Today’s News October 24, 2015

• How To Stamp Out Cultural Marxism In A Single Generation

  Submitted by Brandon Smith via Alt-Market.com,

  There are very few legitimate cultural divisions in the world. Most of them are arbitrarily created, not only by political and financial elites, but also by the useful idiots and mindless acolytes infesting the sullied halls of academia.

  It is perhaps no mistake that cultural Marxists in the form of "social justice warriors", PC busybodies and feminists tend to create artificial divisions between people and “classes” while attacking and homogenizing very real and natural divisions between individuals based on biological reality and inherent genetic and psychological ability. This is what cultural Marxists do: divide and conquer or homogenize and conquer, whatever the situation happens to call for.

  They do this most commonly by designated arbitrary "victim status" to various classes, thus dividing them from each other based on how "oppressed" they supposedly are.  The less statistically prominent a particular group is (less represented in a job field, media, education, population, etc.) in any western society based on their color, ethnicity, sexual orientation, gender, etc., generally the more victim group status is afforded to them by social justice gatekeepers.  Whites and males (straight males) are of course far at the bottom of their list of people who have reason to complain and we are repeatedly targeted by SJW organizations and web mobs as purveyors of some absurd theory called "the patriarchy".

  Although cultural marxism does indeed target every individual and harm every individual in the long run, my list of personal solutions outlined in this article will be directed in large part at the categories of people most attacked by the social justice cult today.

  I do not write often about PC cultism and social justice because the movement is only a symptom of a greater problem, namely the problem of collectivism. The only true and concrete social (group) division is the division between collectivists and individualists: between those who believe the individual should be subservient to the group mind and those who believe the group is meaningless without the individual mind.

  I have already spoken on the root dangers and logical inconsistencies of the social justice cult in articles such as ‘The Twisted Motives Behind Political Correctness' and 'The Future Costs Of Politically Correct Cultism.'

  There are many intelligent commentators on the Web who have consistently demolished the PC mob with reason and logic, and I leave that battle to them. In this article I would like to continue my examination but with the goal of presenting some real and tangible solutions. And like most solutions to most problems, it is the individual who is required to draw the line in the sand and change the way he approaches the realm of cultural Marxism. It is not up to groups, organizations or governments.

  First, let’s be clear, cultural Marxism has already done most of the damage it can possibly do to our way of life. And by damage, I mean the end of long-standing foundational pillars of society that provide stability and prosperity, including traditional marriage (not government-licensed marriage), family, gender “roles,” etc. (which cultural Marxists openly boast about tearing down).

  In Western nations male suicide rates are way up. Women’s proclaimed levels of happiness and contentment are way down, despite the fact that they have had wage equality for decades (yes, the wage gap is a perpetually pontificated Lochness monster-sized myth that was debunked years ago by economists like Thomas Sowell), despite the fact that they have surpassed men in educational participation and despite the fact that they have total control over family planning.

   

  Marriage rates are at historic lows since the 1970s and the rise of social justice activism. Of course, the argument is often presented that economic decline has more to do with this than cultural Marxism. However, setting aside the rising tide of men who fear being bled dry through divorce settlements based on double standards, the West’s economic decline (and thus marriage decline) can be correlated to the increase in overt debt spending. And debt spending is driven directly by socialist legislation, entitlement programs and social welfare addiction, more so even than it can be correlated to military spending.

  Therefore, cultural Marxism and its vicious attempts to forcefully “harmonize” wealth through taxation and welfare have indeed caused the very economic conditions by which marriage is made untenable and families are made unstable.

  While women become more and more unhappy, men and masculinity are essentially demonized by cultural Marxists (mainly feminists) as “toxic.” This propaganda campaign has been so successful that men in many first world nations are beginning to pursue, for all intents and purposes, an asexual lifestyle safer from collectivist intrusions and judgments.

  As if the psychological browbeating were not enough, the chemistry of the male body is also being warped by estrogen-imitating chemicals present in industrial products, plastics and soy-based foods. A decline in normal levels of male testosterone and an ever increasing hormonal feminization of younger generations of men and boys is becoming prevalent.

  Indirect chemical influences aren’t the only threat. Direct drugging of boys (with far greater frequency than girls) with psychotropics in order to subdue their natural tendencies towards physicality and frenetic activity is epidemic in public schools, all with the goal of making boys behave more like girls.

  Finally, the erasure of free speech and thought is always the holy grail of cultural Marxists; but this is not always done through government power — at least not right away. Social justice cultists rely more on collective pressure and public shaming tactics to engineer an environment in which people feel compelled to self-censor rather than deal with the hailstorm of witch hunters and wagging fingers.

  Cultural Marxists do use government force to police what they consider thought crimes, but usually in an incremental manner. One day, it’s the use of government to demand associations, as with a Christian-owned cake business being forced to work for another party that feels entitled to a gay wedding cake. Another day, it might be a public school being forced to allow boys dressed as girls in the girls’ bathroom or locker room. Another day, it might be the implementation of lowered standards and quotas to force businesses to hire people with victim-group status, even if they are unqualified for the job.

  All of these actions impede upon the individual freedoms and privacy rights of others, all under the guise of “equality.” And because cultural Marxists need to constantly observe ever greater modes of oppression and inequality in order to justify their existence, the impositions on individual liberty will never end. Today, people may argue that such violations are “minor” and not to be concerned over. It is happening to strangers or distant neighbors, not to them; so why should they care? Liberty movement champions know full well why this thinking is idiotic; the trampling of one person’s individual liberties is the trampling of ALL people’s individual liberties. Totalitarianism is a virus that feeds on one person to the next until everyone is on the menu.

  It is not enough anymore to simply continue pointing out the insanity of political correctness; we must also take useful steps toward reversing the destruction already wrought.

  And so, here are my solutions, which must be enacted by individuals in their daily lives regardless of the potential backlash. Do you have leftist leaning friends or family members? It doesn’t matter. Are you employed in a workplace crawling with social justice ideologues? Stop seeing them as part of the equation because they do not matter. Worried about losing a relationship if you make a stand? Say good riddance. This is what must be done by free thinkers if they are to counter and reverse the collectivist nightmare of cultural Marxism.

  Feel no shame: Social justice relies on shaming tactics, usually by slandering an opponent with a label that does not really apply to him, in order to control his arguments and behavior. If you don’t care about being called a bigot, a racist, a sexist, a misogynist, a homophobe, etc., then there is not really much that they can do to you.

   

  Do not self-censor: This does not mean you should go out of your way to be antagonistic or act like an ass, but the thought police have power only if you give power to them. Say what you want to say when you want to say it, and do it with a smile. Let the PC police froth and scream until they have an aneurism. Cultural Marxists are generally weaklings. They avoid physical confrontation like they avoid logic, so why fear them?

   

  Realize there is no such thing as white privilege or male privilege: In reality, there is only institutionalized “privilege” for victim-status groups. There is no privilege for whites, males, white males or straight white males. When confronted with such claims, demand to see proof of such privilege. Invariably, you will get a long list of first world problems and complaints backed by nothing but easily debunked talking points and misrepresented statistics. People should not feel guilty for being born the way they are, and this includes us “white male devils.”

   

  Demand facts to back claims: Cultural Marxists tend to argue on the basis of opinion rather than fact. Present facts to counter their claims, and demand facts and evidence in return. Opinions are irrelevant if the person is not willing to present supporting facts when asked.

   

  Do not play the game of "unconscious bias": If social justice cultists can't counter your position with facts or logic, they will invariably turn to the old standby that you are limited in your insight because you have not lived in the shoes of a – (insert victim group here).  I agree.  In fact, I would point out that this reality of limited perception also applies to THEM as well.  They have not lived in my shoes, therefore they are in no position to claim I enjoy "privilege" while they do not.  This is why facts and evidence are so important, and why anecdotal evidence and personal feelings are irrelevant where cultural Marxism is concerned.

   

  Let cultural Marxists know their fears and feelings do not matter: No one is entitled to have teir feelings addressed by others. And, a person’s fears are ultimately unimportant. Whether the issue is the nonexistent “rape culture” or the contempt cultural Marxists feel over private gun ownership, their irrational fears are not our concern. Why should any individual relinquish his liberties in the name of placating frightened nobodies?

   

  Demand that society respect your inherent individual rights: Collectivism’s ultimate propaganda message is that there is no such thing as inherent rights or liberties and that all rights are arbitrary and subject to the whims of the group or the state. This is false. I have written extensively in the past on inherent rights, inborn psychological contents and natural law, referencing diverse luminaries, scientists and thinkers, including Thomas Aquinas, Carl Gustave Jung, Steven Pinker, etc., and I welcome readers to study my many articles on individualism.  Freedom is an inborn conception with universally understood aspects. Period. No group or collective is more important than individual liberty. No artificial society has preeminence over the individuals within that society. As long as a person is not directly impeding the life, liberty, prosperity and privacy of another person, he should be left alone.

   

  Maintain your rights; they do not hurt other people: PC cultists will invariably argue that every person, whether he knows it or not, is indirectly harming others with his attitude, his beliefs, his refusal to associate, even his very breathing.  "We live in a society", they say, "and everything we do affects everyone else…".  Don’t take such accusations seriously; these people do not understand how freedom works.

   

  Say, for instance, hypothetically, that I refuse to bake a gay wedding cake for a couple and I am accused of violating their rights in the name of preserving my own. I would immediately point out that no one is entitled to a gay wedding cake, baked by me or anyone else and I have every right to choose my associations based on whatever criteria I see fit. Now, a corrupt government entity may claim I do not have that right. But the fact is I do, and no one — not even government — can force me to bake a cake if I don’t want to. Also, I would point out that the gay couple in question has every right in a free society to bake their OWN damn cake or open their own cake shop to compete with mine. This is how freedom works. It is not based on collective entitlement; it is based on personal responsibility.

   

  Refuse to deny the scientific fact of biological gender: Gender is first and foremost a genetic imperative. Society does not determine gender roles; nature does. A man who chops up his body and takes hormone pills to look like a woman is not and will never be a woman. A woman who tapes down her breasts and gets a short haircut will never be a man. There is no such thing as “transgendered” people. No amount of social justice or wishful thinking will ever allow them to reverse their genetic proclivities. Their psychological and sexual leanings do not change their inborn biological reality.

   

  By extension, we should refuse to play along with this nonsense. I will never refer to a man in a wig and dress as a “woman.” I will never refer to a woman with identity issues as “transgendered.” They are what nature made them, and we should not police our pronouns just to falsely reassure them that they can deny nature.

   

  Deny the illusion of Utopian equality: There is no such thing as pure equality.  Society is not a homogeneous entity, it is an abstraction built around a group of unique individuals.  Individuals can be naturally gifted, or naturally challenged.  But there will always be some people who are more apt towards success than others.

   

  I have no problem whatsoever with the idea of equality of opportunity, which is exactly what we have in this country (except in the world of elitist finance which is purely driven by nepotism).  I do have a problem with the lie of universal equality through engineered means.

   

  Standards of success should not be lowered in order to accommodate the least skilled people to facilitate artificial parity.  For example, I constantly hear the argument that more people with victim group status should be given greater representation in positions of influence and regard within our culture, from science and engineering, to media, to business CEO's, to politics, etc.  The key word here is "given", rather than "earned".  There is nothing wrong with one group of people excelling in a field more than another group, and there is nothing wrong with inequality when it comes to individual achievement.  We must begin refusing to reward people for mediocrity and punishing success simply because the winners are not part of a designated victim group.

   

  If you are a man, embrace your role: I am a man and cannot claim to know what specific solutions women should take to counter cultural Marxism. I would love to read an article written on the subject by a woman in the Liberty Movement.  I will say that men in particular have a considerable task ahead in terms of their personal endeavors if they hope to repair the destruction of social justice.

   

  For thousands of years, men have been the primary industrial force behind human progress. Today, they are relegated to cubicles and customer service, to video games and Web fantasies, to drug addictions and a lack of responsibility. If we have any chance of undoing the damage of cultural Marxism, modern men must take on their original roles as producers, inventors, entrepreneurs, protectors, builders and warriors once again. They should do this for their own benefit, and not for the validation of others.

