Today’s News December 17, 2015

• A Free Market in Interest Rates

  by Keith Weiner

   

  Unless you’re living under a rock, you know that we have an administered interest rate. This means that the bureaucrats at the Federal Reserve decide what’s good for the little people. Then they impose it on us.

  In trying to return to freedom, many people wonder why couldn’t we let the market set the interest rate. After all, we don’t have a Corn Control Agency or a Lumber Board (pun intended). So why do we have a Federal Open Market Committee? It’s a very good question.

  Someone asked it at the recent Cato Monetary Conference. George Selgin answered: no matter if the Fed stands pat or does something, it’s still setting rates. This is a profound truth, which brings us to a fatal flaw in the dollar.

  In our irredeemable currency, interest cannot be set by the market. There’s literally no mechanism for it. To understand why, let’s start by looking at the gold standard.

  Under gold, the saver always has a choice. If he likes the rate of interest, he can deposit his gold coin. If not, he can withdraw it. By withdrawing, he forces the bank to sell an asset. That in turn ticks down the price of the bond, which is the same as ticking up the rate of interest. His preference has real teeth, and that’s an essential corrective mechanism.

  Unfortunately, the government removed gold from the monetary system. Now you can own it, but your choices have no effect on interest. If you buy gold, then you get out of the banking system. However, the seller takes your place, getting rid of his gold and thereby taking your place in the banking system. The dollars and gold merely swap owners, with no effect on interest rates.

  The Fed has kicked savers to the curb, along with gold. Now the dollar is considered to be money. And what is it, exactly? The dollar is the Fed’s IOU. If you have dollars, then you are funding the Fed. You—along with billions of others around the globe—are empowering the Fed. It can lend at any rate it wishes, because it has a seemingly unlimited credit line. The Fed is lending your wealth to profligate borrowers who use it for nonproductive
  purposes—and that’s putting it mildly.

  The Fed can buy mass quantities of long term bonds. Obviously, this has a profound effect on the interest rate. However, it has a more important way of influencing rates. The Fed dictates the rate for short-term borrowing. This enables banks to borrow short-term, at nearly zero interest, and use the proceeds to fund the purchase of long-term bonds.

  Normally that’s unstable, because the bank’s funding keeps expiring. Imagine buying a house, using a loan with a balloon payment after one month. Every month, you would be sweating bullets about getting a new loan. Banks don’t have to worry about this, with the Fed as lender of last resort. They love this trade, because they pocket the difference between the interest rate they pay (near zero) and the interest rate they earn on long bonds (over two percent). It’s a crony handout, unfair to the people.

  More importantly, the banks are pulling the long-term rate down near the short-term rate.

  Getting back to the question about an interest rate market, we have to ask: how else could the present system work? The Fed is the source of what passes for money. Even if it could just stop lending—and this would quickly lead to disaster—that would still be a monetary policy.

  So long as we use the Fed’s IOU as if it were money, then the Fed is in charge of our interest rate. It’s that simple.

   

  This article is from Keith Weiner’s weekly column, called The Gold Standard, at the Swiss National Bank and Swiss Franc Blog SNBCHF.com.

  

  

  

  

• Ecological Panic: The New Rationale For Globalist Cultism

  Submitted by Brandon Smith via Alt-Market.com,

  Faith in an ideology based on a desire for power over others and the need to feel personally superior without any legitimate accomplishment is perhaps the most dangerous state of being an individual or society can adopt. I would refer to such a mindset as “zealotry,” an integral element of cultism and an extreme result of the elitist side of faith.

  Zealotry and cultism are not limited to the realm of the religious. Zealotry is a clever devil hiding in the woodwork of any political or academic construct, and this includes the scientific community when it strays away from empirical logic and honest data into a world of pseudoscience and social engineering. I cannot think of a better example of zealotry feeding scientific cultism than the highly propagandized climate change/global warming movement.

  Anthropogenic (man-made) global warming is quickly becoming the overarching rationale for almost every policy toward global centralization, as well as a scapegoat for nearly every major crisis from mass shootings and the rise of ISIS to geopolitical shifts in economic structures. Global warming has been projected as a magical force deviously underlying everything. It is presented by climate scientists and activists as an all-encompassing behemoth of cause and effect, yet nearly all of this frantic pontificating is supported by faith, rather than hard data.

  The issue is one of transparency. Without transparency of experimental data, climate scientists and think tank operatives become immune to examination. That is to say, if climate scientists and organizations, many of which are funded by public tax dollars, are not required to reveal the raw data behind their claims on global warming, then their claims are no longer a matter of “fact” or scientific process. Rather, the assertions of climate scientists now become edicts from on high, messages from high priests with a private line to the god of science — a god that no one is allowed to question. Their words become gospel: carbon footprints in the sand.

  Climate research institutions like the Climatic Research Unit at the University of East Anglia, NASA and the National Oceanic and Atmospheric Administration have refused for decades to release the raw data behind their experiments, which they say prove the existence of man-made global warming. For many years the CRU refused to release any data that was not first processed to reflect its own desired outcomes and still refuses to release emails that might prove that climate scientists had rigged data in their warming models.

  Professor Phil Jones of the CRU in charge of maintaining data sets famously told an Australian climate scientist in 2004:

  “Even if WMO agrees, I will still not pass on the data. We have 25 or so years invested in the work. Why should I make the data available to you, when your aim is to try and find something wrong with it.”

  When opposition became more intense in reaction to the CRU’s secretive data, the organization had this to say:

  “We are not in a position to supply data for a particular country not covered by the example agreements referred to earlier, as we have never had sufficient resources to keep track of the exact source of each individual monthly value. Since the 1980s, we have merged the data we have received into existing series or begun new ones, so it is impossible to say if all stations within a particular country or if all of an individual record should be freely available. Data storage availability in the 1980s meant that we were not able to keep the multiple sources for some sites, only the station series after adjustment for homogeneity issues. We, therefore, do not hold the original raw data but only the value-added (i.e. quality controlled and homogenized) data.”

  Whenever the data issue becomes mainstream and pressure builds, climate scientists simply "lose" the original raw data, and once again we are asked to take them at their word.

  Now think about that for a moment. Only in the past few years have climate scientists been pushed to give up raw data to the public, as well as to other unaffiliated scientists, for review. They have enjoyed almost complete immunity from scrutiny since the global warming farce began while acting as the CORE drivers of political and economic policy models by international organizations like the U.N.’s Intergovernmental Panel on Climate Change (IPCC). Future laws and taxes that could affect the entire globe are being written and established on the word of a handful of unaccountable scientists who see their claims as sacrosanct and above investigation.

  Despite the assertions of some global warming enthusiasts, little has changed since the release of the hacked “climategate” data and emails or public pressure on climate research institutions. These organizations continue to dismiss data requests made through the Freedom Of Information Act.

  Recently, the NOAA released studies which it conveniently claims refutes satellite data proving that there has actually been NO global warming for at least 19 years. When asked by lawmakers to release research papers pertaining to the experiments that supposedly back the assertions of the NOAA, the NOAA refused.

  Eventually, apologists for the climate cartel are forced to admit that the raw data is not available to the public.  Climate scientists seem to be the only scientists in the world who get away with presenting theories and conclusions without being required to back what they say with hard data.  Instead of admitting this is an absurd standard, apologists often defend the act of scientific secrecy, claiming that "average people" are not smart enough to interpret the data even if it was made available to us.  We the "profane" public are too unclean to examine the holy books of climate scientists; we are expected to simply bow down to them and globalist entities like the UN as mediators between us and the gods.

  Again, there is no available raw data that proves that overt global warming or “climate change” is even occurring, let alone that it is caused by human beings or carbon dioxide. There is far more hard evidence suggesting that changes in climate are determined by the SUN; you know, that massive ball of heat and radiation at the center of our solar system the size of 1.3 million Earths. This was outlined expertly in a Channel Four documentary on the global warming hoax.

  Until climate scientists are willing to present their findings including all raw data in a legitimate and transparent manner for independent review, NOTHING they have to say on global warming is relevant. Period. They are not high priests. They are not infallible. They are not even particularly honest. Every chart you see in the mainstream showing warming corresponding to human carbon dioxide production is based on hearsay from these pseudoscientists, not hard evidence. Thus, all current and future laws and regulations based on said hearsay are ultimately erroneous and dangerous.

  Unfortunately, corruption within climate research is not where the problem stops. There are people within the halls of power that see the climate change ideology as the perfect vehicle to promote a new kind of social order — an order in which collectivism and centralized governance are “scientifically” indispensable.

  The Club of Rome, a globalist think tank with close ties to the climate change agenda stated on page 75 of its publication “The First Global Revolution” in 1990:

  "In searching for a common enemy against whom we can unite, we came up with the idea that pollution, the threat of global warming, water shortages, famine and the like would fit the bill…. All these dangers are caused by human intervention… The real enemy, then, is humanity itself…"

  The passage appears under the subhead “The Common Enemy Of Humanity Is Man.”

  There is a particular genius in the strategy of essentially uniting humanity against itself. We have heard arguments from politicians in the mainstream about the infinite threats caused by global warming. We have heard many political leaders from across the world demand centralization under the oversight of the U.N. to stop said threats. From Barack Obama to Vladimir Putin, there is considerable geopolitical consensus that the idea of climate change is real (yes, Putin in his last speech at the U.N. demanded action on climate change and more power to the U.N., proving once again that he is not anti-globalist).

  Secretary of State John Kerry, among others, has even suggested that ISIS was caused by climate change. This political rhetoric is meant for the masses who consume 15 minutes or less of news per day from the worst possible mainstream sources.

