- The "Bomber Harris" Of Central Banks
By Chris at www.CapitalistExploits.at
Market dislocations occur when financial markets, operating under stressful conditions, experience large widespread asset mispricing.
Welcome to this week’s edition of “World Out Of Whack” where every Wednesday we take time out of our day to laugh, poke fun at and present to you absurdity in global financial markets in all it’s glorious insanity.
While we enjoy a good laugh, the truth is that the first step to protecting ourselves from losses is to protect ourselves from ignorance. Think of the “World Out Of Whack” as your double thick armour plated side impact protection system in a financial world littered with drunk drivers.
Selfishly we also know that the biggest (and often the fastest) returns come from asymmetric market moves. But, in order to identify these moves we must first identify where they live.
Occasionally we find opportunities where we can buy (or sell) assets for mere cents on the dollar – because, after all, we are capitalists.
In this week’s edition of the WOW we’re covering the Japanese central bank policies and the recent rise in Japanese interest rates
It was back in mid 2011 that I first began shorting the yen. Specifically, I was long both XAU/JPY (in blue) and USD/JPY (in green and red).
On the USD/JPY we moved all the way from 72 to 125 in early 2015 which was obviously a profitable run.
Gold, on the other hand, went ballistic through late 2012, then proceeded to collapse into 2013 before bouncing back and settling into a trading pattern (albeit a volatile one) which is pretty much where we stand today.
I’ve been trading around these core positions ever since I first poked fun at the BOJ in March of 2011.
Then the following year (January of 2012) I wrote a satirical piece, suggesting methods the BOJ could use to entice retail investors into the JGB market. Ironically my satire today looks far more plausible than the methods subsequently taken by the BOJ over the last 4 years. Truth truly is stranger than fiction.
Beginning 2016 the USD/JPY positions have experienced significant drawdowns with volatility spiking. Drawdowns only hurt if you’re levered, while volatility is important for that portion of any position held in options contracts. You want to be buying volatility when it’s cheap and selling it when it’s expensive.
I mention these things since I’ve been looking to re-establish and pyramid back in. And so as I sit here today I’m left pondering the BOJ’s next move and how much manoeuvrability they have left.
Japanese government bond rates have been rising sharply towards the zero mark over the past 6 months. A reversal of the downtrend. We can see this in the 10-year JGB chart below.
This is causing concern amongst the elites at the BOJ. Like market participants such as myself and many of the fund managers (some of the world’s most notable and successful) I regularly speak with, the BOJ may be asking the same question we are: is this the invisible hand of the market beginning to repudiate negative interest rates?
We’ll only know in hind sight and must work with the probabilities in any given scenario. I know of no successful trader or investor who manages risk any other way.
What Will the BOJ Do Next?
In a recent statement Kuroda-san dismissed ideas of calling a halt to their aggressive monetary policy, and while what a central bank says and what a Central bank does are not always the same thing, we do know that the BOJ is in a bit of a pickle.
“It is often argued that there is a limit to monetary easing, but I do not share such a view.
Needless to say, there is still ample room for further cuts in the negative interest rate and for an increase in the quantity dimension.”
The BOJ Conundrum
Do you remember the Monty Python skit with Colin “Bomber” Harris self-wrestling where he succeeds by defeating himself?
The BOJ is the “Bomber Harris” of the central bank world. It’s gotten to the point where it is wrestling with itself and bound to win, and in doing so bound to lose.
They’ve stated their intent purpose is to create inflation. It’s not specifically to destroy the yen or further layer the country with ever greater debts. It’s to create inflation. They are simply accepting that those are the consequences they must bare.
The process which they’ve used to do so is with a record-setting bond purchase program which has now crept into buying equities and commercial property ETFs.
Consider that the former (bond purchasing) was designed to push interest rates down, forcing capital out of the bond market into the equity markets. Forcing people to essentially spend and invest instead of hoard and save, thus stoking the flames of inflation.
The latter (buying equities and commercial real estate ETFs) has been a panicked attempt to do what the market has largely refused to do in the size deemed necessary as the 2% inflation target still looks a long way off.
This is self-wrestling at its best. As bond yields have plunged below the neckline, destroying the ability of savers to get any sort of return those savers have instead saved more and hoarded money. Deflation is persistent as a result.
Many of you will remember my conversation with colleague Grant Williams early this year where we discussed the market reaction to the BOJ going negative. The Nikkei dropped at the open and the yen rallied. Not at all what the BOJ expected or wanted. Wrestling against themselves.
As I mentioned in a recent issue of World Out of Whack focused on demographics, consumption changes radically when you’re retiring. Needs change and that is a qualitative issue that few seem to grasp, certainly not central bankers.
While these policies continue to fail, the debt pile grows and tensions increase. A consequence of enormous debt is the ability to service these debts. Nobody is talking about this anymore. At negative interest rates who cares, right?
The Three Musketeers
In a world where central bank policy globally is co-ordinated, negative interest rates don’t seem to pose much risk. Provided they’re all in it together. One for all and all for one.
The ECB, FED, and BOJ are of course the three most important central banks in the world and the only real players when it comes to deep liquid capital markets.
It’s ironic that the BOJ is using negative interest rates in an attempt to devalue the yen but can only really be successful if they can devalue against the euro and dollar.
This means of course that a yen devaluation needs to be met with either no or less devaluation by the ECB and the FED, otherwise it simply doesn’t work as they all go down together.
And herein lies the conundrum. Co-ordination between these three musketeers is necessary in order for the bond markets to hold together. Breaking ranks could provide a global shock that markets are wholly unprepared for and as the entire ball of wax grows bigger, any divergences become more and more dangerous. Pretty soon the smallest arbitrage will threaten to tear through the increasingly fragile markets.
