US/NATO War on Russia

[David Guyatt]

Foreigners Sell A Record Amount, Over $100 Billion, Of Treasurys Held By The Fed In Past Week

Submitted by Tyler Durden on 03/14/2014 10:51 -0400

http://www.zerohedge.com/news/2014-03-14...ys-held-fe

A month ago we reported that according to much delayed TIC data, China had just dumped the second-largest amount of US Treasurys in history. The problem, of course, with this data is that it is stale and very backward looking. For a much better, and up to date, indicator of what foreigners are doing with US Treasurys in near real time, the bond watchers keep track of a less known data series, called "Treasury Securities Held in Custody for Foreign Official and International Accounts" which as the name implies shows what foreigners are doing with their Treasury securities held in custody by the Fed on a weekly basis. So here it goes: in the just reported latest data, for the week ended March 12, Treasurys held in custody by the Fed dropped to $2.855 trillion: a drop of $104.5 billion. This was the biggest drop of Treasurys held by the Fed on record, i.e., foreigners were really busy selling.

Was that Russia transferring dollar holdings offshore?

By: Patti Domm | CNBC Executive News Editor

Published: Friday, 14 Mar 2014 | 3:05 PM ET

http://www.cnbc.com/id/101495837

The Fed's custody holdings report is usually a sleeper, but this week there was a whopping withdrawal by some central bank. And while there's no evidence, speculation is that it was Russia.

Foreign central banks' holdings of U.S. marketable securities fell in the week that ended Wednesday by a record $106.1 billion, and that was mostly Treasurys. The holdings of U.S. securities held by the Fed for other central banks fell to $3.21 billion, the lowest level since December 2012.

While traders say they suspect it was Russia, they don't know for sure, and it has not shown up on Russia's balance sheet.

However, Marc Chandler, chief Treasury strategist at Brown Brothers Harriman, said everything points to Russia, starting with the timing of Sunday's Crimean referendum and the potential for Western sanctions. He said rather than selling the Treasurys, Russia simply transferred them out of the U.S.

"Everything (Russian President Vladimir) Putin is doing is being extra cautious about retaliation, like bringing troops right to the Ukraine border," said Chandler. "The other reason I say it's most likely Russia is you look at the countries that have the largest reserves. It doesn't feel like it's China because China has enough on its plate."

Chandler said about half of Russia's foreign currency reserves are held in dollar-denominated instruments, and this would be about 80 percent of those dollar holdings. At the end of 2013, Russia had $138 billion in Treasury securities.

"It could be somebody else, but it does seem circumstantial just on the timing alone," said Chandler.

He also said there are precedents for this type of behavior by Russia.

He pointed to the birth of the Eurodollar marketdollars outside the U.S. In 1956, when the Soviet Union invaded Hungary, it feared the U.S. would retaliate with financial muscle, and Russia-based Narodny Bank shifted dollars from the U.S. and deposited them in its London branch, he noted.

I wonder if Putin was just concerned that the US would freeze Russian assets, hence what appears to be his decision to relocate them - probably again to London?

[David Guyatt]

It was possible to break the drone's link with its American operators with the help of the EW (electronic warfare) complex Avtobaza. As a result, the device made an emergency landing and passed into the possession of the self-defense forces almost unbroken," the report says.

This sounds like the obvious weakness of unmanned drones doesn't it. At a distance the signal link can be broken and the blink of an eye, the drone becomes someone else's weapon system. Quite how this can be prevented in the future I have no idea, but it clearly is the achilles heel of remote weapon systems.

[Peter Lemkin]

Foreigners Sell A Record Amount, Over $100 Billion, Of Treasurys Held By The Fed In Past Week

Submitted by Tyler Durden on 03/14/2014 10:51 -0400

http://www.zerohedge.com/news/2014-03-14...ys-held-fe

A month ago we reported that according to much delayed TIC data, China had just dumped the second-largest amount of US Treasurys in history. The problem, of course, with this data is that it is stale and very backward looking. For a much better, and up to date, indicator of what foreigners are doing with US Treasurys in near real time, the bond watchers keep track of a less known data series, called "Treasury Securities Held in Custody for Foreign Official and International Accounts" which as the name implies shows what foreigners are doing with their Treasury securities held in custody by the Fed on a weekly basis. So here it goes: in the just reported latest data, for the week ended March 12, Treasurys held in custody by the Fed dropped to $2.855 trillion: a drop of $104.5 billion. This was the biggest drop of Treasurys held by the Fed on record, i.e., foreigners were really busy selling.