  There are, however, more clever snake-oil salesmen writing what I would call “refined propaganda.” These are the think tank analysts who turn lies into highly reasonable sounding treatise built on complex but always circular logical fallacies. If you want to know how future history texts will be written if the globalists get everything they want, simply read the papers and books of the think tank agents today.

  Years ago, I wrote about one of these elitist analysts in “The Linchpin Lie: How Global Collapse Will Be Sold To The Masses.” The article focused on a member of Rand Corporation named John Casti and his propaganda mechanism called the “Linchpin Theory.” Casti presented the false idea that “overcomplexity” was the primary cause of global crisis’ leading to minor incidents cascading like dominoes into worldwide catastrophes. Casti’s solution is, of course, simplification (Translation: globalization and centralization under a streamlined one-world system). This argument conveniently gives a free pass to the organized criminality of international elites — as if these men and their engineered disasters do not exist or never mattered, and all the fiscal pain and endless war we suffer is merely a product of random chaos.

  I have come across another think tank elitist peddling a similar propaganda mechanism called “Ecological Panic.” Timothy Snyder is a member of the Council On Foreign Relations and the writer of “Black Earth: The Holocaust As History And Warning.” I highly suggest readers listen to this interview with Snyder on Reuters to get a sense of what I mean by “propaganda.”

  Snyder conjures a vast array of disinformation in that interview alone, but I was particularly intrigued with the idea of “ecological panic,” which, I believe, is the next phase (or a more carefully defined phase) in the climate change agenda. Here is a summary:

  Snyder presents the foundational theory that crises — more specifically, “holocausts” — are a product of resource scarcity and unrealistic ideas of proper living standards. He blames these unrealistic standards on his own conceptions of free market systems, which supposedly encourage societies to demand more access to resources than what is practical (keep in mind that the elites want to be the people who have the power to determine what is practical and what is not). Snyder offers up the notion that Hitler himself, in a way that is not exactly made clear, was a promoter of a brand of free market greed, which lured unsuspecting Germans into the mentality of war and genocide for profit.

   

  At every turn, Snyder and the Reuters interviewers attempt to link Hitler’s philosophies and actions back to current principles that are original pillars of Western culture. Snyder suggests that Hitler’s social Darwinism is related to the free-market mentality of competition, which he seems to think means competition at any cost. He argues that the German ideal of high living standards was derived from ranking themselves against American standards. The interview leapfrogs into a comparison between the German obsession with high living standards at the onset of fascism and the American conception of high livings standards today.

   

  Ostensibly, the hint is that high living standards lead to totalitarianism and holocausts.

   

  The final thrust of the discussion revolves around the key idea that state conquests for resources along with global warming are today’s “linchpins” for further war, mass immigrations and genocide. Snyder directly relates Hitlerian genocidal philosophy with resource conquest and Hitler’s refusal to take science into account as a warning or a solution. Snyder links this to “ecological panic,” the claim that a lack of resource management and practicality lead to amoral thought processes and genocide. He suggests that global warming is a new catalyst for ecological panic and that the U.S. and much of the world are diving headlong into the same pattern as Nazi Germany out of greed for resources and a refusal to acknowledge the “wisdom” of climate science.

  So, if you were wondering where the root source was for the argument that climate change skeptics are the same as “holocaust deniers,” this kind of thinking is it.

  Snyder constructs a narrative of moral relativism in which people cannot be saved by enlightenment or moral compass because, according to him (and I am paraphrasing), resource crisis removes all morality from the situation and automatically turns people into monsters.  This is yet another elitist attempt to discount inborn conscience as a factor and elevate collectivist control of environment to mold society.     

  For someone who claims that understanding history requires “undoing the things we think we know implanted in our minds by nationalist history,” Snyder injects a rather ridiculous abstract regurgitation of mainstream history with vast voids of space in his information.

  First off, as shown above, Snyder’s primary thesis falls apart if the ideology of man-made global warming is a lie, a lie generated by false data provided by climate scientists who keep the raw and real data to themselves like some kind of occult knowledge.

  Second, true free markets did not exist in Germany during the Great Depression or World War II; and they certainly do not exist in America today. I’m getting a little tired of socialists and globalists constantly blaming “free markets” for the problems they created.

  Third, Snyder, like Casti from Rand Corporation, completely skips over the historical record when it comes to the influences of internationalists in the creation of disasters or totalitarian governments like the Third Reich. I highly suggest anyone interested in the REAL history of the Nazi Party read the well-documented works of Antony Sutton, including “Wall Street And The Rise Of Hitler.”

  While consistently attempting to connect Hitler’s fancies and genocidal tendencies to his admiration for American history, Snyder utterly ignores the fact that Hitler’s ideas on genocide were directly affected by the philosophy of eugenics, a philosophy which was launched by global elitists like the Rockefellers in the U.S. in the early 1900s — the same elites who later funded the Nazi infrastructure. Resource entitlement and "ecological panic" had little or nothing to do with Hitler’s eugenics background.

  It is documented fact that the success of ISIS in Syria and Iraq is due to the openly admitted support by covert government agencies, including U.S. agencies, tied to internationalist interests — NOT due to global warming, which is perhaps the most insane connect-the-dot theory I have ever heard.

  What we have here from this CFR mouthpiece is a carefully crafted rationalization for globalism. Look at it this way: If ecological panic is the primary trigger of collapse, war and industrialized death, the elites escape all blame. They are the ones, after all, trying to “save us” from ourselves by introducing carbon emissions controls, not to mention the idea of population controls.

  Global warming becomes a catch-all bogeyman, a Frankenstein monstrosity created by humanity and plaguing humanity. Those who deny the existence of global warming or who question the legitimacy of its high priests (climate scientists) are not exercising their right to skepticism; they are contributing to inevitable genocide. Therefore, climate denial would have to be punished by governments, as climate scientists have been publicly suggesting.

  Climate change and Snyder’s world of ecological panic would naturally facilitate the development of population controls and institutionalized eugenics. I have no idea if Snyder is aware of the irony that his ideology is actually more closely related to Hitler’s ideology than free markets ever will be. Being that he is a member of the CFR, I suspect he is aware indeed.

  If you want to know why internationalists and collectivists have been force-feeding the climate change agenda to the world despite considerable opposition and well-publicized incidences of exposed fraud on the part of climate scientists, consider the prize at the end of the game. If climate change and ecological panic become ingrained “truths” within our social framework, literally any horror can be justified.

  Under ecological panic, human beings must apply social Darwinism in order to survive. Amoral rationalizations must prevail. Pseudoscientists and the establishment become the purveyors of life and death, prosperity and poverty. It will be the elitist class, given license by the power of blind faith rather than hard data, that will determine every aspect of existence from resource allocation, to production, to labor, to relationships and birth, to child rearing, to an individual’s very life span and access to healthcare. Globalism, if allowed to continue in the name of climate defense, will become the most pervasive and powerful cult in history.

  

  

  

  

  

• KeRRY STaReDoWN…

  

  

  

  

  

• The Fed Hike Will Unleash A Monster Dollar Rally Goldman Predicts; Merrill Disagrees

  The “long dollar” trade may be the most crowded ever…

  

  …but that doesn’t mean there aren’t disagreements where the greenback goes from here, especially after the Fed’s historic first rate hike which according to some means the end of the dollar’s tremendous year-plus long rally as the market starts to price in the next recession as a result of the Fed’s own action, while according to others as a result of rate differentials and other central banks’ ongoing debasement of their own currencies, the dollar surge is only getting started.

  Among the latter, is none other than infamous Goldman FX strategist Robin Brooks, whose recent firm conviction that the ECB would crush the EUR led to massive losses for anyone who listened. This time, Goldman is intent on making anyone who still isn’t onboard the long-USD monorail, shown originally here in this January 2015 post…

  

  … get right on board.

  From Goldman’s FX team explaining why “they hiked it and they liked it”

  The Fed today raised interest rates for the first time since 2006, without – as our economists note – resorting to an overly dovish message. This was very much in line with our “hike it and like it” expectation and markets responded in the way we anticipated: the SPX bounced, EM currencies like the Mexican Peso strengthened, buoyed by the recovery in risk appetite, and the Dollar rose versus the G10. The turning point for price action came in the press conference, when Chair Yellen did not use a question on credit markets to head in a dovish direction, but emphasized the soundness of the financial system and strength of the economy instead (Exhibit 1).

   

  

   

  As we argued prior to the meeting, risk markets tend to take direction from the Fed when uncertainty is elevated, as in September when a dovish FOMC caused risk to sell off, while risk rallied on the hawkish October statement. This pattern held true today, as Chair Yellen’s upbeat message helped markets put aside worries over credit markets.

  Yes, sure, let’s just forget the terrible September jobs report which unleashed the tremendous October market surge on hopes of a dovish Fed, which then magically morphed into a narrative that it was a hawkish Fed that is good for stocks all along. Anyway back to Goldman:

  The biggest beneficiary in G10 FX was $/JPY, which moved higher on a double lift via rate differentials and the relaxation in risk aversion. Into year-end, long $/JPY is our favorite expression of Dollar strength, as aggressive QQE implementation from the BoJ – 10-year JGB yields have been anchored at 30 bps through recent market gyrations – has on multiple occasions given rise to “phantom” moves higher in this cross, which we think reflect the power that QQE has on domestics shifting their portfolios out of JGBs into risk assets and out of the Yen. This channel, incidentally, is not operating as effectively for the Euro, where the volatility in Bund yields since May and the most recent press conference have undercut the effectiveness of QE.

