The Russian Bear Awakens: Poland Threatened

Too much easy commodity bling has got the Big Bad Russian Bear strutting around, balls out.

I shit you not, when this story from the Jerusalem Post started making the rounds on the trading floors, traders starting pounding equities down and lifting fixed income. I’m not kidding. The squawk boxes were blaring and traders just ran with it.

Shoot first, and don’t ask any questions… not even later.

'Russian general threatens Poland with attack over US deal': “A top Russian general said Friday that Poland's agreement to accept a US missile defense battery exposes the country to attack, pointing out that Russian military doctrine permits the use of nuclear weapons in such a situation, the Interfax news agency reported.

The statement by Gen. Anatoly Nogovitsyn is the strongest threat that Russia has issued against the plans to put missile defense elements in former Soviet satellite nations.

Poland and the United States on Thursday signed a deal for Poland to accept a missile defense battery as part of a system the United States says is aimed at blocking attacks by rogue nations but that Moscow claims is aimed at weakening Russia.

"Poland, by deploying [the system] is exposing itself to a strike - 100 percent," Nogovitsyn, the deputy chief of staff, was quoted as saying.

Interfax said he added, in clear reference to the agreement, that Russia's military doctrine sanctions the use of nuclear weapons "against the allies of countries having nuclear weapons if they in some way help them." Nogovitsyn said that would include elements of strategic deterrence systems, according to Interfax.

At a news conference earlier Friday, Nogovitsyn had reiterated Russia's frequently stated warning that placing missile-defense elements in Poland and the Czech Republic would bring an unspecified military response. But his subsequent reported statement substantially stepped up a war of words.

Tensions between Russia and the West have soared over the brutal fighting that erupted last week between Russian and Georgian forces over the separatist Georgian region of South Ossetia.

Russian forces went deep into Georgia in the fighting, raising wide concerns that Russia could be seeking to occupy parts of its small, pro-US neighbor, which has vigorously lobbied to join NATO, or even to force its government to collapse.

Under the agreement that Warsaw and Washington reached Thursday, Poland will accept an American missile interceptor base.

"We have crossed the Rubicon," Polish Prime Minister Donald Tusk said, referring to US consent to Poland's demands after more than 18 months of negotiations.

Washington says the planned system, which is not yet operational, is needed to protect the US and Europe from possible attacks by missile-armed "rogue states" like Iran. The Kremlin, however, feels it is aimed at Russia's missile force and warns it will worsen tensions.

In an interview on Poland's news channel TVN24, Tusk said the United States agreed to help augment Poland's defenses with Patriot missiles in exchange for placing 10 missile defense interceptors in the Eastern European country.

He said the deal also includes a "mutual commitment" between the two nations to come to each other's assistance "in case of trouble."

That clause appeared to be a direct reference to Russia.

Poland has all along been guided by fears of a newly resurgent Russia, an anxiety that has intensified with Russia's offensive in Georgia. In past days, Polish leaders said that fighting justified Poland's demands that it get additional security guarantees from Washington in exchange for allowing the anti-missile base on its soil.”

"Pop!" said the Commodity Bubble

US dollar strength is smashing up all commodities, from oil and gold down to palm oil and rubber.

Gold, Silver Slump, Leading Commodities Drop on Dollar, Growth: “Gold plunged below $800 an ounce, silver dropped as much as 12 percent and oil, corn and copper slumped as the dollar's rebound reduced the appeal of commodities after a six-year boom.

Palm oil tumbled as much as 9 percent, and rubber and wheat fell as the dollar headed for its longest winning streak in more than two years and on concern a spreading global economic slowdown will reduce demand for raw materials.

Commodities, measured by the Standard & Poor's GSCI index, have tumbled 21 percent from their record July 3, descending into a bear market. Oil traded near its lowest for more than three months, gold for eight months and silver for almost a year. Copper and corn reached six-month lows this week.”

“Pop!” said the bubble (just like all the other bubbles before it).

Really Scary Fed Charts: JULY, More of the Same

Last month: Really Scary Fed Charts: JUNE, ‘Just’ 1% of GDP Now
This month: Things got a little worse….

The really big question is: Just how long can the Fed keep doing this?
Take a close look at the Federal Reserve Balance sheet here.

Maiden Lane LLC is the product of the Bear Stearn’s bailout and is worth $29 billion. A good chunk of that will be lost. No doubt about that.

Outstanding debt on the Term Auction Facility (TAF) is now $150 billion and climbing.

Related Posts:
TAF, TSLF, PDCF Explained.
Fact Sheet: Bush Stimulus Package

Quick Little Oil and Gas Bounce? Ukraine Next?

Another short post.

A quick little bounce in Oil and Gas could be brewing...

From a technical perspective, both are massively oversold, and the Bulls haven't given up on the 'energy is going to infinity because we've reached Peak Oil and the Chinese are gonna buy up everything in the whole wide world' trade yet.

