- Will The Lone Star State Secede? Super Tuesday May Allow Voters To "Reassert Texas As Independent Nation"
Submitted by Mac Slavo via SHTFPlan.com,
The question of secession on a ballot it is a one. Secession might make a powerful statement to voice defiance government tyranny, but it could also set off sparks.
Now, it appears that the biggest and most independent-minded state in the union might test that question. What happens after that is anyone’s guess.
Regardless, the possibility shows the pulse of the nation:
Texans May Have Secession Question on Republican Primary Ballot
by Joshua Krause at the Daily Sheeple
Aside from voting for whatever politician happens to be the flavor of the month, the Republican voters of Texas may have an additional question to answer for when Super Tuesday arrives next year. If the Texas Nationalist Movement has its way, then the Republican primary ballot may have to ask voters to decide whether or not they think “the state of Texas should reassert its status as an independent nation” and secede from the United States
Much to the chagrin of the Republican party, the Texas independence group is currently gathering signatures for a petition that would place their non-binding question on the ballot. According to the Texas Secretary of State, they will need at least 66,894 signatures, though the organization is shooting for 75,000.
Historically, the Republican Party would have the final say on what goes on their ballot, and they’ve tried to distance themselves from the Texas Nationalist Movement in the past. If the petition succeeds, it would be the first time that an outside group has their referendum placed on the Republican ballot. The group’s president hopes that the vote will get state legislators to take the issue seriously. “Texas and Washington, D.C. are on very different paths, and the people of Texas obviously recognize that…The Texas Nationalist Movement message has been one not of reaction to grievance but one of a future we can build as an independent nation.”
Secession, a formal declaration of independence, is by tradition the right of every Texan and American, and the Fed has doubtlessly crossed the line too many times to count. Fed up Americans are looking for ways to voice their anger, and Texans have a notoriously short fuse, a history of independence and tendencies to secede. But the powers that be may have also fueled a trap on sovereignty. What is shirked at the federal level may be accepted at the international level.
The bankers and social engineers are practiced at ruling by divide and conquer to avoid personally confronting pitchforks and angry townspeople. There is a plan underway, which has already been exposed, known as the North American Union. Sponsored by Wall Street firms like Goldman Sachs and organizations like the Council on Foreign Relations, the agenda is creating a globalized world that will use immigration to upend politics, shift demographics, supply corporate labor and fracture society.
Like NAFTA before it, the plan will destroy jobs and displace millions of workers, creating new waves of migration across the border. Further integration will restructure shipping, energy and transportation, all while building a scapegoat for the engineered economic collapse that will rile up the masses.
Like a doctor setting a fracture, the underwriters of the North American plan to actually break up regions of America to ‘enhance’ the management and control of society at many levels. According to author Jerome Corsi:
Understanding the plan to merge the U.S., Mexico and Canada, says Corsi, is “the only context in which the current immigration travesty makes sense – and it must be stopped.” This aim to create a North American Union between the United States, Mexico and Canada is the real reason behind “comprehensive immigration reform.”
“A North American Union would not just be the end of America as we know it,” claims Corsi, “but the beginning of an EU-like nightmare – a bureaucratic coup d’etat foisted upon millions of Americans without their knowledge or consent.”
Thus, the big banks and power brokers are interested in Texas secession, or at least could exploit it easily:
How might secession transition from a fringe idea to a country-ender? In my conversations with economists, political scientists, and futurists, three broad themes came up that I found the most persuasive: economic collapse, the rise of localism, and North American reshuffling.
[…]
Let’s say there’s an American revolution—who leaves first? Once the feds “start imposing just huge taxes,” [Peter] Schiff says, the states that have to pay more in than they’re getting back out will pull their stars off the flag. Schiff lists Texas and California as potential pull-out candidates, whereas “Florida probably wants to stay because of all the Social Security money.” […]
North America’s borders have remained pretty much static for the last century… But this stability shouldn’t imply that our dividing lines make sense. In 1981’s Nine Nations of North America, Joel Garreau argued that the continent’s borders don’t reflect how we live. Garreau’s nine nations map—which highlighted regions where people share common values, culture, and natural resources—wasn’t intended to be predictive of a future breakup [Ed. Note: yet could be spot on].
Take away the artificial borders and we’re all just North Americans… If America ends, so will Canada and Mexico. And if Canada or Mexico goes down the tubes, we won’t be long for this continent either. (Source)
Taken the wrong way by the media, secession and ‘fightin’ talk’ about immigration allow the system to play off the sentiment of the locales and provide friction to open up action. This strategy creates new problems, and give new agency powers to those who could offer to provide solutions. These are new realms for experts to manage, and corporations to service. Remember that calls to secession have been led by bought out “yee haw” politicians like Rick Perry. The gun toting standoff rhetoric has been largely manufactured by scripted suits funded by lobbyists.
Nonetheless, a breaking point is bound to come somewhere, at sometime. As one commenter put it:
“Most Texans do not want to break away from the United States. Most Texans consider themselves Americans. But if ever being American means sacrificing our liberties, we will just prefer to be Texans.”
* * *
Texans May Have Secession Question on Republican Primary Ballot was written by Joshua Krause originally published at the Daily Sheeple.
- Nigeria Central Bank Urges "Don't Panic" As Banks Halt Lending To Each Other
When the head of the central bank utters the two words "don't panic" you know the economy, currency, and financial system is in trouble…and that's just what Nigerian central bank Governor Godwin Emefiele just did. Following government intervention to sweep cash from local to central accounts, banks have panicced. As Reuters reports, overnight interbank lending rates spiked to 200%, which Emefiele opined was "a momentary action… just sentiment," but the interbank naira market was paralyzed for a third day on Thursday, with banks unwilling to lend to each other, even when rates fell back to 20-30%.
O/N rates spiking…
And CDS imply a notable devaluation is looming…
Charts: Bloomberg
As Reuters reports, Nigerian central bank Governor Godwin Emefiele ruled out a naira devaluation on Thursday and told people not to panic about a government order which risks draining billions of dollars from the financial system.
In an interview with Reuters, Emefiele said he was ready to inject liquidity if needed into the interbank market, which dried up this week following the directive to government departments to move their funds from commercial banks into a "Treasury Single Account" (TSA) at the central bank.
The policy is part of new President Muhammadu Buhari's drive to fight corruption, but analysts say it could suck up as much as 10 percent of banking sector deposits in Africa's biggest economy – playing havoc with banks' liquidity ratios.
With global oil prices tumbling, banks and companies are already struggling with the consequences of a dive in Nigeria's energy revenues that has hit the naira currency and triggered flows of capital out of the country.
Then JP Morgan kicked Nigeria out of its influential Emerging Markets Bond Index last week due to restrictions that the central bank imposed on the currency market to support the naira and preserve its foreign exchange reserves.
Since taking office in May, Buhari has vowed to rein in Nigeria's dependency on oil exports which account for 90 percent of foreign currency earnings. However, he has faced criticism from investors for failing to appoint a cabinet yet or outline concrete policies.
Amid confusion over the implementation of the single account policy, overnight interbank lending rates spiked to 200 percent, but Emefiele denied the policy had provoked a liquidity crisis.
"There is no shortage of liquidity," he said, pointing to an oversubscribed sale of treasury bills on Wednesday. "A spike is a momentary action. It's sentiment."
"I do not think there is any need for anybody to panic," he added.
Nevertheless, the interbank naira market was paralyzed for a third day on Thursday, with banks unwilling to lend to each other, even when rates fell back to 20-30 percent.
In a sign of the financial ructions, commercial bank cash balances with the central bank that are normally earmarked for foreign exchange or bond purchases plunged to 173 billion naira on Thursday from 486 billion two days ago.
Analysts had predicted that the TSA edict could suck 1.2 trillion naira ($6 billion) out of the commercial banking system. Emefiele said the amount would be less than one trillion, although he did not give details beyond saying the measure was designed to root out graft.
His comments did not instill confidence in the new rules among economists.
"It's an example of the government deciding on a policy without thinking through the mechanics of how its implementation will work," said Alan Cameron at Exotix, a London-based specialist in frontier markets – a higher risk subset of emerging economies.
- Peter Schiff: "Once Again Fed's Bark Fails To Live Up To Its Bite"
Submitted by Peter Schiff via Euro Pacific Capital,
Once again the Fed’s bite has failed to live up to its bark. Despite months of expectations that it would finally raise rates for the first time since 2006, the Fed continued to sit on its hands while pointing to some unspecified date in the future when all the economic and financial stars will align in a way that makes a 25 basis point increase appropriate. Am I the only one getting bored by the repetition?
Just like it has in prior statements, the Fed’s Open Market Committee painted a picture of a stable and growing economy that was just about ready for a tightening cycle to begin. Its decision to hold off for now was positioned as a temporary concession to largely overseas developments. But the Fed, and the rest of the economic establishment for that matter, continues to ignore the steady torrent of negative data that reveals a slowing economy. Based on the manufacturing, business investment, productivity, and consumer confidence numbers, the Fed could be preparing a fresh round of stimulus, not readying its first economic sedative in nine years.