Interestingly this is where the qualitative, not quantitative side to economics becomes really, really important. It’s a reason why I’ve been hammering on about the change in the zeitgeist affecting US politics as well as the changes taking place in European politics. These are qualitative behavioural economics issues which, together with the quantitative, need to be understood (a topic I’ll be covering later this week).
Rates or Currencies? Take Your Pick
So on the one hand we have currency risk and on the other we have interest rate risk.
Right now interest rates are negative with the outlier being the US. If the chubby lady hikes, even by 25 basis points (because that’s the most they’d dare to do), then the BOJ will get what they want in a depreciating yen. But the consequences to their already falling bond market (rising rates) could get out of hand and quickly.
Ironically the easiest way to counter that would be for the Fed to slash rates, bringing rate differentials closer together but that would not have the same depreciating affect on the yen.
What is clearer with every passing day is that these guys are less and less data dependent. Monetary policy at the BOJ is now completely reactionary and chaotic. After all, what’s the point at looking at data sets anymore when any reference point that may have had any meaning was left miles offshore a long time ago?
Understanding where institutional capital will flow is always a pretty useful question and so..
Imagine you’re an institution (as some readers are) and have to buy government debt in size…
Cast your vote here and also see what others think
Investing and protecting our capital in a world which is enjoying the most severe distortions of any period in mans recorded history means that a different approach is required. And traditional portfolio management fails miserably to accomplish this.
And so our goal here is simple: protecting the majority of our wealth from the inevitable consequences of absurdity, while finding the most asymmetric investment opportunities for our capital. Ironically, such opportunities are a result of the actions which have landed the world in such trouble to begin with.
– Chris
PS: Know anyone that might enjoy this? Please share this with them.
“Oh what a tangled web we weave, when first we practice to deceive” – Sir Walter Scott
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- Latin America's 'Pink Tide' Crashes On The Rocks
Submitted by Ryan McMaken via The Mises Institute,
Ten years ago, South America was witnessing the rise of what came to be known as the "pink tide." Characterized by an allegedly kinder and softer version of socialism than the "red" communism of Castro's Cuba, the pink tide had begun with the election of Hugo Chavez in Venezuela in 1998, followed by the election of Lula da Silva in Brazil in 2002, and followed by the rise of the Kirchners in Argentina in 2003. The tide continued to roll in with the election of Evo Morales in Bolivia in 2006, and Rafael Correa's election in Ecuador in 2007.
As these new leftist candidates gained traction, their success was said to herald a new era of leftist politics in South America that would bring to an end the "neoliberal" consensus and impose a new, more humane economics on Latin American society.
Eighteen years after Hugo Chavez's inauguration, things haven't gone quite as planned.
The economy of Venezuela is in seemingly terminal decline with riots, shortages, and enforced slave labor imposed in an attempt to force more production out of the population. Meanwhile, the economies of Brazil and Argentina — while not comparable to Venezuela — are among the worst in Latin America, with Brazil heading for its its worst depression since 1901.
As economies worsened, corruption and authoritarian tactics worsened as well. Venezuelans have gotten the worst of it with citizens groaning under the weight of a police state that shuts down small business and persecutes even the smallest entrepreneurs for alleged economic "crimes" such as being a "class traitor." In her final years, Kristina Kirchner became increasingly autocratic and paranoid, going so far as to prosecute and impose fines on economists who made economic forecasts the Argentinian state found to be be unflattering. Meanwhile in Brazil, corruption reached new heights as President Rousseff — the pink-tide successor to da Silva — attempted to save the economy and her political career by showering her political allies with "stimulus" cash.
The Hard-liners Give the Worst of It
Much of the most serious damage has been limited to Venezuela, Brazil, and Argentina, however, as it seems the pink tide was never quite as deep or strong as many suspected it to be.
Correa and Morales, for instance, while spouting Marxist rhetoric, proved to be more pragmatic rather than ideological, opting for more restrained reforms that still left room for the more standard fare of so-called neoliberalism, such as expanded international trade and relatively restrained government budgets.
In contrast, Venezuela's regime committed itself to revolutionary changes in its economic and political systems while the Kirchners clamped down on free trade, manipulated exchange rates, imposed capital controls and persecuted political enemies. Brazil expanded government spending to new highs.
Over the past decade, we saw the rise of two different blocs in Latin America. There were the more market-oriented economies, found in Chile, Colombia, Peru, and Uruguay. In some cases, these countries elected avowed leftists as well. But, even these center-left governments tended to lean toward expanded trade or benign neglect toward informal economies and the business sector.
Some countries — Chile, Colombia, Peru, and Mexico — after years of consistent growth and stable politics, were even christened the "Pacific Pumas" in a play on the "Asian Tigers" moniker of the 1990s.
The general trend continued into 2015, as the two blocs of South America show two very different trajectories:
Of course, this is just a snapshot of a trend that has continued for several years. The committed pink tide countries have foundered while the more pragmatic, restrained, and trade-oriented regimes have seen far better growth trends:
Source: IMF calculations and estimates.
The next graph shows trends in GDP per capita since 1990. In this case, I have taken the same per capita GDP values and indexed them, with a base year of 1990 to give us a view of growth over the past 25 years.
In this case, we find that countries that were less committed to the pink tide experienced the most growth. The top three countries for growth by this measure are Chile, Peru, and Uruguay. Argentina had been keeping pace with Peru, but has gone into decline since 2011, and now is about equal to Colombia in terms of growth.
Indeed, there has been generally unabated growth for all countries shown here except for Argentina, Brazil, and Venezuela. All three of the leading "pink tide" countries show distinct downtrends in recent years, with no growth at all over the past five years. Venezuela is in the worst position with no net growth at all in 25 years.