   

  You don’t have to prove to anyone you do "manly things", just go out and do them. Most importantly, become dangerous. Men are meant to be dangerous beings. That does not mean we are meant to be indiscriminately violent (just as women aren’t meant to be indiscriminately violent), but we are supposed to be threatening to those who would threaten us. Modern society has NOT removed the need for masculinity and I believe people will begin realizing this the more our culture sinks into economic despair. Train in martial arts, learn tactical firearms handling, go hunting and don’t take lip from people. In my opinion, every man should know how to kill things, even if he never plans on using those abilities.

   

  Home-school your children: It’s simple, if you don’t want your kids propagandized, if you truly want them to be free from collectivist conditioning, then you will make the sacrifice and extract them from public schooling. With the introduction of Common Core into U.S. schools in particular, there is no other recourse but home schooling to prevent the brainwashing of cultural Marxism. If you do not do this, you are relying on the hope that your children will escape with their critical thinking abilities intact. Some do, and some don’t. Others turn into mindless social justice zombies. You can give them an advantage by removing them from a poisonous environment, and that is what matters.

  The insane lie that cultural Marxists seem to have conned themselves and others into believing is that their “activism” is somehow anti-establishment. In fact, social justice is constantly coddled and supported by the establishment. From politicians to judges to media pundits to the blogosphere, the overwhelming majority of people in positions of traditional power (even in supposedly conservative circles) have been more than happy to become the enforcers of the social justice warrior agenda, an agenda representing a minuscule portion of the public. There is no establishment for the PC army to fight; the establishment bias works vastly more in favor of their ideology than any other. Cultural Marxists ARE the establishment.

  

  

  

  

  

• Japan's PM Demands "Bold Proposals" For Raising The Country's Birth-Rate

  With a birth-rate at record-lows and death-rate at record-highs, Japanese PM Shinzo Abe unveiled a new set of 'arrows' a few weeks ago to 'fix' the demographic disaster the nation faces. At the time, Abe was long of "bold proposals" but short of actual policies to encourage the nation to make more babies (despite dwindling interest in sex). As Bloomberg reports, here are a number of options that Abe's new minister for demographics Kato could introduce to slow the downward spiral of population…

  With the population aging rapidly…

  

   

  And interest in sex and reproduction dwindling…

  

   

   

  Prime Minister Shinzo Abe has ordered his new minister for demographic issues to come up with “bold proposals” for raising Japan’s birthrate. His aim: Stem a slide in the labor force to drive production and fund the retirement of the country’s elderly. As Bloomberg reports, the working-age population in Asia’s second-biggest economy could shrink as much as 40 percent in the next 45 years, while the number of elderly balloons in a country with one of the world’s longest life expectancies.

  

   

  Abe last month made arresting the decline a priority, announcing a new economic plan that calls for stabilizing the population at 100 million in half a century from 127 million now.

   

  Here are some measures Abe’s new minister Katsunobu Kato, a father-of-four, could introduce to slow the downward spiral.

   

  Immigration

  Less than 2 percent of the population are non-Japanese, compared with about 13 percent in the U.S. and Germany. Economists have called for increased immigration, and about half the respondents to an April poll in the Asahi newspaper agreed.

   

  Abe last month rejected the idea of accepting more foreigners, saying he would first seek bolster the fertility rate, and entice women and the elderly into the workforce. Last year, he said foreigners were needed as housekeepers to allow more Japanese women to work outside the home, but details of a pilot program are yet to be decided.

   

  Kindergartens
  Abe has repeatedly pledged to reduce to zero the number of children waiting for daycare places from the current 23,167. But despite a rapid expansion of facilities, waiting lists swelled this year for the first time in half a decade after the government loosened restrictions on families qualified to use the service.

   

  Elderly Care
  Abe has promised to also cut to zero the number of people forced to give up work to care for aging relatives. About 260,000 people were being cared for at home while awaiting a space in a senior facility as of March last year; and with baby boomers — those born between 1947 and 1949 — set to hit 75 in under a decade, many of their children could be forced to drop paid work to care for them.

   

  While subsidies for the nation’s understaffed nursing homes were cut this year, Chief Cabinet Secretary Yoshihide Suga hinted this week that more money could be made available in an extra spending package.

   

  Removing Tax Breaks
  Spouses of employees don’t have to pay pension premiums and get tax breaks if they earn less than 1.3 million yen (or about $10,800) a year.

   

  The system has been blamed for compelling women to accept poorly paid, part-time positions or stay out of the work force completely. While Abe has called for the establishment of a more neutral tax system, opposition including from within his coalition partner Komeito means this is unlikely to be included in tax plans for the next financial year.

   

  Equal Treatment
  Japan’s lifetime employment system is still in place, but only for a shrinking share of the workforce as about 40 percent of the workforce are employed on an hourly or contract basis. Pay is low for these — mostly female — workers and they often don’t receive benefits such as paid maternity leave, making it harder to start a family.

   

  Kathy Matsui, chief Japan equity strategist at Goldman Sachs Group Inc., last year said Japan’s economy could grow nearly 13 percent if the percentage of women in work equaled that of men. She called for more flexible working practices and equal treatment of full-time and part-time workers.

   

  Decentralization
  Women in Tokyo give birth to fewer children per head than those in any other part of Japan — the capital’s average of 1.15 compares with about 1.6 in the southwest. Abe wants to bolster this figure to 1.8.

   

  Former cabinet minister Keiji Furuya advocates policies to reverse the drift from rural areas to Tokyo, including tax breaks for corporations who move their headquarters out of the capital. Proponents of the plan say it would help counter some of the difficulties of raising children in Tokyo, such as cramped housing, long commutes and a lack of support from a extended family nearby.

  *  *  *

  That is all well and good, but remember what Kato is up against…

  To examine Japanese attitudes toward sex, the Japan Family Planning Association interviewed 3,000 subjects, both male and female, about their sex lives. The group found that 49.3 percent of participants (48.3 percent of men, 50.1 percent of women) had not had sex in the past month. 21.3 percent of married men said they were too tired after work (versus 17.8 percent of women). Of men, 15.7 percent answered that they were no longer interested, after having children. 23.8 percent of women said sex was “bothersome.”

   

  There are a number of diagnoses for this aversion to the bedroom. Morinaga Takuro, an economic analyst and TV personality, believes this has something to do with attractiveness. He has suggested a “handsome tax”: “If we impose a handsome tax on men who look good to correct the injustice only slightly, then it will become easier for ugly men to find love, and the number of people getting married will increase.”

  In a nation where sales of adult diapers in Japan exceeded those of baby diapers, it’s an urgent national problem: there isn’t enough procreation.

  *  *  *

  And then there is this!!!!

  

  Love and Sex with Robots conference cancelled in Malaysia

  The Love and Sex with Robots conference due to be held in Malaysia has been cancelled by police for being "illegal".

   

  The annual event, which was supposed to go ahead on 16 November, was called "ridiculous" by police chief Tan Sri Khalid Abu Bakar.

   

  There was "nothing scientific about having sex with machines," he said.

   

  An apology has since been posted on the event organiser's website, loveandsexwithrobots.org.

   

  It said the cancellation was because of "circumstances beyond our control.

   

  "The conference will definitely not be held anywhere in Malaysia.

   

  "We deeply apologise to any person or any authority which has felt offence in any way," a statement said.

  We have nothing to add…

  

  

  

  

  

• Superyacht Getaway Subs And Luxury Bomb Shelters: The Elite Are The Most Paranoid Preppers Of All

  Submitted by Michael Snyder via The Economic Collapse blog,

  When it comes to “prepping”, many among the elite take things to an entirely different level.  As you will see below, the elite are willing to pay big money for cutting edge home security measures, luxury bomb shelters and superyacht getaway submarines. Some of the things that the elite are demanding for their own protection go beyond even what we would see in a James Bond film, and serving the prepping needs of the elite has become a multi-billion dollar business.  Meanwhile, the media outlets that the elite own continue to mock the rest of us for getting prepared.  All the time we see headlines like this one that appeared in a major American news source: “Preppers: Meet the paranoid Americans awaiting the apocalypse“.  Well, if we are paranoid for setting aside some extra food and supplies for the future, what does that make the people that you will read about in this article?

  The elite live in a world that is completely different from the world that you and I live in.  In wealthy enclaves of major global cities such as London, elitists are willing to shell out massive amounts of money to ensure that everyone else is kept out.  The following comes from an article that was just published a few hours ago by the London Evening Standard entitled “The paranoid world of London’s super-rich: DNA-laced security mist and superyacht getaway submarines“…

  Business is booming because billionaires are a paranoid bunch. Take one who recently moved to Mayfair. ‘He wanted everything, from protection from cyber hacking through to physical intrusion and kidnapping,’ says Bond Gunning. ‘We ended up installing fingerprint-activated locks for family members and programmable keys for staff that limit the time they are allowed into the property and the rooms they are able to enter and exit.

   

  ‘Inside and outside we installed 24-hour monitored CCTV cameras that are so hi-tech they can tell the difference between a dog, cat and a person. In the garden there are thermal-imaging cameras that can detect heat sources in the undergrowth. One thing intruders can’t hide is the heat of their bodies.

   

  ‘Should an intruder evade the cameras or ignore the warnings they automatically broadcast, the property itself is protected by bulletproof glass and alarm sensors in all rooms. There is a bullet, gas and bombproof panic or safe room, with its own food and water, medical supplies and communications, and an impregnable supply of fresh air. Just in case the family cannot make it there in time, key rooms are sealed by reinforced shutters.’

  But for many elitists, those kinds of extreme security measures are simply not enough.  That is why sales of “luxury doomsday shelters” are absolutely soaring.  If “the end of the world” arrives unexpectedly, high net worth individuals want to know that there will be somewhere for them and their families to go.  The following is an excerpt from an article about one such facility located in Indiana…

  As we roll down US Highway 41 in Terre Haute, Indiana , my guide insists I give him my iPhone. Then he tosses me a satin blindfold. The terms of our trip were clear—I wasn’t to know where we were going or how we got there.That’s because we’re on our way to the undisclosed location of an underground bunker designed to survive the end of the world, whatever form that apocalypse takes.

   

  When I remove my blindfold, I am standing in a grassy clearing looking at a boxy concrete structure that serves as the entrance to a Cold War–era government communications facility gutted and reborn as Vivos Indiana. This is the Ritz Carlton of doomsday shelters, a hideout where residents can wait out a nuclear winter or a zombie apocalypse in luxury and style while the rest of humanity melts and disintegrates. The living area has 12-and-a-half-foot ceilings, sumptuous black leather couches, wall art featuring cheerful Parisian street scenes, towering faux ferns, and plush carpets. Faith Hill croons from a large-screen TV set in front of three rows of comfy beige reclining chairs. The cupboards are stocked with 60 varieties of freeze-dried and canned foodstuffs; an evening meal might include spaghetti aglio e olio topped with skillet fried steak chunks, a fresh tomato-and-zucchini salad fresh from the hydroponic garden, and decadent turtle brownies. An eight-by-nine bedroom is designed for four people (there are larger units for six) and comes with double-queen bunks clothed in 600-thread-count ivory sheets and duvet covers worthy of a four-star hotel, a comparison highlighted on the Vivos website.

  That sounds lovely.

  But normal people like us cannot afford something like that.  It will only be the elite that will be able to afford to hole up in underground bunkers while the world above descends into madness.

  Other elitists will be taking off in their superyachts and heading out into the open ocean when things really start falling to pieces.  And if their superyachts are threatened, some of them even have “getaway subs”.  Here is more from the Evening Standard…

  The ultimate vehicle of choice is no longer an armoured limousine or a private jet. They’re so Noughties. If you want bragging rights these days, you need your own submarine, which floats out of a sub-sea compartment in your superyacht. ‘It’s a toy, but if the worst happened, it could also be an escape route,’ says one prominent London tycoon with a weakness for Monaco-berthed superyachts — provided they have military-grade radar jammers and missile and torpedo defences.

  So exactly why are so many among the elite so concerned about their own security these days?

  Why are so many of them going to such extraordinary lengths to prepare for worst case scenarios?

  Do they know something that the rest of us do not?

  In a previous article, I included a quote from an article in the Mirror that was published earlier this year entitled “Panicked super rich buying boltholes with private airstrips to escape if poor rise up“…

  Robert Johnson, president of the Institute of New Economic Thinking, told people at the World Economic Forum in Davos that many hedge fund managers were already planning their escapes.

