- Deutsche Bank CEO Returns Home Empty-Handed After Failing To Reach 'Deal' With DOJ: Bild
Following the seemingly endless procession of short-squeeze-fueling trial balloons last week – from settlement rumors to German blue-chip bailouts to Qatari investors – Germany's Bild newspaper confirms the rumors that sparked weakness on Friday: Deutsche bank CEO John Cryan has failed to reach an agreement with the US Justice Department.
Having soared over 25% off the briefly single-digit price levels thanks to well-chosen rumor headlines of an "imminent settlement", news and facts on Friday started to eat away at that confidence…
And now, as Bloomberg reports, Deutsche Bank's Chief Executive Officer John Cryan failed to reach an agreement with the U.S. Justice Department to resolve a years-long investigation into its mortgage-bond dealings during a meeting in Washington Friday, Germany’s Bild newspaper reported.
The meeting was meant to negotiate the multi-billion-dollar settlement the bank will have to pay to resolve alleged misconduct arising from its dealings in residential-mortgage backed securities that led to the 2008 financial crisis, according to a Bild am Sonntag report.
The German lender is still considering seeking damages against Anshu Jain and Josef Ackermann, who are both former CEOs of the bank, the newspaper reported. Bild said the bank froze part of the millions in bonus payments to Jain and other former top managers.
A Deutsche Bank spokeswoman declined to comment to Bild about the outcome of Cryan’s Friday discussion or about clawing back former executives’ compensation. Mark Abueg, a Justice Department spokesman, declined to comment.
Cryan, a Briton who speaks fluent German, has sought for the last three weeks to reassure investors that Deutsche Bank can weather the formidable obstacles to its financial health. His arsenal of strawmen include: denials of bailouts, blaming speculators, rumors of informal capital raising talks with Wall Street firms, rumors of capital injections from Germany's blue-chip corporations, rumors (denied) of Qatari sovereign wealth fund investments, and the sale of key assets and elimination of thousands of jobs.
So what happens next?
Three things:
1) The "settlement-imminent"-driven 25% short-squeeze in stocks – completely decoupled from credit market's less optimistic perspective – is going to end badly…
2) Deutsche Bank will need to raise more capital and that just became more problematic after the bank quietly raised $3bn in a senior unsecured bond issue on Friday at a very wide concession…
Some have wondered why the need to sell new paper at such a wide concession: after all as we reported before, DB has no current liquidity constraints courtesy of substantial ECB generosity, which backstop DB's existing liquidity reserves of just over €200 billion.
… while issuing debt does nothing for the bank's net leverage, and in fact could lead to an erosion of certain credit metrics.
If anything, the push to obtain cash may be seen by some as an indication that management is taking advantage of the recent stock price rebound window to offload securities to investors, which alone could lead to more pressure on the bank.
After all, the question immediately emerges: "does DB know something investors don't?."
3) A "bail-in" is more likely than a 'bailout', and as we detailed earlier, and here's how it can be done… Jonathan Rochford, PM of Australian hedge fund Narrow Road Capital, explains that despite all the recent confidence-building rhetoric and posturing, Deutsche Bank will need a bail-in. In the following analysis he explains how it would (and should) be done.
Following the confirmation that hedge funds have started to reduce their capital and trading with Deutsche Bank its position is now perilous. It is correct to say that Deutsche Bank doesn’t have a liquidity crisis and that even if it did the Bundesbank could provide it with unlimited liquidity. But liquidity alone doesn’t guarantee a bank can continue to operate in the long term, solvency and profitability are essential as well. Deutsche Bank is at best borderline for both solvency and profitability with little prospect of either improving materially in the medium term. Deutsche Bank needs to substantially restructure its business activities and balance sheet, both of those will take time and capital neither of which Deutsche Bank has.
Insufficient Capital
Unlike other global banks Deutsche Bank has failed to adequately lift its capital levels since the collapse of Lehman Brothers eight years ago. It has been allowed to remain undercapitalised due to weak European regulators, which are fighting against global efforts to have all banks increase capital levels. Whilst German and Italian regulators are fighting for lower capital levels and avoiding dealing with their problem banks Switzerland and the US are implementing much higher capital levels, particularly for the largest banks.
On Deutsche Bank’s preferred measure, risk weighted assets, it sits behind most of its peers. That’s after it has gone through a capital optimisation exercise which reduced risk weighted assets without reducing their balance sheet by the same proportion. On the more rigorous leverage ratio shown below, Deutsche Bank is dead last at less than half of its peer group average. When Europe’s most systemically important bank is the most poorly capitalised of its peer group that is a major problem that needs to be corrected as soon as possible.
Source: FDIC
Deutsche Bank’s current equity at book value is €61.9 billion but its market capitalisation is only €15.8 billion. Its total assets are 114.3 times its market capitalisation and its price to book ratio is 25.5%. The only peers with ratios this bad are Italian banks who have dubious solvency and very high levels of non-performing loans. To get from the 2.68% tier one capital ratio shown above to the 5% leverage ratio many consider the minimum acceptable level requires €40.1 billion of new equity.
Not Profitable
There are three primary ways for a bank to increase its capital. Firstly, profits can be retained rather than paid out as dividends. Deutsche Bank hasn’t been meaningfully profitable since 2011. The table below shows the net income after taxes for Deutsche Bank since 2009. The combined total of the last seven and half years is €7.8 billion, an average of €1.04 billion per year. That equates to a return on equity of 1.68% since 2009. Over the last four and a half years the cumulative loss is €3.8 billion with the average return on equity -1.38%.
The CEO has stated that 2016 will be a peak year for restructuring, meaning investors should expect a loss for 2016. The fine being negotiated with the US Department of Justice will have a significant impact this year. Further fines for new scandals, the difficulties of operating in a negative interest rate environment and the potential for another European or global downturn mean there is a material risk of losses continuing in future years. Given sufficient time and capital Deutsche Bank would restructure substantially, ridding itself of unprofitable and low return activities. Unfortunately, it has squandered the opportunities it had over the last eight years and now doesn’t have either the time or capital needed to facilitate the necessary cuts.
Assets Sales Not Sufficient
The second way to raise capital is to sell assets and Deutsche Bank is making a great deal of noise about its asset sale plans. The sales of the UK and Chinese insurance businesses will together raise approximately €4.5 billion. A sale of the asset management business might raise €10 billion. Altogether that’s €14.5 billion which is helpful but not nearly enough. The flipside of asset sales is that future profits are reduced, exacerbating the profitability issues already outlined.
Sufficiently Large Capital Raising Near Impossible
The third way a bank can strengthen its balance sheet is by conducting a capital raising. The problem for Deutsche Bank is that the amount needed is simply too high based on the current metrics. Any investment banker will tell you raising 254% of market capitalisation is extremely optimistic. To achieve that for a business with a history of being marginally profitable is near on impossible.
A Bailout or Bail-in is Needed
Taking into account the lack of capital and the very unlikely prospects for an equity raising or asset sales to be sufficient, Deutsche Bank needs either a bailout or a bail-in. A bailout by the German government is legally possible given the gaps in the regulation that can be exploited. The key question is whether the German government would be willing to do so. In recent years Angela Merkel and her key ministers have consistently denounced the possibility of the Italian government providing a bailout to Italian banks. In recent months they have been adamant they won’t bailout Deutsche Bank.
I’m cynical enough to know that politicians can change their minds extremely quickly when the pressure is on. I acknowledge there is a decent chance that the German government will do that soon. What the rest of this article aims to show is that there is a way to recapitalise Deutsche Bank without taxpayer funds. If there’s a decent solution that doesn’t involve taxpayer funds I think that solution can win out.
Bail-in Mechanics
The recently introduced European regulations lay out a framework for how a bail-in would work. Equity, additional tier 1 securities (Coco’s or hybrids) and subordinated debt can be written off completely if the bank is declared non-viable. Senior debt, particularly that provided by large institutions can also be converted to equity in order to lift reserves. By undertaking a combination of those two processes Deutsche Bank’s undercapitalisation could be quickly rectified.
The table below lays out the liabilities and equity on Deutsche Bank’s balance sheet. Equity, additional tier 1 and subordinated debt securities are broken out. Senior debt has been broken into two categories, the portion which could be expected to be bailed-in and that where it is uncertain. For the purpose of this exercise a conservative approach has been taken, the amount that could be bailed-in is likely much larger.
How Much More Capital is Needed?
In determining how much additional capital is needed a target capital level must be chosen. If a bail-in is executed it needs to be a one-time exercise that removes all concerns about Deutsche Bank’s solvency. Lifting the core equity tier 1 ratio just to the average level of its peers is not enough, it must go much further.
