read or write English. Story partially true, I have an MBA. (not a Harvard or Wharton one) nice wall decoration though.
I went shooting today celibrating the 4th of July. I took my short barrel Mossberg 12 guage. Don’t have to aim so much. Also shooting at cactus while pretending each one a Muslim.
The site refuses to post our resident PhD’s lengthy yet intriguing reply, so our resident PhD is going shopping.
Shebrew 50, Cactus 0.
Krugman sucks, but even a sucky squirrel finds some nuts. Here’s a freebie for you, Y82, from my very favorite economist. Me.
For Institutional Clients
7/2/10 9:00 ET
This morning’s employment report reinforces my baseline macroeconomic model that emphasizes a primary trend deflationary environment for at least the next three quarters. The government account of 9.5% unemployment is illusory; real world American unemployment incorporating underemployment and discouraged non-participation is 22%. Current government policies engender deterioration rather than recovery. The absence of the only real stimulus – tax cuts – is exacerbated by the impending upwards reversion to pre-Bush tax rates on the productive sector. Corporations hold cash reserves of approximately $2 trillion that isn’t being reinvested due to lack of confidence in national leadership (possible equivalent to Smoot Hawley circa 6/1930). Combined with the continuing deflation of the debt bubble, the economic backdrop is bleak and getting bleaker.
Primary Investment Vehicles:
(Stocks) You were alerted to a confluence of time cycles cresting on 4/26, which coincided with SPX high print 1219.80. Equity strategy remains static: Short resistance rather than buy support. Don’t be seduced by low P/Es, as earnings estimates are unrealistically elevated. The 2008-09 deflationary model suggests selling three day rallies when SPX fifteen minute crosses below 34/16 EMAs. Point of emphasis: Stocks are OVERvalued, not UNDERvalued. Continue to anticipate an October pre-election low around SPX 800. Don’t rule out breach of 3/2009 low at 666. Will adapt forecast as needed. Note that retail/housing stocks are getting annihilated. Most consumers are tapped out, and with confiscatory Obama economic plan those with cash are hoarding it.
(Bonds) Prospering as expected during a deflationary phase. Those long as recommended since 4/26 should remove trading position because Bullish Consensus has reached excessive optimistic level of 97. Hold core position for the longer term. Support basis cash 126; then 123.5. Given the potential for carnage in stocks and corresponding flight to safety, shorting bonds for a trade offers nonviable risk/reward.
(Gold) Long term extremely bullish as fiat currencies lose all credibility. Short term prepared to capitalize on potential setback BUT NOT BY SHORTING. Invest with the primary trend by buying support basis cash. First chart support $1160, with excellent (preferred) MA/EMA support at $1128.
(Currencies) Euro has had expected countertrend bounce due to 2% Bullish Consensus. Advise monitoring rather than trading Euro/US Dollar at this juncture since probabilities don’t yet favor speculation. Canadian remains hopelessly captive to American stock market, just as Yen can be expected to continue inverse correlation.
The trend is deflationary. All investments should honor the trend. Some clients have asked whether Bernanke can stem the tide with another sudden Fed intervention. The answer is “Briefly”. Very briefly. The die is cast. The pain is on the way.
DSW
Joy,
Good, they must need the recreation. I shoot and have a small mostly illegal collection, here it’s better to be armed, you never know.
Even with plugs and head mufflers your ears still hurt? I used to be an archer, I almost made Israeli Olympic team once. No noise there except the twang of the Bow.
Good, they must need the recreation. I shoot and have a small mostly illegal collection, here it’s better to be armed, you never know.
Even with plugs and head mufflers your ears still hurt? I used to be an archer, I almost made Israeli Olympic team once. No noise there except the twang of the Bow.
She’s out shooting cactus. I just hope they aren’t shooting back.
Joy here is a prediction, ‘Nobel prize holder’
Krugman Sees U.S. in ‘Third Great Depression’
What does our resident PHD have to say?
I like the concept of a scorecard. Every time one of these analysts gives an opinion, his or her batting average should be posted. What was their most notable quote about Oslo? Arafat? Cast Lead? Context is always nice. The liberal media is almost always wrong, but it’s never held to account. I don’t know Bechor, but I do know a lot of analysts whose punishment for getting their predictions wrong is getting to make more predictions. I would really like to say the same thing about economists, but I don’t have the guts. You never know who will be reading this.
Guy Bechor used to be a very credible analyst. About two years ago he has become a leading Israeli, for what I have no better term than appeasement and retrenchment. Call it a reductionist conception as Shebrew so aptly coined. I stopped reading him a long time ago not because he has veered sharply left but because he is 100%wrong most of the time, just like Barry Rubin. Beware of Think tank pundits, they depend on various sources for funding and all of these sources have agendas.
Maybe I’m the only one who is uninspired.
Good morning, Yamit. It’s just me today. Shebrew and Teenage Shebrew gathered the house arsenal and they’re headed for the desert where they’re going to spend the day making like pistoleros. I must be adopted. I’m the only one in the family who’s not Annie Oakley. Gun noise hurts my ears.
Ditto
This is inspiring news. Unfortunately, it’s wishful thinking. Any country with oil can sell it, even if it means discounting the price. Iran’s willing to take a short term hit financially because having nuclear weapons will transform it into a regional superpower for decades. The cost/benefit for Iran is mostly benefit. The only way to stop the Iranian nuclear program is to bomb it.