May 29

Today’s News May 29, 2015

  • Japan Issues Highest Alert, Evacuation Warnings After Volcano "Explosively" Erupts – No Injuries Reported

    First, earthquakes; then tsunamis; then household spending collapses for the 13th month in a row… and now Japan is dealing with a volcano. NHK reports that Kuchinoerabu-jima, a volcano on Kuchinerabu Islands (off the southern-most tip of Japan) has erupted "explosively." Officials have asked local inhabitants to evacuate the area. As yet there are no reported injuries.

     

     

    • *JAPAN PRIME MINISTER'S OFFICE SETS UP CRISIS CENTER ON VOLCANO

    The volcano is at the southerm-most tip of Japan…

    JMA Warning:

     

    Bloomberg reports,

    • Japan Meteorological Agency raises warning level on volcano on island of Kuchinoerabujima, off southern coast of Japan’s Kagoshima, to highest level of 5 after “explosive” eruption.
    • Level 5 warning calls for evacuations
    • Pyroclastic flow after volcano has reached coast

    Offcial JMA Statement:

    Volcano name Kuchinoerabujima eruption alarm (residential areas)
    Heisei 07 minutes at 27 May 29 June 10 Fukuoka District Meteorological Observatory Kagoshima Local Meteorological Observatory

    ** (Heading) **

    <Eruption warning to Kuchinoerabujima (eruption alert level 5, evacuation) Announces>
    ?Please refer to the strict vigilance (correspondence of evacuation, etc.) in a residential area of ??interest.
    <Pull the eruption alert level from 3 (Iriyama regulation) to 5 (evacuation)>

    ** (This statement) **
    1. Situation and forecast alarm matters of volcanic activity
    ?The new Takeshi, explosive eruption occurred in 59 minutes at 09 today (the 29th). This
    With the eruption, pyroclastic flow occurs, it has reached to the coast.
    ?Strict vigilance in Yakushima-cho Kuchierabujima residential areas the arrival of pyroclastic flow is expected (
    Please refer to the correspondence) of the evacuation, and the like.

    2. Target municipalities, etc.
    ?In the following municipalities, please strict vigilance, such as evacuation in the residential areas
    .
      Kagoshima Prefecture: Yakushima-cho

    3. Such as disaster prevention on vigilance matters
    ?In the residential areas that stream of pyroclastic flow is imminent, strict vigilance (corresponding evacuation, etc.)
    Please refer to the.
    ?Please follow the instructions of evacuation, etc. of Yakushima-cho.?

    <Pull the eruption alert level from 3 (Iriyama regulation) to 5 (evacuation)>

    ** (Note: The description of the eruption alert level) **
    [Level 5 (evacuation)]: required evacuation and the like from the dangerous residential areas.
    [Level 4 (evacuation preparation)]: Prepare for evacuation in the necessary residential areas warning, disaster
              Required evacuation, etc. requiring assistance person.??????
    [Level 3 (Iriyama regulation)]: climbing ban and Iriyama – site regulations to regulations dangerous areas
              Etc.. Evacuation preparation, etc. of a disaster requiring assistance person depending on the situation.
    [Level 2 (crater peripheral regulation)]: – site regulations of the crater around.
    [Level 1 (normal)]: – site regulations into the crater depending on the situation.
    (Note: The target area of ??evacuation and regulations, differ depending on local conditions and volcanic activity)

    *  *  *

    * * *

    As Michael Snyder of The Economic Collapse blog, you may not have noticed, but our planet is becoming increasingly unstable.  According to Volcano Discovery, 40 volcanoes around the globe are erupting right now, and only 6 of them are not along the Ring of Fire.  If that sounds like a very high number to you, that is because it is a very high number.  As I have written about previously, there were a total of 3,542 volcanic eruptions during the entire 20th century.  When you divide that number by 100, that gives you an average of about 35 volcanic eruptions per year.  So the number of volcanoes that are erupting right now is well above the 20th century’s average for an entire calendar year.  And of course we are witnessing a tremendous amount of earthquake activity as well.  Nepal was just hit by the worst earthquake that it had seen in 80 years, and scientists are telling us that the Himalayas actually dropped by an astounding 3 feet as a result of that one earthquake.  How much more does our planet have to shake before people start paying attention?

    Of course the things that we have been seeing lately are part of a much larger long-term trend.  Seismic activity appears to have been getting stronger over the past few decades, and now things really seem to be accelerating.  The following is how one news source recently summarized what we have been witnessing…

    If it seems like earthquakes and erupting volcanoes are happening more frequently, that’s because they are. Looking at global magnitude six (M6) or greater from 1980 to 1989 there was an average of 108.5 earthquakes per year, from 2000 to 2009 the planet averaged 160.9 earthquakes per year: that is a 38.9% increase of M6+ earthquakes in recent years. Unrest also seems to be growing among the world’s super-volcanoes. Iceland (which is home to some of the most dangerous volcanoes on the planet), Santorini in Greece, Uturuncu in Bolivia, the Yellowstone and Long Valley calderas in the U.S., Laguna del Maule in Chile, Italy’s Campi Flegrei – almost all of the world’s active super-volcanic systems are now exhibiting some signs of inflation, an early indication that pressure is building in these volcanic systems.

    But of course most Americans are never going to care about any of this until it starts affecting them personally.

    Well, perhaps they should start paying attention to the warning signs.  In recent weeks we have seen significant earthquakes in Michigan, Texas, Mississippi, California, Idaho And Washington.  In addition, it is being reported that pressure is building in dormant volcanoes in Arizona and California.  Just because we have not had a killer earthquake or a large volcanic eruption in the U.S. in recent years does not mean that it will always be that way.  Right now the entire planet appears to be waking up, and this especially seems to be true of the Ring of Fire.

    If you are not familiar with the Ring of Fire, just imagine a giant ring that runs around the outer perimeter of the Pacific Ocean.  Approximately 90 percent of all earthquakes and approximately 75 percent of all volcanic eruptions occur within this area, and the entire west coast of North America is considered to be part of the Ring of Fire.

    For so long, the west coast has been incredibly blessed not to have experienced a major seismic event.  But scientists tell us that it is only a matter of time.

    And right now, just about every other part of the Ring of Fire is shaking violently.

    For example, a magnitude 6.8 earthquake just hit Japan on Wednesday…

    A magnitude-6.8 earthquake that shook northeast Japan on Wednesday was an aftershock of the devastating 2011 quake that triggered a massive tsunami and nuclear power plant meltdown.

     

    “We consider this morning’s earthquake to be an aftershock of the 2011 Northeastern Pacific Earthquake,” said Yohei Hasegawa, an official at the Japanese meteorological agency.

     

    The temblor, which struck just after 6 a.m. local time (5 p.m. ET Tuesday), was sparked by the Pacific tectonic plate “subducting,” or moving under, the main land plate, he added.

    Hasegawa warned that more tremors may be on the way.

    One Japanese expert is warning that Japan “might have entered an era of great earthquakes and volcanic eruptions“, and considering the immense devastation that the great earthquake and tsunami of 2011 caused, that is a very sobering assessment.

    Meanwhile, a series of very strong earthquakes have struck Papua New Guinea recently as well.  The following comes from the Washington Post…

    A powerful earthquake rattled Papua New Guinea on Thursday, the fourth strong quake to hit the South Pacific island nation in a week. The temblor prompted officials to issue a local tsunami warning, but it was lifted shortly afterward with no reports of damage.

     

    The 7.1-magnitude quake struck about 150 kilometers (94 miles) southwest of the town of Panguna on Bougainville Island at a depth of 23 kilometers (14 miles), the U.S. Geological Survey reported.

    Once again, just because things have always been a certain way does not mean that they will always be that way.

    As Americans, we are not accustomed to being concerned about major earthquakes and massive volcanic eruptions, but that could soon change in a big way.

    The truth is that our planet and our sun are changing in ways that are unpredictable and that our scientists don’t completely understand.

    For example, a recent LiveScience article discussed the fact that scientists are deeply puzzled by the fact that the magnetic field of our planet is getting weaker 10 times faster than previously believed…

    Scientists already know that magnetic north shifts. Once every few hundred thousand years the magnetic poles flip so that a compass would point south instead of north. While changes in magnetic field strength are part of this normal flipping cycle, data from Swarm have shown the field is starting to weaken faster than in the past. Previously, researchers estimated the field was weakening about 5 percent per century, but the new data revealed the field is actually weakening at 5 percent per decade, or 10 times faster than thought. As such, rather than the full flip occurring in about 2,000 years, as was predicted, the new data suggest it could happen sooner.

    And in a previous article, I discussed how one scientist has discovered that activity on the sun is declining at a faster pace “than at any time in the last 9300 years” right now.

    I don’t pretend to have all the answers for why these things are happening, but clearly some very unusual things are taking place.



  • Guest Post: America Has No Enemy More Lethal Than The Neocon

    Submitted by Michael Scheuer via Non-Intervention.com,

    Those men who wrote our Constitution made it perfectly intelligible to anyone who cared to read it. They also left some flexibility in its articles to ensure that as time passed and circumstances changed the document would remain viable as the indispensable protector of the republic they created and of the liberty of citizens who delegated a limited amount of their sovereign power to the national government through its provisions. And after a long and often  angry ratification debate, the first congress added a bill of rights to the Constitution as that document’s first ten amendments. These amendments were fully as clear as the text — perhaps more so — but less flexible than the body of the document because they dealt with the tenets of republican liberty which, if regularly and deliberately violated by the national government, would require that Americans, to paraphrase Jefferson, demolish the existing government and erect a new one that would better safeguard their liberties and their republic’s security.

    In recent decades, however, Americans have been treated to an endless stream of politicians, academics, lawyers, and pundits who describe the opaqueness of the Founder’s Constitution and the need for “experts” to decipher or infer what the document means. As a result, we now have presidents who take the country to war on their whim; politicians who are legally bribed by “campaign contributions” from rich individuals, corporations, labor unions, and foreign lobbies and governments based on an absurd reading of the Constitution; a public that is increasingly endangered by flamboyant blasphemers who seek violence and war under the protection of the First Amendment; and the routine criminality of executive branch officials who refuse to obey their oath of office to execute the laws. We also have the overwhelming majority of both political parties willing to destroy the Fourth Amendment in the name of providing for national security against an enemy they have resolutely refused to either stop motivating or militarily annihilate. Together these realities amount to a more-than-full justification for Americans to recall that, as Jefferson wrote, “it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security.”

