Mish's Global Economic Trend Analysis

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• Calling All Munitions and Fighter Plane Experts: Is German Pilot Claim "Air-to-Air Attack" Brought Down MH17 Credible?
• IMF Warns Pound Overvalued; What About Other Currencies?
• No BBC Video Removal Scandal After All; Evidence of Military Planes Shadowing MH17 Mounts

Calling All Munitions and Fighter Plane Experts: Is German Pilot Claim "Air-to-Air Attack" Brought Down MH17 Credible? Posted: 28 Jul 2014 03:56 PM PDT Peter Haisenko, a German aviation expert made a claim yesterday that air-to-air fire brought down MH17. The above link is to a translated page. As a lay person, it's easy to be persuaded by such arguments. Moreover, even if Haisenko is an aviation expert, one has to wonder about his munitions expertise. I have some questions later, but first let's take a look at some images and a translation of Haisenko's thesis. Haisenko provides this High-Res Image of MH17 Cockpit. Click on chart for sharper image, or click on the preceding link for an even bigger image. Haisenko Notes Cockpit shows traces of shelling, clean round hole, about 30 mm caliper. Some holes are bent inward, some outward Rivets bent outward Moreover, small cuts can be seen, all bent outward, which hint at the fact that fragments have penetrated the outer hull from the inside of the cockpit. Bullet Holes in Shell Now the Controversy The rest of what Haisenko has to say is quite controversial. Here is my modified translation (corrections welcome). So what can be happening? Russia has published radar recordings, that show at least one Ukrainian SU-25 in close proximity of MH17. This corresponds with the statement of the lost Spanish controller who claims to have seen two Ukrainian fighter aircraft in the immediate vicinity of MH17. Consider the armament of the SU-25: It is equipped with a double-barreled 30-mm gun, type GSh-302 / AO-17A, capable of firing 250 rounds anti-tank fire or splinter-explosive projectiles, in a defined order. The cockpit of the MH17 has been fired from two sides: the entry and exit holes on the same page. [Mish Note: Reader John points out that a SU-27 has a service ceiling of 62,523 feet and that the Ukrainian army has that aircraft.] Now just imagine what happens when a series of armored fire and splinter-explosive projectiles, designed so that they can destroy a tank, hit the cockpit. The shells partially escape across the cockpit from the other side, slightly deformed again. The splinter-explosive projectiles will explode inside the cockpit, as designed. Because the interior of a commercial aircraft is a hermetically sealed chamber, the pressure inside the aircraft in a split second will rise to extreme levels by these explosions. But the aircraft is not equipped. It will burst like a balloon. Coherent Picture The largely intact fragments of the rear sections are broken at the points that are based on the construction breakup most likely under extreme pressure. The image of the widely scattered debris field and the brutally damaged cockpit segment fit to do so. Furthermore, a wing segment shows traces of a grazing shot, which directly leads to extension to the cockpit. Interestingly, I found that both the high-resolution photo of the cockpit as the segment are also now been removed from the grazing shot on the wing from Google Images. One can find virtually no other pictures of the wreckage, except smoking ruins. Accident? Even if Haisenko is correct, the image presented does not rule out an accident. For example, it is conceivable Ukrainian military aircraft thought they were firing on a Russian plane. Notice I did not say likely, I said conceivable. Regardless, if plane damage rules out a Buk, then the air-to-air thesis that remains, however unlikely initially, must lead to the truth. By the way, one of my contacts (Not Dreizin) assures me that an SU-25 can get high enough, not for prolonged periods of time, but long enough to make such an attack. I do not know if that claim is credible, but a SU-27 certainly can hit that altitude. Six Questions Is the MH17 damage consistent with either a buk or an air-to-air attack? Does the damage assessment favor one type of attack vs. the other? Could a Buk reasonably have only hit the cockpit? Could multiple Buks be in play to cause both input and exit holes as show? If so, could multiple Buks have only hit the cockpit? Could the flechettes (dart-like or ball bearing-like projectiles) launched when the buk exploded simply have traveled completely through the cockpit leaving both entry and exit holes? Three Scenarios If the damage is only (or primarily) consistent with an air-to-air attack, we have a new ballgame. If the damage is consistent with either a Buk or an air-to-air attack, with roughly equal probability, we have not learned much. If the answer to number 6 is yes, and the rest of the damage is also consistent with a Buk, and the damage is inconsistent with an air-to-air attack , then it is safe to rule out the latter. For now, I would like some military fighter-plane and munitions experts to assess the damaged parts and make a yes-no-maybe type of assessment on Haisenko's analysis, not on who did it or why, but rather on an assessment of the images shown (and what type of weapon did the damage). Meet Elena from Sloviansk Finally, even if it was a Buk, please consider this Video of Militia Soldier - Elena, from Sloviansk with English subtitles. Posted on June 18, 2014 Partial Transcript Good day. My name is Elena. I am in the city of Sloviansk. I am native to this town. I have joined the military ranks. I cannot bear this anymore. We are being bombed every day by Ukrainian army, on orders from Junta, Artillery, Air Force. And they drop bombs not on check-points. They drop bombs on people's houses. People live in cellars with their children. How long are we to bear this? How is it that government sends mercenaries on their own people? The people are fighting from here, in defense of their own city. They want to live, not merely exist. Terrible things are happening. For example: An incident that happened recently. A passenger plane was flying by, and Ukrainian attack aircraft hid behind it. Then he lowered his altitude a bit and dropped bombs on the residential sector of Seminovka. They wanted to provoke the militia to shoot at the passenger plane. There would have been a global catastrophe. Civilians would have died. Then they would say the terrorists did it. There are no terrorists here. There are regular people here, that came out in defense of their own city. ... Don't you have any humanity left? Believable? Easily. Please note that video came out one month prior to the MH17 crash. It was not a made up story afterwards to fit what happened. And it fits numerous other reports none of which appears staged.  Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