Today’s surprisingly dovish statement was notable for the introduction of “international developments” as an ongoing input into the Fed’s rate deliberation process. To many, this refers to the current uncertainty in China. But, in reality, this shift offers the Fed a gallery of new excuses to choose from to explain away its failure to raise rates down the road. Now weakness at home and abroad is sufficient to keep the Fed on the sidelines. The last thing we needed was more excuses.
As I have maintained continuously, rate hike talk from the Fed is just a bluff to disguise its inability to tighten, as even small increases could be sufficient to prick the biggest bubble it has ever inflated. It is no coincidence that the stunning 170% increase in the Dow Jones, that occurred between March 2009 and the end of 2014, happened while the Fed was stimulating the economy almost continuously with QE, and that the rally came to an abrupt end when the QE stopped in December 2014. The recent 10% correction on Wall Street confirms to me just how sensitive the markets remain to the prospect of any rates higher than zero.
When the year began, opinion was divided between those who thought the Fed would move in March, and those who thought it wouldn’t happen until June. When June came and went, September became the odds-on favorite. Now those same experts are once again divided between December and sometime in 2016. When will these “experts” finally connect the real dots and discover that the monetary medicine that the Fed has doused over the economy since 2008 has only created a weak and utterly dependent economy. A rate hike is supposed to be a signal that the economy has a clean bill of health. But as the patient fails to recover, another dose of QE will be just what the doctor orders.
- Japanese Stocks/USDJPY Plunge As China Cracks Down On Aggressive-Buying By "Sinister Stock Squads"
Despite the approval of various Asian nation officials (e.g. Japan's Amari: "Fed decision appropriate"), it appears non-hawkishness is not enough to keep the dream alive. Japan's Nikkei 225 is down over 600 points from its post-FOMC spike highs, and USDJPY has tumbled over 1 handle – back below 120.00. Chinese stocks are extending losses after last night's late tumble, as ironically, China's securities regulator has uncovered a number of market manipulators who boosted prices of some stocks to sky-high levels during the peak of the bull market, attracting numerous followers who have suffered heavy losses in the recent market crash. The PBOC strengthened the Yuan fix for the 2nd day in a row (by the most in 2 weeks).
A sigh of relief from Japan's leadership:
- *AMARI: FED DECISION APPROPRIATE IN VIEW OF WORLD, U.S. ECONOMY
- *AMARI: IMPACT FROM RESULTS OF FED DECISION WASN'T BAD
But it is not enough, as USDJPY and Nikkei 225 are tumbling…
And this did not help…
- *FORMER JAPAN MOF OFFICIAL EISUKE SAKAKIBARA SPOKE IN TOKYO
- *SAKAKIBARA SAYS DOLLAR-YEN MAY MOVE TOWARD 115-120 RANGE
- *SAKAKIBARA SAYS DOLLAR-YEN RATE UNLIKELY TO BE TOWARD 125
Which legged USDJPY lower still.
* * *
Broad asian equity markets weaker…
- *MSCI ASIA PACIFIC INDEX DROPS 0.6%, EXTENDING LOSS
And China is opening lower, extending last night's closing weakness…
- *CHINA'S CSI 300 STOCK-INDEX FUTURES FALL 0.4% TO 3,143.8
Despite a 2nd day of releveraging…
- *SHANGHAI MARGIN DEBT BALANCE RISES FOR SECOND DAY
Which is ironic since China's securities regulator has uncovered a number of market manipulators who boosted prices of some stocks to sky-high levels during the peak of the bull market, attracting numerous followers who have suffered heavy losses in the recent market crash, according to Shanghai's China Business News.
The China Securities Regulatory Commission (CSRC) has penalized two such manipulators, announcing on Sept. 11 the confiscation of 47 million yuan (US$7.3 million) of the illegal gains Ma Xinqi and Sun Guodong made from stock manipulation.
In its announcement, the comission described how Ma Xinqi jacked up the stock price of Beijing Baofeng Technology, an internet video company, by placing massive orders which were canceled shortly afterwards before selling off his original holdings of the stock, making huge gains.
Sun Guodong repeatedly bolstered the stock prices of Guangdong Qtone Education and 12 other listed companies by placing orders for those stocks before selling off his original holdings the following day.
Insiders pointed out that Ma and Sun are members of 10-dd "stock squads" focusing on investments in high-flyers, China Business News said.
"These stock squads, each boasting several hundreds of millions of yuan in funds, carefully study technical market charts and profit from investments of extremely short duration," remarked an executive of a private equity fund, adding that in addition to their own money the squads also solicit funds to boost their clout in manipulating stock prices.
The private equity fund executive said both Ma and Sun are but minor players among the stock squads, however, pointing to their limited profits, according to the announcement of CSRC.
Market insiders suspect that Ma and Sun are followers of much greater forces manipulating stock prices, perhaps involving fund managers, which were behind the stock price rise at daily ceiling of Baofeng Technology for 34 trading sessions consecutively in March this year, according to China Business News.
"Institutional investors have driven the prices of many stocks with shaky fundamentals to sky-high level," the private equity fund executive said.
So – it appears – in China, do not be an over-aggressive buyer or a seller of stocks. We love the smell of free markets in the morning.
China strengthened the Yuan fix fior the 2nd day in a row..
- *CHINA SETS YUAN REFERENCE RATE AT 6.3607 AGAINST U.S. DOLLAR
That was the biggest rise in 2 weeks:
- *CHINA RAISES YUAN REFERENCE RATE BY 0.1%, MOST IN 2 WEEKS
Charts: Bloomberg
- War Is The Health Of The State – Protecting Yourself From "Financial Tyranny"
Submitted by Claudio Grass via Acting-Man.com,
The Misfortune of Being Born Into a State
In an essay titled “The State”, Randolph Bourne, an American writer, made a distinction between a country and a state that I find crucial. He described one’s country as “an inescapable group into which we are born”. In his view, a country is “a concept of peace, tolerance, of living and letting live. But the State is essentially a concept of power, of competition; it signifies a group in its aggressive aspects. And we have the misfortune of being born not only into a country but into a State, and as we grow up we learn to mingle the two feelings into a hopeless confusion”.
Randolph Silliman Bourne: a lifelong enemy of the State and war. His great unfinished work “The State” was discovered after his death. Bourne’s odd physical appearance owed to tuberculosis of the spine, which he suffered in childhood. Jeffrey Riggenbach has published a great paean on the brilliance of Randolph Bourne at the Mises Institute.
Bourne continues to say:
“It cannot be too firmly realized that war is a function of States and not of nations. Indeed, that it is the chief function of States. War is a very artificial thing. It is not the naïve spontaneous outburst of herd pugnacity; it is no more primary than is formal religion. War cannot exist without a military establishment, and a military establishment cannot exist without a State organization. War has an immemorial tradition and heredity only because the State has a long tradition and heredity. But they are inseparably and functionally joined. We cannot crusade against war without crusading implicitly against the State. And we cannot expect, or take measures to ensure that this war is a war to end war, unless at the same time we take measures to end the State in its traditional form.”
Ludwig von Mises came to a similar conclusion, when he stated:
“As tax-funded monopolists of ultimate decision making, states can externalize the costs associated with aggressive behavior onto hapless taxpayers. Hence, states are by nature more prone to become aggressors and warmongers than agents or agencies that must themselves bear the costs involved in aggression and war.”
So, is there any truth to what Bourne and Mises believed? Is it applicable to today’s world? The short answer is: Yes. I would like to take the opportunity to explain why I am convinced that war and the State are inseparable, even today. I would like to draw your attention to some historical facts, since I believe that it is essential to understand history in order to understand the present.
Ludwig von Mises, probably the greatest economist of the 20th century. Mises was not an anarchist, but he was highly critical of the “force monopolist” government and harbored no illusions about it. His incisive analyses of government and bureaucracy are highly recommended reading.
Sutton’s Analysis of US Military Aid to Russia
Professor Anthony C. Sutton, a professor of history, economics and politics, who was born 1925 in London and taught at the Universities of London, Göttingen and California, had a huge impact on my beliefs. In 1962, he became a US citizen and worked as a research fellow at Stanford University’s Hoover Institution from 1968 to 1973. In 1973, he published his first book “National Suicide – Military Aid to the Soviet Union”, in which he found that the Soviet Union received approximately 90% of its technology directly from the West, with the particular support of the US government and large US multinational companies. At the time, Sutton still believed in an open society and thought that these deals originated because of the ignorance, mental laziness and the incapability of an open society to understand the long-term implications of a totalitarian system. However, he never thought that a certain agenda by the US establishment stood behind the “military aid”.
British and American (he was born in London, but held both nationalities) economist and historian Anthony Cyril Sutton. Sutton has left us with a number of highly interesting books about the decisive events shaping the 20th century.
In 1974, Sutton published another book titled “Wall Street and the Bolshevik Revolution”, in which he wrote about the financial support that the Russian October Revolution of 1917 got from Wall Street. He exposes the “relief payments” the Russian revolutionaries received, as well as the trade with Russian gold for financing the Bolsheviks. The USA even supported revolutionary propaganda and employed pro-communist writers.
In summary: According to Sutton, major players in both the US economy and US government supported the communist revolution in Russia. Sutton believed that there were two reasons for the US support of the Bolsheviks. First, they believed that providing technology to Russia would reduce the technological development of the country and thus would minimize future competition from Russia. Second and more important, according to Sutton, was the fact that foreign companies were given access to the Russian market with quasi monopolies as long as they complied with the wishes of the Bolsheviks.
