Today’s News 7th January 2016

• "Markets In Turmoil" As Europe Opens

  With Chinese trading halted mere minutes into its day-session on the back "insane" moves as one Asian manager exclaimed, the rest of the world's markets have borne the brunt of hedging, unwind, selling pressure.

   

  Dow Futures are down 300 points from After-Hours highs…

  

   

  Crude has crashed back to a $32 handle…

  

   

  The dollar is weaker as JPY and EUR surge…

  

  

  And Gold has jumped back above $1100…

  

   

  Time for some jawboning Mr. Draghi.. and what about you Kuroda-san? Get back to work!! Unless the rest of the world is 'ganging up' on The Fed, pressuring the US stock market until Yellen folds and unleashes QE4?

  

  

  

  

• TransCanada Sues Obama Administration; Says Keystone Pipeline Rejection Was Unconstitutional

  On November 6, Obama was delighted to take his place in the pantheon of progressive, liberal Warren Buffett apparatchiks when he proudly announced that the Keystone XL pipeline, which had been delayed for years, had finally been rejected.

  

   

  Exactly two months later, Obama’s “mission accomplished” banner has just led to a big slap on the face of the former constitutional expert, and could carry a multi-billion dollar chage after late this afternoon, TransCanada filed a lawsuit in Federal court in Houston, suing the U.S. government and claiming the Obama acted unconstitutionally when he rejected the Keystone XL, while also seeking $15 billion alleging the pipeline denial was “arbitrary and unjustified.”

  The company’s lawsuit in federal court in Houston does not seek legal damages but wants the permit denial invalidated and seeks a ruling that no future president can block construction.

  According to Reuters, in filing the NAFTA claim, TransCanada said it “had every reason to expect its application would be granted” as it had met the same criteria the U.S. State Department used when approving other similar cross-border pipelines.

  “Presumably they have a case that there are damages, as they were led to believe that if they did these things they’d get it across the line, but they weren’t able to,” said portfolio manager Ryan Bushell at Leon Frazer & Associates in Toronto, whose firm owns more than a million shares in TransCanada.

   

  “I’d imagine that this is more than a PR move and they believe they have a real case.”

  If so that would be big trouble for not only Obama, who will have to find a lot of NSA dirt on a Texas federal judge, but also for Warren Buffett, whose intervention in Obama’s “decision-making process” on halting TransCanada will surely be divulged during the discovery process, revealing the crony capitalist who stood to benefit the most.

  The White House referred requests for comment to the U.S. State Department. The State Department did not immediately respond to requests for comment. 

  Not surprisingly, Canada is staying far away from this one, In Ottawa, a spokesman for the Canadian foreign ministry said the government “has no role in this dispute.” Since October, Canada has been run by Justin Trudeau’s Liberals, who backed the pipeline but not as vociferously as the former ruling Conservatives.

  TransCanada said it will also take an after-tax write down of C$2.5 billion ($1.78 billion) to C$2.9 billion in the fourth quarter after the permit denial.

  The environmentalists, despite winning the first round, are suddenly concerned:

  “The suit is a reminder that we shouldn’t be signing new trade agreements like the Trans Pacific Partnership that allow corporations to sue governments that try and keep fossil fuels in the ground,” said Jason Kowalski, policy director of environmental group 350.org which opposed the pipeline.

  TransCanada called the rejection “a symbolic gesture” aimed at burnishing the Obama administration’s leadership on climate change in the eyes of the international community.

  It was, of course, right. But more importantly, the rejection was a means to promote Warren Buffett’s “alternative” oil pipelines, the railways, which in 2015 had their worst safety year on record, with countless flaming BNSF derailments, which, oddly enough, the White House had little to say about.

  

  

  

  

  

  

• Paul Craig Roberts: The Rule Of Law No Longer Exists In Western Civilization

  Authored by Paul Craig Roberts,

  My work documenting how the law was lost began about a quarter of a century ago. A close friend and distinguished attorney, Dean Booth, first brought to my attention the erosion of the legal principles on which rests the rule of law in the United States. My columns on the subject got the attention of an educational institution that invited me to give a lecture on the subject. Subsequently, I was invited to give a lecture on “How The Law Was Lost” at the Benjamin Cardozo School of Law in New York City.

  The work coalesced into a book, The Tyranny Of Good Intentions, coauthored with my research associate, Lawrence M. Stratton, published in 2000, with an expanded edition published in 2008. We were able to demonstrate that Sir Thomas More’s warning about prosecutors and courts disregarding law in order to more easily convict undesirables and criminals has had the result of turning law away from being a shield of the people and making it into a weapon in the hands of government. That is what we witness in the saga of the Hammonds, long-time ranchers in the Harney Basin of Oregon.

  With the intervention of Ammon Bundy, another rancher who suffered illegal persecution by the Bureau of Land Management but stood them off with help from armed militia, and his supporters, the BLM’s decades long persecution of the innocent Hammonds might have come to a crisis before you read this.

  Bundy and militiamen, whose count varies from 15 to 150 in the presstitute media, have seized an Oregon office of the BLM as American liberty’s protest against the frame-up of the Hammonds on false charges. As I write the Oregon National Guard and FBI are on the way.

  The militiamen have said that they are prepared to die for principles, and the rule of law is one of them. Of course, the presstitute media is making the militiamen into the lawbreakers—and even calling them terrorists—and not the federal government’s illegal prosecution of the Hammonds, whose crime was their refusal to sell their ranch to the government to be included in the Masher National Wildlife Refuge.

  If there are only 15 militiamen, there is a good chance that they will all be killed, but if there are 150 armed militiamen prepared for a shootout, the outcome could be different.

  I cannot attest to the accuracy of this report of the situation (the resources required to verify the information in this account of how the government escalated a “crisis” out of the refusal of a family to bend is beyond the resources of this website) – However, the story fits perfectly with everything Lawrence Stratton and I learned over the years that we prepared our book on how the law was lost. This account of the persecution of the Hammonds is the way government behaves when government has broken free of the rule of law.

  I can attest with full confidence that the United States no longer has a rule of law. The USA is a lawless country. By that I do not mean what conservative Republicans mean, which is, if I understand them, that racial minorities violate law with something close to impunity.

  What I mean is that only the mega-banks and the One Percent have legal protection, and that is because these people control the government. For everyone else law is a weapon in the hands of the government to be used against the American people.

  The fact that the shield of law no longer exists for American citizens is why, according to US Department of Justice statistics, only 4 percent of federal felonies ever go to trial. Almost the entirety of federal felonies are settled by coerced plea bargains that force defendants to admit to crimes that they did not commit in order to avoid “expanded indictments” that, if presented to the typical stupid, trusting, gullible American “jury of their peers,” would lock them away for hundreds of years.

  American justice is a joke. It does not exist. You can see this in the American prison population. “Freedom and Democracy” America not only has the largest percentage of its population in prison than any country on the planet, but also the largest number of prisoners.

  If you consider that “authoritarian” China has four times the population of the United States but fewer prisoners, you understand that “authoritarian” China has a more protective rule of law than the United States.

  Compared to “freedom and democracy America,” Russia has hardly anyone in prison. Yet, Washington and its media whores have defined the President of Russia as “the new Hitler.”

  The only thing we can conclude from the facts is that the United States Government and those ignorant fools who worship it are evil incarnate.

  Out of evil comes dictatorship. The White House Fool, at best a two-bit punk, has decided that he doesn’t like the Second Amendment to the US Constitution any more than he likes any of the other constitutional protections of US citizens. He is looking for dictatorial methods, that is, unlegislated executive orders, to overturn the Second Amendment. He has the corrupt US Department of Justice, a criminal organization, looking for ways for the dictator to overturn both Congressional legislation and Supreme Court rulings.

  The media whores have fallen in line with the would-be dictator. All we hear is “gun violence.” If only Karl Marx were still with us. He would ridicule those who turn inanimate objects into purposeful actors. It is extraordinary that the American left-wing thinks that guns, not people, kill people.

  The position of the “progressive left-wing” in the United States is perplexing. Here are Americans, immersed into a police state, as are the Hammonds, and the progressive left-wing wants to disarm the population.

  Whatever this “progressive left-wing opposition” is, it has nothing in common with revolutionaries. The American left-wing is totally irrevelant, a defeated force that sold out and no longer represents the people or the truth.

  Even more astonishing, judging by comments on RT’s report on the situation and the readers comments, all RT and American blacks want to know is where is the National Guard in Oregon? Why isn’t it called out against the White militia protests as it was called out against the Black Ferguson protests?

  If protesting the murder of a young black American by Ferguson police is not legitimate and the protesters are “terrorists,” why aren’t the Oregon protestors terrorists for trying to protect jailbirds from their “lawful sentence”? This is the wrong question.

  It really is discouraging that the American black community is unable to understand that if any American can be dispossessed, all Americans can be dispossessed.

  It is also discouraging that RT decided to play the race card instead of comprehending that law is no longer a shield of the American people but is a weapon in the hands of Washington.

  Why doesn’t RT at least listen to the President of Russia, who states repeatedly that America and the West are lawless.

  Putin is correct. America and its vassals are lawless. No one is safe from the government.

