Archive - Mar 29, 2013

Tyler Durden's picture

Guest Post: The Chess Game Of Capital Controls





On the surface, it may seem innocuous for Germany to move some pallets of gold closer to home. The Bundesbank said the purpose of the move was to "build trust and confidence domestically, and the ability to exchange gold for foreign currencies at gold-trading centers abroad within a short space of time." It's just satisfying the worries of the commoners. What your friendly government economist doesn't reveal and the mainstream journalist doesn't report (or doesn't understand) is that in the event of a US bankruptcy, euro implosion, or similar financial catastrophe, access to gold would almost certainly be limited. If other countries follow Germany's path or the mistrust between central bankers grows, the next logical step would be to clamp down on gold exports. It would be the beginning of the kind of stringent capital controls Doug Casey and a few others have warned about for years. Think about it: is it really so far-fetched to think politicians wouldn't somehow restrict the movement of gold if their currencies and/or economies were failing? Remember, India keeps tinkering with ideas like this already. What this means for you and me is that moving gold outside your country – especially if you're a US citizen – could be banned.

 

Tyler Durden's picture

And Scene: Big Cypriot Depositors Facing Complete Wipe Out





9.9%? 30%? 60%? 80%? Nope - according to the latest from Reuters, the cash-on-cash return to all uninsured depositors in the healthy, i.e., only remaining big Cyprus bank, will be a big, fat doughnut.

 

Tyler Durden's picture

North Korea Says It Enters "War" Against South Korea, And North Korea Kaption Kontest





Ordinarily this would be Good Friday humor (unless we are very wrong, and it turns out to be Good Friday Global Thermonuclear War) because when one cries wolf a few too many times, this is what happens (from Yonhap):

"North Korea announced Saturday that it has entered a state of war against South Korea. In a special statement, the North said it will deal with every inter-Korean issue in a wartime manner."

And... nothing. In fact, if the market was open the ES would likely ramp limit up on the non-news. By now the world is so numb to the constant provocations by North Korea's confused leader, who is desperate to be finally paid off as nuisance value by the Western powers, that the most he can extract from anyone is laughter when one wonders if the iMac sitting on the desk of glorious leader wasn't hacked by some brand new FBI-launched virus issuing world war 8-Ks and press releases (although with the Ethernet cable unplugged, "no risk" of that as Geithner would say).

 

Tyler Durden's picture

Guest Post: Big Government: An Unnecessary Evil That Should Be Abolished





There are two types of people in this world; those who worship the ideal of centralized command authority, and those who do not.  Those who value freedom regardless of risk or pain, and those who value slavery in a desperate bid to avoid risk and pain.  When I consider the ultimate folly of man, in the end I look to the meek and unquestioning masses who strive to avoid risk, because it is they who always end up feeding the machines of war, despair, and tyranny.  The power thirsty halls of elitism surely instigate and manipulate the tides of this wretched ocean of quivering souls, but ultimately, the weak-hearted and weak minded make all terrible conquests possible. They live by the rule of fear, and their fear drives them to seek control; control of their environment, control of others, and by extension they believe, control of the future.  They attempt to mitigate their overwhelming fear by containing the world and sterilizing it of everything wild, untamed, and unknown.  They dream of a society of pure predictability, and zero responsibility.  They are willing to sacrifice almost anything to attain this position of artificial comfort. The concept of “big government” appeals to such people for many reasons...

 

Tyler Durden's picture

Guest Post: The Knowledge Economy's Two Classes of Workers





Setting aside that our economy is by and large organized to benefit a State-financial Elite and the technocrat Caste that serves them, let's consider the two classes of worker in what Peter Drucker labeled the Knowledge Economy in his 1993 book Post-Capitalist Society: The Marxist class division of labor vs. capitalist/management no longer adequately describes the new economy, as knowledge workers own "the means of production" which is first and foremost knowledge. Since the new economy is no longer characterized by capital vs. labor, it is a post-capitalist economy. Knowledge workers are a minority of the workforce; the majority are service workers, either skilled or low-skilled. Since the service workers own and leverage less capital (knowledge), their ability to create surplus value and thereby demand high wages is intrinsically lower than the knowledge workers. This creates a structural tension, as society has to establish a way to maintain the wages of the service workers in an economy where the value and income they can generate by their labor is capped.
 