Lenin addresses a crowd in St. Petersburg shortly after his return to Russia from exile in Switzerland. It is surprising how much help the Bolsheviks received from the seemingly most unlikely sources. Germany’s Kaiser showered them with money because they promised they would end Russia’s participation in the war. Wall Street magnates decided that it would be advantageous if the Bolsheviks received a finacial shot in the arm from the citadel of capitalism as well. Apparently they had not listened when Lenin remarked that the capitalists would sell him the rope he would hang them with.
Sutton wrote several other noteworthy books including “Wall Street and the Rise of Hitler” (1976), were he describes the intricate relationship between Wall Street and the Nazi regime. He believed that without financing from Wall Street, the German war machine would not have been able to sustain itself.
Government Lies and their Cost
This leads me to another point: Most people don’t question what their government does, especially when it comes to foreign policy. This gives power-hungry politicians the opportunity to lie to the public, so that people willingly accept a war in a foreign country. A recent example is the Iraq war, where the public was led to believe that Saddam was hiding weapons of mass destruction and was an imminent threat to the United States. After the invasion, however, it turned out that Iraq had no WMDs and the threat was exaggerated to gain public support for the war.
Another example. We all know that the CIA and other intelligence services have been involved in questionable activities for ages. My initial motivation for this article was a video with the title “The War Against The Third World” describing America’s foreign interventionism and the expansion of the military-industrial complex. The video shows a speech by John Stockwell, a former Marine and CIA paramilitary intelligence case officer. The video has several different aspects, but I will only mention a few. One of the most shocking excerpts was the section where Stockwell talks about the Church Committee investigation:
“Senator Church said that in the 14 years before he did his investigation he found that they had run 900 major operations and 3000 minor operations. And if you extrapolate that over the whole period of the 40 odd years that we’ve had a CIA, you come up with 3000 major operations and over 10,000 minor operations. Every one of them illegal. Every one of them disruptive of the lives and societies of other peoples and many of them bloody and gory beyond comprehension, almost.”
Church committee hearing in 1974 on the CIA’s activities.
Another important aspect is how Nixon and Kissinger “secretly” bombed neutral Cambodia for 14 months in 1969, unleashing 110,000 tons of bombs on the country. The irony of this story is that Kissinger actually received the Nobel Peace Prize in 1973 for his “honorable” actions to resolve the Vietnam War. Such covert action was easier in the past, because the government controlled radio, TV and newspapers. As we will show later, this is becoming increasingly difficult, due to the fact the Internet has become an independent news source for many.
A late 1974 newspaper headline (New York Times) on the CIA’s operations against anti-war activists and other political dissidents
Are the Elites Implementing a “Divide and Conquer” Strategy?
“Divide and Conquer” is one of the oldest strategies used by the ruling powers. The focus of this strategy is to turn people against each other so that they don’t turn against the establishment itself. This division can take on different forms, such as dividing by race, religion, nationality, poor vs. rich or East vs. West.
When I look at the world today and see what is happening, it is obvious that racism is accelerating and tensions between Christians, Jews and Muslims are increasing tremendously. Europe is currently being flooded with a wave of refugees from the Middle East and Africa who have nothing to lose. I remember the conversations I had while living in the Middle East for two years.
A bust of Philipp II of Macedon, whom the strategy of “divide et impera” is ascribed to. It was later successfully implemented by the Roman Empire and has been a staple of politics ever since. How do you rule over people? Divide them, and make them fight among themselves.
Back in 2004 the overwhelming majority of the people I spoke to in Syria thought that Europe was a kind of “Promised Land”. They believed that they would live a picturesque life, similar to what they see on TV, if they only made it to Europe. Now their dream has been destroyed within seconds. The “Promised Land” turned out to be nothing more than a mirage. They are ending up in refugee camps and the majority will not even be allowed to work.
With no way of working or supporting their families, I am confident they will become vulnerable to radical ideas they hear in some mosques from extremist Wahabis and Salafists. Therefore I am certain that the situation can and will lead to social tensions. Additionally, the European welfare state is essentially broke and unsustainable.
When we take the economic weakness into consideration it becomes clear that most refugees will not find the “European Dream” they were looking for. Ironically, most of the refugees currently fleeing war or oppressive regimes are fleeing situations which Western governments have created or at least endorsed in the first place.
Refugees arriving on Italy’s shores
Ever Expanding State Power at Home
All this meddling in foreign affairs does not only impact foreign countries, but also affects domestic policies. War is often used by the State to further restrict individual liberties and increase the power of the police apparatus. In the essay we mentioned earlier, Randolph Bourne summed up the impact of war on domestic policy as follows:
“With the shock of war the state comes into its own again. It is the reason given for high taxes, internal revenue bureaucracies, pervasive spying, censorship, military conscription, the abolition of civil liberties, heavy debt, an explosive growth of government spending and borrowing, extensive excise taxation, nationalization of industries, socialist central planning, massive public indoctrination campaigns, the punishment and imprisonment of dissenters to the state’s rule, the shooting of deserters from its armies, the conquest of other countries, inflation of the currency, demonization of private enterprise and the civil society for being insufficiently “patriotic”, the growth of the military/industrial complex, a vast expansion of government pork barrel spending, the demonization of the ideas of freedom and individualism and those who espouse them, and a never-ending celebration, if not deification, of statism and militarism.”
Additionally, today terrorism is increasingly being used to increase the government’s powers at home. According to John Whitehead from the Rutherford Institute, North Dakota has become the first state to make it legal for the police to fly drones equipped with everything from rubber bullets to pepper spray to tear gas, sound cannons and tasers. He expects 30,000 drones to be airborne in American airspace by 2020.
I would like to mention a statement by Prof. Carroll Quigley in his book “Weapons Systems and Political Stability”. He claims that as weapons become more sophisticated and professional, the government employing them becomes more totalitarian.
America’s increasingly militarized police forces have a new toy – and soon it will be armed.
How can you Protect Yourself in such an Environment?
I am confident that physical Gold and Silver can protect you to a certain extent from government tyranny. Let me start by explaining the reason why I work in the gold business. First, I am confident that with a monetary system based on free banking, the system of today could not possibly exist. This is because most people would not carry out transactions in a fragile and debt based currency. Second, I learned from history that gold is money – everything else is credit!
Gold has been money for over 5000 years. On the other hand, our current monetary system has been in place for only slightly over 40 years. I believe economic prosperity is not possible when the money that we use can be created out of thin air. Since 2008, global debt has increased from 140 trillion to 200 trillion dollars. Our economy is in shambles and the newly created money goes to the state and its allies, generally bypassing the real economy. I don’t think that we will ever see a real recovery until we return to a system of sound money. We have to choose between freedom or slavery. Only with free markets and the potential of individual minds as a source of inspiration can we build the basis for a free society.
An ancient Anglo-Saxon gold coin, depicting Coenwulf, King of Mercia (796-821).
Our current monetary system is the root cause of many evils of today. Let’s take war, a topic we discussed in this article, as an example. Without a monetary system that creates currency out of thin air, most of the wars that we have had and still have would simply not be financeable. This system is controlled by a few, who change the rules to their own benefit. And as we have seen they use their privileges to finance wars and to bribe politicians.
By holding your wealth in precious metals you are rejecting the current system and also protecting yourself from “financial tyranny”. This includes: capital controls, expropriation, bail-ins, bailouts, negative interest rates, market manipulation on a wide scale and massive paper currency fluctuations. The jurisdiction where you keep your precious metals is also essential in my view. I personally feel safe having my metals stored in Switzerland, a neutral country that doesn’t intervene in international affairs.
The Internet is the Light at the End of the Tunnel
Although things don’t look very positive at the moment, I’m convinced that sooner or later with the help of the Internet, people will start to understand the principles of freedom and appreciate what it means to be free. Broadcasting and distributing information that is accessible from all over the world and uncontrollable by the establishment is helping to spread better ideas. You probably wouldn’t be reading these lines if it weren’t for the Internet. The Internet is already making it increasingly difficult for governments to cover up their actions.
However, more importantly, the Internet will not only change the way we access information. It will also change the financial system. We are standing at a crossroads and I am convinced that the crypto currency movement will change the currency landscape in the foreseeable future. We will have different digital currencies, some of them are even based on gold. They will all compete freely on the market. Cash, checks, and other forms of “money” should gradually disappear. I am certain that taking away the government monopoly of money would lead to a safer world, as governments wouldn’t be able to print money out of thin air to finance their never ending wars.
Never forget that we always have a choice, even if the establishment is telling us otherwise. I personally choose voluntarism and a free market, what would your choice be?
* * *
This is an article reprinted from Global Gold’s Outlook Report (subscribe on www.globalgold.ch)
- Assad Goes On Offense, Bombs ISIS "Capital", Deploys New Russian Weapons
Now that Moscow has officially confirmed that Russian boots are on the ground at Latakia and that the Kremlin is actively ramping up its technical and logistical support for the Assad regime, one point we’ve been keen to drive home is that rebels, “freedom fighters”, and marauding, black flag-waving jihadists alike will now have a much tougher time routing government forces and taking control of the country.