  

  

  

  

  

• Cologne Mayor Slammed For Telling German Women It Is Their Responsibility To Keep Rapists At "Arm's Length"

  Earlier today, we brought you an eyewitness account of the melee that unfolded in Cologne, Germany on New Year’s Eve.

  Allegedly, hundreds of 18-35 year-old males “of Arab and North African origin” robbed and sexually assaulted women gathered in the city center. Assaults were also reported in Hamburg and Stuttgart. Authorities are attempting to discern if there’s a connection.

  Ivan Jurcevic, a hotel club bouncer who was on the job (literally) in Cologne when the trouble started, had the following to say in a video posted to social media: “These people that we welcomed just three months ago with teddy bears and water bottles … started shooting at the cathedral dome and started shooting at police. Well seasoned police officers then confessed to me that they never saw something like this in their entire lives. They called it a ‘civil war like situation.'”

  Here’s an account from a woman who claims to have been a victim of an assualt:

  “The men surrounded us and started to grab our behinds and touch our crotches. They touched us everywhere. I wanted to take my friend and leave. I turned around, and in that moment, someone grabbed my bag.”

  That is of course the last thing Angela Merkel wants to hear. The Chancellor is struggling to convince Germans that Berlin’s open-door policy for Mid-East asylum seekers isn’t set to tear the country’s social fabric apart at the seams.

  For some, the events that unfolded on New Year’s Eve validate concerns about the risk Germany is running by bringing 1.1 million migrants into a country with a population of just 82 million. “Mrs Merkel, is Germany ‘colorful and cosmopolitan’ enough for you after the wave of crimes and sexual attacks?,” AfD party leader Frauke Petry tweeted.

  “Ms Merkel where are you? What do you say? This scares us!,” read a sign held by one of hundreds of protesters who gathered in the city center in Cologne on Tuesday.

  For her part, Cologne mayor Henriette Reker called the attacks “unbelievable and intolerable” but then suggested that the victims should have acted different to avoid getting themselves into trouble. She also seemed to suggest that perhaps those responsible for the attacks were simply unaware of Germany’s cultural norms.

  Now, Reker is drawing sharp criticism for her contention that women in Germany should adopt a “code of conduct” as a kind of rapist repellent.

  “In her first public appearance since the incident, Reker instructed women on how they could protect themselves,” Huffington Post writes “The proposed code of conduct included telling women to stay in groups, not be separated, always try and keep their distance and always stay an arms length away from strangers.”

  “There’s always the possibility of keeping a certain distance of more than an arm’s length – that is to say to make sure yourself you don’t look to be too close to people who are not known to you, and to whom you don’t have a trusting relationship,” she said. “Women would also be smart not to go and embrace everyone that you meet and who seems to be nice. Such offers could be misunderstood, and that is something every woman and every girl should protect herself from,” Reker continued, digging herself an even deeper hole.”

  She also advised women to not be in a celebratory mood.

  

  Needless to say, the comments created a veritable firestorm on social media. 

  Cologne’s female mayor: women must “maintain arm’s length distance to strangers”. Everything about this depresses https://t.co/8qkrawHnmj

  — Catherine Mayer (@catherine_mayer) January 5, 2016

  Mayor of #cologne already victim blaming. If the German govt had any guts they’d deport the lot tomorrow https://t.co/dun3DESp6F

  — Lee Laborczfalvi (@laborcz) January 5, 2016

  Unbelievable. Cologne Mayor reacts to migrant mass sexual assault by giving “guidance” to young German women on proper dress & behaviour

  — A Libertarian Rebel (@A_Liberty_Rebel) January 5, 2016

  German Justice Minister Heiko Maas was note amused: “I don’t think much of the how-to-behave tips for women such as #anarm’slength. It is not women who are responsible, but the perpetrators,” he wrote, in a tweet.

  Later, Reker would say that the media made it appear as though she was confining her prevention suggestions to women when in fact, she also had advice for would-be assailants. To wit: “We need to explain to people from other cultures that the jolly and frisky attitude during our Carnival is not a sign of sexual openness.”

  You’d be forgiven for suggesting that perhaps some German politicians are going out of their way to avoid applying negative stereotypes to migrants. 

  In any event, Germany’s “jolly and frisky” attitude toward refugees is disappearing quicker than a handbag in Cologne on New Year’s Eve and one wonders how long it will ultimately be before the public simply revolts against a government they feel is powerless to protect their property, person, and borders.

  

  

  

  

  

• Enough Already! It's Time To Send The Despicable House Of Saud To The Dustbin Of History

  Submitted by David Stockman via Contra Corner,

  The recent column by Pat Buchanan could not be more spot on. It slices through the misbegotten assumption that Saudi Arabia is our ally and that the safety and security of the citizens of Lincoln NE, Spokane WA and Springfield MA have anything to do with the religious and political machinations of Riyadh and its conflicts with Iran and the rest of the Shiite world.

  Nor is this only a recent development. In fact, for more than four decades Washington’s middle eastern policy has been dead wrong and increasingly counter-productive and destructive. The crisis provoked this past weekend by the 30-year old hot-headed Saudi prince, who is son of the King and heir to the throne, only clarified what has long been true.

  That is, Washington’s Mideast policy is predicated on the assumption that the answer to high oil prices and energy security is deployment of the Fifth Fleet to the Persian Gulf. And that an associated alliance with one of the most corrupt, despotic, avaricious and benighted tyrannies in the modern world is the lynch pin to regional stability and US national security.

  Nothing could be further from the truth. The House of Saud is a scourge on mankind that would have been eliminated decades ago, save for Imperial Washington’s deplorable coddling and massive transfer of arms and political support.

  At the same time, the answer to high oil prices is high oil prices. Could anything not be more obvious than today when crude oil is hovering around $35 per barrel notwithstanding a near state of war in the Persian Gulf?

  Here’s the thing. The planet was endowed by the geologic ages with a massive trove of stored energy in the form of buried hydrocarbons; and it is showered daily by even more energy in the form of the solar, tidal and wind systems which shroud the earth.

  The only issue is price, the shape and slope of the supply curve and the rate at which technological progress and human ingenuity drives down the real cost of extraction and conversion.

  On top of that, the vast resilient forces of the free market have silently, steadily and dramatically improved the energy efficiency of the US economy.

  As shown in the long term chart below, energy consumption per dollar of GDP is only about 40% of the level which obtained when Washington’s politicians first started running around like Chicken Little, claiming that the energy sky was falling at the time of the so-called 1973 oil crisis.

  

  Driven by the supply and demand curves of the ordinary processes of economic markets over the last four decades, therefore, the constant dollar price of oil has gone absolutely nowhere. The threat of high oil prices has been a giant myth all along.

  The red line in the chart below expresses the world crude oil price in March 2015 dollars of purchasing power. At today’s $35 per barrel it is only marginally higher than it was in 1971 before Nixon slammed shut the gold window and inaugurated four decades of central bank fueled monetary inflation.

  

  The truth is, the long era of the so-called oil crisis never happened. It was only a convenient Washington invention that was used to justify statist regulation and subsidization of energy domestically and interventionist political and military policies abroad.

  Back in the late 1970s as a member of the House Energy Committee I argued that the solution to high oil prices was the free market; and that if politicians really wanted to cushion the purely short-term economic blow of a Persian Gulf supply interruption the easy and efficient answer was not aircraft carriers, price controls and alternative energy subsidies, but the Texas and Louisiana salt domes that could be easily filled as a strategic petroleum reserve (called SPRO).

  During the Reagan era we unleashed the energy pricing mechanisms from the bipartisan regime of price and allocation controls which had arisen in the 1970s and began a determined campaign to fill the SPRO. Thirty-five years later we have a full SPRO and a domestic and world economy that is chock-a-block with cheap energy because the pricing mechanism has done its job.

  In fact, OPEC is dead as a doornail, and the real truth has now come out. Namely, there never was a real oil cartel. It was just the House of Saud playing rope-a-dope with Washington, and its national oil company trying to do exactly what every other global oil major does.

  That is, invest and produce at rates which are calculated to maximize the present value of its underground reserves.  And that includes producing upwards of 10 million barrels per day at present, even as the real price of oil has relapsed to 50 year ago levels.

  What this also means is that Imperial Washington’s pro-Saudi foreign policy is a vestigial relic of the supreme economic ignorance that Henry Kissinger and his successors at the State Department and in the national security apparatus brought to the table decade after decade.

  Had they understood the energy pricing mechanism and  the logic of SPRO, the Fifth Fleet would never have been deployed to the Persian Gulf. There also never would have been any Washington intervention in the petty 1990 squabble between Saddam Hussein and the Emir of Kuwait over directional drilling in the Rumaila oilfield that straddled their historically artificial borders.

  Nor would there have been any “crusader” boots trampling the allegedly sacred lands of Arabia or subsequent conversion of Bin-Laden’s fanatical Sunni mujahedeen, which the CIA had trained and armed in Afghanistan, to the al-Qaeda terrorists who perpetrated 9/11.

  Needless to say, the massive US “shock and awe” invasion thereafter which destroyed the tenuous Sunni-Shiite-Kurd coexistence under the Baathist secularism of Saddam Hussein would not have happened, either. Nor would the neocon war mongers have ever become such a dominant force in Imperial Washington and led it to the supreme insanity of regime change in Libya, Syria, Yemen and beyond.