A core equity tier one leverage ratio of 9% would lift Deutsche Bank to the top of the list amongst its global peers. This would provide strong reassurance that another bail-in won’t be needed. It would also provide breathing room to undertake the overdue restructuring of unprofitable and marginal businesses. At a 9% level, another €111.5 billion of tangible equity is required. This would come from the write-off of additional tier 1, subordinated debt and €98.5 billion of senior debt being converted to equity. This implies that 63.1% of the senior debt able to be bailed-in needs to be converted to equity.
For every €100 they are currently owed bailed-in senior debt holders would receive €36.90 in new senior debt as well as material value in new equity. To assist the transition, the regulators and Deutsche Bank should work together to see that those who receive new equity can be offered a transparent and orderly means to sell down those shares. Whilst Deutsche Bank could theoretically just restart trading after the new shares were issued, relisting without an opportunity for new shareholders to sell down to more natural equity owners could be substantially disorderly and may result in much greater losses in value and confidence in banks than would otherwise be the case.
Potential Capital Sell-Down Process
There’s two types of approach that could help facilitate the sale of shares by those who are seeking to exit; a rights issue model and an IPO model. The table below summarises some of the different features of each that could apply in the case of a Deutsche Bank bail-in.
The rights issue model is the most efficient, but it doesn’t allow for Deutsche Bank management to prepare a solid pitch to potential new investors. Management would have only a few days to develop their strategy for making the bank profitable again and limited time to explain that to the many large global investors that may want to buy shares. The IPO model takes longer, but would allow management to put forward a clear plan on what businesses it will exit, what that will cost and the additional profitability that could be generated over time. The downside of the additional time is that it increases the potential for contagion to other banks as investors remain unsure of what recovery they will receive on their new shares for a longer period. Allowing over the counter trading to continue on senior debt would allay some of these concerns.
As a guide to the possible recovery for bailed-in senior debt, other European banks were generally trading at 0.5 to 1.0 times book value in early September. This implies the new equity is worth €89.2 – €178.4 billion. When combined with the new senior debt of €57.5 billion this a total recovery of 94.0% – 151.1% on the old senior debt. If an IPO process was used this would open up the opportunity for the old subordinated debt, additional tier 1 and equity owners to receive some value. If a bookbuild ended up realising more than a 100% recovery for senior debt holders, which is reached if the price to book is 0.55 or above, the additional value could be allocated to the subordinated capital owners via the natural order of priority. This process would largely eliminate arguments that value wasn’t maximised, neutering the possibility of ongoing litigation as has been the case with Fannie Mae and Freddie Mac.
Conclusion
Deutsche Bank’s position is currently marginal as it is woefully undercapitalised and has no clear prospect of becoming meaningfully profitable. As the world’s largest derivative trader and Europe’s most systemically important bank this is untenable. Deutsche Bank is three times larger than Lehman Brothers, making the possibility of an unexpected and uncoordinated failure completely unacceptable. Deutsche Bank needs substantial time and capital to execute a turnaround, neither of which it now has. It does not have the profitability to grow its capital base quickly or to support a capital raising of the size it needs. Deutsche Bank needs either a bail-in or a bailout.
An orderly bail-in process would deliver Deutsche Bank the additional time and capital it needs. In the first instance, the bank should be declared non-viable with all equity, additional tier 1 and subordinated debt written off. By converting 63.1% of long term senior debt to new equity the leverage ratio would increase to an unquestionably strong 9%. Based on recent peer comparisons, bailed-in senior debt holders would receive a recovery of at least 94% of their current position. Using an IPO model, where management develops and presents a new strategy to potential investors over a 2-3 month period, would allow the recipients of newly issued equity an orderly process to sell-down their equity. It also creates the possibility of a substantial recovery for subordinated debt, additional tier 1 and equity investors.
* * *
If the Lehman playbook continues to play out as it has done – denials of any problems… blame speculators… unleash short-squeeze on heels of rumors of foreign sovereign wealth fund investments… and finally acceptance – this will not end well…
Perhaps it's time once again to listen to DoubleLine's Jeff Gundlach, whose advice was simple: don't touch it. "I would just stay away. It's un-analyzable," Gundlach said about Deutsche Bank shares and debt. "It's too binary."
- Ray Dalio Warns A 1% Rise In Yields Would Lead To Trillions In Losses
Last week, we shared with readers a fascinating presentation that Bridgewater’s Ray Dalio made to NY Fed staffers at the 40th Annual Central Banking Seminar held on Wednesday, October 5, 2016. In it, Dalio pointed out that thoughts which dared to question the economic orthodoxy, and which were once relegated to the fringe blogs, have become the norm, pointing out that it is no longer controversial to say that:
- …this isn’t a normal business cycle and we are likely in an environment of abnormally slow growth
- …the current tools of monetary policy will be a lot less effective going forward
- …the risks are asymmetric to the downside
- …investment returns will be very low going forward, and
- …the impatience with economic stagnation, especially among middle and lower income earners, is leading to dangerous populism and nationalism.
He further notes that the debt bubble which was not eliminated during the financial crisis of 2008, has since grown to staggering proportions, and notes that “the biggest issue is that there is only so much one can squeeze out of a debt cycle and most countries are approaching those limits.”
Alas, while the underlying symptoms are clear, that does not make the solution of the problem any easier. Quite the contrary. As Dalio further adds, “when we do our projections we see an intensifying financing squeeze emerging from a combination of slow income growth, low investment returns and an acceleration in liabilities coming due both because of the relatively high levels of debt and because of large pension and health care liabilities. The pension and health care liabilities that are coming due are much larger than the debt liabilities in most countries because of demographics – i.e., due to the baby-boom generation moving from working and paying taxes to getting their retirement and health care benefits.”
Here the Bridgewater head provides a simple explanation for why the system is unsustainable: debt is fundamentally a liability even though it is treated as an asset by those who “own” it. As a result, “holders of debt believe that they are holding an asset that they can sell for money to use to buy things, so they believe that they will have that spending power without having to work. Similarly, retirees expect that they will get the retirement and health care benefits that they were promised without working. So, all of these people expect to get a huge amount of spending power without producing anything. At the same time, workers expect to get spending power that is equal in value to what they are giving. They all can’t be satisfied.”
How does the Fed react to this inconsistency? By a familiar tool: financial repression.
As a result of this confluence of conditions, we are now seeing most central bankers pushing interest rates down to make them extremely unattractive for savers and we are seeing them monetizing debt and buying riskier assets to make debt and other liabilities less burdensome and to stimulate their economies. Rarely do we investors get a market that we know is over-valued and that approaches such clearly defined limits as the bond market now. That is because there is a limit as to how negative bond yields can go. Their expected returns relative to their risks are especially bad.
What does that mean in practical terms? Well, in short: lots of pain for holders of duration: “If interest rates rise just a little bit more than is discounted in the curve it will have a big negative effect on bonds and all asset prices, as they are all very sensitive to the discoun rate used to calculate the present value of their future cash flows. That is because with interest rates having declined, the effective durations of all assets have lengthened, so they are more price-sensitive.”
And the punchline”
… it would only take a 100 basis point rise in Treasury bond yields to trigger the worst price decline in bonds since the 1981 bond market crash. And since those interest rates are embedded in the pricing of all investment assets, that would send them all much lower.
Consider that Ray Dalio’s most stark crash warning to date.
Of course, it is not new to regular readers becuase this is precisely what we warned about back in June, when we showed the massive duration exposure on the market, and explaining “Why The Fed Is Trapped: A 1% Increase In Rates Would Result In Up To $2.4 Trillion Of Losses“
As we showed using Goldman calculations, in 1994, the average yield on the bond index was 5.6%, vs. 2.2% currently. Lower bond coupons means that proportionately more of the bond cashflows now comes from principal, which tends to be distributed towards the end of the bond lifetime.
Here is the math of how much in just bond losses a 1% increase in rates would lead to:
The total face value of all US bonds, including Treasuries, Federal agency debt, mortgages, corporates, municipals and ABS, is $40 trillion (Securities Industry and Financial Markets Association). The Barclays US aggregate is a smaller number, $17 trillion, as the index excludes some categories of debt, such as money markets, with low duration. Using either measure, total debt outstanding has grown by over 60% in real Dollars since 2000.
For conservative purposes, we use the lower debt estimate, and get that when combining a duration estimate of 5.6 years with a total notional exposure of $17trn, and current Dollar price of bonds of $105.6, indicates that, to first order, a 100bp shock to interest rates – the same one that Dalio envisions – would translate into a $1trn market value loss. That is using the more conservative estimate of the bond market. Using the broader, and more accurate, bond market sizing of $40trn, the market value loss estimate would be $2.4 trillion. While the largest number would be stunning, even the smaller $1 trillion loss estimate is massive:
it would amount to over 50% larger than the market value lost in the 1994 bond market selloff in inflation-adjusted terms, and larger than the cumulative credit losses experienced to date in the non-agency residential mortgage backed securities market.