   

  He said: “I know hedge fund managers all over the world who are buying airstrips and farms in places like New Zealand because they think they need a getaway.”

  The next time that someone criticizes you for prepping, just point out what the elite are doing.

  Clearly, many of them are deeply concerned that something may be coming.

  So are you preparing?

  

  

  

  

  

• "The International Buyer Has Been Absent" Unsold Hamptons' Mansions Pile-Up As Bubble Bursts

  Just a few months ago, Hamptons 2nd home-hunting was an elitist's dream. Home sales were surging (highest sicne 2007's peak) even as home prices soared (in the face of bad weather and economic angst). But that has all changed. As Bloomberg reports, sales of luxury homes in the are have tumbled 16% YoY in Q3, prices have plunged 18% YoY, and inventories are surging (up 34%). The reason is simple, as one realtor notes, "the international buyer has been absent."

   

  Mid-Summer, The Wall Street Journal could not be more excited about the bubble in Hamptons' homes…

  As the peak spring season for home sales begins, the market across the region is showing considerable strength, especially in the Hamptons, with its deep pool of affluent summer-home buyers.

   

  Despite frequent winter storms that snowed in many Hamptons properties on the eastern end of Long Island, the number of sales from January through March was the highest during any first quarter since 2007—during the last real-estate boom, market reports show.

  

   

  But, it's all changed… (as Bloomberg reports)

  New Yorkers who want to buy a high-end retreat in the Hamptons have plenty of options to choose from.

   

  Sales of luxury homes in the area, known for its beachside mansions attracting financiers and celebrities, tumbled 16 percent in the third quarter from a year earlier to 52 transactions, according to a report Thursday from appraiser Miller Samuel Inc. and brokerage Douglas Elliman. The inventory of such properties — defined as the top 10 percent of the market by price — climbed 34 percent to 292.

   

  Wealthy buyers on Long Island’s East End are taking a pause after several years of heated sales, leading prices to fall as more houses come to the market. The median price of Hamptons deals completed at the luxury level dropped 18 percent from a year earlier to $5.3 million, in contrast to an increase for lower-cost homes.

   

  “People who had the cash, they came out and bought the last couple of years so they’ve kind of leveled off,” Dottie Herman, chief executive officer of Douglas Elliman, said in an interview. “They’re still here, but the demand has just gotten flatter.”

   

  With many Hamptons luxury buyers employed by the financial industry, the sales drop may have been tied to declines in global markets, said Ernest Cervi, a senior vice president at brokerage Corcoran Group who oversees Hamptons sales. The Standard & Poor’s 500 Index sank 6.9 percent in the quarter, the worst performance in four years, while currencies and commodities also slid.

   

  “There was a lot of turmoil on the financial markets around the world and that might have stopped people from pulling the trigger,” Cervi said. “The international buyer has been absent.”

  *   *   *

  Who could have seen that coming? A bubble in luxury real estate driven by 1%-er equity gains and a desperate outflow of capital from various "growth" countries around the world suddenly collapses when stocks stumble and those nations introduce capital controls.

  

  

  

  

  

• Hillary Clinton Pretends to Be Progressive: She's Actually Conservative

  Submitted by Eric Zuesse,

  The contrast between Hillary Clinton’s stated positions and her actual record, is stark.

  The record shows that she actually supports international trade treaties that allow the participating countries to allow international corporations to murder labor union organizers to keep wages down. Her financial backers include many of the controlling stockholders in corporations that shift jobs overseas to lower-wage nations so as to boost their stock-profits and executive compensation (those executives are paid largely by stock options in the companies they run — the more the stock rises, the bigger their pay); and portions of those takes by the top executives and other top owners of international corporations end up in the political campaign chests of conservative U.S. politicians such as of Barack Obama, Hillary Clinton and virtually all Republicans — i.e., of corrupt or otherwise conservative politicians. But this article will deal only with Hillary Clinton.

  She also supports international trade treaties — such as Obama’s proposed TPP with Pacific countries and TTIP with Atlantic countries — that will cripple participating countries’ ability to regulate the safety of products, such as drugs, food-contamination, water-contamination, auto-safety, the environment, etc. However, her campaign rhetoric lies disfavoring such treaties, even more blatantly than Barack Obama’s rhetoric against NAFTA did, when he was running against her, in 2008.

  THE TRADE DEALS

  On National Public Radio’s Morning Edition, on Thursday October 22nd, David Axelrod, who is one of President Obama’s chief advisors inside the White House, explained Hillary's switch, from verbally supporting, to verbally opposing, President Obama’s proposed trade deals. The interviewer noted that, "Hillary Clinton had previously spoken in favor of the Pacific trade deal [TPP], then once the details were out she said she was against it.” Axelrod asserted, to explain what happened: "I actually think her switch of positions on trade was as much a response to Biden as it was to Sanders. She knew that the Vice President was very much tied to the President’s policy and would have to be, and she wanted to head him off at the pass particularly with organized labor.” That separation of herself from Obama’s proposed trade deals effectively killed Biden’s opportunity to win the support of labor union leaders who don’t believe that a self-declared “socialist” such as Bernie Sanders is even electable in the United States. Biden had been hoping to wedge into the Democratic primaries as being the “centrist” Democrat who could pull lots of supporters away from both Clinton and Sanders.

  The reason why organized labor is opposed to Obama’s trade deals is that (as will be shown) the deals would allow all participating countries to allow international corporations to hire hitmen to murder labor union organizers so as to keep wages down. U.S. workers would then be competing internationally against workers whose rights to participate in labor unions are merely nominal, not authentic. That, in turn, would accelerate the shrinkage of labor unions in the United States; and this would even further benefit the big campaign-contributors. (Obama and Clinton actually support this, though it reduces the labor-union base of the Democratic Party. The electorate are split between a ‘liberal’ party that wants unions to be weak, versus a conservative party that wants them to be dead.)

  President Obama’s Trade Representative, his longtime personal friend Michael Froman, organized and largely wrote Obama's proposed trade treaties: TPP, TTIP, and TISA. Froman told the AFL-CIO and U.S. Senators that when countries such as Colombia systematically murder labor-union organizers, it’s no violation of workers’ rights — nothing that’s of any concern to the U.S. regarding this country's international trade policies or the enforcement of them. On April 22nd, Huffington Post, one of the few U.S. news media to report honestly on these treaties, bannered "AFL-CIO's Trumka: USTR Told Us Murder Isn't A Violation,” and reported that, "Defenders of the White House push for sweeping trade deals argue they include tough enforcement of labor standards. But a top union leader scoffed at such claims Tuesday, revealing that [Obama] administration officials have said privately that they don’t consider even the killings of labor organizers to be violations of those pacts.”

  In other words: This is and will be the low level of the playing-field that U.S. workers will be competing against in TPP etc., just as it is already, in the far-smaller existing NAFTA (which Hillary had helped to pass in Congress). "Trumka said that even after the Obama administration crafted an agreement to tighten labor protections four years ago, some 105 labor organizers have been killed, and more than 1,300 have been threatened with death.” The Obama Administration is ignoring the tightened regulations that it itself managed to get nominally implemented on paper. "Pressed for details about Trumka’s assertion that murder doesn’t count as a violation of labor rules, Thea Lee, the AFL-CIO deputy chief of staff, told HuffPost that USTR officials said in at least two meetings where she was present that killing and brutalizing organizers would not be considered interfering with labor rights under the terms of the trade measures.” Furthermore: “'We documented five or six murders of Guatemalan trade unionists that the government had failed to effectively investigate or prosecute,' Lee said. 'The USTR told us that the murders of trade unionists or violence against trade unionists was not a violation of the labor chapter.’” That U.S. Trade Representative, Michael Froman, is the same person Obama has negotiating with foreign governments, and with international corporations, both Obama's TPP, and his TTIP.

  Any country in TPP, TTIP, or TISA, that introduces worker-protection regulations which are beyond this abysmally low level, will then be fined by corporate panels, and those fines will become income to the companies whose ‘rights’ (such as to murder labor-organizers) have been violated, under the terms of the given treaty: TPP, TTIP, and TISA.

  And that’s just one example of the type of sovereignty (in this instance over workers’ rights) that is being, essentially, ceded to panels controlled by international corporations, under these 'trade’ deals. They’re actually about a lot more than just tariffs etc.; they’re about sovereignty — switching sovereignty to international corporations.

  As the UN’s top official on such matters has said, TTP & TTIP will produce "a dystopian future in which corporations and not democratically elected governments call the shots."

  Here was Hillary Clinton’s past record on NAFTA, her own husband’s trade deal, which was almost as bad as are the ones that Obama is now trying to pass — and Obama’s will cover vastly more nations:

  During the 2008 Presidential campaign, an Obama flyer that Hillary was complaining about, quoted Newsday’s characterization of Hillary’s NAFTA view in 2006: “Clinton thinks NAFTA has been a boon to the economy.” Hillary was claiming that this was a lie. Many in the press blindly supported her accusation against Obama here, because “a boon” was Newsday’s phrase, not hers. However, it was she, and not Obama, who was actually lying: Her 2003 Living History (p. 182) really did brag about her husband’s having passed NAFTA, and she said there: “Creating a free trade zone in North America — the largest free trade zone in the world — would expand U.S. exports, create jobs and ensure that our country was reaping the benefits, not the burdens, of globalization.” This was one of, supposedly, her proudest achievements, which were (p. 231) “Bill’s successes on the budget, the Brady bill and NAFTA.” But Hillary was now demanding that Obama apologise for his flyer’s having said: “Only Barack Obama fought NAFTA and other bad trade deals.”

  If you want to get insight into the reality of both Barack Obama and Hillary Clinton, just click here and examine that 8 February 2008 flyer from the Barack Obama for President campaign, during Obama’s Democratic Party Presidential primaries phase, when both candidates were deceiving Democrats, but only Hillary Clinton was provably and clearly lying  to them. Here are the details:

  Obama’s flyer said: “Of the two candidates in the race, only Barack Obama has been a consistent opponent of NAFTA and other bad trade deals. [Chicago Tribune, 2/29/04]” But, actually, back in 2004, Obama had had nothing to do with NAFTA, except campaign-rhetoric against it in his campaign at that time, to become the Democratic nominee to win the open U.S. Senate seat for Illinois, and his main opponent at that time was Daniel Hynes, the son of a former Mayor Daley machine Democratic Ward Committeeman, Thomas Hynes. This was mere rhetoric from candidate Obama.

  As for Hillary’s record on NAFTA, it was (unlike Obama’s) more  than merely rhetorical, and both her rhetoric and her actions had actually supported NAFTA, before NAFTA became so unpopular among Democrats that she had to become merely rhetorically against it. On 20 March 2008, the day after Hillary finally released her schedule during her White House years, The Nation’s John Nichols blogged “Clinton Lie Kills Her Credibility on Trade Policy,” and he said: “Now that we know from the 11,000 pages of Clinton White House documents released this week that [the] former First Lady was an ardent advocate for NAFTA; … now that we know she was in the thick of the maneuvering to block the efforts of labor, farm, environmental and human rights groups to get a better agreement; … now that we know from official records of her time as First Lady that Clinton was the featured speaker at a closed-door session where 120 women opinion leaders were hectored to pressure their congressional representatives to approve NAFTA; now that we know from ABC News reporting on the session that ‘her remarks were totally pro-NAFTA’ and that ‘there was no equivocation for her support for NAFTA at the time’; … what should we make of Clinton’s campaign claim that she was never comfortable with the militant free-trade agenda that has cost the United States hundreds of thousands of union jobs?”

  On 24 March 2008, ABC’s Jennifer Parker, headlined a blogpost “From the Fact Check Desk: The Clinton Campaign Misrepresents Clinton NAFTA Meeting,” and she reported: “I have now talked to three former Clinton Administration officials whom I trust who tell me that then-First Lady Hillary Clinton opposed the idea of introducing NAFTA before health care, but expressed no reservations in public or private about the substance of NAFTA. Yet the Clinton campaign continues to propagate this myth that she fought NAFTA.” Hillary continued this lie about herself, even after it had been repeatedly and soundly exposed to be a lie. Her behavior in this regard was reminiscent of George W. Bush’s statements on WMD in Iraq, and on many other issues.