After all, battling Assad’s depleted army (which is effectively fighting a three-front war with limited resources) is one thing, but fighting Russian special forces is entirely another, which is of course why the US is so “concerned” about the Russian presence in Syria. Put simply: if the Kremlin doesn’t want Assad to fall, then Assad will probably not fall if the only challenge comes from various ragtag militias and Islamic militant groups. That calculus obviously changes if the challenge suddenly comes from a US-backed coalition consisting of Turkey, Saudi Arabia, France, Britain, Jordan, and Qatar.
It’s with that in mind that we go to Reuters, who reports that the Russians may have breathed new life into Assad’s forces which have reportedly begun using new weaponry and launching offensive strikes on Raqqa (the de facto ISIS capital). Here’s the story:
The Syrian military has recently started using new types of air and ground weapons supplied by Russia, a Syrian military source told Reuters on Thursday, underlining growing Russian support to Damascus that is alarming the United States.
“The weapons are highly effective and very accurate, and hit targets precisely,” the source said in response to a question about Russian support. “We can say they are all types of weapons, be it air or ground.”
The source said the army had been trained in the use of the weapons in recent months and was now deploying them, declining to give further details other than saying they were “new types”.
Syria’s Foreign Minister Walid al-Moualem said on Thursday Russia has provided new weapons and trained Syrian troops how to use them, without saying when or naming any specific systems.
He told state television the government would be prepared to go further and ask Russian forces to fight alongside its troops if needed – though he said there were no such soldiers there now.
Activists said Syrian government war planes had mounted at least 12 air strikes in Raqqa, often described as Islamic State’s de facto capital. The raids started at around 11:30 a.m. and came in three separate waves that hit eight targets.
The strikes hit close to at least four Islamic State offices, including one used by its self-appointed religious police force, said an activist in Raqqa who was contacted via the internet and declined to be named for security reasons.
Islamic State imposed a curfew in two parts of the city.
What this seems to indicate is that regime forces are now set to take the fight to ISIS, which could mean that an already fluid situation is about to become even more indeterminate, so we thought this an opprtune time to remind readers that if you’re having a difficult time keeping track of who’s fighting who and why, you’re not alone.
Take it from us, the haphazard collection of foreign forces, jihadists, rebels, mercenaries, and militants is hard enough to keep track of on its own, and the situation is further complicated by ever shifting alliances, divergent objectives, and external meddling.
Throw in the fact that the US has, at various times, trained and inserted a variety of makeshift contingents, all of which (well, with the exception of “four or five”) have been either killed or captured, or have otherwise disappeared into the desert and you have, to quote an unnamed Pentagon official who spoke to CBS last month, “a friggin’ mess.”
Complicating things further is the fact that the Russians are on the ground and building forward operating bases near Latakia and Turkish troops, if they ever get tired of chasing Kurds in the mountains of Northern Iraq, will probably find themselves operating somewhere between Kobani and Aleppo. As for US SpecOps (which the Pentagon swears are not engaged in combat despite what Gen. Lloyd Austin seemed to suggest when speaking to the Senate Armed Services Committee on Wednesday), there’s no telling where and with whom they’re fighting.
So, as the confusion and violence intensifies we present the following map from Reuters, which will hopefully be useful in helping to explain who controls what and where.
- "We Will Have A Downturn", Dalio Warns, Return To QE Inevitable
Last week, we took a look at why zen master Ray Dalio’s All Weather fund has had a tough time riding out the series of violent thunderstorms that have shaken the market of late.
In short, “the historical relationships between asset classes (volatilities and correlations) that are used to construct optimal “risk-parity” funds in order that ‘risk’ is balanced and hedged across bonds and stocks (for example) broke down dramatically.”
Or, visually:
Fresh off a -4.2% performance for All Weather in August, Dalio sat down Wedensday with Tom Keene and Michael McKee for an interview on Bloomberg TV.
After concedeing that last month was indeed “lousy”, Dalio went on to discuss the outlook for asset prices and the global economy ahead of an expected Fed rate hike cycle. The arguments will be familiar – especially to those who frequent these pages – but are worth recapping nonetheless.
First, there’s the familiar idea that central banks are effectively out of ammunition and even if the will to ease is there (and make no mistake, in today’s centrally planned world where every central banker from Washington to Tokyo has gone Keynesian crazy, we imagine that the will to ease will always be there), actually having the scope to do so is another matter. From Bloomberg:
“I don’t care whether they raise 25 basis points,” Dalio said Wednesday in an interview with Tom Keene and Michael McKee that was broadcast on Bloomberg radio and television. “What scares me, or what worries me, is what the next downturn in the economy looks like, with asset prices where they are and a lesser ability of central banks to ease monetary policy.”
He predicted that returns across asset classes over the next decade will only average 3 percent or 4 percent. Narrower spreads will make it much harder for asset purchases to have a big effect on the market, he said.
And then there’s the argument – which we’ve been making for longer than we can rememeber – that paradoxically, because ultra accommodative monetary policy hasn’t proven effective at engineering a robust global recovery by resuscitating demand, but has instead served to perpetuate a global deflationary supply glut, any move by the Fed to hike rates will almost invariably trigger a dramatic meltdown in already beleaguered emerging markets and that meltdown will in turn feedback to advanced economies causing the Fed to reverse course and launch QE4 at which point any semblance of credibility will be lost as will any hope that the world will ever be able to normalize without suffering through the worst collapse modern capital markets have ever witnessed:
Dalio, who manages the world’s biggest hedge fund, is among a small number of prominent money managers who have urged the Fed not to raise interest rates. Jeffrey Gundlach, co-founder of DoubleLine Capital, has said the Fed would have to reverse course if it raises rates prematurely.
“We will have a downturn,” Dalio said in the interview.
As the U.S. Federal Reserve meets Thursday to decide whether to raise interest rates, Dalio said a big increase in the near future is impossible because the global environment requires lower borrowing costs. He reiterated that the central bank will eventually return to quantitative easing.
If and when the Fed does finally move to hike, it will be interesting to watch not only Dalio’s All Weather fund, but also the rest of the risk-parity crowd to see how the “rebalancing” works out in what are sure to be chaotic markets. On that note, we close with the following from Deutsche Bank:
A “policy error” rate hike might well result in positive correlations among equities, commodities and bonds, due to a combination of risk off and higher rates. In this case it is not entirely clear how risk-parity funds would rebalance: A potential candidate for inflows would be currencies, and in particular the dollar, which could be the only game in town. Of course, this would only put additional upward pressure on the dollar, reinforcing the “policy error” nature of the hike via additional traded goods price deflation (including commodities), weakness in net exports, and exacerbating pressure on dollar peggers.
- Vote With Your Feet: Free States Are Happier & Richer
Submitted by Gabriel Openshaw via The Mises Institute,
The greater the economic freedom, the wealthier and happier the people.
From minimum-wage laws to higher progressive taxation to greater unionization to larger welfare programs to more regulation, left liberals demand a stronger and more economically active central government. Advocates of laissez-faire, on the other hand, favor smaller government, less regulation, lower taxes, and greater individual opportunity and property rights.
But which economic policy approach actually yields the best results?
We’ve already clearly demonstrated — via international and US state migration rates — that people the world over are naturally drawn toward greater economic freedom. Across countries, and even across states, millions of people every year migrate away from greater taxation and more regulation and toward lower taxation and less regulation. But are they better off?
Yes.
Let’s take a look at the fifty US states, ranked by their level of economic freedom. The most highly-ranked states have lower tax burdens, deference to property rights, less government spending, and labor market freedom:
Taking into account cost-of-living differences, the top ten most economically free states have an average $52,334 median household income, which is considerably higher than the $43,090 median income for the ten least free. That’s a 21 percent raise for workers by switching state government policies to a smaller government approach. How much more could it be increased if the same were done at the national level?
The observed results are not a question of race or country of origin: African-Americans, Hispanics, Asians, and immigrants also earn substantially more in the more economically free states. While left liberals should be lauded for their apparent concern for the welfare of minorities, the truth is that their policies yield the worst results for them, a standard of living pay cut just for living in a more regulated and heavily taxed state.
One may think that this could be driven by urban vs. rural states more than policies, but the top ten free states are 71 percent urban vs. 72 percent for the bottom ten — a negligible difference. Moreover, the states in between the two are even more urban, at 75 percent, which effectively rules out correlation.
Another objection may be that “the rich” or “the 1 percent” are skewing the numbers — that income inequality is running rampant with less government to level the playing field, as many persistently believe. The exact opposite is the case.
Using median incomes as the measure (instead of average incomes) effectively eliminates the impact of the very wealthy on the numbers. And the “Poverty Measure” is lower in the most free states (13.3 percent) than in the least free (15.1 percent).
But the real measure of income inequality is the Gini index, and we can put aside for now the fact that median incomes are a far better measure of overall economic well-being than inequality of incomes (i.e., 100 people making $1 a day are perfectly equal but not better off than ninety-nine people making $2 a day and 1 making $5 a day, despite the latter’s higher inequality).
