Today’s News September 10, 2015

• Economic Crisis: How You Can Prepare Over The Next Six Months

  Submitted by Brandon Smith via Alt-Market.com,

  I wouldn’t say that it is “never too late” to prepare for potential disaster because, obviously, the numerous economic and social catastrophes of the past have proven otherwise. There simply comes a point in time in which the ignorant and presumptive are indeed officially screwed. I will say that we have not quite come to that point yet here in the U.S., but the window of opportunity for preparation is growing very narrow.

  As expected, U.S. stocks are now revealing the underlying instability of our economy, which has been festering for several years.  Extreme volatility not seen since 2008/2009 has returned, sometimes with 1000 point fluctuations positive and negative in the span of only a couple days.  Current market tremors are beginning to resemble the EKG of a patient suffering a heart attack.

  Stocks are a trailing indicator, meaning that when an equities crash finally becomes visible to the mainstream public, it indicates that the economic fundamentals have been broken beyond repair for quite a while. What does this mean for those people who prefer to protect themselves and their families rather than wait to be drowned like lemmings in a deluge? It means they are lucky if they have more than a few months to put their house in order.

  The process of crisis preparedness is not as simple as going on a gear-buying bonanza or making a few extra trips to Costco. That is better than nothing; but really, it’s a form of half-assed prepping that creates more of an illusion of survivabilty rather than providing ample security in the event that financial systems malfunction.

  Much of what’s listed in this article will include training and infrastructure goals far beyond the usual standards of beans, bullets and Band-Aids.

  Market turmoil has only just begun to take shape around the globe; and as I explained in my last article, the situation is only going to become exponentially worse as 2015 bleeds into 2016. I certainly cannot say for certain how long our system will remain “stable,” primarily because our current collapse could easily move faster or slower through the influence of outside or engineered events (a slower progression without any black swan-style triggers would likely end in total breakdown within the span of a couple years, rather than a fast progression ending in the span of a few months). What I can do is give you a conservative timeline for preparedness and offer examples of actions anyone can accomplish within that period. For now, my timeline is limited to six months or less, meaning these preparations should be undertaken with the intent to complete them in half a year. If you get more time than that, thank your lucky stars for the extension.

  Find Two Family Members, Two Friends and One Neighbor Of Like Mind

  Here is the bottom line: If you are going the route of the lone wolf or secret squirrel isolated from any community, then you are already dead. You might as well hand your food and supplies over to someone else with a better fighting chance. The lone wolf methodology is the worst possible strategy for survival. And if you look at almost every collapse scenario in history from Argentina to Bosnia to the Great Depression, it is always the people with strong community who end up surviving.

  Going lone wolf is partially useful only if you have zero moral fortitude and you plan to rob or murder every other person you come across and then run. This is not the smartest idea either because it requires a person to constantly seek out violent contact in order to live day to day. Eventually, the lone wolf’s luck will run out no matter how vicious he is.

  I’ve noticed that those people who promote lone wolf survivalism tend to lean toward moral relativism, though they rarely come right out and admit what their real plans are. I’ve also noticed that it is the lone wolves who also often attempt to shame average preppers into isolationism with claims of “OPSEC” (operations security) and warnings of neighbors ready to loot their homes at the first sign of unrest. “Don’t talk to anyone,” they say. “Your only chance is to hide.” One should consider the possibility that the lone wolves prefer that preppers never form groups or communities because that would make their predatory strategy more successful.

  Without community, you have no security beyond the hope that people will not find you by chance. You also have limited skill sets to draw from (no one has the knowledge and ability to provide all services and necessities for themselves). And you will have no ability to rebuild or extend your lines of safety, food production, health services, etc. once the opportunity arises. If you cannot find two family members, two friends and one neighbor to work with you in the next six months, then you aren’t trying hard enough; and thus, frankly, you don’t deserve to survive. I’ve heard all the excuses before: “Everyone around me is blissfully ignorant,” “My family is addicted to their cellphones,” “All my friends are Keynesians” and so on. It doesn’t matter. No more excuses. Get it done. If I can do it, you can.

  Approach Your Church, Veterans’ Hall Or Other Organization

  What do you have to lose? Find an existing organization you belong to and see if you can convince them to pre-stage supplies or hold classes on vital skills. Keep your approach nonpolitical. Make it strictly about preparedness and training. If you can motivate a church or a veterans’ hall or a homeschoolers’ club to actually go beyond their normal parameters and think critically about crisis preparedness, then you may have just saved the lives of dozens if not hundreds or people who would have been oblivious otherwise. Making the effort to approach such groups could be accomplished in weeks, let alone six months.

  Learn A Trade Skill

  Take the next six months and learn one valuable trade skill, meaning any skill that would allow you to produce a necessity, repair a necessity or teach a necessary knowledge set. If you cannot do this, then you will have no capability to barter in a sustainable way. Remember this: The future belongs to the producers, and only producers will thrive post-collapse.

  Commit To Rifle Training At Least Once A Week

  Set aside the money and the ammo to practice with your primary rifle every week for the next six months. Yes, training uses up your ammo supply; but you are far better off sending a couple thousand rounds down range to perfect your shooting ability rather than letting that ammo sit in a box doing nothing while your speed and accuracy go nowhere.

  Also, think in terms of real training methods, including speed drills, movement drills, reloading and malfunction clearing, and, most importantly, team movement and communications drills. Shooting a thousand rounds from a bench at the range is truly a waste of time and money. Train in an environment that matches your expected operational conditions. Make sure you are learning something new all the time and make sure you are actually challenged by the level of difficulty. If you are not getting frustrated, then you are not training correctly.

  Create A Local Ham Network – Expand To Long Distance

  A 5-watt ham radio can be had for about $40. With the flood of low-cost, Chinese-made radios on the market today, there is simply no excuse not to have one. If you want to get your ham license, then by all means do so and expand the number of available frequencies you can legally use. If you don’t have a license, practice on non-licensed channels such as MURS channels (yes, MURS is only supposed to be operated at 1 watt or less; I won’t tattle on you to the Federal Communications Commission if you use 5 watts).

  A 5-watt handheld ham radio can easily achieve 30 miles or more depending on the type of antenna used. With repeaters, hundreds of miles can be covered. With a high frequency (HF) rig, hundreds or sometimes thousands of miles can be covered without the use of repeaters (though HF radios are far more expensive).

  During a national disaster, there is no guarantee that normal communications will continue. Phone and Internet connections can be lost through neglect, or they can be deliberately eliminated by government entities. A nation or community without communications is lost. Find friends and family and set up your communications network now. Over time, your network may grow to cover a vast area; but it has to start with a core, and that core is you.

  Learn Basic Emergency And Combat Medical Response

  We are lucky in my area to have a few people with extensive medical knowledge in our Community Preparedness Team. I have received training in multiple areas of emergency and combat medical response, and I am grateful for access to such people because there is always more to learn in this field. If you do not have people on your team with medical experience, then you will have to seek out such classes where you can.

  Local EMT classes are a good start, but these courses are very limited in scope and do not cover treatment as much as they cover the identification of particular problems. Almost no community courses I can think of delve into combat medical response. If you can’t find a private trainer in your area, then you will have to settle for Web videos. Purchase extra supplies such as Israeli or OLAES bandages and practice using them. Learn your CAT tourniquet until you can use it in the dark. My team even shot a Christmas ham and then pumped fake blood through it to simulate a wound for our blood-stopping class.

  If you already have solid people with medical training, try focusing in a niche area like dental work. At the very least, learn your trauma-response basics and store your own medical supplies. Do not assume that you will have access to a hospital when you need it.

  Store At Least One Year Of Food – Then Store Extra

  With your current food stores can you make it at least one year without a grocery supply source? Can you make it through at least one planting and harvest season with 2000 – 3000 available calories per person? Do you have extra food for people you might wish to help?

  Imagine you or your community come across an ER surgeon during a crisis situation, but he did not prepare. Are you going to “stick it to him” and let him starve because he didn't see the danger coming, or are you going to want to keep that guy and his skill sets around? Food preparedness is not as straightforward as it seems. You have to think in terms of your own survival, yes, but also in terms of individual aid. During a full spectrum collapse food is the key to everything. This is why governments like ours set up provisions for food confiscation. They know well that food is power. Without extra supply, communities struggle to form because people become hyper-focused on themselves and lose track of the bigger survival picture. Governments understand that if they can offer limited food to the desperate, they can control the desperate. Do what you can to make sure there are no desperate people within your sphere of influence and you remove the establishment's best mode of control.

  Plan Your Food Independence In Advance

  To survive you must become your own farmer. Period. Do you know how to do this in your particular climate? Have you accounted for pest control and bad weather conditions? Have you extended your growing season with the use of greenhouses? Are you planning your crops realistically? What provides more sustenance, a field of tomatoes or a field of potatoes? A planting box full of lettuce or of carrots? What crops can be stored the longest and are the hardiest against poor conditions? What gives you the best bang for your buck and for your labor?

  I realize that the current growing season is almost at an end, but that does not mean you can't spend the next six months planning for the next season. Condition your soil for planting now. Store extra fertilizer and compost. Be ready for pests. Learn the square foot method as well as barrel planting. Take note of the space you have and how you can best use it. Stockpile seeds for several years of planting.