  OTHER ISSUES

  Hillary Clinton favored the coup that overthrew the progressive democratically elected President of Honduras on 28 June 2009. And she favored the coup that overthrew the democratically elected (but like all of Ukraine’s Presidents) corrupt President of Ukraine in February 2014. And she favors fracking. (And see more of that here.) And she favors the Keystone XL pipeline. (And see more of that here.) (And here.) And she condemns proposals for a single-payer health-insurance system such as in Canada, and European countries, or else via universal access to Medicare, and she vigorously supports healthcare-as-a-privilege that’s based on ability-to-pay. But her rhetoric, especially after the challenge from Bernie Sanders, is opposite her actions and her long public record on those and many other key issues.

  The only issues where her record has been progressive in her actions, and not merely in her words, are ones where the beneficiaries are ethnic, gender, racial, or other label-groups among the general public, whose votes are crucial in order to be able to compete at all  in Democratic Party primaries — plus, of course, gun-control. However, she has done nothing to oppose the interests of her major campaign donors, no matter how contrary they are to those label-groups.  (A more recent version of that, is my "Hillary Veers Left, to Head Off Sanders.” And a link there will bring you directly to today’s campaign-finance results.) Those support-groups can intelligently rely upon her to favor their positions on their specific issues, in practice, and not merely in words. In turn, those liberal actions by her will antagonize Republicans, so that her Presidency, if she wins, will be very much like Obama’s has been, no matter how far to the right she (like Obama himself) actually rules. The “center” will just keep moving farther to the right (no matter whether the American public keep moving toward the left). The same trends that have been clear ever since George W. Bush came into office will continue, in the same directions. Hillary’s husband started some of these trends himself, such as when he introduced NAFTA and when he ended FDR’s Glass-Steagall Act and deregulated derivatives.

  CONCLUSION

  For a candidate such as Hillary Clinton, a rational voter will ignore her merely-stated positions, and will instead examine, and rely solely upon, her actual record. There are a few successful politicians who are honest with the public, and not merely with donors; but, unfortunately, she isn’t one of them. Consequently, all of the pundits’ talk about such things as “Bernie moving her to the left” is only about her pretense, not at all about her reality. Her reality is what will be in the Oval Office, if she wins.

  Reality is only what a politician does  in office, not about mere rhetoric. Even when rhetoric is great, such as it was with Abraham Lincoln, it has relied upon honesty in order to be able to be so. Lying rhetoric tends simply to be forgotten by historians. It shouldn’t be, even if this requires us to remember some very bad rhetoric. Lies can be very important, no matter how bad the rhetoric might happen to be. History should deal with what’s important. So should voters.

  *  *  *

  Investigative historian Eric Zuesse is the author, most recently, of  They’re Not Even Close: The Democratic vs. Republican Economic Records, 1910-2010, and of  CHRIST’S VENTRILOQUISTS: The Event that Created Christianity.

   

  

  

  

  

  

• How The U.S. Government "Covers Up" 72% Inflation Before Your Very Eyes

  Dear Bureau of Labor Statistics: please pay careful attention to this case study of how your CPI “inflation” gauge, hedonically, seasonally-adjusted or otherwise, is completely inaccurate, and how what you record as 0% inflation is really 72%.

  As Consumerist points out, for the latest example of “stealth inflation” we go to Sodastream, where as part of a redesign of its proprietary line of flavoring syrups which “cost the same” the actual bottle contents are now not only smaller but also diluted.

  “How much smaller? The old version made 50 servings of flavored drink, and the new versions make only 29. Why 29? Why not 30? Such are the mysteries of the Grocery Shrink Ray.”

  Consumerist shows that “the new bottles are somehow taller even though they’re smaller. On the positive side, they no longer look like petite laundry detergent bottles.”

  

  

  Furthermore, while the number of servings is down to 2/3 of the original amount, the bottle size isn’t that much smaller. That’s because the measuring cap is now bigger, and each serving uses more syrup. “The worst part is that they just diluted it with more water so the ‘new improved’ ones LOOK like they are the same size,” reader Erik complained to us. “They are 440ml instead of the old 500. EVIL! Free the bubbles! Stop this shrink ray occupation of my favorite soda!”

  

  The old versions are still available on SodaStream’s site for now, as “Classics,” but readers report that they only find the shrunken version in brick-and-mortar store.

  Consumerist’ conclusion: “maybe SodaStream made this change because they know that the product still looks reasonably priced next to its new competitor, the Keurig Kold. Maybe.”

  Actually, why SodeStream did this is irrelevant: we are confident the decision to shrink and dilute the product was the result of simple concerns about maximizing profit margins.

  What is far more troubling is that for the Bureau of Labor Statistics, both the “old” and the “new” product costs the same, or $5.99, hence there is no inflation… until one does the actual math.

  Presenting the “old“, Dr. Pete soda mix, the one which is no longer available in bricks-and-mortar outlets, which costs $5.99 and which makes 50 servings per bottle.

  

   

  And here is the new one: available everywhere for “the same price as the old one” but with one small difference – it makes only 29 servings per bottle.

  

   

  The math:

  • Cost per serving “old” style: $0.1198
  • Cost per serving “new” style: $0.2066

  Nominal inflation: 72.4%
  

  Worse, there is not even an attempt to make the “new” product “hedonically” better, or for that matter different in any way – it is just smaller, and massively diluted.

  And it just so happens that nobody in the Bureau of Labor Statistics noticed this oldest trick in the book, and why month after month the BLS reports core CPI that is negligible, and why said “lack of inflation” allows the Fed to continue its zero-interest rate policy for 7 consecutive years in a row.
  

  

  

  

  

  

• Meet "Stunningly Catastrophic" Patricia, The World's Strongest Storm Ever Is About To Hit Mexico

  "Stunning, historic, mind-boggling, and catastrophic" is how Weather Underground's Jeff Masters sums up Hurricane Patricia, which intensified to an incredible-strength Category 5 storm with 200 mph winds overnight as it approaches the Mexican coast. As The NY Times reports, The World Meteorological Organization warned that the hurricane’s strength was comparable to that of Typhoon Haiyan, which caused devastation in the Philippines in 2013, and so Mexico has declared a state of emergency for Puerto Vallarta (with officials warning that storm surges could cause waves of up to 39 feet) as she is forecast to hit the coast between 6 and 10pm ET.

  As Weather Undergound reports,

  At 2:46 am EDT October 23, 2015 an Air Force hurricane hunter aircraft measured a central pressure of 880 mb in Patricia, making it the most intense hurricane ever observed in the Western Hemisphere. The aircraft measured surface winds of 200 mph, which are the highest reliably-measured surface winds on record for a tropical cyclone, anywhere on the Earth. The previous strongest Eastern Pacific hurricane was Hurricane Linda of 1997, with a pressure of 902 mb (estimated from satellite imagery.)

   

  

   

  Patricia the fastest-intensifying Western Hemisphere hurricane on record

   

  Patricia's central pressure dropped an astonishing 100 mb in 24 hours, making it the fastest-intensifying hurricane ever observed in the Western Hemisphere. Patricia's pressure at 5 am EDT Thursday, October 22, 2015 was 980 mb, and was 880 mb at 5 am EDT Friday. The previous record was a drop of 97 mb in 24 hours for Hurricane Wilma of 2005 (between 1200 UTC 18 October – 1200 UTC 19 October), according to the official NHC report for the storm.

   

  

   

  Patricia's intensification rate was very close to the WMO-recognized world record for fasting-intensifying tropical cyclone: 100 millibars in just under 24 hours by Super Typhoon Forrest in the Northwest Pacific in 1983.

  Patricia's 200 mph sustained winds make it the 3rd strongest tropical cyclone in world history (by 1-minute averaged wind speed.)

  Officially, here are the strongest tropical cyclones in world history, according to the Joint Typhoon Warning Center and the National Hurricane Center (using 1-minute averaged sustained winds):

  • Super Typhoon Nancy (1961), 215 mph winds, 882 mb. Made landfall as a Cat 2 in Japan, killing 191 people.
  • Super Typhoon Violet (1961), 205 mph winds, 886 mb pressure. Made landfall in Japan as a tropical storm, killing 2 people.
  • Super Typhoon Ida (1958), 200 mph winds, 877 mb pressure. Made landfall as a Cat 1 in Japan, killing 1269 people.
  • Super Typhoon Haiyan (2013), 195 mph winds, 895 mb pressure. Made landfall in the Philippines at peak strength.
  • Super Typhoon Kit (1966), 195 mph winds, 880 mb. Did not make landfall.
  • Super Typhoon Sally (1964), 195 mph winds, 895 mb. Made landfall as a Cat 4 in the Philippines.

  However, it is now recognized (Black 1992) that the maximum sustained winds estimated for typhoons during the 1940s to 1960s were too strong.

  Some Mexican regions are at dire risk...

  Hurricane #Patricia, the strongest storm on record in the E. Pacific, is bound for Mexico! https://t.co/ouR20nJ6Xp pic.twitter.com/lCj3aQG7RO

  — Elliot Abrams (@accuElliot) October 23, 2015

  The city of Puerto Vallarta and some of Mexico’s most popular resorts are in the path of the storm. Flooding and landslides are expected near coastal areas…

   

  Satellite loops early Friday afternoon showed that Patricia’s cloud tops had begun to warm, indicating weakening, and with wind shear now a moderate 10 – 20 knots and interaction with land beginning to occur, Patricia will likely weaken to 155 – 175 mph winds by landfall. The storm's expected turn toward the northeast has begun, and the storm is beginning to accelerate toward the coast of the Mexican state of Colima.

  Regardless of northern motion per last advisory #Patricia jogging northeast now. Getting concerned about Manzanillo pic.twitter.com/qkDniGXM7Q

  — Jim Cantore (@JimCantore) October 23, 2015

  At particular risk is the city of Manzaillo, a regional center that straddles the back of a bay spanning several miles. On its current track, it apperas that Patricia could make landfall sometime between 6:00 and 10:00 pm EDT just to the northwest of Manzanillo–a trajectory that raises the odds of a catastrophic storm surge in or near Manzanillo. Patricia’s strongest winds are confined to a relatively small area, with hurricane-force winds only spanning a range of 30 miles from Patricia’s center. Category 5 winds of 156+ mph cover an area 15 miles across. Wherever those winds are focused, we can expect gigantic waves atop a devastating surge.

  An unnamed 1959 hurricane–the deadliest in Northeast Pacific history, with an estimated 1800 direct and indirect fatalities–struck near Manzanillo on October 27…

  As the storm approached, posts on Instagram showed people trying to leave Puerto Vallarta. One user posted a photograph of a message from a nearby resort that warned people to return home for their safety. “If this is not possible, please wait for further instructions for a possible evacuation,” the notice read.

  In the United States, only three Category 5 storms that made landfall have been recorded, Mr. Feltgen said: a 1935 hurricane that killed more than 400 people; Hurricane Camille, which hit Mississippi and killed 244 people in 1969; and Hurricane Andrew, which hit Florida in 1992, killing at least 10 people there and three in the Bahamas.

  But Hurricane Patricia is “uncharted territory,” as The Weather Channel's Jim Cantore summed it up ominously…

  Historic #Patricia God help these people in its path. pic.twitter.com/hLgDM3Xsz1

  — Jim Cantore (@JimCantore) October 23, 2015

    As Bloomberg concludes,   

  “We can’t underestimate the magnitude of this phenomenon,” Roberto Ramirez, chief of Mexico’s National Water Commission, said in a message streamed on the Internet Friday, urging residents to take precautions or evacuate. “A Category 5 hurricane could lift cars, destroy houses that aren’t built with steel, rebar and cement, and sweep people away.”

  

  

  

  

  

• We Now Have An ETA When The Biggest Bond Bubble In The World Will Burst

  Together with Greece briefly soaring to prominence over the summer (only to fade into perpetual obscurity in its new role as Germany’s certified Mediterranean colony), the biggest event of this past summer – before the EM capital flow/Fed non-rate hike fiasco – was the rapid boom and spectacular bust of China’s equity market, which culminated not only in arrest of sellers, but in the hiking of futures margins so high that nobody actually trades in China any more.