If we assume inequality to be an important economic measure instead of a normal byproduct of economic growth, the most free states do better, with a .446 Gini index vs. a higher and less equal .462 Gini for the least free states. Not only that, but the rate of growth of inequality over the past forty years is lower in the most free states compared to the least free: 22 percent vs. 30 percent. In other words, heavier government involvement has led to more income inequality and faster growth of such, while less government has created a more equal growth in incomes.
A final argument might be that while there may be greater income in more free-market states, the increased government regulation and intervention provides greater care and increases the population’s happiness and well-being. But the opposite is the case.
Gallup publishes an annual Well Being Index, which measures and ranks each state’s population across five core measures of well-being:
- Purpose (liking what you do each day and being motivated to achieve your goals)
- Social (having supportive relationships and love in your life)
- Financial (managing your economic life to reduce stress and increase security)
- Community (liking where you live, feeling safe, and having pride in your community)
- Physical (having good health and enough energy to get things done daily)
Averaging each state’s Wellness rank for the past seven years we find that states with greater economic freedom also bring greater happiness and well-being.
So what happens when you create a more laissez-faire and libertarian environment where people make more money, have less poverty, and find greater happiness in their lives? People want to move there. And indeed, looking at state-to-state migration of Americans between 2006 and 2010, we see a net migration flow of 704,000 from the twenty-five least economically free states to the twenty-five most economically free. That’s hundreds of thousands of Americans choosing to relocate away from more interventionist government to more free market oriented government.
Political Party Just One Factor
On that latter point, it’s important to distinguish small-government ideology from Republican party control in a state. While it’s true that there’s a strong correlation between Republicans and economic freedom — the ten most free states had a Partisan Voter Index (PVI) average of R+10.3 vs. D-6.1 for the ten least free — it’s not a perfect correlation either. Two of the top ten states (Virginia and New Hampshire), for instance, are swing states, and two of the bottom ten economically free states (West Virginia and Mississippi) are solidly Republican.
It’s also worth noting what economic freedom is not: it is not corporatism or crony capitalism, where the government bails out banks and subsidizes politically connected businesses, which both major political parties are heavily guilty of. Rather, it’s smaller, less intrusive government.
The reality on the ground is that states with more libertarian free market policies enjoy better results: greater median incomes, a more equitable distribution, less poverty, greater success for minorities and immigrants, and higher overall levels of happiness and well-being. In the political rhetoric landscape the battle of ideology is fierce and filled with demagoguery; in the real world the difference in results between competing economic policies are strikingly clear.
- Sep 18 – Fed Leaves Rates Unchanged
EMOTION MOVING MARKETS NOW: 15/100 EXTREME FEARPREVIOUS CLOSE: 16/100 EXTREME FEAR
ONE WEEK AGO: 15/100 EXTREME FEAR
ONE MONTH AGO: 14/100 EXTREME FEAR
ONE YEAR AGO: 42/100 FEAR
Put and Call Options: EXTREME FEAR During the last five trading days, volume in put options has lagged volume in call options by 15.83% 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 21.14. 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 – I JUST LOVE MY NEW SWEATER….
UNUSUAL ACTIVITY
TRC Tejon Ranch Co Towerview LLC Director, 10% Owner 7,816 Purchase at $21.95
CRBP Chief Financial Officer P 5,000 A $ 2.121
LIND Director P 4,900 A $ 9.3424 P 100 A $ 9.335
JD DEC 30 CALL Activity .. 3500+ @$1.30
SDRL Activity JAN 10 PUTS on the BID .. @$3.20 2500+
TAP CALL Activity on the name in the OCT 80 and 85 CALLS
HEADLINES
Fed leaves rates unchanged
Yellen: Hike appropriate when lbr mkt improves further
Yellen: Fed has conf that infl will rise to tgt
Yellen: Concerned about China, and ability of officials to respond
Democrats block Senate vote to bar Obama from lifting Iran sanctions
Senate blocks measure to restrict lifting Iran sanctions
Opec Forecasts Point to Mid Term Rise in Opec Oil
Opec says no $100 oil until 2040
EU ramping up oil benchmark probes
Altice to buy US firm Cablevision for $17.7bn
GOVERNMENTS/CENTRAL BANKS
Federal Reserve leaves US interest rates unchanged –Guardian
Yellen: First rate hike appropriate when see further labor market improvement –Rtrs
Yellen: First rate hike appropriate when Fed has conf that infl will rise to 2% in m-term –Rtrs
Yellen: I can’t give you a recipe for what we are looking to see before hiking –Rtrs
NY Fed: FX swaps with foreign cbanks $145m ($4m with BOJ, $141m with ECB)
Democrats block Senate vote to bar Obama from lifting Iran sanctions –USA Today
Moody’s Revises 2015 GDP Growth Forecast For Germany To 1.50% –BBG
UK PM Cameron: EU negotiations going well, confident of being able to recommend staying in –Sky
BoJ’s Kuroda: Japan To Continue Moderate Economic Recovery –FXStreet
Italy’s Visco: MonPol. Responded Quickly To European Debt Crisis –ForexLive
EU’s Moscovici: Greek Haircut Is Not On The Table –ForexLive
FIXED INCOME
U.S. to sell $26 bln 2-yr Notes, $35 bln 5-yr, $29 bln 7-yr, all to settle sept 30
Primary Dealers Rigged Treasury Auctions, Investor Lawsuit Says –BBG
Fitch: Bond Buyback Supports Lafarge’s Credit Profile
FX
CHF: SNB says Franc still overvalued –BBG
EM FX: Brazilian real misses out on dollar retreat ahead of Fed –FT
ENERGY/COMMODITIES
CRUDE: Opec Forecasts Point to Mid Term Rise in Opec Oil –Market Pulse
CRUDE: Opec says no $100 oil until 2040 –Rtrs
METALS: Chile earthquake sends London copper up to two-month high –City AM
NATGAS: EIA NatGas Storage Change (11/Sept): 73 BCF (est 73 BCF, prev 68 BCF)
CRUDE: US house energy panel passes bill to repeal US export ban –Rtrs
GEOPOLITICS: Senate blocks measure to restrict lifting Iran sanctions
Energy firms are using more CDS pricing information to monitor counterparty credit risk –IFR
EU said to ramp up oil benchmark probes, asking some companies to redact business secrets –Rtrs
EQUITIES
PROVIONSAL S&P CLOSE: -0.25% at 1,990
PROVIONSAL DJIA CLOSE: 0.4% at 16,677
PROVIONSAL NASDAQ CLOSE: -0.1% at 4,894
Adobe Systems (Q3 15): Adj EPS $0.54 (est $0.50), Rev $1.22bn (est $1.21bn)
M&A: Altice To Buy U.S. Firm Cablevision For $17.7bn –Rtrs
M&A: Perrigo rejects Mylan’s tender offer –MW
M&A: S&P puts AB InBev on credit watch as it mulls deal –FT
M&A: Australia watchdog queries Shell-BG ?43bn deal –FT
ENERGY: Glencore In Talks To Sell Copper Mine Production –Rtrs
BANKS: Fitch: Jefferies’ Weak Q3 15 Results Extend Challenging 12-Month Stretch
BANKS: Lloyds Fights Forex Whistleblower Case –FT
BANKS: DB closes Russian corporate banking services –IFX
PHARMA: Pfizer faces over 1,000 lawsuits over antidepressant drugs –BBG
RETAIL: Wal-Mart to hire 60k seasonal workers
Amazon reveals new ?50 tablet and new 4K Fire TV box –BBC
AUTOS: GM to pay $900 million fine for criminal charges –MW
Fitch: General Motors’ Legal Settlements Remove Uncertainty
MEDIA: Verizon Says Earnings Next Year May Be Flat –WSJ
INDUSTRIALS: GE to build engines in Europe –Rtrs
SPORTS: Manchester Utd explores $826m share sale –FT
RWE no longer chasing Middle East stake sale –FT
EMERGING MARKETS
US Tsy’s Sheets: We?re pushing the Chinese to accelerate implementation of reform agenda –Rtrs
China SAFE: To Check On Firms’ Forex Buying To Prevent Speculation –Rtrs
Chinese Pres Xi: Economy can maintain L-Term medium-high growth rate –Rtrs
Chinese Pres Xi: Economy Has Room To Manoeuvre, Is Resilient –Rtrs
Analysts Say Brazil’s Economic Measures May Not be Enough –RIO TIMES
- The GOP's De-Donaldization Strategy Exposed (In 1 Simple Chart)
We previously explained what appeared to be Republican leadership’s plan to ‘deal with’ The Donald‘s status quo upsetting rise. As the following chart shows, last night’s debate, as we noted here, seemed to put that plan into action… but it did not work.
We humbly suggest, for now it did not work…
- How Mario Draghi Can Force The Swiss National Bank To Go "Nuclear" On Depositors
Earlier this month, Sweden’s Riksbank found itself in a rather awkward position.