  As yes, the Euro. Let’s recall what happened to that particular Goldman recommendation. On second thought, let’s not and let’s give the podium back to Goldman:

  There is no doubt that 2015 was a difficult year for the divergence trade, notably EUR/$ lower.

  Yes, that’s one way of putting it.

  But we don’t think there is a mystery as to what happened. Disagreement within the ECB has hampered the implementation of QE, which was one driver that caused the bounce in EUR/$ from 1.05 to 1.14 and temporarily put the Dollar on the back foot (the other driver being the dovish shift from the Fed at the March meeting). We certainly do not subscribe to the theory that Dollar strength is over now that lift-off has occurred, which is a popular view in some quarters given the behavior of the greenback during past hiking cycles. We think such historical comparisons ignore what a unique policy experiment has just ended: an emergency setting for policy rates since 2008, large scale asset purchases that more than quintupled the Fed’s balance sheet, and forward guidance that prevented interest differentials from moving more strongly in favor of the Dollar. The unwinding of all this will on our estimates drive the Dollar around 14 percent stronger through end-2017, with front-end rate differentials continuing to dictate that move (Exhibit 2). The Dollar is a buy.

  For the benefit of those who are not convinced, and who have been kermitted one time too many, here is BofA Merrill Lynch with the variant perspective:

  The dollar was mixed in the aftermath of the FOMC today with the market nearly fully priced for the first hike in 9 years. The still optimistic tone of the statement with respect to the labor market and growth, the unlimited ON RRP facility (strengthening the Fed’s ability to control short-rates) and with the dot plots still signaling 4 2016 hikes, the USD initially rallied–though later retraced—price action inconsistent with market’s expectation for a dovish hike. However, the USD’s experience of strengthening the 3-6 months into the first Fed hike, only to selloff in the months after, leaves us hesitant to read today’s Statement and Press conference as unencumbered bullish USD factor. More specifically, net USD long positioning was still quite high heading into the meeting, therefore, the USD’s retracement was likely a reflection of position adjustment than a fundamental catalyst. The mixed price action suggests today’s meeting will not be a near-term catalyst for the USD to rally further.

   

  Dollar performance going forward (now that the Fed has started the normalization process) will depend on: First, US data and the pace of hikes—if the Fed is able to hike 4 times next year versus the 2 priced into the market, the USD will move higher in our view, particularly against a backdrop of further policy easing by the ECB and BOJ in 2016. A sharp RMB depreciation could slow the pace of USD appreciation, in our view. And second, equity performance which, in part, will reflect the market’s assessment of the ability of the economy to handle higher rates (and a higher USD). Given the USD’s positive correlation with equities, any weakness here will likely hamper USD gains against funding currencies like the EUR and JPY in this scenario. Recent financial market volatility and the Fed’s still consistent message of conducting 4 hikes in 2016 (vs only 2 priced by the market) make us cautious on this front.

  And there you have it: two opinions, two diametrically opposite conclusions.

  Confused? That’s the point. However, if one had to come up with a coherent trade from all of the above, it would be to go alongside Goldman’s prop traders, which is by definition precisely the opposite of what Goldman’s clients are advised to do.

  

  

  

  

  

• Search For Fabled Nazi Gold Train Is A Bust: "There May Be A Tunnel…But There Is No Train"

  Submitted by Mac Slavo via SHTFPlan.com,

  It’s no secret that the Nazis stole millions of dollars worth of art, gold jewelry and personal belongings of the millions of people who were eventually sent to one of their many concentration camps across northern Europe. What does remain a secret are the whereabouts of the fabled Nazi gold train, which according to local legend was used to ferry away the Reich’s riches at the end of World War II.

  

   

  Several months ago a couple of amatuer explorers in Poland thought they had finally found the location of the train and the Polish government even sent military teams to start digging it up because it was believed to be hidden in secret railway tunnels some 30 feet underground.

  But as the New York Times reports, the hunt for the train may be a bust:

  “There may be a tunnel,” said Janusz Madej, the head of the scientific team, “but there is no train.”

   

  …

   

  The Krakow University team of geologists and engineers surveyed the site in November using magnetic and gravitation methods, Mr. Madej said at a news conference. The examination revealed some anomalies in the ground, he said, but they are no more than about eight feet below the surface, while the train was supposed to be 30 feet underground.

  “The anomalies could be remnants of a collapsed tunnel,” he said.

   

  The two amateur explorers — Piotr Koper, a Polish construction company owner, and Andreas Richter, a German geologist — said in August that they had “irrefutable proof” of the existence and location of the train, which was thought to be filled with gold, gems and weapons and sealed in a tunnel in the closing days of World War II.

  The supposed findings by the Polish government’s research teams have not persuaded explorers Koper and Richter, however.

  The explorers said their own experts had recently checked the site with ground-penetrating, thermal and magnetic sensors. Based on that data, the two men said there were clear signs of a railway tunnel, with tracks and sleepers.

   

  …

   

  Mr. Koper said on Tuesday that he and Mr. Richter, though just “hobbyist treasure hunters,” stood by everything they said and added, “There can’t be a mistake.”

  It’s certainly possible that Koper and Richter are right. They reportedly began their search after a man who claims he helped hide the train in 1945 made a deathbed confession of its location.

  Should the Nazi money train actually be where they say it is, there could well be billions of dollars worth of gold, silver, guns and prized artwork. That is often motivation enough for government officials and interested parties to engage in a cover-up and keep all the booty for themselves.

   

  

  

  

  

  

• Congress Fumes As Experts Say Iran Violated UN Ban By Test-Firing Nuclear Capable Ballistic Missile

  On October 11, Iran test-fired a new generation of surface-to-surface ballistic missiles capable of hitting Israel. 

  The Emad, as the long-range weapon is called, is a variant of Tehran’s Shahab-3, has a range of 1,700 kilometers, and is accurate to within 500 meters, according to  Anthony Cordesman, a researcher at the Center for Strategic and International Studies. For those who might have missed it, here is the clip:

  As we said at the time, the embarrassment for The White House in the wake of the “historic” nuclear accord continues as Iran will apparently continue to exploit any and all ambiguities to its advantage up to and including building new ballistic missle systems, an act which certainly goes against the spirit of the deal if not the letter. 

  As it turns out, the Emad launch may in fact have represented more than a symbolic violation of the July nuclear accord. As Reuters reports, “Iran violated a U.N. Security Council resolution in October by test-firing a missile capable of delivering a nuclear warhead,” a team of sanctions monitors says.

  As we noted at the time of the launch, the test-fire didn’t technically violate the terms of the P5+1 nuclear deal, but a report from The Security Council’s Panel of Experts suggests that the Emad launch “is a violation by Iran of paragraph 9 of Security Council resolution 1929.” 

  This puts the Obama administration in a decisively precarious position. Congress is now calling for more sanctions but hitting Tehran with further punitive measures risks derailing the deal altogether. “If Washington failed to call for sanctions over the Emad launch, it would likely be perceived as weakness,” For his part, Democratic U.S. Senator Chris Coons (who supported the nuclear deal) said that in the absence of Security Council action, the US should impose direct sanctions on those responsible for the missile tests.

  Indeed, attemps by the Security Council to expand the Iran blacklist would likely run into stiff opposition from Russia and China. 

  Ultimately, this is a dispute about nukes versus Tehran’s arsenal of missiles. As we documented extensively in “Inside Iran’s Secret Underground Missile Tunnels,” Iran has the largest ballistic missile cache in the Mid-East. Here’s a rundown courtesy of The US Institute of Peace:

  • Shahab missiles: Since the late 1980s, Iran has purchased additional short- and medium-range missiles from foreign suppliers and adapted them to its strategic needs. The Shahabs, Persian for “meteors,” were long the core of Iran’s program. They use liquid fuel, which involves a time-consuming launch. They include:
  • The Shahab-1 is based on the Scud-B. (The Scud series was originally developed by the Soviet Union). It has a range of about 300 kms or 185 miles
  • The Shahab-2 is based on the Scud-C. It has a range of about 500 kms, or 310 miles. In mid-2010, Iran is widely estimated to have between 200 and 300 Shahab-1 and Shahab-2 missiles capable of reaching targets in neighboring countries.
  • The Shahab-3 is based on the Nodong, which is a North Korean missile. It has a range of about 900 km or 560 miles. It has a nominal payload of 1,000 kg. A modified version of the Shahab-3, renamed the Ghadr-1, began flight tests in 2004. It theoretically extends Iran’s reach to about 1,600 km or 1,000 miles, which qualifies as a medium-range missile. But it carries a smaller, 750-kg warhead.
  • Although the Ghadr-1 was built with key North Korean components, Defense Minister Ali Shamkhani boasted at the time, “Today, by relying on our defense industry capabilities, we have been able to increase our deterrent capacity against the military expansion of our enemies.”
  • Sajjil missiles: Sajjil means “baked clay” in Persian. These are a class of medium-range missiles that use solid fuel, which offer many strategic advantages. They are less vulnerable to preemption because the launch requires shorter preparation – minutes rather than hours. Iran is the only country to have developed missiles of this range without first having developed nuclear weapons.

  While Iran vigorously denies that its scientists have pursued a nuclear weapon, Tehran has made it abundantly clear that it will continue to pursue its missile program unimpeded. As Defense Minister Hossein Dehghan said on the heels of the Emad launch, “...we don’t ask anyone’s permission to enhance our defense power or missile capability and will firmly pursue our defense plans, particularly in the field of missiles.”

