- Should the Gold Price Keep Up with Inflation?
by Keith Weiner
The popular belief is that gold is a good hedge against inflation. Owning gold will protect you from rising prices. Is that true?
Most people define inflation as rising prices. Economists will quibble and say technically it’s the increase in the quantity of money, however Milton Friedman expressed the popular belief well. He said, “Inflation is always and everywhere a monetary phenomenon.”
There you have it. The Federal Reserve increases the money supply and that, in turn, causes an increase in the price of everything, including gold. It’s as simple as that, right?
Except, it doesn’t work that way. Just ask anyone who has been betting on rising commodities prices since 2011. Certainly the money supply has increased. M1 was $1.86T in January 2011, and in March it hit $3.15T. This is a 69 percent increase. However, commodities have gone the opposite way. For example, wheat peaked at $9.35 per bushel in July 2012, and so far it’s down to $4.64 or about 50 percent. And the price of gold fell from $1900 in 2011, to $1050 late last year, or 45 percent.
Would you say that inflation is +69%, or is it -45% or -50%?
Most people look at retail prices, not raw commodities or gold. Retail prices have not followed into the abyss. Love it or hate it, the Consumer Price Index registers a cumulative 8 percent gain from 2011 through 2015 inclusive.
Let’s consider an example to help understand why. Suppose you own a coffee shop in a central business district. The city enacts a new regulation that limits the hours for delivery trucks. This forces you to pay overtime wages to your staff to unload the trucks, and of course, the carrier charges more for delivery too.
Next, the city allows poor people to stop paying their water bill. So to compensate, they raise the water rates on businesses. While they’re at it, they raise the fees for sewer, garbage, gas line hookups, fire inspections, and sign permits. The state passes a higher minimum wage law. The building inspector requires that you increase the size of your bathroom to accommodate wheelchairs, and you lose revenue-generating floor space. There are hundreds of ways that government increases your costs.
Is this inflation?
Not yet, costs are up but not prices. Sooner or later, all of the affected coffee shops try raising their prices. Consumers don’t necessarily want to pay more for coffee, so a few shops fail. The survivors are now charging 15% more for coffee. They have their higher prices, at the cost of lower sales volume.
The burden of government bearing down on the coffee business only increases. Every day, three constituencies conspire to drive up costs. We’ll call them the “there oughtta be a law” crowd, the “government needs more revenues” mob, and the “they served 10oz of coffee plus 4oz of ice so let’s sue them” racket.
Regulation, taxation, and litigation drive up price. Friedman was wrong. The rising price of lattes is not a monetary phenomenon (the monetary system is pressuring prices lower right now, and in my theory of interest and prices I discuss why). Rising retail prices are a fiscal, regulatory, and judicial problem.
There is no reason for the price of gold to follow retail, because there is no mechanism that connects gold to these non-monetary costs.
- A Look at the EIA Report and Some General Market Commentary (Video)
By EconMatters
The API Report tried to over correct from their previous two misses for weekly forecasts, and caused oil traders to be wrong footed going into the EIA Inventory Report. There was just massive volume following the report with no “fadeable” metrics for shorts to hang their hats on today.
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- What Will The Global Economy Look Like After The "Great Reset"?
Submitted by Brandon Smith via Alt-Market.com,
A very common phrase used over the past couple years by the International Monetary Fund’s Christine Lagarde as well as other globalist mouthpieces is the “global reset.” Very rarely do these elites ever actually mention any details as to what this “reset” means. But if you take a look at some of my past analysis on the economic endgame, you will find that they do, on occasion, let information slip which gives us a general picture of where they prefer the world be within the next few years or even the next decade.
A few goals are certain and openly admitted. The globalists ultimately want to diminish or erase the U.S. dollar as the world reserve currency. They most definitely are seeking to establish the International Monetary Fund’s Special Drawing Rights basket system as a replacement for the dollar system; this plan was even outlined in the Rothschild run magazine The Economist in 1988. They want to consolidate economic governance, moving away from a franchise system of national central banks into a single global monetary authority, most likely under the IMF or the Bank for International Settlements. And, they consistently argue for the centralization of political power in the name of removing legislative and sovereign barriers to safer financial regulation.
These are not “theories” of fiscal change, these are facts behind the globalist methodology. When the IMF mentions the “great global reset,” the above changes are a part of what they are referring to.
That said, much of my examinations focus on these macro-elements; but what about the deeper mechanics of the whole scheme? What kind of economic system would we wake up to on a daily basis IF the globalists get exactly what they want? This is an area in which the elites rarely ever comment, and I can only offer hypothetical scenarios. I am basing these scenarios on the measures that the establishment most obsessively chases. If they want a particular social or economic change badly enough, the signs become obvious.
Here is what the world would probably look like after a global economic reset…
Initial Crisis
Who knows what the trigger will be? There are so many potential catalysts for economic instability that there is no way to make a prediction. The only thing that is certain is that one or more of these catalysts will be triggered. A Saudi depeg from the U.S. dollar, a large scale terrorist attack, a general rout in stock markets due to a loss of faith in central bank policy, a confrontation between Eastern and Western powers. It doesn’t really matter much. All of it is designed to produce one outcome — chaos. To which the globalists will offer “order,” their particular order using their particular solutions as “objective mediators.”