Since doing an embarrassing about face in 2011 by reversing a rate hike cycle on the way to plunging headlong into NIRPdom, the Riksbank has watched Sweden’s housing bubble inflate to what certainly look like epic proportions. Household debt has also become concerning. Unfortunately, inflation expectations have generally been muted and because the Riksbank is in charge of managing inflation and not macroprudential policy, it’s inclined to maintain an easing bias even as it knows that tightening to rein in the housing bubble is probably prudent. Compounding the problem is the ECB, whose €1.1 trillion PSPP isn’t doing the Riksbank any favors when it comes to preventing the krona from strengthening. So you can imagine how vexed Riksbank Governor Stefan Ingves was going into the September 3 meeting knowing that just hours after he made his decision, some expected Mario Draghi to unveil an expansion of PSPP. Needless to say, if the Riksbank remained on hold and the ECB announced more QE, that would be bad news for the krona (i.e. it would strengthen) and thus for Sweden’s hopes of boosting inflation expectations.
Ultimately, the Riksbank gambled and remained on hold, and Mario Draghi only hinted at QE expansion rather than actually confirming it. Here’s what happened to the krona:
You can imagine how bad it would have been if the ECB had explicitly announced a PSPP expansion, committed to extending the program’s duration, or cut rates.
The reason that short story is important is that it highlights the precarious situation created by expectations that the ECB is set to meaningfully expand QE. A PSPP expansion or worse, further rate cuts, would imperil the efforts of regional, non-euro central banks who are struggling to keep a lid on currency appreciation and boost inflation. There is perhaps no better example of this dynamic than the EURCHF cross.
Indeed, following the fall of the peg in January – which might fairly be viewed as an attempt on the SNB’s part to get out ahead of ECB QE and avoid the massive intervention that would likely have been required to hold the floor in its wake – some now wonder what’s next in the event Eurozone 5yr/5yr inflation doesn’t pick up and the situation continues to deteriorate in China prompting the ECB to expand QE and/or take the depo rate further into negative territory.
For their part, Barclays suggests that in the event of a Mario Draghi rate cut, the SNB might well go to the “nuclear option” which would mean, in the final analysis, that retail deposits would no longer be spared from negative deposit rates.
* * *
From Barclays
Our base case is for the ECB, at its October meeting, to extend its timebased commitment for QE for another six to nine months (ie’ through March or June 2017). As a second step, perhaps at the December meeting, the ECB could increase its pace of monthly purchases, or cut the deposit rate on reserves below the current -20bps. The latter option is less likely, but its probability is non-negligible and hence we consider the potential effects of all three courses of action here.
If, as is our base case, the ECB extends the time horizon over which it commits to European government bond purchases, we expect its primary impact to be on 2-3 year EONIA swap rates as the risk of a reversal of ECB balance sheet expansion policies is pushed further into the future. On the margin, the decline in medium-term EONIA rates likely will put further pressure on the EUR to depreciate. However, we do not expect that pressure to be too great on the EURCHF bilateral rate.
As a result, we would expect the SNB to adopt a ‘wait-and-see policy’ rather than respond with immediate action to an extension of the ECB’s time commitment to QE. If EURCHF began to reverse its trend of appreciation, the SNB might cut its deposit rate further into negative territory.
We would expect a similar ‘wait-and-see’ approach from the SNB in the case of an increased pace of purchases from the ECB. Because the policy is reversible if conditions improve – unlike an explicit time commitment – and the effects of QE appear to come mostly through the expectations channel, we would expect an acceleration of purchases to have even less impact on EURCHF than an extension of the ECB’s time commitment.
In contrast, a cut in the ECB’s deposit rate further into negative territory likely would have a significant impact on the EURCHF exchange rate and provoke a more immediate response from the SNB. Indeed, we expect that a cut in the ECB’s deposit rate may have a greater effect on EURCHF than on other EUR crosses. Switzerland applies its negative deposit rate to only a fraction of reserves, currently about 1/3rd of sight deposits by our calculation. In contrast, negative deposit rates apply to all reserves held at the ECB, Riksbank and Denmark’s Nationalbank. Consequently, a cut to the ECB’s deposit rate likely has a larger impact both on the economy and on the exchange rate than a proportionate cut by the SNB. An SNB response to an ECB deposit rate cut could take one of two forms: 1) a further cut in its deposit rate and CHF Libor target range; or 2) the ‘nuclear’ option, removing all exemptions from the negative deposit rate. We think the latter is more likely and would have major implications for EURCHF.
Most retail (private) depositors at domestic Swiss banks still do not face negative interest rates, but we would expect that to change if the SNB removed exemptions of domestic banks on sight deposits at the SNB. Domestic banks receive an exemption of 20x their November 2014 reserve requirement, an amount equal to about 75% of their respective sight deposits at the SNB. Because the non-exempt amount represents only about 5% of their total assets, Swiss banks have been able to swallow the costs and not pass negative rates on to most of their customers. As the non-exempt share has grown, banks gradually have extended negative rates to institutional clients, indirect clients (via external asset managers) and very large holdings of private clients. A removal of domestic banks’ exemption from negative deposit rates likely would force Swiss banks to pass on negative deposit rates as it would increase the proportion of assets charged negative rates to over 20%.
* * *
Here’s how Barclays sums up the above: “There is a low, but non-negligible risk that the ECB cuts its deposit rate further into negative territory at the December meeting, should the euro appreciate on a trade-weighted basis in the coming months, an action that we believe would initially lead to a significant decline in EURCHF but provoke the SNB to take decisive actions that may lead to rapid and sustained reversal of EURCHF.”
There are a couple of interesting points here. First, we’re beginning to see how competitive easing and the global currency wars beget not only an inevitable race to the botom, but in fact a race to the basement as the Riksbank, the ECB, and the SNB are forced to one up (or perhaps “one down” is the more appropriate term) each other or risk further imperiling their inflation targets. Note that this isn’t exactly what the Paul Krugmans of the world would have you believe should be the outcome of ultra accommodative monetary policy.
Additionally, this points to the extent to which turmoil in EM (emanating, of course, from China in one way or another, whether it’s the yuan deval or lackluster demand and the attendant global commodities slump) is set to feedback into advanced economies and DM monetary policy. That is, if we get an outright EM meltdown, Mario Draghi is more likely to ease, not only to stabilize markets, but also to ensure that Germany’s export machine doesn’t get hit even harder from China’s hard landing. But as Draghi eases, so too must the Riksbank, and the SNB, lest the franc and krona should strengthen, putting inflation targets at risk. Here’s what SNB chief Thomas Jordan had to say on Thursday after standing pat at today’s meeting:
“Overall, the Swiss franc is still significantly overvalued, despite a slight depreciation. The negative interest rates in Switzerland and the SNB’s willingness to intervene as required in the foreign exchange market make investments in Swiss francs less attractive; both of these factors serve to ease the pressure on the franc. We must keep negative rates for the foreseeable future.”
The SNB also slashed its inflation forecasts for this year and next.
In the end, we suppose the takeaway is this: in today’s centrally planned world, the proliferation of NIRP means that nothing is sacred – not even a Swiss bank account.
Incidentally, as today’s FOMC decision made clear, the next country to go NIRP might well be the US.
- The Misguided Paperati & Bifurcated 'Gold' Markets
Submitted by Jesse via Jesse's Cafe Americain,
There is a short excerpt of a video interview with hedge fund titan Ray Dalio at the Council on Foreign Relations below.I think it is priceless. Ray lays out his thoughts on wealth and hedging with gold to the chuckles and sniggers of the pampered ruling class in a very clear and straightforward manner.
There is also another video interview in which Dalio discusses his views with the smirking chimps from CNBC. It is almost a scene out of Huxley’s Brave New World, with Dalio as some kind of monetary savage trying to explain reality to those who have been incubated in an artificial currency regime of King Dollar and know nothing else.
* * *
Here is why I think that this is important.
The gold market in particular seems to have bifurcated, or split into two: one market for largely paper speculation and high leverage, and another for the purchase and distribution of actual physical bullion.
Is this a problem?
Yes it is. Because the attitude towards gold among the status quo in the West has become rigidly dogmatic, supported by years of lazy thinking and a determined the campaign of ridicule and propaganda to try and extend the unsustainable.
You can see it emerge every so often in sites and media outlets and analysts who can be considered as creatures of the establishment, to use an older phrase, for whatever reason they may have. Some of the economist manservants of the ruling class talk about gold with the same sneering manner that a Victorian aristocrat might have discussed the ‘rights’ of the peoples of India or of China.
And I do not necessarily think they are bad motives, in the dishonest sense at least. Some may actually believe what they say, although for the most part I don’t think that the fortunate care what is good or what is true, if it serves their own special interests. This is how they have been taught to be, how life is.
If you have been brought up, bred, and bombarded with certain points of view for most of your life, it is no surprise that you may reflexively tend to adhere to and promote those views without regard to any intervening facts, past or present. You have been programmed by your education and, dare I say it, class. I see it all the time.
And it can sometimes lead to odd divergences in reasoning. This is why certain Founding Fathers found it perfectly acceptable to declare that ‘all men are created equal’ and also own slaves. Or to seek to curtail the rights of the non-landed and women in terms of ruling and voting. They are running on what they knew, without proper and rigorous examination.
It is hard for someone who has come from outside that system to understand how they can rationalize such a glaring discrepancy. But if you put yourself in their place, and honestly examine some of your own habitual thinking, it is not so hard.