IMF Warns Pound Overvalued; What About Other Currencies? Posted: 28 Jul 2014 12:26 PM PDT Is the British pound overvalued? What about the Euro? The US Dollar? The Yen? Curiously, economists make that case for all of those currencies. And today, the IMF is pounding the drums with this proclamation "Overvalued" Pound Prevents Rebalancing. The International Monetary Fund warned on Monday that the pound was "overvalued" and preventing the rebalancing of the economy away from a reliance on spending and imports. In its annual assessment of the UK economy, the fund said sterling was between 5 and 10 per cent overvalued because of a "lack of competitiveness and limited export diversification". "Staff estimates that the current account balance is 2.6 per cent weaker than its equilibrium level, and that the real exchange rate is overvalued by about 5–10 per cent," the IMF said. Equilibrium Level Madness Apparently the IMF is the arbiter of the "equilibrium level" of any and every currency. A few examples will prove the point. New Zealand Dollar Overvalued by 20% On April 10, 2014 the IMF warned New Zealand Dollar May Be Overvalued. Canadian Dollar Overvalued by 10% On March 2, 2014 the IMF Warned Canadian Dollar Overvalued by 10%" despite recent depreciation, thus the Bank of Canada should wait before hiking rates.. Australian Dollar Overvalued by 10% On November 21, 2013 the IMF Stated Australian Dollar Overvalued by 10%. US Dollar Overvalued This dates back a while but on October 28, 2010 the IMF said US Dollar 'Overvalued' On Currency Markets. Swiss Franc Overvalued Returning to this year, on March 24, 2014, IMF Suggests SNB Use Negative Rates if Franc Pressured because the "franc remains moderately overvalued." Euro Overvalued As shocking as this may seem, I cannot find a recent IMF opinion on the Euro, but on May 8, 2014, Mario Draghi, president of the ECB discussed the Pernicious Effects of an Overvalued Euro. I am pretty sure the IMF would agree. Yen and US Dollar Overvalued On October 12, 2012, the Wall Street Journal proclaimed If Yen Overvalued in IMF View, So May Be Dollar. Japan's finance minister may have breathed a sigh of relief Thursday when the International Monetary Fund chief reaffirmed the yen is "moderately overvalued," a phrase traders believe is supportive of potential market intervention to weaken the currency against the dollar. Not so well-known in the market, however, is that the 188-member international lender also sees the dollar as "moderately overvalued," a view that makes it harder to conclude the IMF would endorse future intervention by Tokyo in the dollar-yen market. Yuan "Moderately" Undervalued On May 29, 2013, and contrary to sentiment in Washington DC that says the Yuan is massively undervalued, The IMF Seeks Flexible Chinese Yuan, Says "Moderately Undervalued". US Dollar Index click on chart for sharper image Summary Note that the US dollar is about where it has been since the beginning of 2012, but higher than it was in October of 2012 when it was judged to be "overvalued". Is it more overvalued today?  Apparently the British pound, New Zealand dollar, Australian Dollar, the US dollar, the euro, and the yen are all overvalued. The yuan is the one major currency that is allegedly undervalued, but only "modestly". Mathematics IMF overvalued-undervalued judgments are generally on a basket of currencies basis. However, it is not mathematically possible for all those currencies to be 5-20% overvalued against all the other currencies in the same basket. Even if it was possible, based on precise timings and currency fluctuations, the idea that the IMF can fine tune currency valuations to the nth degree as it has done is absurd. All Currencies Overvalued Nonetheless, the IMF appears to be on target with all those "overvalued" assessments, not against  other currencies in the basket or against each other individually, but against gold, and by far greater percentages. If you agree with my assessment, and perhaps even if you don't, please consider How Much Gold Should Someone Own? Where and How To Own It? Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