  However, China’s equity bubble was just the beginning. As we showed in “If You Thought China’s Equity Bubble Was Scary…” even after the Shanghai Composite crashed in the fall, Chinese bonds spreads continued plunging oblivious of everything that was taking place in the stock market.

  

   

  This historic bond bubble is paradoxical for the simple reason that China’s credit fundamentals have never been worse, and as we further showed, as a result of the ongoing collapse in commodity prices (which today’s Chinese rate and RRR-cut will have absolutely no impact on), more than half of commodity companies can’t generate the cash required to even pay their interest, a number which drops to “only” a quarter when expanded to all industries.

  

   

  “The equity rout merely reflects worries about China’s economy, while a bond market crash would mean the worries have become a reality as corporate debts go unpaid,” said Xia Le, the chief economist for Asia at Banco Bilbao. “A Chinese credit collapse would also likely spark a more significant selloff in emerging-market assets.”

  “Global investors are looking for signs of a collapse in China, which itself could increase the chances of a crash… This game can’t go on forever.”

  They will find it soon, because while China may have managed to once again kick the can on its most recent default when state-owned SinoSteel failed to pay due principal and interest this Tuesday only to get a quasi-government bailout, every incremental bail out merely forces even more cash misallocation and even more foolish “investments” into this high risk asset class as investors ignore any concerns about fundamentals, assuming instead that the government will always bail them out.

  The problem with that is that as BofA’s David Cui notes today, China’s bond market is the epitome of a “potential source of financial instability.”

  Here is Cui:

  Our analysis shows that:

  1. the bond market is clearly not pricing default risk properly;
  2. the bond market has taken a few SME bond defaults in stride and seems to be counting on bail-outs of the few SOE bonds that are reportedly facing default risk; and
  3. leverage in the bond market is rapidly building up.

  But most importantly, Bank of America has now given a time frame in which China’s bond market will blow up, resulting in far more dire consequences that the equity bubble bursting this summer.

  On the current trajectory, we doubt the market can stay stable beyond a few quarters, especially if some SOE and/or LGFV bonds indeed default. 

  Why it will be far more dire? Because as of this moment China has between $25 and $30 trillion notional in financial and non-financial corporate credit (in China, where everything is government backstopper, there isn’t really much of a difference), about 5 times greater than the market cap of Chinese stocks (and orders of magnitude greater than their actual float), and 3 times greater than China’s official GDP, which also makes it the biggest bond bubble in the world, even bigger than the US Treasury market.

  

  Here is the full explanation why BofA expects some time around next summer is when the biggest bond bubble in history finally explodes:

  The rumble of distant drums

  When a developer can issue a 5y bond at 3bp lower than 5y quasi-sovereign CDB bond’s yield, the market appears grossly mispricing risks in our view. Credit spreads of LGFV, corp. and enterprise bonds are all at or close to five-year lows at the moment.

  

  Investors are chasing yield, due to rapid money expansion (M2 at 13.1% in Sept vs. 6.2% nominal GDP growth in 3Q). AUM of bond and money market mutual funds expanded by Rmb1.6tr Jan-Sept and by Rmb1.3tr alone since July after the A-share correction vs. Rmb44.1tr bond outstanding as of Sept.

  

  This is in addition to those inflows from the wealth management products and private funds.

  Leverage is also rapidly escalating. Bond repo balance rose by Rmb1.9tr from Aug 12 to Oct 21 (Rmb4.4tr to Rmb6.3tr, Chart below).

  

  Banks use repos to manage short term liquidity; investors, to subscribe to IPOs, and lately, to buy more bonds. We suspect that bond buying has been the primary driver of the growth in repos since July given rising excess reserves at the banks and the weak stock market. Structured bond funds, often providing 4-10x leverage to lower-tranche investors, is another concern. But its size appears small at this stage.

  

  Moral hazard is playing a key role – there is no official default so far in the bond market other than some small SME bonds. Credit spreads narrowed on most occasions when major bond default threats surfaced, suggesting that most investors probably counted on bail-outs (Chart 5-7). Meanwhile, about 2/3 of repos are on less than 7-day term.

  

  

   

  Finally, to answer the question on everyone’s mind – here is the full list of most likely upcoming Chinese debt default cases. When the bubble bursts, these names will be the first to blow up.

  

  

  

  

  

  

  

• Reflections On Venezuela's "Economic Miracle"

  Submitted by Andrew Syrios via The Mises Institute,

  Back in 2013, Salon took a quick break from criticizing a caricature of libertarianism to let David Sirota write an embarrassing article praising socialism in what turns out to be a fantastic case study in both the dangers of socialist economics and of course, speaking too soon.

  The article was titled “Hugo Chavez’s Economic Miracle” and it was certainly not the only one of its kind to come out at the time. It may seem like twenty-twenty hindsight to criticize such foolishness, but it might be instructive as well. However, looking at Venezuela now as compared to the country Sirota saw in 2013 and thought provided an economic alternative to American capitalism (a truly free market was never discussed) serves as a good example of what Nicolás Cachanosky calls “the bait-and-switch behind economic populism.” Or namely, that government policies focused highly on consumption and lowly on investment will show good economic signs at the beginning, only to be followed by an inevitable decline and likely disaster.

  Sirota’s article at least begins by lamenting Chavez’s rather poor record on civil rights (like shutting down a TV station that was critical of him) and noting “a boom in violent crime.” This may somehow be an understatement as Venezuela ranks second in the world in murders per capita at a terrifying rate of 53.7 per 100,000 citizens annually! (So much for socialism alleviating crime.) He finally does arrive at his case for this “economic miracle” that Venezuela was experiencing under Chavez (which, I should note, makes up only one paragraph of his entire article),

  …according to data compiled by the UK Guardian, Chavez’s first decade in office saw Venezuelan GDP more than double and both infant mortality and unemployment almost halved. Then there is a remarkable graph from the World Bank that shows that under Chavez’s brand of socialism, poverty in Venezuela plummeted (the same Guardian data reports that its “extreme poverty” rate fell from 23.4 percent in 1999 to 8.5 percent just a decade later). In all, that left the country with the third lowest poverty rate in Latin America.

  How much of this was due to Venezuela being an oil-rich nation is debatable. But it’s also very much worth observing that these positive (and underreported) trends existed throughout Latin America, including in countries such as Colombia that have moved in the opposite direction economically. According to the World Bank, Between 2005 and 2013, Colombia’s poverty rate (as opposed to extreme poverty) fell from 45 percent to 30.6 percent, Peru’s fell from 55.6 percent to 23.9 percent, Uruguay’s from 32.5 percent to 11.5 percent, Paraguay’s from 38.6 percent to 23.9 percent, and Ecuador’s from 42.2 percent to 25.6 percent. Venezuela, for its part, fell 43.7 percent to 25.4 percent, which seems to be about average. The same could be said for GDP and Venezuela’s infant mortality rate also only ranks in the middle of the pack.

  And of course, all of this was prior to Venezuela’s recent economic crisis.

  The fall in the price of oil has certainly harmed Venezuela, but then again, the rise in oil prices during the last decade certainly contributed to its “economic miracle.” However, Venezuela’s problems were starting to become apparent before the drop in oil prices. Back in October of 2014, just before the price of oil sank, Venezuela ran a 17 percent budget deficit and was dealing with a variety of shortages. Furthermore, while every major oil exporter has been hurt by the low oil prices, they have all weathered the storm much better than Venezuela.

  It appears that the drop in gas prices simply exacerbated, and more accurately, exposed the problems caused by Chavez’s (and his successor Nicolás Maduro’s) extreme populist policies. As Nicolás Cachanosky notes in his review of Rudiger Dornbusch and Sebastián Edwards work on Latin American populism, regimes that follow such policies go through four economic phases. In stage I,

  The populist diagnosis of what is wrong with an economy is confirmed during the first years of the new government. Macroeconomic policy shows good results like growing GDP, a reduction in unemployment, increase in real wages, etc. Because of output gaps, imports paid with central bank reserves, and regulations (maximum prices coupled with subsidies to the firms), inflation is mostly under control.

  This is the stage Venezuela was in when Salon saw fit to publish Sirota’s article in 2013.

  But then comes Stage II when “bottleneck effects start to appear” and “the underground economy starts to increase as the fiscal deficit worsens …” In Stage III, “Shortage problems become significant, inflation accelerates, and because the nominal exchange rate did not keep pace with inflation, there is an outflow of capital (reserves).”

  This is exactly what’s happening in Venezuela today. Venezuela’s projected inflation for 2015 is a whopping 64 percent! The country with the second highest rate in South America is Argentina at 10.9 percent. The CIA Factbook lists Venezuela’s budget deficit at 29.4 percent and Moody’s downgraded Venezuela’s credit rating to the lowest rating possible for a country not in default. And there is serious talk of that coming to pass as well.

  The government has instituted price controls to fight inflation and predictably, massive shortages have forced Venezuelans to turn to the black market for ordinary daily goods such as milk and toilet paper.

  Venezuela’s unemployment rate shot up from 5.5 to 7.9 percent in January of 2015 and is likely to rise further. Even as it stands now, it is the third highest rate on the South American continent (excluding Central America). And as one would expect, poverty has started to rise again as well.

  After Stage III comes Stage IV, which Cachanosky describes as follows,

  A new government is swept into office and is forced to engage in “orthodox” adjustments, possibly under the supervision of the IMF or an international organization that provides the funds required to go through policy reforms. Because capital has been consumed and destroyed, real wages fall to levels even lower than those that existed at the beginning of the populist government’s election. The “orthodox” government is then responsible for picking up the pieces and covering the costs of failed policies left from the previous populist regime.

  Whether it comes to that is still yet to be seen. But what this economic crisis does highlight is that short-term success should never be taken as proof of a long-term solution. And this is particularly true when it comes to quasi-socialist and extreme populist governments. In the long-run, countries that follow these policies have a consistent track record, which is basically the same as what we’re witnessing now in Venezuela.

  We’ll have to see if Salon writes a follow up.

   

  

  

  

  

  

• The GOP's Nightmare Is Coming True: With Jeb Out Of Cash, Insiders Say Trump Nomination Almost Certain

  Three months ago we revealed what was the GOP’s biggest nightmare: Donald Trump dominating the polls, which he did from the first days in the GOP presidential primary.

  

   

  Since then, Trump’s ascent has only gotten steeper, forcing one after another political “expert”, talking head and pundit (it is unclear if the Huffington Post still covers Trump in its Entertainment section) to throw in the towel, and admit they have no idea how to read the American public.

  Things only got worse for the GOP faithful when it was revealed that the man who was considered a frontrunner for the primary post, Jeb Bush, now appears to have run out of money. Earlier today Politico reported that Jeb Bush ordered across-the-board pay cuts to his struggling presidential campaign and warned staff that job functions would change.

  On a Friday conference call, top officials said resources would shift heavily to ballot access and voter contact. One person on the Friday morning staff call said they were left with the impression that “very few people will be left in Miami.” Although campaign officials insisted they’re still in strong shape, the moves — combined with Bush’s stagnant poll numbers, despite millions having been spent by his Right to Rise super PAC on television ads over the last month — suggest otherwise.

  The reason for what may be a surprising and premature end to Jeb’s campaign: his fundraisers have given up. According to the WSJ reports, “the family’s vaunted financial network is mostly disengaged and splintered—and his campaign stock is falling.“

  The one-time front-runner for the Republican presidential nomination is roughly tied for third place among GOP contenders in campaign cash and has fallen to fourth or fifth place in national polls, including the latest Wall Street Journal/NBC News survey. His crowds are modest. He failed to dominate in either of the GOP debates, and million-dollar ad buys in Iowa and New Hampshire have barely moved the needle on his support in the early-contest states.

   

  “Jeb’s just blended into the second tier of the Republican pack,” said Doug Corn, an Ohio-based financial adviser and top fundraiser for George W. Bush who hasn’t donated to a candidate this year. “When you run for president, you have to be very charismatic, you have to articulate extremely well and you have to show unbelievable amounts of passion.”

  But while Jeb may be lacking in charisma, there is one candidates who oozes it.

  

  And with Trump seemingly able to absorb any and everything the media will throw at him, and actually thrives on it, and his teflon popularity rising week after week, not only have the naysayers given up, but far more importantly, the odds that Donald Trump wins the Republican presidential nomination are going up. Actually, make that soaring.