  In short, the massive blowback and episodic eruptions of jihadist terrorism in Europe and even America that plague the world today would not have occurred save for the foolish policy of Fifth Fleet based energy policy.

  Still, there is an even more deleterious consequence of the Kissinger Error. Namely, it has allowed the House of Saud, along with Bibi Netanyahu’s political machine, to egregiously mis-define the sectarian and tribal conflicts which rage in today’s middle-east.

  The fact is, there is no such thing as generic Islamic terrorism. The overwhelming share of the world’s 1.3 billion or so Sunni Muslims are not remotely interested in Jihaddism.

  Likewise, the 200 million adherents of the Shiite Muslim confession are not terrorists in any religious or ideological sense. There are about 60 million Shiite in India and Pakistan and their quarrel, if any, is rooted in antagonisms with Hindu-India, not the West or the US.

  Similarly, the 80 million Shiite domiciled in Iran, southern Iraq, southern Lebanon and the Alawite communities of Syria have been host to sporadic terrorist tactics. But these occurred overwhelmingly in response to efforts by outside powers to occupy Shiite communities and lands.

  That is certainly the case with the 20-year Israeli occupation of southern Lebanon, which gave rise to Hezbollah defense forces. It is also true of the Shiite uprisings in Baghdad and southern Iraq, which gave rise to the various militias that opposed the US occupation.

  Moreover, post-1979 Iran has never invaded anyone, nor have the Shiite communities of northern Yemen, who are now being bombarded by Saudi pilots driving US supplied war planes and drones.

  In short, there has never been a Shiite-based ideological or religious attack on the West. The anti-Americanism of the Iranian theocracy is simply a form of crude patriotism that arose out of Washington’s support for the brutal and larcenous regime of the Shah—–and which was reinforced during Iraq’s US aided invasion of Iran during the 1980s.

  By contrast, the real jihadi terrorism in the contemporary world arose almost exclusively from the barbaric fundamentalism of the Sunni-Wahhabi branch of Islam, which is home-based in Saudi Arabia.

  Yet this benighted form of medieval religious fanaticism survives only because the Saudi regime enforces it by the sword of its legal system; showers its domestic clergy with the bounty of its oil earnings; and exports hundreds of millions to jihadists in Syria, Iraq, Libya, Turkey, Iran, Egypt  and numerous other hot spots in the greater middle east.

  At the end of the day, the House of Saud is also the ultimate inspiration and financial benefactor of the Islamic State, as well. Had it not provided billions in weapons and aid to the Syrian rebels over the last five years, there would be no civil war in Syria today, nor would ISIS have been able to occupy the dusty, impoverished towns and villages of the Upper Euphrates Valley where it has established its blood-thirsty caliphate.

  So this weekend’s execution of a Saudi Shiite cleric who never owned a gun or incited anything other than peaceful protest among the downtrodden Shiite communities of eastern Arabia is truly the final straw. It was a deliberate provocation by a reprehensible regime that has so thoroughly corrupted the War Party that it even managed to have Washington shill for its preposterous appointment to head of the UN Commission on Human Rights!

  During the last several decades Washington has financed more than $100 billion of arms sales to the House of Saud. Accordingly, there is one simple way to clean the slate in the middle east and put an eventual end to Wahhabi Jihaddism.

  That is, cut off arms sales entirely to the Saudi military, which would be grounded within months due to lack of spare parts and support services. Indeed, the mere announcement would send several thousand Saudi princes and their families scurrying for their 747s and escape to Switzerland, London, New York and other fleshpots of the West.

  After an abdication by the House of Saud, the Wahhabi clerics would not long survive, and Iran and its Shiite Crescent allies, including Russia, would make short work of the ISIS caliphate.

  And whatever government emerged on the Arabian peninsula, one thing is certain. It would need to produce all the oil it can, but at least the proceeds at even today’s $35 per barrel price would have a decent chance of benefiting the nation’s 30 million citizens rather than the unspeakable opulence and decadence of a few thousand princes.

  That actually happened in Iran when the mullahs – as religiously rigid and backwards as they might be – overthrew the megalomaniacal tyrant who sat on the Peacock Throne.

  It’s time that the House of Saud found its way into the dustbin of history, as well.

  

  

  

  

  

• Options Traders See Yuan Collapse Continuing In "Dangerous Situation For Policy-Makers"

  Surely, The PBOC will step in at some point and save the collapsing currency? Nope – not if options traders (and Kyle Bass) are to be believed. The odds of the yuan breaking beyond 7 to the greenback by the end of March more than doubled to 12% (from 5.8% at the start of December). Ironically, Bloomberg reports only 1 of 39 analyst predicts Yuan to trade beyond 7 by the end of 2016. The market's extremely strong conviction, and apparent PBOC loss of control is "a dangerous situation for policy-makers" according to one Asian economist.

  As Kyle Bass noted,

  "Given our views on credit contraction in Asia, and in China in particular, let's say they are going to go through a banking loss cycle like we went through during the Great Financial Crisis, there's one thing that is going to happen: China is going to have to dramatically devalue its currency."

  And as Bloomberg reports, the options market agrees – signaling that the yuan’s slide to a five-year low has plenty of room to run.

  Contract prices indicate a 79 percent probability that the currency will weaken this year and 33 percent odds that it will drop beyond 7 per dollar, a level last seen in 2008, according to Bloomberg calculations. That’s up from 15 percent at the start of December and comes as the central bank shows signs of reining in its support for the exchange rate in the face of rising intervention costs and sliding exports.

   

  “We’ve seen explosive growth in demand for options betting the yuan will weaken as clients seek protection against further depreciation," said Frank Zhang, Shanghai-based head of foreign-exchange trading at China Merchants Bank Co., which trades yuan options. "The situation won’t get better until market sentiment stabilizes in the spot market, which isn’t going to happen in the next few months."

  The odds of the yuan breaking beyond 7 to the greenback by the end of March jumped to 11 percent from 5.8 percent.

  

  The notional value of outstanding put options carrying the right to sell the yuan at exchange rates of 7 or higher has climbed to $142 billion from $120 billion, Depository Trust & Clearing Corp. data show.

  Despite the market's sentiment, economists remain less convinced…

  Only one out of 39 analysts in a Bloomberg survey predicted a slide to 7 per dollar in 2016.

   

  

   

  The median estimate is for a 0.6 percent retreat to 6.6. Goldman Sachs Group Inc. said this week that it sees “limited” room for further depreciation as slumping energy prices will help boost China’s current-account surplus and offset capital outflows.

  The People’s Bank of China has been burning through its foreign-exchange reserves to prop up the yuan, with the stockpile recording its first-ever annual decline last year, as the central bank sold dollars both in the onshore and offshore markets. But since The IMF 'enabled' Chinese currency wars, support has been less obvious and the yuan has become a “one-way bet, and the market has figured out that it’s a one-way bet,” Richard Jerram, chief economist at Bank of Singapore, said at a press briefing in Hong Kong on Wednesday.

   

  

   

  He concludes:

  “It’s a dangerous situation for policy makers.”

  China is due to report foreign-currency reserves on Thursday, with the median estimate in a Bloomberg survey predicting a $23 billion decline in December.

  

  

  

  

  

• Here We Go Again: China Halts Trading For The Entire Day After Another 7% Crash
  *CHINA STOCKS HALTED FOR REST OF DAY AFTER CSI 300 TUMBLES 7%

   

  

   

   

  Chinese traders unsure what to do for the rest of the day pic.twitter.com/iZ3Vo17bAa

  — zerohedge (@zerohedge) January 7, 2016

   

  "I won't short the CSI 300 again I promise" pic.twitter.com/OfxIqvFfEo

  — Stalingrad & Poorski (@Stalingrad_Poor) January 7, 2016

  Happy New Year…

  

   

  Crude crashes to a $32 Handle…

  

   

  Gold just surged to $1100…

  

   

  The entire Chinese stock market has been halted on half the trading days in 2016

   

  The punishment will continue until The Fed unleashes QE4!!

  *  *  *

  *CHINA STOCK SLUMP TRIGGERS TRADING HALT AS CSI 300 FALLS 5%

  

   

  US Equity markets are tumbling…

  

   

  And USDJPY is in free-fall…

  

   

  Someone just stepped into support the Offshore Yuan…

  

   

  As we detailed earlier:

  Following the collapse of offshore Yuan to 5 year lows and decompression to record spreads to onshore Yuan, The PBOC has stepped in and dramatically devalued the Yuan fix by 0.5% to 6.5646. This is the biggest devaluation since the August collapse. Offshore Yuan has erased what modest bounce gains it achieved intraday and is heading significantly lower once again. Dow futures are down 100 points on the news.