For help in reading the graph, here are all countries by index value in 2016, and by percentage growth since 1990 (GDP per capita):
- Chile 2.5 (151% growth)
- Peru 2.3 (125% growth)
- Uruguay 2.1 (110% growth)
- Argentina 1.9 (86% growth)
- Colombia 1.8 (77% growth)
- Bolivia 1.6 (59% growth)
- Ecuador 1.6 (55% growth)
- Brazil 1.4 (42% growth)
- Mexico 1.4 (41% growth)
- Paraguay 1.3 (34% growth)
- Venezuela 1 (-1.2% growth)
Naturally, not everything can be explained simply by the politics of the past decade. There are always other major institutional issues, and even military issues, as in the case of Colombia's recently-ended conflict with FARC rebels. Mexico's War on Drugs continues to be a significant drag on growth.
Moreover, it is also too simplistic to slap easy left-right labels on regimes, since the brand of socialism practiced in Venezuela is significantly different from that practiced by the Peronists in Argentina. Clearly, political institutions in Brazil are relatively less authoritarian than those in Venezuela. Even worse would be to go off mere political party labels as in the case of the Socialist Party in Chile, which currently controls the presidency in that country. The "Socialist Party" in Chile is best described as mildly center-left by modern standards, and party members should obviously not be lumped together with the Chavismo socialists of Venezuela.
Nevertheless, whether called Peronista or Chavismo, regimes more committed to populist, third-way, and socialist political action in practice are, not surprisingly, coming up against some of the disastrous economic side effects of their policies.
Of course, we can't prove anything by demonstrating correlations, which is why we must rely on sound economic theory as well.
- Wells Fargo Fires 5,300 For Engaging In Massive Fraud, Creating Over 2 Million Fake Accounts
For years we have wondered why Wells Fargo, America’s largest mortgage lender, is also Warren Buffett’s favorite bank. Now we know why.
On Thursday, Wells Fargo was fined $185 million, (including a $100 million penalty from the Consumer Financial Protection Bureau, the largest penalty the agency has ever issued) for engaging in pervasive fraud over the years which included opening credit cards secretly without a customer’s consent, creating fake email accounts to sign up customers for online banking services, and forcing customers to accumulate late fees on accounts they never even knew they had. Regulators said such illegal sales practices had been going on since at least 2011.
In all, Wells opened 1.5 million bank accounts and “applied” for 565,000 credit cards that were not authorized by their customers.
Wells Fargo told to CNN that it had fired 5,300 employees related to the shady behavior over the last few years. The firings represent about 1% of its workforce and took place over several years. The fired workers went to far as to create phony PIN numbers and fake email addresses to enroll customers in online banking services, the CFPB said.
How Wells perpetrated fraud is that its employees moved funds from customers’ existing accounts into newly-created accounts without their knowledge or consent, regulators say. The CFPB described this practice as “widespread” and led to customers being charged for insufficient funds or overdraft fees, because the money was not in their original accounts. Additionally, Wells Fargo employees also submitted applications for 565,443 credit card accounts without their knowledge or consent, the CFPB said the analysis found. Many customers who had unauthorized credit cards opened in their names were hit by annual fees, interest charges and other fees.
According to the NYT, regulators said the bank’s employees had been motivated to open the unauthorized accounts by compensation policies that rewarded them for drumming up new business. Many current and former Wells employees told regulators they had felt extreme pressure to expand the number of new accounts at the bank.
And, since it is US government policy never to send a banker to prison, they thought that engaging in criminal behavior was not such a bad idea.
Federal banking regulators said the practices reflected serious flaws in the internal culture and oversight at Wells Fargo, one of the nation’s largest banks.
“Today’s action should serve notice to the entire industry that financial incentive programs, if not monitored carefully, carry serious risks that can have serious legal consequences,” said CFPB Director Richard Cordray. He added that “unchecked incentives can lead to serious consumer harm, and that is what happened here.”
“Consumers must be able to trust their banks. They should never be taken advantage of,” said Mike Feuer, the Los Angeles City Attorney who joined the settlement.
On its behalf Wells fargo issued a statement saying it “is committed to putting our customers’ interests first 100 percent of the time, and we regret and take responsibility for any instances where customers may have received a product that they did not request,” the bank said in a statement adding that “at Wells Fargo, when we make mistakes, we are open about it, we take responsibility, and we take action.”
As the NYT puts it, “this is an ugly moment for Wells Fargo, one of the few large American banks that have managed to produce consistent profit increases since the financial crisis.” Now we know one of the reasons why.
As CNN redundantly adds, “the scope of the scandal is shocking.”
And since nobody will go to prison, in a few months we will read another such “shocking scandal” perpetrated by another bailed-out bank.
- The Official Story Is Now The Conspiracy Theory: Paul Craig Roberts Warns "The Tide is Turning"
Authored by Paul Craig Roberts,
In a few days it will be the 15th anniversary of 9/11, and this November 22 will be the 53rd anniversary of the assassination of President John F. Kennedy in Dallas, Texas. These two state crimes against democracy destroyed American democracy, accountable government, and the Constitution’s protections of civil liberty.
Years after the damage done by these events the American people no longer believe the official stories. Neither does the government, but the government will never validate the distrust that Americans now share of the oligarchs’ government by acknowledging the truth.
The official explanation of the assassination of President Kennedy never made any sense. Videos of the assassination contradicted the official story, as did witnesses, and many credible people challenged the government’s story. The CIA was faced with the official explanation becoming unglued and launched its media program stigmatizing doubters as “conspiracy theorists.”