  Although a new IAEA report clearly suggests that Iran pursued a nuclear bomb at least until 2003, the Agency’s Board of Governors passed a resolution on Tuesday to close its investigation into the history of Tehran’s nuclear program. “The decision by the Board of Governors will open a new chapter for cooperation between Iran and the agency,” Iran’s ambassador to the IAEA, Reza Najafi said on Tuesday. 

  Others aren’t so sure. “Iran’s cooperation was certainly not sufficient to close the overall PMD file,” Reuters quotes the Washington-based Institute for Science and International Security, as saying.

  So ultimately, this is just a game of cat and mouse between Tehran and the Western powers – as clear cut as the question might seem (i.e. “are you developing a nuclear bomb or aren’t you?”), the Emad launch suggests that implementing the nuclear deal may prove to be nothing short of impossible. For instance, it’s nothing short of absurd that Congress is now debating whether to slap Iran with more sanctions in connection with the missile launch less than a month before existing sanctions are set to be lifted. 

  At the end of the day, perhaps the US should consider whether Washington’s relationship with Tehran needs to be fundamentally rexamined, and on that note, we close with what we said in October: 

  “…imposing crippling economic sanctions on countries in order to deter their defense buildup (Iran) or otherwise force them into acting in a way that fits your definition of being an internationally responsible country (Russia) is a fool’s errand to the extent that it only serves to aggravate the situation and perpetuates still more of the very same behavior you’re trying to deter in the first place. Need proof? See the video shown above.”

  

  

  

  

  

• China Weakens Yuan For 9th Consecutive Day, Longest Streak Since 2008

  In the first two weeks of August 2008 (just a month before Lehman imploded), as tensions built in US financial markets, China weakened the Yuan for 10 straight days. Tonight, China just extended its streak of weakening the Yuan fix to 9 days (for an aggregate 1.4% devaluation, the largest such drop outside of August’s devaluation in history). This pushes the Yuan back to June 2011 levels.

  Yuan fix at lowest since June 2011…

  

   

  as CNYUSD has been in freefall since The IMF…

  

   

  Why it “might” matter…

  

   

  Now where have we seen that before…

  

   

  And finally, this chart raised our eyebrows… as the now ‘vicious’ Petrodollar circle of death accelerates…

  

  h/t Jeffrey Snider

   

  Charts: Bloomberg

  

  

  

  

  

• A Majority Of Americans Oppose "Assault Weapons Ban" – Highest Number On Record

  Submitted by Mike Krieger via Liberty Blitzkrieg blog,

  

   

  The person who bothers me the most on this entire topic is Mayor Michael Bloomberg, of my hometown NYC.  You can tell when someone is disingenuous if they freak out over gun violence like it is the biggest issue in America today and at the same time protect the banksters and their “too big to fail” culture, which has and continues to systemically steal trillions of dollars from the poor.  This is Michael Bloomberg to a tee, so this man should have no credibility on any moral subject when he protects and coddles the most dangerous criminal organizations on this planet.  I guess there is something “liberal” about white collar crime.

   

  The other way to spot a hypocrite is to see whether they ever speak out about other acts of violence, or if they only open their mouths when it comes to gun incidents.  I see this attitude all over the “fake left” landscape. If someone you know, or someone in the media never decries American drones strikes that kill children regularly in the forgotten parts of the globe, yet jumps at every gun incident like it is the end of the world, that person has an agenda. That person hates guns, not necessarily violence.  They do not have a clear head in this argument.

   

  – From the post: How to Spot a Hypocrite in the Gun Debate and Other Reflections on Newtown

  U.S. President Barack Obama is not just the world’s best gun salesman, he’s also the world’s worst gun control spokesperson.

  Despite immediately politicizing every single shooting event in recent years by using his bully pulpit to lecture the American public on why citizens must give up their rights to feel safe, his message has fallen on deaf ears. Why?

  Mainly because a man who consistently orders drone strikes on women and children all over the world, intentionally bombs a Doctors Without Borders hospital into oblivion, and who launched more shady wars across the globe than George W. Bush, doesn’t exactly hold much credibility as a humanitarian pacifist looking to “save the children.”

  Beyond this obvious hypocrisy, his gun control “sales pitch” is generally void of any logic whatsoever. For the perfect example, read the post: How Obama is Using the Grossly Unconstitutional “No Fly List” to Push Gun Control.

  Meanwhile, countless Americans have no doubt watched the following video, in which the White House Press Secretary stumbles and stutters in a embarrassing attempt to answer a reporter’s simple questions on the potential effectiveness of Obama’s “common sense” gun control measures.

  Put all of this together, and you get the following. From ABC News:

  A majority of Americans oppose banning assault weapons for the first time in more than 20 years of ABC News/Washington Post polls, with the public expressing vast doubt that the authorities can prevent “lone wolf” terrorist attacks and a substantial sense that armed citizens can help.

   

  Just 45 percent in this national survey favor an assault weapons ban, down 11 percentage points from an ABC/Post poll in 2013 and down from a peak of 80 percent in 1994. Fifty-three percent oppose such a ban, the most on record.

  To see just how dramatically public perception has changed, take a look at this chart:

  

   

  Indeed, while the division is a close one, Americans by 47-42 percent think that encouraging more people to carry guns legally is a better response to terrorism than enacting stricter gun control laws. Divisions across groups are vast, underscoring the nation’s gulf on gun issues.

   

  There’s lopsided agreement on another concern: Just 22 percent express confidence in the government’s ability to prevent lone-wolf terrorist attacks, with 77 percent skeptical about it. Confidence in the government’s ability to stop a large-scale organized terrorist attack is much higher, albeit still well short of a majority -– 43 percent.

   

  The results of this survey, produced for ABC by Langer Research Associates, point to a shift away from the position favored by Barack Obama and others who responded to the recent attack in San Bernadino, California, by calling for stricter gun control measures. Notably, in a statistical analysis, Obama’s overall job approval rating is the single strongest factor in views on an assault weapons ban.

   

  The increase in opposition to banning assault weapons since 2013 peaks in some groups -– up 18 points among strong conservatives, 17 points among higher-income earners and 16 points in the generally more liberal Northeast. But it’s a broadly based trend. Many groups have moved from majority support for an assault weapons ban two years ago to majority opposition now: whites, 30- to 64-year-olds, suburbanites, political independents, moderates, residents of the West and Midwest, anyone without a post-graduate degree and those in $100,000-plus households.

  No wonder he’s attempting to push gun control via executive action. Before trying to “spread democracy around the world,” I think Obama should take a long hard look in the mirror.

  

  

  

  

  

• In Dramatic Reversal, US Vice President Biden Calls On Turkey To Withdraw Its Troops From Iraq

  It has been a strange two days for US foreign policy.

  Earlier today we reported that in what amounts to a significant blow to the official US position over Syria, namely the multi-year demands to replace president Assad with a western puppet ruler, John Kerry on Tuesday accepted Russia’s long-standing demand that President Bashar Assad’s future be determined by his own people, as Washington and Moscow edged toward putting aside years of disagreement over how to end Syria’s civil war.”

  “The United States and our partners are not seeking so-called regime change,” Kerry said, adding that the focus is no longer “on our differences about what can or cannot be done immediately about Assad.”

   

  In a testament to the fact that mainstream media is beginning to understand just how weak America’s negotiating position has become, AP offered the following rather sarcastic assessment: “President Barack Obama first called on Assad to leave power in the summer of 2011, with “Assad must go” being a consistent rallying cry. Later, American officials allowed that he wouldn’t have to resign on “Day One” of a transition. Now, no one can say when Assad might step down.”

   

  Kerry also called demands by the “moderate” opposition that Assad step down before peace negotiations begin an “obvious nonstarter.”

  All of the above, some may say, makes the US presence in Syria, whether through CIA covert ops, commandos, or even the Islamic State, moot: after all, if the US has folded on an Assad regime change, then there is no longer any point in continuing the proxy war, which revolves around one key issue: regime change in Syria.

  But then something even more surprising happened.

  Earlier today, Islamic State militants launched an attack on a military camp in northern Iraq where Turkish troops have been stationed. According to officials and press reports, seven Kurdish peshmerga fighters were killed and four Turkish troops were injured in the bombardment and rushed to a hospital in Sirnak, a Turkish province bordering Iraq, according to Anadolu Agency. A Kurdish Rudaw news agency report suggested that two of the trainees at the camp were killed and six wounded.

  Turkey’s general staff said in a statement that Katyusha projectiles fell into the camp around 3 pm local time. Turkish troops returned fire following the attack according to Turkish officials, who provided no further details. Additionally, according to a report by a Kurdish news website, the Slemani Times, over 70 Turkish soldiers went missing after the attack.

  The attack on Turkish soldiers by the Islamic State takes place two weeks after the Turkish military deployed troops in northern Iraq without preclearance from Iraq in what has been seen by some as a military invasion of sovereign territory and has become a major stumbling block in relations between Ankara and Baghdad. While Turkey claims the troops had been deployed at the invitation of the Iraqi government, Baghdad denies this, describing Ankara’s actions as an “incursion.”

  But while the attack on the Turkish soldiers by those they allegedly invaded Iraq to fight may be seen as oddly ironic, the real surprise is what followed shortly thereafter.

  Moments ago, the office of the Vice President released a readout of a phone call Joe Biden had with Iraq’s PM Al-Abadi. The stunning part is that in a dramatic reversion of the NATO narrative on Turkey’s incursion in Iraq as justified, Biden just called on Turkey to withdraw from Iraq.

