“There was a surprising amount of bubble talk at the Milken Institute’s Global Conference in Los Angeles last week.

Top investors and economists spoke publicly about their fear of inflated values for various securities and the broader economy—a decidedly less optimistic view compared to recent years at “Davos with palm trees.”

“I do see many signs of the bubble of the future—the default specter that you’re talking about. I agree that short term we’re not likely to see that, but all the danger signs are there of a future crisis,” Marc Rowan, co-founder of $161 billion private equity firm Apollo Global Management, said during a panel discussion.

“Covenants have been stripped away, cov-lite is the norm, senior debt levels are actually higher than they were in 2007, although total debt is not quite where it was,” Rowan added, noting looser lending terms given to borrowers.

“We’re back to doing exactly the same things that were done in the credit markets in the crisis.”

“It’s just indiscriminate buying. There are no covenants whatsoever. It’s covenant light and there’s just no creditor protections. PIK-toggle is back in a big way,” James Litinsky, founder of investment manager JHL Capital Group, said of leveraged loans and high yield bonds while speaking on a separate panel.

“PIK-toggle” refers to a “payment in kind” bond that allows the issuers to defer paying interest on the note for a higher rate later on, essentially trading a cash payment for a new bond.

“We’ve seen this movie before. We know how it ends,” Litinsky added. “We don’t know where we are—maybe there’s another year to go but as we know, when psychology changes, it changes fast.”

Justin Slatky, a senior portfolio manager at credit-focused investment firm Shenkman Capital Management, agreed while speaking on the same panel….”

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“…………….In his latest quarterly letter, Jeremy Grantham, veteran fund manager at GMO, put out his “best guesses for the next two years.”

Grantham draws on John Hussman’s research that shows “an overpricing for the U.S. markets that ranges from 75% overpriced to 125% at the end of March.” Meanwhile Grantham writes that GMO “very much agrees with the spirit of this data, but our preferred measure for our 7-Year Forecast has the market slightly less overvalued at 65%.”

He also acknowledges that the bull market could already have come to an end even as he wrote his quarterly letter, but he believes “it probably (i.e., over 50%) will not end for at least a year or two and probably not before it reaches a level in excess of 2,250 on the S&P 500.”

Grantham believes the market bubble will burst around or after the 2016 presidential election….”

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“Thank you for inviting me to ICBA’s policy summit. I am pleased to have this opportunity to share my views on some of the key issues facing community banks and how I see the community banking model fitting into the financial system in the years ahead. In particular, I will discuss steps the Federal Reserve has taken to address the “too-big-to-fail” problem and how these steps affect community banks; I will describe how the Fed strives to improve our understanding of the unique role that community banks play in the economy; and then I’ll show how we are using this knowledge to better tailor our supervisory expectations and approaches to community banks.

As you may know, before I rejoined the Federal Reserve Board as Vice Chair in 2010, I had the privilege of serving for six years as president and chief executive of the Federal Reserve Bank of San Francisco. The 12th district is the largest of the Fed’s districts, covering nine western states, and it is home to a significant number of community banks, the majority of which are supervised by the San Francisco Fed directly or indirectly through bank holding companies. Community bankers helped me, when I served as president, to take the pulse of the local economy and also to understand how regulatory and policy decisions in Washington affect financial institutions of different sizes and types, sometimes in very different ways. During the financial crisis, I saw firsthand the challenges that community banks faced in a crisis they did little to cause, and I have felt strongly ever since that the Fed must do what it can to ensure that the actions taken following the crisis do not place undue burdens on your institutions.

I believe a healthy financial system relies on institutions of different sizes performing a variety of functions and serving different needs. In some communities, your banks are actually situated on Main Street, but all community banks serve Main Street by providing credit to small business owners, homebuyers, households, and farmers.

Because of their important role, I am pleased that the condition of many community banks has been improving. Although there is still considerable revenue pressure from low margins, earnings for most community banks have rebounded since the financial crisis. Asset quality and capital ratios continue to improve, and the number of problem banks continues to decline. Notably, after several years of reduced lending following the recession, we are starting to see slow but steady loan growth at community banks. While this expansion in lending must be prudent, on balance I consider this growth an encouraging sign of an improving economy.

Addressing Too Big to Fail
Let me begin by discussing an issue that I know has been on the minds of many community bankers: how policymakers are addressing the problem of banks that are perceived to be too big to fail.¹ Community banks share the interest we all have in reducing the systemic risk posed by firms that are large, complex, and interconnected, and also in reducing any potential competitive advantages that such firms may enjoy as a result of too-big-to-fail.