The CIA’s psych warfare against the public succeeded at the time and for a number of years during which witnesses had mysterious deaths and the trail grew cold. But by the late 1970s there was so much public skepticism of the official story that the US Congress took the risk of being labeled “conspiracy kooks.” The House Select Committee on Assassinations reopened the inquiry into JFK’s murder. The House Committee concluded that the Warren Commission’s investigation was seriously flawed, that there was more than one person firing at President Kennedy and that there was a conspiracy to assassinate JFK.
The corrupt US Department of Justice (sic) contradicted the House Select Committee’s report. However, the American people believed the Select Committee and not the corrupt Justice (sic) Department, which never tells the truth about anything.
By 2013 polls showed that most Americans are “conspiracy kooks” who do not believe the official government line on JFK’s assassination. So with regard to JFK’s assassination, the “conspiracy theorists” are in the majority. The minority are the Americans who cannot escape their brainwashing.
In a few days it will be the 15th anniversary of the alleged al Qaeda attack on the World Trade Center and Pentagon, and we are witnessing the fading protection that the charge of “conspiracy theorist” provides for the officlal government story. Indeed, the official 9/11 story is collapsing before our eyes.
Europhysics, the respected publicaton of the European physics community has pubished an article by scientists who conclude that “the evidence points overwhelmingly to the conclusion that all three [World Trade Center] buildings were destroyed by controlled demolition.” Few American scientists can admit this, because their careers depend on US government and military/security complex research contracts. Independent scientists in the US are a vanishing breed, an endangered species.
The scientists say that in view of their findings, “it is morally imperative” that 9/11 “be the subject of a truly scientific and impartial investigation by responsible authorities.”
So now we are faced with a peculiar situation. The scientifically ignorant two-bit punk American presstitutes claim to know more than the editors of the journal of the European physics community and the scientists who did the investigation. Don’t you think it farfetched that ignorant, corrupt, and cowardly American journalists who lie for money know more than physicists, chemists, 2,700 high-rise architects and structural engineers who have called on the US Congress to launch a real investigation of 9/11, firefighters and first responders who were on the WTC scene, military and civilian pilots and former high government officials, all of whom are on record challenging the unbelievable and physically impossible official story of 9/11? What kind of a dumbshit moron does a person have to be to believe that the United States government and its media whores know better than the laws of physics?
The ability of the presstitutes to influence Americans seems to be on the decline. The media ganged up on Donald Trump during the Republican primaries, intending to deny Trump the nomination. But the voters ignored the presstitutes. In the current presidential campaign, Hillary is not the run-away winner that the presstitutes are trying to make her. And despite the propaganda ministry, the legs under the official 9/11 story are wobbly, to say the least.
Indeed, the official 9/11 story already has lost credibility with the American public. Last April a Rasmussen Poll found that “Americans doubt they’ve been told all the facts about the September 11, 2001 terrorist attacks on the United States and strongly believe the government should come clean.”
A YouGov poll in 2013 found that 50 percent of Americans “have doubts about the government’s account of 9/11,” which shows that the public is far more intelligent and less corrupt than the presstitutes who are paid to lie to the public. This poll also found that as a consequence of the cover-up job performed by the American presstitutes, 46 percent of Americans were not even aware that a third WTC building, Building 7, collapsed on September 11. After viewing films of WTC 7’s collapse, 46 percent saw it as a controlled demolition. By a margin of two to one, poll respondants support a new investigation of Building 7’s collapse.
So, in America today “conspiracy kooks” outnumber those who believe the official lies. As the official lies are themselves conspiracy theories, Americans who disbelieve the official conspiracy theories outnumber Americans who believe official conspiracy theories. The question is: who are the real conspiracy kooks, the majority who disbelieve the official lies or the minority who believe the official lies?
It is curious that the CIA’s psych-op mind-controll has broken down in the cases of the JFK assassination and 9/11, but is still effective in more recently orchestrated events, such as San Bernardino, Orlando, Paris, and Nice. Perhaps this is because not enough time has passed for the public to pay attention to the vast difference between the stories and the evidence.
The Internet offers many refutations of the official accounts. With regard to Nice, France, the Nice police officials themselves are having problems with the official story. The French Anti-Terrorist Sub-Directorate in Paris has ordered the public authorities in Nice to delete the video recordings from security cameras of the “Nice Terror Truck Attack.” The Nice authorities refused on the grounds that this would be destruction of criminal evidence. This story has disappeared from the news. I have asked friends in France how this conflict was resolved and have not heard anything. The French like to live life well and faced with the refugees from Washington’s wars, they seem to be focused on living life well while it can be done. If I hear anything, I will pass it on.
Apparently, the order to delete the video evidence of the “attack” was not sufficient for the French Ministry of the Interior. According to a senior Nice police officer, Sandra Bertin, the Interior Ministry pressured her to falsify her police report on the Nice “truck massacre.” Officer Bertin told the Journal du Dimanche that “he ordered me to put in [the report] the specific positions of the national police which I had not seen on the screen.”
The Interior Minister, Bernard Cazeneuve is suing the Nice police official for “defamation,” as if it is possible to defame any politician anywhere in the corrupt West. Moreover, why would a senior Nice official make up a story about being ordered to change a report? It doesn’t make any sense, does it? Clearly, the central government is trying to hide the evidence against the official story.
It seems that the French media is disposing of the Nice police official by branding her a rightwing racist opposed to the current government.
Watch this video and ignore the narrator’s four-letter vocabulary.
What you will learn is that all those people you saw running in the presstitute TV reports had no idea why they were running. The presstitutes created the impression that they were running away from the truck. However, as the interviews show, they were running because other people were running, because the police told them “terrorists, run,” and because they heard shots (apparently police firing blanks). Those interviewed reported, “You run with them even though you have no idea what you are running from. You can’t help it, you run with them.” None of those running away ever saw a truck.