  PBOC fixes Yuan at its weakest since March 2011… with the biggest devaluation since August

  

   

  And Offshore Yuan collapses…

  

   

  This all has a worrisome sense of deja vu all over again… We have seen this pattern of money flow chaos before… Outflows surge from China, send liquidity needs spiking, which bleeds over into Saudi stress (petrodollar?), causing unwinds in major equity markets (thanks to deleveraging of carry trades) in China and then US stocks…

  

  Chinese stocks are opening down hard:

  • *SHANGHAI COMPOSITE INDEX FALLS 4.01%
  • *SHANGHAI COMPOSITE EXTENDS DROP TO 10% BELOW DECEMBER HIGH
  • *HANG SENG CHINA ENTERPRISES INDEX FALLS 3.03%
  • *CHINA CSI 300 INDEX FALLS 4.05%

   

  

   

  Hold your breath. Dow futures plunged 100 points on the news…

  

  

  

  

  

  

• 2016 Theme #3: The Rise Of Independent (Non-State) Crypto-Currencies

  Submitted by Charles Hugh-Smith of OfTwoMinds blog,

  This week I am addressing themes I see playing out in 2016.

  A number of systemic, structural forces are intersecting in 2016. One is the rise of non-state, non-central-bank-issued crypto-currencies.

  We all know money is created and distributed by governments and central banks. The reason is simple: control the money and you control everything.

  The invention of the blockchain and crypto-currencies such as Bitcoin have opened the door to non-state, non-central-bank currencies–money that is global and independent of any state or central bank, or indeed, any bank, as crypto-currencies are structurally peer-to-peer, meaning they don't require a bank to function: people can exchange crypto-currencies to pay for goods and services without a bank acting as a clearinghouse for all these transactions.

  This doesn't just open the possibility of escaping the debt-serfdom of central and private banks–it opens the door to an entire global economy that's free of the inequality and concentration of wealth and power that is the only possible output of central bank created and distributed money.

  Max Keiser and Stacy Herbert and I discuss these possibilities in The Keiser Report: Radically Beneficial World (25:43)…

   

  Recall that central bank money is borrowed into existence, which means interest must be paid until the money is extinguished by the payment of debt.

  In effect, today's wars, bread and circuses, etc. will be paid for in perpetuity by our kids, grandkids and their kids. This is debt-serfdom. The only possible output of borrowing money into existence is debt-serfdom.

  Debt jubilees, no matter how well-intended, simply maintain the system of bank-issued money and debt-serfdom: dialing back the debt load from impossible to bearable does nothing but continue financial feudalism.

  Just printing money and distributing it to the unemployed and working poor (known as QE for the people) also doesn't change anything structurally: printing money without increasing the production of goods and services just means the flood of new money will chase the existing pool of goods and services, generating runaway inflation (see Zimbabwe, Venezuela, et al.)

  The Keynesian Cargo Cult's fetish is "demand"–meaning the "demand" created by having money in your pocket. The Keynesian Cargo Cult wrongly assumes that this "demand" will magically generate more goods and services.

  If this were true, then there would be no inflation when governments such as Zimbabwe print money with abandon: this new "demand" would magically generate more goods and services.

  But this Keynesian assumption is flat-out wrong. In reality, printing and distributing money does not guarantee a corresponding expansion of productive goods and services. The "magic" is misleading fantasy; the actual mechanism is much more complex than mere "demand."

  The second fatal flaw in the Keynesian Cargo Cult's "solution" of printing and distributing "free money" is the money ends up funding worthless or even destructive uses: bridges to nowhere, ghost cities, needless MRI tests, worthless college degrees, and so on, in essentially limitless mal-investment and waste.

  I propose instead that new crypto-currency money only be created when goods and services that are scarce in real-world communities are produced. I call this CLIME: the Community Labor Integrated Money Economy, and I describe how it works in my book A Radically Beneficial World: Automation, Technology and Creating Jobs for All.

  This is the unsustainable world of bank/state issued money: crushing debt loads across the globe. This is debt-serfdom on a planetary scale.

  

  Debt serfdom is no longer the only option – A Radically Beneficial World beckons.

   

  

  

  

  

  

• Gallup Explains Trump: "A Staggering 75% Of Americans Believe In Widespread Government Corruption"

  Back in July, when the HuffPo was covering Donald Trump’s campaign in its “Entertainment Section” (they are not laughing now), and when not a single political pundit thought Trump had any chance of winning the GOP primary (now most of them do), we said that “Donald Trump’s Soaring Popularity “Is The Country’s Collective Middle Finger To Washington.”

  Here is what we said:

  Donald Trump’s ascendance as the early GOP front-runner is symbolic of a greater global trend: growing pushback against institutional political and economic power.

   

  To many centrist politicians and mainstream political observers, Donald Trump is a boastful, insensitive egomaniac spouting populist rhetoric. Whether such a characterization is true is not worthy of debate, which may explain why the rantings of enraged career political pundits have no impact on Mr. Trump’s popularity among Republican voters in Iowa, New Hampshire, and across America. It seems no amount of ink or air time spent tarring and feathering Trump’s reputation sticks; in fact it seems to help Teflon Don in the polls, where he leads a crowded field of career politicians.

   

  Donald Trump is a threat not only to the nattering nabobs in the press corps and the Republican Party. His day in the sun may be symbolic of a broader dynamic: the declining power held by historically powerful institutions. Ask yourself if Trump’s campaign is making a mockery of the political process or exposing the mockery that the political process has become. A not-insignificant percentage of Americans away from the coasts, are looking past his utter lack of decorum and political savvy to hitch their wagons to his outrage.

  Six months later, virtually everyone recognizes and admits that this is the case: a vote for Trump is not “a vote for Trump”, it is a vote against the broken, corrupt, crony-capitalist model.

  Which explains why increasingly more are terrified he just may win.

  But what explains America’s revulsion with the existing system? The answer comes from the latest Gallup article: “Explaining Trump: Widespread Government Corruption” in which it finds that once the silent majority of the population can identify the object of their distrust and anger – in this case Congress and the political status quo – and once they can subsequently identify an object that represents its opposite, the latter object’s distance to the Oval Office becomes considerably shorter.

  From Gallup:

  Explaining Trump: Widespread Government Corruption
  

  It’s been fashionable to make jokes about Congress’ historically low approval ratings, unbelievable incompetence in the government and now, unfortunately, the perception of widespread government corruption. Pundits and talk-radio hosts have a field day with this. So do late-night comics.

  It’s not funny anymore.

  A staggering 75% of the American public believe corruption is “widespread” in the U.S. government. Not incompetence, but corruption. This alarming figure has held steady since 2010, up from 66% in 2009.

  This sense of corruption probably contributes to much of the extreme anxiety and unrest we see today – including protests, lower voter turnout and increased interest in guns.

  

  Guns — a symbol of freedom from government tyranny to many people — are now a key voting issue. A quarter of U.S. voters say the presidential candidate they vote for must share their view on guns.

  Protests are growing in cities and campuses all around the country. Students and citizens generally have lost faith in their national institutions — the biggest and most powerful of which is, of course, the federal government.

  The last presidential election had an estimated 5 million fewer voters than turned out in 2008, and the 2014 midterm elections saw the lowest turnout in 72 years (36.3%). At alarming levels, citizens — when invited to participate directly in their own democracy — are taking a pass and staying home. Or taking their frustrations to the streets.

  The perception that there’s widespread corruption in the national government could be a symptom of citizen disengagement and anger. Or it could be a cause — we don’t know. But it’s very possible this is a big, dark cloud that hangs over this country’s progress. And it might be fueling the rise of an unlikely, non-traditional leading Republican candidate for the presidency, Donald Trump.

  To make matters worse, that dark cloud appears to be hanging over the growth of small business, which is where virtually all new GDP growth and good jobs originate. Simply put, startups and shootups (small businesses that grow larger) have been in a death spiral. The U.S. Census Bureau reported that the total number of business startups and business closures per year crossed for the first time in 2008.

  And the economy isn’t growing nearly fast enough — it’s been running at an average rate of 2% since the 2008 financial collapse and the Great Recession. Just to compare, following the recession of 1981-1982, GDP grew for six years at 4.5% — one of our greatest economic eras in history.

  Jobs haven’t come back. According to the U.S. Bureau of Labor Statistics, the percentage of the total adult population that has a full-time job has been hovering around 48% since 2010 — the lowest full-time employment level since 1983. This is why the middle class has been dangerously shrinking.

  You don’t have to connect too many dots to conclude that if a government has an alarmingly high appearance of widespread corruption — and that same government creates regulations that businesses cite as a leading barrier to growth — then entrepreneurs might be reluctant to stick their necks out to start a business. Or to boom the businesses they already have.

  Why would they start or boom a business if they think a corrupt government is creating rules and regulations that don’t serve their interests — but rather rules that serve the interests of corrupt officials, corrupt politicians, corrupt insiders and corrupt special interest groups?

  Any wonder why so many Americans want a candidate who’s outside of that system?

  

  

  

  

  

• Macy's Massacre: Thousands Fired; Guidance Slashed (Again); Weather Blamed

  It was less than two months ago when we brought to you the “Macy’s Massacre“: on November 11, the stock of the iconic retailer crashed 13% and its CDS soared after Macy’s announced a trifecta of weak data, reporting a miss on Q3 sales which came at $5.87 billion below the $6.1 billion expected, down from the $6.2 billion, as well as a plunge in comparable store sales which tumbled by 3.9%, far worse than the expected drop of -0.4%, and nearly three times as bad as the 1.4% drop a year ago.

  Cash flow plunged: cash provided by operating activities was $278 million in the first three quarters of 2015, compared with $841 million in the first three quarters of 2014.