The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) addresses the too-big-to-fail issue through steps intended to limit both the likelihood that systemically important firms would fail and the potential damage from any that do. The Federal Reserve and the other financial regulatory agencies have issued a number of regulations to implement the requirements set forth in the legislation and to enhance the supervision of the largest financial firms.

But even before Dodd-Frank became law, the Federal Reserve began to strengthen its oversight of the largest, most complex banking firms and require these firms to materially improve their capital adequacy. For example, in 2009, we conducted the first stress tests of the largest 19 U.S. bank holding companies. That test has subsequently evolved into our annual Comprehensive Capital Analysis and Review, known as CCAR, which requires all bank holding companies with total assets of $50 billion or more to submit annual capital plans for review by the Federal Reserve. CCAR helps ensure that the largest banking organizations will have enough capital to continue operating through times of economic and financial stress.² To be clear, as the federal banking agencies have stated previously, these stress testing and capital planning requirements do not, and should not, apply to community banks.³

In addition to strengthening requirements for stress testing and capital planning, the agencies have also strengthened capital requirements for the largest firms by approving more robust risk-based and leverage capital requirements. Because the financial crisis demonstrated the importance of having adequate levels of high-quality capital at banks of all sizes, many elements of the revised capital framework apply to all banking organizations. In designing the revised capital rules, however, the agencies considered financial stability risks and adjusted the final rules to make the requirements substantially more rigorous for the largest, most systemically important banking organizations than for community banks.⁴

While we have taken a number of steps to address too-big-to-fail concerns, our work is not finished. Because the failure of a systemic institution could impose significant costs on the financial system and the economy, the Board recently finalized a requirement for the eight large, globally systemic banks to meet a significantly higher leverage requirement than other banking organizations. And we are working to implement risk-based capital surcharges for these systemically important firms. We also need to ensure that the new rules are embedded in our supervision of the largest firms; and, we must continue to watch for emerging sources of systemic risk and take steps as appropriate to address these risks.

One such risk that the Federal Reserve has been monitoring closely is the reliance of some firms on potentially volatile short-term wholesale funding.⁵ We are carefully considering the systemic vulnerabilities that may be posed by overreliance on short-term wholesale funding and are weighing potential policy responses. While it would be premature to indicate whether or how we might address these vulnerabilities, I can say that few, if any, community banks are reliant on levels of short-term wholesale funding that could raise concerns about systemic risk, and regulators would carefully consider the ramifications of any action, including the effect on community banks.

Improving Our Understanding of Community Banks
In carefully considering how our actions affect community banks, the Federal Reserve is committed to understanding your institutions and the challenges you face. We continue to try to improve that understanding in two important ways–research and outreach. The Fed is uniquely positioned to employ these two methods because of our traditional strength as a research institution and because of our structure, with Reserve Banks that have deep roots in communities in every region of the country…..”

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“Technology stocks may have suffered a sell-off in the last few weeks, but the U.S. market as a whole is still set for a dramatic correction this year, Marc Faber, the market watcher known as “Dr. Doom” told CNBC Wednesday.

The editor and publisher of The Gloom, Boom and Doom Report said that he personally favors emerging market securities that are still “cheap,” adding that he had even made investments in Iraq last year.

 

“We had already a big break in the market but we haven’t had yet the big break in the overall market,” he said.

In early April, the wider technology sector was hit by a selloff in momentum stocks which saw the Nasdaq Composite Index fall below 4,000 points for the first time since early February. Momentum stocks are fast-rising stocks which can unexpectedly reverse when investors fear they have overshot and a bubble is brewing. The Nasdaq Composite suffered its worst weekly hit since June 2012, and recorded its longest weekly losing streak since late 2012.

Telecommunication, social media, and biotechnology companies were all part of the move lower, but Faber believes this selling will eventually hit the wider indexes, with energy and utility companies seeing a sharp pullback. Faber reiterated his concerns that equities were facing a crash that could be worse than the financial world saw in 2008.

“I believe it is too late to buy the U.S. stock market,” he said. Faber questioned the future returns of these U.S. stocks, highlighting that record low interest rates and high valuations mean companies will not be able to give back bumper returns to their investors….”

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“By Mohamed A. El-Erian

There are four major things to keep in mind when the U.S. Federal Reserve’s policy-making committee meets this week to decide what, if anything, to change in its approach to supporting the economic recovery.