According to the foul-mouthed narrator, the film of the people running away was taken prior to the time the truck allegedly mowed down 185 people, killing 85 of them. The narrator appears to be correct if the time stamps on videos are correct. The narrator says the streets needed to be cleared for the crisis actors to put on their show that is used to control our minds about what happened.
I have pointed out that a truck that hit 185 people, killing 85 of them would be covered in blood and that bodies would be splattered all over the street with blood everywhere. Yet, the photos and videos that we are shown show no such evidence. The stopped truck on which police are directing gunfire is as white as snow.
Independently of the vast analysis online of the video evidence of the alleged “Nice attack,” I suspect the Nice “terror attack” for the same reason that the Pentagon attack is suspect. Despite all the contrary evidence against the official stories, the authorities refuse to release the video evidence that, if it shows what the authorities claim, would shut up the skeptics and prove the official story.
When a government claims it has video evidence that proves its official story but refuses to release it, indeed, demands the destruction of the video evidence, we know for an absolute fact that the video evidence totally contradicts the official story. That is the only possible conclusion.
My readers will write to me asking how the government expects to get away with its faked, and in the case of 9/11 false flag, terror orchestrations? The answer, perhaps, is that just as it took a long time for the JFK assassination and 9/11 lies to catch up with the government, the recent orchestrations will also take some time for a slowly awakening public to catch on. In the meantime the orchestrated events will serve the agendas that they are intended to serve, and by the time that the public sees through the orchestrations, a new situation will be in place with new orchestrations.
Keep in mind that the public thinks it is shown evidence. Newspapers need photos to give a visual dimension to their coverage, and TV needs videos of the events. News organizations are under a time pressure, and they have to use what they are handed or what is at hand. There is no time to scrutinize the visual material or to raise questions about it. Most of the public thinks that the photos and videos shown to them are evidence or would not be shown and accepts the visual evidence without question. In an earlier column I linked to the vast array of Nice photos provided in the UK Daily Mail. The photos show a calm situation. There are a few people lying in the street without any sign of bodily damage or blood and there are covered objects that the public assumes are dead people. But the streets are devoid of the splattered blood and mangled bodies that would be the consequence of a truck hitting 185 people. Similarly, we have been shown very few videos and their origin is unknown except for the one attributed to Richard Gutjahr who was apparently pre-positioned to film inconclusively both the Nice and German “terror attacks.” Online analysis of the videos shows that the videos are not evidence for the storyline. The real question is why the French Interior Minister has prevented the release and demanded destruction of the security camera videos that filmed the entire event, an order that brought the central government in Paris in conflict with the public authorities in Nice. There has been no US media interest whatsoever in this very strange event. It is not a “conspiracy theory” to ask why the public cannot see the video evidence that shows what actually happened.
What agenda is served by the Paris and Nice attacks? This is the question everyone should be asking and the media, if we had one, should be investigating. With the information currently available to me, my answer is this. Of all the peoples of Western Europe, the French are the most independently minded. French independence has taken a number of recent hits from Washington:
The largest French bank was forced to hand over $9 billion to Washington for doing business with a country on Washington’s disapproval list.
Washington forced France to cancel a lucrative ship-building program for Russia, to the detriment of French companies and shipyard workers.
Washington has forced France into a diplomatic conflict with Russia that the French do not want and into a looming military conflict which the French want even less, as the conflict would mean the vaporization of France. As one Russian SS-18 can wipe out three-fourths of the state of New York, how many do you think it would take to wipe France off of the face of the Earth? Not even a handful.
Keep in mind that in 1966 President Charles de Gaulle pulled France out of NATO on the grounds that it was necessary to preserve French independence in world affairs. France did not again submit to Washington’s control until 2009 when Washington-owned Nicolas Sarkozy, put into the French presidency by Washington’s money, followed his orders and rejoined NATO.
The Paris and Nice orchestrated events serve to scare France back into Washington’s arms. Dreams of independence become nightmares when independence leaves the French people at the mercy of both terrorists and Russians. Washington, who owns Sarkozy, who is once again Washington’s candidate for president of France, intends to keep France in NATO.
The article in Europhysics pointing out the impossibility of the official 9/11 story could possibly lead to a rebirth of skepticism among Europeans. Only a skeptical media willing to investigate government storylines can bring a halt to the staged terror events that serve secret agendas.
Keep in mind that the US government has plentiful video evidence of the 9/11 attack on the Pentagon but refuses to release the evidence that it says support its story. Similarly, the French federal government has prohibited Nice authorities from releasing the security camera videos of the Nice truck attack and has ordered the video evidence destroyed. How can we believe governments that refuse to show us the hard evidence?
- And The Fed Wants To Raise Rates When?
For the sixth year running, exuberant GDP growth projections have been drastically marked down to a new normal low. But this year is different, not only have 2016 GDP growth expectations been marked down to post-crisis lows, but The Fed – in all its wisdom – is determined to raise rates (twice if you believe them) because, in their own words“the economy is in good shape and headed in the right direction…”
Does this look like the right time raise rates?
The oft-quoted Zero Hedge chart above prompted DoubleLine’s Jeff Gundlach to state “clearly this is a bad time to raise rates” adding that if rate-hike odds remain below 40%, then September is off the table (as The Fed does not want to shock the markets)…
Good luck Janet.
- Over 70% Of US Doctors Surveyed Say Hillary's Health Concerns Are "Serious, Possibly Disqualifying"
On a day when Hillary Clinton proclaimed the media biased (against her), labeling the GOP as "sad, misogynistic sexists," a survey of the Association of American Physicians and Surgeons (AAPS) found that nearly 71% of physicians thought concerns about Hillary Clinton's health are "serious – could be disqualifying for the position of President."
