- US Military Admits It "Misplaced" Black Plague Samples
Back in May, the US military was forced to admit that it had done something really stupid and what’s great about the story is that it requires very little in the way of explanation and/or added color to explain why what happened can be fairly classified as an example of sheer governmental incompetence. Put differently: this story speaks for itself. Here’s a recap:
According to CNN, “four lab workers in the United States and up to 22 overseas have been put in post-exposure treatment, a defense official said, following the revelation the U.S. military inadvertently shipped live anthrax samples in the past several days.” The army apparently thought they were shipping samples rendered inactive by gamma radiation last year, but that clearly was not the case because when a Maryland lab received their sample last Friday they were able to grow live Bacillus anthracis. The lab reported their concerns to the CDC. By Saturday afternoon, labs in Maryland, Texas, Wisconsin, Delaware, New Jersey, Tennessee, New York, California and Virginia were notified that the US military had accidentally mailed them the deadly bacteria. A sample sent to a US base in South Korea was destroyed on Wednesday.
That came just a few months after the CDC admitted to mishandling an Ebola sample, potentially exposing a dozen people to the deadliest virus known to mankind.
Needless to say, the story grabbed headlines across the country as Americans struggled to understand how it’s possible that the US army could possible have managed to unknowingly jeopardize dozens of lives by FedEx-ing live anthrax to nine states and one foreign country.
Well don’t look now, but the DoD is out warning that the army might have also mishandled samples of the black plague which isn’t known to be dangerous unless you count the time it wiped out 60% of Europe’s entire population. Here’s more from CNN:
The U.S. Department of Defense is looking into possible mishandling of bubonic plague and equine encephalitis samples at its laboratories, a Pentagon spokesman said Thursday.
The new inquiry is part of an investigation into the mishandling of anthrax at Department of Defense labs, Pentagon spokesman Peter Cook said.
The department hasn’t determined whether samples containing plague bacteria and specimens of the deadly virus were shipped from its labs, Cook said.
The latest investigation started after CDC inspectors found a sample of the plague in a freezer outside of a containment area on August 17 at the Edgewood Chemical Biological Center in Maryland, Cook said.
Investigators are working to determine whether the sample posed an “infectious threat,” Cook said. Army tests found it was not infectious.
“That’s the scientific work that’s being done at this particular time, determining exactly what happened there, and whether or not … there was mislabeling,” he said.
Yersinia pestis, the same type of bacterium that was responsible for the plague pandemic that wiped out 60% of the European population between the 14th and 17th centuries, maintains a foothold in the United States and around the globe in rodents and the fleas that live on them.
Today, the infections are treatable with antibiotics if they’re caught early enough. Since 1970, there have been anywhere from a few to a few dozen cases of plague every year in the United States, most of them occurring in Western states, according to the Centers for Disease Control and Prevention.
Yes, only “a few to a few dozen cases of plague” per year, but that bubonic dearth is nothing the US military can’t fix with a few “mislabed” samples and a FedEx account.
For their part, Fred Upton (chairman of the House Energy and Commerce Committee) and Frank Pallone (ranking Democrat) are incredulous: “Anthrax being mishandled is disconcerting enough, but now the mishandling also includes [the] plague.” Here’s a bit more from USA Today:
The Pentagon’s most secure laboratories may have mislabeled, improperly stored and shipped samples of potentially infectious plague bacteria, which can cause several deadly forms of disease, USA TODAY has learned.
The Centers for Disease Control and Prevention flagged the practices after inspections last month at an Army lab in Maryland, one of the Pentagon’s most secure labs. That helped prompt an emergency ban on research on all bioterror pathogens at nine laboratories run by the Pentagon, which was already reeling from revelations that another Army lab in Utah had mishandled anthrax samples for 10 years.
Army Secretary John McHugh ordered the research moratorium on Sept. 2, Pentagon officials say, out of an abundance of caution.
The suspect specimens, which may be live despite being labeled as killed or weakened, indicate a wider range of dangerous bioterror pathogens being handled using sloppy safety practices at laboratories operated by the U.S. military. They also further illustrate the risks faced by other scientists who rely on pathogen “death certificates” to know whether or not a provided sample is still infectious and can be worked with safely without special protective equipment. An ongoing USA TODAY Media Network investigation has revealed numerous mishaps at government, university and private labs that operate in the secretive world of biodefense research prompting growing concern in Congress and among biosafety experts.
And while all of the above may look, on the surface, like cause for concern, you shouldn’t worry because ignorance is bliss and the US government is doing its best to make sure that you remain in the dark about anything that might actually be important:
Pentagon spokesman Peter Cook: “We’re trying to be as forthcoming as we can be right now without alarming the public.”
- A Libertarian Stand On Immigration: Refugees and Migrants In A World Of Government Meddling
Submitted by Per Bylund via The Mises Institute,
[Updated Author’s Note: The issue of immigration has only become more pressing over the ten years that have passed since this article’s original publication. And, unfortunately, the libertarian movement has not reached a consensus on this issue.
But it should be easy, considering how government is at both ends of the problem: government is the number one reason people choose to escape their countries, whether because of governments’ war or devastating poverty due to the lack of opportunities in regulated markets; and government is the reason ordinary people, in a desperate state because their lives have been forcefully uprooted, have a hard time choosing where to lead their lives in peace. The desperation is due to the so-called “failings” of their own governments, and augmented by ours.
I too have fled my country, though not because I’m fearing for my life but because I sought a better life and greater opportunities. While the immigration issue generally focuses on people from poor countries with little skill or education, it is hardly the case that governments welcome people at the other end of the spectrum: the highly productive, highly educated, and hard-working. On the contrary, government is the least forgiving, least reasonable, and most costly when it deals with non-citizens — those who cannot hold government officials accountable in any sense and do not have a voice. This should make immigration a prime target for the libertarian argument for freedom, peace, and property.
Immigration Controls and the State
The pre-1914 world saw no immigration issues or policies, and no real border controls. Instead, there was free movement in the real sense; there were no questions asked, people were treated respectfully and one did not even need official documents to enter or leave a country. This all changed with the First World War, after which states seem to compete with having the least humane view on foreigners seeking refuge within its territory.
The “immigration policies” of modern states is yet another licensing scheme of the twentieth century: the state has enforced licensing of movement. It is virtually impossible to move across the artificial boundaries of the state’s territory in the search for opportunity, love, or work; one needs a state-issued license to move one’s body, be it across a river, over a mountain, or through a forest. The Berlin Wall may be gone, but the basic principle of it lives and thrives.
Immigration controls are not different from other kinds of licensing even though it has been awarded a special name. Licensing has the same result regardless of what is licensed: licensing of physicians causes poor health care at higher cost just as licensing taxi businesses causes poor and untimely service at high cost — licensing on movement means restricted freedom and higher taxes for people (whether “citizens” or “foreigners”). From a libertarian point of view it should be clear that all licensing needs to be done away with, including licensing for immigrants.
Yet the immigration issue seems to be somewhat of a divide within libertarianism, with two seemingly conflicting views on how to deal with population growth through immigration. On the one hand, it is not possible as a libertarian to support a regulated immigration policy, since government itself is never legitimate. This is the somewhat classical libertarian standpoint on immigration: open borders.
On the other hand, the theory of natural rights and, especially, private property rights tells us anyone could move anywhere — but they need first to purchase their own piece of land on which to live or obtain necessary permission from the owner. Otherwise immigration becomes a violation of property rights, a trespass. This is an interpretation of a libertarian-principled immigration policy presented by Hans-Hermann Hoppe a few years ago, which since then has gained increasing recognition and support.
To a non-libertarian bystander, the discussion of the two alternatives must seem quite absurd. What is the use of this libertarian idea of liberty, if people cannot agree on a simple issue such as immigration? I intend to show that the libertarian idea is as powerful as we claim, and that there is no reason we should not be able to reach consensus on the immigration issue. Both sides in this debate, the anti-government-policy as well as the pro-private-property, somehow fail to realize there is no real contradiction in their views.
The Open Borders Argument
The people advocating “open borders” in the immigration issue argue state borders are artificial, they are creations based on the coercive powers of the state, and therefore nothing about them can be legitimate. As things are, we should not (or, rather: cannot) regulate immigration. Everyone has a right to settle down and live wherever they wish. This is a matter of natural right; no one enjoys the right to force his decision upon me unless it is an act of self-defense when I am violating his rights.
In a world order based on natural rights, this would be true. It is a golden rule, a universal rule of thumb proscribing that I’ll leave you alone if you leave me alone; if you attack me or try to force something or someone on me, I have a right to use force to defend myself and what is mine.
The problem with this idea is that it has too much of a macro perspective. While arguing there should be no states and therefore no state borders, it presents arguments with an intellectual point of departure in the division of mankind into territorial nationalities and ethnicity. It is simply not possible to make conclusions on immigration to, say, the United States, if we start our argument from the libertarian idea. What is “immigration” in a world with no states?
The Pro-Property Argument
A less macro view on immigration is taken for granted in the pro-property argument. Here, the individual’s natural right to make his own choices and his right to personal property is the point of departure. Since we all have in our power to create value through putting our minds and bodies to work, we also enjoy a natural right to do as we please with that which we have created and place ourselves wherever we have property owners or guests. Or, as Hoppe puts it, “[i]n a natural order, immigration is a person's migration from one neighborhood-community into a different one.”
Consequently, the immigration issue is in real terms solved through the many choices made by sovereign individuals; how they act and interact in order to achieve their goals. There can simply be no immigration policy, since there is no government — only individuals, their actions and their rights (to property). The “open borders” argument is therefore not only irrelevant, since it has a macro point of view; it also fails to realize property rights as a natural regulation of movement. Since all property must be owned and created by the individual, government cannot own property. Furthermore, the property currently in government control was once stolen from individuals — and should be returned the second the state is abolished since property rights are absolute. There is consequently no unowned land to be homesteaded in the Western world, and so “open borders” is in essence a meaningless concept.
Libertarian Utopia
Immigration will thus be naturally restricted in a free society, since all landed property (at least in the Western world) is rightfully owned by self-owning individuals. Just like Nozick argues in his magnum opus Anarchy, State, and Utopia, a society based on natural rights should honor property rights in absolute terms, and therefore the rightful owners of each piece of property should be identified despite the fact that humankind has been plundered by a parasitic class for centuries.
What is to be considered just property when the welfare-warfare state is eventually abolished is not at all clear. Can one take for granted that the subjects (citizens) of a certain state have the right to an equal share of what is currently controlled by the government? Are they, at all, the rightful owners to what they currently control with the state’s legal protection? If we intend to seek the just origin of property, we need to roll back all transactions until the times before the modern state, before monarchies and feudalism, and probably to a time before the city states of ancient Greece. If we do, how should we consider the produced values of the generations we’ve effectively dismissed?
There is probably no way to sort out this unbelievable mess along the lines of absolute property rights. It should be dealt with this way, but I dare say it will be a practical issue when we get to that point, rather than a philosophical one.
A State Immigration Problem
Another problem of immigration and property arises from the social welfare system financed by money extorted from citizens. With the open borders argument, private property rights might be undermined even further if immigrants are entitled to special rights such as housing, social security, minority status and rights, etc. Also, immigrants will automatically become part of the parasitic masses through enjoying the common right to use public roads, public schooling, and public health care — while not paying for it (yet).
The concept of private property rights seems to offer a solution to this, but it is not really a way out: it is not as simple as “private property rights — yes or no?” Private property rights is a philosophical position offering a morally superior fundamental framework for how to structure society, but it does not offer guidance in what to do with non-property such as that currently controlled by government.