No BBC Video Removal Scandal After All; Evidence of Military Planes Shadowing MH17 Mounts Posted: 28 Jul 2014 12:24 AM PDT On July 23 the BBC deleted a video report from correspondent Olga Ivishina regarding the crash of MH17. This has caused quite a stir in the blogosphere because the deleted video contained eyewitness reports of military aircraft flying on the same day, shadowing MH17. Here is the deleted video from cache: Катастрофа рейса MH17 Би би си в поисках Бука 23 07 2014, LQ  Global Research Canada has some interesting translation clips in Deleted BBC Report. "Ukrainian Fighter Jet Shot Down MHI7″, Donetsk Eyewitnesses. BBC's Initial Response I found dozens of references to the removal, but to find BBC's reason for removing the video, I had to search the BBC website. It's in Russian. Jan Leder, managing editor of Russian BBC Service explains Why Bi-bi-si Material Removed From Site. Video Reposted My initial reaction was that Leder's response was disingenuous. However, the BBC has since re-posted the video. Reader Jacob Dreizin, a US citizen who speaks Russian and reads Ukrainian, went over the original and now re-posted videos and it appears the BBC was telling the truth all along. From Dreizin Although it's not entirely clear, the managing editor says that the intent from the get-go was to fix the material and put it back up as soon as possible. I have reviewed the original version side-by-side with the new one. And I can see what she's talking about. The new video still has all the eyewitness ladies that everyone has focused on. The new video removed a somewhat irrelevant lecture from the VItalii Naida, the Ukrainian counterintelligence chief. Instead, it has a Ukrainian official claiming that no combat flights take place over rebel areas, followed by a local resident making a mockery of that claim. It also has a segment where a BBC aviation expert is quoted as giving his rebuttal to a rebel's claim that Ukrainian warplanes have used civilian flights as cover. The expert says that while he can't rule it out, it seems very unlikely to him, for various technical reasons. However, I don't think he quite understands precisely what the interviewees are saying. All in all, there's no BBC scandal here.  But if you just want to focus strictly on what the eyewitness ladies said I've improved it a bit.  Here goes... Eyewitness #1:  There were two explosions in the air.  This is how it [the plane] tore apart. And it [the remains of the plane] flew off to the sides [gesturing with hands in two opposite directions].  Eyewitness #2:  And nearby there was one other airplane, a military one, everyone saw. Eyewitness #1:  Yes, yes. It was going lower, because it could be seen. It was going below the passenger plane. Eyewitness #3:  There were sounds of an explosion. But they were in the sky.  Then this plane turned around sharply like this [gesturing with her finger], changed trajectory, and flew in that direction [showing the direction with her hand]. Mounting Evidence Credible eyewitnesses saw multiple planes. Russia claims radar picked up multiple planes Russia claims Ukrainian Buks in Eastern Ukraine Plane moved from original flight path in mysterious circumstances Russia gave a detailed report on numbers 2 and 3 (See Russia Claims Photos of Ukraine Deploying BUK Missiles in East, Radar Proof of Warplanes in MH17 Vicinity) Ukraine denies all of the above, and of course the rebels deny having Buks. It's quite possible, and in fact likely, that both sides are lying about multiple things. That said, Russia has at least come out with some of its evidence. The US and Ukraine have little to offer but hype and reports that appear fake, coupled with over-reliance social media. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com  Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

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