  Train Your Mind To Handle Crisis

  Panic betrays and fear kills. The preparedness culture is built upon the ideal that one must defeat fear in order to live. How a person goes about removing uncertainty from the mind is really up to the individual. For me, combat training and mixed martial arts is a great tool. If you get used to people trying to hurt you in a ring, it's not quite as surprising or terrifying when it happens in the real world. If you can handle physical and mental trauma in a slightly more controlled environment, then fear is less likely to take hold of you during a surprise disaster.

  Six months may be enough time to enter a state of mental preparedness, it may not be, but more than anything else, this is what you should be focusing on. All other survival actions depend on it. Your ability to function personally, your ability to work with others, your ability to act when necessary, all rely on your removal of fear. Take the precious time you have now and ensure you are ready to handle whatever the future throws at you.

  

  

  

  

  

• AsiaPac Stocks, FX Tumble As China Devalues Yuan Most In 4 Weeks, Sees "No Need For Massive Economic Stimulus"

  Losses from the US session extended following comments in one of the government's official mouthpieces that "China doesn't need massive stimulus." A BoNZ rate cut (blaming China's devaluation) sent Kiwi tumbling, Ringgit hit a fresh 17 year low against the USD, Japanese stocks collapsed over 650 points so far, and Chinese stocks are opening notably lower. Volume remains de minimus (99% below average) in Chinese futures trading as China devalues the Yuan by the most since Aug 13 and injects another 80 billion Yuan liquidity.

   

  US weakness did not help but once this hit early on in the Asia session…

  • CHINA DOESN’T NEED MASSIVE ECONOMIC STIMULUS: FINANCIAL NEWS

  Adding:

  • *CHINA FACES DOWNWARD PRESSURE IN 2-3 YEARS: PBOC ADVISOR HUANG
  • *CHINA YET TO FIND NEW GROWTH PILLARS: PBOC ADVISOR

  Losses grew.

  *  *  *

  The Bank of New Zealand cut rates:

  • *NEW ZEALAND CUTS KEY INTEREST RATE TO 2.75% FROM 3.00%
  • *WHEELER: SIGNIFICANT YUAN DEVALUATION WOULD BE BIG WORRY
  • *RBNZ SAYS FURTHER NZD DEPRECIATION IS APPROPRIATE

  Slamming Kiwi lower…

  • *NEW ZEALAND DOLLAR DROPS MORE THAN 2% FOLLOWING RBNZ RATE CUT

  

   

  The Maysian Ringgit dropped another 1% in the early trading – to its weakest since 1998…

  • *MALAYSIA'S KEY STOCK INDEX OPENS DOWN 0.7% AT 1,592.16
  • *MALAYSIAN RINGGIT DROPS 1% TO 4.3728 PER DOLLAR

   

  

   

  Japanese stocks opened down 550 points at the cash open having fallen all day during the US session… Now down 650 points

  

   

  Broad AsiaPac stocks are lower…

  • *MSCI ASIA PACIFIC INDEX DROPS 2.2%, EXTENDING LOSS

  And China opens weaker (despite Fink's help)…

  • *CHINA'S CSI 300 STOCK-INDEX FUTURES FALL 0.5% TO 3,308.4

  

  As China injects another 80 billion Yuan…

  • *PBOC TO INJECT 80B YUAN WITH 7-DAY REVERSE REPOS: TRADER

  And then devalues The Yuian by th emost since 8/13…

  • *CHINA SETS YUAN REFERENCE RATE AT 6.3772 AGAINST U.S. DOLLAR
  • *CHINA WEAKENS YUAN FIXING BY 0.22% TO 6.3772/USD

  

   

  Perhaps the recent Treasury selling gave them enough to hold the Yuan down here?

   

  Charts: Bloomberg

  

  

  

  

  

• Is This The End Of The Idea Of America?

  Politicians learned long ago that it's easier to just import non-Americanized voters to vote for you, than, as FutureMoneyTrends notes, to get naturalized citizens who still cherish the idea of America to vote for things like national healthcare systems, higher taxes on business owners, and the catering to every little tribal group that declares themselves a minority.  

   

   

  As SHTFPLan's Mac Slavo concludes, with Europe’s immigrant crisis coming to a head and similar events having played out in the United States last summer, it should be clear that what’s happening is an orchestrated detonation of First World nations…

  The cultural genocide going on in this country… where school teachers, politicians and community leaders believe we have something to be ashamed about.

   

  Humanity is ugly. And America’s history is no different. But let’s not pretend that blacks weren’t slave owners and slave distributors. Native Americans went to war all the time over land and killed other native Americans.

   

  And no, La Raza, California, Arizona and Texas are not yours. At least not for now. And please, if Mexico’s borders really did control those states you would just be flooding into Colorado, Idaho and Wyoming. Because if California, Arizona and Texas were Mexico, those states would be shit.

   

  Although given enough time – and they’ll be there – California is already looking pretty third-world with a rapidly shrinking middle class.

   

  In southern California, drive down a street where Mexicans are migrating to and you’ll notice a boom in window security bars.

  It is only a matter of time before the middle class is wiped out and America begins to resemble the poverty, violence and tyranny so often associated with the countries from which many illegal migrants originate.
   

  

  

  

  

  

• Will China Invade Alaska, Canada? Will Russia?

  Authored by Bernie Quigley, originally posted op-ed at The Observer,

  The theory of 65-year cycles points to a critical moment in China's evolution

  Five Chinese navy ships are currently operating in the Bering Sea off the coast of Alaska, the Wall Street Journal reported Wednesday, marking the first time the U.S. military has seen them in the area. Why the sudden interest?

  Because the Chinese have been studying the cycles. From generational theorists William Strauss and Neil Howe, they have learned that political/cultural cycles last only 65 years, and then they collapse, cycles first observed by Taoist monks and Roman philosophers. And China is exactly 66 years advanced since the Chinese Communist Revolution of 1949. In terms of generational cycles, China is on the eve of destruction. (In terms of the Strauss/Howe theory, so are we.)

  The Chinese have been studying Western theories and economic cycles like the Elliott Wave, which suggests that the life cycle of a dominant currency has its limitations, and the American dollar cycle has ended. They have been studying economist Harry Dent, investment gurus Jim Rogers, Marc Faber and libertarian Ron Paul, seen often here only in the shadows, and understand that America is at a full economic transition, potentially a catastrophic cultural turning.

  They have been reading Nicholson Baker’s day-by-day account, Human Smoke: The beginnings of WWII, the End of Civilization. They understand fully without Western sentimentality or illusion what comes next at the end of the economic cycle: Total war.

  And they know that they have every advantage, for so many reasons. The first might reach back to 1913, when the 17th Amendment was approved in America. It focused power in New York and Washington and nullified the natural rise and development of states and regions into indigenous republics or “laboratories of democracy,” the phrase used by Justice Louis Brandeis. But created in time a vast meandering horde wandering without fences, formed by Hollywood light and sound, answering to no one, or anyone. It was one of the early Tea Party initiatives to put the fences back, but it is now too late and not enough.

  They understand the “lessons of Vietnam”: Here in the age of the individualized common man where every woman or man can be emperor, it is not just the rich who will not fight, not just the connected who will avoid service (Dick Cheney had five military deferments in the Vietnam era). Almost no one will fight and those who do will be despised.

  And although nostalgico generations celebrating Franklin D. Roosevelt (like Bernie Sanders) still romantically view us as unified (largely European) minions formed by great Hollywood figures; Frank Capra, Howard Hawks, Gary Cooper movies like Sergeant York, we no longer are. We view ourselves today as “totalitarian lite” benevolent world conquerors and everybody wants to be like us (except the Chinese and Russians). Senator from Arkansas Tom Cotton today calls for “global military dominance.” But we have no temperament for war. Scholarly studies report that, just one percent of current residents of New Jersey have served in military since Vietnam.

  Secretary of State John Kerry’s appeasement of the Ayatollahs in the Iran deal comes as no surprise. Not to China, which carefully plans its next steps in the now permanent relationship with the war-weary and wary West.

  Jim Webb, warrior/scholar and former Senator from Virginia, who is running for president has been watching this a long time.

  “From this point forward,” he wrote in the Wall Street Journal back in 2001, “no one should doubt that our over investment in the economy of a nondemocratic and ever more aggressive nation has seriously compromised our ability to conduct foreign policy in the world’s most dynamic region. And the fact that we have become vulnerable to a Chinese military modernized through the benefits of our own technology should give all of us pause.”

  

  Chinese missiles are seen on trucks as they drive next to Tiananmen Square and the Great Hall of the People during a military parade on September 3, 2015 in Beijing, China. (Photo: Kevin Frayer/Getty Images)

  Webb prefaced his article with a quote from Sun Tzu, in The Art of War: “Draw them in with the prospect of gain, take them by confusion. Use anger to throw them into disarray.”

  It is safe to say today that we are now passed the “draw them in” phase and entering into the “take them by confusion” phase and that is what the Chinese ships are doing off the Alaskan coast. Soon ahead, the “use anger to throw them into disarray” phase.