Hypocrisy, maybe. And maybe it is just the unexamined prejudices of the fortunate. Sometimes even what seems to be an obvious truth can only be seen clearly through tears. And we have quite a surplus of the exceptionally fortunate these days, who have been pampered and privileged by an order which care very well for them, but that seems to be passing.
A big change is what we are heading for. We have a financial system that still holds a vast amount of gold in the central banks, including the US and Europe according to their reports at least. And more importantly, it is on a mad increase in the East with the central banks and the people buying in ever increasing amounts. Those who serve the power circles of New York, Washington, and London do not want to hear about it, anymore than Winston Churchill had a regard for the thoughts of Mr. Gandhi.
And despite the huge change in the global supply and demand for bullion, we have a holdover, a significant price discovery mechanism in New York and London that is increasingly diverging from the physical realities of supply and demand.
There is going to be a reconciliation of attitudes and realities at some point. And it may be quite impressive. The longer that the status quo and their courtiers try to maintain their modern aristocracy, like vast tectonic plates unable to move but building greater and greater pressure, the more dramatic that change may be when it finally comes.
And alas, so many of our politicians are servants, although well paid and well taken, of the moneyed interests. So they will do nothing that would perturb their true lords and masters, if they wish to also become fabulously rich and rise within the existing system.
The thought of the harm that this careless disregard for justice and right reason is doing to a very large group of relative bystanders and innocents, whose proper role is to be protected by those who have been gifted with greater talents accompanied by oaths of office, is almost disheartening.
- Yellen Responds To Allegations The Fed Is Responsible For America's Record Wealth Gap
Earlier we noted what we think was the most important thing Yellen discussed today, namely the potential for the Fed to usher in negative rates and as much as she Yellen felt clearly uncomfortable discussing NIRP at a time when the Fed was supposed to take a victory lap with its first rate hike in 9 years, she admitted that the Fed “would look at all of our available tools. And that would be something that we would evaluate in that kind of context.”
What else did she say? Below are the key comments on various economic issues as summarized courtesy of Bloomberg.
On the Rate Outlook
“The recovery from the Great Recession has advanced sufficiently far and domestic spending appears sufficiently robust that an argument can be made for a rise in interest rates at this time. We discussed this possibility at our meeting. However, in light of the heightened uncertainties abroad and the slightly softer expected path for inflation, the committee judged it appropriate to wait for more evidence, including some further improvement in the labor market, to bolster its confidence that inflation will rise to 2% in the medium term”
“Every meeting is a live meeting where the committee can make a decision to move to change our target for the Federal funds rate. That certainly includes October”
On Unemployment
“Although we are close to many participants’ and the median estimate of the longer-run normal rate of unemployment, at least my own judgement, and this has been true for a long time, is that there are additional margins of slack, particularly relating to very high levels of part-time, involuntary employment. And labor force participation that suggests that at least to some extent the standard on employment rate understates the degree of slack in the labor market. But we are getting closer. The labor market has improved. And as I’ve said in the past we don’t want to wait until we have fully met both of our objectives to begin the process of tightening policy given the lags in the operation of monetary policy”
On Below Target Inflation
“An important reason for that is that declines in import prices, reflecting the appreciation of the dollar and declines in energy prices, are holding down inflation well below our target and well below core inflation. We expect those effects to be transitory and with well-anchored inflation expectations we expect inflation to move back to 2%”
On International Developments
“We reviewed developments in all important areas of the world but we have focused particularly on China and emerge markets. Now we have long expected and most analysts have to see some slowing in Chinese growth over time as they rebalance their economy. And they have planned that. And I think there are no surprises there, The question is whether or not there might be a risk of a more abrupt slowdown than most analysts expect. And I think developments that we saw in financial markets in August in part reflected concerns that there was downside risk to Chinese economic performance and perhaps concerns about the gaps where policymakers were addressing those concerns; in addition we saw a very substantial downward pressure on oil prices in commodity markets”
On Fed-Induced Uncertainty
“I know that of course there is uncertainty about Fed policy. As I mentioned, we’re well aware that there’s been a huge focus on the decision today. And you know, I would ask you to appreciate that there are a lot of cross currents in economic and financial developments that we need to take into account in deciding on what the appropriate course of policy is. And we don’t make continuous decisions every single day about our policy. We meet periodically. We do our darnedest to pull together the best analysis we can”
On Housing
“we are envisioning further improvements in the housing market. It remains very depressed. Housing starts below levels that seem consistent with underlying demographics especially in an economy that’s creating jobs and we have lots of people who are still doubled up and demand for housing should be there and should materialize as the job market improves and income growth improves. So are we counting on it? Housing is now a very small sector of the economy it’s not the driver of — it is not the key driver in my own forecast of ongoing improvements in the U.S. economy”
On Budget Standoff
“It played absolutely not at all in our decision I believe it’s the responsibility of Congress to pass a budget to fund the Government to deal with the debt ceiling so that America pays its bills. We have a good recovery in place that’s really making progress and to see Congress take actions that would endanger that progress, I think that would be more than unfortunate”
* * *
Last but not least, here is here response to allegations the Fed creating the biggest wealth divide in US history: “Do you think the Fed has widened the wealth gap with its low interest rate policy? These people say low interest rates mainly benefit the wealthy.
“Well, I guess I really don’t see it that way. It is true that interest rates affect asset prices, but they have complex effect through balance sheets, through liabilities and assets. To me, the main thing that an accommodative monetary policy does is put people back to work. To me, putting people back to work and seeing a strengthening of the labor market that has a disproportionately favorable effect on vulnerable portions of our population, that’s not something that increases income inequality. There have been a number of studies that have been done recently that have tried to take account of many different ways in which monetary policy acting through different parts of the transmission mechanism affect inequality, and there’s a lot of guesswork involved, and different analyses can come up with different things. But a pretty recent paper that’s quite comprehensive concludes that the — that Fed policy has not exacerbated income inequality.
Well, if a paper written by an economist said so, then it must be true.
Source: Bloomberg
- Decades-Long "Megadrought" Looms For Entire US As Lake Powell Runs Dry, NASA Warns
With the number of people living in the U.S. Southwest and Central Plains, and the volume of water they need, having increased rapidly over recent decades – and, with NASA scientists expecting these trends to continue for years to come – the current severe drought combined with the tapping of the Lake Powell's water at what many consider to be an unsustainable level, has reduced its levels to only about 42% of its capacity.
Forecasting that there is an 80 percent chance of an extended drought in the area between 2050 and 2099 unless aggressive steps are taken to mitigate the impacts of climate change, the researchers said their results point to a challenging – and remarkably drier – future.
As Reuters reports, scientists from NASA and Cornell and Columbia universities warned earlier this year that the U.S. Southwest and Central Plains regions are likely to be scorched by a decades-long "megadrought" during the second half of this century if climate change continues unabated.
More than 500 feet (150 meters) deep in places and with narrow side canyons, the shoreline of the lake is longer than the entire West Coast of the United States. It extends upstream into Utah from Arizona's Glen Canyon Dam and provides water for Nevada, Arizona and California.
…
The peak inflow to Lake Powell occurs in mid to late spring, as winter snow melts in the Rockies. But since 2012, snow and rainfall totals have been abnormally low as the region suffered persistent drought.
As the following images show, all around the lake, strikingly pale bands of rock have been exposed by the receding waters…
See more stunning images here…
- Fed Credibility Crushed – The Aftermath
Despite uber-dovishness, stocks did not play ball with The Fed as it appears we have reached a tipping point in central planning credibility…
"You're just nothing but a dumb bear…"
2016 it is… Dec odds drop to 49%…
Only one thing mattered today… 1400ET and Yellen's bullshit explanation why The Fed will never, ever, raise rates… (note the move in bonds and USD early when Hilsy seemed to leak the decision)…
Notice stocks initially snapped down to bonds early move (blue oval), then decoupled in a QE trade, before stocks plunged…
All major indices closed red post FOMC…
Not pretty…
VXX bounced perfectly off its 50 and 100-day moving average, closing unchanged…
Note the huge plunge in VIX (catching down to equity exuberance after th elast 2 days of hedging) and now recoupled to the downside with stocks…
Investor rushed into the safety of Biotechs!!??
And dumped financials…
EM was bid briefly, then dumped…
Which left the short-end of the curve lower on the week, collapsing across the curve today… biggest drop in 5Y yields since March…
with a dramatic steepenig in 5s30s (up over 6bps today)
The US Dollar was crushed down 1% on the day.. the biggest drop in a month…
Commodities all surged post-FOMC as the dollar dumped with Gold and Silver leading the day…
Charts: Bloomberg
- Eye In The Sky? 60 U.S. Police Departments Have Asked For Drone Certification
Submitted by Mike Krieger via Liberty Blitzkrieg blog,
Are drones coming to a police department near you? Possibly.
Next thing you know, they’ll be pepper spraying you from 10,000 feet.
From Yahoo News:
Los Angeles (AFP) – Drones are increasingly making their mark in the arsenal of US police forces, operating in a legal gray area and sparking concerns of constant surveillance of civilians.
Since 2012, government agencies can use small drones — weighing less than 55 pounds, or 25 kilograms — under certain conditions and after obtaining a certificate from the Federal Aviation Administration.
But the FAA, which is preparing small drone regulations, does not have authority on privacy protection and there is no specific framework on the issue on a national level.