In our highly interdependent system in the West in which more than 80 percent of the population has been domesticated and is psychologically incapable of self-reliance, it is very likely that a disruption of normal supply chains and services would result in considerable poverty and death. Such a threat would invariably lead frightened and unprepared people to demand increased government controls so that they can return to the level of comfort they have grown accustomed to within the grid.
One important factor to note is the rationale globalists will offer for increased centralization and control in the hands of a few. In my article, The Linchpin Lie: How Global Collapse Will Be Sold To The Masses, I study the clever narrative of Rand Corporation member John Casti and his “Linchpin Theory.” In Casti’s theory (more propaganda than theory), collapse is inevitable in what he calls “overly complex systems.” The more independent elements within any system, the more chance there is for unpredictable events that lead to supposed disaster. Ostensibly, the solution would be to streamline all systems and remove the free-radicals. That is to say, complete centralization is the answer. What a surprise.
In a post-reset world, the elites will argue that the banks and bankers are not necessarily to blame. Rather, they will accuse the “system” of being too complex and chaotic, leaving itself open to greed, stupidity and overall unconscious sabotage. The fact that the crisis was engineered from the very beginning will never be mentioned. Centralization will be championed as the cure-all to the barbaric relic of complexity. Almost all other changes to our economic environment will stem from this single lie.
Thinning Of The Financial Herd
You are going to see long standing financial institutions sacrificed in the name of rehabilitating the global system. Do not assume that certain major banks (Deutsche Bank?) will not be brought down, or that certain central banks will not be toppled (Federal Reserve) as the reset progresses. Also do not assume even that certain geopolitical structures will not be brought into disarray (European Union). In the push towards total globalization and one world economic governance, the elites have no loyalty to any single corporation, nation or even central bank. They will chop off almost any appendage if they can achieve a one world system in the trade.
What this means on a micro-level is the activation of bail-ins; that is to say, the legalized confiscation of bank accounts, pension funds, stock holdings, etc. as a method for prolonging a collapse event. We have seen this already to some extent in Europe, and it will happen in the U.S. eventually. Some people (socialists/communists) may even cheer the action as the end of “capitalism” and a step toward economic “harmonization”; which is easy for them to cheer for since most of them have never worked hard enough to earn property or assets worth confiscating.
Currency Devaluation
Everyone who is aware expects this, but it is important to realize that currency devaluation will probably occur across the board in every region of the world. Some currencies will simply be hit harder than others. The dollar is a primary target of the globalists and WILL be brought down. It won’t disappear, but it will become progressively irrelevant on the global stage. If the projections of 'The Economist' are the correct timetable, then the end of the dollar will be well underway before 2018.
While the initial scenario we face in America will be one of stagflation, many necessities and the means to produce those necessities will skyrocket in cost. There may not be inflation in every sector of the economy because imploding demand could offset some of the effects of falling currency value, but there will be extreme inflation in the areas that hurt common people most.
The Digitization Of All Trade
Despite all the failings and control mechanisms involved in fiat money, there are still worse systems to be had. Last month more than 100 executives from the world’s largest financial institutions met privately at the Times Square office of Nasdaq Inc. to discuss the future of money; more specifically a software apparatus called “Blockchain.” The goal is to implement Blockchain as a medium to fully digitize monetary transactions around the world and in a way that is traceable and foolproof. In other words, the goal is put an end to all transactions involving physical cash.
The establishment of a cashless society would mark the end of all privacy in trade. Even supposedly anti-centralization digital currencies like Bitcoin are hindered by the blockchain feature, which requires the tracking of ALL transactions in order for the currency to function. While methods for anonymity could be argued, the fact of the matter is, digital currency by its very nature is a destroyer of the truly private trade offered by cash and barter. When all trade is tracked, and all savings digitized, whoever owns the keys to the core of the blockchain will have the power to wreak havoc on the life of any participant at will.
To be sure, the “blockchain” that the elites have in mind will never allow for anonymous transactions, because digital currency is not about anonymity or “convenience,” it is about control.
Consolidation Of Government Power
Corrupt government is the tool by which globalists can extort goods and labor from a population as well as exert force to subdue rebellion. It is highly unlikely that the global reset will result in a collapse of government. On the contrary, it is usually during economic collapse that governments grow in power to the point of totalitarianism. There will always be a new currency mechanism or financial structure to replace the old, and the globalists will always have a way to pay off armies and useful idiots to do their bidding. No one should be counting on the idea that the elites face collapse as we face collapse. This is naive. The elites created the collapse; they plan to be ready to use it to their advantage.
The End Of Private Production And Business
After the reset and the opening crisis it is probable that resource allocation will become a major issue. Production of goods on the massive scale seen today will not ever be allowed to return if the elites have their way. This will create a perpetual lack of supply (by design). The only methods for dealing with lost production on an industrial level would be to either encourage localized production in every community, or to force people to reduce their standard of living and demand in the extreme. The elites will certainly press for the latter.