    In the midst of America’s third consecutive despotic presidency — each more despotic than its predecessor, and all more than Nixon — the citizenry now sees two singularly courageous individuals standing up and saying the destruction of the Fourth Amendment must stop. The junior senator from Kentucky, Mr. Paul, and FOX’s senior judicial analyst, Judge Andrew Napolitano, have been and are saying that it is unconstitutional for any congress and/or president to order NSA to collect the electronic communications of all Americans. (NB: Note to Congressman Gowdy: Can’t you get Hillary Clinton’s e-mail from NSA? Or is the unconstitutional collection system rigged so the corrupt elite are exempt?) If the U.S. educational system was not run by people who yearn and work for despotism, and if that system taught civics and history instead of political indoctrination, the senator and the judge would not be so alone in their opposition to tyranny. (NB: Perhaps the sheep-like silence and passivity of much of the public toward this deliberate and cynical violation of their constitutionally protected rights is the best reason for destroying the federal Department of Education at the first opportunity.)

    Those who support the destruction of the 4th Amendment, of course, do so because they have knowingly failed to provide for the security of the United States since Osama bin Laden declared war on the nation in August, 1996. The threat from al-Qaeda, and now from its progeny, the Islamic State, exists and is still growing because we have had three presidents who refused to either stop motivating the Islamists to attack us or to annihilate them, their supporters, and their infrastructure with U.S. military power. Instead, they have made Americans pay with the currency of their soldier-children’s lives and limbs and their liberty for the government’s deliberate failure to protect the republic against enemies foreign and domestic. Indeed, the last three presidents and their lieutenants have provided the bulk of America’s domestic enemies, and their transparently unconstitutional and enemy-protecting behavior is ample, accumulated justification for Americans to begin to look for ways to devise ”Guards for their future security.”

    Last Thursday evening (21 May 2015) on Bret Baier’s excellent “Special Report”, Judge Napolitano concisely and clearly explained the intention of the White House and Congress to continue their illegal evisceration — it began with the Mr. Bush’s Patriot Act — of the Constitution’s 4th Amendment. Napolitano convincingly made his point and then another panelist — the Neoconservative Charles Krauthammer– replied that he was “dead wrong.” Krauthammer and his Neocon brothers, who labored mightily for the 2003 invasion of Iraq (lost war 1), the 2014 re-intervention (lost war 2), and now for the return ground troops to Iraq to lose again — pray God, three strikes and they are exiled to Israel — have been accurately described by the erudite political scientist Claes G. Ryn as the “New Jacobins”.

    The new Jacobin does not want competition in prescribing the right model [of government]. … The new Jacobin is convinced that he knows what is best for all mankind, and if much of mankind shows reluctance to follow his lead, it is to him a sign that injustice, superstition, and general backwardness or a misconceived modernistic radicalism is standing in the way of progress. The new Jacobin is not content with voicing his own ideas and letting the peoples of the world make their own decisions. They must recognize the superiority of his principles. Governments that do not do so appear to him perverse. … The world must be rid of unenlightened, undemocratic societies. If persuasion and diplomatic pressure fail, the forces of democracy should be willing to resort to military means, especially against powers that have the temerity of openly defying the United States. The new Jacobin desires strong, activist government that can enact what he considers virtuous purposes.

    Intolerably, individuals fitting Professor Ryn’s description dominate both American political parties and for decades have made foreign policy for the United States. Since the early 1990s they have brought America constant war and its reliable companion, the steadily broadening erosion of constitutional liberty. The names of these people are well known. Beyond Krauthammer, the following are, to name just a few, members of the Jacobin/Neocon fold: Hillary Clinton, Marco Rubio, Madeline Albright, Lindsey Graham, Jeb Bush, Joseph Lieberman, Ted Cruz, Mike Huckabee, Barack Obama John Boehner, Joe Biden, Bill Kristol, John Bolton, and the 90-plus Senators who did not join Kentucky’s junior senator in defending the 4th Amendment. All of them, to judge by their words, believe it is the absolute right of the United States to intervene politically and militarily abroad wherever and whenever it chooses, and to impose by force what they define as “universal values”.

    But their words are lies, there are no such things as universal values. There is only one value common to all men in all times and that is the universal lust for gaining and exercising arbitrary power, and that power is exactly what the Jacobin/Neocon crowd is after. They want power abroad and they want power over the American citizenry at home. They have proven they cannot attain power abroad — having lost every war they started — and they cannot get power at home unless Americans permit them to continue to systematically hollow out the Constitution and the Bill of Rights.

    On that score, however, they are incrementally succeeding, and this success is the reason that Americans must begin thinking about what “new Guards for their future security” might be appropriate. And to ensure U.S. citizens can realistically discuss all options for preventing or destroying tyrannical government at home, the Founders left them the Second Amendment. After all, as Jefferson asked in 1787, “And what country can preserve its liberties, if the rulers are not warned from time to time, that this people preserve the spirit of resistance? Let them take arms.”



  • Chinese Stocks Are Crashing

    The Shanghai Composite has extended yesterday’s losses and is now officially in “correction” – down over 11% from its highs yesterday.

    This is the biggest 2-day drop since August 2009

    The much-heralded Shenzhen Composite is also down over 11% from yesterday’s highs…

     

    Intraday, a small opening ramp has been demolsihed in Shenzhen, CHINEXT, and CSI-300…

     

    *  *  *

    This has all happened since Hanergy’s CEO exposed the endgame of the biggest Ponzi market ever

    Charts: Bloomberg



  • Elizabeth Warren Needs You To Help Her "Blow Debt Free College Wide Open"

    In “Cancel All Student Debt — The Petitions Begin,” we outlined The White House’s plan to explore “new bankruptcy options” for former students who, by virtue of an anemic US economic “recovery” or by virtue of their having majored in a subject that was exceedingly unlikely to land them a good job in any economy, find themselves in dire financial straits. On the heels of that, the calls began for the government to simply “cancel” the country’s $1.3 trillion student debt pile. Here, in what is a classic passage, is how we assessed the situation:

    Sure, why not: leaving aside the very touchy topic of personal responsibility and accountability, in a world in which record debt is merely “replaced” by even more debt, and in which profits are privatized but losses are always socialized with taxpayers and future generations bearing the brunt in the form of a record $18.2 trillion in public debt (and some $7 trillion more if one adds the government-backed GSEs which one should), why not go ahead and “cancel” the debt. And don’t bother trying to explain the simple math that debt is never cancelled, as every liability is someone’s asset, and that asset holder will demand to be made whole in the form of more debt elsewhere or else, like Hank Paulson in 2008, it will scream mutual assured destruction and threaten to blow up the world unless bailed out.

    Since then we’ve gone on to elaborate on the math behind underreported delinquency rates and taken an in-depth look at IBR, the “dirty little secret” that could end up costing taxpayers billions over time. 

    Finally, we highlighted a plan by Presidential candidate Bernie Sanders which would tax stock trades in order to make college free for everyone.

    In the (perhaps misguided) spirit of free college for all we bring you the following from Senator Elizabeth Warren who wants you to “stand with her” to make “debt-free college” a reality.

    Stand with Elizabeth Warren: Support debt-free college


    Join Campaign For America’s Future and support Brian Schatz, Elizabeth Warren, Raul Grijalva, Keith Ellison, and other progressive leaders in Congress to get the debt out of college. These progressive champions are launching a new resolution to build support for debt-free college:

     

    “Resolved, that Congress supports efforts to ensure that, through a combination of efforts, all students have access to debt-free higher education, defined to mean having no debt upon graduation from all public institutions of higher education.”

     

    Our goal is simple: Get Congress on record in support of debt-free college and spark a movement to make it a reality. This resolution can be the start of something big — but we need your support to blow it wide open. Are you with us?

    *  *  *
    Anyone who has ever dreamed of “blowing something wide open” with Elizabeth Warren can do so by clicking here.



  • The Clinton Foundation Paid Sidney Blumenthal $10K/Month As He Gave Horrible Libya Advice To State Dept

    Submitted by Mike Krieger via Liberty Blitzkrieg blog,

    Mr. Gowdy’s chief interest, according to people briefed on the inquiry, is a series of memos that Mr. Blumenthal — who was not an employee of the State Department — wrote to Mrs. Clinton about events unfolding in Libya before and after the death of Col. Muammar el-Qaddafi. According to emails obtained by The New York Times, Mrs. Clinton, who was secretary of state at the time, took Mr. Blumenthal’s advice seriously, forwarding his memos to senior diplomatic officials in Libya and Washington and at times asking them to respond. Mrs. Clinton continued to pass around his memos even after other senior diplomats concluded that Mr. Blumenthal’s assessments were often unreliable.

     

    But an examination by The Times suggests that Mr. Blumenthal’s involvement was more wide-ranging and more complicated than previously known, embodying the blurry lines between business, politics and philanthropy that have enriched and vexed the Clintons and their inner circle for years.

     

    While advising Mrs. Clinton on Libya, Mr. Blumenthal, who had been barred from a State Department job by aides to President Obama, was also employed by her family’s philanthropy, the Clinton Foundation, to help with research, “message guidance” and the planning of commemorative events, according to foundation officials.

     

    Much of the Libya intelligence that Mr. Blumenthal passed on to Mrs. Clinton appears to have come from a group of business associates he was advising as they sought to win contracts from the Libyan transitional government. The venture, which was ultimately unsuccessful, involved other Clinton friends, a private military contractor and one former C.I.A. spy seeking to get in on the ground floor of the new Libyan economy.