  Here is the full readout of Vice President Biden’s Call With Iraq’s Prime Minister Haider Al-Abadi

  The Vice President spoke with Iraqi Prime Minister Haider Al-Abadi yesterday following his December 14 call with Turkish Prime Minister Ahmet Davutoglu. The Vice President noted the recent deployment of Turkish forces into northern Iraq had occurred without the prior consent of the Iraqi government. Both leaders welcomed initial indications of the withdrawal of some Turkish forces and agreed this should continue, reiterating that any foreign forces can only be present in Iraq with the coordination and permission of the Iraqi government. The Vice President reaffirmed the United States’ commitment to Iraqi sovereignty and territorial integrity and called on Turkey to do the same by withdrawing any military forces from Iraqi territory that have not been authorized by the Iraqi government. The Vice President encouraged continued dialogue between Iraq and Turkey to address any outstanding grievances in the spirit of mutual cooperation. Both leaders reaffirmed their continued commitment to the fight against ISIL in Iraq.

  So first the US backtracks on its core long-running demand that “Assad must go”, and now it has just turned its back on a key NATO-member ally and what is allegedly the biggest provider of funding and supplies (including Ford F250 pick up trucks) to the Islamic State, Turkey.

  Perhaps if only Putin, Lavrov, and Kerry had more staring contests such as this one…

  

  … in which the latter invariably blinks, the world’s geopolitical conflicts would be promptly resolved.

  

  

  

  

  

• Asset Protection? Silver Has Held Its Value For 23 Centuries

  Submitted by Simon Black via SovereignMan.com,

  Thousands of years ago in ancient city of Babylon, specially trained scribes gathered each day in the Temple of Marduk to record the day’s events.

  They used cuneiform writing instruments and clay tablets, over 1200 of which still survive today.

  These scribes kept excellent records, detailing astronomical observances and water levels of the Euphrates River, as well as market prices for the most popular commodities like wheat, barley, and wool.

  It’s incredible that we have detailed records of grain prices going back thousands of years.

  The ancient Babylonians quoted grain prices in shekels, a unit of weight equivalent to 8.33 grams of silver.

  Over the 3+ century period between 384 BC and 60 BC, for example, the price of barley averaged 0.02053 shekels per quart in Babylonia.

  At 8.33 grams per shekel, this would be equivalent to about 0.171 grams of silver per quart, or about $3.75 based on today’s silver price.

  After converting the unit of measurement from ancient quart to modern hundredweight (cwt), that means that barley in Babylonian times sold for $5.23 per cwt when priced in today’s dollars.

  And according to the US Department of Agriculture, yesterday’s price for barley was… $5.25 per cwt.

  Amazing. When denominated in silver, the price of barley is almost exactly the same as it was thousands of years ago.

  In other words, if a farmer from 23 centuries ago had sold a quart of barley, he would have received 0.171 grams of silver.

  Fast forward to today and that 0.171 grams of silver would buy almost the exact same amount of grain as it did 23 centuries ago.

  This is an important reminder, especially today as the entire financial system waits with bated breath to see if the US Federal Reserve will raise interest rates for the first time in nearly a decade.

  It’s ultimately a complete farce. Our entire financial system is based on awarding total control of our money to a tiny, unelected committee of bureaucrats.

  They have the power to conjure trillions of dollars, euros, yen, pounds, renminbi, etc. out of thin air that are backed by absolutely nothing other than a thin veneer of confidence.

  Civilizations have been experimenting with this model for thousands of years. And every single time it has failed.

  Future historians will certainly wonder why we chose a financial system based on a model with such a long history of failure, and why we gave control of our savings and economic activity to unelected bureaucrats who are consistently wrong.

  When you step back and look at the big picture, this system is totally mad. And full of risk.

  Governments are insolvent. Central banks are nearly insolvent. Banking systems are extremely illiquid. National pension funds are insolvent.

  And their solution is to keep borrowing and printing more money.

  Look, holding some physical cash does make sense right now as a *short-term* hedge against risks in the financial system.

  If the GFC 2.0 hits, you’ll be glad that you’re holding some physical cash (more on this soon).

  But how much do you think your paper currency will be worth 23 centuries from now? Or even 23 years? Or potentially even 23 months?

  Bottom line– you’re not protected unless you own some real assets. Gold. Silver. Land. Productive business. This should be part of any rational person’s Plan B.

  

  

  

  

  

• Why the Fed Is WRONG About Interest Rates

  Richard Werner – an economics professor and the creator of quantitative easing – says that it’s a myth that interest rates drive the level of economic activity. The data shows that the opposite is true: rates lag the economy.

  Economics prof Steve Keen – who called the Great Recession before it happened – points out today in Forbes that the Fed’s rate dashboard is missing crucial instrumentation:

  The Fed will probably hike rates 2 to 4 more times—maybe even get the rate back to 1 per cent—and then suddenly find that the economy “unexpectedly” takes a turn for the worse, and be forced to start cutting rates again.

   

  This is because there are at least two more numbers that need to be factored in to get an adequate handle on the economy: 142 and 6—the level and the rate of change of private debt. Several other numbers matter too—the current account and the government deficit for starters—but private debt is the most significant omitted variable in The Fed’s toy model of the economy. These two numbers (shown in Figure 2) explain why the US economy is growing now, and also why it won’t keep growing for long—especially if The Fed embarks on a period of rate hiking.

  Figure 2: The two key numbers The Fed is ignoring

  

  [T]he dilemma this poses for The Fed—a dilemma about which it is blissfully unaware—is that a sustained growth rate of credit faster than GDP is needed to generate the magic numbers on which it is placing its current wager in favor of higher interest rates.

   

  The Fed, along with all mainstream economists, dismisses this argument on the basis that the level of private debt doesn’t matter to the macroeconomy: for every debtor who can spend less because of higher rates, there is a saver who can spend more, so the two effects cancel out. This is naïve nonsense [background], because it pretends that banks don’t create money when they lend—which they do, as the Bank of England recently explained in painstaking detail—and equally, destroy it when they take in more in repayments than they pay out in new loans. So expanding bank credit adds to demand (and income and capital gains) in the economy, while contracting bank credit subtracts from demand.

   

  With bank credit expanding at about 6% per year, total demand in the economy is expanding fast enough to give the appearance of a recovery: recorded unemployment now seems to be back to pre-crisis levels, and asset markets have boomed. But a few rate hikes over the next year will be enough to trigger a reversal in credit growth, because the level of private debt is substantially higher than it was when the last big boom began in the mid-1990s. The increased debt servicing burden will put enough debtors into distress to cause credit growth to slow down, and when it does, so will the economy.

   

  The Fed will then be forced to do what every other bullish Central Bank has been forced to do since this crisis began: reverse direction and cut rates once more as the economy tanks, rather than returning to “Equilibrium”. It will never get back to its preferred Federal Funds rate of 4% until it learns, finally, that credit matters, and it starts to consider policies to reduce private debt to a manageable level—which is something like half its current number of 142% of GDP.

  Sigh …

  

  

  

  

• Something Strange Is Taking Place In The Middle Of The Atlantic Ocean

  Early last month, we noted that something very strange was happening off the coast of Galveston, Texas. 

  As FT reported, “the amount of oil [now] at sea is at least double the levels of earlier this year and is equivalent to more than a day of global oil supply.” In short: the global deflationary crude supply glut is beginning to manifest itself in a flotilla of stationary supertankers, as millions of barrels of oil are simply stuck in the ocean as VLCCs wait to unload.

  Ultimately, this led to nearly 40 crude tankers with a combined cargo capacity of 28.4 million barrels waiting to anchor near Galveston. Here’s what the logjam looked like:

  

   

  In the latest sign that the world is simply running out of capacity when it comes to coping with an inexorable supply of commodities, three diesel tankers en route from the Gulf to Europe did something rather odd on Wednesday: they stopped, turned around in the middle of the ocean, and headed back the way they came! 

  “At least three 37,000 tonne tankers – Vendome Street, Atlantic Star and Atlantic Titan – have made U-turns in the Atlantic ocean in recent days and are now heading back west,” Reuters reported, citing its own tracking data.

  The Vendome Street actually made it to within 800 miles of Portgual (so around 75% of the way there) before abruptly turning around. “Ship brokers said a turnaround so late in the journey would come at a cost to the charterer,” Reuters notes. 

  The problem: low prices, no storage capacity, and soft demand.

  

  

  Here’s Reuters again:

  “European diesel prices and refining margins have collapsed in recent days to six-year lows as the market has been overwhelmed by imports from huge refineries in the United States, Russia, Asia and the Middle East. At the same time, unusually mild temperatures in Europe and North America further limited demand for diesel and heating oil, ptting even more pressure on the market.

   

  Gasoil stocks, which include diesel and heating oil, in the Amsterdam-Rotterdam-Antwerp storage hub climbed to a fresh record high last week.

  And here are the stunning visuals via MarineTraffic.

  Vendome Street

  

  Atlantic Titan

  

  As of now, it’s “unclear if the tankers will discharge their diesel cargoes in the Gulf Coast or await new orders,” but what you’re seeing is a supply glut so acute that tankers are literally just sailing around with nowhere to go as there are reportedly some 250,000 tonnes of diesel anchored off Europe and the Mediterranean looking for a home. On that note, we’ll close with the following quote from a trader who spoke to Reuters: 

  “The idea is to keep tankers on the water as long as you can and try to find a stronger market.”