1. The Context

The majority view at the Fed is that a healing U.S. economy is gradually approaching “liftoff,” and that the economic weakness experienced earlier this year can be attributed largely to unseasonably cold weather. Because policy makers believe the pickup in growth is likely to happen in an economy that has been operating below potential, the Fed isn’t very concerned about inflationary pressure. If anything, the worry is that inflation could be too low.

The Fed’s post-meeting statement will provide updated insights on officials’ comfort with this contextual characterization, with a fuller picture emerging when the minutes of the meeting are released three weeks later. In the meantime, don’t expect any dramatic changes in the Fed’s assessment of the economy, positive or negative. And don’t expect much talk of either “secular stagnation” — the idea that the U.S. has entered an extended period of slow growth and persistently high unemployment — or the threat posed by Ukraine’s deepening geopolitical crisis.

2. Policy Decisions

Given the Fed’s relatively sanguine outlook, expect it to continue the gradual phasing out of its extraordinary bond-buying program, known as quantitative easing. Specifically, it will probably announce a $10 billion reduction in its monthly purchases of U.S. Treasuries and mortgage-backed securities, to $45 billion a month. Although the Fed will undoubtedly reiterate its willingness to change course if necessary, this will do little to dislodge consensus market expectations of a total exit from quantitative easing later this year. Indeed, only a major economic surprise — and, I stress, major — would alter the current policy course.

Look for the Fed to hold its short-term interest-rate near zero, and to provide additional guidance on the future course of interest rates as part of its broader goal of enhancing transparency. Such forward guidance includes more holistic measures of the labor market, as opposed to the unemployment rate alone, and a move toward putting greater emphasis on inflation metrics. All this will be done in the context of an important pivot from a target-based approach, such as the calendar guidance the Fed was providing not long ago, to an objective-based one.

3. Market Reactions….”

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“The similarities between 2007 and 2014 continue to pile up.  As you are about to see, U.S. home sales fell dramatically throughout 2007 even as the mainstream media, our politicians andFederal Reserve Chairman Ben Bernankepromised us that everything was going to be just fine and that we definitely were not going to experience a recession.  Of course we remember precisely what followed.  It was the worst economic crisis since the days of the Great Depression.  And you know what they say – if we do not learn from history we are doomed to repeat it.  Just like seven years ago, the stock market has soared to all-time high after all-time high.  Just like seven years ago, the authorities are telling us that there is nothing to worry about.  Unfortunately, just like seven years ago, a housing bubble is imploding and another great economic crisis is rapidly approaching.

Posted below is a chart of existing home sales in the United States during 2007.  As you can see, existing home sales declined precipitously throughout the year…

Now look at this chart which shows what has happened to existing home sales in the United States in recent months.  If you compare the two charts, you will see that the numbers are eerily similar…

New home sales are also following a similar pattern.  In fact, we just learned that new home sales have collapsed to an 8 month low…

Sales of new single-family homes dropped sharply last month as severe winter weather and higher mortgage rates continued to slow the housing recovery.

New home sales fell 14.5% to a seasonally adjusted annual rate of 385,000, down from February’s revised pace of 449,000, the Census Bureau said.

Once again, this is so similar to what we witnessed back in 2007.  The following is a chart that shows how new home sales declined dramatically throughout that year…

And this chart shows what has happened to new homes sales during the past several months.  Sadly, we have never even gotten close to returning to the level that we were at back in 2007.  But even the modest “recovery” that we have experienced is now quickly unraveling…

If history does repeat, then what we are witnessing right now is a very troubling sign for the months to come.  As you can see from this chart, new home sales usually start going down before a recession begins.

And don’t expect these housing numbers to rebound any time soon.  The demand for mortgages has dropped through the floor.  Just check out the following excerpt from a recent article by Michael Lombardi…”

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“Terrence Duffy, who as executive chairman of CME Group Inc. oversees the world’s largest futures exchange, has a solution for those seeking to fix the U.S. stock market: kill dark pools.

While all futures trades happen on exchanges such CME Group’s, only about 60 percent of American equity volume does. The rest takes place on venues including dark pools, where orders are hidden until transactions are completed. That hurts investors because it obscures the true price of stocks, Duffy said yesterday during an interview at Bloomberg News headquarters in New York.

“Fix the fragmentation issue, and you’ll fix the problem,” Duffy said. “We need to have 100 percent of that liquidity on exchanges.”