This is what Goldman concludes in early June when delivering its own stark forecast of massive losses should rates spike:
“even if there is not a large net social loss from a rise in rates, the $1 trillion gross loss estimate suggests that some investor entities would likely experience significant distress. In the 1994 bond market decline, for example, losses on a mortgage derivative portfolio were a major factor contributing to the Orange County, California bankruptcy event. All in, the increase in total gross debt exposure, combined with lengthening bond durations and an arguably expensive bond market, suggest that rising yields should be on the short list of scenarios to be monitored by risk managers.”
Now we know that it certainly is on the very short list of scenarios monitored by the world’s biggest hedge fund.
So what, if any, recommendations does Dalio have now that virtually all the “smartest men in the room” admit the Fed is not only trapped, but that a spike in yields would lead to the worst crash in 35 years:
Right now, a number of the riskier assets look attractive in relationship to bonds and cash, but not cheap in relationship to their risks. If this continues, holding non-financial storeholds of wealth like gold could become more attractive than holding long duration fiat currency flows with negative yields (which is what bonds are), especially if currency volatility picks up.
Needless to say, we are eagerly waiting for precisely that inflection point.
- Bernie Sanders Supporters Furious Over Hillary's Leaked Wall Street Speeches
With the media exclusively attuned to every new, or 11-year-old as the case may be, twist in the Trump “sex tape” saga, it appeared that everyone forgot that a little over 24 hours ago, Wikileaks exposed the real reason why Hillary was keeping her Wall Street speech transcripts – which we now know had always been within easy reach for her campaign – secret. In her own words: “if everybody’s watching, you know, all of the back room discussions and the deals, you know, then people get a little nervous, to say the least. So, you need both a public and a private position.” In other words, you have to lie to the general public while promising those who just paid you $250,000 for an hour of your speaking time something entirely different, which is precisely what those accusing Hillary of hiding her WS transcripts had done; and as yesterday’s hacked documents revealed, they were right.
The Clinton campaign refused to disavow the hacked excerpts, although it quickly tired to pin the blame again on Russia: “We are not going to confirm the authenticity of stolen documents released by Julian Assange, who has made no secret of his desire to damage Hillary Clinton,” spokesman Glen Caplin said in a prepared statement. Previous releases have “Guccifer 2.0 has already proven the warnings of top national security officials that documents can be faked as part of a sophisticated Russian misinformation campaign.”
Ironically, it was literally minutes before the Wikileaks release of the “Podesta Files” that the US formally accused Russia of waging a hacking cyber attack on the US political establishment, almost as if it knew Wikileaks was about to make the major disclosure, and sought to minimize its impact by scapegoating Vladimir Putin.
And while the Trump campaign tried to slam the leak, with spokesman saying “now we finally get confirmation of Clinton’s catastrophic plans for completely open borders and diminishing America’s influence in the world. There is a reason Clinton gave these high-paid speeches in secret behind closed doors – her real intentions will destroy American sovereignty as we know it, further illustrating why Hillary Clinton is simply unfit to be president”, Trump’s campaign had its own raging inferno to deal with.
So, courtesy of what Trump said about some woman 11 years ago, in all the din over the oddly coincident Trump Tape leak, most of the noise created by the Hillary speeches was lost.
But not all.
According to Reuters, supporters of former Democratic presidential candidate Bernie Sanders on Saturday “seethed“, and “expressed anger and vindication over leaked comments made by Hillary Clinton to banks and big business that appeared to confirm their fears about her support for global trade and tendency to cozy up to Wall Street.“
Clinton, who last it emerged had slammed Bernie supporters as “basement dwellers” in a February fundraiser, with virtually no media coverage, needs Sanders’ coalition of young and left-leaning voters to propel her to the presidency, pushes for open trade and open borders in one of the speeches, and takes a conciliatory approach to Wall Street, both positions she later backed away from in an effort to capture the popular appeal of Sanders’ attacks on trade deals and powerful banks.
Needless to say, there was no actualy “backing away”, and instead Hillary did what he truly excels in better than most: she told the public what they wanted to hear, and will promptly reneg on once she becomes president.
Only now, this is increasingly obvious to America’s jilted youth: “this is a very clear illustration of why there is a fundamental lack of trust from progressives for Hillary Clinton,” said Tobita Chow, chair of the People’s Lobby in Chicago, which endorsed Sanders in the primary election.
“The progressive movement needs to make a call to Secretary Clinton to clarify where she stands really on these issues and that’s got to involve very clear renunciations of the positions that are revealed in these transcripts,” Chow said.
Good luck that, or even getting a response, even though Hillary was largely spared from providing one: as Reuters correctly observes, the revelations were immediately overshadowed by the release of an 11-year-old recording of Donald Trump, the Republican presidential nominee, making lewd comments about women. In fact, the revelations were almost entirely ignored by the same prime time TV that has been glued to the Trump slow-motion trainwreck over the past 24 hours.
Still, the hacked speeches could lead to further erosion in support from the so very critical to her successful candidacy, young American voter.
Clinton has worked hard to build trust with so-called progressives, adopting several of Sanders’ positions after she bested him in the primary race. The U.S. senator from Vermont now supports his former rival in the Nov. 8 general election against Trump. Still, Clinton has struggled to win support from young “millennials” who were crucial to Sanders’ success, and some Democrats expressed concern that the leaks would discourage those supporters from showing up to vote.
“That is a big concern and this certainly doesn’t help,” said Larry Cohen, chair of the board of Our Revolution, a progressive organization formed in the wake of Sanders’ bid for the presidency, which aims to keep pushing the former candidate’s ideas at a grassroots level. “It matters in terms of turnout, energy, volunteering, all those things.”
Still, despite the Trump media onslaught, the message appeared to filter through to those who would be most impacted by Hillary selling out her voters if she were to win the presidency.
“Bernie was right about Hillary,” wrote Facebook user Grace Tilly cited by Rueters, “she’s a tool for Wall Street.”
“Clinton is the politicians’ politician – exactly the Wall Street insider Bernie described,” wrote Facebook user Brian Leach.
Democratic strategist Steve Elmendorf said progressive voters would still choose the former first lady, even with misgivings. “I’d like to meet the Bernie Sanders supporter who is going to say, ‘Well I’m a little worried about her on international trade, so I’m going to vote for Donald Trump’,” he said.
He just may meet a few, especially if Bernie’s supporters ask themselves why Bernie’s support for Hillary remained so unwavering despite a leak confirming that Hillary was indeed all he had previously railed against.
In a statement earlier, Sanders responded to the leak by saying that despite Hillary’s paid speeches to Wall Street in which she expressed an agenda diametrically opposite to that espoused by the Vermont socialist, he reiterated his his support for the Democratic Party platform.
“Whatever Secretary Clinton may or may not have said behind closed doors on Wall Street, I am determined to implement the agenda of the Democratic Party platform which was agreed upon by her campaign,” he said in a statement.
“Among other things, that agenda calls for breaking up the largest financial institutions in this country, re-establishing Glass-Steagall and prosecuting those many Wall Street CEOs who engaged in illegal behavior.“
In retrospect we find it fascinating that in the aftermath of October’s two big surprises served up on Friday, Sanders actually believes any of that having read through Hillary’s Wall Street speeches, certainly far more fascinating than the staged disgust with Trump who, the media is suddenly stunned to find, was no more politically correct 11 year ago than he is today.
- Hitler's New World Order alive in the markets – FX History Lesson 28
As explained in our groundbreaking best-seller Splitting Pennies – the world isn’t as it seems; in fact, the world is a lot simpler and less complex than perceived. We’re victim of “Perception Deception” – as explained eloquently in David Icke’s book. If we can for a moment, de-politicize, de-emotionalize, and ‘de’ all the programming, advertising, and other ‘noise’ designed to distract us from reality; a different picture begins to emerge on the planet. We’re talking about Forex, so let’s look at what happened this week in FX:
During two chaotic minutes of Asian trading, the pound plunged the most since the Brexit referendum in June, with traders saying computer-initiated sell orders exacerbated the slump.
The 6.1 percent drop drove sterling to a 31-year low of $1.1841, according to composite prices compiled by Bloomberg of contributions from dealers. Traders speculated the crash might have been sparked by human error, or a so-called “fat finger,” with algorithms adding to selling pressure at a time of day when liquidity is relatively low.
While the currency snapped back in Asia, it resumed its freefall during European hours, as concern welled up that Britain is headed for a so-called hard Brexit that would restrict its access to the European Union’s single market in return for gaining control of immigration.