  Possibly we would come together in defense today if an outside invader approached the United States (Lower 48) either from China on one side, or Russia on the other. But would Americans in the Lower 48 defend Alaska? Canada? Or would we instead deal Canada away to avoid war below and “find peace”? As our long, intimate, historic relationship with Israel disintegrates almost overnight, General Secretary of the Communist Party Xi Jinping thinks he knows the answer.

  Most Americans who have never seen Dougie Gilmour crawl off the ice with a broken leg in his last day on ice, have never been to Tim Hortons or canoed the mystic Canadian wilderness, think Canadians are silly, preoccupied only with hockey. Scott Walker, Governor of Wisconsin, who wants to be president, fully personifies this dangerous American narcissism: He wants to build a fence not only across the border with Mexico, but one across the border with Canada as well. But Canada, and Alaska, are absolutely vital to America’s defence, even to our very existence.

  Time to read again, John McPhee’s Coming into the Country. Time to read again, Margaret Atwood’s Survival: A Thematic Guide to Canadian Literature. Time to read again, Sun Tzu’s The Art of War.

  That President Obama is the first American president to cross into the Arctic Circle is astonishing. That tells the Chinese, and the Russians who planted the flag at the North Pole and declared it to be their own well back in 2007, virtually everything they need to know about our relationship with the Great White North.

  That is where they must start in the next phase of civilization between China, Russia and North America: Using “anger to throw them into disarray.”

  

  

  

  

  

• "Where Is Everyone Going?" Presenting Goldman's Immigration Flow Chart

  As discussed here on Tuesday evening, people flows (i.e. immigration and migration) are grabbing international headlines these days thanks in large part to i) the massive influx of asylum seekers entering Western Europe from war-torn Syria, and ii) GOP frontrunner Donald Trump’s outspoken position on illegal immigration in the US. These two issues are part of a larger discussion about how demographics affect societal and economic outcomes or, as we put it yesterday, “demographic shifts, whether gradual or sudden, whether wholly domestic or emanating from some exogenous shock (like say a horrible US foreign policy outcome) matter – and they matter a lot.”  

  Regardless of one’s position on immigration in the US or the EU’s response to the worsening migrant flow from the Mid-East, understanding “where everyone is going” (so to speak) may be more critical now than at any time in recent history. 

  With that, we present the following flowchart from Goldman which shows, in analyst Hugo Scott-Gall’s words, “net people outflow and inflow countries (in grey and blue respectively), with major people flows highlighted. Size of the box depicts size of net inflows/outflows; note that line colours are only meant to make flows easier to follow.”

  

  

  

  

  

  

• Guest Post: So You Really Want To Make "Syrian Refugees" An Election Issue?

  Submitted by Mark Jeftovic via The Libertarian Party Of Canada,

  Thomas Pynchon once wrote:  ‘If they can get you asking the wrong questions, they don’t have to worry about the answers.’  Words to live by for the  the major political parties in Canadian Federal politics.

  The refugee crisis in Syria, Iraq and spilling into Europe has become an election issue, with each of the major parties pulling magic numbers out of their ears around “how many” is the “right number” of refugees to admit to Canada, which once again underscores the Libertarian criticism that the both major political parties espouse largely uniform campaign platforms in which the issues are for the most part homogenous while the really important questions are rendered conveniently out-of-scope (and even the NDP’s, sniffing a faint shot at power, are pivoting off their principles in order to get it)

  If we peer behind the veil of mainstream media oversimplification we find that the humanitarian crisis we are faced with today are the straight line consequences of a decades-old policy on the part of the West (defined as the US, the UK, Israel and including complicit Canada) to subvert and destabilize the very nations that are submerged in civil war and strife.

  A String of Coup D’Etats

  Syria and Iran were both once full-on democracies who’s duly elected governments committed the literal, mortal sins of offending Western corporate powers. Iran’s Mohammad Mosaddegh wanted to audit the books of the Anglo-Iranian Oil Company and was instead overthrown and replaced with the Shah. We’re all aware how that turned out why Iran is so fond of the West to this day.

  

  Foreign Policy FTW

  Syria’s plight is not as well known, our (meaning the West’s) first political coup d’etat against their elected government was in 1949, when the CIA over throws  Shure al-Quwatly and replaces him with the first of many military strongmen in Syria, Colonel Husni al-Zaim.  “America’s Boy” as he was dubbed, wasn’t so strong after all and was deposed and executed after 2 months in power. No fewer than 5 more military coup’s were sponsored over the years in Syria, so many that there is even a Wikipedia page  “List of Military Coups in Syria” (1954, 1961, 1963, 1966 and 1970).

  When not actively overthrowing the elected governments of Syria and Iran, the west has been for decades, offering up policies designed to justify them and other initiatives that will destabilize and subvert the autonomy of “the target nations”.

  A Multi-Decades Policy of Destabilization and Subversion

  Via various think tanks and policy institutes, white papers are authored by the same recurring personages to shape the direction of mid-east policy. They have names which overlap heavily with the US Neo-conservative movement which ended up having a much stronger effect on the direction of Canadian politics than many would care to admit.

  The rationales for these behaviours is usually the same: “when the citizens of these countries see where their improperly aligned leaders have gotten them, they will embrace democracy” (considering at least two of the targets in question started out as democracies in the first place, it brings to mind the parable of the Harvard MBA and the fisherman).

  As far back as 1982, Oded Yinon publishes “A Strategy for Israel in the Nineteen Eighties” in Hebrew in the journal Kivunium.

  “The paper, published in Hebrew, rejects the idea that Israel should carry through with the Camp David accords and seek peace. Instead, Yinon suggests that the Arab States should be destroyed from within by exploiting their internal religious and ethnic tensions: “Lebanon’s total dissolution into five provinces serves as a precedent for the entire Arab world including Egypt, Syria, Iraq, and the Arabian peninsula and is already following that track. The dissolution of Syria and Iraq later on into ethnically or religiously unique areas such as in Lebanon, is Israel’s primary target on the Eastern front in the long run, while the dissolution of the military power of those states serves as the primary short term target. Syria will fall apart, in accordance with its ethnic and religious structure, into several states such as in present day Lebanon.”

  A decade later,  Princeton University professor  Bernard Lewis describes the process of “Lebanonization”  in his Foreign Affairs article “Rethinking the Middle East” when “[the] state then disintegrates into a chaos of squabbling, feuding, fighting sects, tribes, regions and parties.”

  The thrust of the article argues that “the West and Islam have been engaged in a titanic ‘clash of civilizations’ and that the US should take a hard line against all Arab countries.”

  Then in 1996 Lewis’ protege, Richard Perle, is lead author on a position paper for Benjamin Netanyahu entitled “A Clean Break: A New Strategy for Securing the Realm” that advocates abandoning the previous peace process in favour of destabilizing Syria and Iraq and exploiting mid-east tensions.

  After 9/11 Richard Perle becomes a chief architect of “The global war on terror” and with it came things like “slam dunk” WMDs in Iraq (which were never found) and the Saddam Hussein / bin Laden axis (which did not exist). Today, Iraq is in shambles and not a single WMD was ever found there. Anybody who read former UN weapon’s inspector Scott Ritter’s “War on Iraq: What Team Bush Doesn’t Want You To Know“, published more than a year ahead of the Iraq invasion, already knew that there were no WMD there. Everybody now has the hindsight to see that the entire Iraq war was premised on lies but few talk about it in polite company.

  Canada Gets With the Program…

  One could argue that “peace keeping”, in the context we are all supposed to understand it (creating a multi-national coalition in a hot spot to prevent a global thermonculear war from erupting) was a Canadian invention with Lester Pearson’s solution to the Suez Crisis which earned him the Nobel Peace Prize.

  In those days, both major parties would be headed by leaders with strong convictions about what was “the right thing to do” for the world at large and for Canada as a nation. Whether it was Pearson’s aforementioned statesmanship during the Suez Crisis or Deifenbaker’s stance, very much ahead of its time, on the issue of South African Apartheid. As a nation we seemed to have some kind of functional moral compass which had important divergences from both our UK and US “allies”.

  Today, not so much.

  While Chretien did manage to keep Canada out of the disastrous and criminal invasion of Iraq, he did join in the occupation of Afghanistan, which seemed a turnkey, off-the-shelf intervention just waiting for an excuse to happen. Ostensible reasons for the invasion aside (i.e. like that it was actually legal), the one big outcome of the invasion (and our participation in it) has been the steady increase in heroin output of that country ever since.

   

  

   

  On a parallel track to neo-Con flavoured designs on a “new American Century” south of the border, the co-opting of Canadian diplomacy began in earnest during the 90’s with the country’s largest corporate interests positioning for a “Grand Bargain” with the US, it was once again 9/11 that provided the catalyst for putting these policy tracks into overdrive.

  The Canadian Council of Chief Executives (CCCE) sent a delegation to Washington in April 2003 where they received their marching orders from US overseers, namely DHS Secretary Spencer Abraham and (once again) Richard Perle (congenially known within the beltway by now as “The Prince of Darkness”). The latter delivered a particularly moving lecture* to the corporate elite in attendance that Canada had to unambiguously “get with the program” and step up as an unwavering ally of US foreign policy. This included dramatically increasing military and security commitments.  This was framed as the “ante” for having the next round of Free Trade talks with the USA. (*detailed in Ricardo Grinspun and Shamsin Yamsie’s “Who’s Canada? Continental Integration, Fortress North America, and the Corporate Agenda“)

  The meeting is considered a defining moment in Canada/US relations. The Paul Martin Liberals quietly adopted the CCCE agenda and which was then embraced more aggressively by Team Harper.