Was that Russia transferring dollar holdings offshore?

By: Patti Domm | CNBC Executive News Editor

Published: Friday, 14 Mar 2014 | 3:05 PM ET

http://www.cnbc.com/id/101495837

The Fed's custody holdings report is usually a sleeper, but this week there was a whopping withdrawal by some central bank. And while there's no evidence, speculation is that it was Russia.

Foreign central banks' holdings of U.S. marketable securities fell in the week that ended Wednesday by a record $106.1 billion, and that was mostly Treasurys. The holdings of U.S. securities held by the Fed for other central banks fell to $3.21 billion, the lowest level since December 2012.

While traders say they suspect it was Russia, they don't know for sure, and it has not shown up on Russia's balance sheet.

However, Marc Chandler, chief Treasury strategist at Brown Brothers Harriman, said everything points to Russia, starting with the timing of Sunday's Crimean referendum and the potential for Western sanctions. He said rather than selling the Treasurys, Russia simply transferred them out of the U.S.

"Everything (Russian President Vladimir) Putin is doing is being extra cautious about retaliation, like bringing troops right to the Ukraine border," said Chandler. "The other reason I say it's most likely Russia is you look at the countries that have the largest reserves. It doesn't feel like it's China because China has enough on its plate."

Chandler said about half of Russia's foreign currency reserves are held in dollar-denominated instruments, and this would be about 80 percent of those dollar holdings. At the end of 2013, Russia had $138 billion in Treasury securities.

"It could be somebody else, but it does seem circumstantial just on the timing alone," said Chandler.

He also said there are precedents for this type of behavior by Russia.

He pointed to the birth of the Eurodollar marketdollars outside the U.S. In 1956, when the Soviet Union invaded Hungary, it feared the U.S. would retaliate with financial muscle, and Russia-based Narodny Bank shifted dollars from the U.S. and deposited them in its London branch, he noted.

I wonder if Putin was just concerned that the US would freeze Russian assets, hence what appears to be his decision to relocate them - probably again to London?

Maybe these assets will have to seek refuge in the Bolivian Embassy to avoid extradition.....nah!...the Bankers of the London Corporation love money too much to ever give it up - even to their Uncle Sam.

[David Guyatt]

[Peter Lemkin]

While no one's hands are clean, this is not a fair vote - there is no way anyone can vote no - the way it is worded. The only way to vote 'no' [person thinks Crimea should remain part of Ukraine] is to not vote - yet if more than one vote yes, it wins...so it is a de facto win, before the vote. Everyone's hands are dirty here....one can only argue who started it, and who's hands are more dirty. ::

With the vote already decided, what happens next is the big fear and challenge.

[Magda Hassan]

It's faaaaar more than the Irish ever got from Britain.

[Paul Rigby]

While no one's hands are clean, this is not a fair vote - there is no way anyone can vote no - the way it is worded. The only way to vote 'no' [person thinks Crimea should remain part of Ukraine] is to not vote - yet if more than one vote yes, it wins...so it is a de facto win, before the vote. Everyone's hands are dirty here....one can only argue who started it, and who's hands are more dirty. ::

With the vote already decided, what happens next is the big fear and challenge.

Five Myths about the Crimean Referendum

http://darussophile.com/2014/03/five-myt...eferendum/

3) There is no choice both options are, in effect, a "yes."

Here is the form, which is printed in the Russian, Ukrainian, and Tatar languages. The two options are:

Do you support joining Crimea with the Russian Federation as a subject of Russian Federation?
Do you support restoration of 1992 Crimean Constitution and Crimea's status as a part of Ukraine?
It is also clearly stated that marking both answers will count as a spoiled ballot.