Localized production in every community would kill any means of financial control the globalists might have on a population. In fact, I believe they will attempt to make any local production impossible, first through taxation so high that only the largest still-surviving corporations can afford to operate, and second, by confiscation of raw resources needed to manufacture goods on a scale that would grow wealth for a community. The government will claim that such resources must be managed by the authorities for the good of everyone rather than “wasted” by independent businesses in the “pursuit of personal wealth.” You won't even see children running lemonade stands, let alone common people operating small factories, farms and store fronts.
Eventually, they will also have to limit or outlaw barter and alternative currencies in order for the digitized economy to work.
Carbon Output And Environmental Extortion
No matter how much information is released which completely contradicts the fraud of man-made global warming, the establishment continues to charge full steam ahead with the creation of a carbon-based economic model. Why? Because the idea of the “carbon footprint” is the ultimate weapon for domination. A “carbon tax” is a tax on life itself. There is no way around it.
In my article 'Ecological Panic: The New Rationale For Globalist Cultism' I dissect the elitist think-tank propaganda of Council on Foreign Relations member Timothy Snyder. Snyder argues in his writings that nearly all man-made disasters are a product of high or extravagant living standards. Though his definition of "high living standards" is rather vague, I expect that he sees the vast majority of Western society as people that need to be taken down several pegs. He also argues that tyrants and mass murderers often ignore scientific authority in the pursuit of greater productive wealth, and that people who ignore "climate science" are contributing to future holocausts. So, to summarize, we all must stop producing, stop pursuing personal wealth and achievement and sacrifice our own individual progress in the name of progress for the collective and the safety of the planet.
Like Casti, Snyder's narrative requires the populace to bow down to a central authority in the name of the greater good. And surely it is mere coincidence that the globalists these men work for will be at the helm of that central authority.
Remember, in order to fully centralize, the elites must streamline. This does not only mean streamlining economic governance, but also streamlining the size of the system they seek to dictate. The larger and more diverse the system, the harder it is to wrap your tentacles around it. This means greatly diminished production, but also by extension greatly diminishing the population. Population controls then become vital.
If the production of carbon can be taxed and administrated, then the production of life can be taxed and administrated. The establishment becomes godlike; the purveyor of all means of sustainment. The carbon boogeyman can be used to frighten the now crisis weary public into complete sublimation, for if mere carbon can cause the end of the world as we know it, then people, by their very existence, become a threat to the future that must be regulated.
Anthropogenic climate change is THE model the elites must assert if they hope to convince the citizenry that a concrete ceiling on production and population is acceptable. If we ever get to the point where human society becomes so self-loathing as to seek its own enslavement and destruction through carbon controls, it may be a thousand years before we ever see freedom again.
We’re Not There Yet
All of the dangers described above are NOT set in stone. Some may claim that the “end is nigh” – these people are idiots. The end is never nigh. Humanity has faced calamity after calamity for generations; our calamity just happens to be historically epic by comparison. It is not the last calamity. Centuries from now, there will be new disasters and new idiots telling everyone “the end is nigh.”
Through it all, courageous people have risen to the occasion. Some are successful and some are not, but we do not live in a New World Order, yet, and that is saying something. Today is nowhere near as terrible as tomorrow could be if we do not act accordingly.
The globalist reset needs a trigger, a crisis which admittedly we do not have the ability to avoid. But, the reset also depends on the right people in place to rebuild the system after the crisis unfolds. Here is where the future can be determined. Whoever is left standing after the opening salvo will have a choice: to hide and hope for the best, or to fight for the position to choose who builds tomorrow. Will it be the psychotic globalist cabal, or will it be free people of conscience? It may not seem like it now, but the end result is up to us.
- London's New Mayor To Donald Trump: Let Muslims In Or They Will Attack The US
Ever since he officially took office on May 9, London’s first Muslim mayor Sadiq Khan wasted no time in criticizing and attacking Donald Trump’s proposed Muslim ban. Several days ago, the presumptive candidate told the New York Times that he was happy to see Mr Khan elected, saying it could be “very, very good.” However, the pleasantry was not returned, and instead Khan said Trump’s “ignorant” view of Islam could make both Britain and the US less safe, which ironically implies more potential terrorist attacks by Muslims in both the US and the UK.
Khan brushed aside Trump’s suggestion that he would exempt him from his proposed ban on Muslims entering the United States, and said that “this isn’t just about me – it’s about my friends, my family and everyone who comes from a background similar to mine, anywhere in the world,” he said. Quoted by the Telegraph, Khan added: “Donald Trump’s ignorant view of Islam could make both of our countries less safe – it risks alienating mainstream Muslims around the world and plays into the hands of extremists.” He may well be right, although it only pushes the discussion back to square one – how should the US (and not just the US in the aftermath of the terrorist attacks in Paris and Brussels) defend itself from extremists?