  Again we have the incumbent parties following the same path, largely dictated by an external power along which we find ourselves today: party to the latest military engagement in Syria, actively complicit in ubiquitous surveillance both at home and abroad and none of it open to discussion, debate or alternatives among the citizens of Canada.

  ISIS did not arrive on a comet from deep space

  To borrow a phrase coined by David Stockman in his book about the (mal)response to the 2008 Gobal Financial Crisis, “ISIS did not arrive on a comet from deep space”.

  Rather, they are the consequences of deliberately executed campaigns of intervention and subversion designed to produce exactly the kind of humanitarian crisis occurring now. Granted, it gets messy when the fallout from grand stratagems fail to confine themselves to the target countries of Syria, Iraq and Iran, but these “deep-policy” ideologues have a track record for underestimating “blowback”.

  The rise of ISIS then, is hardly surprising. Nor is their meteoric ascent within their sphere of operations. For decades, we’ve been usurping any democratically elected governments in the target countries, instead propping up strongmen and authoritarian regimes, inducing various factions into war with each other (supplying both sides), dropping and droning bombs from the sky and occasionally stepping in with boots-on-the-ground military invasions.

  Now we’re shocked when another reactionary, fundamentalist, West-hating movement steps into the vacuum?

  Former NATO Secretary Generals Javier Solana and Jaap de Hoop Scheffer lamented that any further intervention and escalation in Syria would have precisely the opposite effects of their ostensible intentions:

  “Rather than secure humanitarian space and empower a political transition,Western military engagement in Syria is likely to provoke further escalation on all sides, deepening the civil war and strengthening the forces of extremism, sectarianism and criminality gaining strength across the country. The idea that the West can empower and remotely control moderate forces is optimistic at best. Escalation begets escalation and mission creep is a predictable outcome if the West sets out on a military path [emphasis added].”

  Today in Syria, the situation tragically comic as the West supplies it’s “anti-Assad rebels” with weapons, who often end up switching allegiances to ISIS.

  The truth is that what Solana & Scheffer were cautioning against has been going on since  at least 1949 (the date of the first of six Western engineered military coup d’etats in Syria) and what we have today is the result of it.

  Conclusion: Sooner or later….

  “Sooner or later, everyone sits down to a banquet of consequences…” – Robert Louis Stephenson

  So if you really want to make “refugees” the election issue “du jour”, one can waste a lot of time watching the mainstream incumbent parties bicker over the “right” number of refugees to allow into Canada or how much taxpayer money to throw at aid, or even whether more Canadian “boots on the ground” should be headed over there on various “peace keeping” escapades.

  OR,

  You could ask the really hard hitting questions like

  • Why is there a refugee crisis in the first place?
  • Would there be one if Western foreign policy wasn’t one of destabilization and subversion going back for decades?
  • Could what we call “terrorism” possibly be an asymmetric response to our pre-emptive (and often brutal, often bloody, often murderous) subversion of foreign governments whom we deem unfavourable to our interests?

  And, given the newer data points such as 1) the arrival of Russia’s military in Syria and 2) Canada’s deployment of military trainers to the Ukraine, another good question could be

  • Would you mind very much if we got into a shooting war with Russia?

  Finally:

  • Given Canada’s complicity in this mess, both under Conservatives and Liberal regimes, should either of those parties be taken seriously in their earnest looking hand wringing?

  The major parties are happy to serve up easily digestible over-simplified “solutions” to these election issues.

  It takes a Libertarian to ask the truly relevant, albeit uncomfortable questions like “what was our part in it?” and to face the unpleasant facts that our society, our country isn’t an ubermoral saviour to these “Arab savages” rending their own societies apart, but that we are were actually complicit in implementing and profiting from policies and actions that helped cause it and we are collectively happier to be ignorant of that.

  Now you can wonder how many of these refugees we should take in.

  *  *  *

  Mark Jeftovic is the Libertarian Party candidate for Parkdale / High-Park in the upcoming federal election.

  

  

  

  

  

• David Stockman Sums It All Up In 3 Minutes

  Stockman unleashes truthiness hell on Bloomberg TV: "Federal Reserve [actions] will have disastrous long-term consequences… when you deny price-discovery in the market for so long, it is a massive subsidy to speculation… In an era of peak debt, the only thing zero interest rates achieve is create an enormous incentive for Wall Street to gamble more and more recklessly…"

   

  195 seconds… watch, listen, and think…

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• Guess Who Was Buying Stocks (Again)?

  Corporate buybacks, based on BofAML's client flows, are at the highest four-week-average level in 18 months as the irrationally non-economic buyers of last resort pile in to tumbling prices to maintain their CFO's and CEO's year-end performance bonuses. While hope remains that this pick-up will continue, the demise of the corporate credit market suggests the last greater fool just entered the market…

  So who was buying? Simple! Companies, again!

  

   

  But do not expect it to last…

  

   

  It's hard to justify blowing cash on buybacks when the cost of financing is surging… and liquidity is drying up for even the best issuers.

  This week's calendar (of corporate issuance) looks huge (as evident in higher yields thanks to rate-locks) but it all seems desperate last-minute deals (with decent concessions) ahead of The Fed's decision.

  Charts: Bloomberg

  

  

  

  

  

• Sep 10 – Hilsenrath: Agreement on September Hike Eludes the Fed

   

  EMOTION MOVING MARKETS NOW: 13/100 EXTREME FEAR

  PREVIOUS CLOSE: 13/100 EXTREME FEAR

  ONE WEEK AGO: 10/100 EXTREME FEAR

  ONE MONTH AGO: 14/100 EXTREME FEAR

  ONE YEAR AGO: 42/100 FEAR

  Put and Call Options: EXTREME FEAR During the last five trading days, volume in put options has lagged volume in call options by 23.44% as investors make bullish bets in their portfolios. However, this is still among the highest levels of put buying seen during the last two years, indicating extreme fear on the part of investors.

  Market Volatility:  NEUTRAL The CBOE Volatility Index (VIX) is at 26.23. This is a neutral reading and indicates that market risks appear low.

  Stock Price Strength: EXTREME FEAR The number of stocks hitting 52-week lows exceeds the number hitting highs and is at the lower end of its range, indicating extreme fear.

  PIVOT POINTS

  EURUSD | GBPUSD | USDJPY | USDCAD | AUDUSD | EURJPY | EURCHF | EURGBP| GBPJPY | NZDUSD | USDCHF | EURAUD | AUDJPY 
  

  S&P 500 (ES) | NASDAQ 100 (NQ) | DOW 30 (YM) | RUSSELL 2000 (TF) | Euro (6E) |Pound (6B)

  EUROSTOXX 50 (FESX) | DAX 30 (FDAX) | BOBL (FGBM) | SCHATZ (FGBS) | BUND (FGBL)

  CRUDE OIL (CL) | GOLD (GC)

   

  MEME OF THE DAY – DUBAI GOLD DEALER OLYMPICS

   

  UNUSUAL ACTIVITY

  RHT @$.75 .. SEP 72.5 CALL Activity 3300+ Contracts

  IP SEP WEEKLY2 42.5 CALLS @$.62 on offer 1300+ Contracts

  KHC SEP 70 PUT ACTIVITY 2K+ @$.50 on offer

  KRO Director Purchase 967 @$6.905 Purchase 1,033  @$6.909

  TTS SC 13G/A .. Tremblant Capital Group .. 11.69%

  More Unusual Activity…

   

  HEADLINES

   

  Bank of Canada Holds Interest Rate at 0.5%

  US JOLTS Job Openings (Jul): 5.753m (est 5.3m, rev prev 5.323m)

  US MBA Mortgage Applications (Sep- 04): -6.2% (prev 11.30%)

  Larry Summers: A Fed hike is an unnecessary risk –FT

  Hilsenrath: Agreement on September hike eludes the Fed –WSJ

  S&P cuts China 2016 growth view to 6.3%, 2015 unch

  CA Housing Starts Aug: 216.9K (est 190.5K; rev prev 193.3K)

  CA Building Permits (MoM) Jul: -0.60% (est -5.00%; rev prev 15.50%)

  UK NIESR GDP Estimate (3M/3M) (Aug): 0.50% (rev prev 0.60%)

  ECB’s Praet: QE is largely producing desired effects

  ECB’s Mersch: QE helping bank funding

  BoJ’s new measure of core CPI accelerates in July

  BOJ considering trimming price outlook, export view

   

  GOVERNMENTS/CENTRAL BANKS

  Bank of Canada Holds Interest Rate at 0.5% –WSJ

  Larry Summers: A Fed hike is an unnecessary risk –FT

  Hilsenrath: Agreement on September hike eludes the Fed –WSJ

  ECB’s Praet: QE is largely producing desired effects –ForexLive

  ECB’s Mersch: QE helping bank funding –Rtrs

  BoJ’s new measure of core CPI accelerates in July –Rtrs sources

  BOJ said to be thinking about trimming price outlook, may also cut export view –ForexLive