     

    – From the New York Times article: Clinton Friend’s Memos on Libya Draw Scrutiny to Politics and Business

    Keeping tabs on the shadiness, cronyism and ineptitude of Hillary Clinton while she was Secretary of State alone is a full time job. I’m not even kidding, it feels like every day I wake up to another story that in itself should be enough to disqualify her as a Presidential candidate. Yet she remains the front runner to win in 2016, which proves without a shadow of a doubt that America is not a functioning democracy, but a clownish oligarch-owned Banana Republic.

    Before I get into the many disturbing and dangerous angles to the Sidney Blumenthal story, it’s important to highlight what a complete and total disaster U.S. foreign policy in Libya has been during the Obama Administration. Rather than helping the situation, NATO destroyed the nation and left it far worse than it ever was under Qaddafi. I highlighted this fact in detail earlier this year in the post, The Forgotten War – Understanding the Incredible Debacle Left Behind by NATO in Libya. Here’s an excerpt:

    In retrospect, Obama’s intervention in Libya was an abject failure, judged even by its own standards. Libya has not only failed to evolve into a democracy; it has devolved into a failed state. Violent deaths and other human rights abuses have increased severalfold. Rather than helping the United States combat terrorism, as Qaddafi did during his last decade in power, Libya now serves as a safe haven for militias affiliated with both al Qaeda and the Islamic State of Iraq and al-Sham (ISIS). The Libya intervention has harmed other U.S. interests as well: undermining nuclear nonproliferation, chilling Russian cooperation at the UN, and fueling Syria’s civil war.?

     

    As bad as Libya’s human rights situation was under Qaddafi, it has gotten worse since NATO ousted him. Immediately after taking power, the rebels perpetrated scores of reprisal killings, in addition to torturing, beating, and arbitrarily detaining thousands of suspected Qaddafi supporters. The rebels also expelled 30,000 mostly black residents from the town of Tawergha and burned or looted their homes and shops, on the grounds that some of them supposedly had been mercenaries. Six months after the war, Human Rights Watch declared that the abuses “appear to be so widespread and systematic that they may amount to crimes against humanity.”?

     

    As a consequence of such pervasive violence, the UN estimates that roughly 400,000 Libyans have fled their homes, a quarter of whom have left the country altogether. ?

    You wonder how American “leaders” can be so inept, and then you realize that they have no idea what they are doing. Rather than making informed policy decisions, U.S. leaders and their “advisors” are mainly thinking about how they can make millions in the wake of death and destruction they created. Don’t believe me? Read the following excerpts from the New York Times:

    Mr. Gowdy’s chief interest, according to people briefed on the inquiry, is a series of memos that Mr. Blumenthal — who was not an employee of the State Department — wrote to Mrs. Clinton about events unfolding in Libya before and after the death of Col. Muammar el-Qaddafi. According to emails obtained by The New York Times, Mrs. Clinton, who was secretary of state at the time, took Mr. Blumenthal’s advice seriously, forwarding his memos to senior diplomatic officials in Libya and Washington and at times asking them to respond. Mrs. Clinton continued to pass around his memos even after other senior diplomats concluded that Mr. Blumenthal’s assessments were often unreliable.

     

    But an examination by The Times suggests that Mr. Blumenthal’s involvement was more wide-ranging and more complicated than previously known, embodying the blurry lines between business, politics and philanthropy that have enriched and vexed the Clintons and their inner circle for years.

     

    While advising Mrs. Clinton on Libya, Mr. Blumenthal, who had been barred from a State Department job by aides to President Obama, was also employed by her family’s philanthropy, the Clinton Foundation, to help with research, “message guidance” and the planning of commemorative events, according to foundation officials.

     

    Much of the Libya intelligence that Mr. Blumenthal passed on to Mrs. Clinton appears to have come from a group of business associates he was advising as they sought to win contracts from the Libyan transitional government. The venture, which was ultimately unsuccessful, involved other Clinton friends, a private military contractor and one former C.I.A. spy seeking to get in on the ground floor of the new Libyan economy.

    A free market economy this is not.

    The projects — creating floating hospitals to treat Libya’s war wounded and temporary housing for displaced people, and building schools — would have required State Department permits, but foundered before the business partners could seek official approval.

    Quite the business model. Bomb countries into oblivion, then make money building hospitals and temporary housing for displaced people. You can’t make this up.

    It is not clear whether Mrs. Clinton or the State Department knew of Mr. Blumenthal’s interest in pursuing business in Libya; a State Department spokesman declined to say. Many aspects of Mr. Blumenthal’s involvement in the planned Libyan venture remain unclear. He declined repeated requests to discuss it.

    Of course he did.

    “We were thinking, ‘O.K., Qaddafi is dead, or about to be, and there’s opportunities,’ ” Mr. White said in a brief telephone interview. He added, “We thought, ‘Let’s try to see who we know there.’ ”

    Mr. White declined to answer follow-up questions about what role Mr. Blumenthal was playing in the business venture. But Mr. Grange described Mr. Blumenthal as an adviser to Mr. White’s company, along with two other associates: Tyler Drumheller, a colorful former Central Intelligence Agency official, and Cody Shearer, a longtime Clinton friend.

     

    Even as their plans sputtered, Mr. Blumenthal continued to draw on the business associates for information about Libya as he shaped his memos to Mrs. Clinton. Sometimes the two realms became blurred.

     

    In January 2012, for example, Mr. Blumenthal sent Mrs. Clinton a memo describing efforts by the new Libyan prime minister to stabilize his fragile government by bringing in advisers with experience dealing with Western companies and governments.

     

    Among “the most influential of this group,” Mr. Blumenthal wrote, was a man named Najib Obeida, who worked at the fledgling Libyan stock exchange. Mrs. Clinton had the memo forwarded to her senior State Department staff.

     

    What Mr. Blumenthal did not mention was that Mr. Obeida was one of the Libyan officials Mr. Grange and his partners hoped would finance the humanitarian projects. The day before Mr. Blumenthal emailed Mrs. Clinton, Mr. Grange wrote to a senior Clinton aide at the State Department to introduce the venture with Mr. Obeida in Libya and seek an audience with the United States ambassador there. Mr. Grange said he had not received a reply.

    Can you believe this? This clown Blumenthal was pretending to be passing on real intelligence to Hillary (and she repeatedly passed on his nonsense), all the while working to further business interests.

    Mr. Blumenthal sent Mrs. Clinton at least 25 memos about Libya in 2011 and 2012, many describing elaborate intrigues among various foreign governments and rebel factions.

     

    Mrs. Clinton circulated them, frequently forwarding them to Jake Sullivan, her well-regarded deputy chief of staff, and requesting that he distribute them to other State Department officials. Mr. Sullivan often sent the memos to senior officials in Libya, including the ambassador, J. Christopher Stevens, who was killed in the 2012 attacks in Benghazi.

     

    In many cases, Mr. Sullivan would paste the text from the memos into an email and tell the other State Department officials that they had come from an anonymous “contact” of Mrs. Clinton.

    He didn’t even have the decency to admit where the information was coming from, since Mr. Blumenthal was specifically banned by the Obama Administration from serving under Hillary in an official capacity. And you wonder why the American political system is circling the toilet bowl.

    But the skepticism did not seem to sour Mrs. Clinton on Mr. Blumenthal. She continued to forward Mr. Blumenthal’s memos, often appending a note: “Useful insight” or “We should get this around asap.”

    The emails suggest that Mr. Blumenthal’s direct line to Mrs. Clinton circumvented the elaborate procedures established by the federal government to ensure that high-level officials are provided with vetted assessments of available intelligence.

    The above certainly explains why American foreign policy is such a dangerous joke, but it gets even worse. It appears the entire time Blumenthal was providing the State Department with inaccurate, crony and clownish “intelligence” on Libya, he was earning $10,000 per month from the Clinton Foundation. We learn from Politico that:

    Sidney Blumenthal, a longtime confidant of Bill and Hillary Clinton, earned about $10,000 a month as a full-time employee of the Clinton Foundation while he was providing unsolicited intelligence on Libya to then Secretary of State Hillary Clinton, according to multiple sources familiar with the arrangement.

     

    Blumenthal was added to the payroll of the Clintons’ global philanthropy in 2009 — not long after advising Hillary Clinton’s presidential campaign — at the behest of former president Bill Clinton, for whom he had worked in the White House, say the sources.

     

    Blumenthal has been subpoenaed by the U.S. House committee investigating the 2012 attack on the U.S. consulate in Benghazi, Libya, and Clinton’s handling of it. He is expected to testify next week about a series of memos containing sometimes specious intelligence on the situation in Libya, which he sent to Hillary Clinton’s personal email account.

     

    Clinton, whose efforts to hire Blumenthal as an adviser at the State Department were rebuffed by top aides to President Barack Obama, last week defended her relationship with her old ally but also minimized his influence.

    To summarize, I think Ben Mathis-Lilley at Slate put it best:

    To recap the whole situation: In 2011 and 2012, Hillary Clinton, as secretary of state, used an off-books email account to discuss national policy with a private citizen who might have been violating the law by participating in the conversation, who had a related business interest (though not a “financial interest”?) in the subject of his advice that he may or may not have disclosed to the government, and who was simultaneously employed in a questionable “full-time” capacity at significant expense to a nonprofit that has been accused of acting as the bag man for a Clintonian influence-peddling operation.

    Must be nice.

    Screen Shot 2015-05-28 at 11.23.35 AM



  • Super-Tanker Surge Signals More Crude Carnage To Come

    "The supply of oil continues to build," warns the CEO of one super-tanker fleet, and "all of this oil needs to go somewhere," which is why the surge in super-tankers to a seven year high strong suggests all is not well in the world's hopeful 'demand' picture. With charter rates up a stunning 57% in the last few weeks with millions of barrels being stored on ships is another indication that the oil glut is yet to dissipate (and in fact, as Bloomberg reports, is getting worse – with almost half a billion barrels of oil in transit to buyers at the start of June, the most this year). With OPEC's meeting around the corner, a sudden realization of this rising glut may send prices plummeting once again.