Up to two dozen police forces are currently fully equipped with drones and trained to use them, including pioneers Grand Forks in North Dakota; Arlington, Texas; Mesa County, Colorado and the Utah Highway Patrol.
According to the digital rights group Electronic Frontier Foundation, at least 60 police forces across the country — from Houston, Texas, to Mobile, Alabama, North Little Rock, Arkansas, and Miami-Dade County — have asked for drone certification.
The FBI also uses drones for specific missions
Rights groups are not opposed to drones as such but rather are concerned that some law enforcement agencies will use them for constant surveillance of the population.
Silly conspiracy theorists. Your government loves you, and would never surreptitiously spy on you.
“Without proper regulation, drones equipped with facial recognition software, infrared technology and speakers capable of monitoring personal conversations would cause unprecedented invasions of our privacy rights,” the ACLU said.
“Tiny drones could go completely unnoticed while peering into the window of a home or place of worship.”
The Electronic Privacy Information Center, for one, is calling for a warrant before each police drone flight.
For related articles, see:
The FBI Has Been Using Drones Domestically Since 2006
Drones in America? They are Already Here…
Where in the USA are the Drones Headed?
- 2Y Yields Collapse Most Since 2009 As December Rate-Hike Odds Crater
The probability of a rate-hike in December collapsed from 65% yesterday to just 45% today after Yellen's admission that any and everything will keep them on hold as they wait for nirvana to allow interest rates to rise again.
This rippled across the Treasury curve and after Tuesaday's record-breaking spike in yields, 2Y yields collapsed 13bps today – the biggest single-day plunge since QE was unleashed in March 2009.
Charts: Bloomberg
- Meanwhile, In Burkina Faso: Images From A West Africa Military Coup
In October of last year, Blaise Compaoré stepped down after nearly three decades as President of the West African nation of Burkina Faso amid a popular uprising that some likened (in spirit anyway) to the protests that defined the Arab Spring.
On Thursday, October 30, Compaoré sought to pass legislation that would have paved the way for a new 5-year term. Here’s how WSJ describes what happened next:
That ambition was thwarted by tens of thousands of his compatriots, who swarmed the streets of the capital Ouagadougou. They set fire to the parliament building where the vote had been scheduled to take place, among other government offices. They tore through hotels and shops seen as pro-regime. Up to 30 people were killed in rioting, a French diplomat said, citing preliminary reports.
As the Journal went on to detail, “under Compaoré’s rule, Burkina Faso [had] seen an explosion of young people flocking to its cities. Many seek the perks of metropolitan life—jobs, spending money, a chance to travel abroad—only to find themselves on the underside of an economy where just 5% of working age adults are employed full time, according to a 2013 Gallup Poll.” “We wanted a change, that’s all. If we people didn’t complain, it would have never happened,” one citizen told the paper.
But the push for democratic reform would be short lived. Predicatably, several members of the military immediately declared themselves leader prompting the US and France to warn that if army officers took power, Compaoré’s outster would be considered a military coup. Around three weeks later, former foreign minister Michel Kafando was named interim President by a committee made up of military, religious, and political leaders.
Fast forward to the present. Burkina Faso had planned to hold free elections (viewed as a turning point for its democracy) on October 11, but that hope was dashed virtually overnight on Wednesday when, apparently in retaliation for a government decision to disband the Presidential Guard, the elite military unit (which served the Compaoré regime for decades) arrested President Kafando along with Prime Minister Yacouba Isaac Zida.
Here’s Reuters with more:
A shadowy spy master formerly the right-hand man to toppled President Blaise Compaore seized power in Burkina Faso at the head of a military coup on Thursday, less than a month before elections meant to restore democracy in the West African state.
General Gilbert Diendere, who for three decades served as Compaore’s chief military adviser and operated an intelligence network spanning West Africa, was named as the head of a military junta called the National Council for Democracy.
The power grab led by the presidential guard unfolded three days after a government committee recommended dissolving the elite unit, which was a pillar of Compaore’s 27-year rule and has repeatedly meddled in politics since his fall.
A spokesman for the coup leaders hinted at a political agenda to back a return to power by loyalists to Compaore, who has remained in exile in neighbouring Ivory Coast since he was toppled by a popular uprising in October last year.
Under Compaore, Burkina emerged as an important regional ally of France and the United States against al Qaeda-linked militants. It hosts some 200 French special forces as part of France’s Barkhane regional anti-terrorist operation.
On Thursday, soldiers fired warning shots to disperse a crowd of more than 100 protesters gathered in central Independence Square of the capital Ouagadougou. Soldiers drove the streets in pick-up trucks, beating and detaining demonstrators.
And more from WSJ:
The coup, which was confirmed in a television and radio announcement on Thursday, was greeted by protests in the capital Ouagadougou, which turned deadly as the demonstrators clashed with soldiers. At least 12 protesters were killed by soldiers during the clashes, according to a pro-democracy movement called Balai Citoyen, or Citizens With Brooms.
At least one presidential candidate said his home had been ransacked by the army, as the military attempted to regain control of the situation. However, the troops have struggled to quell the protests in the country at large.
A curfew is now in place, and the military has closed the borders. Here are the visuals:
* * *
We suppose the question now, is how the West will view the coup in light of the spread of Islamist conflicts in neighboring Mali. We also wonder what this means for the future of Operation Creek Sand.
- Antidepressants Scientifically Linked To Violent Behavior In Youth
Submitted by Derrick Broze via TheAntiMedia.org,
A new study published in the PLoS Medicine journal has found that younger people taking antidepressants are more likely to commit violent crimes.
Reuters reports that the researchers “used a unique study design which aimed to avoid confounding factors by comparing the same individuals’ behavior while they were on and while they were off medication.” The study was led by Seena Fazel of Britain’s Oxford University.
Fazel’s team used matched data from Sweden’s prescribed drug register and its national crime register over a three-year period. Among 850,000 people prescribed Selective Serotonin Reuptake Inhibitors (SSRIs), one percent were convicted of a violent crime. SSRIs are often prescribed to fight off anxiety and depression and include drugs like Prozac and Paxil.
Most of the age groups did not show an increase in crime and violence, however, the 15-24 year-old group showed a 43 percent increase in their risk of committing violent crime while on SSRIs. The researchers also observed an increased risk for younger people to be involved in violent arrests, non-violent convictions and arrests, non-fatal injuries, and alcohol problems when they were taking antidepressants. The results also showed those who took lower doses had an increased risk of being violent.
Ironically, the researchers recommend that young people might take higher doses of the drugs to reduce the risk of violence and criminal activity. Fazel told Reuters it is possible that younger people taking lower doses are not being “fully treated,” leaving them vulnerable to impulsive behavior.
Fazel cautioned that the study does not conclusively prove SSRIs will lead to increases in violent activity and said further studies should be conducted. He went on to tell Reuters that if the results are confirmed, “warnings about the increased risk of violent behavior among young people taking SSRIs might be needed.”
Anti-Media previously reported on a study by the Harvard School of Public Health that found high doses of antidepressants in teens and young adults correlate to marked increases in self-harm.
That study examined 162,625 subjects between the ages of 10 and 64 for 12 years. For subjects aged 24 and younger, higher-than-average doses of antidepressants doubled the rate of suicidal behavior. In addition, a 2004 review by the U.S. Food and Drug Administration (FDA) also found that antidepressants double the risk of suicides between the age of 18 and 25.
Recently, journalist Ben Swann released a Reality Check report examining the possible connection between gun violence and SSRIs.
“The crime scene tape was still up in Roanoke, Virginia when politicians began calling—almost predictably—for tougher gun control laws,” Swann wrote. “Here’s a question: why is it always a discussion about guns and not about mental health and mood altering prescription drugs?”
Swann goes on to list several examples of shootings committed by individuals under the influence of SSRIs.
“1999: 15-year old Oregon school shooter Kip Kinkel, who opened fire in his school cafeteria, had been on Prozac.
1999: Eric Harris, the Columbine killer, was taking Luvox.
1999: Conyers, Georgia school shooter T.J. Solomon was on Ritalin.
2005: Red Lake Indian Reservation shooter Jeff Weise was taking Prozac.
2007: Virginia Tech shooter Cho Seung-Hui, who shot and killed 32 people, was on antidepressants and taking Prozac.
2012: Colorado theater shooter James Holmes… was reportedly heavily hooked on the prescription painkiller Vicodin. And he took a cocktail of anti-depressants before his shooting spree.
2012: Conn. school shooter Adam Lanza’s uncle said the boy was prescribed Fanapt, a controversial anti-psychotic medicine.”
It would appear that a certain amount of skepticism is necessary when listening to the claims made by members of the pharmaceutical-industrial complex. Studies show antidepressants are overprescribed, and in my own experience with depression and anxiety, I found that doctors are far too often willing to offer pills than have a conversation and work to solve the root causes of these issues.
We need to help promote a culture where individuals are able to safely talk about their depression, anxiety, and even thoughts of suicide. As humans, we have the ability to create a culture that values open and honest communication, respect, and love. This could allow each individual to have a safe space to process their pain and receive the healing necessary for personal growth and collective liberation. Empower each other and break your addiction to Big Pharma.
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