  According to Politico, 81% of Republican insiders say the likelihood that Trump becomes their party’s nominee is more today than it was a month ago, and 79 percent of Democrats said the same. That’s according to the Politico caucus – a weekly bipartisan survey of top strategists, operatives and activists in the early-voting states of Iowa, New Hampshire, South Carolina and Nevada.

  Some, such as this bitter, livid Iowa Republican, appear to have moved on beyond the anger and bargaining stage, and reached acceptance. “I can’t even describe the lunacy of him as our nominee. But reason has not applied to date in this race, and my hopes are fleeting that it will ever surface.” Lamented the Iowa Republican, who like all participants was granted anonymity in order to speak freely. If he thinks reason died in the race, he should come see what is going on in the so-called “markets”…

  Others pile on:

  “Predictions of his demise keep not coming true,” said a New Hampshire Republican.

  “Donald Trump being the GOP nominee is now within the realm of possibility,” asserted a South Carolina Republican.

  “Maybe, just maybe, Trump wins an early contest or two. That will trigger a much stronger Stop Trump movement,” a New Hampshire Republican said. “The party will nominate Bob Dole — in 2016 —before it will nominate Trump. And a Trump nomination would result in a third candidate emerging.”

  “The summer of Trump has lasted longer than conventional wisdom suggested it would,” a South Carolina Republican said. “It’s going to take a sustained, multi-pronged paid media effort to educate voters that Trump is not a conservative and has flip-flopped on practically every issue. Major donors are quickly getting to the place where they are ready to fund such an effort.” That’s odd, because many say the same (but inverse) about Hillary: she is not a progressive but is in fact a conservative – perhaps this is the first presidential election in which a Democrat pretends to be a Republican and vice versa.

  “Numbers are numbers and you have to give them credence. I remain skeptical that he has the ability to turn people out, come primary day, but I [have] been wrong about this campaign every step of the way so far“, added a New Hampshire Republican, who like all participants responded via an online survey.

  Yes, yes, we get it – everyone hates Trump, everyone was certain he would be crushed by now, and everyone was wrong precisely for those reasons.

  And just as it was cool to bash Trump three months ago, suddenly it has become all too hip to predict his success: it is amusing how “experts” have become the laughing stock themselves, exposed as nothing more than clueless windsocks .

  To be sure, not everyone is a hater:

  • “I think he’s now mounting a serious campaign,” a South Carolina Republican said. “His stump speech had matured and even though the novelty of his candidacy is wearing off, his straight talk is appealing to people who are so sick of being lied to by the political class.”
  • Another Iowa Republican agreed, saying, “The more time that goes by that he continues to lead — the more likely it is he wins. That simple. Also, comparatively, he is building a real campaign. More so than many others.”
  • “Not sure why anyone should be so surprised that Trump’s campaign is getting so serious in terms of infrastructure build-out,” a New Hampshire Democrat said. “Trump may be a jerk, but he is an extremely successful jerk. He has the means and the smarts to compete everywhere — and he is not slowing down.”

  Politico continues:

  Twenty-two percent of Caucus Republicans said Trump has a 50-50 shot at becoming the Republican nominee; the same percentage said he has a 30 percent chance. The rest of the respondents were divided, with the majority saying his odds are still less than 50 percent. But more than 8-in-10 GOP respondents said those are better odds than they gave Trump a month ago.

   

  The results are notable because they represent a big shift in the thinking of POLITICO Caucus insiders, who this summer were deeply skeptical of Trump’s staying power.

   

  “Trump will be among 3-4 finalists well into April; of that there is no doubt,” an Iowa Republican said.

  But the punchline comes from this insider:

  “I think he’s now mounting a serious campaign,” a South Carolina Republican said. “His stump speech had matured and even though the novelty of his candidacy is wearing off, his straight talk is appealing to people who are so sick of being lied to by the political class.”

  And that is how the biggest Republican nightmare is coming true, because the bolded is all that really matters: if Trump can appeal to the silent, but vast majority – and so far he is doing just that – that is wholeheartedly sick of the fake left-right divide which has made a mockery of representative government and is pandering only to select special interests who have hijacked the US government in the past century, not only is the Trump’s nomination “looking more likely” but so is the Trump presidency.

  

  

  

  

  

• Weekend Reading: Compelling Intellection

  Submitted by Lance Roberts via STA Wealth Management,

  Wednesday, October 21st, marked the date in the future that Martin McFly visited in the second "Back To The Future" film. One thing is for certain, if the Cubs win the World Series, the internet will likely melt.

  

  While the futuristic edition of the "USA TODAY" predicted many things, such as the first female President and the rise of "Slamball," it didn't mention the state of the economy and financial markets. 

  So, without the benefit of a "futuristic paper" on which to make our bets, we must make decisions on the basis of the information we have today. Importantly, as always, we must separate "fact" from "fiction," while setting our emotional biases aside.

  As an investor, it is always important to remember that being "right," but early, is the same as being wrong. But of course, "timing is everything." 

  ---

  THE LIST

  1) The Trouble With Financial Bubbles by Howard Davies via Project Syndicate

  “Bubble-pricking may indeed choke off growth unnecessarily – and at high social cost. But there is a counter-argument. Economists at the Bank for International Settlements (BIS) have maintained that the costs of the crisis were so large, and the cleanup so long, that we should surely now look for ways to act pre-emptively when we again see a dangerous build-up of liquidity and credit.

   

  Hence the fierce (albeit arcane and polite) dispute between the two sides at the International Monetary Fund's recent meeting in Lima, Peru. For the literary-minded, it was reminiscent of Jonathan Swift's Gulliver's Travels. Gulliver finds himself caught in a war between two tribes, one of which believes that a boiled egg should always be opened at the narrow end, while the other is fervent in its view that a spoon fits better into the bigger, rounded end."

  Read Also: 3 Reasons Stock Market Corrections Are Inevitable by Sean Williams via Motley Fool

  Also Read: The Calm Before The Stock Market Storm by Joe Calhoun via Alhambra Partners

   

  2) The 401k Crisis Is Getting Worse by Carol Hymowitz via Bloomberg

  “Even as people live longer and must save more for old age than prior generations, most can not depend on any help from employers. Almost half of U.S. workers didn't have a company-sponsored retirement plan in 2013, compared with 39 percent in 1999, according to an analysis of Census Bureau data.

   

  Those most vulnerable include both millennials at startups and managers in their 40s and 50s who've gone from corporate jobs with benefits to small businesses without them. Some 58 percent of the 68 million wage-and-salary workers without a company-sponsored retirement plan in 2013 worked for a business with fewer than 100 employees, according to the Employee Benefit Research Institute.

   

  "The current 401(k) system was designed for a workplace that doesn't exist for most people: lifetime careers at big corporations that offer benefits," says Teresa Ghilarducci, an economist at the New School who researches retirement policies. "Saving consistently — which you need to do for just a modest retirement income — isn't remotely likely."

  

  Read Also: 51% Of American Workers Make Less Than $30k by Michael Snyder via End Of American Dream

  But Also Read: How Screwed Is America's Middle Class by Chris Matthews via Fortune

   

  3) Why Many Investors Keep Fooling Themselves by Jason Zweig via WSJ

  “What are we smoking, and when will we stop?

   

  A nationwide survey last year found that investors expect the U.S. stock market to return an annual average of 13.7% over the next 10 years.

   

  We all should be so lucky. Historically, inflation has eaten away three percentage points of return a year. Investment expenses and taxes each have cut returns by roughly one to two percentage points a year. All told, those costs reduce annual returns by five to seven points.

   

  So, in order to earn 6% for clients after inflation, fees and taxes, these financial planners will somehow have to pick investments that generate 11% or 13% a year before costs. Where will they find such huge gains? Since 1926, according to Ibbotson Associates, U.S. stocks have earned an annual average of 9.8%. Their long-term, net-net-net return is under 4%."

  Read Also: 7 Ways Your Brain Makes You Poor by Sam Ro via Business Insider

  But Also Read: You Don't Need A Recession For A Bear Market by Eric Parnell via Seeking Alpha

   

  4) The Fed & The Great Depression Myth by John Tamny via Real Clear Markets

  "There is a great deal to criticize the Federal Reserve about. Countless books have been written for just that purpose. My next book will argue that while the Fed's power is vastly overstated, it's surely perilous to the economy's health on its worst days, while superfluous on its best.

   

  So while the Fed is regularly being blamed for everything from inflation to acne, one of the seemingly more common and "credible" assertions is that the Fed somehow caused the Great Depression. This is one of those comical myths that just won't die."

  Read Also: The Fed Is Stuck by Jeffrey Bartash via MarketWatch

  But Also Read: I Don't Trust The Phillips Curve by Matt Phillips via Quartz

   

  5) 8 Biggest Question On Investors' Minds by Nicholas Colas via ZeroHedge

  "When we get a chance to leave the bubble of the New York financial world, we grab on and hold tight. Today we spoke on a panel in Atlanta for SunTrust Investment Services where we got to hear the real world opinions of scores of advisors and, by extension, their clients.

   

  Top of mind issues included "When is the Fed going to increase interest rates", "what does the election next year mean for stocks", "where are oil prices going", "what's the outlook for equities over the next decade" and "what could go wrong right now".

   

  The upshot of the discussions was clear: the bull case for U.S. stocks seems clearest but no one thinks there is any easy money to be made from current levels. Our message was to embrace the bearish case, but use upcoming volatility as a buying opportunity for the next bull market. This one, we think, is on its last, faltering legs and the hyenas are circling. Other panelists were more optimistic, so read on for the complete story."

  Read Also: Get Used To It, Low Rates Are Here To Stay by Noah Smith via Bloomberg

  Read Also: Rebellion At The Fed by Matt O'brien via Washington Post

  ---

  Other Reading

  • Stocks Aren't Overvalued? by Jesse Felder via The Felder Report
  • Faber's Monthly Compendium Of Insights by Meb Faber via Faber Research
  • QE Vs. Negative Rates by Tyler Durden via ZeroHedge
  • 5 Bad Reasons To Raise Rates by Paul Kasriel via Advisor Perspectives
  • Hitting The Limit Of "Whatever It Takes" by Karen Ward via WSJ
  • Oil Glut Getting Worse, Not Better by Matt Smith via OilPrice.com
  • Beware The Red Swan by David Stockman via David Stockman's Contra Corner
  • Most Important Charts In The World by Myles Udland via Business Insider

  ---

  “October is a particularly dangerous month to speculate in stocks. Followed by July, January, September, April, November, May, March, June, December, August, and February.” – Mark Twain

  Have a great weekend.

  

  

  

  

  

• Majority Of Americans Believe US Would Be Safer If More People Carried Guns

  When 26-year old Chris Harper Mercer opened fire at an Oregon community college earlier this month killing 9 people, the gun control debate was once again thrust into the national spotlight just a little over a month after Vester Flanagan gunned down a reporter on live television and just three months after 9 worshippers were fatally shot at an African American church in downtown Charleston. 

  The arguments are always the same on both sides. On the one hand there are those who contend that easy access to firearms and the very existence of the Second Amendment are to blame for the violence. On the other side are those who say that mental health is the problem and that in fact, the world would be a safer place if more people had concealed carry permits (i.e. if more people were carrying around guns in public). 

  As is always the case, the truth is probably somewhere in the middle, but from a kind of mutually assured destruction/ deterrence perspective, there does seem to be some merit to the idea that one responsible citizen with a handgun might well be able to make a difference in scenarios like that which played out at Umpqua Community College. That’s not to say that the best thing to do is turn the entire country into the Wild West where disputes are solved at ten paces in the middle of a dusty street at high noon, only that it’s a lot easier to stop someone who is determined to shoot innocent people if you have a gun yourself. 

  Against this backdrop, we bring you the following from Gallup whose most recent poll shows that the majority of Americans think the country would be safer if more people carried firearms after passing a criminal background check and training course. Here’s more:

  A majority of Americans, 56%, believe that if more Americans carried concealed weapons after passing a criminal background check and training course, the country would be safer.

   

  

   

  These results are from Gallup’s annual Crime poll conducted Oct. 7-11. In the wake of mass shootings at schools and other public places, some have argued that the shootings could have been stopped if any of the victims had carried weapons. Others argue that having more citizens carrying weapons can lead to more violence and accidental shooting.