  Finally, M also slashed its full year same store guidance down from flat to -1.8% to -2.2% with sales projected to drop -2.7% to -3.1%, compared to a previous guidance of -1%, as contrary to the propaganda, the discretionary spending of the US consumer is bad and getting worse by the day.

  Fast forward to today when the massacre is back with a vengeance, after the company not only reported yet another cut in its guidance, but also announced it would be laying off another boatload of retailers, demonstrating just how strong the “service” economy truly is.

  First, Macy’s said that its comparable sales on an owned plus licensed basis declined by 4.7% percent in the months of November and December 2015 combined, compared with the same period last year. This compares to previous, already poor guidance, of -2% to -3%. The weather was, of course, blamed.

  “The holiday selling season was challenging, as experienced throughout 2015 by much of the retailing industry. In the November/December period, we were particularly disadvantaged by the historically warm weather in northern climate zones where both Macy’s and Bloomingdale’s are especially well-represented. About 80 percent of our company’s year-over-year declines in comparable sales can be attributed to shortfalls in cold-weather goods such as coats, sweaters, boots, hats, gloves and scarves. We also continued to feel the impact of lower spending by international tourists as the value of the dollar remained strong,” said Terry J. Lundgren, Macy’s, Inc. chairman and chief executive officer.

  Compare this to Macy’s 8-K from precisely two years ago, and try not to laugh too hard:

  “poor January sales were due to the unusually harsh winter weather across much of the country. Once warm spring weather arrives and our full assortment of fresh spring merchandise is in place, we believe customers will return to a more normalized pattern of shopping.”

  So much for the comedy, now back to the tragedy for shareholders, as the company admits not even “harsh cold weather” can save it as it slashes earnings guidance…

  Macy’s, Inc. is not expecting a major change in sales trend in January and expects a comparable sales decline on an owned plus licensed basis in the fourth quarter of 2015 to approximate the 4.7 percent decline in November/December (from previous guidance of down between 2 percent and 3 percent for the fourth quarter). This calculates to guidance for comparable sales on an owned plus licensed basis in the full-year 2015 to decline by approximately 2.7 percent (from previous guidance of down 1.8 percent to 2.2 percent).

   

  Earnings per diluted share for the full-year 2015 now are expected in the range of $3.85 to $3.90, excluding expenses related to cost efficiencies announced today and asset impairment charges associated primarily with spring 2016 store closings. This compares with previous guidance in the range of $4.20 to $4.30. Updated annual guidance calculates to guidance for fourth quarter earnings of $2.18 to $2.23 per diluted share, excluding charges associated with cost efficiencies and store closings. This compares with previous guidance for earnings per diluted share of $2.54 to $2.64 in the fourth quarter. Earnings guidance for 2015 includes an expected $250 million gain on the sale of real estate in downtown Brooklyn.

  … and a tragedy for its employees, many of whom are about to be fired.

  Macy’s, Inc. today announced a series of cost-efficiency and process improvement measures to be implemented beginning in early 2016 that will reduce SG&A expense by approximately $400 million while still investing in growth strategies, particularly in omnichannel capabilities at Macy’s and Bloomingdale’s. The actions represent progress toward the company’s previously stated goal of re-attaining over time an EBITDA rate as a percent of sales of 14 percent.

  To address the need for greater efficiency and productivity, among the changes being implemented by Macy’s, Inc. in early 2016 are:

  • Adjusting staffing levels at each Macy’s and Bloomingdale’s store in line with current sales volume to increase productivity and improve efficiency. An average of three to four positions will be affected in each of Macy’s and Bloomingdale’s approximately 770 going-forward stores (out of an average workforce of approximately 150 associates in each store), for a total of about 3,000 affected associates nationwide. Roughly 50 percent of affected store associates are expected to be placed in other positions.
  • Implementing a voluntary separation opportunity for about 165 senior executives in Macy’s and Bloomingdale’s central stores, office and support functions who meet certain age and service requirements and chose to leave the company beginning in spring 2016. Approximately 35 percent of these executive positions will not be replaced.
  • Reducing an additional 600 positions in back-office organizations by eliminating tasks, simplifying processes and combining positions, with about 150 of these associates reassigned to other positions.

  Luckily, the US service economy is so very strong as Macy’s results confirm, or otherwise someone might get the idea that the “manufacturing recession is not contained.”

  

  

  

  

  

• Brazil's Olympic Stadium Goes Dark Over Unpaid $250,000 Electric Bill

  Three weeks ago, in “‘Dark’” Days Ahead: Main Power Supplier For Brazil Olympic Games Pulls Out”, we brought you the latest humiliation out of Latin America’s EM darling gone bust.

  To be sure, there were already a number of concerns about the upcoming Olympic games in Rio. For instance, last summer we learned that thanks to a lack of sanitation infrastructure, Olympic athletes are almost certain to come into contact with disease-causing viruses in the water. As AP reported, these viruses in some tests “measured up to 1.7 million times the level of what would be considered hazardous on a Southern California beach.”

  Meanwhile, Brazil’s worsening budget crisis means the government is no longer willing (or able) to foot the bill for costs in excess of the Rio organizers’ budget. In other words: organizers can only spend what they estimate they’ll take in from sponsorships, ticket sales, and a grant from the International Olympic Committee.

  Unfortunately, the games are already some $520 million over budget, which means cutbacks will be necessary.

  First on the list: amenities in Olympic Village where athletes will be forced to pay for their own air conditioning and where televisions will not come standard in rooms.

  

  As if all of the above weren’t embarrassing enough, a major supplier of power reportedly backed out of the event last month, suggesting that in addition to unsanitary conditions and no air conditioning, athletes could well run out of energy – literally.

  As Reuters reported, “longtime Olympic power provider Aggreko has pulled out of a tender to supply generators for the games in Rio de Janeiro next year, dealing a major blow to organizers rushing to secure an energy source for the world’s largest sporting event.” Here’s what we said:

  More worrisome is that “the temporary power contract guarantees a stable and secure energy supply for international broadcasters.”

   

  Interruptions in coverage mean lost ad impressions and if advertisers and sponsors become concerned that Brazil will ultimately be unable to deliver, they could begin to rethink their commitment.

   

  Additionally, one has to wonder how long it will be before fans begin to rethink their plans to attend.

   

  After all, no one wants to go to an opening ceremony where the only light is the Olympic torch.

  Well believe it or not, the track and field stadium for this year’s games went dark on Monday due to unpaid utility bills. “In a statement, the city hall said Botafogo soccer club has been responsible for the utility bills since May 2015,” AP reports. “But the club told the AP in a statement that the city government owed it money to pay water and electricity bills.”

  

  “We have to find out who is responsible for the debt,” the club said.

  Yes, “we have to find out,” because the bill is a quarter of a million dollars. “The Brazilian website Globo Esporte, which is connected to the newspaper O Globo, said the unpaid bills totalled 1 million reals ($250,000),” AP continues, noting that apparently, the lights have been out since last week while the water was cut off last month. 

  “[The stadium] is the home ground of Botafogo football, which was previously responsible for the costs of running the stadium,” Sky News says. “But this month the club returned management of the arena to Brazil’s government while preparations got under way for the Olympics.”

  AP goes on to document the pitiable plight of the games’ organizers, many of whom are now unpaid volunteers who, in addition to not receiving a wage for their efforts, are actually forced to pay for their own accommodations while in Rio. 

  So not only has the provider of auxiliary power pulled out of a tender for the games, the host city is now refusing to pay the light bill for a key facility. We wonder how long it will be before Brazil “pulls the plug” (so to speak), on the whole thing.

  

  

  

  

  

• ISIS – The Case For Non-Intervention

  Submitted by Roger Barris via Acting-Man.com,

  Happy Armchair Warriors

  The recent terrorist attacks in Paris and San Bernardino, California, have thrown the debate about ISIS into overdrive, particularly among the presidential candidates.  Several strands have emerged from these discussions, but I think that their taxonomy is not often clearly laid out.  I would therefore like to try to do this.

   

  

  IS military parade in Mosul

  I think that there are three inter-related strands to the discussion, which I summarize below:

  • Military action against ISIS in Syria and Iraq
  • Protecting the border (including the related issue of profiling)
  • Data privacy

  Today, I would like to discuss the case for military action against ISIS.

  The argument here is that, in order for the world to defend itself against terrorism, ISIS must be defeated in its homeland.  ISIS must be denied territory.  This position is supported by, among the major Republican candidates, Jeb Bush, Marco Rubio and Chris Christie.

  Less clear are the positions of Donald Trump and Ted Cruz, who are both reluctant to engage in further foreign interventions, but who also make belligerent noises about ISIS.  The only candidate who is consistently and unambiguously against military escalation is Rand Paul.

  The undercard of the Republican debates, however, features the most aggressive proponent of escalation, Senator Lindsey Graham.  Graham is the only candidate in either party proposing “boots on the ground.”  He has recently reiterated this stand in an editorial in The Wall Street Journal entitled “How to Defeat ISIS Now – Not ‘Ultimately.’”