So the option isn't between joining Russia or joining Russia, but between joining Russia and getting more autonomy.

Furthermore, there is a clear and democratic way to vote AGAINST any changes boycott the referendum (as official Kiev and the Mejlis have been urging Crimeans to do). If turnout is below 50%, the referendum is automatically invalidated.

[Magda Hassan]

And there is this:

The Crimea will host a referendum this Sunday, March 16, 2014, to determine whether the autonomous republic will remain in Ukraine under expanded autonomy or ask to be absorbed into the Russian Federation. For the past two weeks, Ukraine's new authorities in Kiev have railed against the vote, arguing that the Crimean parliament has no right to pursue secession without the participation of the national government.
Some Russian Internet users are now concluding from images circulating online that Crimean state officials might be planning to exclude their own electorate from the voting process, as well.
The photograph at the center of the ballot falsification scandal.

On March 12, blogger Rustem Adagamov published photographs from Itar-Tass by Sergei Fadeichev of referendum preparation throughout the Crimea. In one photograph (see above), a young man is moving what appears to be a stack of voting ballots. After Adagamov published the images, observant readers quickly noticed that the cover sheets on the stacks of paper were printed with pro-secession votes already selected.
The website freejournal.biz picked up the chatter on Adagamov's blog, running a story with the headline, "Ballots in the Crimea Already Filled Out in the Right Place." The piece also cited a Facebook post by Ukrainian parliament member Oleksandr Briginets, where he reported secondhand information that Russian citizens were being bused into Simferopol to stuff the ballot box in favor of secession. "My mom and many people living in Feodosia saw these buses!!!" Briginets wrote on March 13.
According to Yandex's blogs search engine, there are 780 separate pingbacks to the freejournal.biz post, meaning that hundreds of Russian bloggerswriting mostly on Vkontakte and Twittershared this story, typically expressing their anger about the apparent voter fraud planned for this Sunday.
A close-up of the pro-secession Crimean referendum leaflets.

Upon closer inspection, however, the falsified ballots in the photograph on Adagamov's blog may in fact be leaflets made by pro-Russia agitators. The same day that Adagamov posted the images, newspaper RBC Daily published its own photographa close-upof the same documents (see above), which it identified as leaflets produced by a local chapter of the Party of Regions.
Admittedly, the leaflets were designed to be nearly identical to the real ballots. There are two important differences, however. Unlike the official ballot announced earlier this week by Crimean election head Mikhail Malyshev, the leaflets were printed on white paper. (The actual ballots are being printed on yellow paper.) The paper size of the leaflets also seems to be larger than the dimensions that Malyshev advertised this Tuesday. Finally, of course, there is the booming red checkmark on the leaflets. If you look carefully at RBC's picture, you'll see that the box around the checkmark doesn't close completely. There is a small space left unfilled, making it impossible even to suggest that the vote was cast after the ballot was printed.
So does this mean that Russia won't try to steal the referendum on Sunday? It absolutely does not mean that. But this one photograph and the reaction it's causing online do suggest that Russians won't be terribly surprised, if the vote is fixed. Many are ready to believe the worst now, even on laughably circumstantial evidence.

http://globalvoicesonline.org/2014/03/15...hat-wasnt/

[Paul Rigby]

[video]http://www.bbc.co.uk/news/world-europe-26600492[/video]

[Paul Rigby]

German Exporters Fire Warning Shot About Russia "Sanction-Spiral," Banks At Risk

The "mal-calculation"

Thursday, 13 March 2014

http://www.testosteronepit.com/home/2014...n-spi.html

It took a while. But it had to come, the public warning shot after what must have been a ferocious lobbying campaign behind closed doors. No one in Germany is allowed to get in the way of the sacrosanct exporters. The German economic model, to the chagrin of neighboring countries, is based on them.

It wasn't as bombastic as US Secretary of State John Kerry's blast to lawmakers that the Ukrainian debacle could "get ugly fast," and "in multiple directions," but it had the heft of the German export industry.