   

  

   

  Among key subgroups, Democrats and those with postgraduate education are least likely to believe that more concealed weapons would make the U.S. safer. Republicans and gun owners are most likely to say it would make the nation safer. Younger Americans are more likely to choose the “safer” option than those aged 30 and above.

   

  The seemingly continuous incidence of mass shootings in the U.S. in recent years underscores the need for a focus on what can be done to prevent such tragic events in the future. Previous Gallup research has shown that Americans believe a failure of the mental health system to identify individuals who are a danger to others and easy access to guns are more to blame for mass shootings than other causes tested.

   

  Gallup’s most recent poll on gun control shows that a majority of Americans favor stricter gun sale laws in this country. At the same time, however, less than half of Americans believe that one such stricter law — universal background checks — would prevent mass shootings. In fact, a majority say that if more Americans carried concealed weapons after passing background checks and training, the nation would be safer.

  From a sociological perspective, the interesting thing here is that the spirit of the Second Amendment to a certain extent harkens back to citizens’ right (indeed, their civic duty) to resist injustice in the event government becomes oppressive. Now, the social fabric of the US has apparently been stretched to the point that citizens need to exercise their Constitutional right to bear arms just to keep from getting shot in math class or at the movie theatre.  

  We’ll leave it to readers to determine what that says about where society is headed going forward. 

  

  

  

  

• Crude Crashes & Stocks Soar As Global Central Bankers Hit Panic Button

  Distraction time….because quite frankly buying into this central bank-driven mania confirms most investors are from another planet bereft of common sense…

   

  From the China rate cut, stocks spiked then retraced it all before a mysterious buyer of first resort lift everything back to the highs of the day (to 'prove' everything is awesome)…

  

   

  But Nasdaq was soaring on the back of GOOG, AMZN, FB, and MSFT…

  

   

  AMZN, MSFT, GOOG – bwuahahaha

  

   

  On the day, Nasdaq was the biggest winner with Trannies lagging but everything higher…

  

   

  On the week, Nasdaq was again the big winner as Small Caps scrmabled back to the unchanged line (and S&P back to unch year-to-date)

  

   

  The cash Nasdaq Composite closed above 5000 for the first time since 8/18. Dow & S&P closed above its 200DMA, And The S&P 500 Tech sector closed at its highest since September 2000… (the 5% gain this week is the biggest since Dec 2011)…

  

   

  VIX notably decoupled from stocks today…

  

   

  And more clearly over the last 2 days… VIX is unchanged from 1230ET yesterday, while the S&P is up 30 points since then…

  

   

  Of course – it wasn't just US equities. Japanese stocks were insane – NKY rose over 1100 points this week tick for tick with USDJPY's surge…

  

   

  Treasury yields rose in sympathy with equity exuberance today with the belly underperforming the long-end on the week(decoupling today after China)

  

   

  But TSYs and stocks remain decoupled on the week…

  

   

  The US Dollar soared against the majors this week… (the best week in 4 months to 3-month highs) – the last 2 days are the biggest rise in The USD Index since Oct 2011

  

   

  And had its best wek against Asian FX in a month.. (amid very significant volatility)

  

   

  Commodities all lost ground on the week against the stronger USD – Gold's worst week in the last 6, Silver's worst in the last 8, but crude was wost… not exactly the picture of rate-cut driven growth expectations…

  

   

  Gold was waterfalled after spiking on China rate cut news…

  

   

  This was Crude's worst week in 3 months… (down 10% in the last 2 weeks)

  

   

  *  *  *

  Finally, all regions saw rate-hike timing rise (extend) with Europe now assuming no rate hike for at least 3 years!!

  

   

  Charts: Bloomberg

  Bonus Chart: And Here's Why You Were Buying This Week!!!

  S&P 500 Forward EPS Estimate falls for 6th consecutive week, 13 week ROC turns negative pic.twitter.com/sEoqGYwan3

  — Not Jim Cramer (@Not_Jim_Cramer) October 23, 2015

  

  

  

  

• Why The Chinese Rate Cut Will Do Nothing To Slow China's Economic Decline

  Submitted by Bryce Coward via Gavekal Capital blog,

  Today the Peoples Bank of China cut the benchmark interest rate by .25% and lowered banks’ reserve requirements by .5%. The measure is supposed to spur growth and make life a little easier on debt-ridden Chinese companies. In the immediate term it may give a slight boost to the economy, but there is no chance this measure, or others like it, will keep the Chinese economy from slowing much further in the years ahead. Let us explain…

  The continued and dramatic slowing of the Chinese economy in the years ahead is baked in the cake. For the last decade Chinese growth has been fueled by investment in infrastructure (AKA fixed capital formation).

   

  In an effort to sustain a high level of growth massive and unprecedented investment in fixed capital was carried out and fixed investment has now become close to 50% of the Chinese economy.

   

  On the flip side, consumption as a percent of GDP has shrunk from about 46% of GDP to only 38% of GDP. Most emerging market countries run with fixed investment of around 30-35% of GDP and with consumption accounting for about 40-50% of GDP – exactly the opposite dynamic of the Chinese economy.  China has run into a ceiling in terms of the percent of the economy accounted for by fixed investment and now fixed investment must shrink to levels more appropriate for China’s stage of economic development.

   

  This necessarily implies a slowing of the Chinese economy from what the government says is near 7% to something closer to 2-4%, and that is in the optimistic scenario in which consumption growth picks up the pace to mitigate the slowdown in investment.

  This is why cuts in rates mean practically nothing for China’s long-term economic prospects. In the short-term rate cuts may postpone corporate bankruptcies by allowing companies to refinance debt at lower rates. Rate cuts may also make housing more affordable, on the margin. But these are cyclical boosts that act as tailwinds to China’s economic train.

  

   

  No amount of wind, save a hurricane, is going to keep the train from slowing.

  As a reminder, it has not been working…

  

  

  

  

  

  

• Three Chinese Warships To Dock In Florida Port

  At a time when the US and China are practically at arms over the artificial islands in the South China Seas, with the US sending warships on location to patrol (despite White House Spokesman Josh Earnest saying on Oct. 8 that U.S. warships “should not provoke significant reaction from the Chinese”) and a stunned China responding “What On Earth Makes Them Think We Will Tolerate This“, the last thing we thought we would see right now was three Chinese warships about to port in Florida’s Naval Station Mayport.

  And yet according to USNI that is precisely what is about to happen: citing US Navy officials, USNI reports that he three ships about to dock in the US are the Type 052C Luyang II-class guided-missile destroyer Jinan (152), the Type 054A Jiangkai II-class guided-missile frigate Yiyang (548) and the Type 903 Fuchi-class fleet oiler Qiandao Hu (886).

  

  Type 52 Luyang II guided missile destroyer Jinan

  “Three vessels are on an around-the-world deployment and will conduct the goodwill visit after completing port calls in Europe,” read a statement from Navy Region Southeast. “The amphibious assault ship USS Iwo Jima (LHD-7) will serve as the host ship. In Mayport, sailors from both navies will participate in sporting events and interact during ship tours.”

  The close navy encounters go both ways: yesterday, a collection of about two dozen U.S. naval officers paid a visit to the Chinese aircraft carrier Liaoning in China, according to Chinese state controlled press and confirmed by the Navy.

  U.S. officials would not elaborate if there would be an at-sea training component to the visit slated to run from Nov. 3rd to the 7th.

  What makes the visit particularly awkward is that, as Navy officials stressed, the visit was planned months in advance and comes just as Washington and Beijing are at loggerheads over territorial possessions in the South China Sea.

  It is also notable, that in addition to the Mayport visit, China has sent the flotilla to first ever port visits in the Baltic Sea in ports like Stolkholm, Sweden and Helsinki, Finland as part of the world tour. Perhaps it is just part of China’s due diligence.

  Some US Congressmen are not too happy about the Chinese visit: “While the U.S. has been fervently cultivating military-to-military exchanges, China’s behavior at sea has not tracked with its rhetoric of a ‘peaceful rise’,” read a Thursday statement from Rep. Randy Forbes, from the chair of the House Armed Services Subcommittee on Seapower and Projection Forces, to USNI News.

  “Engagement like the upcoming Chinese visit to Mayport should not be done purely for engagement’s sake, and I hope that in addition to increased transparency, we start to see China moderate its other destabilizing activities.”

  However, the most interesting news is that according to the US Naval Institute, despite much posturing, the Obama administration has not yet dispatched ship toward China, and instead has been merely weighing for weeks whether or not it will send a freedom of navigation mission within 12 nautical miles — the internationally recognized maritime border — of features in the Spratly and Paracel China has reclaimed from the sea.

  It would appear that Obama was once again all talk and once China threatened to call the U.S. bluff and warned it would use force, the US desire for confrontation promptly evaporated.

  

  

  

  

  

• Is Russia The King Of Arctic Oil By Default?

  Submitted by Colin Chilcoat via OilPrice.com,

  To be king implies preeminence, or lasting rule. In the Arctic, such oil and gas supremacy is still little more than a dream. That dream remains alive in Russia however, and the nation – through an unmatched stubbornness and a decidedly timid field of competitors – is making a strong bid for the throne.

  A cursory search of ‘Arctic’ and ‘oil’ elicits little in the way of positivity. Certainly, Shell’s failure in the Chukchi Sea is notable. Combined with the Obama administration’s waffling distaste for future offshore Arctic development, it marks what should be a period of relative dormancy in U.S. waters. Still, it’s not indicative of the sector globally, which is seeing progress, albeit at a glacial pace.

  The shining example of such development to date is Gazprom Neft’s Prirazlomnaya platform. Located nearly 40 miles offshore in the Pechora Sea, the rig is the world’s first Arctic oil project involving a stationary platform – though the general concept itself has been employed before (see: BP’s Northstar Island).

  Gazprom Neft began production at the Prirazlomnoye field in 2013 and reached commercial figures last year, with a total output of roughly 5,000 barrels per day (bpd). With production well number two (of 19) now online, output should reach somewhere between 10,000-15,000 bpd by year’s end.

  To be fair, several important tests lie ahead for Prirazlomnaya and Russia’s Arctic shelf development in general. Chief among them is rapidly addressing its import dependence – one of the primary targets of U.S. and EU sanctions. No more than 10 percent of the equipment applied at the Prirazlomnaya installation is believed to be Russian-made, and this level of disparity is commonplace at both Russia’s onshore and offshore fields.

  Attention, domestic and international, has been given to the courting of China, India, and other backers – both financial and technological – but all eyes should be on the Russian solution, which will seek to demonstrate its efficacy by 2020.

  At the Prirazlomnoye field, the Russian institute Omskneftekhimproekt has begun work on the modernization of the rig’s drilling installations, technological equipment, and safety and telecommunications systems. The primary objectives are to boost production capacity (to ~120,000 bpd) toward 2020 and lay the building blocks for the future development of Russian-sourced platforms.

  The work by Omskneftekhimproekt mirrors that of several institutes, companies, and universities across the country, rallying around the call for import substitution. However, just how much can actually be accomplished is the billion dollar question.

  As Russia moves from ideas to concrete mechanisms (read: any forced Russification of the upstream oil and gas industry), the country’s traditionally poor institutions and penchant for corruption will not be easily circumvented – not to mention the stark technical realities of reducing import dependence some 70 percent.

  In the meantime – technology be damned – Russia continues to actively and ambitiously position itself across its Arctic geography. The holder of some 58 percent of the entire region’s hydrocarbon resources, Russia has several notable projects in the pipeline.

  Gazprom Neft’s Novy Port, Bashneft and Lukoil’s Trebs and Titov, as well as Gazprom Neft and Novatek’s Severenergia are three of the most promising Arctic onshore greenfield projects currently under development. Crude deliveries from Novy Port have already hit the European market, and together the three projects could produce as much as 400,000 bpd by the end of the decade.

  The Dolginskoye, Messoyakha, and Russkoye fields are further from realization, though they’re demonstrative of both Russia’s relatively prolific Arctic movements, and its sheer productive capacity.

  In the medium-term, competition will be light: arctic crude production in Alaska has slipped noticeably and will continue to decline through 2040; activity in Canada’s Beaufort Sea appears dead in the water; and years of exploratory drilling in Greenland have not yielded a single development project.

