Archive - Mar 3, 2015

For this commentary to make any sense to most readers; it’s necessary to address the two questions which immediately come to their minds: “what is the Baltic Dry Index?” and “why should I care about it?” Dealing with these questions in order; the Baltic Dry Index measures the prices paid to ship various forms of cargo, in the form of an index.

By far the most important geopolitical event of the day, as straight-to-C Span-poluist-pandering as it may have been, was Israel Prime Minister's address to congress, in which for nearly one hour the Israeli leader bashed Iran, stopping just shy of fabricating even more evidence about how close Iran is to developing a nuclear weapon. Yet one person missed everything including the standing ovation at the end: president Barack Obama. As it turns out he had more important things to do...

In a surprise move, the RBI just cut its main interest rates for the second time in two months, taking it from 6.75% to 6.50%, in what the central bank calls a “pre-emptive” policy move, but what is in reality merely a confirmation that so far in 2015 at least 20 central banks have lowered their interest rate.

At the Environmental Protection Agency (EPA), red tape is preventing the removal of a top level employee accused of viewing porn two to six hours a day while at work, since 2010. Even though investigators found 7,000 pornographic files on his computer and even caught him watching porn, he remains on the payroll.

Just in time for both total auto loans and total student debt outstanding to top the $1 trillion mark, we get a match made in FICO hell as the subprime lending unit of AIG Springleaf, has purchased OneMain, another subprime lender that’s been relegated to Citi’s Citi Holdings trash bin for years. The deal creates a subprime lending powerhouse with some $14 billion in possibly-not-toxic receivables.

Recency bias no doubt once again playing a role, but more likely it is this new-ish trend to deny any damaging economic possibility as it might disrupt the balance of financialism. Any system that cannot even countenance just a small possibility of contrary thought is not robust or “resilient” at all. As we saw in 2008-09, oil liquidations were entirely appropriate for economic conditions; how can “everyone” deny outright something even slightly similar?

After three hopeful months of greater-than-50 prints for Japanese Services PMI, February saw it plunge back into contraction with a considerably worse than expected 48.5 print. This drags the overall composite PMI for Japan to 50.0, its weakest reading in 4 months as New Orders drop to May 2014 lows and employment craters to its lowest since Oct 2012. On the heels of last night's weak JGB auction and sell-off in stocks on relatively hawkish comments from economists, tonight is seeing more of the same as the Nikkei 225 is having the worst 2 days in 2 months and JGB yields are jumping once again. Abegeddon is back...

Revealed in Clinton portrait...

Amid a booming housing market (home prices +14.4% YoY), and busting economy (PMI 44.2 from 55.1 2014 peak), Australia's Gold output in 2014 surged 4% to its highest since 2003. As Mining.com reports, the world's no.2 gold-producing nation (after China) has been forced to increase the grade of ore they were targeting and push their processing plants even harder, and mining consultants Surbiton Associates warns "it's not all good news."

Tens of thousands marched Sunday through Central Moscow to honor Boris Nemtsov, outspoken opposition critic of Vladimir Putin who was murdered Friday night and thousands more mourned today at his funeral (though notably not Putin himself) and more pointedly, The BBC reports, several EU politicians and Russian opposition leader Alexei Navalny were barred from attending the funeral. Hours later, Mr Navalny accused the Russian authorities of responsibility for the murder, adding to slew of competing theories involving everything from the CIA to Islamic militants and Ukrainian nationalists.

Not to be outdone by his partner Charlie Munger (who offended many with his comments that "gold is a great thing to sew onto your garments if you're a Jewish family in Vienna in 1939,"), Berkshire Hathaway's Warren Buffett decides to take on Europe (and The Big Lebowski), and particularly the Greeks in today's 'perhaps it's time to just STFU' moment. Responding to questions about Europe's future, Buffett compares Greece to a "dog peeing on the carpet" of Europe, suggesting Germany stop "rewarding behavior you want to get rid of."

Financial collapse is already baked in, and it's only a matter of time before it happens, and precipitates commercial collapse when global supply chains stop functioning. Political collapse will be resisted, and the way it will be resisted is by starting as many wars as possible, to produce a vast backdrop of failure to serve as a rationale for all sorts of “emergency measures,” all of which will have just one aim: to suppress rebellion and to keep the oligarchy in power.

In "an unprecedented move", the controversial head of Norway's Nobel Peace Prize committee was removed Tuesday and demoted to the rank of mere member.  Thorbjoern Jagland, a former Norwegian premier, drew criticism after becoming committee chairman in 2009 for awarding the prestigious Nobel to newly elected US President Barack Obama. He will be replaced by current Deputy Chair Kaci Kullmann Five.

The underlying concept of how Petrodollar recycling, or as some call it, petrocurrency mercantilism works, leaves some confusion. So in order to alleviate that, here courtesy of Cult State, is a quick and simple primer that should hopefully answer all questions.