It is deceivingly simple to claim all of the state’s subjects have just claims to “state property” since they are entitled to retribution for years of rights violations. This is, however, only part of the truth. It is also a matter of fact that all private production to some degree is part of the rights violation process, with direct state support through subsidies, tax breaks, patent laws, police protection, etc., or indirectly through state meddling with currency exchange rates, “protective” state legislation, through using publicly-owned and maintained property and services for transportation, and so on. There is simply no such thing as just private property anymore in the philosophical sense.
Therefore, it is impossible to say immigrants would be parasites to a greater degree than, e.g., Bill Gates: the Microsoft Corporation has benefited greatly thanks to state regulation of the market, but has also been severely punished in a number of ways. We are all both victims and beneficiaries. Of course, one might argue that forced benefits are not really benefits, but only one aspect of oppression. Well, in that case it would also be true for immigrants, who too are or will be victims of the state (but perhaps not for as long as you and I).
A Libertarian Stand on Immigration
We must not forget libertarianism is not a teleological dogma striving for a certain end; it rather sees individual freedom and rights as the natural point of departure for a just society. When people are truly free, whatever will be will be. Hence, the question is not what the effects of a certain immigration policy would be, but whether there should be one at all.
From a libertarian point of view, it is not relevant to discuss whether to support immigration policy A, B, or C. The answer is not open borders but no borders; the libertarian case is not whether private property rights restrict immigration or not, but that a free society is based on private property. Both of these views are equally libertarian — but they apply the libertarian idea from different points of view. The open borders argument provides the libertarian stand on immigration from a macro view, and therefore stresses the libertarian values of tolerance and openness. The private property argument assumes the micro view and therefore stresses the individual and natural rights.
There is no conflict between these views, except when each perspective is presented as a policy to be enforced by the state. With the state as it is today, should we as libertarians champion open borders or enforced property rights (with citizens’ claims on “state property”)? Both views are equally troublesome when applied within the framework of the state, but they do not contradict each other; they are not opposites.
- China Fixes Yuan Stronger After Premier Li Says "No QE" Amid Record High, Surging Pork Prices
Despite the biggest intervention surge in offshore Yuan on record ("predatoring" any excess speculative fervor on PBOC actions in the spot market), a 'PBOC Advisor' noted that "long-term FX intervention was not their target." The Hong Kong Dollar is pressuring the strong-end of its range against the USD, trapped between the USD peg and weak economy (like so many others). Chinese stocks continue to tread water as China's Premier Li rules out QE (perhaps because pork prices are already at record high prices and are rising at a record pace), exclaiming that there "well be no hard landing," but BofAML expected 50-100bps more RRR cuts this year. PBOC strengthened the Yuan Fix tonight (just modestly).
Despite this…
- *PBOC ADVISER SAYS LONG-TERM FOREX INTERVENTION NOT TARGET: NEWS
Offshore Yuan surged by the most on record overnight (removing all the devaluation premium)…
After last night's major devaluation, PBOC strengthens Yuan:
- *CHINA SETS YUAN REFERENCE RATE AT 6.3719 AGAINST U.S. DOLLAR
And officials proudly crowed that…
- *AT LEAST 47 FOREIGN CENTRAL BANKS HAVE YUAN RESERVES: FIN. NEWS
And in other FX news:
- *HONG KONG DOLLAR TOUCHES STRONG END OF PERMITED RANGE TO USD
China's Premier ruled out Quantitative Easing since he implored thare will no hard landing.
He said during a speech at the World Economic Forum in Dalian on Thursday that quantitative easing alone could not solve structural problems in economic growth and that it would lead to negative and spillover effects.
*CHINA'S INDUSTRIAL SLOWDOWN MAY BOTTOM OUT SOON: ECO INFO DAILY
Perhaps this is why…
But BofAML says forget Pork.. we need moar… (via ForexLive)
- There is still room for one to two interest rate cuts (25bp each) in the rest of the year
- But we believe the chance for aggressive rate cuts is very small, given rising CPI inflation and capital outflow pressures
- Domestic liquidity has become tighter partly due to capital outflows and PBoC ' s FX intervention
- We expect at least 50 – 100bp in RRR cuts in coming months to offset the liquidity drain
- The PBoC will also likely use multiple tools … to flexibly manage domestic liquidity
- Targeted credit support to key infrast ructure projects and SMEs are likely to expand
Two words – "Social Unrest"
* * *
Chinese stocks trod water overnight amid close-to-zero volume…
and are flat so far today:
- *FTSE CHINA A50 INDEX FUTURES FALL 0.2% IN SINGAPORE
- *CHINA'S CSI 300 STOCK-INDEX FUTURES RISE 0.3% TO 3,310
Charts: Bloomberg
- In Major Humiliation For Obama, Iran Sends Soldiers To Support Russian Troops In Syria
When Zero Hedge first reported ten days ago that Russian troops, in their bid to support the Assad regime in its ongoing confrontation with various ISIS, Al Nusra, and other US-supported groups in what has become the proxy war of 2015 (one which even comes with thousands of refugees for dramatic media impact) had been quietly massing in Syria and have set up a forward operating base near Damascus, there were those who were openly skeptical.
Then, just a few hours ago, Bloomberg finally confirmed that “top officials were scheduled to meet at the National Security Council Deputies Committee level to discuss how to respond to the growing buildup of Russian military equipment and personnel in Latakia” and that Russia is “set to start flying combat missions from a new air base inside Syria.”
So yes, for whatever reason (and the reason as we explained is clear: natural gas pipelines) Russia is making not only its increasing support for Assad known, but also that it is in Syria and that any further US-funded and supported incursions by ISIS or whatever is the media scapegoat terrorist organization du jour, will not be tolerated.
To be sure, none of this is in any way a surprise to the US – just as the US is using ISIS as a pretext to invade or pressure any mid-east nation it desires “in order to hold the jihadist terrorist scourge”, so Russia is now using ISIS as a comparable excuse to intervene. After all, if ISIS is the friend of humanity, then surely Russian aid will be welcome. That it is not, had made it abundantly clear that not only is ISIS just a convenient diversion, but the reasons for a Syrian invasion and deposition of Assad, are purely political and entirely in the realm of real-politik. Also, Russia’s return to Syria in greater numbers is no surprise to anyone in the Pentagon – this was merely the long-awaited escalation of the foreplay that started when ISIS mysteriously emerged on the scene just over a year ago.
But in the latest twist in what we have been warning for months has the makings of the biggest proxy shooting war in years, one that will come as a major humiliation to the Obama administration, today we find out that none other than America’s most recent diplomatic sweetheart in the Gulf region, Iran, has deployed ground soldiers into Syria in the past few days in cooperation with Russia’s President Vladimir Putin.
This answers our question from earlier this week:
So as the coalition drives towards Sana’a – which the Saudi-owned al-Hayat newspaper says will be “liberated” after a “decisive battle” in Marib – and as Turkey, the US, Saudi Arabia, Jordan, and Qatar mull options for the final push to oust Assad in Syria, the only remaining question is whether Iran will remain on the sidelines and allow the Houthis to be routed and Assad deposed, or whether, like Moscow, Tehran finally decides that the time for rheotric has come to an end.
And on that note, we’ll close with the following from AP: “Iran’s foreign minister on Monday criticized demands for the resignation of Syrian President Bashar Assad, saying such calls have prolonged the Arab country’s civil war. Mohammad Javad Zarif went so far as to say that those who have in the past years demanded Assad’s ouster “are responsible for the bloodshed in Syria.”
And so, Iran appears to have picked its side, and knowing that it has Obama wrapped around its finger as part of Obama’s huge “diplomatic coup” of restoring relations with Iran as part of the Nuclear Deal (since any backtracking would further embarrass the US president) and can pivot in any direction in the Syrian conflict, it has decided to side with Russia and Syria.
According to Ynet, a further said that the increased military involvement in Syria was “due to Assad’s crisis and under Russian-Iranian cooperation as a result of a meeting between Soleimani with Russian President Vladimir Putin.”
Where things get even more complicated, is that while Israel would do everything it can to turn public opinion against Iran, especially if it is now involved in the Syrian debacle, Israel still has cordial relations with Russia: “We have dialogue with Russia and we aren’t in the middle of the Cold War,” said the source. “We have open channels with the Russians.”
So what does Iran joining the conflict really mean? “It’s hard to forecast whether Russia’s presence will decide the fate of Syria, but it will lengthen the fighting and bloodletting for at least another year because ISIS won’t give up,” said the source.
In other words, unless even more foreign powers intervene, you know “to stop ISIS” by focusing all their firepower on attacking or defending Assad, the Syria conflict will drag on indefinitely with an unknown outcome. Which in turn begs the question: how long will Israel keep out of the war, and if it decides to join whether it be using one of the more traditional, false flag methods to enflame public opinion against Iran. Who will be collateral damage then.
One thing is certain: with the GOP unable to block the Iran nuclear deal in the Senate, should it emerge and be confirmed, that Iran is indeed present, then Obama will be faced with the biggest diplomatic headache in his administration’s history, namely the explanation of why he is scrambling to restore diplomatic connections with a regime that couldn’t even wait for the Iran deal to be formally passed before it turned its back on its newest “best friend” in the Oval Cabinet, and promptly side with the KGB agent who over the past two years has emerged as the biggest US enemy in three decades.
Furthermore, it also means that now Russia suddenly has the media leverage in its hands: a few “leaked” photos of Iran troops to the press and the phones in the US Department of State will explode.
But the most important news is that, as we warned previously, with every incremental party entering the Syria conflict, the probability of a non-violent outcome becomes increasingly negligible. And now that Iran is involved, it means that both Israel and Saudi Arabia will be dragged in, whether they like it or not.
- Anyone Who Believes The COMEX Numbers Is Very Naive (They Are Much Worse!)
Via Investment Research Dynamics,
“The information in this report is taken from sources believed to be reliable; however, the Commodity Exchange, Inc. disclaims all liability whatsoever with regard to its accuracy or completeness. This report is produced for information purposes only.”
– disclaimer now posted on the Comex gold and silver daily warehouse stock report as of Monday, June 3, 2013 – Investment Research Dynamics – June 4, 2013
Yesterday we published an article detailing the Comex gold futures to deliverable physical gold ratio that is now north of 200:1. But an erudite colleague of mine, John Titus of “Best Evidence,” correctly pointed out that: “They are probably bluffing. In other words, the real number is significantly higher than 200:1.”
For the record, John does more thorough research on the economic numbers and reports that he studies than anyone I’ve ever come across. And he does it with the trained analytic eye of a seasoned patent litigation attorney.
Let’s put everything in perspective. The numerical reports from which fancy graphs and and dry detailed data presentations are created originate from the Too Big To Fail Banks. I’ve said for quite some time that IF the bullion banks who control the Comex and the LBMA are submitting honest data reports for the Comex and LBMA, it would be the only business line in which they do not hide the truth and report fraudulent numbers. What is the probability of that?
JP Morgan was recently caught stuffing proprietary Comex futures short-sell trades into the “Managed Money” account category of the COT report. The CFTC scolded JPM and slapped them with a whopping $650,000 – LINK. Does anyone really believe that the CFTC wrist-slapping corrected any fraudulent data reporting by the likes of JP Morgan? Really?
Put your “think like a criminal hat” on for a moment. You know that the people who care about this sort of thing already know that the there’s a paper vs. physical problem in the market. So just show them a number that they’ll buy into and that will be “the number.” Most analysts will accept that number at face value and use that in their articles and blog posts. That number then becomes accepted in goldbug circles as the “real” number.
But the truth of the matter is that they are more than likely reporting numbers they want us to see, not the real numbers. For instance, the silver market is now seizing up from lack of supply. Please see this report from Greg Hunter and David Morgan if you are still skeptical: Retail Silver Has Seized Up.