Pound ‘flash crash’ sees sterling plunge 6pc within minutes – but was it due to a ‘fat finger’ https://t.co/cFKxo39A1T
— fxbanker (@fxbanker) October 7, 2016
So Bloomberg gets one of their London based FX customers on the line, Kit Jukes from SocGen, and asks him candidly about what happened. He says that, Forex markets (and many other markets – too) are going to be volatile until a “New World Order” is implemented. Or to quote him verbatim “Price discovery will be an issue as we move to a New World Order.” The “NWO” he is referring to, is some sort of market panacea, where price discovery is so efficient, well – that’s not a market! Let’s remember how all this Forex started, going back to a small hotel in New England, Bretton Woods:
Preparing to rebuild the international economic system while World War II was still raging, 730 delegates from all 44 Allied nations gathered at the Mount Washington Hotel in Bretton Woods, New Hampshire, United States, for the United Nations Monetary and Financial Conference, also known as the Bretton Woods Conference. The delegates deliberated during 1–22 July 1944, and signed the Bretton Woods agreement on its final day. Setting up a system of rules, institutions, and procedures to regulate the international monetary system, these accords established the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (IBRD), which today is part of the World Bank Group. The United States, which controlled two thirds of the world’s gold, insisted that the Bretton Woods system rest on both gold and the US dollar. Soviet representatives attended the conference but later declined to ratify the final agreements, charging that the institutions they had created were “branches of Wall Street.”[1] These organizations became operational in 1945 after a sufficient number of countries had ratified the agreement. On 15 August 1971, the United States unilaterally terminated convertibility of the US dollar to gold, effectively bringing the Bretton Woods system to an end and rendering the dollar a fiat currency.[2] This action, referred to as the Nixon shock, created the situation in which the US dollar became a reserve currency used by many states. At the same time, many fixed currencies (such as the pound sterling, for example) also became free-floating.
Fast forward, it’s 10-8-2016, and leading FX strategists are telling us that markets are waiting for a “New World Order” – wasn’t that what was agreed at Bretton Woods? Was Nixon in on this plot, was he tricked, was it a coincidence that Kissinger was with Nixon at Camp David (and who knows, who else) the weekend before they created their ‘plan’ to default on Bretton Woods? No one knows, but we can certainly analyze current data.
For a little perspective, we must understand the history of the world from an American perspective, after World War 2. WW2 was the defining event that shaped the 20th and 21st century. The best perspective for any American businessman, investor, or trader – is to READ THIS BOOK: IBM and the Holocaust. This book is a MUST READ for any Forex trader, stock investor, or anyone who wants to understand how the world ‘really’ works: IBM and the Holocaust.
This is New York Times Bestseller with well over 1 Million copies sold. It’s a well documented, research gold mine. After reading this book, you can say that you understand more about world politics than Political Science professors. This is the reality of the way the world really works, which is NOT taught in school. Through the book, you’ll see how the founder of IBM (Watson) not only enabled the Nazi regime to expand economically and manage the holocaust, he was Hitler’s personal friend (if you can say, Hitler had a friend), receiving the 2nd most prestigious medal of honor offered by the Nazi’s in that time.
So what does this have to do with Forex? Two things. First, this laid the foundation for Bretton Woods and the Euro. The Euro is practically a derivative of the US Dollar. That’s why countries such as the United Kingdom, Switzerland, Norway, and others – stayed out of the Euro. The Euro is the financial end result of the Marshall Plan which was designed to ensure the US Dollar was THE world reserve currency. Second, by seizing Germany as a vassal state, the US-UK “Axis” cemented its control over Europe, the highest economic prize across the pond. That’s because in Europe itself, Germany has always been the ‘strongest’ state, being the biggest producer and economic leader of Northern countries, whereas Southern Europe has been plagued by debt, complicated politics, and other issues (like African refugees floating to ‘the promised land’ or the Mafia hiding Nuclear waste in Italy & Ukraine, Terrorism (Real terrorism, not this ‘fabricated’ terrorism, etc.)
To add to the spoils of war, Project Paperclip brought top Nazi scientists (most notably, Von Braun) without which NASA programs in the past 60 years would not have been possible. Interestingly, this was also a period where the CIA was created, leading to the current global survelleince society we have today. Planned and organized in London, executed and accounted for in New York & Washington, all for the benefit of various international multi-ethnic owners (some American, some Dutch, Swiss, French, Italian, German, Russian, British, Israeli, etc.)
Fast forward to 2016 – during World War 2, IBM, the most sophistocated, largest, powerful computer company in the world was feeding the Nazi war machine. What are computer companies (think Google, Facebook, Microsoft) doing today in Europe? In London? Google, Facebook, Microsoft, all have strong relationships with the DOD (Department of Defense).
It was Hitler that first wrote famously the words “New World Order” – and now this same ‘goal’ is the solution to market microstructure illiquidity, volatility, wide spreads, and huge price swings? It seems that over the past 100 years really, not much has really changed, it is the same group of banks pulling our nose (historically speaking), whether they’re funding Hitler or Clinton, whoever wins, nothing seems to change. In war there are no winners, only victims. There’s a popular banking advertisement ‘banks compete – you win’ – it should be ‘When countries compete, banks win’ – and this is most obvious in the Forex market, where such a move in the GBP/USD can be a quick 10 or 20 yard-bagger for a major bank who is on the front of the order. And all this commotion- banking profits all the way to the New World Order!
And – according to this book The Mind of Hitler – written by a Psychoanalyst, Hitler was not only supported and financed by the Rothschilds – he WAS a Rothschild! They tried this NWO once before, maybe this is attempt 2, their ‘trump’ card. Pun intended.
To learn more about Forex history, and how it impacts us today, checkout Splitting Pennies – Understanding Forex – or checkout Fortress Capital Trading Academy, who offers a great Introductory course. Forex = The reality of how the world works.
- Republican National Committee Begins To Redirect Funds From Trump
“Our party is in its deepest crisis since Watergate in 1974,”
– Ron Nehring, former chairman of the California Republican Party
In the aftermath of the “Trump Tape”, there has been a surge in GOP officials who have either rescinded their support for Trump or have openly called for him to step down. As the WSJ put it, “the speed and breadth of the abandonment of Mr. Trump’s candidacy shocked some long-time party members and exposed a shattered party without a clear path forward.” The latest full list of republicans bailing on Trump is shown in the table below courtesy of Taniel, and can be tracked on The Hill’s website.
Those declarations are mostly symbolic, with the RNC having little effective power to impact Trump’s process. As Ron Nehring notes, former chairman of the California Republican Party, “it doesn’t matter whether Donald Trump were to bow out. It’s too late to change the candidate on the ballot.”
However, in a surprising move showing the dwindling support for Trump within the GOP, this evening the WSJ reported that the Republican National Committee (RNC) Chairman Reince Priebus on Saturday told party officials to redirect funds away from nominee Donald Trump to down-ballot candidates. In practical terms, the party will be working to mobilize voters who support GOP House and Senate candidates regardless of their position on the presidential race.
As the WSJ explains, that means the RNC will push Floridians who support both Democratic nominee Hillary Clinton and Republican Sen. Marco Rubio to vote. Before today, the RNC wouldn’t have sought to turn out Clinton voters, leaving split-ticket voters for Senate campaigns to target.
The GOP nominee has not made the large-scale ground-game investments that are typical of a major-party nominee. So the RNC has picked up the lion’s share of that slack. Before this move, the RNC’s field staff prioritized Trump, meaning that they would focus first on turning out voters for Trump, even if that meant those voters may not support GOP candidates down the ballot.
Earlier on Saturday, Politico reported that the RNC directed a mailing vendor to hold off on all projects related to the RNC-Trump joint “Victory” fund.
While the RNC did not immediately comment on the WSJ story, Sean Spicer, the RNC’s chief strategist, said on Twitter to briefly cast the story as “not true.”
Not true https://t.co/59j2wbo6G0
— Sean Spicer (@seanspicer) October 8, 2016
Which most likely means it is, and is just the latest indication of the chaos spreading through the RNC at this moment.
Meanwhile, if the RNC is trying to send Trump a not so subtle message to get out of the race, so far it has failed: the real-estate mogul has emphatically declared he would not drop out in a message on Twitter on Saturday.
The media and establishment want me out of the race so badly – I WILL NEVER DROP OUT OF THE RACE, WILL NEVER LET MY SUPPORTERS DOWN! #MAGA
— Donald J. Trump (@realDonaldTrump) October 8, 2016
As The Hill notes, legal experts are skeptical that the party could remove Trump without his consent. But if Trump were to step down, the RNC would vote on a new nominee after a meeting with its 168-member committee.
The latest fallout may explain why the RNC chairman is no longer set to appear on tomorrow’s Face the Nation, with the slot going to Rudy Trump as the “campaign wanted a campaign person” according to Politico’s Jake Sherman.