   

  

  John McCain and Lindsay Graham: the happy warriors

  He wrote the article with his Senate colleague, and fellow happy warrior, John McCain.  Since they are such vocal advocates of escalation, let’s use their article as the standard bearer for the position. As the title implies, Senators McCain and Graham presume that defeating ISIS should be a goal of American foreign policy, a goal that they clearly link to the fight against terrorism:

  In his address on national television Sunday night, President Obama insisted that he has a strategy to destroy…ISIS.  But what Americans see instead is an incremental, reactionary, indirect approach that assumes that time is on our side.  It is not.  The danger is growing nearer: from attacks in Paris and Beirut, to the bombing of a Russian airliner, to the Islamic State-inspired shooting in San Bernardino, Calif.

  The Senators implicitly claim that only by defeating ISIS in its heartland can we protect ourselves in San Bernardino.  They apparently don’t feel that this linkage requires justification, just treating it as a self-evident truth.  But it is far from obvious that ISIS’ control of territory materially increases its willingness and ability to commit the type of attacks that we have recently seen in Paris and San Bernardino.

   

  

  Territory controlled by the Islamic State in Syria and Iraq as of late 2015 – click to enlarge.

   

  Interventionist Arguments

  I have seen three arguments put forth by the proponents of attacks on ISIS:

  • ISIS’ prestige is enormously enhanced by its occupation of territory and its declaration of a caliphate.  Among other things, it is a demonstration to the devout that God is on their side.  This is an essential recruiting tool for the movement.
  • ISIS uses its controlled territory to plot assaults – “Apocalyptic terrorists cannot be allowed to have sanctuary in ungoverned spaces, from which to plan attacks against the West,” to use the wording of the Senators – and train attackers.
  • ISIS uses the financial resources arising from its territory – taxes and natural resources, such as oil – to further its terrorist activities.

  These are the arguments for why ISIS must be defeated militarily in order to weaken its ability to commit acts of terror.  But there is a forth element required to make the argument complete, as  even the Senators admit.  The fourth element is that ISIS must be replaced with stable regimes that can and will permanently repress the group or any of its successors.

  Let’s examine each of these four elements in turn.

  To my mind, the validity of the first step comes down to the following question: Which is the more effective recruiting tool for ISIS, (a) the prestige of declaring and holding a caliphate or (b) the ability to point to bombs falling on Muslim brothers?  Although I cannot, fortunately, put myself in the mind of an Islamic terrorist, I don’t think that there is any doubt that (b) wins.

  It is obvious that the terrorist attacks are “blowback” against military action against ISIS.  This is clearly seen in the bombing of the Russian plane, which was only targeted after Russia commenced military action in Syria.  The terrorists in Paris were reported to have shouted references to Syria and Iraq during their spree.

   

  

  Syria lies in ruins – nearly every bomb dropped in the region drives more recruits into the arms of extremist groups like IS

  A recent terrorist knifing in London also involved the attacker shouting references to Syria.  I think that only the deliberately obtuse could deny that blowback anger makes a better recruiting poster than territorial occupation.

  I am equally unconvinced of the validity of the second element.  The San Bernardino terrorists, for example, were “inspired” by ISIS, but never trained nor plotted from this area.   Certain of the Paris terrorists had trained or fought in Syria, but I can’t see that this was essential to the attacks they committed.

  The reality is that these are low-tech assaults upon soft targets.  The idea that the attackers require an ungoverned sanctuary to carry out their plotting or training is nonsense.  Almost any suburban living room would serve.

   

  

  San Bernardino attackers Syed Farook and Tashfeen Malik – quite possibly inspired by ISIS, but they certainly didn’t need the self-anointed Caliphate to commit the attack. Islamist fundamentalist ideology cannot be eradicated militarily.

   

  The third argument – the financial one – is probably the strongest, but even this one fails to compel.  I repeat, these attacks are low tech assaults upon soft targets which do not require a great deal of financial support.  The San Bernardino attackers, for example, were able to fund themselves, with a little help from an online “P2P” lender .

  The attacks in France were more expensive, but even they would not have required anywhere near the financial resources of an ISIS.   Although ISIS requires state-like revenues to support its military actions, this is not true of its terrorism.

   

  The Failure of Nation-Building

  But it is with the last element that the proponents of military action against ISIS really fail to make their case.  Our experience in Afghanistan and Iraq – both places where we defeated our enemies militarily, as the proponents of military action against ISIS somehow forget – shows that we cannot win the war against ISIS unless we can also win the peace.

  Otherwise, our enemies will simply melt away, waiting for the inevitable slackening of our resolve to re-emerge, just as the Taliban have done in Afghanistan and just as the Sunni supporters of Saddam Hussein did in Iraq (before becoming, among other things, ISIS).

  Senators McCain and Graham acknowledge this in their article, which contains quotes such as:

  Iraqis must win the peace, but Americans have a major stake in their success, and a unique role to play in helping them.  The only way to do so is to be present.

  And:

  At the same time, Islamic State’s ability to spread is directly related to the collapse of political order.  Unless America does more to help these countries make the transition to just and inclusive governments, Islamic State will find havens to pursue its evil ends.

  And finally:

  So the U.S. should lead an effort to assemble a multinational force…[to] destroy Islamic State in Syria.  Such a force could also help to keep the peace in a post-Assad Syria, as was done in Bosnia and Kosovo.  Here, too, if the West wins the war and leaves, it should not be surprised if violence and extremism return.

  In other words, what the happy warriors have to offer is the same old “nation building” mantra that the neoconservatives have been chanting forever, combined with an apparent willingness to garrison these regions in perpetuity.

  And right on cue they have defaulted to Bosnia and Kosovo as the lone alleged success story for this strategy, which is in fact no success at all and where we have recently been treated to Kosovan parliamentary debates featuring tear gas attacks from the opposition, as proof of the vibrant democracy we have fostered.

  

  Parliamentary debate, Kosovo-style: tear-gassed by the opposition.

   

  But probably the most amazing thing about the article is the total lack of proportionality.  Although tragic, the 14 deaths and 22 injuries in San Bernardino would have been, in the Detroit of my youth, about an average tally for a hot summer weekend.  Yet in response to this, Senators McCain and Graham want us to embark on a Pax Americana which has been shown to work exactly nowhere.

  Looking at this, it is hard to resist the notion that they are spoiling for a fight and since they can’t claim that ISIS is developing weapons of mass destruction, San Bernardino will have to do.

   

  Dubious Logic

  Although Senators McCain and Graham would lead us into a massive overreaction, this should not be interpreted as an endorsement of the current policy of the Obama administration (and, by extension, the proposed policy of Hillary Clinton, which is basically the same with a “no-fly zone” added to show that she is more butch than her former boss).

  Obama’s policy uses enough military action to expose us to “blowback” attacks and keep the ISIS recruiters busy, yet is insufficient to actually achieve military victory.  From the standpoint of the America’s interests, this is not as barmy as the proposals from the happy warriors, but it isn’t much better.

  It should be noted that American politicians are not the only ones pursuing this dubious logic.  Russia’s Vladimir Putin and the UK’s David Cameron have also decided that the best way to fight terrorism is to put their countries in harm’s way for more of it.

  Even Francois Hollande, on behalf of a country not known for its martial appetite, has joined in.  It is hard to see this as anything but the deplorable universal tendency for politicians to need to do something, no matter how misguided.

   

  

  The UK government’s reaction to the Paris Attacks

   

  Conclusion – We Have no Dog in this Fight

  I continue to believe, as I stated way back in September 2013, that we don’t have a dog in this fight.  San Bernardino doesn’t change the calculation.  ISIS will eventually collapse under its own homicidal and parasitical weight, probably with the help of one or more of its neighbors, whose inactivity and divisiveness we currently underwrite.

  Then ISIS will be replaced by something better…or worse…it is impossible to know in this region.  In the interim, we and our European friends should focus our efforts on isolating ourselves from the madness.  And we certainly should not go out of our way to draw further fire.

  

  

  

  

  

• Sell In 1973, And Go Away

  Returns from being long the commodity super-cycle have evaporated in the last 18 months… to 42 year lows…

   

  

   

  h/t Sean Corrigan (@TrueSinews)

  

  

  

  

  

• Guns Don't Cause Suicide

  Submitted by Ryan McMaken via The Mises Institute,

  Homicide rates in the United States have been declining for 20 years as the number of privately-held guns in the US has increased substantially.

  In some states, such as New Hampshire and Oregon, which have very weak gun laws, homicide rates are remarkably low, and these states are among the safest places on earth.

  As homicide rates have declined, however, and gun-related homicides with them, gun-control advocates have attempted to create a new category of "gun violence" by blaming suicides on access to guns.

  Most "Gun Violence" Is Suicide 

  Note this recent article from The Washington Post which casts suicide as indistinguishable from homicide, and goes on to point out that there were as many firearm related deaths in 2014 as there were deaths that resulted from automobile accidents.

  The article rightly notes that thanks to medical science and safety features on automobiles, deaths from car accidents have gone into steep decline in recent years. The article then notes that suicides have been increasing over the same period, but then attempts to connect this rise with access to firearms.

  The article never explicitly says that suicides are indistinguishable from homicides, of course — since any rational person can see a large and obvious distinction —  but it does imply the two are more  or less the same by classifying both firearm-related suicides and firearm-related homicides as "gun violence."