Geopolitical developments are starting to raise some eyebrows. The Russians aren't too keen on keeping the ceasefire in Georgia...

The real big prize is the Ukraine. With 11 million ethnic Russians living in the east, Russia is just 'itching to cause some serious shit' before December when NATO reviews Ukraine's membership application...

Never forget: The Poisoning of Ukraine's President:

“Under the radar, in early December, tests came back from three undisclosed labs in Belgium, Britain and Germany, confirming what many scientists already suspected: In September, 2004, Ukrainian President Viktor Yushchenko had been poisoned. His blood samples did indeed contain an abnormally high level of dioxin, 1,000 times the accepted level. One year later, Yushchenko's face—with its strong jaw and movie-star features, perfect politician material—remains badly pockmarked.

Dioxins are normal byproducts of industry and waste incineration. Most people have been exposed to them in small doses. For example, anyone who eats animal fat has a little dioxin in their bodies. But, in higher quantities, the chemicals can cause cancer, organ disease, miscarriages, menstrual ailments, low birth weight, abnormal hair growth or a severe form of acne called chloracne. This same skin condition plagued the locals exposed to a chemical spill in Seveso, Italy, in 1976 and now Yushchenko suffers the same fate.

Most experts believe Yushchenko ingested the dioxin on the night of September 5, 2004, in the midst of a neck-and-neck presidential race, after dining with General Igor Smeshko, the former head of Ukrainian intelligence. Shortly after dinner, Yushchenko complained of sickness and vomited. Bad sushi, the state-run media claimed at the time.

No one has been charged with the president's poisoning and, like most criminal cases in the former Soviet Union, it is unlikely to be solved. But that has not stopped scientists in the Ukraine from assembling their own version of events.

In the days following the dinner, Yushchenko fell gravely ill. He underwent three weeks of detoxification treatment while being sequestered at an Austrian clinic. Doctors diagnosed him with acute pancreatitis and symptoms of edema. But, two weeks later, his face developed pockmarks.

"We knew right away he was poisoned because his skin symptom was very symptomatic of this kind of dioxin," said Mykola Prodanchuk, one of Ukraine's top toxicologists and the director of the Kiev-based Institute of Eco-Hygiene and Toxicology.

Tasteless but highly toxic, the dioxin Yushchenko ingested was administered in a dose probably less than 1 mg. A drop in a bowl of soup would have gone undetected, said Prodanchuk. Yushchenko was served a rather large dose, roughly a quarter of the lethal quantity for rhesus monkeys. Once ingested, the dioxin—a fat-soluble chemical—moves from the blood to fatty tissues. The body then tries to eliminate the dioxin through its sebaceous glands, which are what causes skin to grow oily or pimply. Half a dose of dioxin gets eliminated every few years but never completely rids itself, Prodanchuk said.

The dioxin found in Yushchenko's blood—pure 2,3,7,8-TCDD—is "the most potent of all the dioxins," said Daniel Hryhorczuk, professor of environmental and occupational health sciences at the University of Illinois. "I doubt someone could have been sophisticated enough to give a dose in the range where you'd be guaranteed to maim and not kill," added Hryhorczuk, implying that the intent was most likely Yushchenko's death, not disfigurement. Hryhorczuk said the dioxin was probably not a homegrown concoction made in Ukraine, but rather, the work of a foreign laboratory. "To make a compound this pure requires a lot of sophistication."

The early suspect: Russian intelligence. After all, it is no secret that Yushchenko, a pro-Western reformer, was not the Kremlin's preferred candidate in 2004. Moreover, Russia's KGB has a long history of failed assassination attempts of political figures, stretching as far back as the time of Rasputin, Tsarina Alexsandra's mystic who was nearly poisoned in 1916 by pastries laced with cyanide.”

The 'Recast' Bomb

Could you survive a 20% increase in your mortgage payments? How about 40%? 60%? 80%?!

Starting in 2009 option ARMs start to 'recast' in ever increasing quantities, from less than $10 billion a quarter to $20 and then $30 billion. The bulk of these recasts will occur between 2010 and 2012.

Bank Debt Risk Rises as Writedowns, Losses Exceed $500 Billion: “The cost of protecting bank bonds from default rose after UBS AG and JPMorgan Chase & Co. pushed writedowns and losses from the worldwide credit crisis to more than $500 billion.”

These write downs don’t yet include any real Alt-A (option ARM) losses. Estimates for total losses to the financial system now exceed $1 TRILLION. The highest estimates are for losses of $1.6 TRILLION.

Good thing the Bulltards on CNBC are calling a bottom in equities eh? The fastest way to blow your account is to listen to Jim Cramer foam at the mouth and bounce around in front of the camera like a retarded ninja on speed.

“Buy! Buy! Buy!”