  S&P cuts China 2016 growth view to 6.3%, 2015 unch –BBG

  EU’s Juncker: Greece must respect bailout, or there will be EU reaction –Rtrs

  COMMENT: FT’s Martin Wolf makes the case for keeping rates low –FT

  GEOPOLITICS

  Iran’s Supreme Leader Rules Out Negotiations With U.S. Beyond Nuclear Issues –WSJ

  U.S. Voices Concern Over Russia?s Buildup in Syria –WSJ

  FIXED INCOME

  US Tsy yields fall as buyers return to market –Rtrs

  US sells 10-year notes at 2.235% vs 2.245% WI –ForexLive

  NY banking regulator in US Treasury market probe –FT

  FX

  EUR: Dollar rises with stock rallies that sting euro –Rtrs

  JPY: Dollar rises against yen as Abe promises tax cuts –MW

  GBP: Pound’s prospects murky after UK setback –FT

  EM FX: Emerging Market Currencies Strengthen in early play –WSJ

  ENERGY/COMMODITIES

  WTI futures settle 3.9% lower at $44.15 per barrel

  Brent futures settle 3.9% lower at $47.58 per barrel

  CRUDE: EIA lowers 2016 US demand growth forecast –ForexLive

  CRUDE: Saudi Arabia August oil output dips slightly –CNBC

  CRUDE: North Sea faces ?12bn investment collapse from oil price slump –Tele

  METALS: Gold Prices Tread Water Ahead of Federal Reserve Meeting –WSJ

   

  EQUITIES

  S&P 500 unofficially closes down 1.4% at 1,942

  DJIA unofficially closes down 1.4% at 16,256

  Nasdaq unofficially closes down 1.2% at 4,756

  TECH: Apple launches new iStuff, shares softer

  M&A: KKR to Buy Stake in London Hedge-Fund Firm Marshall Wace –WSJ

  TECH: Alibaba Braces for Sales Slowdown as China?s Growth Falters –WSJ

  TECH: Tax concerns on Yahoo’s Alibaba stake spinoff prompt target cuts –Rtrs

  INDUSTRIALS: Lockheed Martin to Cut 500 Information Systems Jobs –ABC

  RETAIL: Barnes & Noble sales fall for 5th straight quarter –Rtrs

  CRA: Fitch Affirms BT At ‘BBB’; Outlook Positive

  ASIA EQUITIES: Japan Shares Jump Most in Seven Years –WSJ

  BANKS: Credit Agricole may pay about $900 million in U.S. sanctions probes – Rtrs sources

  F&B: McDonald’s moving to ‘cage-free’ eggs in US, Canada over 10 years –Rtrs

  CSUITE: United Continental: CEO Exit ‘Might Just Be What It Needs’ –Barrons

  EMERGING MARKETS

  Chinese Primer Li: Economy Faces Downward Pressure –BBG

  Chinese Primer Li: China Doesn’t Want Currency War, Reassures on Growth –Rtrs

   

  China Is Changing How It Reports GDP to Meet IMF’s Standard –BBG

  

  

  

  

  

• Russia Sends More Tank Landing Ships, Military Aircraft To Syria

  On Wednesday, Jean-Claude Juncker unveiled Europe’s preliminary “plan” to try and cope with the massive influx of asylum seekers fleeing the violence in war-torn Syria. Brussels’ approach to the crisis will reportedly involve a list of so-called “safe countries of origin.” As WSJ reported earlier today, migrants from those countries who are denied asylum will be subject to fast-track repatriation.” Here’s what we said about the proposed “safe” countries list:

  Because there are “safe” countries of origin that must mean there’s a list of “unsafe” countries of origin as well, and we can only assume that list includes Syria, which Europe will make safer by bombing it. 

  That was a reference to reports out earlier this week that suggested French President Francois Hollande’s response to Europe’s biggest refugee crisis since World War II would involve bombing the very place from which the refugees are fleeing. Here’s what Bloomberg (and Hollande himself) said on Monday:

  Hollande is seeking a response to Europe’s biggest refugee crisis since World War II in tune with public opinion that remains largely hostile to a massive increase in immigration.

   

  “I’ve asked the minister of defense to begin reconnaissance flights over Syria from tomorrow that would allow for strikes against the Islamic State,” Hollande said at a press conference in Paris on Monday. Hollande, who ruled out sending troops, said Syrian leader Bashar al-Assad is an impediment to peace in the country.

  In many ways, this looks like a replay of the infamous YouTube chemical weapons videos which were supposed to serve as the original pretext for Western strikes on the Assad regime. That is, the US and its allies are determined to find the right mix of propaganda to justify a ground incursion and this time around, that mix will apparently include heart-wrenching pictures of migrants. As we said on Tuesday, the real tragedy here is that now, the pitiable plight of Syria’s beleaguered masses will be used as an excuse to cause them still more pain and suffering.

  Well sure enough, on Wednesday, we got still more evidence that Western Europe is set to join the US and Turkey (and soon Saudi Arabia, Jordan, and Qatar) in conducting bombing raids in Syria. Here’s WSJ:

  Faced with a burgeoning refugee crisis in Europe sparked by global extremism, U.S. and European officials said Tuesday there is a growing consensus that the multinational military campaign against Islamic State must focus more on targeting the group’s nerve centers in Syria.

   

  With thousands of people flowing into Europe every day, France and England are both poised to set aside long-standing reservations and join Washington in carrying out airstrikes against Islamic State in Syria.

   

  Western nations and U.S. allies also are responding to rising concerns about extremists in Syria planning attacks on European targets, such as a thwarted attempt last month by a lone gunman to kill passengers on a Paris-bound train.

   

  That attack was a key factor for France in deciding to launch reconnaissance missions over Syria. French President François Hollande said Monday that his military is poised to carry out airstrikes in Syria.

   

  On Tuesday, government officials in London said the British military also is prepared to continue targeting Islamic State extremists in Syria suspected of plotting attacks in England. The pledge came after the U.K. announced its first targeted airstrikes in Syria, which killed two British extremists.

   

  Prime Minister David Cameron has renewed his push to convince a reluctant Parliament to clear the way for England to carry out broader airstrikes against Islamic State, also known as ISIS or ISIL, which has established its de facto capital in the city of Raqqa, Syria.

  How France and the UK plan to explain, if pressed, the logic behind the idea that dropping more bombs on Syria should leave Syrians more predisposed to reminaing in the country as opposed to fleeing to Europe is anyone’s guess, but even WSJ is starting to pick up on the fact that the timing here looks rather convenient, as the UK and France are now set to throw their respective air forces into the mix just as Russia moves to provide Assad with badly needed reinforcements at Latakia. Here’s WSJ again:

  As Europe deepens its involvement, Russia appears to be increasing its military role in Syria. U.S. military officials said Tuesday that Russia has sent in new planes, personnel and equipment in what appears to be an effort to set up a new air hub on the Syrian coast.

   

  American officials are concerned the Russian buildup is an attempt by Moscow to provide more air support for embattled Syrian President Bashar al-Assad, but Moscow’s intentions aren’t yet clear. The moves by Moscow could increase the risk that members of the U.S.-led coalition could face off against Russian jets in the skies above Syria.

  Speaking of Russia and their expanded presence, it now looks as though the Kremlin may soon abandon all pretense that its soldiers are not in Syria to fight – although obviously, no one on either side is yet prepared to drop the ISIS charade that has served, from the beginning, as the smokescreen politicians use to keep the public hyptnotized and blissfully unaware of their respective governments’ real geopolitical agendas. Here’s Bloomberg:

  Russia said it’s ready to look at measures to fight Islamist insurgents in Syria if the conflict worsens, rejecting U.S. criticism of its deepening military involvement in the Middle Eastern country.

   

  “Russia has never made a secret out of its military cooperation with Syria,” Foreign Ministry spokeswoman Maria Zakharova Zakharova said in Moscow. “Russian specialists are helping Syrians to use Russian equipment. It’s difficult to understand the anti-Russian hysteria in this regard.”

  And then from Reuters:

  Russia has sent two tank landing ships and additional aircraft to Syria in the past day or so and has deployed a small number of forces there, U.S. officials said on Wednesday, in the latest signs of a military buildup that has put Washington on edge.

   

  The two U.S. officials, who spoke to Reuters on condition of anonymity, said the intent of Russia’s military moves in Syria remained unclear.

   

  U.S. officials have not ruled out the possibility that Moscow may be laying the groundwork for an air combat role in Syria’s conflict to bolster Syrian President Bashar al-Assad.

  And still more: 

  Russian military experts have expanded their presence in Syria over the last year, a Syrian military official said on Wednesday, pointing to a deepening of ties which Washington fears may be a buildup to support President Bashar al-Assad.

   

  “Russian experts are always present but in the last year they have been present to a greater degree,” the Syrian official said. “All aspects of the relationship are currently being developed, including the military one,” he said.

  Finally, Germany has now “warned” Moscow to tread lightly in its support of Assad:

  Germany’s foreign minister warned Russia on Wednesday against increased military intervention in Syria, saying the Iran nuclear deal and new U.N. initiatives offered a starting point for a political solution to the Syrian conflict.