Yet, the Comex bank custodians are reporting over 51 million ounces of silver available fore delivery – LINK. In fact, CNT – an official supplier to the U.S. mint – is showing 13.3 million ounces of deliverable silver. So why is there’s a shortage of silver at the U.S. mint? IF that silver were actually in the vault, the U.S. mint could buy a spot contract – September has a silver contract open – and take immediate delivery.
Also, why did the CME, unannounced, start slipping that little accuracy disclaimer into its daily gold and silver inventory reports in 2013? I’ll let you draw your own conclusion about the truth.
The silver market is seizing up which means that there’s a severe shortage of silver available. It is also showing up in the LBMA wholesale market based on the backwardation in gold and silver forward contracts that have been observed for several weeks. It means that any visible inventories reports from ETFs and Comex/LBMA banks custodial vaults are fraudulent. That includes SLV reports.
It also means that the recent discovery that the LBMA altered its gold refining flow statistics, revising what was originally reported to be 6,601 tonnes of gold cleared by the LBMA in 2013 down by 2,000 tonnes to 4600 tonnes, are likely off the mark. That’s a big miss, given that the total global mine production annually is around 2500 tonnes.
The significance of this is that it’s easier to explain how 4600 tonnes of gold was refined into bars and sent to Asia than 6600 tonnes, given that the total global supply of gold from mine production + scrap production was reported to be slightly more than 3000 tonnes.
From where did that extra 1600 tonnes come? The REAL question is, from where did the extra 2600 tonnes come if we use the original number? And is the 6600 tonne number a good number? Was the real number even higher?
The obvious conclusion is that the supply deficits in gold and silver are being remedied by hypothecating gold and silver bars from allocated accounts held at bullion banks, including the accounts held in behalf of the gold/silver ETFs, like GLD and SLV. This is why ABN Amro and Rabobank stopped allowing their physical gold account investors to take physical delivery of the gold they thought they have invested in – the gold was not there to deliver. This also occurred in 2013.
Now for the final blow to any skeptics. You’ll note that the LBMA revised down the amount of gold it cleared from refineries in 2013. But you’ll also note that the Comex inventory report disclaimer at the top of this post was first inserted into the daily Comex inventory reports in June 2013. See any coincidences? Bueller…
Bill Murphy and GATA have maintained for years that the fraud and corruption in the precious metals market would eventually be revealed as the biggest financial fraud scheme in history. It would seem that the cracks in the wall of this scheme are growing wider and it’s becoming easier to see rays of truth.
History tells us that all Ponzi schemes and market interventions fail. I believe we are on the cusp of a massive failure in the scheme to cover up the truth about the precious metals market.
- We Now Know What Happened At 6:12 AM This Morning
In a day in which the total breakdown of the market and the sheer dominance of various HFT algos was painfully obvious for any remaining carbon-based trader forms to see, we started off with not one but two E-mini trading halts following ridiculous buying slams.
This is what we asked first thing this morning:
Anyone waking this morning will glance at US equity futures and happily note its unchanged-ness relative to weakness in Asia overnight. But behind the scenes of the last 12 hours was a total and utter farce of price discovery failure. S&P 500 e-mini futures have been halted twice (0551ET anbd 0612ET) in what one market observer exclaimed “looks like manipulation to me.” So what exactly happened at 6:12am?
We now know.
As Nanex shows, what happened at 5:51 am and at 6:12 am, the ES breaks were nothing more than an aggravated case of HFT spoofing – the same infringement which will likely send Navinder Sarao behind bars for years – which first sent the E-mini soaring higher so fast, it broke the velocity logic circuit, and then it smashed the E-mini lower.
Here is the first spoofing instance, which prompted Eric Hunsader to declare the manipulator “busted.” Indicatively, the entire move amounted to just about 20 S&P points on the way up, or about 0.4%.
And the second one: what goes up must come down.
In summary: what we do know: a nearly 1% move up and down in the S&P due to blatan – and illegal – spoofing manipulation; what we don’t know: the identity of the spoofer.
What is certain: if the culprit is a central bank or one of its trading agents like Citadel, the CFTC will never follow up. If it is some Indian living in his parents’ basement in a London suburb, you can run but you can’t hide.
- Goldman Fears "Government Shutdown" Is Looming As Lew Urges Congress "Raise Debt Limit ASAP"
With Treasury Secretary Jack Lew sending a letter to Congress this evening demanding they raise the debt limit as soon as possible, warning that cash balances have dropped below the "minimum target," it is perhaps less than surprising that Goldman Sachs is warning that a government shutdown at the end of the month has become much more likely over the last several weeks. While out-months in VIX (beyond the prospective shutdown) remain elevated, Goldman finds a silver-lining claiming that the effect of a potential shutdown on financial markets and the real economy would probably be modest if it did occur. We shall see…
As Goldman explains…
- While it is a close call, we still think it is slightly more likely that Congress will avoid a shutdown and pass spending legislation just before the current funding expires on September 30.
- More importantly, while the risk of a shutdown is real and the outcome of the political debate is hard to predict, the effect of a potential shutdown on financial markets and the real economy would probably be modest if it did occur. Unlike 2013, a shutdown in October would be unrelated to raising the debt limit, and it would probably also be shorter in duration. If so, it would probably have little effect on output or personal income, though it could dent confidence.
A government shutdown at the end of the month has become much more likely over the last several weeks, in our view. Federal spending authority expires on September 30, and with little hope of resolving differences on full-year spending bills by then, Congress will need to pass a “continuing resolution” to avoid a lapse in funding that would result in a partial government shutdown.
While the parties have disagreed on 2016 spending levels for some time, a shutdown only recently emerged as a risk, mainly because the controversy surrounding whether to block funds to the Planned Parenthood organization has created the sort of binary issue that has caused or threatened to cause shutdowns in the past. Some Republicans want to use the upcoming spending bill to block the organization from receiving federal funds, while Democrats generally oppose such a move. Unlike budget disagreements, which can be settled by meeting halfway, these issues are harder to resolve because one side basically needs to give up on their position.
More generally, the political environment at the moment seems ripe for fiscal conflict. We are still closer to the last election than the next one, and it is not a coincidence that recent major fiscal disruptions occurred in 2011 and 2013—odd years—when upcoming elections were still more than a year off. In the 2013 experience, public sentiment toward Republicans dropped sharply during and after the shutdown (Gallup’s Republican favorability measure hit a 20-year low), but a year later Republicans won the majorities in the House and Senate. Some lawmakers may conclude from this that voters’ memories are short and the political price for a shutdown more than a year before the next election is low. Anti-establishment political sentiment is also running high; “outsider” candidates are performing surprisingly well in the contest for the Republican and, to a lesser extent, Democratic nomination, and efforts to remove House Speaker Boehner (R-OH) from his position as Speaker have resurfaced.
Ultimately, the outlook hinges on House Republican leaders. In the next week or two, the House looks likely to pass a continuing resolution that defunds Planned Parenthood. The Senate already considered legislation dealing with that topic and failed to muster 60 votes, suggesting that only a “clean” funding bill can pass there. As has been the case several times before, this will put House leaders in the position of accepting a “clean” bill that the Senate will eventually pass, thereby averting a shutdown, or insisting on their version, which the President would surely veto in any case.
There is more than one way that Congress could still avoid a shutdown at the end of the month. The most obvious option would be for House Republican leaders to bring “clean” spending legislation to a vote, with the expectation that it would pass with substantial Democratic support. To satisfy conservatives, the House could also vote on separate legislation to enact the specific policy changes some lawmakers are demanding, potentially via the reconciliation process, which requires only 51 votes in the Senate and therefore would allow congressional Republicans to send such a bill to the President’s desk (it would nevertheless be vetoed, but the effort might be enough to satisfy House conservatives). A second option would be to split off the controversial issues from the funding for other agencies, limiting the scope of any potential shutdown, similar to the strategy used in late 2014 to extend spending authority in the face of Republican opposition to the President’s executive action on immigration. However, it seems unlikely that congressional Democrats would support such a move this time around.
So will a shutdown occur? With a few weeks to go until the deadline, the outlook is very murky but our best guess is that Congress will narrowly avoid it. While there are several considerations that make a shutdown possible, as noted above, support for the current effort is still fairly limited. Prior to the 2013 shutdown, for example, 80 House Republicans signed on to the effort to oppose spending legislation unless it blocked funding for the Affordable Care Act (ACA, or Obamacare). By contrast, only around 30 have signed on to the current effort, though that number may rise.
More importantly, while the probability of a shutdown of some kind seems to us to be approaching 50%, we think the probability of a shutdown that has a significant effect on the financial markets or real economy is much lower, for two reasons.
First, unlike the 2013 shutdown, which coincided with the deadline to raise the debt limit, the next deadline to raise the debt limit is unlikely to be reached until at least mid-November. As shown in Exhibit 1, shutdowns that overlapped with debt limit deadlines—the 1990 and 2013 shutdowns—have tended to result in a stronger reaction in financial markets than other shutdowns where the debt limit deadline was not about to be reached.
Exhibit 1: Shutdowns create volatility mainly when they overlap with a debt limit deadline
Source: Bloomberg, Congressional Research Service, Goldman Sachs Global Investment Research
Second, a potential shutdown would probably be very short. In 2013, the shutdown ended up lasting longer than initially expected, in large part because the only natural deadline was the debt limit deadline, which was 2.5 weeks after funding lapsed. While one might argue that the lack of any deadline could lead to an even longer potential shutdown this year, it is more likely in our view that it would simply result in a decision to end the shutdown soon after it began, as has been the case with nearly every other government shutdown. In the 12 instances since 1980 that the federal government has shut down due to a funding lapse, the shutdown has lasted more than a week only twice. In 2013, we estimated that each week that all agencies were shut down would reduce real GDP growth in the quarter by around 0.2pp, though most of this effect would be reversed in the following quarter (after the first week, most civilian defense employees returned to work, reducing the economic effect of the final two weeks of what turned out to be a three-week shutdown).
It is too early to predict with any certainty whether a shutdown will occur, let alone how long it might last, but as the situation stands today, it seems likely to us that if a shutdown does occur it would have a smaller effect than the one in 2013.
- Nomi Prins: Mexico, The Fed, & Counterparty Risk Concerns
Submitted by Nomi Prins via NomiPrins.com,
On August 27th, I had the opportunity to address the Aspen Institute, UNIFIMEX and PWC in Mexico City during a Q&A with Patricia Armendariz. Subsequenty, on August 28th, I gave the opening talk at the annual IMEF conference. The main issues of concern to local Mexican banks, as well as to Mexico's central bank, are:
1) How the Federal Reserve's (and to a lesser extent ECB's and People's Bank of China) policies and actions have, and wlil continue to impact their currency and interest rate levels, and
2) The risks posed by the structural, and ongoing problems of too-big-to-fail banks, which remain as much a US as a Mexican problem as manifested by heightened economic, market and financial stress.
I posted the slides from my talk here, including the ten main risks that Mexico (and really all countries) are facing today, as well as the four factors of volatility that I have spoke about many times before. Much uncertainly emanates from central bank policy and the associated artificial stimulation of mega banking institutions and capital markets throughout the world. There is no foreseeable remedy to the long-term damage already caused, and that will continue to grow in the future.
What follows is a related piece that I co-authored with researcher, Craig Wilson that first appeared in Peak Prosperity:
Too big to fail is a seven-year phenomenon created by the most powerful central banks to bolster the largest, most politically connected US and European banks. More than that, it’s a global concern predicated on that handful of private banks controlling too much market share and elite central banks infusing them with boatloads of cheap capital and other aid. Synthetic bank and market subsidization disguised as ‘monetary policy’ has spawned artificial asset and debt bubbles – everywhere. The most rapacious speculative capital and associated risk flows from these power-players to the least protected, or least regulated, locales.