>@Reince no longer appearing on Face the Nation. replaced by Rudy G. Trump campaign wanted a “campaign person”
— Jake Sherman (@JakeSherman) October 8, 2016
- US Soldiers Resist Obama's Support Of Al Qaeda
Submitted by Eric Zuesse via Stratgic-Culture.org,
As is by now well-known, the U.S. Defense Intelligence Agency’s previously classified 2012 report on the origin of the Islamic insurgency against Bashar al-Assad was released to the public on 18 May 2015, and it revealed the Obama Administration’s knowledge, at least since that time, that «the Salafist [Saudi-backed fundamentalist Sunni Islamic], the Muslim Brotherhood [Qatari-backed fundamentalist Sunni Islamic] and AQI [Al Qaeda in Iraq] are the major forces driving the insurgency in Syria», and acknowledgement that «the West, Gulf countries [Saudi Arabia and Qatar mainly], and Turkey support the opposition [to Bashar al-Assad], while Russia, China, and Iran support the regime», so that the U.S. Government is, in fact, allied with Al Qaeda there, to overthrow Assad.
This pro-Al-Qaeda position was news, however, to America’s military personnel in that region.
On 29 September 2016, the Russian news site rusvesna.su headlined «Scandal in the US Army: Obama, we will not fight for your fighters in Syria! – Soldiers protest (PHOTOS, VIDEO)», and they showed alleged U.S. military personnel holding up signs covering their faces, upon which signs were handwritten messages such as:
«I joined the military to protect my family from terrorists»
«Obama, I will not deploy to fight for your Al-Qaeda rebels in Syria. WAKE UP PEOPLE»
«I DIDN’T JOIN THE NAVY TO FIGHT FOR AL QAEDA IN A SYRIAN CIVIL WAR!»
«I will NOT fight for Al Qaeda in Syria»
Whether these men (they all appear to be that) authentically are in-service U.S. military personnel cannot be established conclusively at this time, and no U.S. military would want to be publicly identified as opposing the U.S. government’s instructions, in any case. No active-duty U.S. personnel are likely to identify themselves publicly as refusing to participate in what their Commander-in-Chief is requiring of them.
However, at the very top of the U.S. military command, in the Joint Chiefs of Staff, there have, in fact, been resignations and firings by President Barack Obama, in order to keep the Syrian war going in this way: as a joint U.S.-and-jihadist effort. Though the great investigative journalist Seymour Hersh could not obtain U.S. publication for his major reports about the Syrian war, the London Review of Books has been publishing these reports; and one of them, «Military to Military», on 7 January 2016, stated that:
Barack Obama’s repeated insistence that Bashar al-Assad must leave office – and that there are ‘moderate’ rebel groups in Syria capable of defeating him – has in recent years provoked quiet dissent, and even overt opposition, among some of the most senior officers on the Pentagon’s Joint Staff. Their criticism has focused on what they see as the administration’s fixation on Assad’s primary ally, Vladimir Putin. In their view, Obama is captive to Cold War thinking about Russia and China, and hasn’t adjusted his stance on Syria to the fact both countries share Washington’s anxiety about the spread of terrorism in and beyond Syria; like Washington, they believe that Islamic State must be stopped… Lieutenant General Michael Flynn, director of the DIA between 2012 and 2014, confirmed that his agency had sent a constant stream of classified warnings to the civilian leadership about the dire consequences of toppling Assad. The jihadists, he said, were in control of the opposition.
…By the late summer of 2013, the DIA’s assessment had been circulated widely, but although many in the American intelligence community were aware that the Syrian opposition was dominated by extremists the CIA-sponsored weapons kept coming… General Dempsey and his colleagues on the Joint Chiefs of Staff kept their dissent out of bureaucratic channels, and survived in office. General Michael Flynn did not. ‘Flynn incurred the wrath of the White House by insisting on telling the truth about Syria,’ said Patrick Lang, a retired army colonel who served for nearly a decade as the chief Middle East civilian intelligence officer for the DIA. ‘He thought truth was the best thing and they shoved him out. He wouldn’t shut up.’ Flynn told me his problems went beyond Syria. ‘I was shaking things up at the DIA – and not just moving deckchairs on the Titanic. It was radical reform. I felt that the civilian leadership did not want to hear the truth. I suffered for it, but I’m OK with that.’
Dempsey resigned voluntarily: he took retirement, on 25 September 2015, when Obama replaced him with Joe Dunford, whose views at the time were unknown, except that a CFR neoconservative and champion of the «Maximalist» position of the U.S. in international relations, Stephen Sestanovich, praised the new head of the Joint Chiefs of Staff as «‘Fighting Joe’ Dunford»; and, to paraphrase a cliché: it takes a neoconservative to recognize a neoconservative. But neither Sestanovich nor Dunford would say anything about their views on Syria.
But then, during a press conference on 29 March 2016, Dunford said:
The Russian military presents the greatest array of threats to U.S. interests… Our primary partners on the ground, the Syrian Democratic Forces, have been successful in recovering a large swath of ground in northeast Syria. And I’ll call them the SDF… The adversary knows exactly what the threshold is for us to take decisive military action. So they operate below that level. They continue to advance their interests and we lose competitive advantage. And, frankly, our interests are adversely affected. And for me it’s actually one of the most significant challenges that we’re dealing with right now.
This view of Russia as being America’s main enemy, is entirely consistent with Barack Obama’s «National Security Strategy 2015», which identified Russia as by far the world’s most «aggressive» nation. In other words: Russia is a continuation of the Soviet Union, in both Obama’s and Dunford’s view. The United States overthrew many heads-of-state who were friendly toward Russia — Saddam Hussein in 2003, Muammar Gaddafi in 2011, Viktor Yanukovych in 2014, and have been targeting Bashar al-Assad ever since at least 2011 — but calls Russia, by far, the world’s most aggressive nation.
Martin Dempsey didn’t want to serve in such a military (i.e., in a military led by a President such as that), nor did Michael Flynn, but it’s what Barack Obama demands. (He demands the overthrow of Assad.) And, therefore, Dunford can talk now about having (via America’s allied «primary partners on the ground») «been successful in recovering a large swath of ground in northeast Syria», as if the U.S. (and its allies, Saudi Arabia, Qatar, UAE, and Kuwait, which pay those «primary forces on the ground» — and Turkey, which provides the jihadists passage into Syria) have any right to that land. Obama is out for conquest, not peace, but whether he will carry this all the way to World War III, isn’t yet known.
Furthermore, as the independent journalist Rick Sterling at Consortium News put the matter, on September 23rd, some proponents of overthrowing Assad:
actively call for U.S./NATO military intervention through a «No Fly Zone,» which would begin with attacks upon and destruction of government anti-aircraft positions and aircraft.
Taking over the skies above another country is an act of war that would require a major U.S. military operation, according to senior American generals.
The New York Times reported that in 2012 General Martin E. Dempsey, chairman of the Joint Chiefs of Staff, told the White House that imposing a no-fly zone in Syria would require up to 70,000 American servicemen to destroy Syria’s antiaircraft system and then impose round-the-clock control over Syrian airspace.
General Carter Ham, former commander of the U.S. Africa Command who oversaw the aerial attacks on Libya in 2011, said on CBS News that «I worry sometimes that, when people say ‘impose a no-fly zone,’ there is this almost antiseptic view that this is an easily accomplished military task. It’s extraordinarily difficult…
«It first entails — we should make no bones about it. It first entails killing a lot of people and destroying the Syrian air defenses and those people who are manning those systems. And then it entails destroying the Syrian air force, preferably on the ground, in the air if necessary. This is a violent combat action that results in lots of casualties and increased risk to our own personnel».
In other words, an appeal for a «no-fly zone» is not a call for a non-violent solution. It is seeking a bloody act of war by the United States against Syria, a nation that poses no threat to America.
Obama’s intended successor, Hillary Clinton, champions the imposition of a «no-fly zone» to shoot down the planes of Russia and Syria, in Syria — to shoot down the planes that have been successfully killing the jihadists who have been trying to overthrow and replace Assad. The U.S. is with the jihadists, who have been imported into Syria by, and paid by, the royal families of Saudi Arabia, Qatar, and UAE.
Thus, for example, Hillary said, on 19 December 2015, «I am advocating the no-fly zone both because I think it would help us on the ground to protect Syrians; I'm also advocating it because I think it gives us some leverage in our conversations with Russia». She wants to order Russian planes out of Syria, and to order Syria’s only legitimate government to be replaced with an anti-Russian government. And she wants to do this not only «to protect Syrians» (who overwhelmingly blame the U.S. for the hell they’re now experiencing, the U.S.-Saudi proxy armies of imported jihadists) «because I think it gives us some leverage in our conversations with Russia».
Although there might still be some resistance remaining at the top levels of the U.S. military against the restoration and heating-up of the formerly Cold War against the USSR (now against only Russia and any head-of-state who isn’t hostile toward it), Obama has probably by now eliminated almost all of those people at the top level; and so virtually the only U.S. military personnel who oppose the increasingly hot U.S. war against Russia could be the troops who would be ordered to do the killing and dying in that war. They would face a choice of either resigning and losing their means-of-livelihood and much else, or of fighting and maybe dying for a cause that they think to be evil (allied with Al Qaeda).