  

  

  

  

  

• Meet The Foreign Criminals Using L.A. Real Estate To Launder Money & The Developers Who Help Them

  Submitted by Mike Krieger via Liberty Blitzkrieg blog,

  Here, as in other roosting places of the superrich, the recent influx of foreign money has gone hand in hand with the rising use of shell companies — generally limited liability companies. Shell companies were used in three-quarters of purchases of over $5 million in Los Angeles over the last three years, a higher rate even than the roughly 55 percent in New York, according to a New York Times analysis of data from PropertyShark. What is more, in Los Angeles, where so many of the new palaces are spec houses — luxury magnets for global wealth — not only are the buyers shielded by shell companies, but the developers are, too.

   

  – From the New York Times article: A Mansion, a Shell Company and Resentment in Bel Air

  While New York City and London are already well known as top destinations for shady, foreign-money laundering oligarchs who often attain untold riches by thieving from their own people, the Los Angeles area has likewise morphed into a criminal real estate hub.

  Monday’s article in the New York Times, titled, A Mansion, a Shell Company and Resentment in Bel Air, sums up so much of what is wrong about the U.S. economy and society as we reflect on how far we’ve fallen in 2015. A culture in which not only are the rich and powerful above the law, but where foreign criminals also can do whatever the heck they want and get away with it as long as they have billions to throw around. The fact that no one seems to be doing anything about any of it tells you all you need to know.

  What follows are a few excerpts, but you should really read the entire article. From the New York Times:

  Yet for all that, over four years of violation notices, inspections and hearings, efforts to hold someone accountable for the mess at 901 Strada Vecchia have repeatedly hit a legal wall. It is, as a judge said during an October session where once again nothing got done, “an extremely complicated case.”

   

  That is because “themodernhouseofhadid” belongs not to Mr. Hadid but to an entity that keeps the actual owner at a legal remove — a shell company named 901 Strada L.L.C.

   

  Fueled largely by the vast streams of wealth crossing the globe as never before, a new generation of hyper-luxury homes with stratospheric price tags is colonizing the most gilded hillsides and canyons of Los Angeles. In some areas, every third or fourth home has been torn down, leaving gashes of dirt and debris where new mansions will rise.

   

  And more often than not, the people behind the purchases are hidden by shell companies. 

   

  Here, as in other roosting places of the superrich, the recent influx of foreign money has gone hand in hand with the rising use of shell companies — generally limited liability companies. Shell companies were used in three-quarters of purchases of over $5 million in Los Angeles over the last three years, a higher rate even than the roughly 55 percent in New York, according to a New York Times analysis of data from PropertyShark. What is more, in Los Angeles, where so many of the new palaces are spec houses — luxury magnets for global wealth — not only are the buyers shielded by shell companies, but the developers are, too.

   

  Today in Los Angeles, as at 901 Strada Vecchia, L.L.C.s have provided insulation — some would say impunity — amid a gathering anti-development backlash.

   

  Head up North Alpine Drive in Beverly Hills, for example, and on the right is a $14.7 million home owned by a shell company tied to Kola Aluko, a Nigerian businessman who is a figure in an investigation of that country’s former oil minister. 

   

  A block away is one of several local properties that have been owned by shell companies tied to a son of Suharto, the corrupt and brutal former president of Indonesia. 

   

  And back down the hill is Le Palais, a faux chateau — with a swan pond and a Turkish bath with hand-carved Egyptian limestone columns — that a shell company tied to Mr. Hadid sold to a shell company tied to Lola Karimova-Tillyaeva, a daughter of the president of Uzbekistan. The Karimov family faces corruption investigations in several countries, according to two people who have worked in law enforcement and have knowledge of the inquiries.

   

  The property at 901 Strada Vecchia is the crystallization of all this — in its grandiosity, its 60 pages of violations and other notices, and the ire it has provoked.

   

  Silver-maned at 67, Mr. Hadid, like many of his clients, is an immigrant. Born in Israel, he moved to Virginia as a teenager with his Palestinian family and spent his early business career in the Washington, D.C., area, developing office buildings and Ritz-Carlton hotels. Central to his success even then was his ability to woo foreign financiers — French and German backers, and in particular the SAAR Foundation, a group of Saudi investors.

   

  Among his big-ticket sales was a Beverly Hills house, with a glowing pyramid in a reflecting pool, that was acquired in 2010 by a shell company tied to the stepson of the prime minister of Malaysia. (The prime minister is now a target of corruption investigations at home and abroad.) 

   

  No. 73 is a home owned by TBN Holdings Inc., which traces to a Saudi prince, Turki bin Nasser. As a high-ranking military official during the 1980s and ’90s, Prince Turki was involved in arms deals with the aerospace company BAE that led to allegations of bribery and large fines in Britain and the United States. According to reports by The Guardian, the BBC and “Frontline,” Prince Turki was a bribe recipient, but, as had long been their practice, American and British authorities prosecuted only the company. 

   

  Prince Turki did not respond to requests for comment.

   

  At No. 58 is a home bought in 2004 by a shell company tied to another Russian politician, a former senator named Alexander Sabadash. Last spring, Mr. Sabadash was sentenced in Russia to six years in prison for attempted embezzlement of public funds, according to Russian news reports. A man who answered at the phone number listed for the shell company said the Sabadashes might be renting the house. 

   

  Finally, at No. 27, is a home owned by a shell company that has ties to the family of Bambang Trihatmodjo, long a contentious figure in Indonesia because his businesses amassed great wealth during the reign of his father, Mr. Suharto. Though Mr. Suharto died in 2008, his family’s fortune remains a focus of questions and legal action. Last summer, the Indonesian Supreme Court ordered the Suharto family to return $324 million that was embezzled from a foundation established with public money, according to news reports. 

   

  The money was to have paid for education for the poor. 

   

  In July 2014, the city said it intended to revoke the project’s work permits. That week, Mr. Hadid posted on Instagram, “The construction must go on.” It did, even after the permits were pulled. Neighbors documented workers on the site that Thanksgiving.

   

  Mr. Hadid is not the only developer flirting with nine-figure price tags. His main competitor is Nile Niami, a former film producer building a Bel Air home he has said he hopes to sell for $500 million.

   

  One of Mr. Niami’s past projects was a boxy, modern house at 755 Sarbonne Road. In April 2012, a shell company tied to Mr. Niami sold it to a shell company traced to Kola Aluko, the Nigerian businessman.

   

  What followed was a tangle of events spanning two continents, involving oil and water, a host of shell companies and lessons in the difficulty of tracing responsibility.

   

  Mr. Aluko, it turned out, was on a buying spree. In addition to purchasing the Sarbonne Road house for $24 million, shell companies tied to him soon bought another Beverly Hills house for $14.7 million and two others in Santa Barbara for $33 million.

   

  Letting these characters and their billions enter the country is a far bigger threat than Mexican immigrants, but as is typically the case, people prefer to punch downward.

  

  

  

  

  

• Caption Contest: Kerry, Putin, Lavrov Staring Match Edition

  Earlier today, in “The Humiliation Is Complete: Assad Can Stay, Kerry Concedes After Meeting With Putin,” we documented John Kerry’s visit to Moscow where America’s top diplomat discovered there are Dunkin Donuts in Russia and also found some time to talk Syria with Vladimir Putin and Sergei Lavrov.

  After what amounted to a staring contest over the fate of Bashar al-Assad, Kerry blinked as expected, and the US is now willing to concede that the Syrian President may remain in power indefinitely. 

  

  

  

  

  

  

• Fed Hikes Rates, Unleashing First Tightening Cycle In Over 11 Years

  On the 7th anniversary of entering ZIRP, and for the first time since June 29th 2006, The Federal Reserve announced today that it will try and raise interest rates:

  *FED RAISES INTEREST RATES 0.25 POINT IN UNANIMOUS VOTE

  Of course, the flowery language and dots are as dovish as possible while maintaining some semblance of credibility with regard growth expectations as The Fed unleashes a tightening cycle for the first time in over 11 years.

  Pre-FOMC: S&P Futs 2050, 2Y 98bps, 10Y 2.29%, Gold $1072, Oil $36, EURUSD 1.0960

   

  Wow – 10-year Treasury liquidity – lowest I've EVER seen it.. back to 2008 at least

  — Eric Scott Hunsader (@nanexllc) December 16, 2015

   

  Heading into the decision, gold and silver suddenly started to fade, bond yields slid notably, and the USD jerked lower.

  What's happened since The Fed folded in September? Macro "data" got worse… Market "data" got better…

  

   

  The Fed has never raised rates in December when stocks were down over the last 6 months…

  

  h/t @RyanDetrick

  And when it has raised rates in December, stocks have pushed lower.

   

  The Fed is raising rates today with the VIX above 20 for the first time since 2000…

  

   

  That did not end well…

  

   

  The Fed is also raising rates with Junk bonds trading worse that after Lehman…

  

   

  * * *

  In the end, the Fed did not surprise, and raised interest rates for the first time in almost a decade in a widely telegraphed move while signaling that the pace of subsequent increases will be “gradual” and in line with previous projections. The Federal Open Market Committee unanimously voted to set the new target range for the federal funds rate at 0.25 percent to 0.5 percent, up from zero to 0.25 percent. Policy makers separately forecast an appropriate rate of 1.375 percent at the end of 2016, the same as September, implying four quarter-point increases in the target range next year, based on the median number from 17 officials.

  

  “The committee judges that there has been considerable improvement in labor market conditions this year, and it is reasonably confident that inflation will rise, over the medium term, to its 2 percent objective,” the FOMC said in a statement Wednesday following a two-day meeting in Washington. The Fed said it raised rates “given the economic outlook, and recognizing the time it takes for policy actions to affect future economic outcomes.”

