Archive - Jun 20, 2015

During the same period over which Greek banks lost nearly €30 billion in deposits, banknotes in circulation jumped by some €13 billion. In short, because Greeks are increasingly prone to stuffing their euros in mattresses, a large proportion of the deposit flight has come in the form of hard currency withdrawals, meaning the Bank of Greece is forced to (literally) print billions in physical banknotes.

"If no agreement is reached on Monday, then the ECB will have little reason to show further flexibility and it will likely freeze its ELA limit on Greek banks. As a result capital controls will become almost inevitable after Monday."

The West is impotent to prevent Armageddon. It is up to Russia and China, and as Washington has framed the dilemma, Armageddon can only be prevented by Russia and China accepting vassal status. This is not going to happen. Why would any self-respecting people submit to the corrupt West? The hope is that Washington will cause its European vassals to rebel by pushing them too hard into conflict with Russia. If European politicians were to break from Washington’s hegemony and instead represent European interests, Washington would be deprived of cover for its war crimes. The breakdown of the neoconservative unipower model would then be apparent even to Washington, and the world would become a safer and better place.

What the stock bubble shows is the unthinkable degree of difficulty in trying to actually manage letting air out of any bubble in an orderly fashion. It may already be too late, as growth declines still further month by month, but stock prices go even more insane, drawing in more and more “retail” accounts and regular Chinese. In other words, the reform idea may have been impossible from the start; that the PBOC went ahead anyway, and still continues despite all that has happened, more than suggests that they now recognize the most dangerous existence is asset bubbles, far and away more important than even “necessary” growth.

The idea of an imminent US recession may seem moot as all the self-proclaimed experts and talking heads still acts as we are well into a recovery and patiently waiting for the forthcoming escape velocity which will take care of all ills plaguing today’s over-indebted society. Never do they stop to think about why things looks as dismal as they do. The sheer scale of the backwardness shown in such gross economic illiteracy suggest to us there is ulterior motives behind so-called Keynesian economic theories. Comparing GDP with cumulative goods sold and inventory accumulation since 2000 should tell you everything you need to know. The US economy is now on the verge of a new recession.

Presented with no comment...

As we move toward the second half of 2015, signs of financial turmoil are appearing all over the globe. Slowly but surely, we are starting to see the smart money head for the exits. As one Swedish fund manager put it recently, everyone wants “to avoid being caught on the wrong side of markets once the herd realizes stocks are over-valued“.

On Monday, Saudi Arabia celebrated the beheading of its 100th prisoner this year. The story was nowhere to be seen on Arab media despite the story's circulation on wire services. Even international media was relatively mute about this milestone compared to what it might have been if it had concerned a different country. How does a story like this go unnoticed? Today's release of the WikiLeaks "Saudi Cables" from the Saudi Ministry of Foreign Affairs show how it's done.

This is an eventful period for EU-Russia gas relations. How should the most recent evolutions of the Russian waltz of pipelines be interpreted? There are three possible scenarios...

One of the most stunning data points of the ponzi bubble called Chinese Stock Markets has been the greater-than-exponential rise in the opening of new retail stock trading accounts in the last few months. If ever there was a better indicator of speculative excess or a government policy out of control, it was the pace of new account openings. So... when we discover that after 8 years of weekly data provision, China Securities Depository & Clearing (CDSC) Corp has decided to discontinue the time series - it is clear China is getting very worried.

Any economic intervention, no matter how slight, causes unintended consequences. There are things that you cannot see, that the planner cannot anticipate. There are also easy ones...

A Greek exit from the euro would change everything. The greatest change being simply doubt and fear regarding the outlook for other vulnerable EU nations, EU banks and the EU banking and financial system. We discuss short and long term considerations, best and case outcomes, and wealth preservation strategies.

White? check. Woman? check. "Poor Progressive"? hhmm....

The Greek case offers quite a relevant view into the world of 21st century monetary alchemy, because that is what it really amounts to.  What is left, however, is the worst of all cases; no recovery, no lending and now just more financial imbalance piled onto the same negative pressures and imbalances that never really went away. What is amazing is how short the attention of “investors” may be, and how they allow themselves to think monetary complexity passes for proficiency or even expertise despite all and continued observation otherwise.