  Employing the usual lazy methods of mainstream journalists, The Post fails to provide hard numbers or to direct links to sources, so I'll do it for you:

  To come up with this new category of "gun violence" The Post combines the CDC's statistics of firearm suicides (a total of 21,175 in 2013) to the total of gun homicides (a total of 11,201 in 2013). Then it compares this total to the number of accidental automobile deaths, which was 33,804 in 2014. (The article claims there is new 2014 data from the CDC showing more gun deaths than automobile deaths, but the CDC web site has not been updated to reflect this.)

   

  So, overall, as of 2013, there were 32,376 gun deaths and 33,804 automobile deaths. (During that same period, about one-third of automobile deaths were alcohol-related.)

   

  So, yes, according to the CDC, the number of gun-related deaths and the number of automobile deaths are similar — but only if suicides are included.

  Contained in all of this, however, is the implied conclusion that were it not for such easy access to guns, the suicide rate in the US would be lower. This is of course pure speculation, and rather baseless speculation at that.

  More Guns, Less Suicide Than Much of Europe

  Certainly, if we compare the US to other countries, we have no reason to believe that suicides in the US are unusually common. Indeed, the US is very unremarkable in terms of suicide rates. Deborah Azrael at the Harvard Youth Violence Prevention Center has said "cut it however you want: in places where exposure to guns is higher, more people die of suicide." But, for anyone who can do arithmetic and make simple comparisons, this claim is easily shown to be bunk: 

  

  Source. (OECD Data.)

  The US comes in between gun-restrictive countries Sweden and Austria, and, of course, has a suicide rates far below that of Japan which is often held up as a paradise of gun-free non-violence. Korea, where privately-owned guns are nearly non-existent, has one of the worst suicide rates in the world. The US also has a suicide rate about equal to Switzerland, which in spite of its reputation as being a country of gun-toters, is estimated to have less than half as many guns per capita as the United States.

  Nevertheless, lumping suicides in with homicides is a key component of anti-gun propaganda. The Brady campaign, for example, does not employ homicide rates in its state-by-state analysis. If it did, it would find that the states with the least amount of gun control often have the lowest homicide rates. Instead, Brady relies on "gun violence" rates, which allows it to count states with rock-bottom homicide rates, like Idaho and Vermont, as states with lots of "gun violence." (In the US, altitude appears to correlate more with suicide than gun ownership.)

  This is a tricky sleight of hand maneuver, of course, since, when we're talking public policy, what people fear are homicides, not suicides.  Even Noah Smith, the Austrian-economics-hating, left-of-center finance blogger admits that classifying suicides as "gun violence" is stretching things a bit:

  With accidental gun deaths steady at around 500-600 per year, the bulk of those 32,000 "gun deaths" are suicides…In fact, murder by gun has been falling steadily since the early 1990s. Some of that is due to improvements in emergency medicine, but most is a result of the overall decline in violent crime that America has enjoyed over the last two decades. The fact that overall gun deaths has risen since 2000, despite the fall in murders, suggests that increased gun suicide has accounted for more than 100% of the increase in gun deaths. Obviously, suicide is a tragedy, and I don't want to minimize it. But people aren't panicking over suicide, they're panicking over murder, and gun-related murder is on the way down.

  (By the way, in 2013, accidental deaths by firearms was 505 (according to the CDC). That's out of a total of over 130,000 accidental deaths in a country of 300 million people. In other words, the accidental gun-deaths total is extremely small.)

   

  Won't Somebody Think of the Children? 

  But what about little Johnny? Maybe he won't commit suicide if there are fewer guns around.

  First of all, in regards to teenage suicide, we know that the United States is unremarkable in this measure as well.  In the 15-19 age group, suicides are less common in the US than in 14 OECD countries (plus Russia):

  

  Moreover, according to the CDC, intentional self harm (suicide) using a firearms is less likely in the lower age groups than suicide by some other means. In the 15-24 age group, for example, more suicides happen by means of something other than a firearm (6.1 per 100,000) than by firearm (5 per 100,000). This is true for all the younger age groups, and we only find that firearms suicides become more common than non-firearm suicides in the 55-64 age group or above.

  And yet, we never hear of "rope violence" or "carbon monoxide violence" or "prescription drug violence" when other methods are used for suicide.

  More alarming for parents should be the fact that deaths by prescription painkillers alone (whether suicide or accidental) totaled 16,000 in 2013.  If we include drug overdoses in general, the total balloons to 46,000 deaths (suicide and accidental) which means that government-controlled or prohibited substances account for more than twice as many deaths as gun suicides, and more than four times as many compared to gun homicides.

  

  Moreover, it is hotly debated as to whether or not anti-depressants might actually increase the likelihood of suicide. There are only a handful of studies on the matter, and they tend to contradict each other.

  Given the lack of knowledge over the causes of suicide, perhaps it might make more sense to take a look at why people commit suicide than to fixate on the methods people might use. This appears to be especially obvious given that lack of access to a gun clearly does not prevent the very high suicide rates in Japan and Korea.

  But, when it comes to preventing fatalities, only gun ownership is to be a topic of a "national debate."

  When a driver recently mowed down diners with her car on the Las Vegas strip, there was no call for a "national debate" over licensing of drivers. And certainly, there is no call for a "national debate" over the prevalence of deadly prescription painkillers in millions of American homes.

  Pro-Suicide, Anti-Gun

  Even more illogical is the fact that many advocates of gun control who pretend to be greatly concerned over suicide, actually applaud suicide in other contexts, and in some cases, those who claim to be advocating for fewer suicides via their opposition to guns, simultaneously will advocate for more suicide in the form of "assisted suicide" and euthanasia laws.

  When Brittany Maynard opted to kill herself rather than suffer from brain cancer, she was treated as a hero by many on the left, and "assisted suicide" has long been a project of the left, which seeks to make suicide easier. We also often hear about how "progressive" Belgium is, where the elderly and children are encouraged to embrace euthanasia.

  So, for the pro-suicide, anti-gun party, they should stop pretending to be concerned about suicide, but should instead admit that they merely object to the means of attaining it. They simply want people to die by some other method. That's fair enough, and if adults wish to contract with someone else to poison themselves, that's not the state's business. Indeed, if there are people who would prefer suicide using a third party instead of a gun, it is not legitimate for the state to prevent that. At the same time, let's stop pretending that people who applaud Brittany Maynard while decrying suicide as "gun violence" are interested in suicide prevention. They're not.

   

  

  

  

  

  

• "We The People Are Pissed": New Poll Finds Whites And Republicans Are Angriest Americans

  If Donald Trump’s poll numbers tell us anything, it’s that Americans are angry.

  Angry with what they perceive to be government ineptitude, angry with the economy, angry with US foreign policy, angry with just about everything.

  The palpable sense of rage has manifested itself in support for dark horse presidential candidates like Donald Trump and Bernie Sanders and is also apparent in “incidents” like that which occurred on Saturday when armed militiamen seized a remote government building in Oregon.

  Just how mad are Americans? Very, according to a new poll conducted by Esquire, SurveyMonkey, and NBC News. Here’s the preface from Esquire:

  WE THE PEOPLE ARE PISSED. THE BODY POLITIC IS BURNING UP. AND THE ANGER THAT COURSES THROUGH OUR HEADLINES AND NEWS FEEDS—ABOUT INJUSTICE AND INEQUALITY, ABOUT MARGINALIZATION AND DISENFRANCHISEMENT, ABOUT WHAT THEY ARE DOING TO US—SHOWS NO SIGN OF ABATING. ESQUIRE TEAMED UP WITH NBC NEWS TO SURVEY 3,000 AMERICANS ABOUT WHO’S ANGRIEST, WHAT’S MAKING THEM ANGRY, AND WHO’S TO BLAME.

   

  

  
  

  LET’S BEGIN WITH THE BIG REVEALS: Half of all Americans are angrier today than they were a year ago. White Americans are the angriest of all. And black Americans are more optimistic about the future of the country and the existence of the American dream. There are depths and dimensions, dark corners and subtle contours to our national mood, and setting aside the issue of who actually has a right to be angry and about what—these pages are neutral territory; everyone is allowed their beef—we found three main factors shaping American rage: expectations, empathy, and experience.

  Below, find some of the highlights which include the fact that when it comes to being “pissed”, no one is angrier than white people and Republicans. “Overall, 49 percent of Americans said they find themselves feeling angrier now about current events than they were one year ago,” NBC writes. “Whites are the angriest, with 54 percent saying they have grown more outraged over the past year [while] sixty-one percent of Republicans say current events irk them more today than a year ago, compared to 42 percent of Democrats.”

  

  

  

  

  

  

  

  Full poll

  

  

  

  

  

• Spot The Most Manipulated Market In The World

  One of these bubbles is not like the others, one of these bubbles just doesn’t belong… and yet still “officials” and talking-heads proclaim it cheap…

   

  

   

  Still think that China’s stock market is “stable” at these levels?

  

   

  Source: Bloomberg

  

  

  

  

  

• That`s the Bottom in the Oil Market

  By EconMatters
   

  

   

    

  Clear Out Weak Hands in the Market

   

  On Wednesday the oil market sold off to $33.77 on large product`s builds, China`s devaluation of its currency, and a substantial selloff in equities. Sure Oil can go a dollar below this low, but for all intents and purposes this is the bottom in the oil selloff that was predicted for the start of the year. This move down was as predictable a move as there is in financial markets, and we called this down move to start the year with a piece we issued in December.