     

    Four months into oil’s rebound from a six-year low, the tanker market is sending a clear signal that the rally is under threat. As Bloomberg reports,

    A sudden surge in demand for supertankers drove benchmark charter rates 57 percent higher in the two weeks through May 20. OPEC will have almost half a billion barrels of oil in transit to buyers at the start of June, the most this year, while analysts say about 20 million barrels is being stored on ships in another indication the glut has yet to dissipate.

     

    The Organization of Petroleum Exporting Countries is pumping the most oil in more than two years, determined to defend market share rather than prices. A record cut to the number of active U.S. drilling rigs and billions of dollars of spending reductions by companies since last year’s price plunge has yet to translate into a slump in barrels produced. The world is pumping about 1.9 million barrels a day more crude than it needs, according to Goldman Sachs Group Inc.

     

    “Supply of oil continues to build,” said Paddy Rodgers, the chief executive officer of Antwerp, Belgium-based Euronav NV, whose supertanker fleet can haul 56 million barrels of crude. “All of this oil needs to go somewhere,” he wrote in an e-mail May 19.

     

    Daily rates for supertankers on the industry’s benchmark route reached $83,412 on May 20, from $52,987 on May 6, according to the Baltic Exchange in London. While rates since retreated to $65,784, they’re still the highest for this time of year since at least 2008.

     

    …

     

    Spare tanker capacity in the Middle East has seldom been tighter. The combined excess of ships competing for the region’s exports stood at 6 percent last week, the lowest for the time of year in Bloomberg surveys of shipbrokers that started in 2009.

     

    …

     

    “The summer is not usually the time when rates really should go high,” Odysseus Valatsas, chartering manager at Dynacom Tankers Management in Glyfada, Greece, said by phone May 21.

    *  *  *

    Last night's API inventory build also throws the "peak production" hopers meme under the bus.

    Of course, for those looking for a silver lining here, there is always the kiss of death to super-tanker fleet operators…



  • US Oil Production Sets New Modern Record Last Week

    By EconMatters

     

     

    EIA Report


    I looked over the weekly Petroleum Inventory Report put out by the EIA today, and the biggest takeaway by far was that US Oil Production set a new modern era high at 9.566 Million Barrels per day. The last high in US Production occurred in March, and it appeared that the US Production numbers were getting slightly weaker, and maybe the top in US Production was in. But this past week Production really ramped back up with a blowout number, and if it wasn`t for a week in which imports were unusually low for the week, there would have been another huge build in Oil Inventories for the week.

     

    Energy Storage Hubs



    Refineries were operating near full capacity on the week cranking out a utilization rate just shy of 94%, which also helped avoid another weekly inventory build in oil supplies. However, Cushing Oklahoma and the Gulf Coast Region barely budged in reducing the oil inventory surplus at those two crucial storage hubs. Cushing Oklahoma still has 60 Million Barrels stuck in storage facilities, while the Gulf Coast has 242 Million Barrels awaiting refinery for end use.

     

     

    Shale Industry


    However, the noteworthy takeaway is that despite a large reduction in drilling rigs, and the lower prices of the last year US Oil Production is still going up, and not tapering off at all! So much for the Saudi and OPEC strategy of putting a dent in US Oil Production by not cutting production and hoping to gain market share for their oil by putting the Shale Industry out of business.

     

     

    Annual Comparison



    For example, a year ago US Oil Production was 8.472 Million Barrels per day, and now after a market share price war between OPEC and the US Producers, the US is producing a record level of Production, a new modern era record since the EIA began tracking this data in 1983 at 9.566 Million Barrels per day. This is an increase of over 1 Million Barrels per day in US Oil Production in a year`s time, and considering the decline in drilling rigs, this speaks volumes about the increased efficiencies taking place in a lower price and cost environment.

     

     

    Market Reaction



     

    The oil keeps coming out of the ground at record levels, and throw in OPEC`s record output, and it doesn`t bode well for oil prices the second half of the year once the summer driving season ends and we start the building season all over again in oil inventories! We really are at risk of both the Cushing and Gulf Coast storage hubs reaching their storage limits over the next year, and it will be interesting how the oil market deals with this reality. 

     

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  • Paul Craig Roberts Rages "Free Financial Markets Are A Hoax"

    Via Paul Craig Roberts,

    There are no free financial markets in America, or for that matter anywhere in the Western word, and few, if any, free markets of any other kind. The financial markets are rigged by the big banks, the Federal Reserve, and the Treasury in the interests of the profits of the few big banks and the dollar’s exchange value, which is the basis of US power.

    There is a contradiction between a strong currency on one hand and on the other hand massive money creation in order to sustain zero and negative interest rates on the massive debt levels. This inconsistency is revealed by rising gold and silver prices.

    When gold hit $1,900 an ounce in 2011 the Federal Reserve realized that the precious metal market was going to limit its ability to provide enough liquidity to keep the thoughtlessly deregulated financial system afloat. The rapid deterioration of the dollar in terms of gold and silver would sooner or later spill over into the exchange value of the dollar in currency markets. Something had to be done to drive down and to cap the gold price.

    The Fed’s solution was to take advantage of the fact that the prices of gold and silver are determined in the futures market where paper contracts representing gold and silver are traded, and not in markets where the physical metal is actually purchased by people who take possession of it. The Fed realized that uncovered short sales provided enormous leverage over the prices of the metals and that it would be profitable for the bullion banks, such as JPMorgan, Scotia, and HSBC, to short the market heavily and then cover their shorts at lower prices produced by selling as a result of triggering stop-loss orders and margin calls.

    Dave Kranzler and I have shown on numerous occasions that the bullion banks and the Federal Reserve make profits and protect the dollar by suppressing the prices of gold and silver. They do this by illegally selling huge numbers of uncovered shorts in the futures market. This illegal operation is supported by the so-called “regulatory authorities” who steadfastly refuse to intervene.

    It has just happened again. Dave Kranzler describes it in detail here.

    If memory serves, Matt Taibbi explained a few years ago how Goldman Sachs got position limits removed from speculators, so that now speculators can dominate market forces.

    Neoliberal economists in service to the financial sector have created a rationale for why interest rates can be negative in the face of massive debt and money creation and a slew of troubled financial instruments from corporate junk bonds to sovereign debt. The rational is that there is too much saving: The excess of savings over investment forces down interest rates. The negative interest rates will discourage people from saving and encourage them to spend, because the price of consumption in terms of foregone future income from saving is zero. It even pays to consume, because saving costs more than it earns.

    Economists argue this even though the Federal Reserve reported that a majority of Americans are so low on savings that they cannot raise $400 without selling personal possessions.

    That economists would concoct such an absurd explanation for negative interest rates, an explanation obviously contradicted by empirical evidence, shows that economists are now prostitutes just like the media. The economists are lying in support of a Federal Reserve policy that benefits a handful of mega-banks at the expense of the rest of the world.

    The absence of integrity in Western institutions and politicized professions is proof that Western civilization has declined into total decadence just as Jacques Barzun said.

    It is amazing that there still are some Russians and some Chinese who want to be part of the sordid decadence that is the Western world.

    It is just as amazing that Americans and Europeans are so trapped in The Matrix that they have no inkling that their future has been destroyed.



  • The Leading And Most "Distinctive" Causes Of Death In Your State

    In a nation in which every third citizen is obese, it should come as no surprise that the leading cause of death in virtually all states (except the “healthier” ones) is heart disease. Which the map below, of most common sources of death in any state using CDC data, confirms is precisely the case.

    Fig 1: Leading Cause Of Death By State

     

    No surprises there.

    However, that doesn’t mean that every “average” American is doomed to die from a heart attack.

    According to a recent study by the CDC looking at the most distinctive deaths by state, by which they mean which type of death is abnormally represented relative to the national mean, Americans have a veritable cornucopia of ways in which they “pass” depending on which state they call home.

    As the CDC observes, the resulting map depicts a variety of distinctive causes of death based on a wide range of number of deaths, from 15,000 deaths from HIV in Florida to 679 deaths from tuberculosis in Texas to 22 deaths from syphilis in Louisiana. The largest number of deaths mapped were the 37,292 deaths in Michigan from “atherosclerotic cardiovascular disease, so described”; the fewest, the 11 deaths in Montana from “acute and rapidly progressive nephritic and nephrotic syndrome.” The state-specific percentage of total deaths mapped ranged from 1.8% (Delaware; atherosclerotic cardiovascular disease, so described) to 0.0005% (Illinois, other disorders of kidney).

    For the Illinois fans: the reason “gunshot wounds” is not shown is because it is not a part of the International Classification of Diseases, 10th Revision, which is where the CDC pulled its disease sample from.

    So without further ado, here is the color-coded map of “most distinctive causes of death by state, 2001-2010.” Twenty-three different causes of death were identified. The most common was “other and unspecified acute lower respiratory infections,” seen in 6 states (Iowa, Kansas, Minnesota, Nebraska, Ohio, and Wisconsin).

    Source: CDC



  • Meanwhile In India, It Is So Hot The Roads Are Melting, "One Billion People Impacted"

    While we patiently await Wall Street’s weathermen, formerly known as economists, to blame the next swoon in US GDP on California’s relentless drought, now in its fourth year, we wonder how many double seasonally-adjusted, pro-forma, non-GAAP GDP points India’s blistering heatwave will bring. Because if California thinks it has it bad, India has it far worse.

    According to the National Post, soaring summer temperatures in India have left more than 1,400 people dead over the past month, officials said Thursday. Most of the 1,412 heat-related deaths so far have occurred in Andhra Pradesh and neighbouring Telangana, where temperatures have soared up to 47 C, according to government figures.

    AccuWeather described India’s scorching weather as the most intense heat wave in India in recent years, adding that “a very active typhoon season, combined with drought in much of India, could have a significant impact on lives and property for more than a billion people in Asia during the summer of 2015.”

    “The rains which have eluded us for the last couple of years have created serious drought conditions,” said state minister K.T. Rama Rao in Telangana, which was carved out of Andhra Pradesh as a separate state just last year.

    India’s response to the stifling heat? In line with that of the Greek government and stockholders everywhere in the new normal: hope.