The World Bank and IMF award brownie points to the nations offering the most ‘financial liberalization’ or open market, privatization and foreign acquisition opportunities. Yet, protections against the inevitable capital outflows that follow are woefully inadequate, particularly for emerging markets.
The financial world has been focused largely on the volatility of countries like China and Greece recently. But Mexico, the third largest US trading partner (after Canada and China), has tremendous exposure to big foreign banks, and the largest concentration of foreign bank ownership of any country in the world (mostly thanks to NAFTA stipulations.)
In addition, the latitude Mexico has provided to the operations of these foreign financial firms means the nation is more exposed to the fallout of another acute financial crisis (not that we’ve escaped the last one).
There is no such thing as isolated “Big Bank” problems. Rather, complex products, risky practices, leverage and co-dependent transactions have contagion ramifications, particularly in emerging markets whose histories are already lined with disproportionate shares of debt, interest rate and currency related travails.
Mexico has benefited to an extent from its proximity to the temporary facade of US financial health buoyed by Fed policy, but as such, it faces grave dangers should any artificial bubble pop, or should the value of the US dollar or US interest rates rise.
There are other clouds forming on Mexico’s horizon. In the past month, the Mexican stock market has fallen 6 percent. Its highs were last seen in September, 2014. Shares in the nation’s largest builder, Empresas ICA SAB, just fell to a 12-year low as lower growth expectations.
(Source)
Because of currency misalignments based on central bank machinations, the Mexican Peso sits near all time lows vs. the US dollar. The Central Bank of Mexico just announced a currency boosting round of $8.6 billion of Pesos over the next two months, with likely more to come. This impinges upon its reserves. (Source)
Mid-level Mexican financial firms will struggle with access to credit should the air in the tires of this global liquidity boosting exercise continue to leak out. Other problems loom on Mexico’s horizon based on a host of interrelated factors.
These include the potential of capital flight, liquidity loss, over-reliance on external debt and investors, oil price declines (oil revenues account for about one-third of Mexico’s federal government budget), economic downturn in the US or Mexico, and rising volatility due to central bank policy shifts impacting interest rates and currency relationships, geo-politics, credit defaults, or additional big bank crimes.
The high concentration of large banks in Mexico and in the US presents extra systemic risk. Local Mexican firms and individuals, as well as foreign investors should consider these co-mingled factors and hedge against them for protection.
Capital Flight due to US Rate Hikes, Real or Anticipated
The possibility of US rate hikes, or even the threat of them, could freeze demand for non-US stocks and bonds – everywhere. If we learned anything from the US financial crisis, economic hardship in Greece and other Southern European countries, and the rout in the Chinese stock market, it’s that capital flight, particularly leveraged capital flight, can crucify an economy, especially high debt burdens accentuate the process.
Mexico, though somewhat protected from financial upheaval during the first leg of the 2008 financial crisis, may be the next victim of capital’s mercurial tendencies for that very reason. Mexico’s relative stability and liberalized financial markets have invited more foreign capital through these channels, which means more can leave to return to headquarter countries, or seek opportunities elsewhere, in emergencies.
In addition, heightened “de-risking” (or the reducing of counter-party agreements and cross-border remittances between the US and Mexico) will impact future remittance flows. Though de-risking practices are officially designated to thwart money launderers and drug-dealers – the true effect of the closing of bank branches or reduction of services that enable remittance flows burdens the population and the local banks that rely on them.
Big Bank Concentration and Counterparty Risk
Mexico’s domestic bank concentration problems have marginally improved since the financial crisis, but not by much. As of 2014, just five of Mexico’s private sector banks hold 72 percent of all financial assets. The top two, Banamex, a unit of Citigroup Inc., and BBVA Bancomer, a unit of Spain's Banco Bilbao Vizcaya Argentaria SA, hold 38 percent of all assets. (Source) (Source)
Concentration has accelerated in the US. Since the financial crisis, the Big Six US banks (JPM Chase, Citigroup, Bank of America, Goldman Sachs, Wells Fargo and Morgan Stanley) have grown in terms of assets, deposits, cash, trading assets and derivatives volume.
In terms of counter-party risk, from a credit and derivative perspective, the fewer banks operating in any sphere, the greater the risk that a collapse in any one of them triggers a domino effect in the others. The main foreign banks in Mexico, and those engaging in business with Mexican banks, can quickly close services and shift capital and credit from the country, or place barriers to retrieve it, in a pinch.
Ongoing US Bank Bailouts and Mexican Fallout
The US Federal Reserve buying program, though officially over, has rendered the Fed the largest hedge fund in the world, with a $4.5 trillion book of securities, more than a dozen times the figure of seven years earlier. The mortgage backed securities component remains at about $1.5 trillion, up from zero seven years ago.
Mexico was fortunate not to have been on the US bank radar screen to receive, or be induced to borrow against, the $14 trillions of dollars of toxic US-bank made assets. US bankers mostly focused on selling these subprime assets into Europe. Thus, Mexico escaped the fallout that countries like Greece and Spain felt.
Still, Mexico’s financial conditions are showing increasing signs of weakness, despite comparatively low inflation and, as a result, the ability to keep interest rates around 3 percent (the same as in Chile) below those in Columbia and Peru.
Aside from business problems, the amount of people living in poverty in Mexico increased from 49 million in 2008 to 53 million in 2012. In addition, Mexico came in last of the 34 countries examined by the Organization for Economic Co-operation and Development OECD for inequality. The combination of poverty and inequality on the ground, plus incoming instability on a business and banking basis could prove a disastrous mix in Mexico (and in the US) in the face of possible rising interest rates, a strengthening dollar in the near-term, or enhanced volatility.
EM Debt Defaults and Bond-Stock Divergence
Credit default risk looms as well. The amount of corporate and bank debt issued since the Fed embarked on its zero-interest rate and QE policy and pushed it on the world, has escalated. Thus, rising interest rates or corporate defaults in the US would impact Mexican (and other EM) corporate bond prices and default rates.
The divergence between credit-risk as reflected by rising high-yield bond spreads (up from seven year lows in mid-2014) and equities is predominantly predicated on the 60 percent drop in oil prices this year, which as of August 20th, hit a six and a half year low. The energy sector represents 15 percent of the high yield market.
Energy stocks have dropped nearly thirty percent. If commodity prices continue falling, other sectors and the stock markets would be more effected. Countries reliant on oil revenues, such as Mexico where 30 percent of the federal budget is based upon them, are impacted directly from profit loss and secondarily by defaults. (Source)
According to a recent report issued by the Institute of International Finance, “Corporate Debt in Emerging Markets: What should we be worried about?”, emerging market (EM) non-financial corporate debt rose to a record high of 83 percent of GDP, up from 67 percent in 2009. The total size of the EM non-financial corporate bond market has more than doubled to $2.4 trillion in 2014 vs. 2009.
Between 2015 and 2017, about $645 billion of that debt is set to mature with US dollar denominated bonds comprising $108 billion of that figure. Meanwhile, the volume of non-performing loans and general debt payment burdens have risen on US dollar strength, meaning EM banks, particularly those exposed to high degrees of foreign-currency lending, are increasingly in trouble.
Figure 1 – Source: BIS, IMF, OECD, McKinsey, IIF; Brazil, China, Czech Rep., Hungary, India,
Indonesia, Mexico, Poland, Russia, Saudi Arabia, South Africa, Thailand, Turkey.The low or zero interest rate policies from the FED, ECB and even EM central banks have propelled this issuance, particularly in the EM non-financial corporate segment, even in countries where public debt issuance hasn’t also skyrocketed.
Of the $1.7 trillion EM in non-financial corporate debt raised since 2009 in the international markets, about 30 percent ($510 billion) was in foreign currency, 80 percent of that ($430 billion) was in US dollars. The more reliant on external borrowing, the less stable a borrowing country’s financial situation becomes, and the more prone its firms are to downgrades or defaults as a result of external or internal weakening.
The report notes that higher foreign-currency risk exists in countries like Brazil, Mexico and Korea. In addition, a number of EM countries are holding cash reserves in domestic bank accounts from large percentages of proceeds raised offshore. They would be forced to withdraw from these funds to support currency weaknesses to service debt, which could increase the funding risk of EM banks.
What This All Means
This level of global inter-connected financial risk is hazardous in Mexico, where it’s peppered by high bank concentration risk. No one wants another major financial crisis. Yet, that’s where we are headed absent major reconstructions of the banking framework and the central bank policies that exude extreme power over global economies and markets, in the US, Mexico, and throughout the world.
Mexico’s problems could again ripple through Latin America where eroding confidence, volatility, and US dollar strength are already hurting economies and markets.
The difference is that now, in contrast to the 1980s and 1990s debt crises, loan and bond amounts have not just been extended by private banks, but subsidized by the Fed and the ECB. The risk platform is elevated. The fall, for both Mexico and its trading partners like the US, likely much harder.