Khan pressed on saying “Donald Trump and those around him think that Western liberal values are incompatible with mainstream Islam – London has proved him wrong.” We are confident that Trump would also agree, however the Donald has never said he is focused on “mainstream Islam”, only its radical fringes, and those as Europe has found out the hard way over the past year, are very difficult to isolate.
The reason for the tension between the two figures is that Trump has vowed a “total and complete” temporary shutdown of America’s borders to Muslims following last December’s deadly attack in San Bernardino by a husband and wife team who had Islamic State connections. When asked by the New York Times how his proposed ban on Muslims would apply to Mr Khan, Trump said: “There will always be exceptions.”
Despite his outspoken views on Muslims, Trump insisted he was pleased to see Mr Khan elected as the capital’s first Muslim mayor. “I was happy to see that. I think it’s a very good thing, and I hope he does a very good job because, frankly, that would be very, very good.”
Sadiq, however, has refused to back down and earlier today he told CNN’s Christiane Amanpour that he hopes Donald Trump does not win the U.S. presidential election.
Speaking Wednesday in London, he said American voters faced a decision “of hope over fear, unity over division. A choice of somebody who is trying to divide, not just your communities in America but who is trying to divide America from the rest of the world. And I think that, you know, that’s not the America that I know and love.” He continued: “I’m hoping he’s not the guy that wins.”
Khan reiterated his belief that Trump’s views of Islam are ignorant. “It is possible to be a Muslim and to live in the West. It is possible to be a Muslim and to love America,” he said, adding that he himself loves the country. “By giving the impression that Islam and the West are incompatible, you are playing into the hands of the extremists.”
He continued: “Imagine that America has a sign saying no Muslims: What message does that send to Muslims around the world?”
Well, ostensibly, one that the public wants to hear.
However, what is perhaps most surprising is that in response to Khan’s criticism, Trump appeared to subtly soften his tone on his proposed ban on foreign Muslims entering the United States Wednesday, The planned ban, Trump said on Fox News Radio’s “Kilmeade and Friends,” is only “temporary” according to The Hill.
“It hasn’t been called for yet. Nobody’s done it,” the presumptive Republican nominee said. “This is just a suggestion until we find out what’s going on.”
Trump stood by his proposal, which has been criticized as potentially unconstitutional, as he has repeatedly since emerging as the presumptive GOP nominee last week. “I assume he denies that there’s Islamic terrorism,” Trump responded on Wednesday. “I mean, if you look at this Islamic radical terrorism all over the world right now, it’s a disaster what’s going on. I assume he is denying that.”
Yet the slight softening could suggest a change in rhetoric following protracted criticism from Sadiq Khan, the new London mayor. Khan, who is Muslim, has launched perhaps the most direct attacks on Trump’s policies in recent days.
The question, then, is whether Trump’s shift in tone will be perceived as a backing off from a platform that has appealed to many Amerians, or if instead it will be seen as a modest centrist move by a candidate who is preparing to court a far broader cross-section of the US.
- Getting It All Straight – Trumpism, Nationalism, Patriotism, & Libertarianism
Submitted by Justin Raimondo via Anti-War.com,
I was struck by a tweet from libertarian Republican congressman Justin Amash, who has become the “new Ron Paul” now that the three-time presidential candidate and libertarian icon has taken a well-deserved rest from politics. The other day he tweeted:
“Patriotism & nationalism are profoundly different. Patriotism is love of country. FA Hayek called nationalism ‘a twin brother of socialism.’”
Amash, who has vowed to never support GOP frontrunner and likely presidential nominee Donald Trump, undoubtedly had the New York real estate mogul in mind, but no matter what one thinks of The Donald, Amash is quite wrong about the nature of American nationalism and the meaning of “patriotism.”
To begin with, Hayek was clearly talking about European nationalism, not the American variety. I’ll get to the difference between them, but I want first to point out the irony of Amash’s citation of this particular Hayek quote, because the great libertarian theorist was here talking about the problem of centralization: that is, the growing tendency of smaller political units to be subordinated to and swallowed up by bigger entities.
If we place Hayek’s discussion in the present context, then it becomes clear that nationalism is not the enemy but a (potential) friend of liberty. For the modern trend is toward supra-national entities, like the European Union, the UN, and the North American “Free Trade” Agreement, which are engaged in erecting precisely that “society which is consciously organized from the top” so abhorred by Hayek. When nationalism is arrayed against globalism, i.e. against the concept of a regional super-state, or even a World State, libertarians must clearly take sides with the former.
Furthermore, what is a “nation,” exactly?
The libertarian theorist Murray Rothbard takes on this question in his trenchant essay “Nations By Consent: Decomposing the Nation-State,” and his ability to cut through to the heart of any question underscores the error made by Amash and anti-nationalist libertarians in general:
“Libertarians tend to focus on two important units of analysis: the individual and the state. And yet, one of the most dramatic and significant events of our time has been the re-emergence – with a bang – in the last few years of a third and much-neglected aspect of the real world, the ‘nation.’ When the nation has been thought of at all, it usually comes attached to the state, as in the common word nation-state, but this concept takes a particular development in recent centuries and elaborates it into a universal maxim. In recent years, however, we have seen, as a corollary of the collapse of communism in the Soviet Union and in Eastern Europe, a vivid and startlingly swift decomposition of the centralized state or alleged nation-state into its constituent nationalities. The genuine nation, or nationality, has made a dramatic reappearance on the world stage.
