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March 25, 2012

70000 feet successful spacedive

Felix Baumgartner successfully leapt from an altitude of more than 70,000 feet last week -- and that was just a trial. It's all part of Baumgartner's attempt to complete a record-breaking 120,000 foot "spacedive" later this year and, based on early returns, he seems well on his way. The idea behind last week's run was to test out the balloon and pressurized capsule, though Baumgartner is apparently hoping to complete another jump from about 90,000 feet above ground, before attempting the record breaker sometime this summer. For more details on this, check out Red Bull Stratos' video below:

Italy Exposure to Derivatives

It was nothing more than a footnote in the Morgan Stanley financials; a $3.4 billion pay-out by Italy to settle a derivatives contract made in 1994. Say goodbye to 50% of the tax hikes imposed by the Monti government because that is what was wiped out by this payment. It is also interesting to note that that Mario Draghi, currently President of the European Central Bank, was the Director-General of the Italian Treasury when this derivative was formulated. Then comes the bomb, only mentioned in a brief article on Bloomberg, and not noted anywhere in the Press. Marco Rossi Doria, an undersecretary in Monti’s administration, tasked with responding to a parliamentary interrogation on derivatives, admitted that the Italian Treasury had $211 billion in "notional" exposure to derivatives, which is around eleven percent (11%) of Italy’s total GDP. This new exposure now brings Italy’s actual debt to GDP ratio to a whopping 144.3%.
Expect further corrections of Monti's government in the following months, the ransack of Italy to cover derivatives contracts is likely to continue for years.

Possible dates of Iran attack

Following  the Israel Security Council's majority vote authorizing Iranian "action" when required, we are wondering at this stage the "when" and not the "if". Rapidan and other strategic analysts are crunching data on a possible date for the attack considering carrier deployment and moonless nights.

From Rapidan Group
Timing Considerations

Based on press reports, officials see high odds of an attack sometime between 2Q12 and the end of the year, with most pointing to 2Q or 3Q.

If Israel elects to conduct a conventional military strike, the optimal conditions would be moonless and cloudless nights. “Operation Orchard,” Israel’s attack on Syria’s reactor at Al-Kibar on Sep 6, 2007, took place 5 days before the new moon. This suggests windows starting about 5 days before a new moon and ending five days after - see the table below. Low humidity is also ideal, but not required.

Attackers would want to avoid sandstorms, which have afflicted Iran in April, July, and September in recent years. Last year, a large sandstorm in mid-April hit 20 provinces, forcing the shutdown of schools and businesses. Sandstorms are visible and predictable, however, and would be taken into account by planners.

For non-kinetic options, climate is not a consideration to our knowledge. Presumably, they would be tried before kinetic ones and only after leaders were convinced Iran had not yet felt enough pain to compel it to freeze enrichment. 

And here is the latest naval update from Stratfor. Keep your eye on CVN 65.

Daily Photo: Notre Dame Interior

Zombie-like disease spreading in Africa

CNN reported a strange disease currently spreading in Uganda that has WHO and CDC baffled:

Called nodding disease, the zombie-like disorder has spread to more than 3,000 children in Northern Uganda, and the Center for Disease Control and Prevention (CDC) and World Health Organization (WHO) are scrambling to figure it out.
The disease causes the affected children to sit and nod—hence the name—but also has some much weirder, and creepier, effects. The disorder causes severe seizures, amnesiac behavior, stunted development and extreme pyromania. Affected children often start fires or wander off, and more than 200 deaths have been reported from incidences caused by the infected, i.e. fires.
One parent, Grace Lagat, said several villagers have taken to tying infected children up to keep them from wandering off. She says her son, Thomas, often bites and gnashes at the rope to try and get free.
"When I am going to the garden, I tie them with cloth," Lagat told CNN. "If I don't tie them I come back and find that they have disappeared."
The disease has been popping up in smaller outbreaks the past four years, though it is now bordering on a regional epidemic.
With everyone from WHO to the CDC on the case, scientists have still not figured out the cause, or a cure. But, they do know that more than 90 percent of cases occur in areas that are home to the parasitic Onchocerca Volvulus worm, which is carried by insects, and vitamin B6 deficiency could be a factor.
"At first we cast the net wide," CDC disease detection director Dr. Scott Dowell said. "We ruled out three dozen potential causes and we are working on a handful of probabilities."
Though experts don't expect a worldwide epidemic—the disorder doesn't appear to be contagious at this point—they are taking some precautions to ensure it (hopefully) doesn't spread beyond the affected regions.
"We know from past experience an unknown disease could end up having more global implications," Dr. Dowell said.

Obama escalate Security Preparedness

Quietly, and with little fanfare, President Obama signed a “National Defense Resources Preparedness” Executive Order on Friday. As the name suggests, the order intends to shore up the country’s national defense resources in advance of a national emergency.

To be fair, this is not the first time that such an order has been written. Presidents Bush (II), Clinton, Reagan, and even Eisenhower provided directives in the same spirit as President Obama’s order– providing some level of government commandeering in times of national emergency.

In the past, these orders have related to things like production capacity for defense contractors, or giving FEMA authority to resolve disputes between other departments in federally designated emergency areas.