Duffy’s position aligns him with his biggest rival: Jeffrey Sprecher, the chief executive officer of IntercontinentalExchange Group Inc. Sprecher’s company, which like Chicago-based CME Group has its roots in futures, recently bought the New York Stock Exchange, giving it about 20 percent of the nation’s equities volume. NYSE and its rivals have lobbied the U.S. Securities and Exchange Commission to enact rules limiting the amount of trading on dark pools.

In Duffy’s idealized stock market, even though trades could still be distributed across multiple exchanges, dark pools and other off-exchange platforms would be eliminated. There are currently 13 stock exchanges, with ICE, Nasdaq OMX Group Inc. and Bats Global Markets Inc. the biggest operators. Beyond that, there are about 45 alternative trading systems, including dark pools.

In CME Group Inc. Chairman Terrence Duffy’s idealized stock market, even though trades…Read More

More Concentrated….”

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“The Federal Reserve has exposed itself to massive interest rate risk, warns Scott Hein, a former St. Louis Fed senior economist.

In fact, if it was a commercial bank, it would probably flunk its own stress tests, Hein writes in an article for the American Banker.

Its quantitative easing program (QE), which entails borrowing short term to purchase huge amounts of long-term bonds, has created that severe risk, explains Hein, now at Texas Tech University.

If a top-30 bank had that kind of risk on its balance sheet, it would be taken to task by examiners and shunned by investors,” he notes

Previously, the Fed would create reserves to finances its purchases. Banks would then use those reserves to support new deposits created when making new loans.

With QE, the Fed began paying banks a 0.25 percent rate on its reserves, essentially buying reserves to pay for its QE purchases, Hein explains. “As such, it is operating like any other bank today, buying funds from one part of the economy and lending them to another.”

It’s been hugely profitable for the Fed. It’s paying 0.25 percent on the reserves used to the buy the assets that are earning about 3 percent.

However, the scenario seems a lot like the savings and loans crisis in the 1980s, Hein cautions. The S&Ls used short-term loans to provide 30-year fixed-rate loans to homeowners.

“As with the Fed today, this strategy was initially profitable. However, when interest rates began to rise, the losses quickly piled up. The Fed today is exposing itself to similar financial losses should interest rates rise.”

The Fed has said short-term rates will remain low for an extended period, but it hasn’t done a good job forecasting the economy, Hein notes. For instance, short-term interest rates fell much more than expected after the financial crisis and stayed low much longer than expected…..”

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“As markets head for summer doldrums, analysts are becoming more concerned that the long bull market in stocks is ripe for a correction.

“We’re in a period where equity markets generally want to go up, but they went up so much last year, that they’re having a bit of a holiday,” Richard Harris, CEO of Port Shelter Investment Management, told CNBC.

“This is a kind of a lull in an ongoing bull market and as a result there is some sensitivity to subtle bits of bad news,” he said. “While the markets are not quite too sure, not quite too confident in themselves, this is the time we might have a little (rapid correction).”

Read MoreThis could be a big short opportunity: Ron Insana

The S&P is now nearly 1 percent higher for the year, after rising around 30 percent last year, but it is still down over 1 percent from the all-time high it touched in early April.

The Dow Jones Industrial Average is off around 1 percent this year, after climbing over 22 percent last year.

Harris expects the market could “take fright” from any number of factors, such as an escalation of tensions in Ukraine, deleveraging in China or even if the Federal Reserve’s moves to taper its asset purchases prove to be too fast….”

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“William Patalon writes: During the 30 years I’ve spent as a business journalist and financial columnist, I’ve developed a long list of personal axioms that have helped me identify “Best of Breed” investments.

These axioms touch on such topic areas as finance, marketing, intellectual property, and even competitive threats. But some of the most important of my personal investment aphorisms have to do with leadership and a company’s management team.

And leadership starts with the CEO.

As one of my precepts holds, “A good CEO can create a very strong company. But a great CEO can create an empire.”

Just like these…

Build an Empire of Profits

The example I usually use to illustrate this axiom is John F. “Jack” Welch Jr., who ran General Electric Co. (NYSE: GE) from 1981 to 2001.

Welch had already been with GE for two decades prior to becoming the head honcho and had a well-earned reputation as a maverick.

When he took over as chairman and CEO in 1981, he inherited a moribund industrial company with a stultifying bureaucracy, an oversized workforce, and many laggard businesses. One of his edicts stated that every GE business had to be either No. 1 or No. 2 in its respective market; those that couldn’t meet this requirement would be sold, broken up, or shut down.

