"My humble thesis tonight is that the entire 20th Century was a giant mistake. And that you can put the blame for this monumental error squarely on Thomas Woodrow Wilson - a megalomaniacal madman who was the very worst President in American history... well, except for the last two."
Following the deaths of 36 bankers last year, 2015 has got off to an inauspicious start with the reported suicide of Chris Van Eeghen - the 4th ABN Amro banker suicide in the last few years. As Quotenet reports, the death of Van Eghen - the head of ABN's corporate finance and capital markets -"startled" friends and colleagues as the 42-year-old "had a great reputation" at work, came from an "illustrious family," and enjoyed national fame briefly as the boyfriend of a famous actress/model. As one colleague noted, "he was always cheerful, good mood, and apparently he had everything your heart desired. He never sat in the pit, never was down, so I was extremely surprised. I can not understand." Most believe that the suicide is not related to his work at the bank, but a former colleague had noticed that on his Facebook recently changed its job title to "former." Chris leaves behind a son - who had recently been cleared of cancer.
When you read about female doctors feeling forced to prostitute themselves to feed their children, about the number of miscarriages doubling, and about the overall sense of helplessness and destitution among the Greek population, especially the young, who see no way of even starting to build a family, then I can only say: Brussels is a bunch of criminals. And Draghi’s QE announcement is a criminal act. It’s a good thing the bond-buying doesn’t start until March, and that it’s on a monthly basis: that means it can still be stopped.
With Fed mouthpiece Jon Hilsenrath warning - in no lesser status-quo narrative-deliverer than The Wall Street Journal - that The ECB's actions (and pre-emptive collapse in the EUR) means the U.S. economy must deal with a rapidly strengthening dollar that will make American goods more expensive abroad, potentially slowing both U.S. growth and inflation; and Treasury Secretary Lew coming out his crypt to mention "unfair FX moves," it appears The Fed (and powers that be) are worrying about King Dollar. This suggests, as Mises Canada's Patrick Barron predicts, the Fed will start charging negative interest rates on bank reserve accounts as the final tool in the war on savings and wealth in order to spur the Keynesian goal of increasing “aggregate demand”. If savers won’t spend their money, the government will take it from them.
With President Obama shunning Bibi and cutting short his India trip (along with Michelle) to meet new Saudi Arabian King Salman (dementia and all), we thought this cartoon summed up the relationship between America and its oil-exporting ally...
The ECB may have failed at everything else but it has certainly achieved one thing: sending 20% of Europe's universe of government bonds, some €1.4 trillion, into negative territory.
- Sovereign QE not working in Europe
- Emerging market capital flight
- Political risk/popularist governments
- US wage inflation
- Increased currency volatility
- Insurance against natural catastrophes
"The second quarter is going to be devastating for the service companies," warns Conway Mackenzie - the largest U.S. restructuring firm - adding that, despite slashing thousands of jobs, delaying (or scrapping) billions in capex amid the prolonged rout in oil prices, "there are certainly companies that are going to die." As Bloomberg reports, oil drillers will begin collapsing under the weight of lower crude prices during the second quarter and energy explorers who employ them will shortly follow with oilfield-service providers are facing a "double-whammy." As we noted here, there are more than a few candidates for this 'death' list as it appears increasingly clear that what was considered an "unambiguously good" narrative for the nation is anything but...
Left-wing anti-EU party Syriza has extended its lead over incumbent Nea Dimokratia (ND) to 7 percentage points in the polls ahead of tomorrow's crucial Greek election. As Keep Talking Greece reports, To Potami and Golden Dawn (the neo-Nazi party that is facing charges for being a "criminal organization") are running 3rd with 6-7% of the vote (Syriza 33.5%, ND 26.5%) and with 20% admitting they had changed their opinion about which party to vote for in the pre-election period, it appears ND incumbents have taken up the "Scotland" strategy - fearmongery. Speaking on Greek TV, just 48 hours before the elections, ND-candidate Sofia Voultepsi implied that if Syriza wins the elections and forms a government on Monday Greeks will run out of toilet paper... and with JPMorgan noting that deposit outflows hit EUR8bn last week (double the previous 2 weeks combined), the "bank run" could easily morph into Venezuelan "toilet paper runs."
In 55BC, Cicero stood before the Senate of Rome (warning of its looming demise), spoke of the “arrogance of officialdom” and the more one studies going ons throughout history, the clearer it becomes – the story remains the same, only the actors change - history repeats because the passions of man never change. Those who may grudgingly support the ECB stimulus in the hope that it will buy time for governments to enact structural overhauls, keep praying that politicians will push aside their own personal self-interests for once and focus of the interests of the people. Such wishful thinking is foolish since history demonstrates that only takes place when the system collapses. People who do hold to this view are also worried that looser monetary policy may work against structural measures. The European Central Bank’s stimulus diminishes any incentive for governments to reform. The policy makers and specialists at Davos were divided over the effect of even that program; but where do these people get off assuming they have the ability and right to manipulate the world?
Over the past 48 hours, the world has been bombarded with a relentless array of soundbites, originating either at the ECB, or - inexplicably - out of Greece, the one place which has been explicitly isolated by Frankfurt, that the European Central Bank's QE will benefit everyone. Setting the record straight: it won't, and not just in our own words but those of JPM's Nikolaos Panigirtzoglou, who just said what has been painfully clear to all but the 99% ever since the start of QE, namely this: "The wealth effects that come with QE are not evenly distributing. The boost in equity and housing wealth is mostly benefiting their major owners, i.e. the wealthy." Thank you JPM. Now if only the central banks will also admit what we have been saying for 6 years, then there will be one less reason for us to continue existing.
If earnings are the "mother's milk" of equity market returns, then stocks are about to turn sour (that is of course if fundamentals have anything whatsoever to do with it anymore). As we detailed previously, Q4 is shaping up to be the worst in years for earnings, and with next week seeing the bulk of names (36% of the S&P 500) reporting (including many of the biggest belwethers and major energy firms), we suspect the 2014 EPS chart below (and the already collapsing consensus expectations for 2015 earnings) will continue to plummet.
Just as people enjoy the presumption of innocence in a criminal trial, property owners never convicted or even charged with a crime should not be presumed guilty in civil asset forfeiture proceedings. The Civil Asset Forfeiture Reform Act of 2000 has proven inadequate for curbing abuses, as countless Americans across the nation, having done nothing wrong, continue to lose their homes, businesses, and, sometimes, their very lives to the aggressive, acquisitive policing that this law encourages. Civil asset forfeiture is a big challenge. While the Justice Department has recently stepped up to limit the scope of this problem, it is time for Congress to act.