“The nation, of course, is not the same thing as the state, a difference that earlier libertarians, such as Ludwig von Mises and Albert Jay Nock understood full well. Contemporary libertarians often assume, mistakenly, that individuals are bound to each other only by the nexus of market exchange. They forget that everyone is born into a family, a language, and a culture. Every person is born into one or several overlapping communities, usually including an ethnic group, with specific values, cultures, religious beliefs, and traditions. He is generally born into a country; he is always born into a specific time and place, meaning neighborhood and land area.”
In short, the “nation” consists entirely of non-governmental structures and institutions: it is the web of social interactions and cultural context which the government spends most of its energy trying to bend to its will.
In a free society, this effort is largely unsuccessful: in a dictatorship, the state has replaced the nation and substituted its own “culture,” imposed from the top, for the traditions and values that have been established over time by the voluntary actions and decision-making of individuals.
What Amash forgets, or never knew, is that from a libertarian perspective American nationalism is sui generis. Nationalism, after all, is by definition the valorization of a nation’s heritage, its traditions, and most especially its origins. And how did the American nation originate? Why, in the first – and only – successful libertarian revolution in world history.
“Constitutional conservatives” of Amash’s sort are constantly invoking the Constitution as some sort of sacred canon, the libertarian ur-text through which all issues must be viewed. We’ll pass over just how libertarian this document is – there’s a large and persuasive school of libertarian thought that views the adoption of the Constitution as a counterrevolution – and ask: where does Amash think that holy writ came from? It was made possible by those who had fought a revolution and established a nation, one founded on the supremacy of individual liberty.
This is what differentiated it from the nations of Europe, and what, in the end, separated American nationalism out from the European varieties. In Europe, nationalism inevitably meant the growth of State power at the expense of regional autonomy and individual liberty: in America, it meant the victory of a libertarian revolution and the establishment of a government that respected both the rights of the separate states and individual autonomy.
Walled off by two oceans from a world dominated by monarchs and aggressors, born in a revolt against imperialism, imbued with a culture that nurtured the free individual, America is truly the exceptional nation, albeit not in the way today’s purveyors of “American exceptionalism” usually mean it. An American nationalist isn’t a Bismarckian: he’s a Jeffersonian.
Mutants like Teddy Roosevelt – and his contemporary fan club, the neoconservatives – are the exception that proves the rule. Speaking very generally, American libertarianism is consistent nationalism: not the expansionist, militaristic nationalism of Europe, but that of the Founders.
In this country, a nationalist necessarily upholds the American tradition of limited government, the rule of law, and – yes – “isolationism” (“She goes not abroad in search of monsters to destroy”). No wonder John Kerry preaches the virtues of a “borderless world,” and warns graduating students of the dangers of “looking inward”! Empires aspiring to world hegemony don’t recognize the legitimacy of borders, and as for looking inward – why do that when we have a whole world to conquer?
In a world where supranational bureaucracies – who want to centralize economic and political decision-making and put it in the hands of a trans-national elite – are actively subverting the very idea of national sovereignty, nationalists are on the right side of the barricades. Should Catalonia be forced to be a part of Spain? Should England be dragooned into the European Union? Should the American economy be ruled by a World Central Bank? What “libertarian” can answer yes?
I am struck, in the Rothbard quote cited above, by the phrase a “much-neglected aspect of the real world.” Libertarians, all too often, have to be constantly reminded of the real world, as opposed to the world of floating abstractions they sometimes seem to inhabit. It is one thing to have principles: it’s quite another, however, to apply those principles to reality – not by compromising them, but by recognizing that one-dimensional models of human behavior will not chart a course to liberty.
And now a word about “patriotism”: this concept has been used as a bludgeon against opponents of every war in American history, and is trotted out to smear government critics as “unpatriotic,” if not outright traitors. Such expressions of “patriotism” as the Pledge of Allegiance (authored by a socialist), and the odious maxim “My country right or wrong,” are nothing more than state-worship, the very opposite of true nationalism in the American sense.
- In China, Nobody Wants To Be A Bagholder
With the frenzied speculation that drove levels and volumes in Chinese commodities off the charts having dawned on everyone from Cramer to Chinese Securities regulators as ‘not real’, it appears everyone is scrambling to not be the bagholder for this bubble as authorities crackdown on Chinese asset managers pooling retail investor funds, warning of the rise of “ponzi schemes.” While nobody knows for sure how much of the trading surge has been driven by individuals, but the evidence suggests retail punters are playing a big role, and as Bloomberg reports, the average holding period for contracts including rebar and iron ore was less than 3 hours in April!
