Archive - Jun 2015

We have now reached the point where the euro does not have a problem – the euro is the problem. De-risking it should be a priority for European leaders, as it now poses a chronic risk to global financial stability. Either the outliers need to leave or the countries inside the eurozone needs to move down the pathway to full political, economic and monetary union.

I am called contagion, but that is not my name...

Today’s America* is an ugly fraud. Today’s America* has nothing in common with the nostalgic images and grand successes of the nation as it were in her glory days. In fact, we would argue not only does America* lack any authentic representation of times past but is the antithesis of America. We have come full circle, back to the very thing our ancestors fought, died and ultimately persevered to escape.

Amid escalating violence in Ukraine and stepped up efforts by the Pentagon to rally support for Washington's increasingly aggressive posturing towards Moscow, NATO conducts war games in Poland designed to replicate the conflict in Ukraine.

Greek end hogame is at hand.  US economy is gaining momentum--consumption, capex, and housing.  Several equity markets are at cross-roads.

And does it really want to?

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.