- Sep 11 – David Tepper: Good Time To Take Money Off The Tablev
EMOTION MOVING MARKETS NOW: 15/100 EXTREME FEAR
PREVIOUS CLOSE: 13/100 EXTREME FEAR
ONE WEEK AGO: 11/100 EXTREME FEAR
ONE MONTH AGO: 9/100 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 23.39% 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 24.37. 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)
MEME OF THE DAY – HEY GIRL…
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%
HEADLINES
US Import Price Index (MoM) (Aug): -1.80% (est -1.60%, prev -0.90%)
US Import Price Index (YoY) (Aug): -11.40% (est -11.10%,rev prev -10.50%)
US DOE Crude Inventories (WoW) (Sep 04): 2570K (est 900K, prev 4667K)
US DOE Cushing Inventories (WoW) (Sep 04): -897K (est 400K, prev -388K)
US EIA Natural Gas Storage Change (Sep 04): 68 (est 77, prev 94)
US Wholesale Inventories (MOM) (JUL): -0.1% (EST 0.30%, prev 0.90%)
US Wholesale Trade Sales (MoM) (Jul): -0.3% (est 0.10%, prev 0.40%)
US Initial Jobless Claims (Sep 05): 275K (est 275K, rev prev 281K
US Continuing Claims (Aug 29): 2.26m (est 2.253m, rev prev 2.259m)
US Kansas City Fed LMCI Index (Aug):-0.12(Prev -0.23)
CA New Housing Price Index (YoY) (Jul): 1.3% (est 1.30%, prev 1.30%)
CA Capacity Utilization Rate (Q2): 81.3%% (est 81.70%, rev prev 82.60%)
BoE leaves rates unchanged, McCafferty dissents again in 8-1 vote
ECB Liikanen: Bond purchases will be extended if needed
ECB Praet: Recovery hinges on full implementation of QE
David Tepper: Good time to take money off the table
GOVERNMENTS/CENTRAL BANKS
US’s Boehner: Fall Budget Talks To Discuss Disc Spending Hike –MNI
BoE leaves rates unchanged; McCafferty dissents again in 8-1 vote –Rtrs
ECB Liikanen: Bond purchases will be extended if needed –ForexLive
ECB Praet: Cyclical recovery hinges on full implementation of QE –ForexLive
Riksbank’s Skingsley: Economic activity is improving –Riksbank
Reuters poll sees RBNZ cutting interest rates again in October –ForexLive
Greek Interim FinMin: There will be no bail-in of Greek bank deposits –BBG
GEOPOLITICS
Putin To address Syria and ISIS in UN speech later this Month –Rtrs
FIXED INCOME
US sells 30-year bonds at 2.980% vs 2.990% WI –ForexLive
Apple and Shell sell over E1bn of debt –FT
European banks flock to issue dollar bonds –FT
FX
USD: USDJPY shows a reluctance above the 200 day MA –ForexLive
GBP: BoE Minutes see considerable uncertainty over impact of GBP on inflation –ForexLive
GBP: BoE Minutes see considerable uncertainty over impact of GBP on inflation –ForexLive
EUR: EUR/JPY onto 136 handle on strong rally –FXstreet
CNY: PBoC Adviser Huang: Yuan should not be pegged to USD –BBG
CNY: PBoC Lowers Criteria For Cross Boarder Yuan Pooling –Business News
CNY: China Premier Li: No basis for persistent yuan depreciation –FXStreet
ENERGY/COMMODITIES
WTI futures settle +4% at $45.92 per barrel
Brent futures settle +2.75% at $48.89 per barrel
US DOE Crude Oil Inventory Change (WoW) (Sep 04): 2570K (est 900K, prev 4667K)
US DOE Cushing Crude Inventory Change (WoW) (Sep 04): -897K (est 400K, prev -388K)
US DOE Gasoline Inventory Change (WoW) (Sep 04): 384K (est -150K, prev -271K)
US DOE Distillate Inventory Change (WoW) (Sep 04): 952K (est 900K, prev 115K)
US DOE Refinery Utilization (WoW) (Sep 04): -1.90% (est -0.50 %, prev -1.70%)
US EIA Natural Gas Storage Change (Sep 04): 68 (est 77, prev 94)
CRUDE: Saudi Arabian oil output down 100k bpd in August
CRUDE: Kuwait: OPEC Not Keen To Shoulder Impact Of Price Decision
AGS: World food prices fall sharply in August, extending slide –Rtrs
LNG: LNG pipeline project could see more delays –Washington Times
US shale giants turn to 2016 with somber outlook –RTRS
EQUITIES
S&P 500 unofficially closes up 0.5% at 1,952
DJIA unofficially closes up 0.45% at 16,327
Nasdaq unofficially closes up 0.8% at 4,795
David Tepper: Good time to take money off the table –CNBC
M&A: GE plans to sell asset management arm –FT
M&A: EU to rule on $16.7bn Intel/Altera deal by 14/Oct –Rtrs
M&A: Avon shares surge on deal report –FT
BANKS: EU’s Vestager Confident’ of reaching agreement with Italy on bad bank –Rtrs
INSURANCE: Lloyd’s of London H1 profit drops as competition bites –Rtrs
TECH: Google rolls out Android Pay in US –Rtrs
TECH: Dell says to invest $125 bln in China over five years –CNBC
INDUSTRIALS: GE to decide on new location for HQ in Q4 –CNBC
TECH: 3M to could spin off or sell its health information systems business –MW
CRA: Moody’s affirms Glencore’s Baa2 ratings with negative outlook
EMERGING MARKETS
China is a source of global growth, not risk, says Li Keqiang –FT
Fitch: US Money Market Funds’ Exposure to China Slowing
Brazil Rousseff Promises New Fiscal Effort; Analysts Skeptical –MNI
Brazil credits resilient after junk rating –Rtrs
- Presenting 3 Chinese "Endgame Scenarios"
As we’ve tried to make abundantly clear in the wake of China’s adoption of a new currency regime in August, Beijing’s attempt to strike some kind of illusory compromise between a free floating currency and a currency that’s completely controlled by the PBoC was doomed from the word go. “Whereas the daily fix was previously used to fix the spot rate, the PBoC now seemingly fixes the spot rate to determine the daily fix, [thus] the role of the market in determining the exchange rate has, if anything, been reduced in the short term,” BNP’s Mole Hau wrote last month, and as we said then, less of a role for the market means more of a role for the PBoC and that, in turn, means burning through FX reserves.
Complicating the situation further is the fact that FX reserve drawdowns work at cross purposes with RRR cuts by sucking liquidity from the market meaning each intervention necessitates some manner of short-term liquidity injection (e.g. reverse repos, etc.) or else more RRR cuts.
Of course policy rate cuts and liquidity injections are seen by the market for what they are: attempts to ease. And unfortunately for China, that’s true whether or not the net effect of the push and pull on money markets is easing or not, and that perception on the part of the market leads to downward pressure on the yuan at which point the entire thing starts over again in a nightmarish, FX reserve-depleting circle.
Add in stepped up efforts to close the gap between the onshore and offshore spot and you have yourself a rather untenable situation and as with all things untenable, there will, sooner or later, be an endgame.
Against this backdrop, we present Daiwa’s list of China’s three possible endgame scenarios (via Bloomberg):
China’s balance sheet under serious contractionary pressure as money leaves and Fed decision looms, resulting in three endgame scenarios, Daiwa analysts Kevin Lai and Junjie Tang write in note dated Sept. 9.
- Scenario 1: PBOC actively intervenes by selling FX reserves to support CNY; a painful credit crunch ensues; companies come under pressure to liquidate assets to pay debts in classic case of “debt deflation”
- Scenario 2: Govt. stops FX intervention and prints massive amounts of money; interest rates and reserve ratio potentially slashed; moves put significant downward pressure on CNY and implications of a currency crisis would be global
- Scenario 3: China muddles through between scenarios 1 and 2, where PBOC tries to manage an “orderly” downward adjustment for CNY; stimulus wouldn’t ultimately be large enough to have any meaningful impact
So the commentary on Scenario 1 there seems to suggest that ultimately, China will not be able to wholly or effectively offset the liquidity crunch caused by the FX reserve burn, triggering a contractionary nightmare. Scenario 2 looks like a rehash of Citi’s recent suggestion, which for those who missed it (or for anyone in need of some Thursday comic relief), was this:
As regards funding the fiscal stimulus, only the central government has the deep pockets to do this on any significant scale. The first-best would be for the central government to issue bonds to fund this fiscal stimulus and for the PBOC to buy them and either hold them forever or cancel them, with the PBOC monetizing these Treasury bond purchases. Such a ‘helicopter money drop’ is fiscally, financially and macro-economically prudent in current circumstances, with inflation well below target and likely to fall further.
Scenario 3 is probably what will end up playing out, but frankly, it’s not entirely clear that 3 is that much different from 1, because as we noted at the outset, the market doesn’t like the whole “orderly downward adjustment” idea, precisely because it telegraphs further devaluation which leads traders to speculate on more yuan weakness and that speculation necessitates more reserve liquidations.
In short, the only “scenario” that doesn’t result in an “endgame” is for everything to suddenly be fixed overnight, or, as SocGen recently put it, “for the RMB to appreciate compared to its current value will require a very positive environment for EM coupled with a cessation of capital outflows and a vibrant cyclical growth and an export recovery.” That, obviously, is laughable so all we can say to the PBoC (and also to the Fed, who must consider all of the above when weighing liftoff) is “good luck.”
- Caught On Tape: Donald Trump Asked About Libertarianism
Submitted by Mike Krieger via Liberty Blitzkrieg blog,
*Note: This post originally maintained Trump was saying “be careful” to Nick Gillespie, when in reality he seems to have been talking to others walking with him in the crowd with equipment. The post has been changed to reflect this realization.
Reason’s editor in chief Nick Gillespie recently caught up with Donald Trump on the campaign trail and asked him about libertarianism. This is what ensued:
This exchange is troubling from several different angles.
First off, Trump does his typical dance in which he avoids questions he doesn’t want to answer by giving a simplistic jingoistic response.
He is clearly uncomfortable with the question. Why?
Overall, the above exchange is kind of unnecessary since it’s abundantly clear Trump is anti-liberty and anti-freedom.
Let’s recall what he said should be done with Edward Snowden. From a Washington Times story in 2013:
Edward Snowden, the man at the heart of the NSA information leaks, is nothing but a “traitor” — and America ought to recreate history in dealing with him, real estate mogul Donald Trump said on a “Fox & Friends” interview.
In other words, execute him, Mr. Trump implied.
“I think Snowden is a terrible threat, I think he’s a terrible traitor, and you know what we used to do in the good old days when we were a strong country — you know what we used to do to traitors, right?”
For more on the “real” Donald Trump, see:
Rand Paul Op-ed Blasts Donald Trump – Calls Him a “Fake Conservative” and Wannabe “King”
Will Donald Trump Run as a 3rd Party Candidate?
You’re Fired – Trump Campaign Tweets Photo of Trump’s Head Next to Nazi Soldiers
Meet the Immigrants Building Trump’s International Hotel in Washington D.C.
- The UN's "Sustainable Development Agenda" Is Basically A Giant Corporatist Fraud
Submitted by Mike Krieger via Liberty Blitzkrieg blog,
This Agenda is a plan of action for people, planet and prosperity. It also seeks to strengthen universal peace in larger freedom. We recognize that eradicating poverty in all its forms and dimensions, including extreme poverty, is the greatest global challenge and an indispensable requirement for sustainable development.
All countries and all stakeholders, acting in collaborative partnership, will implement this plan. We are resolved to free the human race from the tyranny of poverty and want and to heal and secure our planet. We are determined to take the bold and transformative steps which are urgently needed to shift the world onto a sustainable and resilient path. As we embark on this collective journey, we pledge that no one will be left behind. The 17 Sustainable Development Goals and 169 targets which we are announcing today demonstrate the scale and ambition of this new universal Agenda. They seek to build on the Millennium Development Goals and complete what these did not achieve. They seek to realize the human rights of all and to achieve gender equality and the empowerment of all women and girls. They are integrated and indivisible and balance the three dimensions of sustainable development: the economic, social and environmental.
– From the Preamble to the UN’s 2030 Agenda for Sustainable Development
* * *
UN records reveal that the intergovernmental body has already marginalised the very groups it claims to be rescuing from poverty, hunger and climate disaster.
Records from the SDG process reveal that insiders at the heart of the UN’s intergovernment engagement negotiations have criticised the international body for pandering to the interests of big business and ignoring recommendations from grassroots stakeholders representing the world’s poor.
Formal statements issued earlier this year as part of the UN’s Post-2015 Intergovernmental Negotiations on the SDGs, and published by the UN Sustainable Development Division, show that UN ‘Major Groups’ representing indigenous people, civil society, workers, young people and women remain deeply concerned by the general direction of the SDG process?—?whereas corporate interests from the rich, industrialised world have viewed the process favourably.
This allegation is borne out by UN records, which show that its own Major Groups representing the very people the global institution professes to be empowering?—?poor people in developing countries?—?are increasingly sceptical of the SDG agenda.
– From Nafeez Ahmed’s recent article: UN Plan to Save Earth is “Fig Leaf” for Big Business
On September 25th, Pope Francis will address the United Nations General Assembly in New York City. To much fanfare, the Pope will celebrate the unveiling of the UN’s Sustainable Development Agenda 2030.
A key plank of this agenda relates to the UN’s “Sustainable Development Goals,” or SDGs. While this sounds all warm and fuzzy, several well meaning participants have become horrified by the extent to which multi-national corporations have influenced the entire process. So much so, that insiders are claiming the UN is actually marginalizing the very people it claims to be saving. The poor, the weak, and the voiceless.
In an invaluable piece of investigative reporting, Nafeez Ahmed writes the following:
UN records reveal that the intergovernmental body has already marginalized the very groups it claims to be rescuing from poverty, hunger and climate disaster.
At the end of this month, the UN will launch its new 2030 Sustainable Development agenda for “people, planet and prosperity” in New York, where it will be formally adopted by over 150 world leaders.
The culmination of years of consultations between governments, communities and businesses all over the world, there is no doubt that the agenda’s 17 Sustainable Development Goals (SDGs) offer an unprecedented vision of the interdependence of global social, economic and environmental issues.
