In just about any realm of activity this nation does not know how to act. We don’t know what to do about our mounting crises of economy. We don’t know what to do about our relations with other nations in a strained global economy. This is a society in deep danger that doesn’t want to know it.
As we noted previously, it is likely that whatever Draghi does this week "will not deliver a significant impulse to the real economy" in Europe but while negative rates are almost guaranteed (based on the consensus), reviving the ABS market (via focused QE) is being heralded by many as a positive swing factor. Unfortunately, as SocGen explains, even if the ECB began purchasing ABS in H2 2014, the size and reach of the market is not enough to move the scale as Europe acts desperately to avoid a Japanese-style lost decade.
Throughout history, Chinese reformers have fallen short and met grisly ends. Why did they always fail? If in the 21st century, rulers still hold the same thoughts and ideas as those reformers in history. If they do not boldly seek to reform the system for the benefit of the nation and the people but try to maintain the existing system, then they shouldn’t even try to reform. Otherwise, even if the reforms don’t fail, they will bring chaos, and could hasten the arrival of revolution.
Despite this weekend's exuberance over an oddly exuberant "20th month of expansion" official China PMI (survey) given the hard-macro-data that has been exhibited by the reforming nation, it seems China's 'other' PMI (HSBC/Markit - less biased to larger SOEs) just missed expectations (for the 7th month in a row), fell and printed in contraction for the 5th month in a row as China's economy is clearly bifurcating between the have (government's help) and have-nots... (as employment continued to plunge) which are you investing in?
A number of Vietnamese officials have now threatened to bring legal action against China over their territorial dispute in the South China Sea; but it does not seem to be having any impact on China's efforts to defend and sustain their presence. As Bloomberg reports, a total of five Chinese fighter jets have now been deployed to the area of exploration in disputed waters off the coast of Vietnam today (compared to 1 previous day) citing Fishing Control Department under Vietnam’s agriculture ministry. China has refused to answer the case the Philippines filed with an international tribunal at The Hague. It is likely to pursue a similar strategy if Vietnam appeals to international law in its own disputes with China.
As members of the world's central banks (most importantly Draghi and the ECB this week) are held up as Idols on mainstream business TV, despite their disastrous historical performances and inaccuracies, we thought it time to dust off the dark 'reality' behind the Federal Reserve - the uber-central bank... perhaps summed up nowhere better than in the words of former Fed Chair Alan Greenspan himself... "There is no other agency of government which can over-rule actions that we take."
"...so I think the low comes in economically in Q1 and Q2 in 2015. Every single macro indicator you can find will bottom at Q1/Q2. For the equity market, I think the top is 1900/1950. But you can't both predicted the level and the timing. And I’m more confident about the timing, not the level. So my timing I’m confident, and the timing I am confident on is the fact that the second half of this year is going to see a 30% correction from the top."
While we have historically noted the explosion of youth unemployment as a key factor for instability in Europe, there appears to be an ever more concerning indicator of the potential fragility of the European Union. As Bloomberg's Maxime Sbahi notes, the difference in economic performance (and mood) between France and Germany, often referred to as the European “engine,” is at a record high. This disparity is likely to weaken France and isolate Germany further, heightening political tensions and indecision in the euro area.
When it comes to ridiculous, bizarre, and even "insane" contraptions, projects and ideas, China is indeed second to none. Which is why it was only a matter of time before China's engineers came up with unprecedented "solutions" to what has rapidly become perhaps the biggest problem for people living in China: air quality, in a broad sense, and specifically: unprecedented smog covering all the major metropolises on a daily basis. But fear not: China is on top of it. Declaring war on air pollution, the PRC is prepared to pump 1.7 trillion yuan ($277 billion) into coming up with solutions to curb the fuzzy sludge that opaques most of their country’s cities. This has led to the creation of several new and innovative, interesting — even ridiculous — pollution fighting methods. So here, courtesy of VJ, are the 13 most head-scratching proposals intended to do just that: fix China's smog.
This is a great example of how the game works. In a world in which every government on earth needs “liquidity” to survive, and the primary goal of every government is and always has been survival (the retention of arbitrary power at all costs), the provider of liquidity is king. So what is liquidity and who provides it? ...Ecuador agreed to transfer more than half its gold reserves to Goldman Sachs for three years as the government seeks to bolster liquidity...“Gold that was not generating any returns in vaults, causing storage costs, now becomes a productive asset that will generate profits,” the central bank said in the statement.
Last week Americans were shocked and saddened by another mass killing, this one near a college campus in California. We all feel deep sympathy for the families of the victims. As usual, many people responded to this shooting by calling for new federal gun control laws, including the mental health screening of anyone attempting to purchase a firearm. There are a number of problems with this proposal. Instead of focusing on passing more laws, our focus should be replacing the entitlement culture with a culture of self-responsibility and respect for the rights of others.
There was a small ray of hope just after the Lehman collapse that one of the most deplorable characteristics of US society - the relentless urge to build massive McMansions (funding questions aside) - was fading. Alas, as the Census Bureau today confirmed, that normalization in the innate desire for bigger, bigger, bigger not only did not go away but is now back with a bang. According to just released data, both the median and average size of a new single-family home built in 2013 hit new all time highs of 2,384 and 2,598 square feet respectively.
Is it any wonder The Bilderberg Group has Barack Obama's foreign policy as an agenda item?
The news of Spain's King Carlos' abdication this morning warranted barely a headline in the US media. However, once again, the simmering social unrest of nations full of repressed citizens burst into action as widespread anti-monarchy protests erupted across Spain. On the heels of last week's European elections that saw extreme left and extreme right parties, it seems the Spanish monarchy's move has lit the blue touch paper in a nation still suffering from record high unemployment and record high suicide rates. Protesters carried guillotines and chanted "Neither king nor master" and "Long live the struggle of the working class" demanding a referendum.