With her lead over Trump tumbling to six-week lows following a poor performance at last night's "commander-in-chief" forum, and a press conference focused on what she was not asked (or didn't answer)…
Hillary Clinton's campaign has called "sexism" on the GOP. As The Hill reports,
The Democratic nominee, along with top surrogates and allies, has seized on Trump’s recent comment that Clinton does not have a “presidential look,” using the comment to depict him as sexist.
The former secretary of State also laid into Republican National Committee Chairman Reince Priebus for his tweet that she looked “angry” during an MSNBC presidential forum.
Clinton didn’t rule out sexism when asked if she was being treated differently in the political race because she is a woman.
“I'm going to let all of you ponder that last question,” the first female presidential nominee replied with a grin at a press conference.
“I think there will be a lot of Ph.D. theses and popular journalism writing on that subject for years to come. I don’t take my advice and I don’t take anything seriously that comes from the RNC.”
Chelsea Clinton also waded into the debate on Thursday, criticizing Trump’s remarks about a “presidential look.”
“Everyone can see that as the sad, misogynistic, sexist rhetoric that I hoped we had moved beyond in the 21st century,” the former first lady's daughter said.
This isn’t the first time accusations of sexism have bubbled up during the campaign.
Earlier this year, Clinton fired at Trump for saying that if she were a man, “she would get 5 percent of the vote.” The billionaire criticized Clinton at the time for playing the “woman card.”
“They're pretty quick to yell sexism in a crowded theater … but constantly playing the victim card is not something you do from a position of strength,” said Republican strategist Matt Mackowiak.
Mackowiak said playing up gender is a “risk that can backfire” especially because “the first to make inroads with the other [demographic] will win.”
This 'sexist' call follows a lambasting of any and everyone who even mentions her health as "conspiracy theorists" with a political axe to grind. Ultimately, the media frenzy culminated in an article written by the WaPo's Chris Cilizza who concluded that "the questions about Hillary Clinton's health are absurd"…
… a statement which could pass for absurd judging by the Clinton campaign's furious response to demonize any member of the mainstream who dares to even bring them up.
* * *
Which means that, according to AAPS, over 70% of US doctors and surgeons are absurd right-wing tin-foil hat-wearers…
Concerns about Hillary Clinton's health are "serious—could be disqualifying for the position of President of the U.S.," say nearly 71% of 250 physicians responding to an informal internet survey by the Association of American Physicians and Surgeons (AAPS). About 20% said concerns were "likely overblown, but should be addressed as by full release of medical records." Only 2.7% responded that they were "just a political attack; I have confidence in the letter from her physician and see no cause for concern."
While more than 81% were aware of her history of a concussion, only 59% were aware of the cerebral sinus thrombosis, and 52% of the history of deep venous thrombosis.
More than 78% said the health concerns had received "not enough emphasis" in the media, and only 2.7% that there had been "too much emphasis."
Nearly two-thirds said that a physician who had a concern about a candidate's fitness to serve for health reasons should "make the concerns known to the public." Only 11% said a physician should "keep silent unless he had personally examined the patient," and 10% that the candidate's health was "off limits for public discussion."
Eighty-eight respondents submitted comments.
One said that "the public interest will ALWAYS override either privacy rights or rights of self-determination in the case of a presidential candidate."
Another mentioned Clinton's "so called loss of memory claimed during her FBI questioning about her email server."
Beyond the specific questions, one remarked that "I think that the candidate should be honest with the public about his/her health!"
The history of the concussion was concerning: "The public must watch the movie Concussion to realize that such an injury does affect thought process."
A poll of 833 randomly selected registered voters by Gravis Marketing showed that nearly half (49%) were not aware of the "well documented major health issues that Hillary Clinton has." Nearly three-fourths (74%) were unaware of Bill Clinton's statement that Hillary suffered a "terrible" concussion requiring "six months of very serious work to get over." The majority (57%) thought that candidates should release their medical records.
"Both physicians and other voters think that health concerns are relevant when choosing a presidential candidate," states AAPS executive director Jane M. Orient, M.D.
"However, more than 40% of physician respondents were unaware of the cerebral sinus thrombosis, and the vast majority of voters were not aware of all of Clinton's problems or their potential serious long-term implications for cognitive function."
Now that's a lot of "absurd conspiracy theorists."
- AsiaPac Stocks, Won Tumble After Possible North Korea "Nuke Test"
Reports of an "artificial earthquake" in North Korea sparked a bout of risk off in AsiaPac stocks and the Korean Won as USGS says the 5.3 magnitude quake at zero depth is near past North Kore nuclear test sites.
- *S. KOREA DETECTS ARTIFICIAL EARTHQUAKE IN N.KOREA AROUND 9:30AM
- *S. KOREA GOVT CALLS FOR TASK FORCE ON POSSIBLE NUKE TEST:YONHAP
- *5.3 MAG. EARTHQUAKE CHINA-NORTH KOREA BORDER REGION :EMSC
- *USGS CITES 'POSSIBLE EXPLOSION' FOR M5.3 EVENT IN N. KOREA
- *USGS: LOCATION NEAR PAST NORTH KOREA NUCLEAR TESTS
- *JAPAN SAYS NORTH KOREA LIKELY CONDUCTED NUCLEAR TEST
As Bloomberg reports, the 5.1-magnitude earthquake in a similar location was recorded before North Korea’s fourth nuclear test in January at the site. The news agency said the test was at the same location.
- *SUGA: JAPAN SEES POSSIBILITY N.KOREA QUAKE WAS NUCLEAR TEST
- *S. KOREA FOREIGN MINISTRY HOLDS EMERGENCY MEETING: YONHAP
And the initial reaction is selling pressure in local currencies…
And stocks…
As AP reports, a second nuclear test this year would be a defiant response to Western pressure on Pyongyang to halt its nuclear ambitions. The country has previously conducted tests every three to four years.