There is no public sign yet of any such mutiny against the U.S. regime, either by its soldiers, or by its subjects.
Two articles may be especially relevant to understanding why this would be the case. One is «Russia Finds – Shaming The U.S. Government Into Action Can Work», from the brilliant blogger who goes by the name «Moon of Alabama». The other is, «How Bamboozled the American Public Are About Syria», from me. Whereas the former article focuses upon the U.S. government’s operation to fool the American people into believing that ‘their’ government cares about fighting Al Qaeda in countries where Al Qaeda is actually instead a crucial ally of the American government against Russia and allies of Russia, the latter article focuses upon the enormous success of that governmental lying-operation.
But the success of Obama’s lying-operation has been even more striking in regards to Ukraine, Crimea, and Donbass — a matter which the head of Stratfor called «the most blatant coup in history», but which the American people still believe to have been a ‘democratic revolution’ that overthrew a ‘dictator’. It was an extraordinarily bloody coup there. And, as a result of it, Crimeans were terrified and overwhelmingly sought, and then obtained, Russian protection, and citizenship; and Donbassers were terrified and broke away from the newly installed Ukrainian regime, and likewise sought Russian citizenship, but were turned down by Putin, who regrettably provided only military and humanitarian assistance against the constant bombing by the newly installed nazis in Ukraine.
The economic sanctions against Russia that Obama had imposed by alleging that Putin ‘stole’ Crimea, caused Putin to say no to Obama’s millions of victims in Donbass. Russia accepted approximately a million refugees from Donbass, but Obama (via his paid nazi surrogates) basically destroyed Donbass (though not as much as he’s destroying Syria via his paid Al Qaeda etc. surrogates, a country that he wants even more to conquer, because the Saudi royal family demand it and are actually paying most of the bills for it). (Europe’s taxpayers are paying most of the bills for Obama’s conquest of Ukraine, and Europe also gets many of the refugees from there.)
Politically, what the American public see is that Republican politicians criticize Obama for fictitious reasons (such as that he ‘wasn’t born in the United States’), and Democratic politicians say that those fictitious reasons are the only reasons to criticize him. As a consequence, the American public have no idea about the reality of Obama, and of his policies.
So: these are some of the reasons why there is no mutiny.
- A Real Life "House of Cards" – The Most Striking WikiLeaks Revelations From The "Podesta Files"
They say that “life imitates art”…or is it the other way around…the lines are getting so blurred. In any event, we thought we would take this opportunity to highlight some of the most startling discoveries we found so far in Doug Stamper’s…sorry, John Podesta’s emails. You have to admit there are some similarities there and they even have the same position…hopefully the Clinton Foundation is receiving royalties from HBO…
Yesterday we pointed out the many amazing one-liners offered up by Hillary as she was out collecting millions of dollars for her “Wall Street speeches.” Here is an expanded sample:
Hillary Clinton: “I’m Kind Of Far Removed” From The Struggles Of The Middle Class “Because The Life I’ve Lived And The Economic, You Know, Fortunes That My Husband And I Now Enjoy.” “And I am not taking a position on any policy, but I do think there is a growing sense of anxiety and even anger in the country over the feeling that the game is rigged. And I never had that feeling when I was growing up. Never. I mean, were there really rich people, of course there were. My father loved to complain about big business and big government, but we had a solid middle class upbringing. We had good public schools. We had accessible health care. We had our little, you know, one-family house that, you know, he saved up his money, didn’t believe in mortgages. So I lived that. And now, obviously, I’m kind of far removed because the life I’ve lived and the economic, you know, fortunes that my husband and I now enjoy, but I haven’t forgotten it.” [Hillary Clinton Remarks at Goldman-Black Rock, 2/4/14]
Hillary Clinton Said There Was “A Bias Against People Who Have Led Successful And/Or Complicated Lives,” Citing The Need To Divese Of Assets, Positions, And Stocks. “SECRETARY CLINTON: Yeah. Well, you know what Bob Rubin said about that. He said, you know, when he came to Washington, he had a fortune. And when he left Washington, he had a small — MR. BLANKFEIN: That’s how you have a small fortune, is you go to Washington. SECRETARY CLINTON: You go to Washington. Right. But, you know, part of the problem with the political situation, too, is that there is such a bias against people who have led successful and/or complicated lives. You know, the divestment of assets, the stripping of all kinds of positions, the sale of stocks. It just becomes very onerous and unnecessary.” [Goldman Sachs Builders And Innovators Summit, 10/29/13]
Hillary Clinton Noted President Clinton Had Spoken At The Same Goldman Summit Last Year, And Blankfein Joked “He Increased Our Budget.” “SECRETARY CLINTON: Well, first, thanks for having me here and giving me a chance to know a little bit more about the builders and the innovators who you’ve gathered. Some of you might have been here last year, and my husband was, I guess, in this very same position. And he came back and was just thrilled by— MR. BLANKFEIN: He increased our budget. SECRETARY CLINTON: Did he? MR. BLANKFEIN: Yes. That’s why we — SECRETARY CLINTON: Good. I think he—I think he encouraged you to grow it a little, too. But it really was a tremendous experience for him, so I’ve been looking forward to it and hope we have a chance to talk about a lot of things.” [Goldman Sachs Builders And Innovators Summit, 10/29/13]
Clinton Said When She Got To State, Employees “Were Not Mostly Permitted To Have Handheld Devices.” “You know, when Colin Powell showed up as Secretary of State in 2001, most State Department employees still didn’t even have computers on their desks. When I got there they were not mostly permitted to have handheld devices. I mean, so you’re thinking how do we operate in this new environment dominated by technology, globalizing forces? We have to change, and I can’t expect people to change if I don’t try to model it and lead it.” [Clinton Speech For General Electric’s Global Leadership Meeting – Boca Raton, FL, 1/6/14]
Clinton Joked It’s “Risky” For Her To Speak To A Group Committed To Futures Markets Given Her Past Whitewater Scandal. “Now, it’s always a little bit risky for me to come speak to a group that is committed to the futures markets because — there’s a few knowing laughs — many years ago, I actually traded in the futures markets. I mean, this was so long ago, it was before computers were invented, I think. And I worked with a group of like-minded friends and associates who traded in pork bellies and cotton and other such things, and I did pretty well. I invested about a thousand dollars and traded up to about a hundred thousand. And then my daughter was born, and I just didn’t think I had enough time or mental space to figure out anything having to do with trading other than trading time with my daughter for time with the rest of my life. So I got out, and I thought that would be the end of it.” [Remarks to CME Group, 11/18/13]
Hillary Clinton Said Jordan Was Threatened Because “They Can’t Possibly Vet All Those Refugees So They Don’t Know If, You Know, Jihadists Are Coming In Along With Legitimate Refugees.” “So I think you’re right to have gone to the places that you visited because there’s a discussion going on now across the region to try to see where there might be common ground to deal with the threat posed by extremism and particularly with Syria which has everyone quite worried, Jordan because it’s on their border and they have hundreds of thousands of refugees and they can’t possibly vet all those refugees so they don’t know if, you know, jihadists are coming in along with legitimate refugees. Turkey for the same reason.” [Jewish United Fund Of Metropolitan Chicago Vanguard Luncheon, 10/28/13]
Hillary Clinton Said The Saudis Opposed The Muslim Brotherhood, “Which Is Kind Of Ironic Since The Saudis Have Exported More Extreme Ideology Than Any Other Place On Earth Over The Course Of The Last 30 Years.” “And they are getting a lot of help from the Saudis to the Emiratis—to go back to our original discussion—because the Saudis and the Emiratis see the Muslim Brotherhood as threatening to them, which is kind of ironic since the Saudis have exported more extreme ideology than any other place on earth over the course of the last 30 years.” [2014 Jewish United Fund Advance & Major Gifts Dinner, 10/28/13]
Hillary Clinton Said Her Dream Is A Hemispheric Common Market, With Open Trade And Open Markets. “My dream is a hemispheric common market, with open trade and open borders, some time in the future with energy that is as green and sustainable as we can get it, powering growth and opportunity for every person in the hemisphere.” [05162013 Remarks to Banco Itau.doc, p. 28]
Meanwhile, there are plenty of other great email exchanges as well.
The following exchange comes from the President of the Soros-funded “Open Society Foundation“ (we previously wrote about the society’s plan to “Enlarge electorate by at least 10 million voters” here) who offers some advice on “police reform.” The email points Podesta to an article previously written by the Open Society Foundation, ironically titled “Get the Politics Out of Policing.” Surprisingly, Stone points out that the problem isn’t a lack of independence by police but by politicians:
The problem is not a lack of independence just from the police, but independence from city politics. Since 2007, Chicago has had an agency separate from the police to investigate officer-involved shootings, but the “independent” agency (the Independent Police Review Authority, or IPRA) is still under the mayor, and generally retreats from any investigation that might lead to criminal charges. Until we get investigations of cases like this out of the hands of politicians, even the best policies a police chief can impose won’t change the culture.