  Eni’s Goliat project in the Norwegian Arctic, which is set to come on stream pending final approval from Norwegian authorities, is the lone bright spot for the other four major littoral nations. It differs significantly from Prirazlomnaya, but at its peak, Goliat should deliver 100,000 bpd from its floating perch high in Norway’s “manageable” Barents Sea.

  To be sure, no one can yet claim supremacy over Arctic oil, but, for the time being, Russia remains its king by default.

  

  

  

  

  

• Is Mario Draghi About To Go Full-Kuroda? RBS Says ECB Could Buy Stocks

  At Thursday’s presser, Mario Draghi telegraphed more easing from the ECB come December. 

  This wasn’t exactly a surprise. In fact, some observers had expected Draghi to expand PSPP at the September meeting and although the market was disappointed in that regard, the ECB did raise the issue limit from 25% to 33% effectively giving themselves more dry powder. 

  The question now, is what exactly the ECB will announce. That is, will Draghi cut the depo rate further into negative territory thus setting off a chain reaction for the Riksbank and the SNB and thus raising the spectre of NIRP for retail depositors? 

  How long into 2017 will PSPP be extended? 

  Given the scarcity of purchasable paper, will the ECB expand the universe of eligible assets and if so, will Draghi go full-Kuroda knowing full well that you never, ever go full-Kuroda? 

  All good questions, and ones we suspect many a sellside strategist will attempt to answer in the weeks ahead. For his part, RBS’ Alberto Gallo is out with a rundown of the ECB’s options and not only are non-financial corporate bonds on the list (something we predicted months ago), but so are (gasp) stocks, suggesting that the ECB may soon embark on a Japan-style effort to corner the equity market along with the government bond market. 

  First, Gallo notes the ECB’s mention of the SNB (another central bank which, like Japan, is sitting on a hundred billion dollar equity book): 

  Yesterday the ECB prepared the ground for more easing in December, as we expected. What was surprising was the post-meeting Q&A, which went into more detail on the possibilities for easing, and even made a direct comparison with the Swiss National Bank – currently the central bank with the largest balance sheet as % of GDP (90%) in developed markets.

   

  
  

  Next, RBS suggests that we should take the ECB quite literally when they say that they are “open to a whole menu of monetary policy instruments”:

  All options considered means non-financial credit, wholesale loans, subsovereigns, and even equities. We have already outlined that expanding purchases to other types of credit could theoretically double the pool of the ECB’s purchasable bonds, to almost €19tn. 

   

  Adding more utilities or state-backed corporates is a logical step, but it is not going to give the ECB much further room. The ECB could decide to go further into the pool of € non-financial corporate bonds (€893bn) rated BBB and above, including € bonds from non-Eurozone issuers (€687bn excluding non-Eurozone issuers). 

   

  

   

  Adding equities would be particularly aggressive, offering a further €7tn of purchasable assets.

  Then there’s the possibility of buying muni bonds:

  Sub-sovereign bonds are another option, adding €336bn of local government bonds to the pool of assets. Sub-sovereign bonds account for around 3% of Eurozone GDP (this is small compared with the US, where municipal bonds are 21% of GDP).

  And finally, in what might be looked upon as an even more outlandish move than buying equities, the ECB could simply buy individual personal loans from banks because apparently, doing so indirectly via ABS purchases hasn’t worked:

  One incentive for the ECB to launch the ABS purchase programme last year was likely to encourage securitisation, helping banks to deconsolidate their balance sheets and unlock new lending. But securitisation issuance hasn’t picked up (see SIFMA data). This is partly due to the lack of harmonisation of national-level rules, the harsh capital treatment even for simple securitisations and the lack of government support (no guarantees to mezzanine tranches, even though the ECB can now buy guaranteed mezzanine tranches through ABSPP). Given the stagnant developments in the securitisation market, the ECB could instead start to buy loans directly to better target easing at the real economy. There are practical hurdles to loan purchases – illiquidity, lack of transparency, long settlement periods. 

  Yes, “practical hurdles” like “illiquidity, lack of transparency, long settlement periods” … and let’s not forget “the public perception that the Gods must be crazy”, which is precisely what people would think once they learned that a developed market central bank had begun buying individual borrowers’ car loans from banks.

  Just how large could this program ultimately get, you ask? Well, you’re in the pee wee league if you’re a central bank and your balance sheet doesn’t sum to a respectable percentage of GDP and on that measure, the ECB has a long way to go:

  The SNB has a balance sheet equivalent to 90% of GDP, the highest amongst major developed economies (see chart above). Taken that as a theoretical ceiling, the ECB could further expand its balance sheet by another 70% of GDP, i.e. over three times what they have done so far.

  Of course none of this is going to work. As we’ve seen in Japan, you can monetize assets until the cows come home (indeed, until you break the market), but virtually all of the evidence from the global, post-crisis experiment in unconventional monetary policy suggests that you will have i) little to no effect on inflation expectations, and ii) a muted effect at best on aggregate demand. In fact, one would think that the ECB would have learned something from the fact that they’ve been buying bonds since early March and the bloc is now back in deflation. 

  In the end, all that will happen is the EMU’s neighbors will be forced further into NIRP and the ECB will end up with a nightmarish balance sheet full of stocks, corporate credit, munis, and God only knows what kind of loans purchased from banks, and all of which will have been bought at or near the top. As Gallo notes, “the larger the balance sheet and the riskier the assets a central bank buys, the higher the potential for losses”.

   Indeed, and that sets up the possibility that central banks could end up being forced to operate from a negative equity position. In other words: it sets up the possibility that they’ll technically go broke. As for what happens next, we’ll leave that for another post.

  

  

  

  

  

  

• DOJ Closes Lois Lerner Investigation Without Charges

  Confirming once again that the U.S. has full devolved into a total banana republic, moments ago CNN reported that the US Department of “Justice” is closing its two-year investigation into whether the IRS improperly targeted tea party and other conservative groups. There will be no charges against former IRS official Lois Lerner or anyone else at the agency, the Justice Department said in a letter.

  The DOJ’s finding:

  The probe found “substantial evidence of mismanagement, poor judgment and institutional inertia leading to the belief by many tax-exempt applicants that the IRS targeted them based on their political viewpoints. But poor management is not a crime.”

   

  “We found no evidence that any IRS official acted based on political, discriminatory, corrupt, or other inappropriate motives that would support a criminal prosecution,” Assistant Attorney General Peter Kadzik said in the letter. “We also found no evidence that any official involved in the handling of tax-exempt applications or IRS leadership attempted to obstruct justice. Based on the evidence developed in this investigation and the recommendation of experienced career prosecutors and supervising attorneys at the department, we are closing our investigation and will not seek any criminal charges.”

  They must have searched real hard, especially once they found all those deleted lost emails.

  CNN adds that the IRS mishandled the processing of tax-exempt applications in a manner that disproportionately impacted applicants affiliated with the tea party and similar groups, leaving the appearance that the IRS’s conduct was motivated by political, discriminatory, corrupt, or other inappropriate motive.

  So now we know that in addition to insider traders working for SAC, targeting conservatives is, according to the DOJ, also not a crime.

  What is a crime? Blowing the whistle on the Big Brother state, where every single electronic communication among US citizens is processed and recorded in perpetuity.

  Now that is nothing short of treason.

  And now back to your regularly scheduled market meltup which at this point may last forever: after all, it is only a matter of time before the DO”J” pulls a page out of the Chinese playbook and decides that selling any stock is also a criminal offense punishable with years of hard time.

  

  

  

  

  

• 3 Questions They Should Have Asked Hillary About Benghazi, But Didn't (And Never Will)

  Submitted by Jake Anderson via TheAntiMedia.org,

  The circus is back in town in Washington D.C. (actually, it’s part of a permanent residency), as a congressional panel spent Thursday peppering presidential candidate Hillary Clinton with questions about her role in the Benghazi consulate attack. The attack left four Americans dead, including Ambassador Chris Stevens, and has been the subject of political scandal ever since, with Republicans claiming then-Secretary of State Clinton didn’t do enough to sufficiently fortify the security detail of the consulate.

  It’s pure political theater, but sadly, no one on this congressional panel will ask the real questions to which Americans deserve answers. And this is because the real scandal presents questions that can’t be asked, because the answers indict the entire U.S. government.

  What was our true geopolitical motive in Libya?

  At its core, the 2011 NATO-backed rebels’ deposal of Libya’s dictator, Muammar Gaddafi, involved United States foreign policy interests. As with other recent military actions in the Middle East, it is part of a deep and blood-soaked history of coups that includes no less than 35 countries.

  Soon after 9/11, former General Wesley Clark was informed about a memo outlining how the U.S. government planned to “take out” seven countries in five years. Those countries included Iraq, Libya, Syria, Lebanon, Somalia, Sudan, and Iran.

  According to many reports, this plan had been in the works since the 1990s, when the neoconservative think tank, Project For A New American Century — which was presided over by stalwart war profiteers Dick Cheney, Donald Rumsfeld, Paul Wolfowitz, Richard Perle, and others — drew up plans for an all-out invasion of Iraq as early as 1998. This plan included comprehensive military actions throughout the Middle East, as described by General Clark.

  The overthrow of Libya’s secular-Arab nationalist regime was very much a part of this geopolitical coup, a predicate of which was protecting the petrodollar (which is a term used to describe the world’s dominant reserve currency, the U.S. dollar, which is based on petroleum exports) and establishing a permanent occupying force in the Middle East. When Gaddafi announced in 2009 that he planned to nationalize the country’s oil reserves, he may have sealed his fate.

  So, the question for then-Secretary of State Hillary Clinton would be something like this: do you still support the administration’s decision to arm the terrorist group Al Qaeda (remember them?) in order to topple Gaddafi, destabilize the government, and allow the U.S. to install a puppet regime amenable to economic imperialism? The answer would not be politically expedient.

  What was the role of Ambassador Stevens in supplying arms to Syria?

  A wide variety of news sources have now confirmed the CIA was indeed running an arms smuggling team in Benghazi at the time the consulate was attacked. Pulitzer-prize winning investigative reporter Seymour Hersh, among others, dug up more of the facts about what was really going on Libya and why the matter is controversial for all the wrong reasons:

  “A highly classified annex to the report, not made public, described a secret agreement reached in early 2012 between the Obama and Erdo?an administrations. It pertained to the rat line. By the terms of the agreement, funding came from Turkey, as well as Saudi Arabia and Qatar; the CIA, with the support of MI6, was responsible for getting arms from Gaddafi’s arsenals into Syria.”

  So our question to Clinton would be: how would you characterize Ambassador Steven’s role in the rat line that was running guns to Syrian rebels through Libya?

  Did we topple Gaddafi because he was rejecting the petrodollar and threatening to adopt a gold-based currency?

  As mentioned above, the toppling of Libya’s dictator was directly related to protecting the power of the petrodollar in the Middle East. According to Anthony Wile, prior to his ousting, Gaddafi had made no secrets about introducing a gold dinar, “a single African currency made from gold, a true sharing of the wealth.”

  Gaddafi possessed about 144 tons of gold and believed this gold dinar would prove to be a major financial asset as a national currency. In an interview with RT, Wile said:

  “If Gaddafi had an intent to try to re-price his oil or whatever else the country was selling on the global market and accept something else as a currency or maybe launch a gold dinar currency, any move such as that would certainly not be welcomed by the power elite today, who are responsible for controlling the world’s central banks. … So yes, that would certainly be something that would cause his immediate dismissal and the need for other reasons to be brought forward from moving him from power.

   

  “The central banking Ponzi scheme requires an ever-increasing base of demand and the immediate silencing of those who would threaten its existence. Perhaps that is what the hurry is in removing Gaddafi in particular and those who might have been sympathetic to his monetary idea.”

  There is plenty of precedence for such a military-backed silencing. Many analysts believe Saddam Hussein’s intent to trade Iraqi oil in Euros instead of the dollar was the final straw before the U.S. invasion of Iraq.

  In Gaddafi’s case, his overthrow may have protected our petroleum-based currency from a gold dinar alternative, but it has plunged North Africa into chaos and allowed Islamist militias to gain control over Tripoli.

  So our final question to Madam Secretary Clinton (and it’s a doozy): approximately how many innocent civilians have died protecting the petrodollar?

  

  

  

  

  

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