  Has you can see from the above, ISIS – the reason everyone involved cites when asked to explain their interest in intervening militarily in Syria – tends to get lost in the shuffle. That’s not a coincidence. Rather, it simply reflects the fact that, as we noted over the weekend, neither side cares too much about what does or doesn’t happen to Islamic State unless the group’s fate somehow matters in determining whether a post-civil war Syria is still governed by Assad. In short, ISIS has played its role. The Assad regime is destabilized and Damascus is up for grabs. From here on out, it’s all about whether a coalition comprised of the US, Turkey, Saudi Arabia, Jordan, and Qatar ends up in a direct military conflict with Russia and the Assad regime. 

  If you need a bit of anecdotal evidence to support that assessment, just ask people on the ground, many of whom can’t seem to understand, what with all the fanfare about stepped up airstrikes and a more determined coalition, why no one seems to be fighting ISIS. Once more, from WSJ:

  Islamic State fighters intensified their advance in recent days on a town in northern Syria close to a vital supply route for Syrian rebels near the border with Turkey, according to opposition rebels and local residents.

   

  A number of rebel factions are struggling to stave off the militants, who have been gradually encircling the town of Marea about 15 miles south of the Turkish border. Marea is a key town along a 60-mile stretch of the border that Turkey and the U.S. want to clear of Islamic State fighters and the group’s offensive appears aimed at thwarting those efforts.

   

  On Friday, Islamic State briefly entered the town, only to be beaten back by rebels, Marea residents and rebels said. But the rebels have lost three villages.

   

  Though the U.S. and Turkey have said they want to oust Islamic State from this area, rebels in the Marea area say they are battling the militants on their own and complain they have not received much support from either country.

   

  “We are fighting ISIS by ourselves,” said Abu Firas, referring to Islamic State by one of its acronyms. near Marea in the last month.

  Marea is near the so-called “ISIS-free” zone that the US and Turkey sought to establish last month after Erdogan effectively traded Washington access to Incirlik (which gives the US army a forward operating base for what will eventually be a ground incursion in Syria) for NATO’s acquiescence to the extermination of the Kurdish opposition in Turkey. Of course ISIS might have already been routed from the area were it not for the fact that Washington and Ankara have literally forbidden the Kurdish YPG from continuing their highly successful offensive along the Turkish border due to Turkey’s disdain for anything and everything Kurd-related. Given that, one would think that the very least Turkey would do, if it were genuinely concerned about ISIS that is, is make a concerted effort to stop towns like Marea from being captured but instead, Turkish President Recep Tayyip Erdogan’s army is off chasing the PKK in the mountains of Northern Iraq. 

  If you think this is a “friggin’ mess” (to quote the Pentagon) now, just wait until the UK, France, and Germany get involved in the face of an increasingly obstinate Russia. 

  This folks, is the worst circle of foreign policy hell, and it’s brought to you exclusively by governments’ never-ending struggle to gain leverage over one another by controlling the distribution of the world’s energy supply.

  

  

  

  

  

• Brazil Cut To Junk By S&P, ETF Falls 5% Post-Mkt

  It’s not as if the writing wasn’t on the wall, and don’t say we didn’t warn you. 

  Brazil, whose economy officially slid into recession in Q2 – a quarter during which Brazilians suffered through the worst inflation-growth outcome (i.e. stagflation) in over a decade – and whose efforts to plug a yawning budget gap are complicated by political infighting and a growing public outcry against embattled President Dilma Rousseff, has been cut to junk by S&P. 

  • BRAZIL CUT TO JUNK BY S&P; OUTLOOK NEGATIVE

  

  Unsurprisingly, the iShares MSCI Brazil ETF is trading sharply lower AH on the announcement:

   

  S&P’s move comes as the country’s finance minister fights for his political life and as deficits on both the current and fiscal accounts paint a bleak picture, especially in the face of persistently low commodity prices, China’s move to devalue the yuan, and the impossible dilemma facing the central bank which, like its “LA-5” counterparts, can’t hike to combat a plunging currency for fear of exacerbating FX pass through inflation and can’t cut to boost the economy for fear of jeopardizing the 2016 4.5% inflation target.

  

  Expect this to get far, far worse before it gets better. Here’s the headline dump: 

  • S&P SEES BRAZIL REAL GDP CONTRACTION OF ABOUT 2.5% THIS YEAR
  • S&P SEES BRAZIL REAL GDP CONTRACTION OF 0.5% IN ’16
  • S&P SEES BRAZIL REAL GDP MODEST GROWTH IN 2017
  • BRAZIL GOVT DEFICIT TO RISE TO AVG 8% GDP IN ’15, ’16, S&P SAYS
  • BRAZIL WON’T HAVE PRIMARY FISCAL SURPLUS IN ’15, ’16: S&P

  Here’s a look at the country’s twin deficits:

  

  Followed by a more granular look at the Brazilian nightmare:

   

  And in the wake of the most recent GDP data and last week’s confirmation of the budget blues, here’s what Barclays had to say about the economy and the fiscal situation:

  We now forecast a 3.2% fall of real GDP in Brazil in 2015, to be followed by a 1.5% contraction the next year. The downside surprise in Q2 and the deeper recession in the second half of this year also imply a negative contribution to next year’s growth. Household consumption should continue contributing negatively to headline growth, together with fixed asset investment. 

   

  

   

  The disappointment with fiscal execution, coupled with the lack of capacity of the government to negotiate structural changes in how expenditures grow, leads us to expect a fiscal primary deficit for this year and next of 0.3% and 0.5% of GDP, respectively. For 2015, the fiscal measures approved in Congress were reduced meaningfully from the original proposal and are contributing with only 0.53% of GDP to the fiscal balance. Even including those, we forecast total real fiscal revenues to fall 3.2%, as the growth slowdown is having the biggest negative contribution on this year’s result.

   

  

   

  The implication is a downgrade in less than one year. We believe the rating agencies will take off the investment grade rating in H1 16, starting likely in April by S&P, given the increased pace of deterioration of the macroeconomic juncture and the disappointment relatively to the agencies’ forecasts. Moody’s could follow suit in the second half of the year, if it becomes clear that the country will fail to achieve real GDP growth and the primary surplus as percentage of GDP near 2%, as the agency expects for 2017. At this point, it is very hard to foresee any meaningful change in the political and/or economic scenario that could avoid such an outcome.

   

  

  Finally, here’s S&P with more color:

  The negative outlook reflects our view that there is a greater than one–in–three likelihood that we could lower our ratings on Brazil again. We anticiapte that within the next year a downgrade could stem in particular from a further deterioration of Brazil’s fiscal position, or from potential key policy reversals given the fluid political dynamics, including a further lack of cohesion within the cabinet. A downgrade could also result from greater economic turmoil than we currently expect either due to governability issues or the weakened external environment. 

  *  *  *

  

  

  

  

  

  

• Czech Politician Has "Solution" For Refugee Crisis – Concentration Camps

  Following Hungarian cameramen kicking 10-year-old girl refugees, and Czech police hauling immigrants of trains and writing numbers on their arms, it appears the horrors of the past are quickly forgotten when it comes to 'solutions' for the present. As The Jerusalem Post reports, the leader of the Czech 'nationalist' National Democracy Party, has called for refugees to be placed in Terezin – a former Nazi concentration camp – "Why build tent camps for the aliens? We have the beautiful fortress town of Terezin where the aliens could concentrate before they are taken home by trains." Police are investigating whether his comments constitute a criminal act and Czech Jewish leaders have refused to comment on the incident.

  As The Jerusalem Post reports, police in the Czech Republic are investigating comments made on Facebook by an extremist politician calling for refugees to be placed in Terezin, the former Nazi concentration camp.

  Adam Bartos, the leader of the fringe yet vocal far-right nationalist National Democracy Party, published the comments about the site, located in the central European country, on Monday.

   

  

   

  Reacting to the establishment of a refugee camp near the country’s border with Slovakia, Bartos wrote, “Why build tent camps for the aliens? We have the beautiful fortress town of Terezin where the aliens could concentrate before they are taken home by trains.”

   

  A police spokeswoman told the Czech News Agency on Monday that the police will probe whether or not the comments constitute a criminal act. According to Czech law, hate speech and comments inciting national, racial or religious hatred can carry penalties of up to three years in prison.

   

  Bartos is under investigation for four incidents involving allegedly racist, anti-Semitic and violence-inciting remarks. He also keeps a blog titled Hall of Jewish Fame that critics say lists politicians, journalists and other public figures of supposedly Jewish origin.

   

  Bartos’ party failed to gain seats in the European elections last year, the only campaign it has run in under his leadership.

  Terezin, also known as Theresienstadt in German, is located some 40 miles northwest of Prague.

  The town was turned into a concentration and transit camp by the Nazis in 1941. Roughly 144,000 Jewish people were sent there during the Holocaust, most of whom were later transported to extermination camps in occupied Poland. Some 33,000 died in the Terezin camp.

  

  Publicizing the camp for its rich cultural life, the Nazis used the camp as a propaganda tool to fool the Western allies.

  Czech Jewish leaders have refused to comment on the incident.