Well that seemed to backfire. To summarize, Stone says don’t do exactly what the FBI did in its investigation of Hillary’s email scandal.
Here is a fairly racist email asserting that “Jews*, Hindus/Sikhs and Chinese people” are “almost always highly successful” while “Muslims, blacks and Roma” are “professional never-do-wells” and “fare badly almost irrespective of circumstances.”
The following email from Clinton press secretary, Brian Fallon, points out more collusion with the press (“Today Show has indicated they definitely plan to ask about guns”) and Hillary’s support for an “executive order” to close the “gun show loophole” and “impose manufacturer liability.”
The following “Sanders Hits” email chain points out a specific request from Hillary to do a “deeper dive” on “hits that could either by written or deployed during the next debate on Sanders.”
But, Ron Klain, former “Ebola Czar”, quickly points out that they didn’t really have anything material on Sanders, saying “that seems like a weak hit.” You don’t get elevated to a powerful position like “Ebola Czar” without being able to quickly cut through the BS.
Of course, Podesta attempted to raise doubts over the veracity of the Wilileaks emails saying that he doesn’t “have time to figure out which docs are real and which are faked” and that he’s not happy about “being hacked by the Russians in their quest to throw the election to Donald Trump.”
2. …I’m not happy about being hacked by the Russians in their quest to throw the election to Donald Trump.
— John Podesta (@johnpodesta) October 7, 2016
4. …But, for starters, Assange’s first claim that I co-own the Podesta Group is completely false.
— John Podesta (@johnpodesta) October 7, 2016
While it’s a nice try, something tells us that Podesta would find the time to figure out which emails “are real and which are faked” if, in fact, any of them were fake.
- What The Market Says – Trump Wins If…
While the variance across the mainstream media's presidential election polls remains high, the trend in the last week appears to have been one of Trump losing ground to Hillary. While the two campaigns lob headline-grenades at one another, we leave it to the markets to decide what it will take to lead Trump to victory…
It appears that markets – Stocks, Bonds, and FX – are leading indicators of the gap between good or bad, or the lesser of two evils, depending on your perspective.
The positive trend for Hillary appears to be catching up to stocks…
Treasury yields have swung (lower) in the direction of Hillary's gains recently…
And The US Dollar Index's srecent strength is supportive of Hillary…
So to summarize – S&P needs to hit 2,000; 30Y yields top 2.50%, and/or USD Index weakness is all that is needed for markets to imply a Trump win (that or a Peso collapse of course).
- Globalization Is Done
Submitted by Raul Ilargi Meijer via The Automatic Earth blog,
I read a lot, been doing it for years, about finance and affiliated topics (a wide horizon of them), which means I’ve inevitably seen a wholesale lot of nonsense fly by. But for some reason, and I think I know why, Q3 2016 has been gunning for a top -or bottom- seat in that regard, and Q4 is looking to do it one better/worse.
Apart from the fast increasingly brainless political ‘discussions’ that don’t deserve the name, in the US and UK and beyond, there are the transnational organizations, NATO, IMF, EU and all those things, all suffocating in their own hubris, things I’ve dealt with before in for instance Globalization Is Dead, But The Idea Is Not and Why There is Trump. But none of it still seems to have trickled through anywhere that I can see.
The end of growth exposes the stupidity and ignorance of all but (and even that’s a maybe) a precious few (of our) ‘leaders’. There is no other way this could have run, because an era of growth simply selects for different people to float to the top of the pond than a period of contraction does. Can we agree on that?
‘Growth leaders’ only have to seduce voters into believing that they can keep growth going, and create more of it (though in reality they have no control over it at all). Anyone can do that. So ‘anyone’ who’s sufficiently hooked on power games will apply.
‘Contraction leaders’ have a much harder time; they must convince voters that they can minimize the ‘suffering of the herd’. Which is invariably a herd that no-one wants to belong to. A tough sell.
Any end to growth will and must therefore inevitably change the structure of a democracy, any democracy, any society for that matter. It will lead to new leaders, and new parties, coming to the front. And it should not surprise anyone that some of these new leaders and parties will question the very structure of the democracy they are part of, if only because that structure is already undergoing change anyway.
The tight connection between an era of economic growth (and/or contraction) and the politicians that ‘rule’ during that era is reflected in Hazel Henderson’s“economics is nothing but politics in disguise”.
On the one hand you have the incumbent class seeking to hold on to their waning power, churning out false positive numbers and claiming that theirs is the only way to go (just more of it), and on the other hand you have a loose affiliation – to the extent there’s any affiliation at all- of left and right, individuals and parties, who smell change that they can use to their own benefit.
They just mostly don’t know how to use it yet. But they’ll find out, or some of them will. Blaming people and groups of people for what’s gone wrong will be a major way forward, because it’s just so easy. It’s another reason why the incumbents class, the traditional parties, will go the way of the dodo: they will be blamed, and rightly so in most cases, for the fall of the economic system.
That’ll be the number one criteria: if you’re -perceived as- part of the old guard, you’re out. Not at the flick of a switch, but nevertheless the rise of Trump and Farage and all those folks has been much faster than just about anyone would have thought possible until very recently.
They feed on discontent, but they can do so only because that discontent has been completely ignored by the ruling classes everywhere. Which has a lot to do with the rulers in all these instances we see pop up now still being well-off, while the lower rungs of societies definitely are not.
Moreover, if most people still had comfortable middle-class lives, the dislike of immigrants and refugees would have been so much less that Trump and Wilders and Le Pen and Alternative for Deutschland could never have ‘struck gold’. It’s the perception that the ‘new’ people are somehow to blame for one’s deteriorating living conditions that makes it fertile ground for whoever wants to use it.
And since the far left can’t go there, the right takes over by default. Bernie Sanders and Jeremy Corbyn have brave ideas on redistribution of wealth, but there is still too much resistance, at the moment, to that, from the incumbent class and their voters, to have much chance of getting anywhere.
Of course the traditional right wing smells the opportunity too, so Hillary (yeah, she’s right wing) and Theresa May and Sarkozy and Merkel are all orchestrating sharp turns to the right, away from their once comfortable seats in the center. They all sense that power will not be emanating from the center going forward, and it’s power, much more than principles, that they are after.
But enough about politicians and their parties, who can and will all be voted out of power. Much harder to get rid of will be the transnational organizations, like the EU and IMF (there are many more), though they represent the ‘doomed construction’ perhaps even more than mere local or national power-hungries. The leading principle is simple: What has all the centralization led to? To today’s contracting economies.
To that end, let’s just tear into a recent random Bloomberg piece on this week’s IMF meeting, and the ‘expert opinions’ on it:
Existential Threat To World Order Confronts Elite At IMF Meeting
Policy-making elites converge on Washington this week for meetings that epitomize a faith in globalization that’s at odds with the growing backlash against the inequities it creates. From Britain’s vote to leave the EU to Donald Trump’s championing of “America First,” pressures are mounting to roll back the economic integration that has been a hallmark of gatherings of the IMF and World Bank for more than 70 years. Fed by stagnant wages and diminishing job security, the populist uprising threatens to depress a world economy that IMF Managing Director Christine Lagarde says is already “weak and fragile.”
The calls for less integration and more trade barriers also pose risks for elevated financial markets that remain susceptible to sudden swings in investor sentiment , as underscored by recent jitters over Deutsche Bank’s financial health. “The backlash against globalization is manifesting itself in increased nationalistic sentiment, against the outside world and in favor of increasing isolation,” said Louis Kuijs at Oxford Economics in Hong Kong, a former IMF official. “If we lose consensus on what kind of a world we want to have, the world will probably be worse off.”
Oh, but we do have consensus, Louis: Ever more people don’t want what they have now. That too is consensus. And since you said that what it takes is consensus, we should be fine then, right?!
Also, I find the term ‘elevated markets’ interesting, even if I don’t know what it’s supposed to mean. I can only guess.
In its latest World Economic Outlook released Tuesday, the fund highlighted the threats from the anti-trade movement to an already subdued global expansion. After growth of 3.2% in 2015, the world economy’s expansion will slow to 3.1% this year before rebounding to 3.4% in 2017, according to the report, keeping those estimates unchanged from July projections. The forecasts for U.S. growth were cut to 1.6% this year and 2.2% in 2017.
“We’d like to see an end to the creeping protectionism in the world and more progress on moving ahead with free-trade agreements and other trade-creating measures,” Maurice Obstfeld, director of the IMF’s research department, said in a Bloomberg Television interview with Tom Keene. Lagarde said last week that policy makers attending the Oct. 7-9 annual meeting of the IMF and World Bank have two tasks. First, do no harm, which above all means resisting the temptation to throw up protectionist barriers to trade. And second, take action to boost lackluster global growth and make it more inclusive.