But records from the SDG process reveal that insiders at the heart of the UN’s intergovernment engagement negotiations have criticised the international body for pandering to the interests of big business and ignoring recommendations from grassroots stakeholders representing the world’s poor.
Formal statements issued earlier this year as part of the UN’s Post-2015 Intergovernmental Negotiations on the SDGs, and published by the UN Sustainable Development Division, show that UN ‘Major Groups’ representing indigenous people, civil society, workers, young people and women remain deeply concerned by the general direction of the SDG process?—?whereas corporate interests from the rich, industrialised world have viewed the process favorably.
Among the ‘Major Groups’ engaged in the UN’s SDG process is ‘Business and Industry.’ Members of this group include fossil fuel companies like Statoil USA and Tullow Oil, multinational auto parts manufacturer Bridgestone Corporation, global power management firm Eaton Corporation, agribusiness conglomerate Monsanto, insurance giant Thamesbank, financial services major Bank of America, and hundreds of others from Coca Cola to Walt Disney to Dow Chemical.
Despite claims that the UN’s previous Millennium Development Goals (MDG) have succeeded in halving global poverty since the 1990s, there is good reason to question this narrative.
Today, 4.3 billion people live on less than $5 a day. Although higher than the World Bank poverty measure at $1.25 a day, the development charity ActionAid showed in a 2013 report that a more realistic poverty measure would be under $10 a day.
Yet far from decreasing, since 1990 the number of people living under $10 a day has increased by 25%. Global poverty has not reduced?—?it’s got worse.
But all we know what has gotten better…a lot better. Corporate profits.
I asked Hickel why, despite so much internal criticism from UN stakeholders within the SDG process itself, these concerns had not impacted on the text of the SDG ‘Zero Draft.’ “In an early version of the Zero Draft, there was a commitment to replace GDP with an alternative measure of economic well-being. But somehow that disappeared from the final text,” said Hickel. “I don’t know what happened behind the scenes.”
This allegation is borne out by UN records, which show that its own Major Groups representing the very people the global institution professes to be empowering?—?poor people in developing countries?—?are increasingly skeptical of the SDG agenda.
The civil society statement also points to parallel efforts by Western governments to forge new ‘free-trade’ agreements, such as the Transatlantic Trade and Investment Partnership (TTIP) along with proposed Investor-State Dispute Settlement (ISDS) clauses.
Yep, sounds exactly like the “free trade fraud” being perpetrated on the global populace at the moment. The current status quo strategy is to put a “nice spin” on what are essentially corporatist takeovers. See:
U.S. State Department Upgrades Serial Human Rights Abuser Malaysia to Include it in the TPP
Julian Assange on the TPP – “Deal Isn’t About Trade, It’s About Corporate Control”
As the Senate Prepares to Vote on “Fast Track,” Here’s a Quick Primer on the Dangers of the TPP
These new trade and investment frameworks are being negotiated by governments in secret without public accountability. The UN’s civil society group notes that the ISDS clauses “empower corporations to sue governments for reducing the value of investments through regulations that promote human rights, the environment, and labor standards.”
Yet the SDGs offer little to protect vulnerable communities in the face of such corporate encroachment.
Surprised? You shouldn’t be. This whole thing is just corporatist PR.
On 25th March, the Indigenous Peoples Working Group told a Major Group dialogue hosted by the Trusteeship Council Chamber at UN headquarters that the SDG process “is in jeopardy of excluding Indigenous Peoples from the agenda.”
The SDGs make no clear reference to the human right to water, for example, effectively providing “an open door for turning water into a commodity.”
The UN workers group particularly opposes the emphasis on public-private partnerships, which it describes as “an expensive and inefficient way of financing infrastructure and services, since they conceal public borrowing, while providing long-term state guarantees for profits to private companies.”
As I have maintained for years, the moment you hear “public-private partnership” run for the hills. You are being screwed over in unimaginable ways. See:
Wall Street Teams Up with U.S. Intelligence Cronies in Bid to Form Fascist “Cyber War Council”
Bread and Circuses – The Shady, Slimy and Corrupt World of Taxpayer Funded Sports Stadiums
A Deep Look into the Shady World of the Private Prison Industry
In fact, despite overwhelming support from UN member states for a more robust and transformative approach, the report reveals that “a vocal minority, including the Vatican and Saudi Arabia, has once again blocked consensus.”
The failure of the SDG process to incorporate such criticisms from the UN’s own Major Groups representing marginalized communities, is a direct result of entrenched power disparities within the UN itself.
According to an expert report circulated to UN officials, a detailed analysis of SDG documents reveals that the entire process has been “fundamentally compromised” by corporations with a vested interest in continuing business-as-usual.
In addition to mis-framing the structural origins of poverty, the report shows that the very concept of “development” deployed within the UN’s SDG documents derives from a “specifically neoliberal and corporatist conception of how the world does and should work.”
Despite acknowledging “deep problems and contradictions when relying on GDP growth to tackle poverty”, the SDG agenda still leaves “undifferentiated, perpetual growth” as the prime basis of development.
Hidden between the lines of the SDG vision, then, is a great delusion?—?the unflinching blind faith of the rich industrialised elite in the unquestionable perfection and immortality of neoliberal capitalism as a ‘way of life.’
According to Brewer, by removing all discussions about power from the SDG process, “the increasingly unpopular neoliberal agenda remains fully in place.”
The total omission of corporate and banking power from SDG texts, despite their unprecedented prevalence in the UN process, “is very telling in its own right,” he told me. “We know that multinational corporations are the most powerful political actors, and that they are profoundly concentrated vehicles for wealth consolidation.”
This is why, Alnoor Ladha explained, TheRules.org did not engage in the formal UN civil society SDG process.
“The process is a sham,” he said. “They will co-opt our engagement and say they have consulted us. All of the civil society groups that have tried to reform the SDGs have been co-opted by the UN, including the more critical voices.”
In other words, the SDG stakeholder engagement process draws selectively on the input of civil society groups to promote its public legitimacy, while systematically ignoring the voices that challenge the wider political and economic structures in which the entire process is embedded.
The above represents only excerpts from Dr. Ahmed’s piece, which can be found in its entirety here.
- What Bubble? 6 Castles That Are Cheaper To Rent Than An Apartment In NYC Or SF
As we have noted numerous times in the past, there is a Bull market in serfdom.
America's Renter Nation has never spent more of its paycheck on rent and as Zumper notes, with rent prices in San Francisco and New York at the highest in the nation, affordability does not seem to exist in these two metropolitan areas. For some idea of the scale, there are actually castles in France and Italy that can be rented for about the same price as average apartments in these cities…
All of the castles on this list have at least five bedrooms (one has eleven), while the correspondingly priced apartments in San Francisco or New York range from a studio with a murphy bed to a four bedroom.
1. Antic Castle, Tuscany, Italy- 11 bed, 11 bath, $4,040/month
Nestled on a private hill and surrounded by trees and vineyards, this massive eleven bed castle can comfortably house up to twenty five guests. Built in the Middle Ages, this former aristocratic residence has been renovated to include modern day luxuries such as air conditioning, central heating, and satellite television. However, the 17th century stone fireplaces and beautiful terracotta floors still exude a warm, historical charm.
Or you can rent…
Stuyvesant Town, New York City, NY- 2 bed, 1 bath, $4,000/month
Newly renovated, this contemporary two bedroom apartment has spacious bedrooms with generous closets, an adorable kitchen with modern appliances, and a stylish bathroom with a sparkling tub. Along with concierge service, this apartment building also comes with a fitness center, residents lounge, and on-site laundry. Having twenty five guests may be a little tight, however.
2. Chateau Le Mur, Comblessac, France- 8 bed, 5 bath, $2,800/month
Sitting on 180 acres, this fifteenth century, eight bedroom castle is immense and fit for royalty. You can take in the stunning views of the scenic dairy farms nearby from the balcony or sunbathe in the bountiful garden. Inside, there are multiple, large fireplaces, medieval themed kitchens, and a knight’s armor at the door to greet you.
Or you can rent…
Upper East Side, New York City, NY – 2 bed, 1 bath, $2,995/month
Recently renovated, this cozy two bedroom apartment has glossy hardwood floors, new fixtures, and a minimalist kitchen. The bedrooms are compact, but with large windows to let in an abundance of natural light, the rooms feel much bigger than they are.
3. Chateau Arfeuilles, Region Auvergne, France- 6 bed, 3 bath, $6,525/month
Sophisticated and elegant, this six bed castle has been carefully decorated so each room is unique but the entire interior still exudes a tasteful charm throughout. The kitchen is fully equipped with modern appliances, there are two living rooms, one with a television, and every bedroom has a chandelier hanging from the ceiling. If you want to enjoy the sun, you can bask by the pool or lounge in one of the terraces.
Or you can rent…
Hell’s Kitchen, New York City, NY- 4 bed, 2 bath, $6,700/month
In a brand new building, this stylish four bedroom apartment has shiny oak floors throughout, a natural calacatta marble backsplash in the kitchen, and porcelain walls in the shower. There is a large rooftop sun deck, private storage available, and 24/7 security in the lobby.
4. Ringuette, Region Aquitaine, France- 7 bed, 2 bath, $2,925/month
On a piece of land that covers over 200 acres, this magnificent seven bed castle can accommodate up to twelve people. The spacious kitchen has a wood stove and the living room has a large fireplace. Outside, there is a lush, walled garden covered with vines and flowers, a private swimming pool, and a beautiful courtyard formed by the structures of the castle.
Or you can rent…
Lower Haight, San Francisco, CA- Studio, 1 bath, $3,000/month
With just over 400 square feet, this snug studio apartment comes fully furnished with designer fittings. If you wanted to entertain guests, the Becker Murphy bed can be lifted up and hidden away. The kitchen has modern appliances and the bathroom comes with a tub. Some building amenities include a fitness center and a landscaped roof deck.
5. Perrier, Périgord, France- 6 bed, 5 bath, $4,940/month
Fully restored, this tremendous six bedroom castle has a double fireplace in the living room, a large kitchen, and a game room with a billiard table. Outside, you can take in the stunning views of the countryside in the garden that covers three acres, play football in one of the several lawns, or relax and enjoy the sun in the private pool.
Or you can rent…
Laurel Heights, San Francisco, CA- 3 bed, 2 bath, $4,995/month
With plenty of windows, this bright three bedroom apartment lets in plenty of natural light. Dark, hardwood floors run throughout the home and the spacious master bedroom has a large walk-in closet. The kitchen has a breakfast bar that opens up into the dining room area and there is a wood-burning fireplace in the living room.
6. Manoir de la Motte, La Motte, France – 5 bed, 3.5 bath, $6,064/month
Tucked in an abundance of trees, this five bed, nineteenth century castle is a hidden, romantic escape from the world. All of the bedrooms are meticulously decorated with embroidered sheets and beautiful draping over the beds. You can take a hike through the lush forest or relax and enjoy the peaceful ambiance in the private garden.
Or you can rent…
NOPA, San Francisco, CA- 3 bed, 2.5 bath, $6,300/month
With 1,750 square feet of space, this three bedroom condo feels like a single family home. It has a recently remodeled kitchen with new appliances, a quaint garden with lemon and plum trees, and adorable pastel walls throughout the home. There are glossy hardwood floors in the living room and kitchen and soft beige carpet in the bedrooms.
* * *
With buying out of the question for mnost (hint – Student loans and affordability) and renting becoming increasingly unaffordable, the entire household formation "upside case" is now collapsing on itself, something we've discussed on a number of occasions. Recall the rise in "parental co-residence rates":
Note that this situation has the potential to become self-fullfilling. That is, as homeownership becomes increasingly unrealistic, demand for rentals will only increase, driving further increases in the cost of rental housing. The question then becomes this: what happens when a family that can't afford a down payment can no longer afford to pay the rent?