   

  

    

  500k Futures Contracts Traded on Wednesday

   

  It took over 500k in futures contracts just to push oil futures below $34 a barrel on Wednesday, and trust me it wasn`t an easy task for those involved in the pushdown. They now are stuck with being far too short the market at a level they don`t even like being stuck short. At a time when US Production is about to drop off a cliff, and the Middle East is a ticking time bomb that is about to blow up any day now. Look for a major short squeeze in the oil market over the next month as the ramifications of $34 oil play out in the market.

   

  

    

  Earning`s Season

   

  This entire move in equities and oil was already preplanned at the beginning of the year. Read our the market is a game piece as this was just about cleaning out the weak hands before the start of the earning`s season to make a whole bunch more money for the first quarter. Shoot the Shanghai Composite Index was up over 2% on the devaluation of the currency, yeah they took it really bad! Please this is the same old crap the players played in August, and at the end of the third quarter, and voila the market was suddenly fixed right in October just in time for Earning`s season. It’s all a game, learn how the game is played and the profits will follow my friends!

   

  

    

  Market Call on Record

  This is a short piece just to get our market calling for an essential bottom in the oil market in for the record. You may now go long the oil market in your preferred instrument. Just stay away from companies that are going to go bankrupt, but in buying something like the USO oil futures ETF, you will definitely have a positive expected return over the next six months to a year going forward.

  © EconMatters All Rights Reserved | Facebook | Twitter | Free Email | Kindle

  

  

  

  

• Read The Powerful Saudi Terrorism Article Censored By Al-Jazeera

  Submitted by Mike Krieger via Liberty Blitzkrieg blog,

  On December 3rd, a month before Saudi Arabia carried out it largest mass execution since 1980 — subsequently setting the region on fire — Arjun Sethi wrote an article for Al-Jazeera titled: Saudi Arabia Uses Terrorism As An Excuse for Human Rights Abuses. According to Cora Currier at the Intercept:

  Al Jazeera’s headquarters in Qatar appear to have blocked the article outside of the United States because it is critical of an ally of Qatar.

  Naturally, this makes you want to drop everything and read it. So here are some excerpts courtesy of the Intercept:

  Reports emerged last week that Saudi Arabia intends to imminently execute more than 50 people on a single day for alleged terrorist crimes. 

   

  All the convictions were obtained through unfair trials marred by human and civil rights violations, including in some cases torture, forced confessions and lack of access to counsel. Each defendant was tried before the Specialized Criminal Court, a counterterrorism tribunal controlled by the Ministry of Interior that has few procedural safeguards and is often used to persecute political dissidents. Lawyers are generally prohibited from counseling their clients during interrogation and have limited participatory rights at trial. Prosecutors aren’t even required to disclose the charges and relevant evidence to defendants. 

   

  The problems aren’t just procedural. Saudi law criminalizes dissent and the expression of fundamental civil rights. Under an anti-terrorism law passed in 2014, for example, individuals may be executed for vague acts such as participating in or inciting protests, “contact or correspondence with any groups … or individuals hostile to the kingdom” or “calling for atheist thought.” 

   

  One of the defendants, Ali al-Nimr, was convicted of crimes such as “breaking allegiance with the ruler” and “going out to a number of marches, demonstrations and gathering against the state and repeating some chants against the state.” For these offenses, he has been sentenced to beheading and crucifixion, with his beheaded body to be put on public display as a warning to others. 

   

  Because of these procedural and legal abominations, the planned executions for these Shia activists must not proceed. They should be retried in public proceedings and afforded due process protections consistent with international law, which includes a ban on the death penalty for anyone under the age of 18. 

   

  This deafening silence is not lost on Saudi Arabia and has emboldened its impunity. In the wake of the Arab uprisings, the kingdom’s brutal campaign against its Shia minority and political opposition has deepened. Shias have limited access to government employment and public education, few rights under the criminal justice system and diminished religious rights. Those who protest this discrimination face arbitrary trial and the prospect of execution for terrorism. Consider that Saudi Arabia has not carried out a mass execution for terrorism-related offenses since 1980, a year after an armed group occupied the Grand Mosque of Mecca. 

   

  Despite its appalling human rights record, Saudi Arabia was awarded a seat on the U.N. Human Rights Council last year and this summer was selected to oversee an influential committee within the council that appoints officials to report on country-specific and thematic human rights challenges. Unsurprisingly, Saudi Arabia has used its newfound power to thwart an international inquiry into allegations that it committed war crimes in Yemen.

   

  So that’s a great example of how Saudi Arabia blocks the truth within the region. Now let’s look at how it mobilizes its U.S. mercenaries to spew propaganda across mainstream media. From the Intercept:

  Saudi Arabia’s well-funded public relations apparatus moved quickly after Saturday’s explosive execution of Shiite political dissident Nimr Al-Nimr to shape how the news is covered in the United States.

  The Saudi side of the story is getting a particularly effective boost in the American media through pundits who are quoted justifying the execution, in many cases without a mention of their funding or close affiliation with the Saudi Arabian government.

   

  A Politico article about the rising tensions between Saudi Arabia and Iran by Nahal Toosi, for instance, quoted only three sources: the State Department, which provided a muted response to the executions; the Saudi government; and Fahad Nazer, identified as a “political analyst with JTG Inc.” Nazer defended the executions, saying that they served as a “message … aimed at Saudi Arabia’s own militants regardless of their sect.”

   

  What Politico did not reveal was that Nazer is himself a former political analyst at the Saudi Embassy in Washington. He is currently a non-resident fellow at the Arab Gulf States Institute in Washington, a think tank formed last year that discloses that it is fully funded by the Saudi Embassy and the United Arab Emirates.

   

  The Washington Post quoted consultant Theodore Karasik of Gulf State Analytics as saying that the executions were a “powerful message that Saudi Arabia is intent on standing up to its regional rival.” Karasik is a columnist at Al Arabiya, an English-language news organization based in the UAE and owned by Middle East Broadcasting Center, a private news conglomerate that has long been financially backed by members of the Saudi royal family. Its current chairman is Sheikh Waleed bin Ibrahim, a billionaire Saudi businessman whose brother in law was the late King Fahd. (Al Arabiya‘s coverage of the crisis is almost comically pro-Saudi, featuring headlines like “Storming embassies.. Iranian speciality.”)

   

  The U.S. government is obviously not  eager to alienate a government that President Obama has wooed with warm words and over $90 billion in arms sales. The diplomatic offensive by Saudi-financed flacks and media has provided some space for it to provide a muted response to the execution.

  Yes, you read that right. $90 billion. Make sense considering Saudi Arabia is now the world’s biggest arms importer.

  

  

  

  

  

• Stocks Plunge To 3-Month Lows Amid Crude Carnage, Chinese Currency Collapse

  Ok to summarize – China has lost control of its currency (whether intentionally or not) and that is forcing carry unwinds en masse; North Korea tests a nuke; European inflation disappoints; US services economy collapses (follows manufacturing's lead and another pillar of hope is destroyed); Crude crashes to fresh decade plus lows; The Fed offers nothing in the way of hope for growth (or puts); Bernanke says not to expect Fed to save stocks; World Bank cuts global growth outlook… But apart from that, everything is awesome!!!

   

  Before we start, this happened!! Bloodbath in Yuan (offshore Yuan near record lows)…

  

   

  On the day, a wild ride… with the ubiquitous closing ramp

  

   

  Deja Deja Vu all over again…

  

   

  On the week – year-to-date – it appears bad news is bad news – let's just hope China doesn't open tonight eh?

  

   

  Note that evwerything but Nasdaq is red since the end of QE3…

  

   

  Post-FOMC, everything was chaotic… Gold flat, bonds up and stocks rescued…

  

   

  We do note the VIX-manipulation to move stocks around…

  

   

  Stocks are catching down to their breadth-based reality…

  

   

  And it's looking a lot like August again…

  

   

  Energy stocks plunged back to reality… who could have seen that coming?

  

   

  Financials are catchiung down to credit again…

  

   

  FANTAsy stocks were mostly lower but NFLX was ripped higher as CEO Reid Hadtings spewed some more bullshit… #netflixeverywhere – seriously!!

  

   

  AAPL had a mysterious massive buyer as it broke $100…

  

   

  Treaaury yields plunged with 7Y back under 2% and 30Y back under 3%… on the week 2s30s is now 6bps flatter

  

   

  The USD slipped lower after FOMC Minutes but is brioadly flat for 2 days (and up on the week)…as AUD collapses and JPY surges…

  

   

  Crude was clubbed, copper limped lower but PMS rallied further…

  

   

  Carnage…

  

   

  WTI Crude crashes to its lowest level since Dec 08's lows at $32.40…

  

   

  Charts: Bloomberg

  Bonus Chart: We have seen this pattern of money flow chaos before… Outflows surge from China, send liquidity needs spiking, which bleeds over into Saudi stress (petrodollar?), causing unwinds in major equity markets (thanks to deleveraging of carry trades) in China and then US stocks…

  

  

  

  

  

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