President Obama’s order, however, takes things much, much further.

The order vastly expands the role of Homeland Security.
DHS now has authority to direct the emergency preparedness of every other government department. The Secretary of Homeland Security has effectively become the Emergency Czar.
He will have oversight of “all other national defense programs, including civil defense and continuity of Government.”

The order further provides for an effective nationalization of the entire US economy in the event of an emergency.
The Secretary of Labor, for example, will “collect and maintain data necessary to make a continuing appraisal of the Nation’s workforce needs for purposes of national defense” and then “formulate plans, programs, and policies for meeting the labor requirements of actions to be taken for national defense purposes.”
The purpose of this order, for example, is to “take actions necessary to ensure the availability of adequate resources and production capability, including services and critical technology, for national defense requirements;”
It goes on to list ‘adequate resources’:
(i) “all forms of energy including petroleum, gas (both natural and manufactured), electricity, solid fuels… solar, wind, other types of renewable energy, atomic energy”, etc.
(ii) “all usable water, from all sources, within the jurisdiction of the United States, that can be managed, controlled, and allocated to meet emergency requirements…”
(iii) “all commodities and products… that are capable of being ingested by either human beings or animals…”
(iv) “drugs, biological products, medical devices, materials, facilities, health supplies, services and equipment required to diagnose, mitigate or prevent the impairment of, improve, treat, cure, or restore the physical or mental health conditions of the population.”
Obama’s executive order puts all of these resources under control of the government and allocates them exclusively to meet the needs of government.

Furthermore, NSA’s new Utah spy center will collect and archive the complete contents of every email, tweet, Facebook post, Google search, phone call, and text message.

Is the US Government getting ready for something nasty coming?

Eurozone Unsustainable Debt could bring Germany to leave the Euro

Eurozone crisis can has been temporarily frozen by the ECB but is on track to come back home with a revenge. There are many signs that the ECB intervention could have actually made things worst in exchange for some months of relative calm on the markets. Let us not forget that as far back as September 2011, PIMCO’s Co-CIO, Mohamed El-Erian (one of the most connected of the financial elite) noted that French Banks were running REAL leverage levels of almost 100-to-1.

El-Erian said French banks are a particular cause for concern, noting that "credit markets now put their risk of default at levels indicative of a BB rating, which is fundamentally inconsistent with sound banking operations." He adds that bank equity now trades at a 50% discount to tangible book value on average, while the ratio of market capital to total assets has fallen to 1%-1.5%, compared with 6%-8% for "healthier banks."

The ECB managed to swap out its Greece debt into new debt. But it won’t be able to do this with the remainder of PIIGS’ debts. Instead, the ECB plans on shifting any of the losses from these debts onto the individual EU national banks:

ECB Balance Sheet Jumps Above €3 Trillion
The mix of bond purchases and loans has exposed the ECB and the 17 national central banks that make up the euro to losses in the event of defaults or bank failures. Last month, the ECB was forced to swap its €50 billion Greek bond portfolio for new bonds to shield the banks from potential losses in the event of any forced write-­downs.

If banks that have borrowed from the ECB can't pay the money back and the collateral they have posted falls in value or becomes worthless, the ECB would be on the hook for losses. Most of these losses would be spread across national central banks according to their size, meaning Germany's Bundesbank would face the largest exposure.

Germany is certainly aware of this since it has already put up a firewall that would allow it to walk out of the Euro at any point. Obviously it doesn’t want to, but when the ECB will try to shift the losses from its PIIGS exposure onto Germany’s shoulders, Germany will have no choice.  The reality is that the ECB is far too small to cover the astonishing amount of debt a look at the chart below gives an idea of what kind of figures we are talking about.

A solution would be for the ECB to start printing money but it is blocked form doing so from Germany who made clear will walk away from the Euro rather than trigger an hyperinflation.

March 17, 2012

Santorini Caldera at risk of eruption

Should the Santorini Caldera erupt as per report below Greece economic woes would reach a totally new dimension:

From GAtech:
Newman, a geophysicist in the School of Earth and Atmospheric Sciences, cannot be certain whether an eruption is imminent since observations of such activity on these types of volcanoes are limited. In fact, similar calderas around the globe have shown comparable activity without erupting. However, Newman says the chamber has expanded by 14 million cubic meters since last January. That means enough magma has been pumped into the chamber to fill a sphere three football fields across.

Should Santorini erupt, Newman says it will likely be comparable to what the island has seen in the last 450 years.

That could be dangerous,” notes Newman. “If the caldera erupts underwater, it could cause local tsunamis and affect boat traffic, including cruise ships, in the caldera. Earthquakes could damage homes and produce landslides along the cliffs.”

More than 50,000 tourists a day flock to Santorini in the summer months (from May to October). It’s common to see as many as five cruise ships floating above the volcano.

Santorini is the site of one of the largest volcanic events in human history. The Minoan eruption, which occurred around 1650 B.C., buried the major port city of Akrotiri with more than 20 meters of ash and created Santorini’s famous, present-day cliffs. Newman says such history will likely not repeat itself any time soon. Such an eruption comes along once every 100,000 years, and the current inflation in the magma chamber is less than 1 percent of the Minoan blast.