  *  *  *

  The situation appears dreadful everywhere…

  Absolutely appalling conditions in Hungary detention camps 4 asylum seekers, kept in crowded pens like cattle. pic.twitter.com/Hhr5gMi4SJ

  — Peter Bouckaert (@bouckap) September 9, 2015

  Having unveiled its €780 Million "Compulsory" Refugee Quota Plan, we suspect the union of European nations will be torn asunder as these unfortunate "collateral damage" from American empire-building are tossed around like hot unwanted potatoes… (as we noted before)

  The refugee issue can and will not be solved by the EU, or inside the EU apparatus, at least not in the way it should. Nor will the debt issue for which Greece was merely an ‘early contestant’. The EU structure does not allow for it. Nor does it allow for meaningful change to that structure. It would be good if people start to realize that, before the unholy Union brings more disgrace and misery and death upon its own citizens and on others.

  However this is resolved and wherever the refugees end up living, we, all of us, have the obligation to treat them with decency and human kindness in the meantime. We are not.

  

  

  

  

  

• In Ironic Twist, Stock Crash Leads To First CNBC Ratings Increase In Years

  If CNBC’s intention when moving its Squawk Box crew from Englewood Cliffs in NJ to the Rock Center in Manhattan, not to mention hiring Andrew Ross Sorkin four years years ago (there has been a 23% decline in total viewership since then) was to boost the popularity of the sagging flagship program which is celebrating its 20th anniversary this year, it failed.

  Yet where CNBC won, is in the irony department, because while its ratings had sunk so law at the end of 2014 that – as we first reported – CNBC was forced to ask Nielsen to “stop” counting its viewers, in the past several month Squawk Box’s viewership had experienced a renaissance of sorts. Why? For the same reason CNBC’s viewers had all but disappeared: the recent surge in volatility as a result of the first market correction since 2011, following the most artificial, laughable and central-bank orceshtrated rally in history.

  Ironic, because it is precisely CNBC’s constant cheerleading of what little viewers it had left that pushed the market to such nosebleed levels that on August 24 it suffered its second flash crash in just five years.

  It is even more ironic, because instead of a rational, objective coverage of the newsflow, the constant stream of cherry-picked, “double-seasonally adjusted” good news is precisely why viewers had left the Comcast cable station in droves, realizing the disconnect between the economy and stocks is simply too ridiculous to stomach, and that they are being lied to with every instance of the “BTFD” dogma.

  As a result, it wasn’t until the much dreaded market crash that viewers finally came back. At least some of them.

  

   

  The same pattern is visible when looking at the entire CNBC viewership, for both the 25-54 demographic and total audiences. Still, for what many – and certainly google trends – said was the most dramatic crash since 2008, the recent rebound is simply far too little, and certainly too late.

  

   

  In any event, now that CNBC’s advertisers have seen it can be done, don’t be surprised if suddenly the channel’s “cautiously optimistic” tone undergoes a dramatic transformation for the more objective and/or nuanced. After all, in a day and age when “apps are the next big thing on TV”, suddenly every CNBC anchor is expendable unless revenue quotas are met.

  

  

  

  

  

• Stocks, Commodities, Bond Yields Plunge As "Rally Fueled By Hope" Crushed

  Reuters summed it up (because there really was absolutely nothing at all new from Japan or China)…

  

  h/t @StockCats

  While deadlift fails and etrade babies would be appropriate, the idea of pride coming before the fall (as evidenced by so many talking heads in the last 2 days on mainstream media) seemed summed up perfectly as follows (forward to 2:10 and enjoy):

   

  Before we start, let's apportion some blame – Tim Cook…

  

  Oops…

  

   

  We did warn you…

  AAPL better wrap this up soon or the market will flash crash

  — zerohedge (@zerohedge) September 9, 2015

  But it all started in Asia with some major JPY dumpage (paging Mr. Kuroda) to ramp Nikkei almost 8 ridiculous percent!!

   

  

   

  Japan is already down 500 Points from overnight highs…

  

   

  And the disappointment is a clear inflection point in the markets…

  

   

  But still higher since Friday (for now)…

  

   

  We are going to need some more help from Asia…

  

   

  Dow Futures give us better context for this dead-cat-bounce…

  

   

  Today's ramp was a perfect stop-run to last week's highs…

  

   

  With OPEX looming, one wonder how this relationship will change this week..

  

   

  Still could be worse…

  

   

   

  Treasuries extended losses early on as rate-locks dominated amid heavy corporate issuance but as AAPL rolled over and the "hope/hype" faded, bond yields collapsed…

  

   

  The US Dollar ended unch on the day, driven as usual by EUR, but JPY strength and AUD weakness broke the back of the recent exuberant carry-driven idiocy…

  

   

  JPY carry momo lost its mojo…

  

   

  Despite some weakness in the dollar, commodities rolled over as reflation/stimulus hype faded quickly…

  

   

  With crude crumbling back to the week's lows, closing with a $44 handle…

  

   

  Charts: Bloomberg

  

  

  

  

• Martin Armstrong: "Hillary's Dream Is Evaporating Rapidly"

  Submitted by Martin Armstrong via ArmstrongEconomics.com,

  

  Hillary’s dream of becoming the first woman president is evaporating rapidly. She leads Bernie Sander by only 8 point in New Hampshire when she was supposed to be the big name and her coronation as the next Democratic candidate was claimed to be the safest bet in Washington. But her obstruction of justice has violated everything from Treason taking money from foreign government for her “charity” to dodging subpoenas which was an obstruction of justice and violating the Freedom of Information Act. Her trust rating collapsed to 28%, showing that even Jeb Bush would clean her clock. Bill will come to the rescue to try to raise more money for her, but this not about money.

  As I have stated, there was NO POSSIBLE WAY that the FBI would have started an investigation into Hillary and her obstruction of justice (treason) for conducting personal business intermixed with state business from a private server… unless all along, those of us who understand the interworking of Capitol Hill could read between the lines that Obama supported Biden, not Hillary. I expect Biden to announce he is entering by October. Hillary seems not to fear prosecution whereas any other unwanted candidate would back off with the onset of an investigation into criminal activity. The talk of the town is when will Biden enter. Now the press is picking up saying it’s time for Joe.

  Why did Ross Perot back out of running for president? There was, of course, the lame excuse that was a total lie.

  Perot eventually stated the reason was that he received threats that digitally altered photographs would be released by the Bush campaign to sabotage his daughter’s wedding. Regardless of the reasons for withdrawing, his reputation was badly damaged. Many of his supporters felt betrayed and public opinion polls would subsequently show a large negative view of Perot that was absent prior to his decision to end the campaign^.

   

  Source: Wikipedia

  There was the rumor that there were threats of investigating his airport. His airport does not handle tourists, only cargo. It was alleged that a lot of illegal things were going in and out of his hub. Yet, then there was the Clinton connection. A deal was allegedly promised to Perot that Hillary’s healthcare proposal would give his computer company the contract for the entire healthcare system she was designing. That failed to get through, but allegedly Perot was a ringer to swing the election to Clinton in 1992. This was just another one of those corruption views with the Clintons that people would say you better count your fingers after shaking hands.

  Perot was in the running, but his campaign did not seem focused on winning. What did emerge was Bill Clinton, who suddenly soared from third in the polls to becoming President of the United States. Perot blamed the Republicans for creating doctored pictures of his daughter. Those claims or excuses were pretty crazy. Any doctored photo would have been detected.

  Moreover, I was even asked by leading members in the Republican Party to meet with Perot. I was in Tokyo and agreed to fly to Dallas for a meeting on my way home. That meeting was scheduled for the weekend that he pulled out of the race. They would NEVER have asked me to fly to Texas to meet with him if they were trying to blackmail him with doctored photos nobody ever saw of his daughter. It was a total surprise to them and I landed in Dallas before I could change my flight.

  Perot, claiming to be a fiscal conservative, made no sense when he suddenly blamed Republicans knowing those allegations were benefiting Clinton. Perot exited, then reentered, based upon allegation that the Clintons’ offered him a deal he could not refuse — the biggest contract in computing history. He dropped from 39% before his crazy exit to 19% after reentering, so those votes were key to getting Clinton elected.

  Larry Nichols, Clinton’s key inside man who knew what was going on back then, was the a key witness for the prosecution during his impeachment. Nichols allegedly admitted that Perot was a “ringer” to win the election for Clinton.

  The legacy of the Clinton’s behind the curtain has also been one of questioning everything, two, three, if not four to ten times. The lack of honesty between the words seems to be catching up. Hillary and Bill have been rather notorious for doing whatever it takes to win while lining their pockets at the same time. So it is no surprise that Hillary may fight to the end without ever fearing prosecution for anything she has ever done is in the past.

  

  

  

  

  

• Mom And Pop "Will Probably Get Trampled": Alliance Bernstein Warns On Bond ETF Armageddon

  Right up until China threw the financial world into a frenzy by devaluing the yuan right smack in the middle of a stock market meltdown that Beijing was struggling to contain, bond market liquidity was all anyone wanted to talk about. 

  Of course we’ve been talking about it for years (literally), as have a few of the sellside’s sharper strategists, but earlier this year the mainstream financial news media caught on, followed in short order by the rest of the Wall Street penguin brigade, and before you knew it, even the likes of Jamie Dimon were shouting from the rooftops about illiquid corporate credit markets. 

  The problem, in short, is that the post-crisis regulatory regime has made dealers less willing to warehouse bonds, leading to lower average trade sizes, sharply lower turnover, and a generalized lack of market depth. That in turn, means that trading in size without triggering some kind of dramatic move in prices is more difficult. 