  The increase draws to a close an unprecedented period of record-low rates that were part of extraordinary and controversial Fed policies designed to stimulate the U.S. economy in the wake of the most devastating financial crisis since the Great Depression. The FOMC lowered its benchmark rate to near zero in December 2008, three months after the collapse of investment bank Lehman Brothers Holdings Inc. and 10 months before unemployment in the U.S. peaked at 10 percent.
   

  *  *  *

  Full Redline below:

  

  The number of words per statement:

  

   

  There was much expectation that the Fed's announcement would be a Dovish hike based on a reduction in the 2016 median dot, however the Fed did not do that, and instead while the Kocherlakota negative dot was removed, the FOMC kept the median 2016 fed funds rate at 1.4% for year end, suggesting 4 rate hikes during 2016 and that the market is underestimating the pace of rate increases.

  Where there was some dovishness was in the 2017 year end median FF, which was reduced from 2.6% to 2.4%. This can be seen in the compared dot plots.

  

  Additionally, what is perhaps even more surprising is that while the Fed did boost its 2016 year end GDP forecast, it cut the median core PCE forecast from 1.7% to 1.6%, suggesting that the deflationary forces continue to prevail aside from the "transitory" impact of oil.

  

  

  

  

  

  

• Hoax Or No Hoax? You Decide – Here Is The Full Text Of The Email Threat That Closed LA Schools

  Below is the full text of the threatening email directed toward the Los Angeles Unified School District that led to the closing of all schools (and which NYC School District decided was a hoax)… you decide?

  Via ABC7

  TO WHOM IT MAY CONCERN:

   

  I am emailing you to inform you of the happenings on Tuesday, 12/15/15.

   

  Something big is going down. Something very big. It will make national headlines. Perhaps, even international ones. You see, my last 4 years here at one of the district high schools has been absolute hell. Pure, unmitigated, agony. The bullying, the loneliness, the rejection… it is never-ending. And for what? Just because I'm 'different'?

   

  No. No more. I am a devout Muslim, and was once against violence, but I have teamed up with a local jihadist cell as it is the only way I'll be able to accomplish my massacre the correct way. I would not be able to do it alone. Me, and my 32 comrades, will die tomorrow in the name of Allah. Every school in the L.A. Unified district is being targeted. We have bombs hidden in lockers already at several schools. They are strategically placed and are meant to crumble the foundations of the very buildings that monger so much hate and discrimination. They are pressure cooker bombs, hidden in backpacks around the schools. They are loaded with 20 lbs. of gunpowder, for maximum damage. They will be detonated via Cell Phone. Not only are there bombs, but there are nerve gas agents set to go off at a specific time: during lunch hour. To top it off, my brothers in Allah and I have Kalashnikov rifles, Glock 18 Machine pistols, and multiple handheld grenades. The students at every school in the L.A. Unified district will be massacred, mercilessly. And there is nothing you can do to stop it.

   

  If you do end up trying to, by perhaps, beefing up security, or canceling classes for the day, it won't matter. Your security will not be able to stop us. We are an army of Allah. If you cancel classes, the bombings will take place regardless, and we will bring our guns to the streets and offices of Los Angeles, San Bernardino, Bakersfield, and San Diego.

   

  I wish you the best luck. It is time to pray to allah, as this may be your last day.

  *  *  *

  Better safe than sorry?

  

  

  

  

  

• Presenting Saxo Bank's 10 "Outrageous Predictions" For 2016

  On Tuesday, we brought you Bloomberg’s top 10 “worst case scenarios” for 2016. The list, compiled by polling “dozens of former and current diplomats, geopolitical strategists, security consultants, and economists” included everything from devastating cyber attacks by Iranian and Russian hackers to a military coup in China. 

  They even threw in a Trump victory in the national elections for good measure.

  Bloomberg’s “pessimist’s guide” to 2016 was just the latest in a number of outlook pieces by pundits, journalists and sellside macro strategists who are all engaged in a black swan spotting expedition. We’ve laid out a number of risk factors both for capital markets and on the geopolitical front that are worth paying attention to as we head into the new year. Here are a few notable flashpoints:

  • soaring junk bond redemptions; 
  • rising investment grade (and high yield) yields pressuring corporate buybacks; 
  • record corporate leverage and sliding cash flows; 
  • Chinese devaluation back with a vengeance; 
  • capital outflows from EM accelerating as dollar strength returns; 
  • corporate profits and revenues in recession; 
  • CEOs most pessimistic since 2012, 
  • the Fed’s first rate hike in 9 years expected to soak up as much as $800 billion in excess liquidity
  • Syria’s seemingly intractable civil war
  • the still simmering conflict in Ukraine
  • Brazil’s political crisis which threatens to keep one of the world’s most important emerging markets mired in a stagflationary nightmare
  • a migrant crisis that threatens to tear Europe apart at the seams
  • the resurgence of the far left and far right as voters lose faith in the political status quo

  For their part, Saxo Bank has taken a unique approach by presenting ten “outrageous” and in some cases counterintuitive predictions that could play out over the course of the next 12 months. 

  *  *  *

  From Saxo Bank

  Intro by Steen Jakobsen 

  The irony in this year’s batch of outrageous predictions is that some of them are “outrageous” merely because they run counter to overwhelming market consensus. In fact, many would not look particularly outrageous at all in more “normal” times – if there even is such a thing!

  In other words, it has become outrageous to suggest that emerging markets will outperform, that the Russian rouble will be the best-performing currency of 2016, and that the credit market will collapse under the weight of yet more issuance. We have been stuck in a zero-bound, forward-guidance lowering state for so long that there exists a whole generation of traders who have never seen a rate hike from the Federal Reserve. 

  As we close out 2015, it has been nearly 12 years (early 2004) since the US economy was seen as recovering strongly enough to warrant starting a series of hikes – and that series ended in early 2006, nearly ten years ago.

  Mind you, I have been trading for over 25 years and I have only seen three Fed rate hike cycles in my entire career: 1994, 1998 and 2004.

  We are truly entering a new paradigm for many market participants and the new reality is that the marginal cost of money will rise, and thus so will volatility and uncertainty.

  All of this is embedded in this year’s Outrageous Predictions.

  EURUSD direction? It’s 1.23…

  Many years ago back in 1989 I wrote one of my first research reports and I made the call that USDDEM should trade all the way down to 1.23. It was an outrageous call and colleagues from back then still remind me when we meet (the dollar to the deutsche mark was trading in the high 1.60s at the time). Now it’s again time to call for 1.23 but this time in EURUSD. In four of the last five Fed rate hike cycles, the US dollar has peaked around the first hike indicating that the direction of the US dollar is inversely correlated to the Fed rate cycle. A higher EURUSD will not only make the European Central Bank lose face but also catch the consensus out as most investors and traders believe parity between the EUR and USD is only a matter of time.

  Russia’s rouble rises 20% by end-2016

  By late 2015, the combination of collapsing oil prices and financial sanctions against Russia over the situation in Ukraine saw a rough ride for Russian assets and its currency, the rouble. But in 2016, oil prices surge again as demand growth in the US and especially China outstrip overly pessimistic estimates, just as US oil production growth is slowing and even reversing on a financial debacle linked to shale oil companies. This is a boon to Russia’s energy dependent economy. Meanwhile, in 2016, the US Federal Reserve allows the US economy to run a little bit hot as the strong USD sees the Fed raising rates at perhaps an inappropriately slow pace. This represents a bonanza for emerging markets and their currencies, in particular Russia as commodity bears are left out in the cold in 2016. 

  Silicon Valley’s unicorns brought back down to earth

  The first half of 2015 had the lowest number of venture capital deals in 25 years as VC firms rushed to plough money into so-called unicorns – startups valued above $1 billion each. This rush to capture everything that might have blockbuster potential inflated the bubble in unlisted US tech firms. 2016 will smell a little like 2000 in Silicon Valley with more startups delaying monetisation and tangible business models in exchange for adding users and trying to achieve critical mass. Remember the dotcom gospel of clicks and page views instead of focusing on revenue and profits? 

  Olympics to turbo-charge EM’s Brazil-led recovery 

  The poster child for emerging market weakness is Brazil with its recession, collapsing consumer confidence, skyrocketing unemployment and plunging currency. USDBRL has nearly doubled so far this year while confidence is at a decade low and unemployment is at a five-year high. Oh, and lest we forget; yearly GDP growth has been negative for five straight quarters – and this count could turn double-digit before it is over. A poster child, maybe, but Brazil is hardly alone in struggling to come to terms with the end of the commodity super-cycle, which has morphed into a full-scale oil price meltdown, a weakening China-led global manufacturing cycle and a run-up in dollar-denominated debt. Add uncertainty about the Federal Reserve’s first rate hike in more than a decade to the mix and the picture is bleak. Against this disturbing backdrop we look for the host of the 2016 Olympics to lead EM out of the current malaise with equities outperforming. Leading indicators are stabilising in China and climbing in India, and recent policy easing furthermore helps the outlook for the former. 

  Democrats retain presidency, retake Congress in 2016 landslide

  In 2016, the Republican primaries descend into chaos after the party’s voters narrowly manage to nominate another weak, centrist candidate after the long self-destructive process of the nomination process. Donald Trump goes down in flames, taking the Republican Party with him and leaving its voters demoralised with their weak options in the presidential and congressional elections. In Congress, the Republican Party goes from strength to dramatic weakness as the rifts from its civil war on its future direction play out over the next four years. This leads to a landslide victory for the Democratic Party as the Democrats successfully execute a successful get-outthe-vote campaign. That campaign gains traction among the US’ now largest generation: the younger, more diverse, more liberal, overeducated and underemployed Millennials, who come out to vote in droves in favour of the Democratic ticket as they have been frustrated by the political stalemate and weak job prospects of the last eight years. 