    “This is unprecedented … so there is a little bit of panic,” he said. “Hopefully the monsoon will be on time. Hopefully we will receive rain very, very soon.”

    For the locals it’s no laughing matter: “If I don’t work due to the heat, how will my family survive?” said construction worker Mahalakshmi, who earns a daily wage of about $3.10 in Nizamabad, a city about 150 kilometres north of the state capital of Hyderabad.

    Other examples of just how bad it is:

    Volunteers were passing out pouches of salted buttermilk or raw onions — both thought to be hydrating. People used handkerchiefs and scarves to block searing winds and stifling air from their faces.

     

    Across the country, teenagers flocked to water basins and rivers to cool off. Many adults took refuge atop woven cots in the shade.

     

     

    DasBoys dive into a water tank on a hot summer day in New Delhi Wednesday

     

    Newspapers devoted full pages to covering the heat wave and its effects, with headlines saying “Homeless bake in tin shelters” and “birds & animals drop dead.”

     

    An Indian farmer pushes his bicycle past a parched paddy field in Ranbir Singh Pura, about 34 km (21 miles) from Jammu, India.

     

    In cities like New Delhi, crowds of office workers gathered around stalls selling fruit drinks and iced water, while police officers wearing sweat-soaked shirts squinted into the sun while directing road traffic.

     

     

    ImagesAn Indian man uses a rickshaw to transport ice from an ice factory in Amritsar on Wednesday.

     

    “We are even spraying the reptiles,” Delhi Zoo curator Riyaz Khan said, noting fans were also set up to keep enclosures cooler, while the animals were also receiving glucose in their drinking water.

    The good news: cooling monsoon rains are expected to arrive next week in the southern state of Kerala and gradually advance north in coming weeks.

    In the meantime, it is so hot the read is literally melting as shown in the following clip.

     

     



  • Emergency Powers Give Barack Obama Authority Over Just About Everything During A Major National Crisis

    Submitted by Michael Snyder via The Economic Collapse blog,

    Presidents have always exercised emergency powers, but now thanks to dozens of new laws, regulations, court decisions and executive orders, Barack Obama is the most powerful president in all of U.S. history.  Of course the U.S. Constitution does not actually give the president any special powers during a time of national emergency, but over time presidents have decided that they should be able to exercise such powers and the courts have generally agreed with them.  During World War II and prior to that, these emergency powers were largely uncodified and were primarily used during times of war.  But since World War II things have completely changed, and this has particularly been true since 9/11.  Over the past decade or so, a whole host of extraordinary powers have specifically been given to the office of the president, and all that it takes to exercise them is a major “national emergency”.  So if we do have a full-blown economic collapse, a historic natural disaster, a significant war or a massive pandemic, Barack Obama could use the emergency powers that he has been given to essentially take authority over everything.

    There is not a single document or series of documents that contain all of the emergency powers that Barack Obama could potentially wield during a major national emergency.  As I mentioned above, these powers come from literally dozens of laws, regulations, court decisions and executive orders.  But in this article I will discuss a few important documents.  One of these is a presidential directive that was issued during the second term of George W. Bush.  It is entitled NATIONAL SECURITY PRESIDENTIAL DIRECTIVE/NSPD – 51/HOMELAND SECURITY PRESIDENTIAL DIRECTIVE/HSPD – 20, and you can take a look at it on the FEMA website right here.  This document is primarily concerned with the continuity of our federal government in the event of a catastrophic emergency.  So precisely what would constitute a “catastrophic emergency”?  The following is how the document defines that term…

    “Catastrophic Emergency” means any incident, regardless of location, that results in extraordinary levels of mass casualties, damage, or disruption severely affecting the U.S. population, infrastructure, environment, economy, or government functions;

    That sounds quite broad to me.  It could apply to all sorts of scenarios.

    If we do have such a “catastrophic emergency”, the president essentially becomes a dictator at that point.  The document certainly talks about the need to ensure that “constitutional government” continues, but during the course of the emergency there really is not much of a role for the other two branches of government to play.  Instead, the “shadow government” takes over under the overall command of the president.  The following is a short excerpt from the document…

    The President shall lead the activities of the Federal Government for ensuring constitutional government. In order to advise and assist the President in that function, the Assistant to the President for Homeland Security and Counterterrorism (APHS/CT) is hereby designated as the National Continuity Coordinator. The National Continuity Coordinator, in coordination with the Assistant to the President for National Security Affairs (APNSA), without exercising directive authority, shall coordinate the development and implementation of continuity policy for executive departments and agencies. The Continuity Policy Coordination Committee (CPCC), chaired by a Senior Director from the Homeland Security Council staff, designated by the National Continuity Coordinator, shall be the main day-to-day forum for such policy coordination.

    Of course the 11 page document that we have on the FEMA website is just the tip of the iceberg when it comes to continuity of government planning.  Unfortunately, most of the plans are top secret and are not allowed to be seen by the public.  Astonishingly, this even applies to members of Congress.  The following comes from Wikipedia…

    On July 18, 2007, Rep. Peter DeFazio (D-OR), a member of the U.S. House Committee on Homeland Security, requested the classified and more detailed version of the government’s continuity of government plan in a letter signed by him and the chairperson of the House Homeland Committee, which is supposed to have access to confidential government information. The president refused to provide the information, to the surprise of the congressional committee.

    Another document that raises a lot of red flags is an executive order entitled “National Defense Resources Preparedness” that was issued by Barack Obama on March 16th, 2012.  This particular executive order updates previous executive orders, and it gives the president extraordinary authority during a time of national emergency.  Below, I have posted most of section 201 of that executive order.  As you can see, it potentially gives Barack Obama authority over just about everything during a time of national emergency if he feels it is needed for “national defense”…

    Sec. 201.  Priorities and Allocations Authorities.  (a)  The authority of the President conferred by section 101 of the Act, 50 U.S.C. App. 2071, to require acceptance and priority performance of contracts or orders (other than contracts of employment) to promote the national defense over performance of any other contracts or orders, and to allocate materials, services, and facilities as deemed necessary or appropriate to promote the national defense, is delegated to the following agency heads:

     

    (1)  the Secretary of Agriculture with respect to food resources, food resource facilities, livestock resources, veterinary resources, plant health resources, and the domestic distribution of farm equipment and commercial fertilizer;

     

    (2)  the Secretary of Energy with respect to all forms of energy;

     

    (3)  the Secretary of Health and Human Services with respect to health resources;

     

    (4)  the Secretary of Transportation with respect to all forms of civil transportation;

     

    (5)  the Secretary of Defense with respect to water resources; and

     

    (6)  the Secretary of Commerce with respect to all other materials, services, and facilities, including construction materials.

     

    (b)  The Secretary of each agency delegated authority under subsection (a) of this section (resource departments) shall plan for and issue regulations to prioritize and allocate resources and establish standards and procedures by which the authority shall be used to promote the national defense, under both emergency and non-emergency conditions.  Each Secretary shall authorize the heads of other agencies, as appropriate, to place priority ratings on contracts and orders for materials, services, and facilities needed in support of programs approved under section 202 of this order.

    A similar executive order regarding national communications was issued on July 6th, 2012.

    But the powers that Barack Obama could potentially wield during a time of national emergency are not just limited to what is written down.  This may shock many Americans, but it is true.  In the past, presidents have used their “emergency powers” to suspend habeas corpus, to place American citizens in internment camps and to seize private property.  The following comes from Wikipedia…

    A claim of emergency powers was at the center of President Abraham Lincoln’s suspension of habeas corpus without Congressional approval in 1861. Lincoln claimed that the rebellion created an emergency that permitted him the extraordinary power of unilaterally suspending the writ. With Chief Justice Roger Taney sitting as judge, the Federal District Court of Maryland struck down the suspension in Ex Parte Merryman, although Lincoln ignored the order. 17 F. Cas. 144 (1861).

     

    President Franklin Delano Roosevelt similarly invoked emergency powers when he issued an order directing that all Japanese Americans residing on the West Coast be placed into internment camps during World War II. The U.S. Supreme Court upheld this order in Korematsu v. United States. 323 U.S. 214 (1944).

     

    Harry Truman declared the use of emergency powers when he seized private steel mills that failed to produce steel because of a labor strike in 1952. With the Korean War ongoing, Truman asserted that he could not wage war successfully if the economy failed to provide him with the material resources necessary to keep the troops well-equipped. The U.S. Supreme Court, however, refused to accept that argument in Youngstown Sheet & Tube Co. v. Sawyer, voting 6-3 that neither Commander in Chief powers nor any claimed emergency powers gave the President the authority to unilaterally seize private property without Congressional legislation. 343 U.S. 579.

    And it is important to keep in mind that Barack Obama now possesses far more power than any of those presidents ever did.  All it is going to take for him to exercise those powers is a major national emergency.  This is something that Jim Powell discussed in an article for Forbes…

    Not long after that, we found ourselves in an open-ended national emergency declared on September 14, 2001 and extended since by both George W. Bush and Barack Obama.  This means the president has standby powers from hundreds of statutes that would enable him to re-introduce military conscription, seize private property and in myriad ways establish a government-run economy.

    Thankfully, things are still somewhat stable for the moment so Obama does not have a reasonable excuse to use all of the powers that he has been given.  But that could change at any time.  If we do see a “catastrophic emergency” in the next year or so, there are very few limits on what Barack Obama would be able to do.  That includes potentially postponing or suspending the 2016 election so that he can remain in office throughout the course of the national emergency.

    We have never seen such a thing happen before, and hopefully we never will.  And of course it isn’t just Barack Obama that we need to be concerned about.  A future leader of this nation could potentially be even worse than him.  It has been exceedingly foolish for us to give a single person so much power in the event of a “catastrophic emergency”, and in the end we may regret this bitterly.



  • In Shocking Move, Goldman Slashes America's Long-Run "Potential GDP" From 2.25% To 1.75%

    While Ben Bernanke will never agree that global economic growth has ground to a halt as a result of his monetary policies, a phenomenon which in the past year has been dubbed “secular stagnation” by the very serious weathermen (and will certainly never admit the reason for such stagnation), with every passing month one thing becomes clear: there can be no growth and certainly no prosperity for the broader population with a $200 trillion (and rising at over $10 trillion per year) overhang in global debt. And now, even Goldman gets it.