Anton Börner, president of the German Association of Exporters (BGA), which represents 120,000 companies, the lifeblood of the economy, warned at a press conference in Berlin that further escalation of the crisis in the Ukraine could hit exporters very hard. He said that the BGA expected exports to rise 3% to €1.13 trillion and imports 2% to €914 billion for a trade surplus of €215.6 billion the highest in history. But "if the crisis in the Crimea escalates further," these wondrous forecasts of endlessly growing exports and surpluses "could turn very quickly into a mal-calculation."

The sanction spiral

Further intensification of "the most serious political crisis in Europe since the end of the war in former Yugoslavia" would degrade bilateral economic relations between the EU and Russia. He warned not to underestimate the drag of secondary and tertiary effects on the world economy. "Russia itself, Europe, Germany, and the whole world have a lot to lose," he said. "But if there's a sanction-spiral, Germany has the most to lose."

About 6,200 German companies were trading with Russia or had invested there. The bilateral trade volume was over €76 billion last year. And German companies have invested €20 billion in Russia. The "sanctions-spiral" that is currently gaining momentum could have "unforeseen consequences," especially for Russia, he said. They'd be "painful for the German economy, but life-threatening for the Russian economy."

And there'd be a price to pay, not only of economic nature, but also of political nature, he warned.

Better than pushing someone into a corner

"We merchants are always in favor of keeping a communication channel open," he said. Within the Western world, Germany had the best connections to Russia, politically, diplomatically, economically, and culturally. So it would have to play a decisive mediator role, Börner said. "Talking is better than pushing someone into a corner."

Given the "inexperienced and opaque" Ukrainian government, there were additional uncertainties another reason to deescalate the crisis. The EU would need to integrate Russia and Putin in the decision-making processes, "at eye level and as part of the solution." Putin should be given the "widest possible understanding for his situation," but at the same time, it should become clear that unilateral changes of international contracts and borders would "lead his country to the sidelines."

And the banks?

It isn't just German exporters that are fretting, and lobbying with all their might. Russia, with an economy that is already stagnating, and dogged by vicious bouts of capital flight, has $732 billion in foreign debt. Relatively little of it is sovereign debt, but nearly $700 billion is owed by banks and corporations most of them owned or controlled by the Kremlin. Oil major Rosneft and gas mastodon Gazprom owe $90 billion combined to foreign entities; the four state banks Sberbank, VTB, VEB, and Rosselkhozbank owe $60 billion. Some of this debt matures this year and next year.

US banks are marginally involved. Between Bank of America, Citigroup, JPMorgan, and Wells Fargo, they have only $24 billion on the line. But European banks and insurance companies are up to their dirty ears in this suddenly iffy and potentially toxic Russian debt.

When it comes due, it will have to be rolled over, and some of the companies will need to borrow more, simply to stay afloat. Alas, the current sanction regime of visa bans for the elite, asset freezes, and trade restrictions could make that difficult. Then there's the threat, now more broadly but still unofficially bandied about, that Russian companies should simply default on this $700 billion in debt in retaliation for the sanctions.

Some European banks, including some German banks, might crater. Even the possibility of a major loss would further rattle the confidence in these banks with their over-leveraged and inscrutable balance sheets and their assets that are still exuding whiffs of putrefaction. And this sort of fiasco, as the financial crisis has made clear, has an unpleasant way of snowballing and taking down the already shaky global economy with it.

During the financial crisis, German exports collapsed, banks toppled and got bailed out, and the economy experienced its two worst quarters in the history of the Federal Republic. No politician in Germany has any appetite to re-experience that. And the banking industry, with its powerful and long tentacles winding their way through the hallways and doors of the German government, has been assiduously at work, quietly and behind the scenes, to whittle any sanctions down to irrelevance.

Washington's defaulting on an agreement with Russia about Ukraine's future, and the prospect of NATO troops in Ukraine, convinced Putin and much of the Russian elite that there's no point in negotiating with the US. Big risks lie ahead.