China’s asset managers were warned of “Ponzi scheme” risks from pooling investor funds intended for different products, as an industry association said a joint venture between Citic Trust and Citic-Prudential Fund Management was being punished for violating restrictions on such practices. As Bloomberg details,
Citic-CP Asset Management, known for marketing Uber Technologies Inc. shares in China, has been suspended for six months from issuing new products because of the breaches, according to an Asset Management Association of China statement on its website on Thursday. No one answered at a phone number listed on a website for Citic-CP Asset Management on Friday.
The risk from pooling money is that cash from new investors can be used to repay existing investors, as occurs in the scams named after Charles Ponzi. The association reiterated that funds investing in securities are banned from running cash pools and pledged to work with the China Securities Regulatory Commission to cleanse the industry of the practice.
In Thursday’s statement, the asset-management association urged its industry to abandon the “grey area,” saying cash pools could hide financial risks for long periods, only to create enormous damage when things went wrong.
Of course, with the now famous Chinese propensity for gmabling on any and everything that is going up, as evidenced by the stunning collapse of average trading periods in commodity futures…
“I’m pretty bored at work, so I trade commodities futures for some excitement,’’ said He, whose account swelled to as much as 700,000 yuan ($107,443) before sliding back to 400,000 yuan at the end of April.
“Because I’m making investments with my friend, we can comfort each other when we are making a loss.’’
Nobody knows for sure how much of the trading surge has been driven by individuals, but the evidence suggests retail punters are playing a big role. More than 40 percent of the volume in rebar futures last month came during the night session, when it’s more convenient for people with day jobs to trade. The average holding period for contracts including rebar and iron ore was less than 3 hours in April, according to data compiled by Bloomberg.
Individuals with a bank account and official identity card can open a futures trading account at a brokerage within 40 minutes, with no initial balance required, Morgan Stanley said in a report on May 4.
One would suspect the Chinese do in fact need protecting from themselves as lessons learned from the stock market’s bubble burst, the corporate bond bubble’s burst, and the real estate bubble’s burst still led them to pile into Chinese commodities… and deal with that bursting too…
“The authorities in China are on an ongoing journey of educating investors about risk and reward as well as trying to manage the booming wealth management industry,” Pogson said.
- 11 Signs That The U.S. Economy Is Rapidly Deteriorating Even As The Stock Market Soars
Submitted by Michael Snyder via The Economic Collapse blog,
We have seen this story before, and it never ends well. From mid-March until early May 2008, a vigorous stock market rally convinced many investors that the market turmoil of late 2007 and early 2008 was over and that happy days were ahead for the U.S. economy. But of course we all know what happened. It turned out that the market downturns of late 2007 and early 2008 were just “foreshocks” of a much greater crash in late 2008. The market surge in the spring of 2008 was just a mirage, and it masked rapidly declining economic fundamentals. Well, the exact same thing is happening right now. The Dow rose another 222 points on Tuesday, but meanwhile virtually every number that we are getting is just screaming that the overall U.S. economy is steadily falling apart. So don’t be fooled by a rising stock market. Just like in the spring of 2008, all of the signs are pointing to an avalanche of bad economic news in the months ahead. The following are 11 signs that the U.S. economy is rapidly deteriorating…
#1 Total business sales have been declining for nearly two years, and they are now about 15 percent lower than they were in late 2014.
#2 The inventory to sales ratio is now back to near where it was during the depths of the last recession. This means that there is lots and lots of unsold stuff just sitting around out there, and that is a sign of a very unhealthy economy.
#3 Corporate earnings have declined for four consecutive quarters. This never happens outside of a recession.
#4 Profits for companies listed on the S&P 500 were down 7.1 percent during the first quarter of 2016 when compared to the same time period a year ago.
#5 In April, commercial bankruptcies were up 32 percent on a year over year basis, and Chapter 11 filings were up 67 percent on a year over year basis. This is exactly the kind of spike that we witnessed during the initial stages of the last major financial crisis as well.
#6 U.S. rail traffic was 11 percent lower last month than it was during the same month in 2015. Right now there are 292 Union Pacific engines sitting idle in the middle of the Arizona desert because there is literally nothing for them to do.
#7 The U.S. economy has lost an astounding 191,000 mining jobs since September 2014. For areas of the country that are heavily dependent on mining, this has been absolutely devastating.
#8 According to Challenger, Gray & Christmas, U.S. firms announced 35 percent more job cuts during April than they did in March. This indicates that our employment problems are accelerating.
#9 So far this year, job cut announcements are running 24 percent above the exact same period in 2015.
#10 U.S. GDP grew at just a 0.5 percent annual rate during the first quarter of 2016. This was the third time in a row that the GDP number has declined compared to the previous quarter, and let us not forget that the formula for calculating GDP was changed last year specifically to make the first quarter of each year look better. Without that “adjustment”, it is quite possible that we would have had a negative number for the first quarter.
#11 Barack Obama is poised to become the first president in U.S. history to never have a single year during his time in office when the economy grew by more than 3 percent.