    Having recently cut its estimate of US trend productivity growth to 1.5%, in a shocking move earlier today, Goldman admitted US trend growth is far less than previously speculated (or, “secularly stagnating“) and moments ago lowered its long-term potential GDP. The bank says: “after adjusting for a drag from government sector productivity and incorporating an updated assessment of trend labor force growth, we now see long-run potential GDP growth at 1¾%, half a percentage point below our prior estimate.”

    This is a huge deal as Goldman just recalibrated every single economic (i.e., inflation, employment) and financial (i.e., bond rates, leverage) equation by more than 20%, not to mention the amount of implied residual slack in the economy. In short, an absolutely massive amount!

    But whatever happened to Jan Hatzius’ repeat forecasts that the US would grow at an “above consensus” rate of 3-4% as far as they eye could see? When will he revise these?

    In any event, all else equal, Goldman just admitted that the US standard of living will henceforth grow over 20% slower.

    It also means that the Penguin express of Wall Street weathermen are about to jump on board, as will the various regional Feds starting with the Bill Dudley-run NY Fed, before aunt Yellen, too, has to admit that not only is the long-term US growth rate lower than previously expected, but that as a result, the slack in the economy is also far, far less and as a result, the Fed most certainly has a green light to hike, even as soon as June.

    Full note below:

    Lower Measured Productivity = Lower Potential GDP (Dawsey)

    • We recently reduced our estimate of US trend productivity growth to 1½%, mainly due to a downgrade in our view of trend total factor productivity (TFP). In today’s Daily, we refresh our view on potential GDP growth in light of our new productivity estimates. After adjusting for a drag from government sector productivity and incorporating an updated assessment of trend labor force growth, we now see long-run potential GDP growth at 1¾%, half a percentage point below our prior estimate.

    In our most recent Weekly, we reduced our estimate of US trend productivity growth?traditionally measured as growth in nonfarm business output per hour—from 2% to 1½%. The most important factor behind slower productivity growth over the past decade appears to be a smaller contribution from the IT sector. Indeed, Exhibit 1 shows that trend productivity growth of around 1½% would be similar to that seen during the two decades through the mid-1990s, but would be significantly lower than that during the dot-com productivity boom. Although we have argued that measurement issues may be resulting in an undercount of value added by information technology, and as a result downwardly distorted productivity figures, we do not expect these measurement issues to be addressed any time soon. As such, we expect measured productivity growth to run below its historical average going forward.

    Exhibit 1. Back to a Sluggish Rate of Measured Productivity Growth

    Looking at the issue with a different lens, we have found the “growth accounting” approach to productivity forecasting to be helpful in past work. In this framework, productivity growth can be broken into: (1) the contribution from growth in capital services, (2) the contribution from changes in labor composition, and (3) growth in total factor productivity (i.e. the residual component). Based on the outlook for capital spending, labor force growth, educational attainment, and other demographic changes, we expect contributions from capital services and labor quality that are very similar to our prior estimates. Over the coming ten years, we expect capital services to contribute about 0.9 percentage point (pp) per year to productivity growth, and labor composition to add another 0.1pp.

    However, our prior estimate for growth in total factor productivity (TFP) now looks too high. As the strong productivity period before 2004 fades further into the background and new data for 2013 and tentative estimates for 2014 have become available, our estimate of the TFP trend has fallen back to the ½% trend seen from 1974 to 1995 (Exhibit 2). That said, assessing the trend in TFP is difficult, not least due to heightened volatility in the years around the Great Recession. We think a reasonable confidence band around our TFP estimate is roughly 1 percentage point. Uncertainty aside, combining our point estimates for the contribution from capital services, labor composition, and TFP results in a trend productivity estimate of 1½%.

    Exhibit 2. TFP Trend Looks Lower

    Productivity measures that are typically quoted—including the official productivity release from the Labor Department—refer to growth in nonfarm business output per hour worked. In order to convert the estimate to “total economy” productivity, an adjustment must be made for the fact that (by virtue of how the national accounts are constructed) productivity in the government sector is a mechanical drag. Historically, subtracting about four-tenths of a percentage point has been appropriate (very roughly: 20% government share of GDP multiplied by roughly -2% “missing” productivity growth vs. the rest of the economy). However, as we anticipate a slower rate of productivity growth in the private sector vs. the historical average in the future, we think that a subtraction of roughly three-tenths is appropriate going forward.

    The last piece needed to arrive at an updated estimate of potential GDP growth is a projection for growth in potential hours worked. Because weekly hours per employee will likely be stable over the long term, we focus on growth in the potential labor force. Using updated Census projections for population growth by age category released in December 2014, combined with an assumption of stable participation by age group in the long term, we think that potential labor force growth will average about 0.5 percentage point over the next ten years, similar to CBO’s assessment. Exhibit 3 shows that potential labor force is likely to be below growth in the 16+ population, as the average age of the US population is increasing and older individuals are less likely to participate in the labor force.

    Exhibit 3. Potential Labor Force Growth Will Likely Fall Short of Population Growth

    Adding up the pieces, growth in nonfarm business output per hour of 1½%, a “total economy” adjustment of about -0.3pp, and potential labor force growth of about 0.5pp sum to a potential GDP growth estimate of 1¾%, half a point below our prior estimate. Of course, the same “new economy” measurement issues that we identified as potentially affecting productivity growth feed through directly to measured GDP growth, and so we would be cautious of confident pronouncements that the true standard of living in the United States is likely to grow more slowly than in the past.



  • Putting The 'Great' In Great Depression, Stephen Roach Warns On TPP's Currency Rules

    Authored by Stephen Roach, originally posted at Project Syndicate,

    As the US Congress grapples with the ever-contentious Trans-Pacific Partnership – President Barack Obama’s signature trade legislation – a major stumbling block looms. On May 22, the Senate avoided it, by narrowly defeating – 51 to 48 – a proposed “currency manipulation” amendment to a bill that gives Obama so-called “fast-track” authority to negotiate the TPP. But the issue could be resurrected as the debate shifts to the House of Representatives, where support is strong for “enforceable currency rules.”

    For at least a decade, Congress has been focusing on currency manipulation – a charge leveled at countries that purportedly intervene in foreign-exchange markets in order to suppress their currencies’ value, thereby subsidizing exports. In 2005, Senators Charles Schumer, a liberal Democrat from New York, and Lindsey Graham, a conservative Republican from South Carolina, formed an unlikely alliance to defend beleaguered middle-class US workers from supposedly unfair competitive practices. Stop the currency manipulation, went the argument, and America’s gaping trade deficit would narrow – providing lasting and meaningful benefits to hard-pressed workers.

    A decade ago, the original Schumer-Graham proposal was a thinly veiled anti-China initiative. The ire that motivated that proposal remains today, with China accounting for 47% of America’s still outsize merchandise trade deficit in 2014. Never mind that the Chinese renminbi has risen some 33% against the US dollar since mid-1995 to a level that the International Monetary Fund no longer considers undervalued, or that China’s current-account surplus has shrunk from 10% of GDP in 2007 to an estimated 2% in 2014. China remains in the crosshairs of US politicians who believe that American workers are the victims of its unfair trading practices.

    While this argument has great emotional and political appeal, it is deeply flawed, because the United States has an insidious saving problem. America’s net national saving rate – the sum total of household, business, and government saving (adjusted for the depreciation of aging capacity) – currently stands at 2.5% of national income. While that is better than the negative saving rates of 2008-2011, it remains well short of the 6.3% average of the final three decades of the twentieth century.

    Lacking in saving and wanting to grow, America must import surplus savings from abroad. And to attract that foreign capital, it has no choice but to run equally large balance-of-payments deficits.

    So it is no coincidence that the US economy has a chronic current-account deficit. While this shortfall has narrowed from a peak of 5.8% of GDP in 2006 to 2.4% in 2014, it still leaves the US heavily dependent on surplus foreign savings in order to grow.

    This is where the trade deficit comes into play. The US does not just pluck surplus foreign savings out of thin air. To attract the capital it needs, America must send dollars overseas through foreign trade.

    And it is here that the currency manipulation argument falls apart. In 2014, the US ran trade deficits with some 95 countries. In other words, America does not suffer from a small number of bilateral trade deficits that can be tied to charges of currency manipulation by countries like China, Japan, Malaysia, or Singapore. Rather, the US suffers from a multilateral trade imbalance with many countries, and this cannot be remedied through the imposition of bilateral penalties such as tariffs.

    Without fixing its savings problem, restricting trade with a few so-called currency manipulators would simply redistribute the US trade deficit to its other trading partners. In effect, America’s trade balance is like a water balloon – applying pressure on one spot would simply cause the water to slosh elsewhere.

    Moreover, this approach could easily backfire. For example, assuming that there is no increase in domestic US saving, penalizing a low-cost producer like China for currency manipulation would most likely cause the Chinese piece of America’s trade deficit to be reallocated to higher-cost producers. That would be the functional equivalent of a tax hike on middle-class families – precisely the constituency that so concerns Congress. Further complications would arise from putting the verdict on currency manipulation – presumably dependent on some type of “fair value” metric – in the hands of politicians.

    This is also the twist that underscores the ultimate congressional hypocrisy. The charge of currency manipulation is nothing but a foil for the US to duck responsibility for fixing America’s saving problem. Lacking any semblance of a strategy to boost savings – not just a long-term fix to the federal government’s budget deficit, but also meaningful incentives for personal saving – US politicians have turned to yet another quick fix.

    In the end, there is no way around it: If Congress does not like trade deficits, it needs to address America’s saving problem and stop fixating on misplaced concerns over currency manipulation.

    None of this is to argue that the US should ignore unfair trading practices. As a member of the World Trade Organization, the US has ample opportunity to use that body’s dispute-resolution mechanism to adjudicate major problems with its trading partners. And it has enjoyed success with this approach. What Congress cannot do is pretend that wrong-footed trade policy is the answer to its inability or unwillingness to refocus its domestic policy agenda.