Any test will lead to a strong push for new, tougher sanctions at the United Nations and further worsen already abysmal relations between Pyongyang and its neighbors. North Korean nuclear tests worry outside governments because they are seen as moving North Korea's scientists and engineers that much closer to their goal of an arsenal of nuclear-tipped missiles that can reach the United States.
North Korea is thought to have a handful of rudimentary nuclear bombs and has spent decades trying to perfect a multistage, long-range missile to eventually carry smaller versions of those bombs. After several failures, it put its first satellite into space with a long-range rocket launched in December 2012, and has since launched another such successful launch.
Experts say that ballistic missiles and rockets in satellite launches share similar bodies, engines and other technology. The U.N. calls the North's long-range rocket launches banned tests of ballistic missile technology.
Some analysts say the North hasn't likely achieved the technology needed to manufacture a miniaturized nuclear warhead that could fit on a long-range missile capable of hitting the U.S. But there is a growing debate on just how far the North has advanced in its secretive nuclear and missile programs.
The question is – what does it take to prompt a retaliation from South Korea (or its big brother 'Murica)? - The Deep (Left) Pockets Of Black Lives Matter
Authored by Mitchell Shaw, originally posted at TheNewAmerican.com,
While claiming to be a grassroots organization formed in response to the prevalence of police violence, Black Lives Matter (BLM) is actually 100-percent pure Astroturf. With coffers bulging with millions of dollars from George Soros, the Ford Foundation, and other deep-pocketed leftist individuals and groups, BLM is little more than a front organization for these leftists and their agenda to reshape the very fabric of American society, culture, and law.
As The New American recently reported, Ken Zimmerman, the director of U.S. programs at Soros’s Open Society Foundations (OSF), denied last year that Soros had funded BLM, saying it was just a rumor. That was before hackers with DCLeaks.com published OSF documents showing that the Soros group had already given at least $650,000 directly to BLM. Those same documents reveal the reason for OSF bankrolling BLM: the “dismantling” of America so that it can be recast according to the vision of Soros and his leftist cohorts. As we reported then:
The relevant portion of the report says:
The killing of Freddie Gray in April helped spawn weeks of peaceful protests by Baltimore residents and allies from the #BlackLivesMatter movement that were temporarily interrupted by a period of unrest that lasted less than 48 hours and resulted in some injuries and millions of dollars in property damage to neighborhood businesses. While many lamented the damage done, the overwhelming sentiment is that the uprising has catalyzed a paradigm shift in Baltimore that offers opportunities for major justice reforms.
In particular, recent events offer a unique opportunity to accelerate the dismantling of structural inequality generated and maintained by local law enforcement and to engage residents who have historically been disenfranchised in Baltimore City in shaping and monitoring reform. Building on our existing networks and programs, OSI-Baltimore will focus investments on: 1) creating a culture of accountability for policing in Baltimore, recognizing the pervasive racism, disrespect and lawlessness that gave rise to recent events; and 2) building the capacity of activists in Baltimore to demand and achieve immediate and long-term reforms.
The sum of $650,000 is quite something for an organization claiming both that it is “grassroots” and that it represents the people being oppressed by an evil, racist society. Grassroots aren’t normally that wealthy, and evil, racist societies don’t normally fund organizations dedicated to throwing off those chains. There is clearly something else at work here and that something is an Astroturf front for racial agitation.
And, as much money as $650,000 is, it is mere drop in the bucket. The Washington Times reports that between OSF and the Center for American Progress, BLM has been the beneficiary of $33,000,000. Through grants to a variety of subversive organizations under the BLM umbrella, OSF and the Center for American Progress are funding a false narrative about racial disparity and police violence with the end-goal of “reforming” local police by federalizing them. By using the looting and rioting as “opportunities for major justice reforms,” Soros and his ilk have fanned the flames of an invented fire for their own purposes.
As bad as all of that would be on its own, even that $33,000,000 is — yet and still — just a drop in the bucket. The Ford Foundation and Borealis Philanthropy have recently formed the Black-Led Movement Fund with a six-year commitment to a pooled donor campaign to the tune of $100,000,000. Race-hustling, it would appear, is a booming industry. After all, you can’t make omelets without breaking a few eggs and you can’t reconstruct a society until you first tear it down. And there is no tool better at tearing down a society that the proven method of divide-and-conquer. $133,000,000 will pay for a lot of #BLM #FTP t-shirts.
So, under the banner and hashtag of “Black Lives Matter” sits a bulging and growing money bag. What is BLM doing with its ill-gotten gains? Have these “leaders” of black America started career training centers in the most impoverished and disenfranchised neighborhoods? No, they have simply demanded higher minimum wages. Rather than help the poor, black residents of the nation’s poor, black neighborhoods learn more valuable job skills, BLM simply demands that entry-level McJobs pay more than the jobs are worth. Have these “leaders” of black America started drug rehabilitation programs to help the poor overcome addictions? No, they have instead demanded that the legalization of drugs which addle the minds of the poor, black Americans in the inner-cities of America. Have these “leaders” of black America launched programs to address the cycle of poverty which necessarily accompanies high illegitimate birth-rates and fatherless homes? No, instead they have demanded that the “sex work” industry (a not-so-veiled reference to prostitution) be legalized. If black lives mattered to these “leaders” in the BLM “movement,” they would seek ways to make black lives better. Instead they use black lives as cannon fodder in their war on police — which is part of a larger war on society.