But you never hear Obama talk about that statistic, do you?
And the mainstream media loves to point the blame at just about anyone else. In fact, the Washington Post just came out with an article that is claiming that the big problem with the economy is the fact that U.S. consumers are saving too much money…
The surge in saving is the real drag on the economy. It has many causes. “People got a cruel lesson about [the dangers] of debt,” says economist Matthew Shapiro of the University of Michigan. Households also save more to replace the losses suffered on homes and stocks. But much saving is precautionary: Having once assumed that a financial crisis of the 2008-2009 variety could never happen, people now save to protect themselves against the unknown. Research by economist Mark Zandi of Moody’s Analytics finds higher saving at all income levels.
So even though half the country is flat broke, I guess we are all supposed to do our patriotic duty by going out and running up huge balances on our credit cards.
What a joke.
Of course the U.S. economy is actually doing significantly better at the moment than almost everywhere else on the planet. Many areas of South America have already plunged into an economic depression, major banks all over Europe are in the process of completely melting down, Japanese GDP has gone negative again despite all of their emergency measures, and Chinese stocks are down more than 40 percent since the peak of the market.
This is a global economic slowdown, and just like in 2008 it is only a matter of time before the financial markets catch up with reality. I really like how Andrew Lapthorne put it recently…
On the more bearish slant is Andrew Lapthorne, head of quantitative strategy at Societe Generale. To him this profit downturn is a sign that stocks are far too overvalued and the economy is weaker than you think.
“MSCI World EPS is now declining at the fastest pace since 2009, losing 4% in the last couple of months alone (this despite stronger oil prices),” wrote Lapthorne in a note. For the S&P 500 specifically, the year on year drop in profit drop was the most since third quarter of 2009.
“Global earnings are now 14% off the peak set in August 2014 and back to where they stood five years ago. Equity prices on the other hand are 25% higher. Gravity beckons!”
I couldn’t have said it better myself.
Look, this is not a game.
So far in 2016, three members of my own extended family have lost their jobs. Businesses are going under at a pace that we haven’t seen since 2008, and this means that more mass layoffs are on the way.
We can certainly be happy that U.S. stocks are doing okay for the moment. May it stay that way for as long as possible. But anyone that believes that this state of affairs can last indefinitely is just being delusional.
Gravity beckons, and the crash that is to come is going to be a great sight to behold.
- When Social Media Goes Too Far: French Woman Broadcasts Her Suicide On Periscope
Social media can be a positive thing. It can help family stay connected, help old friends re-connect, and even introduce new friends. However, for all of the positives, social media can also be taken too far, and end up having quite a negative impact.
For example, it could lead to literally be addicted to one's smart phone, or even worse, social media could be used as a final "broadcast" for some that choose to take their own life.
As RT reports, a 19 year old girl was recording herself on live video-streaming app Periscope when she threw herself under a train at the Egly station, about 25 miles south of Paris.
Around 1,000 viewers watched as the girl said "What's about to happen will be very shocking, but I'm not doing it for the hype, I am doing it to send a message", which prompted users to respond with such comments as "we're waiting", and "give us a hint."
Eventually during the video, the screen went dark, and an emergency worker could be overheard saying "I am under the train with the victim; I need to move the victim." The girl had in fact had broadcast to the public the moment she took her own life. RT also goes on to say that the girl sent a text message to one of her close friends several minutes before her death, announcing her intentions.
Local prosecutor Eric Lallement said that the incident is being investigated, as the girl allegedly spoke of rape and named the aggressor during the video as well.
Unfortunately, this of course isn't the first incident that has been broadcast on social media platform. Last month, an 18 year old Ohio woman was arrested for streaming video on Periscope of her friend being raped. Another incident that was live streamed was an attack by two teens on a drunken 24 year old man in Bordeaux, France – both teens were arrested.
Sadly, these terrible events are a stark reminder that social media can indeed be taken too far.
- Turkey Threatens Europe: "Unless Visas Are Removed, We Will Unleash The Refugees"
Following months of appeasement of Turkey’s dictator Recep Erdogan, Europe has found itself surprised that as it yields to every incremental demand, Turkey simply asks for more and more. One such example was chronicled by the FT earlier today in “Turkey demands EU hands over €3bn for refugees” in which we read that “a row has erupted between Turkey and the EU over billions of pounds in aid for Syrian refugees, casting fresh doubt on a fragile deal to halt the flow of people towards Europe.”
Erdogan’s argument is that he want the money to be transferred over to him directly to dispense with as he pleases, while Europe insists that UN agencies oversee that the money be spent as designated for refugee needs, instead of funding another wing for Erdogan’s palace. Of course, the only reason why Erdogan is confident he has leverage is because Turkey is currently hosting over 3 million Syrian refugees that is holding back from flooding into Europe once more, potentially resulting in the most acute episode of Europe’s refugee crisis.
And to his credit, Erdogan has been successful in that, because as the following chart shows, for the first time since April 2015, more refugees arrived in Europe via Italy than on the path through Greece to the east. The flow of migrants through the Aegean Sea has waned since the European Union and Turkey struck a deal in March to send refugees back that arrive in Greece.