In the years to come, Welch restructured GE’s business holdings, bought some businesses and sold others, and carved out unneeded layers of management. He also slashed business-unit work forces while leaving the underlying business alone – a corporate version of the “Neutron Bomb” invention of the time. The parallels earned Welch his “Neutron Jack” sobriquet, a nickname he was said to despise.

Welch’s results ultimately silenced any critics: During his tenure at GE, the company’s value rose 4,000%. His retirement came with a severance of $417 million – the largest in history. And GE hasn’t been the same company since.

As I’ve mentioned in past Private Briefing columns, I had the opportunity to interview Welch. And I followed his career – and results – with a deep interest. And when I related this story to a colleague a week or so ago, it served as a bit of inspiration… giving me an idea of something we could do here – for you.

It’s something I believe will put some real money in your pocket.

So let’s take a look …

An Intriguing Conversation…

A week or so ago, I related this story about Welch to Radical Technology Profits Editor Michael Robinson. Like me, he had an earlier career as a journalist, so we were quickly in synch in analyzing the importance of leadership.

Wanting to capitalize on Michael’s tech-sector expertise, I ended up issuing a bit of a challenge.

“We see the long-term gains that Welch was able to generate for his shareholders,” I told Michael. “So, what if we turn our attention to the tech sector – your bailiwick – and ‘handicap’ the five CEOs that we’d want to take the same kind of long-term trip with? A lot of these companies have probably enjoyed some pretty dramatic gains already. But those are the ‘trees’… and we can’t lose sight of the reality that the kind of long-term returns that Welch generated for GE shareholders are actually the ‘forest.’ I’m betting that if we use your insights into the global tech sector, we could identify the ‘Neutron Jacks’ of the digital world – folks with vision and the ability to create a venture that can evolve, adapt, and grow with the changes technology brings.”

I could tell that Michael was locked in on what I was saying, because he immediately added: “And the great thing, Bill, is that – with GE, as great as it was at the time – you’re still talking about an industrial company. Here we’ll be talking about tech firms. And, for that reason alone, you’d have to think that, over the same long-haul period, the returns that we’ll be talking about will be much, much more than were realized by Welch.”

Three final thoughts: First, we decided to handicap five CEOs instead of just one in the interest of diversification… not every one of these will play all the way out. And, second, we chose established CEOs – those with a track record already. A startup might generate stratospheric returns, but that wasn’t the point of this exercise. Finally, we wanted to do this now, reasoning that any kind of an extended sell-off might give you the chance to establish positions in these stocks at even lower prices than they’re trading at today.

The breakdown I present now is the result of a lot of legwork by Michael – with a few contributions from me…

Top Tech CEO No. 1
Elon Musk, of Tesla Motors

Best known as a co-founder of electric-vehicle (EV) firm Tesla Motors Inc. (Nasdaq: TSLA), Musk showed a burning desire to turn his technical talents into money very early in life.

Raised in his native South Africa and later in Canada, Musk learned computer programming at age 12. Working by himself, he programmed a video game that he then sold for $500.

Peanuts, to be sure, but the experience was an inspiration to Musk – an epiphany, in fact, that high-tech was the pathway to success – and wealth.

After earning his physics degree from the University of Pennsylvania and business degree from Wharton, Musk turned his passion for business into a string of successes.

He helped launch Zip2, a software company later sold for $305 million, netting Musk $22 million for his shares. He then developed PayPal, which later sold to eBay Inc. (Nasdaq: EBAY) for $1.5 billion. At the time, Musk owned 11.7% of the company, making his stake worth roughly $175 million.

In 2002, he founded SpaceX with $100 million of his own money. Less than six years later, the company received a $1.6 billion NASA contract. In 2012, the firm made history as the first commercial company to launch and dock a vehicle at the International Space Station (ISS).

Besides serving as Tesla’s CEO, Musk is chairman of the board at SolarCity Corp. (Nasdaq: SCTY). Over his career, he’s received countless awards.

In 2007, Inc. magazine named him “Entrepreneur of the Year” for his involvement with Tesla and SpaceX. And in 2011, Forbes named him one of “America’s 20 Most Powerful CEOs 40 and Under.”

Along the way, Tesla’s shareholders have done extremely well. Since Tesla’s initial public offering (IPO) back in 2010, the stock has returned nearly 1,100%.

Tesla’s shares have sold off sharply of late. But the lower they go, the more interested we get. Musk is a proven builder. And he’s still standing at the starting line of what we believe will be a very profitable career for those willing to go along for the ride.