Tyler Durden's picture

"I Went To Sleep Friday A Rich Man, I Woke Up Poor"





Another non-Russian, non-oligarch, non-billionaire, non-tax evader speaks up...

 

Tyler Durden's picture

ECB Backs Dijsselbloem's Liquidation Policy "Template"





It appears the European Central Bank is having trouble keeping its lies straight. When Jeroen Dijsselbloem ("Diesel-BOOM", "D-Boom", or just "Diesel") made his now infamous "template" comment last week, reality was shattered for many trend-following, momentum-monkey, hope-and-dreamers that actual real monetary pain could exist for a bank that was entirely incompetent (and insolvent). Instantly the rest of Europe stepped up to deny-deny-deny (as did D-Boom himself) explaining this was a 'unique' situation with French ECB Director Benoît Coeuré explicitly stating that Cyprus is not a model for future bank rescues. However, as Reuters reports, it appears fellow-Dutchman and ECB Governing Council member Klaas Knot said last night that there was "little wrong" with J-Boom's comment and that "the content of his remarks comes down to an approach which has been on the table for a longer time in Europe. This approach will be part of the European liquidation policy." Further confirming D-Boom's perspective, Knot added that, "there has to be transparency about losses in the banking sector... and banks have to wind down their loss-making operations." It seems that in 2012 the ECB split was between the Germans and Draghi on unlimited inflation threats; in 2013 it will be between those who want bail-ins and bail-outs.

 

 

Tyler Durden's picture

Toys"R"Us Withdraws IPO After Dismal Earnings





It seems equity markets at all-time highs, high-yield funding markets near all-time low yields, and supposed money on the sidelines flooding back into stocks are just not enough to provide cover for the latest IPO:

*TOYS R US FILES TO WITHDRAW IPO :TOYS US

Not citing any specific reasons for the withdrawal, we suspect the weather and market conditions will be blamed as they just reported abysmal earnings of $239mm vs $343mm last year and sales down $155mm from last year (with Q4 comp sales -4.5% domestically and 5.4% international). Back to the drawing board for KKR and Bain to push this off to the next greater fool.

 

Tyler Durden's picture

Guest Post: 3 Types of Contagion And What They Mean For The Global Economy





In one of a few early hints that Europe might surprise the world with its Cyprus bailout, on February 10th the Financial Times leaked the content of a secret EU memo. It reported that bank depositor haircuts were among three options being considered to reduce bailout costs. And the memo also warned ominously that “such drastic action could restart contagion in eurozone financial markets.” Clearly, policymakers decided to take their chances. And now we’re living through the contagion that the memo’s authors predicted. But what exactly does that mean? Sure, we can see volatility in asset prices, but how long will it last? Some pundits say it’ll blow over like a late afternoon shower on an otherwise sunny day. I disagree. I’ll suggest there’s more to it than rising market volatility and that we should take a closer look at the meaning of contagion. I’ll argue there are three different types at work today: vanilla contagion, latent contagion and stealth contagion. And when you add up the three effects, Cyprus will have a bigger global impact than many expect.

 

Tyler Durden's picture

The Week That Was: March 23-29th 2013





Succinctly summarizing the positive and negative news, data, and market events of the week...

 

Tyler Durden's picture

Oooops...





After reading this memo from the Central Bank of Cyprus sent to bank CEOs on February 11, arguably to put them at ease, all we can say is "Oooops"...

 

Tyler Durden's picture

Why European Monetary Policy Is Now Impotent





For the last year or so, Mario Draghi (the omnipotent head of the ECB) has discussed 'market fragmentation' as a major concern. The reason is clear - his easy money policies are entirely ineffectual in a monetary union when his actions do not 'leak' out to the real economy. Nowhere is this fragmentation more obvious than in the inexorable rise in peripheral lending rates (to small business) compared to the drop (over the last 18 months) in the core. Simply put, whether it is demand (balance sheet recessionary debt minimization) or supply (banks hoarding for safety), whatever the punch ladeled from the ECB's bowl, it is not helping the most needy economies. Of course, that was never really the point anyway - as we have pointed out many times; the actions of the ECB are (just as with the Fed) to enable the banking system to live long enough to somehow emerge from the black hole of loan losses and portfolio destruction that they heaped upon themselves. This chart is yet another example of proof that monetary policy is entirely ineffectual in the new normal - and yet the central planners push for moar...

 
Do NOT follow this link or you will be banned from the site!