- "If It Bleeds, We Can Kill It" – Top Performing Hedge Fund Manager Compares China To The Predator
It is no accident that over the years, and especially in the past few months, we have been profiling what in our opinion is one of the few, truly worthy hedge funds, Horseman Global, which despite (or maybe due to) being net short stocks since the start of 2012 (and long bonds), has outperformed 99% of its peers and has generated tremendous returns during its lifetime.
Just last month, in “Short For Three And A Half Years And Outperforming 98% Of Traders: This Hedge Fund Did It“, we explained how in July the fund generated a 7% return, just as all the beta-levered, momentum-monkey, hedge fund hotel residents were losing steam.
One month later, and following a ghastly August in which virtually everyone lost money, the $2.5 billion Horseman was up a whopping 9.4%, and is now up 17.7% for the year.
And no, you can’t allocate the funds you redeemed from Ackman to Horseman at this moment: “Due to a high level of interest in the fund, we are again soft closing the fund. Any investment into the fund will need approval.”
But it was not easy, as the following story from Russel Clark, Horseman’s CIO, recounts in the fund’s monthly letter.
Being bearish on China for the last few years has reminded me of the 1987 action classic “Predator”. In the film, a special ops force are ordered on a mission to an unnamed South American jungle.
However, while trying to complete their mission they are slowly hunted down by an alien creature. At each stage, they think they have managed to trap it, but it continually defies anything any of them have seen before. It moves and lives in the trees! It can turn itself invisible! It has infra-red and heat vision! It has a shoulder mounted laser rifle! Needless to say most if not all of the members of the team succumb to its abilities….
For bears, much like the alien in Predator, the Chinese government has continually used special abilities that were previously unknown. The first surprise came in 2008/9 when China embarked on an immense stimulus program, where decade’s worth of infrastructure investment was fast tracked to counteract the global slowdown, a punishing period for anyone short at the time.
Eventually, the infrastructure boom came to an end, and there seemed to be an excess of housing in the market. Many funds were bearish on Chinese property developers in 2011, only to see the government promote housing investment. Many property stocks, went on to rally 300% or more. Your fund had been short property names, but having been caught on the wrong end of policy before, managed to avoid getting caught in this attack on bearishness.
Then in 2014, with the real exchange rate of the Renminbi surging as both Japan and Europe devalued their currencies via Quantitative Easing, it seemed that China was running out of options. If they cut interest rates to promote growth, then they would have to devalue. And yet, somehow the government was able to manufacture a stock market boom. This meant that capital that would usually leave China as interest rates were cut stayed in China to participate in the stock market.
Bearish investors in China had been picked off relentlessly and seemingly effortlessly by the government and the central bank. But then just as suddenly, the stock market started to sell off and the pressure on the currency began to build. This led to the small devaluation we saw in the Renminbi in August.
The People’s Bank of China (‘PBOC’) has fallen into a classic emerging market trap in my view. There was some pressure on the exchange rate, but they were unwilling to raise rates to defend the currency, so chose to devalue. However, as they wished to promote stability they devalued by a relatively small amount, in the hope that this will reduce capital outflows.
In this they are completely wrong. The small devaluation will do nothing for the export sector, but creates huge amount of fear in the investing public, that has previously assumed the exchange rate was “safe”. Contrary to reducing pressure, the small devaluation will actually increase the capital outflow, and the pressure on the exchange rate. If the PBOC had really wanted to reduce capital outflow, it would have needed to move the exchange rate much more significantly.
In my experience, in the mind of the international investment community, small devaluations tend to encourage even more capital outflow, which in turn leads to even larger devaluations. Or to borrow a line from Predator, “If it bleeds, we can kill it”.
In the movie, the Predator dies.
As for the punchline, Clark goes out in style: “Your fund remains long bonds and short equities.”
- Iran Cuts Crude 'Selling Price' To Asia To 3-Year Low
In what appears to be a bid to lure Asian buyers to lock in longer-term supplies, Reuters reports that Iran has cut its quarterly selling price (for its flagship 'light' crude) to its lowest (relative to Saudi) since Q4 2012. According to recent tanker loading data, Iran's oil sales in September are set to hit a six-month low, and this price reduction is just one of the steps taken by the OPEC producer to ramp up output and regain market share lost since U.S. and European sanctions aimed at its nuclear program cut its crude oil exports by more than half.
Iran has cut its relative prices notably over the past year…
Iran set its official selling price (OSP) for Iranian Light crude for October at a 25 cents a barrel premium to Oman/Dubai, down 35 cents from the month before, two sources with knowledge of the matter said on Thursday.
This puts Iranian Light OSP at a 15-cent premium to Saudi's Arab Light in the fourth quarter, the lowest quarterly price since the last three months of 2012, according to Reuters data.
Asian buyers have called for lower prices amid a supply glut that has made it tougher for Iran to elbow its way to higher sales volumes despite optimism over the deal that eased some of the sanctions in exchange for curbs on Tehran's nuclear work.
An executive at a North Asian oil refiner said it is in talks with the National Iranian Oil Company for next year's term supply, but that Iran's crude prices have been uncompetitive.
…
Iran sets its OSPs every quarter at differentials to Saudi prices, following discussions with key customers.
In the fight for market share, Iran and fellow members of the Organization of the Petroleum Exporting Countries, including Kuwait and Iraq, have dangled carrots in the form of extended credit and free oil deliveries in addition to outright price cuts to increase their sales.
* * *
Time for another sit down in The White House with The Sauds…
- Why Apple’s Launch Event Was "Creepy As Hell"
Submitted by Doug Litowitz
Apple’s Launch Event Was Creepy As Hell
Yesterday all eyes were on Apple’s product launch.
This is because Apple has become a bellwether for the stock market as a whole.
Legendary short seller Jim Chanos spoke candidly to CNBC, explaining that institutional investors and hedge funds are treating Apple stock as a “hedge fund hotel” where they can buy a single name and ride it upwards as opposed to concocting complex trading systems as they did in the past. Indeed, SEC filings by hedge funds bear this out, and so the product launch attracted a huge audience, generating play-by-play reporting on CNBC and Yahoo Finance.
By the end of trading, Apple stock declined nearly 2%, indicating that investors were not impressed.
To paraphrase poet Horace, the mountain shuddered and gave birth to a ridiculous mouse.
I too watched the entire product launch. The Apple Watch doesn’t do much more than other devices and it looks ugly next to a Rolex; the new iPhone has a few tweaks that don’t amount to much; the new iPad Pro tablet is unwieldy with a humor-inducing stylus; and the Apple TV box is interesting for voice-activation but not that different from what others are already offering in streaming content.
That would be the end of my story.
But I am feel obliged to confess that I found the event creepy as hell from a psychological and cultural perspective.
After two hours of watching their best and brightest, my mind was reeling with associations of cults, lifestyle gurus, and new-age hokum.
The Man At The Helm
Let’s start with the venue, which was the first thing CEO Tim Cook mentioned in his opening remarks. It was held in San Francisco at the Bill Graham Civic Center. Stop right there. What makes Apple so “civic” that it needs a public forum, instead of launching products from its own headquarters?
Apple doesn’t seem particularly “civic” to me, and not to the Senate Subcommittee that has been investigating how they avoid paying taxes while sticking you and me with their tab. They move corporate entities offshore to avoid taxation that would benefit the civic community, and they run sweatshops in China instead of hiring Californians drawn from the, uh, civic community.
So it’s a cheap trick to hold the launch in a civic center named after a man who launched free health clinics and free festivals to celebrate the counterculture against big corporations like, well, Apple. You cannot squeeze out some kind of imprimatur of good citizenship by holding a product launch in a “civic” center. I’m not buying it.
The second problem is that Tim Cook took the stage dressed – or rather underdressed – in blue jeans and an ill-fitting blue shirt with a plain belt. The outfit looked like it was thrown together at the last minute from the clearance rack at Kohl’s. This man is worth hundreds of millions of dollars and runs the most profitable company in the world. I refuse to believe that he is too busy (or too cheap) to stop at Nordstrom Rack and drop $800 on a pair of Armani slacks, a Zegna dress shirt, a Hugo Boss tie, and Allen Edmonds’ belt and shoes.
Cook recently came out as gay, which took courage, and I applaud that. But that only makes his choice of outfit more bizarre. Is he playing against type, to make the point that gays can be slobs too? Or is he saying that gays are harmless and will conform seamlessly? Regardless of his sexuality, there is no reason to dress that way except to brainwash us into thinking that he is so laser-focused on product development that ‘clothes be damned.’ Again, I’m not buying it.
Steve Jobs could get away with wearing a turtleneck sweater because he had a maverick personality to back it up. To put it crudely, when you watched Steve Jobs, you knew that he was an SOB on some level, that he wasn’t there to impress you as much as to impress himself, and he knew that you knew it. He had demons. But sometimes a bad guy is good, so to speak. We all knew that Jobs’ refusal to dress ‘appropriately’ was the flipside of a loner genius with a unique vision who wasn’t going to conform. He was half-crazy but headed to unexplored territory. The first guy who does that is authentic; the second guy is not. CEO Tim Cook is the second guy.
Cook’s persona is creepy, almost mortician-esque. He has an unconvincing forced jubilance, wedded to a lurking, hunchbacked rigidity. His body seems superfluous, a nuisance. The white hair and nerdy glasses round out a kind of depthless, mealy look that betrays a measure of cruelty. His arms hang useless, as if he has to exert every ounce of willpower to raise them when the script calls for mock exultation.
I watched him closely for 30 minutes and then it hit me.
Cook IS a computer.
Or at least, he’s more like a computer than a human.
Intelligent, desexualized, emotionless, disembodied, apolitical, steely, gimmicky, and lacking in charisma. He wants us to become cybernetic, to sync our entire lives to Apple so that we become computers like him. The technology does not have some higher purpose like social justice, or eradication of disease, or ending poverty. The bar is much lower: you can now get the weather and read CNN headlines on your watch – what a great day in Western Civilization! Cook and his ‘team’ (as he refers to the thousands of people who do the actual work under extreme stress) don’t have any appreciation for the downside of technology.
Missing Apple’s Man Upstairs
Steve Jobs understood minimalism.
Sometimes less is more. And he had a weird belief system that made him something of a Luddite – he would not let his own kids use the iPad, he forced them to talk face-to-face, and he ridiculed college kids who wanted to go to Silicon Valley just to make money. For all his eccentricities, he knew that there was an outside world and that bigger things were at stake.
Cook is the other extreme – he thinks that technology improves everything, and that every little gimmick is noteworthy. In his world, the Apple Watch and the new iPhone are miraculous contributions because they let you change the channel on the Apple TV without getting off your butt and fetching a remote.
As an illustration of how the Apple Watch changed people’s lives, he tells us how the watch helped a man keep to an exercise schedule. Does he think we’re so dumb we believe this was never possible until the invention of this watch? Also he showed how a doctor could tilt the watch forward and check his daily schedule of rounds; ironically, this task was something that my own father could handle with a small notebook and a pencil in the 1960s, as a doctor at San Francisco General Hospital no less.
The Apple Launch soon became a drone-fest, with Cook introducing another man who was dressed virtually identically to Cook, who introduced another guy dressed the same, and then a woman dressed similarly, then again another guy, like Russian matryorska dolls popping out of each other. They were all in the same uniform, or rather anti-uniform, in some kind of California-forced-conformity/anti-conformity. The last time I saw so many people looking like that, it was the mass suicide at Heaven’s Gate.