Top Tech CEO No. 2
Reed Hastings, of Netflix

A natural whiz at math, Hastings didn’t start out in business. Instead, he joined the Peace Corps, serving in places like Switzerland and Africa.

With public service under his belt, Hastings went back to school, eventually receiving a Master’s Degree in computer science from Stanford. In 1991, he founded Pure Software, which provided debugging and troubleshooting services.

Then came Netflix…

Hastings founded the company in 1998, as a through-the-mail movie-rental business. The company began with a subscription format focused on physical media like videotapes and DVDs.

It was here that Hastings showed he was a visionary exec, and not a caretaker.

The “experts” up on Wall Street thought the company would have a tough time moving to a web-based platform.

Hastings proved them wrong.

He recast Netflix Inc. (Nasdaq: NFLX) as a dominant player in the burgeoning market for online movies. And the company has won awards for its original TV shows.

Hastings also is pushing the boundaries of the format by moving Netflix into ultra-high-definition TV (UHDTV), a Next-Big-Thing technology that could ignite the next spending boom in broadcasting. (Indeed, one of our favorite recommendations – which allowed Private Briefing subscribers to double their money in just a few months last year – is a play on this “4K” technology.)

Today, Netflix has 44 million subscribers in more than 40 countries around the world. The stunner: The company says its subscribers watch more than a billion hours of its streaming service each month.

Hastings has done incredibly well by his shareholders. With a $22 billion market cap, the stock trades at $378 a share. Over the past five years, it’s gained 920%.

Top Tech CEO No. 3
Jeff Bezos, of Amazon.com…..”

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“Financial sanctions against Russia could lead to a banking crisis in the West and even a military war, warns Harold James, a professor of history and international affairs at Princeton University.

Financial war could hurt the West’s highly complex and interconnected financial system much more than it would hurt Russia’s relatively isolated financial market, James writes in an article for Project Syndicate.

Just look at how Lehman Brothers’ bankruptcy sparked the 2008 U.S. financial crisis to see how banking integration creates vulnerability. And Lehman was small compared with the Austrian, French and German banks that are extremely exposed to Russia, points out James, a specialist in German economic history and globalization.

“Given this, a Russian asset freeze could be catastrophic for European — indeed, global — financial markets.”

With that in mind, Russian President Vladimir Putin believes the West can’t possibly be serious about financial war, James writes. Putin hopes to destabilize Ukraine while simultaneously exploiting European financial vulnerabilities.

“Indeed, Putin sometimes likes to frame it as a contest pitting him against the power of financial markets.”

Based on past experience, financial war could presage real war, he cautions. That’s what happened before World War I.

Prompted by a dispute over control of Morocco in 1911, France organized a massive withdrawal of investments from Germany. But Germany was ready for the attack, he says.

“Indeed, German bankers proudly noted that the crisis of confidence hit the Paris market much harder than markets in Berlin or Hamburg.”

Recognizing the importance of financial warfare….”

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“A former U.S. diplomat and member of the Council on Foreign Relations, James Jeffrey, is calling for U.S. ground troops to be injected into the brewing civil war in Ukraine. Jeffery is a visiting fellow at the Washington Institute for Near East Policy, a beltway think tank controlled by the American Israel Public Affairs Committee and associated with the neocon wing of the Republican Party.

“The best way to send Putin a tough message and possibly deflect a Russian campaign against more vulnerable NATO states is to back up our commitment to the sanctity of NATO territory with ground troops, the only military deployment that can make such commitments unequivocal,”Jeffrey writes for The Washington Post, an establishment newspaper often used by neocons to push pro-war propaganda and the concept of American exceptionalism, the philosophical basis for imperialism and warmongering.

Jeffrey believes a relatively small number of U.S. ground troops deployed to Eastern European nations would result in a generalized mustering of troops in those countries. This would likely result in heightened tension and the possibility of confrontation with Russia.

Few in Congress have suggested sending troops into Ukraine. Arizona Senator John McCain and Lindsey Graham of South Carolina, however, have suggested supporting the coup government by sending weapons.

“We call on President Obama, together with our NATO allies, to immediately fulfill the Ukrainian government’s request for military assistance,” the neocon duo stated on March 28. “This assistance should include small arms, ammunition, and defensive weapons, such as anti-armor and anti-aircraft systems – as well as critical non-lethal support, such as protective equipment, medical supplies, spare parts, and intelligence sharing.”

In addition to providing arms to the unelected junta, McCain and Graham said the Crimean referendum “must be a wake-up call to NATO…..”

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