Archive - Nov 2014

In The West today we see mass delusion everywhere. People seem to believe their governments are almighty beings capable of performing magic - water into wine, debt into wealth. Here are some of the biggest myths we see in the system today...

A rubber band can remain stretched for some time, but it takes some force to keep it stretched. In this case, the force is the daily VIX body-slam and the resulting pop up in equities. This has worked to keep RUT and its cousins aloft for several weeks of going nowhere, but the chart suggests all the kiddies who are supremely confident that Santa will deliver more equity gains might find their complacency is not rewarded.

When a member of the press dared to ask Obama if the head of the "most hypocritical transparent administration ever" "misled Americans" about the taxes and about keeping the plan "in order to get the bill passed" the response was "No, i did not." This was Obama's conclusion after he had just gotten "well-briefed before he came out here." Indeed, nothing escapes the American president who continued: "The fact that some adviser who never worked on our staff expressed an opinion that I completely disagree with in terms of the voters is no reflection on the actual process that was run." Unfortunately, because Obama apparently wasn't briefed quite as well as he would have hoped, let's just take a look at what Dr. Gruber did do.

As the G-20 meeting comes to a 'successful' end with back-patting congratulations having agreed to create $2 trillion more GDP out of thin air (or maybe hookers and blow), it appears that someone - or more than one - among these nations was less than diplomatic towards every nations' best friend - America. As AP reports, The State Department has taken the unprecedented step of shutting down its entire unclassified email system as technicians repair possible damage from a suspected hacker attack. Earlier attacks have been blamed on Russian or Chinese attackers, although their origin has never been publicly confirmed.

This process is not over, not by a long shot. As anyone who invested during the Peso crisis or Asian crisis can tell you, when carry trades blow up, the volatility can be EXTREME.

The inevitable result of the centrally planned Asian Miracle Model is credit bubbles and the crippling misallocation of capital in Building Bridges to Nowhere.

In what the pro-Russian separatists call "an act of genocide," Ukraine's President Poroshenko signed a decree Friday that will explicitly withdraw state support for the regions within a month. While appearing to implicitly recognize the regions of Donetsk and Luhansk as autonomous, the decree means that the central bank will no longer service bank accounts, prisoners will be transferred (inmates with minor offences will be released), and perhaps most troubling as the cold winter begins, the order covers all public services, including crucial ones, such as schools, hospitals, and emergency services; and local heating and power plants will be subject to new laws that could involve cutting energy supplies altogether to the plants that don’t pay. Luhansk's leader exclaimed, "the total socio-economic blockade of Donbass is de facto an act on genocide and devastation of our people," and as the images below show, bank runs have already begun across the region with long lines forming at ATMs.

If there were no puppet masters in Washington DC or the Kremlin, what would happen next week?  

Perhaps in prompt and direct refutation that the infamous executioner "Jihadi John" had been injured, a few hours ago, ISIS release its latest execution video. Yet, oddly, as in several previous instances, the 15-minute video released Sunday doesn’t show the beheading according to the WSJ, but closes with a masked man clad in black standing above what he claims is Mr. Kassig’s severed head. The extremist spoke with a British accent, and appeared to be the same man who appeared in four videos released over the past few months showing the killing of British and American hostages, i.e., the same Jihadi John who was said to have been injured.

Some may herald the new ISIS coins as the successor of the dollar.  Fat chance.  It may not be fiat money, but is still not viable currency outside of where ISIS rules by sword.  

Wondering where all the Russian gold is coming from? Stop looking and start reading...

"I write this letter, my last letter, to you, Mr. Bush and Mr. Cheney. I write not because I think you grasp the terrible human and moral consequences of your lies, manipulation and thirst for wealth and power. I write this letter because, before my own death, I want to make it clear that I, and hundreds of thousands of my fellow veterans, along with millions of my fellow citizens, along with hundreds of millions more in Iraq and the Middle East, know fully who you are and what you have done."

In the past 3 months there has been much discussion regarding the gruesome and barbaric beheadings by ISIS of western hostages. Yet surprisingly, a similar and just as barbaric tradition has been taking place for ages just a few hundred miles east of ISIS, in Saudi Arabia. It has been met with nothing but silence by the same indignant western societies who are quick to condemn ISIS villainy. Why the disconnect? According to the following interview by Canada's CBC reporter Anna Maria Tremonti with Newsweek's Janine Di Giovanni looking at the "shock over ISIS beheadings but silence over Saudi Arabia beheadings" the answer why few if any dare to criticize the Saudis is simple: oil.

Having been 'guest-of-honor' at the APEC Summit the previous week, it appears Russian President Vladimir Putin is getting the 'Obama-at-APEC' treatment at the G-20 meeting in Brisbane. Following his 'odd' shaped convoy of protection last week, The Independent reports Putin chose a different type of entourage this week as he headed to meet the world's leaders. Putin has stationed four warships close to Australian waters as he arrived in Australia. Having drawn ridicule from no lesser wit than Britain's David Cameron who sarcastically bleeted, "I didn't feel it necessary to bring a warship myself to keep myself safe at this G20, and I’m sure that Putin won’t be in any danger," when it came time for the team photo, it was clear what 'message' was being sent...

"The Chinese, among others, seem to be responding to the lower oil price with additional demand," notes one tanker executive as Bloomberg reports the number of supertankers sailing toward China’s ports matched a record on Oct. 17 and is still close to that level now. The plunge in price has enabled China to add 35 million barrels to its inventories in the past three months as the nation fills its strategic petroleum reserves, OPEC said yesterday. Furthermore, though the oil slide is hurting nations from Venezuela to Iran - that depend on energy for revenues - ship owners serving the industry’s benchmark Middle East-to-Asia trade routes are reaping the best returns from charters in years as the slump drives down the industry’s single biggest expense. As one analyst notes, "we've seen the Chinese buying a lot from the Middle East and that’s really let rates cook." So it appears the Chinese, in the face of the worst growth and economy in years, are rational enough to buy more at lower prices (as opposed to the buy-more-because-stocks-are-at-all-time-highs Western investors).