They were all being ‘authentic’ by wearing the same thing and telling us that we were ‘revolutionary’ by consuming their products. It’s the same line used by the guy at the mall who sells Anarchy T-shirts for $20. Soon, these words lose their meaning: authentic people dressed alike, humans wearing machines to supposedly make them more human, freedom by buying more products. Do they believe this stuff themselves?
And then there is Siri, who featured prominently in the show.
“SORRY… I DIDN’T GET THAT…”
To all the idiots in the audience, let me remind you that Siri is not a human person.
It is a search engine with a voice. To attribute wisdom to Siri, or to think that Siri is your servant or your friend, is to mistake a THING for a HUMAN. Apple shamelessly encourages this category mistake by having its spokesmen talk to Siri as a person, in the same way that a psychotic ventriloquist converses with his dummy. There is nothing more pathos inducing, more cringe-worthy, than a grown human being asking a machine what is the meaning of life.
I have saved the most disturbing phenomenon for last. The audience spent most of its time looking at computers and smart phones on their laps, and taking pictures of each other and the event. They were present, and yet they weren’t. What a spectacle. Thousands of people celebrating how the computer will set them free and let them connect to anyone and anything, but each lost in their own computer world, incapable of connecting with anything outside themselves.
Mercifully, it ended with Cook giving a shout out to the Apple workers in the audience, who responded like cult members fed sugar and gumballs all week. And then, in a fawning introduction, he introduced the band One Republic, who gave a kind of generic performance that would offend nobody, in a hall that hosted revolutionary bands like Jimi Hendrix, Janis Joplin, and the Grateful Dead.
Lest I be called a killjoy, let it be noted that I am typing this on a MacBook Air. I have an iPhone 6, and an iPad Mini. I am an Apple person, as it were. But just because I buy the products doesn’t mean that I buy the mythology surrounding them.
I know that for every connection I make online, there is a connection I lose in the real world. For every song I can record playing guitar and singing into my MacBook, there is a place where I could be playing with real people. And I have been to China and seen the factories, so I know that for every machine I buy, there is someone getting rich, someone getting cheated, someone unhappy, a miserable executive, a ruined life in a dirty dormitory. For everything there is a trade off, that’s life. And there are limits to what technology can do. The Apple Watch can show my appointments today, and the Apple TV can find all the movies starring Jason Bateman, but I am not going to stand up and clap for it, for the simple reason that it cannot help us end violence, or reduce poverty, or provide health care, or spark an economic recovery. I don’t clap for my refrigerator either.
The Apple Launch is a closed circle of fawning sycophants, thrilled with gimmicks, adapted to computers, programmed, a throng of identical authentic individuals chained to their machines and congratulating themselves on being ‘connected,’ led by a human that resembles a robot.
Two hours of watching the Apple Launch actually made the Manson Family seem homey.
- Mapping A Migration: An Infographic Look At Europe's Refugee Crisis Response
Well, it’s official, Washington can add “out of control refugee crisis” to the list of bad foreign policy outcomes stemming from America’s Mid-East meddling.
That list also includes things like accidentally arming an Iran-backed militia with a half billion in sophisticated weapons in Yemen, sponsoring the nullification of a democratic election outcome in Turkey, abandoning support for one Egyptian despot only to see the new US-backed despot sentenced to death after being overthrown in a military coup, and training a group of Syrian freedom fighters who later metamorphosed into a black flag-waving band of marauding jihadists bent on establishing a medieval caliphate.
And that’s all in the space of, let’s call it five years.
Of course the US has a habit of dragging its European allies along for the ride and the conflict in Syria is no different only this time around, not only will Western Europe be expected to join (or at the very least verbally sanction) the invasion of a sovereign Middle Eastern country at the possible cost of thousands of soldiers’ lives, it will now also have to cope with an unprecedented flow of asylum seekers fleeing the carnage in Syria. The EU’s first stab at tackling the migrant crisis came on Wednesday in the form of a compulsory quota system that seeks to distribute some 160,000 refugees. Because the “plan” has been the subject of some confusion and a lot of criticism, we thought it useful to provide an overview of the proposal and on that note, we turn it over to The New York Times:
The president of the European Commission offered a plan on Wednesday to share the burden of resettling 160,000 people in Greece, Hungary and Italy, the three countries where the most migrants have arrived in Europe.
The plan assigns each member state a number of people based on its economic strength, population, unemployment and the number of asylum applications it has approved over the last five years.
Based on the proportions outlined in the proposal, here are countries that have already approved asylum applications at a rate:
- Paul Krugman Is "Really, Really Worried" That He Might Have Screwed Up Japan
Late last year, a very important and very “powerful” man took a field trip to Japan to observe Keynesian insanity prowling around in its natural habitat…
That’s right, last November Paul Krugman – the mere mention of whom is enough to strike terror in the hearts and minds of the sane – found himself in a limousine with Japanese economist Etsuro Honda who was intent on securing the Nobel laureate’s help in convincing Prime Minister Shinzo Abe to delay a planned (and prudent) sales tax hike. As a reminder, here’s how Bloomberg described the “historic” series of events:
When Japanese economist Etsuro Honda heard that Paul Krugman was planning a visit to Tokyo, he saw an opportunity to seize the advantage in Japan’s sales-tax debate.
With a December deadline approaching, Prime Minister Shinzo Abe was considering whether to go ahead with a 2015 boost to the consumption levy. Evidence was mounting that the world’s third-largest economy was struggling to shake off the blow from raising the rate in April, which had triggered Japan’s deepest quarterly contraction since the global credit crisis.
Honda, 59, an academic who’s known Abe, 60, for three decades and serves as an economic adviser to the prime minister, had opposed the April move and was telling him to delay the next one. Enter Krugman, the Nobel laureate who had been writing columns on why a postponement was needed.
It was in a limousine ride from the Imperial Hotel that Honda told Krugman, 61, what was at stake for the meeting. The economist, who’s now heading to the City University of New York from Princeton University, had the chance to help convince the prime minister that he had to put off the 2015 increase.
The concept of outside opinion influencing Japanese decision-making is known as gaiatsu, or foreign pressure, in Japanese, and has historical precedent since at least the arrival of U.S. Commodore Matthew Perry’s squadron in 1853 in Tokyo Bay, which led to an opening in the nation’s trade policies. Gaiatsu also has been used as cover by Japanese officials when they’ve pushed through controversial measures.
Krugman plays down his role, saying the Nov. 6 meeting with Abe “was very straightforward.”
But Honda tells a different story:
“That nailed Abe’s decision — Krugman was Krugman, he was so powerful.”
Yes, “Krugman was Krugman,” which means everyone in attendance was subjected to 40 minutes of crisply-worded nonsense and unlike Deputy Riksbank Governor Per Jansson – who, earlier this year, suggested that Krugman “write fewer articles and have more of a look at the data” after Krugman essentially accused Sweden’s central bank of being an evil cabal of job-hating heretics motivated by an overwhelming (not to mention completely inexplicable) desire to perpetuate global inequality by enriching creditors at the expense of impoverished debtors – no one had the good sense to tell him to shut up.
Sure enough, the tax hike was delayed.
Just days earlier, Krugman penned the following laughably ridiculous words in a blog post explaining why Japan should avoid doing anything that could be mistaken for a rollback of Abenomics:
When I see, say, the IMF inserting into its latest Japan survey a section titled “Maintaining focus on fiscal sustainability” my heart sinks (and so, maybe, does Abenomics); [even though] it’s hard to argue against sustainability.
It sure is, but Krugman will do it and powerful people will unfortunately listen and by the time everyone realizes that efforts to micromanage economic outcomes and smooth out the business cycle by cranking up the printing presses and gluing rates to the zero lower bound have failed it will be far, far too late to normalize which of course is precisely what’s unfolding across the world today.
We retold the story presented above because on Thursday a very funny thing happened: Paul Krugman told an audience in Tokyo that he is “really, really worried” that Abenomics might fail. Here’s Bloomberg:
Nobel laureate Paul Krugman said risks of failure are growing for Prime Minister Shinzo Abe’s “Abenomics” campaign to end Japan’s two-decade slump.
“I’m still really, really worried,” Krugman said at a conference in Tokyo on Wednesday. A big problem remains building enough momentum in the economy to escape deflation, he said.
“Japan has spent a long time in this deflationary trouble,” said Krugman, who helped convince Abe to delay another planned increase in the nation’s sales tax after a hike in April last year pushed the world’s third-biggest economy into a recession.
Japan needs to reach a point where everyone believes that it has pulled out of deflation, he said. “And then if that can be believed, then it may be able to stay out of trouble thereafter,” he said.
Reading that, we’re reminded of BoJ cheif Haruhiko Kuroda, who, back in June, hilariously likened himself and his fellow DM central bankers to Peter Pan when he said the following about what’s needed to perpetuate the central bank omnipotence myth:
“I trust that many of you are familiar with the story of Peter Pan, in which it says, ‘the moment you doubt whether you can fly, you cease forever to be able to do it.’ Yes, what we need is a positive attitude and conviction.”
What Krugman and Pan are both tacitly admitting, is that Abenomics has demonstrably failed and the only thing that can save Japan now is for everyone to suspend disbelief in the face of voluminous evidence that what Kuroda and Abe (at Krugman’s behest) are doing simply isn’t working.
And because “Krugman is Krugman”, we’re never more than one Google search away from a hilarious soundbite from the New York Times blog archives, and so it’s with great pleasure and with everything said above in mind, that we leave you with the following excerpt from a Krugman classic entitled “Why Keynes Is Slowing Winning” ca. 2014:
“Why does the tide finally seem to be turning? Partly, I think, it’s just a matter of time; after six years it’s becoming hard not to notice that the anti-Keynesians have been wrong about everything. And the refusal of almost everyone on the anti-Keynesian side to admit any kind of error has gradually made them look ridiculous.”
- Kerry Picks Clinton Donor To Be State Department's "Email Czar"
The new “email czar” appointed by Secretary of State John Kerry to oversee the burgeoning Hillary Clinton email scandal is a Clinton campaign donor who recently made a generous contribution, according to federal records obtained by Judicial Watch.
Her name is Janice Jacobs, a former career diplomat assigned by Kerry this week to be the State Department’s “Transparency Coordinator,” according to a mainstream news report. Jacobs will be in charge of responding to public-record requests involving the secret email account that Clinton used exclusively to conduct official government business. She will also handle congressional requests “faster and more efficiently,” and will improve the State Department system for keeping records.
Kerry reportedly assigned an “email czar” in an effort to ensure that the State Department promptly responds to an onslaught of record requests without directly undercutting Clinton and the Democratic Party’s presidential front-runner. Ego also played a role in the appointment because aides cited in the story said Kerry has been annoyed at the distraction the Clinton email controversy has caused for his agency, which has at times “overshadowed his diplomatic efforts.”
Kerry could not have picked a better team player. Jacobs is a big Clinton fan who contributed $2,700 to the Hillary for America presidential campaign fund, Federal Election Commission records obtained by JW show. Can we really expect her to be fair and objective as the new gatekeeper of Clinton’s records? Besides being an admirer and campaign donor of the former Secretary of State, Jacobs has a long history as a State Department insider serving as Deputy Assistant Secretary for Visa Services and Assistant Secretary for Consular Affairs until retiring last year.
No cabinet secretary has ever established their own external communication system in an effort to circumvent both the unclassified and classified government systems. Judicial Watch has been a leader in exposing the Clinton email scandal and has a number of lawsuits pending in federal court. JW was also the first to report that Clinton likely also used unauthorized electronic equipment—an iPad and an iPhone—as Secretary of State after being warned not to. A veteran State Department official told JW in March that on at least half a dozen occasions Clinton’s top aides asked the State Department’s Office of Security Technology to approve the use of an iPad and iPhone. Each time the request was rejected for security reasons.
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