    Of course, it is always easier to blame others than to look in the mirror. But history has not been kind to major trade blunders. Just as the Smoot-Hawley Tariff Act of 1930 sparked a global trade war that may well have put the “great” in the Great Depression, Congressional enactment of enforceable currency rules today could spark retaliatory actions that might devastate the free flow of trade that a sluggish global economy desperately needs.

    The US Senate was wise in rejecting this dangerous option. We can only hope that similar wisdom prevails in the House of Representatives. Currency manipulation legislation is one tragedy that can and should be avoided.



  • States Turn To Pension Ponzi Scheme To Close Funding Gaps

    One thing we’ve covered quite extensively of late is the growing fiscal crisis facing state and local governments in the US. 

    To recap a few of the more important (and amusing) stories, recall that Chicago recently saw its debt downgraded to junk status by Moody’s after the Illinois Supreme Court struck down a pension reform law which would have paved the way for Mayor Rahm Emanuel to push for similar changes in Chicago where underfunded pension liabilities are set to triple by 2018. Adding insult to injury, Moody’s decision also triggered some $2 billion in accelerated payment rights for the city’s creditors and jeopardized the refinancing of some $900 million in floating rate paper. 

    Meanwhile, in Kansas, GOP Governor Sam Brownback’s tax cuts have backfired, helping to blow an $800 million hole in the state’s budget resulting in cuts to education and proposed worker furloughs and prompting one angry waitress to advise Brownback to “tip the schools” rather than his server. 

    Down south things aren’t much better as falling oil prices have plunged Louisiana into a $1.6 billion fiscal abyss that’s now threatening to bankrupt LSU.

    Visually, the situation looks like this…

     

    Now, lawmakers fear the Illinois Supreme Court may have set a precedent that will hamper efforts to cut pension costs meaning state and local government officials will need to figure out alternative ways to plug the holes and as you might have guessed, option number-one is …drumroll… more debt.

    The New York Times has more:

    Facing a shortfall of more than $50 billion in his state’s pensions, and with no simple solution at hand, Gov. Tom Wolf of Pennsylvania is proposing to issue $3 billion in bonds, despite the role that such bonds have already played in the fiscal woes of other places.

     

    And he is not alone. Several states and municipalities are considering similar action as they struggle with ballooning pension costs.

     

    Interest in so-called pension obligation bonds is expected to intensify in the wake of a recent Illinois Supreme Court decision that rejected the state’s attempt to overhaul its severely depleted pension system. The court ruled unanimously that Illinois could not legally cut its public workers’ retirement benefits to lower costs, forcing lawmakers to scramble for the billions of dollars it will take to keep the system intact.

     

    While the Illinois ruling is not binding on other states, analysts think it may influence lawmakers elsewhere to look to alternatives to cutting public pensions…

     

    “My reaction was, ‘Yeah, that’s going to play here,’ “ said John D. McGinnis, a lawmaker in Pennsylvania, which has also been diverting money from its pension system, setting the stage for a crisis as more and more public workers retire. The state has no explicit constitutional mandate to protect public pensions, as Illinois does, but that is irrelevant, said Mr. McGinnis, a Republican and former finance professor at Pennsylvania State University.

     

    “The judiciary in Pennsylvania has been solidly of the belief that there are ‘implicit contracts,’ and you can’t deviate from them,” he said. If lawmakers in Harrisburg were to unilaterally cut pensions now, he said, they could be taken to court and be dealt a stinging rebuke, like their counterparts in Illinois.

    ‘Solving’ this problem by issuing bonds is an enticing option but at heart, it amounts to what one might call a “pension liability-bond arbitrage.” The idea is to borrow the money to plug the pension gap and invest it at a rate of return that’s higher than the coupon on the bonds, thus saving money over the long-haul.

    Of course, much like transferring a balance on a high interest credit card onto a new card with a teaser rate (or refinancing a high interest credit card via a P2P loan) this gimmick only works if you do not max out the original card again, because if you do, all you’ve done is doubled your debt burden. As it relates to pension liabilities, this means that what you absolutely cannot do is use the cash infusion as an excuse to get lax when it comes to pension funding because after all, that’s what caused the problem in the first place. Here’s NY Times again:

    Fiscal analysts say it is possible, in theory, to shape a pension obligation bond deal responsibly, but that is not what they usually see.

    Instead, the deals are typically used to make troubled pension systems seem a little less troubled for a few years, allowing elected officials to celebrate a pension reform without having to make the system sustainable over the long term.

     

    The flood of cash from the bonds may also tempt officials into taking a break from their pension-funding schedule — the very action that has caused so much pension distress to begin with. Skipping annual pension contributions produces an off-balance-sheet debt that can start growing exponentially.

    Aside from the rather obvious fact that borrowing huge sums of money to paper over problems has a tendency to promote the very same type of irresponsible behavior that got the borrower into trouble in the first place thus setting the stage for a scenario that ends up being twice as bad as it was initially, there’s also the fact that, as documented in these pages extensively, investment return assumptions for public pension plans are often at odds with reality. That is, projecting a 7% return in a world governed by ZIRP and NIRP means that in the best case scenario you are being absurdly optimistic and in a worst case scenario you’re likely taking greater risks in an effort to maximize returns. Reinforcing the latter is the following graphic which shows the extent to which pensions have moved increasingly into riskier assets over time in an effort to stay solvent in a low rate environment:

    And, for those who missed it, here is a sampling of the return assumptions from Chicago’s local government pension plans (ask yourself how one can possibly hope to hit these targets by investing conservatively in today’s markets):

    As for pension obligation bonds well, they aren’t necessarily something you want to get involved with if you’re a yield-starved investor because as it turns out, helping broke states and municipaltiies perpetuate pension ponzis sometimes ends very poorly:

    After declaring bankruptcy in 2013, Detroit sought to have $1.4 billion of pension obligation bonds voided outright, saying they had been sold illegally in 2005 and were not enforceable. Ultimately, Detroit settled the debt for about 13 cents on the dollar, the lowest recovery rate of any of its bonds.

    Meanwhile, in San Bernardino, California (a city which still finds $650,000 to pay off victims of post-horse chase police brutality), investors learned the pension obligation bond lesson the hard way. 

    Via Bloomberg:

    U.S. Bankruptcy Judge Meredith Jury on Monday threw out a lawsuit in which investors had claimed their pension bonds must be paid off at the same rate as the California Public Employees’ Retirement System in the San Bernardino bankruptcy. The $304 billion fund is the biggest in the U.S.

     

    Jury acknowledged that her decision may discourage investors from buying pension-obligation bonds in the future.

     

    “What I see as unfair, and might seem unfair to the outside world, does not matter under law,” Jury said, referring in part to the powerful remedies Calpers can seek if the city doesn’t honor its contract…

     

    An investor who buys pension-obligation bonds “is just asking for trouble,” said Cohen, who manages $345 million for individual investors. The cities’ bankruptcies show that pensioners and municipal employees have an advantage over bondholders, she said.

    In the end, at least one concerned Pennsylvania citizen (who is ironically a retired state employee) gets it and because we appreciate his candor, we’ll give retired accountant Barry Shutt the last word:

    “When you’re borrowing money for pensions, you’re getting a new credit card to pay off the old one, and you still haven’t paid off the old one.”



  • Corruption: That's What Government Was Designed For

    Submitted by Bill Bonner via Bonner & Partners,

    Why I’m Looking Forward to the Next Big Crash

    Our beef with our own generation is not that it failed, but that it succeeded too well. It took control of government and used it like an ape uses a rock – to crack open a nut. But we’ll come back to that in a minute…

    Yesterday, a London-based magazine and a TV station interviewed us. Both asked if we were “pessimistic.” “Of course not,” we replied. “We expect today’s financial system to fall apart in a terrible crash and depression. But we’re looking forward to it.” This was not exactly the answer they were looking for… And there’s not enough time in an interview to explain why this view makes any sense at all. The audience must have thought we had lost our mind.

    We also had a meeting with our old friend and editor of the Gloom, Boom & Doom Report Marc Faber yesterday. He helped make sense of our “pessimism.”

    “The system is corrupt,” he said. “The government. The banks. The central banks. Big business.”

    People always use their wealth and power to try to protect themselves. Sometimes they use it to take wealth and power away from others, too. That’s corruption. Of course, that’s what government was designed for: to allow one group to rob another. If the elite could take no advantage from it, why would they bother with government at all?

    Dirty Work

    We baby boomers took over in the 1980s. We have been in charge ever since. Since then, we’ve corrupted the economy, the markets, and government. By the 1970s, some of the dirty work was already done: The Nixon administration had ditched honest money. Now, the coast was clear. We could use this new credit-based money to pervert the whole shebang.

    The U.S. government used to be limited. That was the point of the Constitution – to restrict the feds’ power. Much of the restraint was financial. States were forbidden from making anything but gold and silver legal “tender.” But there was restraint when it came to foreign wars, too. Congress was supposed to bear the sole power not only to put troops in the field, but also to raise the money to pay for them.

    Today, the Constitution is in a musty drawer somewhere; not even the Supreme Court justices can find it. The new money, along with a sans souci attitude toward debt, changed everything. Now, the feds can get away with anything – including murder – if they put the right spin on it.

    Pretend to be fighting terrorists, drugs, cancer, racism, global warming, lack of consumer demand, or tobacco use and nobody asks questions.

    Capitalism No More

    The Reagan administration talked about balanced budgets and fiscal conservatism. But within months of arriving in Washington, the Republican Party rolled over. Since then, it’s scarcely ever met a zombie it didn’t like – especially if he had a gun in his hand. Wars overseas. Wars at home. Every fight cost money and every one was a loser. But not for everyone…

    And now capitalism is no more – not in the 50 states at least. Now we have cronyism, in which businesses angle for favors from the feds.

    Why the switch? It is more profitable.