  Opec turmoil triggers brief return to $100/b oil

  The oil market remains under pressure as we enter 2016 with oversupply and the imminent increase in exports from Iran adding some additional downside pressure. During the first quarter, Brent crude reaches and breaches the 2009 recession low as US tight oil producers continue to show resilience. The selling is driven by capitulation from investors in exchange-traded products while hedge funds build a new record short position in the futures market. Opec’s crude oil basket price drops to the lowest since 2009 and the unease among weaker as well as wealthier members of the cartel over the supply-and-rule strategy continues to grow as the economic pain spreads across the 12-member group. The long awaited sign of an accelerated slowdown in non-Opec production finally begins to flicker. Suitably buoyed, Opec catches the market on the hop with a downward adjustment in output.That move breaks the downward price spiral and price mounts a quick recovery with investors scrambling to re-enter the market to the long side. 

  Silver breaks golden shackles to rally 33% 

  Semi-precious metal silver’s price direction is driven by movements in both gold and industrial metals. Its third consecutive annual decline in 2015 was driven by worries about demand (industrials) and tightening US monetary policy (gold). However, towards the end of 2015, mining companies began responding to falling prices by announcing production cutbacks of key metals such as copper and zinc. Silver is often mined as a by-product from the extraction of other metals including copper, zinc and gold with primary production only accounting for a third. With copper and zinc both hitting six-year lows at the end of 2015 as the outlook for Chinese demand deteriorated, the only way to support prices was to cut production even more. During 2016, this will add to production cuts already in place from major producers such as Glencore and BHP Billiton. While production of silver from these reductions slows economic activity and demand in key markets such as China, both Europe and the US strengthen, helping to boost confidence in silver. 

  Aggressive Fed sees meltdown in global corporate bonds

  When Bridgewater Associates founder Ray Dalio told markets last August that the next big Fed monetary policy move would be to ease and not to tighten, it was a clear message that a tightening path will not be common sense as long as strong secular disinflationary forces are at play. More importantly, he argued that ending the long-term debt cycle with a series of rate hikes would inevitably cause turmoil, because ever-declining interest rates have encouraged endless borrowing and leverage, growing the cycle into a monstrous supercycle. In other words: the bubble is simply too big to burst. But late in 2016 the Fed will come to believe that there is no way out, and growing evidence of overheating markets – affecting labour, housing, equities and bonds – will propel Fed chief Janet Yellen down a hawkish path with a series of aggressive rate hikes.Although expected for years, this action triggers huge selloffs in all major bond markets as global bond yields start to rise, quickly magnifying the risk premium investors demand on riskier assets, when the risk free rate is not zero anymore. All of this is expected and normal in a rate hike scenario. But what happens next is so unusual and scary that it’s eerily reminiscent of the bond market apocalypse after the Lehman collapse. As the portions of bank and broker balance sheets allotted to bond trading and market making have almost disappeared, one of the vital parts of a functioning market is simply not there.

  El Niño sparks inflation surge

  According to many climate forecasters, 2015 and 2016 will likely be the hottest two years on record, adding to the growing number of droughts around the world. The volatile weather we’ve experienced in recent years has also increased the number of floods and other devastating weather extremes. On top of this, next year’s El Niño will be the strongest on record and will cause moisture deficits in many areas of southeast Asia and droughts in Australia. Global agricultural production will be affected negatively. Lower yields across agricultural commodities will curb supply at a time when demand is still increasing on the back of global economic expansion. The outcome will be a 40% surge in the Bloomberg Agriculture Spot Index, adding some much-needed inflationary pressure.

  Inequality has last laugh on luxury

  Luxury is the reflection of an unequal society. The conspicuous consumption of luxury goods and services is a way of demonstrating membership of the elite. The elite is ready to pay extra just for the privilege of it and to differentiate themselves from the rest of society. It is what we call the snob effect. The money spent on luxury cars, jewellery and clothing items could have been used for better infrastructure, education or for poverty alleviation. In that sense, luxury is a net economic loss. Since the global financial crisis, poverty has increased in Europe because of the economic downturn and austerity measures. The International Labour Organization estimates that 123 million people are at risk of poverty in the EU, which represents a quarter of the European population. This total has risen from 116 million in 2008. Faced with rising inequality and unemployment of over 10%, Europe is considering the introduction of a basic universal income to ensure that all citizens, regardless of whether they work, can afford to meet their basic needs. In a more egalitarian society where other values are promoted, demand for luxury goods decrease sharply.

  See the full presentation here

  

  

  

  

  

• What Benefits To Savers? Banks Rush To Hike Prime Rate To 3.50%, Forget To Increase Deposit Rate

  Someone forgot to give the banks the memo that the Fed’s first rate hike since 2006 was supposed to, at least on paper, benefit the savers of America and not so much the, well, banks.. Because the ink hadn’t even dried on the Fed’s statement and one after another banks revealed that they would promptly boost their Prime lending rate from the current benchmark of 3.25% to the new Fed Funds-implied prime rate of 3.50%.

  As a reminder, while generically comparable to LIBOR, a bank’s prime rate is the rate at which banks lend to their most creditworthy customers, clients and large corporations. But what makes the Prime hike most important is that it is used as the benchmark for other loans like credit card and small-business loans. In other words, banks wasted no time to serve their indebted customers with the cost of the Fed’s rate hike. Banks such as:

  • Wells Fargo
  • US Bankcorp
  • JPMorgan
  • M&T
  • PNC
  • Citi

  And soon every other bank.

  As CNBC reported, “a change in the federal funds rate will have no impact on the interest rates on existing fixed-rate mortgage and other fixed-rate consumer loans, a Wells Fargo representative told CNBC. Existing home equity lines of credit, credit cards and other consumer loans with variable interest rates tied to the prime rate will be impacted if the prime rate rises, the person said.”

  The good news: the rates on mortgages, auto loans or college tuition aren’t expected to jump anytime soon, according to AP, although in time those will rise as well unless the long-end of the curve flattens even more than the 25 bps increase on the short end.

  What about the other end of the question: the interest banks pay on deposits? Well, no rush there:

  “We won’t automatically change deposit rates because they aren’t tied directly to the prime,” a JPMorgan Chase spokesperson told CNBC. “We’ll continue to monitor the market to make sure we stay competitive.”

  Bottom line: for those who carry a balance on their credit cards, their interest payment is about to increase. Meanwhile, those who have savings at US banks, please don’t hold your breath to see any increase on the meager interest said deposits earn: after all banks are still flooded with about $2.5 trillion in excess reserves, which means that the last thing banks care about is being competitive when attracting deposits.

  

  

  

  

  

• SEC Throws Up On Third Avenue's Gating Plan (Then Folds)

  Update: The SEC Folds:

  • SEC PERMITS TEMPORARY SUSPENSION OF THIRD AVENUE REDEMPTIONS
  • THIRD AVENUE WILL BE SUBJECT TO ONGOING SEC OVERSIGHT
  • SEC SAYS IT REQUIRED FUND TO PUT IN PLACE INVESTOR PROTECTIONS

  As Bloomberg reports, Third Avenue Management LLC received approval from U.S. regulators to temporarily suspend redemptions from its $788.5 million high-yield bond fund.

  “The commission required the fund to put in place investor and market protections, including ongoing commission oversight and provisions involving an orderly and fair process as a condition of its approval of the order,” an SEC spokeswoman said in an emailed statement Wednesday.

  *  *  *

  As we detailed previously, HYG, the now infamous high-yield bond ETF, had an "ok" day, rallying along with everything else post-Fed. However, shortly after the close, it started to fade quickly as SEC "expressed concerns" about Third Avenue's plan for liquidation.

  Third Avenue last week said it plans to move assets from the fund, the Third Avenue Focused Credit Fund, into a liquidating trust after losses and redemptions left it unable to pay back redeeming clients without resorting to fire sales. Clients would have gotten interests in the trust, but would not have been able to pull out cash until the assets were liquidated over time. But as Bloomberg reports, new regulatory filings show:

  • *THIRD AVENUE CANCELS PLAN TO PLACE ASSETS IN LIQUIDATING TRUST

  Third Avenue Management LLC canceled plans to place assets from its $788.5 million high-yield bond fund in a liquidating trust after the staff of the Securities and Exchange Commission “expressed concern” about the idea, according to a regulatory filing.

   

  The New York based management firm, headed by Martin Whitman, is now asking the SEC to issue an order that would permit the fund to suspend redemptions, the filing said.

  The fund claimed:

  • *THIRD AVENUE: FUND WAS UNABLE TO SELL ASSETS AT RATIONAL PRICES

  And noted that

  • *THIRD AVENUE: FAIR VALUED PART OF FUND EXCEEDED 15% BY NOV. 30

  Which translated means:

  1. The SEC threw up on Third Avenue's plan to stash the "guess the market value" bonds in a trust;
  2. Which means Third Avenue will be forced to sell at market; unless
  3. The SEC grants them permission to suspend redemptions.

  As a reminder, The Investment Company Act of 1940 requires mutual funds to stand ready to redeem their shares at net asset value on a daily basis. Suspending such redemptions normally requires an explicit authorization from the SEC, securities attorneys have said.

  Why would The SEC allow this? Would it not seem like encouraging moral hazard? Or pandering?

  The reaction so far:

  

   

  You didn't really think it was all over, right?

   

  Charts: Bloomberg

  

  

  

  

  

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