I can see how a vote against the likes of Hollande, Hillary or Cameron constitutes a “the backlash against globalization”. What I don’t see is how that has now become the same as the anti-trade movement. When did Trump express any feelings against trade? Against international trade deals as they exist and are further prepared, yes.
But those deals don’t define ‘trade’ to the exclusion of all other definitions. As for ‘protectionism’, that’s just a term designed to make something perfectly fine and normal look bad. Every single society on the planet should protect its basic necessities from being controlled by foreigners, either for money or for power.
Nothing good can come of relinquishing that control for any society, ever. There‘s not a thing wrong with protecting your control of your own water and food and shelter, and these are indeed things that should never be traded or negotiated in global markets.
So claiming that ‘do no harm’ equals NOT protecting your basics is nothing but a self-serving and dangerous kind of baloney coming your way courtesy of those people whose sociopathic plush seats and plusher bank accounts depend on your ongoing personal loss of control over what you need to survive.
It’s what any ‘body’ does that has reached the limits of its growth: it starts feeding on its host. Be it a cancerous tumor, the Roman Empire or our present perennial-growth driven economic models, they’re all the same same thing because they are fueled by the same -thoughtless- principle.
Ilargi: See that upward line at the end? Well, it’s an IMF growth ‘forecast’. Which are always so wrong, and always revised downward, that you must wonder if the term ‘forecast’ is even appropriateAchieving even those modest objectives may prove elusive. Free trade has become polling poison in the U.S. presidential campaign, with Democratic nominee Hillary Clinton now criticizing a trade deal with Pacific nations, which isn’t yet ratified in the U.S., that she had praised when it was being negotiated.
Republican challenger Trump has lashed out at Mexico and China, threatening to slap big tariffs on imports from both nations. Rattled by the U.K.’s June vote to leave the EU, European leaders know it may just be the start of a political earthquake that’s threatening the continent’s old certainties.
In case you didn’t catch it, “..the continent’s old certainties” is a goal-seeked term. Old in this case means not older than, say, 1950, if that. Look back 100 years and “the continent’s old certainties” dress in a whole other meaning.
Next year sees elections in Germany and France, the euro area’s two largest economies, and in the Netherlands. In all three countries anti-establishment forces are gaining ground. With growing resentment of the EU from Budapest to Madrid, policy makers have described the current surge in populism as the greatest threat to the bloc since its creation out of the ashes of World War II. There are also growing signs that the union and Britain are heading for a so-called “hard exit” that would sharply reduce the bloc’s trade and financial ties with the island nation. U.K. Prime Minister Theresa May said on Oct. 2 that she’ll begin her country’s withdrawal from the EU in the first quarter of next year.
I have addressed the misleading use of the term ‘populism’ before. In its core, it simple means something like: for, and by, the people. How that can be presented as somehow being a threat to democracy is a mystery to me. They should have picked another term, but settled on this one.
And in the western media consensus, it comprises anything from Trump to Beppe Grillo, via Hungary’s Orban and Nigel Farage, Spain’s Podemos, Greece’s Syriza and Germany’s AfD. All these completely different movements have one thing only in common: they protest the failed and fast deteriorating status quo, and receive a lot of support from their people for doing that.
Because it’s the people that bear the brunt of the failure, not the leadership; even Greece’s politicians still pay themselves a comparatively lush salary.
As for Britain, it’s the textbook example of utter blindness. Those who were/are well provided for, be they politically left or right, missed out on what was happening around them so much they had no idea Brexit was a real option. And in the 15 weeks since the Brexit vote, all anyone has done in the UK is seeking to blame someone, anyone but themselves for what they all failed to see coming.
Perhaps the biggest beneficiary of free trade over the past generation, China, still restricts access to many of its key industries, with economists worried about increasingly mercantilist policies. It’s also seeking a larger role in the existing global framework, with entry of the yuan into the IMF’s basket of reserve currencies on Oct. 1 the most recent example. An all-out trade war would be a disaster for China’s economy, with Trump’s threatened tariff potentially wiping off almost 5% of its GDP, according to a calculation by Daiwa Capital Markets.
John Williamson, whose Washington Consensus of open trade and deregulation was effectively the governing ethos for the IMF and World Bank for decades, said the 2008-09 financial meltdown had undercut support for economic integration. “There was agreement on globalization before the crisis and that’s one thing that’s been lost since the financial crisis,” said Williamson, a former senior fellow at Peterson Institute for International Economics who is now retired.
The growing opposition to economic integration has been fueled by a sub-par global recovery. “Perhaps the most striking macroeconomic fact about advanced economies today is how anemic demand remains in the face of zero interest rates,” former IMF chief economist Olivier Blanchard wrote last week in a policy brief for the Peterson Institute.
These ‘experts’ seem to have an idea there’s something amiss, but they don’t have the answers. Which is impossible to come and say out loud if you’re an expert. Experts must pretend to know it all, or at least know why they don’t know. “There was agreement on globalization before the crisis”, and now it’s no longer there. That they see.
That they ain’t coming back, neither the agreement on it nor globalization itself, is a step too far for them. To publicly acknowledge, at least. That Blanchard expresses surprise about ‘anemic demand’ at the same time that interest rates are equally anemic is something else.
That both are two sides of the same coin, or at least may be, is something he should at least mention. That is to say, low rates induce deflation, though they are allegedly supposed to induce the opposite. Economists are mostly very misguided people.
The world economy is getting some lift after rising at an annual rate just shy of 3% in the first half of this year, according to David Hensley, director of global economics for JPMorgan. But much of the boost will come from a lessening of drags rather than from a big burst of fresh growth, said Peter Hooper at Deutsche Bank Securities, a former Federal Reserve official. Recessions in Brazil and Russia are set to come to an end, while in the U.S. cutbacks in inventories and in oil and gas drilling will wane.
Please allow me to chip in here. ‘Lessening of drags’ in a nonsense term. And so is the idea that “..recessions in Brazil and Russia are set to come to an end”. That’s all goal-seeked day-dreaming. Smoke or drink something nice with it and you’ll feel good for a few hours, but that doesn’t make it real.
“I’m characterizing the global economy as something akin to a driverless car that’s stuck in the slow lane,” said David Stockton, a former Fed official and now chief economist at consultants LH Meyer. “Everybody feels like they’re being taken for a ride but they’re pretty nervous because they can’t see anybody in control.”
I really like this one, because off the bat I thought Stockton had it all wrong. What I think is the appropriate metaphor, is not “a driverless car that’s stuck in the slow lane”, but one of those cars in a carousel at a carnival, a merry-go-round, where you can sit in it forever and you always end up in the same spot. And the only one who’s in control in the boss who hollers that you need to pay another quarter if you want to keep on riding.
Or, alternatively, and to stay at the carnival, it’s a bumper car, which allows you to hit other cars and get hit, but never to leave the rink. That’s the global economy. Not getting anywhere, and running out of quarters fast.
Still, for the first time in the past few years, Stockton said he sees a real upside risk to his forecast of continued global growth of around 3% next year. And that’s coming from the possibility of looser fiscal policy in the U.S. and Europe. In the U.S., both Clinton and Trump have pledged to boost infrastructure spending on roads, bridges and the like. In Europe, rising populism provides a powerful incentive for governments to abandon austerity ahead of the elections next year – and perhaps beyond. Whether such a shift will be enough to mollify those who have been on the losing side of globalization for decades is debatable, however.
“The consensus in policy-making circles was that more trade meant better economic growth,” said Standard Chartered head of Greater China economic research Ding Shuang, who worked at the IMF from 1997 to 2010. “But the benefits weren’t shared equitably, so now we see a round of anti-globalization, anti-free trade. “Globalization will stall for the moment, until we can find a way to share those benefits,” he added.
Globalization is done. And while we can discuss whether that’s of necessity or not, and I continue to contend that the end of growth equals the end of all centralization including globalization, fact is that globalization was never designed to share anything at all, other than perhaps wealth among elites, and low wages among everyone else.
The EU and IMF have not delivered on what they promised, in the same way that traditional parties have not, from the US to UK to basically all of Europe. They promised growth, and growth is gone. They may have delivered for their pay masters, but they lost the rest of the world.
Anything else is just hot air. But that doesn’t mean they will hesitate to use their control of the military and police to hold on to what they got. In fact, that’s guaranteed. But it would only be viable in a dictatorial society, and even then.
We are transcending into an entirely different stage of our lives, our economies, our societies. Growth is gone, it went out the window long ago only to be replaced with debt. And that’s going to take a lot of getting used to. But there’s nothing that says we couldn’t see it coming.
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