    Another old friend, Strategic Investment editor Jim Davidson, described the payoff:

    The Sunlight Foundation reports on research it undertook between 2007 and 2012, tracking 200 of America’s most politically active corporations:

     

    “After examining 14 million records, including data on campaign contributions, lobbying expenditures, federal budget allocations and spending, we found that, on average, for every dollar spent on influencing politics, the nation’s most politically active corporations received $760 from the government. The $4.4 trillion total represents two-thirds of the $6.5 trillion that individual taxpayers paid into the federal treasury.”

    “That translates to a 75,900% rate of return,” says Jim.

    Real capitalism means taking real risks… working hard… getting lucky… and discovering the future. Cronyism is safer and surer. It favors old, established businesses, the ones that can afford expensive lobbyists.

    It doesn’t lead to wealth creation or progress, but it is easier for politicians and central planners to work with. They know where the money is! And they can plan for the past; it’s the future they have trouble with.

    But wait… We came to praise our fellow boomers, not to bury them in scorn. Have we nothing nice to say about our own generation?



  • Welcome To The Ebay Stock Market

    When we first brought the world's attention to the 330ET daily ramp in US equity markets, we were shrugged off as conspiracy wonks once again, but 2 years later – as trading activity has become increasingly focused in smaller and smaller windows during the trading day, so the mainstream media has finally been forced to admit that the US equity market has become nothing but Ebay – where everyone waits til the last second.

     

    During the day, “people are watching the paint dry,” said Leonid Hmelnitsky, head of equities trading for Mellon Capital Management, a San Francisco money manager with $404 billion under management. “We’ve definitely seen the shift.”

     

    Just as we noted 2 years ago, The Wall Street Journal reports across Wall Street, less trading is taking place at 3 p.m. or, in fact, most any time but the opening minutes and the final half hour.

    The rising use of index funds, which generally prefer to trade at the close, is contributing to the shift. So are the scores of computer models sniffing out the best times to trade, when they have the greatest chance of matching up without driving the price higher or lower.

     

     

    With the trend has come concerns about liquidity in the multitrillion-dollar U.S. stock market. As more volume migrates to the end of the session, liquidity—or the ability to buy or sell stocks easily at a given price—is harder to come by during midday hours, traders said. That makes trading away from the end of the day more costly, making it harder for traders looking to capitalize on favorable midday stock moves.

     

    The shift also raises the prospect that stocks will be more vulnerable to outsize swings during low-volume trading hours in the middle of the day, an outcome that could expose investors, including retail stock buyers, to losses.

    By the numbers it is quite stunning…

    More than one in six trades in S&P 500-listed stocks took place between 3:30 and the 4 p.m. closing bell last year, according to an analysis by Ana Avramovic, trading strategist at Credit Suisse. The 17.8% of trades in that period compares with 13% in 2007.

     

    For shares of smaller companies, 19.3% of trades were in the final 30 minutes, up from 14% in 2007. That is important because it can often be difficult for investors to trade smaller-company stocks without pushing the price up or down.

     

    Even the closing minutes of trading have become more crowded. The final five minutes accounted for 6% of all volume last year, rising each year since 2010, according to Trade Informatics, a trading-analytics firm.

    A growing reliance on computerized trading tools has accelerated the shift.

    Such tools aim to lower costs and limit the impact money managers have on share prices. These include programs that dribble out trades at intervals, known as “volume weighted average price” algorithms. Their proliferation has led volumes to snowball at times when investors are already active, such as at the close.

     

    “It just kind of feeds on itself,” said Joe Rodela, head of U.S. trading at Allianz Global Investors. “Volume attracts volume.” Mr. Rodela, who trades on behalf of portfolio managers at the $499 billion investment firm, said a greater share of Allianz’s own stock trades over the years take place later in the day. Trading later is cheaper and comes with less volatility, he said.

    *  *  *

    How is this good for the retail investor?

    “In the middle of the day… you have such a liquidity void,” said Joe Spinelli, who heads trading in single stocks for the Americas at Deutsche Bank.

    Perhaps even more worrisom, just like in the US, so in the case of a clearly rigged stock in the world's biggest bubble – all the rigging takes place in the very end of trading…

    A Financial Times analysis of two years of trading data of Hanergy Thin Film stock — more than 800,000 individual trades on the Hong Kong Stock Exchange — shows that shares consistently surged late in the day, about 10 minutes before the exchange’s close, from the start of 2013 until February this year.

     

    To make it more clear what this means…

    As The FT reports, a trader who bought HK$1,000 ($129) worth of HTF at 9am on every day of trading since January 2 2013 and sold those shares at 3.30pm each day, would have seen their money shrink to HK$635 by February 2015.

     

    But if they held on for just under half an hour more each time, the HK$1,000 would have turned into HK$8,430. This calculation does not include overnight gains.

     

     

     

    *  *  *

    Welcome to the Ebay Market… where every index is Hanergy.



  • Martin Armstrong Warns "This Time Is Very Different"

    Submitted by Martin Armstrong via ArmstrongEconomics.com,

    For years, I have warned that we will face our worst nightmare – the collapse of socialism. In the death throes of this abomination that even the Ten Commandments listed as a serious sin, equal to “thou shalt not kill”, government will become the ugly beast that will devour society to retain power.

    capitalism-vs-socialism

     

    Of course, they will never see themselves that way, but they will justify in their minds that stripping us of our freedom, rights, privileges, and immunities, is necessary to maintain socialism for the good of the people.

    Thatcher-Socialism

    We are running out of other peoples’ money, as Margaret Thatcher warned.

     

    Marx-Changing World

    Karl Marx, who sought to change society by sheer force, set all this in motion. What has taken place is really scary, for indeed they have altered society far more than anyone dares to ponder.

    Why is this Sovereign Debt Crisis collapse different from 1931? When the governments of the world defaulted on their debts in 1931, there were no pension funds. Government has exempted itself from all prudent reason for you take the state operated pension funds, like Social Security in the USA, where 100% of the money is in government bonds. They may have no intention of defaulting, but very few government have ever paid off their debts in the end. Then there are states who regulate pension funds requiring more than 80% to be in government bonds.

    A Sovereign Debt Default this time around will wipe out socialism, yet the bulk of the people are clueless not merely about the risk, but the ramifications. Younger generations do not save to support their parents for that was government’s job post-Great Depression. Socialism has altered thousands of years of family structure following the ranting of Karl Marx. This has been one giant lab experiment that ended badly in China and Russia and is coming to a local government near you.

    So this time it is SUBSTANTIALLY DIFFERENT. Government is now on the hook, which is part of the reason why they are moving to eliminate cash to prevent bank runs and to force society to comply with their demands. This is why we have people like Gordon Brown, who sold Britain’s gold reserves in 1999 making the low, claiming now that eliminating cash will eliminate the boom and bust of the business cycle. Let’s face it, Gordon Brown has NEVER been right when it comes to politics, not even once, and he has been the worst manager of finance that Britain has ever known. He sold the low in gold and now he presumes he can fulfill Marxism by eliminating cash. He postulates ideas that are theory without any support whatsoever. We cannot afford more arrogant people like this in politics who believe they have a right to experiment with society.

    This time it is very different. They have wiped out society placing the entire scheme of socialism as a terrible nightmare that will end badly, and they have ruined the social family structure disarming people that for thousands of years was our very means of self-sufficient survival. These clown have set the tone for wiping out the dreams they sold the elderly, all while hunting taxes and causing job creation to implode as the youth has been converted into the lost generation. All this with pretend good intentions. Can you imagine the damage to society if they had actually intended this mess? They have lied to themselves and to the people. We have to crash and burn – that part is inevitable. Only when the economy turns down will we then argue over solutions.



  • Dead Markets Drifting As Dollar Drops

    Given the efforts in JPY carry and VIX clubbing to juice stocks today, this seemed appropriate…

     

    But by the close… despite the best efforts of VIX and JPY, we ended red

     

    Futures show we drifted lower overnight with the opening ramp helping bring things back

     

    On the week, Nasdaq and Small Caps were lifted back green after early weakness…

     

    Trannies hit "correction" 10% down territory…

     

    It seems VWAP is going mainstream…

     

    Treasuries and Stocks remain decoupled…

     

    VIX was a gappy mess (that is a technical term only experienced traders will understand) that was on a mission to go lower…

     

    VIX futures volume is getting massively concentrated… Thanks VXX rebalance

     

    The USDollar slipped on the day – amid more volatility around the US open – led by EUR and CHF strength…4th day in a row of overnight USD buying and US session selling…

    This is the first consecutuive days drop in USD in 2 weeks.

    Treasury yields were very quiet today – short-end outperformed…

     

    Gold for the 3rd day was deadsstick as was Copper and silver…

     

    Gold has traded in a $5 range the last 3 days… with the USD a lot more volatile

     

    Crude did its shenanigannery once again as inventrory draw gains were reversed on production surges and then machined higher into NYMEX close…

     

    Charts: Bloomberg

    Bonus Chart: Oil – friend or foe to stocks?



  • Chinese Housewives Displeased After Biggest Stock Market Drop In 2 Years

    For the 4th day in a row, China opened with a dip last night… but this time it was different. A half-hearted BTFD-effort was met with major selling pressure. Between real-estate developer Kaisa's failed bailout and yet another entity defaulting (Zhuhai Zhongfu stock plummetted) it appears the 8% rip of the last few days in the Shenzhen Composite was just too much for Chinese housewives not to take some profits. By the end of the day, Shanghai Composite, CSI-300, and CHINEXT were all red on the week (the latter down hard) and the meteoric Shenzhen Composite up just 0.6% on the week (after its biggest daily drop in 2 years).

     

    It was different this time…

     

    Something does not look right… though panic may not be setting in yet…

     

    Worst single-day drop in 2 years and almost worst since 2010…

     

    Within the Shenzhen Composite 271 stocks (out of 1730) plunged by 9.99% or more (but Saimo Electric, Sichuan Maker Biotech, and Global Infotech all rose more than 40% on the day)

     

    And 179 (of 1083 stocks) in The Shanghai Composite dropped 9.99% or more overnight…

     

    In other words – this is the worst sell-off since the new smart investing public joined the casino.

    Social Unrest coming soon…



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