  But that’s not the end of the story. 

  Seven years of ZIRP have i) herded yield-starved investors into riskier assets, and ii) encouraged corporates to take advantage of voracious demand and low borrowing costs by issuing more debt. The rapid proliferation of ETFs and esoteric bond funds has encouraged this phenomenon by giving investors easier access to corners of the bond market where they might normally have never dared to tread. These vehicles have also given investors the illusion of liquidity. 

  Ultimately then, the picture that emerges is of an increasingly crowded theatre (lots of IG and HY supply and plenty of demand) with an ever smaller exit (dealers increasingly unlikely to inventory bonds in a pinch). 

  With that as the backdrop, we bring you the following excerpts from a new paper by Alliance Bernstein:

  We agree that low liquidity is a risk—but by focusing on regulations, we think most investors are underestimating the gravity of that risk. While new regulations have contributed to the problem, there are sev- eral less obvious causes that have the potential to make the liquidity crunch worse.

   

  Some stem from global central bank policies: easy money has driven government bond yields to record lows and forced yield-hungry small investors to crowd into the same trades. Another driver is caution by large institutional investors, who are less and less willing to take the long view in bonds and ride out short-term market volatility.

   

  While regulatory changes have reduced the supply of liquidity, these trends have drastically increased the potential demand for it. None on its own is likely to trigger a major market crisis. But taken together, they’re creating a lot of dry tinder. And the next shock to hit markets— that prompts everyone to sell—might be the spark that sets every- thing ablaze. With volatility in fixed-income markets rising, investors can’t afford to take this risk lightly. 

  And here’s some further color on central banks’ role in creating these conditions (note the bit about what happens when markets that are driven solely by central bank liquidity suddenly reverse course):

  When liquidity evaporated in 2008, central banks worldwide stepped in to provide it by slashing interest rates and eventually buying huge amounts of government bonds. These were emergen- cy policies, for use in an emergency. They were designed to flood the financial system with money, encourage risk-taking and get the economy moving again. Investors responded as policymakers hoped they would—by charging into riskier assets to earn a decent return. 

  If rallies are being driven by central bank liquidity rather than fundamentals, it follows that sell-offs should be, too. In fact, over the past two years, markets have undergone a series of sell- offs—one might call them miniature fire sales—in which bonds, stocks, commodities and other assets have all declined. None of these episodes have lasted as long or done as much damage as the sharply correlated declines in 2008—at least, not yet. Still, the pattern is disturbing.

  Ironically, central bank policies that were applied with the best intentions and designed in part to boost liquidity are helping it to dry up. These easy money policies aren’t over yet. But with the Federal Reserve likely to raise interest rates later this year, the beginning of the end is in sight. 

  Finally, here’s a bit more on the relationship between reduced dealer inventories, increased access to the bond market for “mom-and-pop”, ETF liquidity, and what happens when someone yells “fire”:

  While banks have been retreating from the bond market, investors have been charging into it. This is a direct result of central banks’ easy money policies: by driving interest rates to record lows, these policies pushed investors—even income-starved mom-and-pop investors—into riskier assets, such as high-yield bonds and emerging-market debt, to earn a decent return. In 2014, retail-oriented mutual and exchange-traded funds owned nearly 23% of the US high-yield market, up from 15% in 2006. Retail ownership of investment-grade bonds more than doubled over the same period.

   

  The result: large numbers of investors are crowded into the same trades. That causes prices to trend strongly in one direction, but may leave the market vulnerable to a sudden correction if everyone wants to sell at once.

   

  The fact that small investors are playing a bigger role in these mar- kets is important, because they tend to move into and out of assets often, depending on the latest headline or price trend. In recent years, investors have charged into—and out of—various assets, including high-yield bonds and emerging-market debt, with alarming frequency (Display 4).

   

  

   

  What’s more, a great many investors—and we suspect this even goes for some large ones—are venturing into riskier corners of the credit markets because central banks’ low-interest-rate policies have made it hard for them to find income elsewhere. Many are taking on more risk than they ordinarily would. When interest rates start to rise, government bonds or even cash may suddenly look more attractive, potentially causing a rush for the door.

   

  In theory, investors can exit an open-ended mutual fund or an ETF at will. But the growing popularity of these funds forces them to invest in an ever larger share of less liquid bonds. If everyone wants to exit at once, prices could fall very far, very fast. A lucky few may get out in time. Others will probably get trampled.

  Note that the last passage there is precisely what we began warning about earlier this year and indeed, the relationship between retail flows, ETFs, and shriking dealer inventories was recently the subject of a live debate between Carl Icahn and Larry Fink during which Icahn called BlackRock a “dangerous company” for providing the vehicles through which investors have been allowed to crowd into bonds.

  For an in-depth look at what we’ve called “ETF Phantom liquidty” see our complete guide here, but for now, recall that as Howard Marks warned earlier this year, an ETF “can’t be more liquid than the underlying and we know the underlying can become quite illiquid.” This means that in the event flows into HY (or any other type of fund for that matter) suddenly become largely non-diversifiable (i.e. unidirectional), fund managers will either need to meet redemptions with borrowed cash or else venture into the illiquid markets for the underlying bonds and risk tipping the first dominoe on the way to a firesale. 

  With that, we’ll close by reiterating the fact that no fund manager in the world will be able to line up enough emergency liquidity to avoid tapping the corporate credit market in the event of panic selling in the increasingly crowded market for bond funds. In other words, when the exodus comes, the illiquidity that’s been chasing markets for the better part of seven years will finally catch up, and at that point, all bets are officially off.

  

  

  

  

  

• Economy In Pictures: Is It Strong Enough?

  Submitted by Lance Roberts via STA Wealth Management,

  I have written extensively about the data behind the headline media reports. I have also discussed the importance of the relationship between the underlying data trends relative to broader macroeconomic perspectives.  However, it is sometimes helpful just to view the various economic indicators and draw your own conclusions outside of someone else's opinion. 

  With the economy now more than 6-years into an expansion, which is long by historical standards, the question for you to answer by looking at the charts below is:

  "Are we closer to an economic recession or a continued expansion?"

  

  How you answer that question should have a significant impact on your investment outlook as financial markets tend to lose roughly 30% on average during recessionary periods.  However, with margin debt at record levels, earnings deteriorating and China struggling with a sinking economy, this is hardly a normal market environment within which we are currently invested.

  Therefore, I present a series of charts which view the overall economy from the same perspective utilizing an annualized rate of change. In some cases, where the data is extremely volatile, I have used a 3-month average to expose the underlying data trend. Any other special data adjustments are noted as well.

  ---

  Leading Economic Indicators

  

  Durable Goods

  

  

  Investment

  

  

  

  ISM Composite Index

  

  Employment & Industrial Production

  

  

  

  To understand more about the difference between the BLS employment report with and without the Birth/Death adjustment read this.

  

  Retail Sales

  

  

  Social Welfare

  

  The Broad View

  

  Economic Composite

  (Note: The Economic Composite is a weighted index of multiple economic survey and indicators – read more about this indicator)

  

  If you are expecting an economic recovery, and a continuation of the bull market, then the economic data must begin to improve markedly in the months ahead. The problem has been that each bounce in the economic data has failed within the context of a declining trend. This is not a good thing and is why we continue to witness an erosion in the growth rates of corporate earnings and profitability. Eventually, that erosion combined, with excessive valuations, will weigh on the financial markets which is potentially much of what we are witnessing now.

  For the Federal Reserve, these charts make the case that continued monetary interventions are not healing the economy, but rather just keeping it afloat by dragging forward future consumption.  The problem is that it leaves a void in the future that must be continually filled. 

  The question on everyone's mind is whether the economy is strong enough to withstand rate hikes by the Federal Reserve? In my opinion, the answer is no. The economy continues to ebb and flow between weak growth and no growth. This puts the Federal Reserve at risk of a policy mistake that could trip the economy into an outright recession. While there have certainly been positive bumps in the data, as pent-up demand is released back into the economy, the inability to sustain growth is most concerning.

  But then again, that is just what I see. 

   

  

  

  

  

  

• Greenspan: “Debt, Deficits and Entitlement Programs Are All Coming to a Head In a Few Months, All Over the World”

  Former Fed chief Alan Greenspan told CNBC last week:

  Debt, deficits and entitlement programs are all coming to a head in a few months, all over the world.

  This is very interesting, given that financial luminaries such as Ray Dalio, Kenneth Rogoff, Bill Gross, Kyle Bass, BCA Research and John Mauldin think that we’re at the end of a debt supercycle.

  

  

  

  

• How To Beat Every Hedge Fund in Just 2 Trades & 4 Hours A Day

  Forget Risk-Parity… ignore volatility-targeting… Risk management is for losers, value-investing is for dummies, and chasing momentum is for suckers… The path to successful trading in the new normal is easy… and involves just 4 simple steps…

  Step 1: Put on Pants;

  Step 2: Buy S&P 500 Futures at Midnight ET;

  Step 3: Sell S&P 500 Futures at 4amET;

  Step 4: Go back to bed…

   

  

   

  Probably the most stunning chart we have ever seen – note the red line’s performance – minimal drawdown, maximal return…

   

  h/t @NanexLLC

  

  

  

  

  

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