However, this potential onslaught of Europe-bound refugees is also Erdogan’s biggest trump card: should Europe deny anything Turkey wants, he will simply open the gates leading to spiraling political chaos of the type already seen in Austria and Germany where anti-immigrant parties have stormed higher in the political polls in recent months.
Confirming precisely that, was a warning by Burhan Kuzu, a high-ranking deputy for Turkey’s ruling AKP party and former adviser to President Erdogan, who said that Ankara will send migrants back to the EU if the European Parliament won’t grant visa-free travel to Turkish citizens. Kuzu made several statements on Twitter in anticipation of Wednesday’s session of European parliament, at which visa exemption for Turkish nationals in the Schengen zone, as part of a migrant deal between Brussels and Ankara, was to be discussed.
“The European Parliament will discuss the report that will open Europe visa-free for Turkish citizens. If the wrong decision is taken, we will unleash the refugees!” in what was an unmistakable threat.
Avrupa Parlamentosu,yar?n Türk Vatanda?lar?na Avrupa yolunu vizesiz açacak raporu görü?ecek.Yanl?? bir karar verirse Mültecileri göndeririz!
— Burhan Kuzu (@BurhanKuzu) May 10, 2016
He also told Bloomberg: “If Turkey’s doors are opened, Europe would be miserable.“
“Europe is on the edge of an important decision: It will decide on Turkey’s visa-free travel rights today. If a positive decision comes out, this is also a benefit for Europe,” the MP wrote in a separate tweet.
As RT writes, it’s not the first time the deputy has threatened to flood Europe with over 2 million migrants from North Africa and Middle East, stranded in Turkish refugee camps.“Finally the EU understood Turkey’s stake and loosened its purse strings. What did we say? ‘We will open the borders and set Syrian migrants on you’,” he wrote back in December 2015.
But in the worst news for Greece, and an indication that Erdogan’s gambit is no longer working, EUobserver wrote earlier that the European parliament had “quietly” suspended discussions of visa-free travel for Turkey Monday. EU parliament chief Martin Schulz put the debate on hold because Turkey had not yet met all EU visa-free criteria, said Judith Sargentini, a Dutch Green MEP. According to the site, the move is aimed at putting pressure on the European Commission so that it would take a firmer stance on Turkey fulfilling its part of the deal.
“The ball is back with the European commission,” one of the MEPs told EUobersver, while the other stressed that the suspension will “make the parliament more important.”
Meanwhile, Turkey’s minister for EU affairs Volkan Bozkir met with EU Commissioner for Migration, Home Affairs and Citizenship, Dimitris Avramopoulos, in Strasbourg today. The minister will also hold talks with Johannes Hahn, Commissioner for European Neighborhood Policy and Enlargement Negotiations, on Friday in Brussels. No press events were planned following both meetings.
The reason for the visit is because on May 4, the European Commission proposed to the European Parliament and the EU Council to lift visa restrictions for Turkish citizens, if Ankara fulfils five conditions by the end of June. They included measures to prevent corruption, holding talks on an operational agreement with Europol, judicial cooperation with all EU member states, bringing data protection rules in line with EU standards, and the revision of legislation on the fight against terrorism. It was the last condition that Turkey found particularly unacceptable.
Bozkir told Turkish NTV broadcaster Wednesday that “it is not possible for us to accept any changes to the counter-terrorism law” as demanded by the EU.
This followed a firm statement by Erdogan who told the EU on Friday that Turkey would not make the changes, declaring: “we’re going our way, you go yours”.
Wednesday’s repeated refusal, and assertion that there had never been a reciprocal deal over the laws, will likely alarm EU officials already worried by the departure of Prime Minister Ahmet Davutoglu, seen as a more flexible negotiating partner.
The EU said last week Turkey still had to change some laws, including narrowing its legal definition of terrorism, to secure visa-free travel for its citizens – part of a wide-ranging deal to secure Turkish help in reducing the flow of migrants into Europe.
Turkey’s clear rejection and insistence that it has all the required leverage, sets Europe and Turkey for what will be a dramatic showdown in which Turkey’s increasingly despotic dictator will either be appeased one more time, or his bluff will be called.
With Europe hit by the biggest migrant crisis in decades, the EU and Ankara signed the migrant deal back in March. According to the agreement, Turkey would take back refugees seeking asylum in the EU in exchange for a multi-billion euro aid package and some political concessions, including the visa-free regime.
If the deal falls apart, Turkey will surely flood millions more in refugees who will unleash far more political havoc across Europe, and certainly Germany, than Greece ever could.
So for all those focusing closely on the risk of Brexit or developments in Greece this summer where the third Greek bailout may or may not give the insolvent nation a few more months before its next payment to the ECB is due while it pretends to “reform”, a far bigger risk is what Greece’s neighbor to the east, ruled by an unhinged, irrational president, will end up doing, and how Europe would respond if he actually follows through with his bluff.
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