Take for instance just one of the many subversive organizations which will receive that $100,000,000 from The Ford Foundation and Borealis Philanthropy. The Movement for Black Lives (MBL) advocates for all of the above-mentioned ideas and more. MBL demands reparations including free college and a minimum wage with no requirements for the one receiving the “wage” to perform any work in order to receive it. (Of course, "minimum wage" is not the correct term since the very definition of "wage" is payment received for work performed.) It’s enough to make one wonder what the free college education is for if people will get money for nothing. MBL also demands the legalization (they prefer the term “decriminalization”) of drugs and prostitution. Their demand goes so far as to make such policy retroactive and to include — say it with me — reparations. And, with a wink and a nod to Marx and Engels, MBL demands “economic justice” to include “collective ownership, not merely access.”
The communist-on-its-face nature of these and other demands of the organizations under the BLM umbrella are a clear indicator of the real intent of BLM. The deep-pocketed funding by the likes of Soros, the Center for American Progress, the Ford Foundation, and Borealis Philanthropy show that BLM is the means, not the end. BLM is little more than a tool of social revolutionaries hell-bent on destroying America so they can build their long awaited dystopia which they attempt to pass off as a utopia.
h/t Brandon Smith's Alt-Market.com
- 40% Of GDP Per Year: Goldman Calculates The True Growth Rate Of China's Debt
For a long time when it came to Chinese loan creation, analysts would only look at the broadest reported aggregate: the so-called Total Social Financing. And, for a long time, it was sufficient – TSF showed that in under a decade, China had created over $20 trillion in new loans, vastly more than all the “developed market” QE, the proceeds of which were used to kickstart growth after the 2009 global depression, to fund the biggest capital misallocation bubble the world has ever seen and create trillions in nonperforming loans.
However, a problem emerged about a year ago, when it was revealed that not even China’s TSF statistic was sufficient to fully capture the grand total of total new loan creation in China. We profiled this three months ago in a post titled “China’s Debt Is Far Greater Than Anyone Thought“, where, according to Goldman, “a substantial amount of money was created last year, evidencing a very large supply of credit, to the tune of RMB 25tn (36% of 2015 GDP).” This massive number was 9% higher than the TSF data, which implied that “only” a quarter of China’s 2015 GDP was the result of new loans. As Goldman further noted, the “divergence from TSF has been particularly notable since Q2 last year after a major dovish shift in policy stance.”
In short, in addition to everything else, China has also been fabricating its loan creation data, and the broadest official monetary aggregate was undercutting the true new loan creation by approximately a third. The reason for this is simple: China does not want the world – or its own population – to realize just how reliant it is on creating loans out of thin air (and “collateralized” by increasingly more worthless assets), as it would lead to an even faster capital outflow by the local population sensing just how unstable the local banking system is.
Unfortunately for the Beijing politburo, there are ways to find the real number. This is how Goldman did it: the firm’s approach is not to directly quantify the amount of credit extended, because financial institutions (FIs) do not provide good clarity on the true nature of their assets and hence it is difficult to conclude how much of those are indeed credit to corporates and households. Rather, the firm looks at the mirror image of credit—i.e., “money”, which is a metric related to FIs’ funding side. The basic idea is that credit generation is essentially a money creation process, hence an effective gauge of “money” can give a good sense of the pace of credit. But as the officially reported broad money, M2, has been rendered less relevant by continued financial diversification, so Goldman construct our own money flow measure to fit our purpose.
- Quantify the money flow from households and corporates to various financial investments, including i) bank deposits from households and corporates and ii) non-deposit financial investment by households and corporates, including wealth management products (WMPs), investment funds, insurance schemes and collective trust products.
- Adjust the money flow measure above for factors that affect the quantity of money but are unrelated to credit generation; These include changes in net government financial balance, FX/RMB conversion by households and corporates, and cross-border RMB flow.
- Add entrusted loans (which are company-to-company lending and do not create money) to the adjusted money flow measure to make it comparable to the TSF concept.
The table below shows Goldman’s estimates for 2016 Q1-Q2, in addition to its estimates for 2011- 2015 discussed previously. In seasonally adjusted terms, our estimate of credit flow for the first half of 2016 is 35% of GDP.
Here is the good news: compared to late 2015, the record credit creation has slowed down fractionally, and the gap with the TSF total has shrunk. The smaller gap seems to be in line with recent reports that listed banks’ “investment receivables” expanded less rapidly in 2016 H1, and it might partly reflect the regulators’ tougher stance against shadow lending in recent months.
And now, the bad news: this “tougher stance” has not been nearly tough enough, because as the following chart shows on a 1-year moving average, nearly 40% of China’s “economic growth” is the result of new credit creation, or in other words, new loans.
What this really means, is that China’s debt/GDP, estimated most recently by the IIF at 300%…
… is now growing between 30% and 40% per year, when one accounts for the unaccounted for “shadow” credit conduits.
Here is how Goldman concludes this stunning observation:
The PBOC appears to have shifted to a less dovish, though still supportive, policy bias in the last few months. However, given the prospective headwinds from slower housing construction and tighter on-budget fiscal stance in the coming months, there remains a clear need to sustain a high level of infrastructure investment, which is credit intensive, to achieve the minimum 6.5% full-year growth target (see our recent comment here). This poses constraints on how much further the PBOC can keep reining in credit, in our view.
Translating Goldman, some time around 2019, China’s total Debt/GDP will be over 400%, an absolutely ridiculous number, and one which assured a banking, if not global, financial crisis. The only saving grace is that for the time being, the PBOC and Beijing have managed to sweep away China’s unfixable problems under the rug, with a series of amazing distractions and the effectively nationalization of the stock, bond and FX markets. Alas, this is also the basis for “recovery” in all other developed nations, which means that as of this moment, it is a race between the world’s central banks not who can devalue the fastest, but who can avoid losoing credibility first, and watch as these Keynesian mountains of debt, never before seen in the history of manking, come crashing down as JM Keynes “long run” finally catches up with everyone.
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