Archive - May 2014 - Story

Plenty of progressives up till literally yesterday were saying yes yes, Piketty’s theoretical framework leaves much to be desired, but he’s a top scholar when it comes to the trends he’s documented. And now that much of that empirical work might be totally bunk, the defense is to argue that yes yes, the historical data might be the exact opposite of what Piketty claimed, but boy he offers some compelling theoretical predictions with which we must grapple. Until this sorry episode, we had no idea just how much progressives hated rich people, and how little regard they had for intellectual integrity.

As the anti-China protests in Vietnam - following China's imposition of an oil-rig in disputed territorial waters - RFA reports that a vietnamese woman belonging to an outlawed Buddhist movement died Friday after setting herself on fire in protest against China's actions. The woman, 67-year-old Le Thi Tuyet Mai, surrounded herself with seven banners denouncing Beijing’s claims in the South China Sea before dousing herself in gasoline and setting it alight early Friday morning in front of the Reunification Palace in downtown Ho Chi Minh City. As the following clip shows, police put out the blaze within three minutes but she succumbed to her burns. With China showing no signs of backing down, one of Mai's banners perhaps warrants most attention for the future, "I offer my body as a torch to light the path of all patriots."For its part, the U.S. has expressed a hope of increasing engagement with Vietnam in the wake of the China-Vietnam clashes. A spokesman for the U.S. Seventh Fleet told Reuters that Washington “would welcome increased port visits with Vietnam.”

The individual or system that never experiences dissent, volatility or stress is systemically unhealthy and increasingly prone to sudden "gosh, I didn't see this coming" collapse. The individual who walks daily (i.e. aerobic exercise) is healthier than the couch potato, but the individual who routinely engages in short bouts of strenuous activity has the added benefits of triggering rebuilding/repair responses. Political economies, government agencies, enterprises and communities are no different, as all systems respond the same way: either growing brittle and vulnerable by suppressing dissent and volatility or maintaining strength, resilience and adaptability by encouraging dissent and volatility.  Our centralized government and bank have spared no expense to ruthlessly suppress these essential forces of healthy systems at every turn. The cost of their gross incompetence has yet to be paid, but it will be paid, and in full, in the years ahead.

Just a matter of time...

After another, even deadlier, terrorist attack in Urumqi, Beijing must reevaluate its anti-terrorism strategy.

How do you get rid of hundreds of tons of highly radioactive water?  You dump it into the Pacific Ocean of course!  In Japan, the  Tokyo Electric Power Co. has made the “painful decision” to begin purposely dumping massive amounts of radioactive water currently being stored at the destroyed Fukushima nuclear facility directly into the Pacific.  This is being done even though water radiation levels near Fukushima spiked to a brand new all-time record high just a few days ago.

Having explained how well socialism worked in France and in Venezuela, why socialism alway fails; and exposing the "costs" of socialism around the world, we leave it to the much more erudite UKIP member Daniel Hannan to explain why socialism does not work. Hannan, simply put, explains why socialism (using force to make individuals comply with planners plans) doesn't produce the results the planners planned. As Austrian Addict notes, socialists don't like the spontaneous order that results when individuals are free to make decisions on what they produce, consume, and exchange. The only reason central planners think that socialism hasn't worked is because it hasn’t been tried by the right people, namely them.

Banking didn’t start out as a reckless, parasitical plaything of a moneyed and politically-connected aristocracy.

Ever seen Jamie Dimon, wearing his presidential cufflinks, stretch, bend and break the truth in front of Congress? The guy, and by implication JPMorgan, is unflappable: there is nothing in this world that could dent his cool. And yet, we may have just uncovered the weakest link in JPMorgan's armor. The one thing in the world that would make JPM "blink" is...

With relative front-runner Yulia Tymoshenko suggesting Ukraine hold a referendum on joing NATO in June - exactly the event that Putin has expressed grave concern about - this weekend's elections in the troubled nation are considerably more crucial to global geopolitical anxiety than the record low levels of implied volatility across FX, bond, and stock markets would suggest. AS Deutsche explains, Ukraine's new president will face challenges in almost all key spheres – in particular, de-escalating tensions within Ukraine, especially in the eastern provinces; conducting deep economic reforms in order to move Ukraine on the path of recovery along with dealing with the international lenders; finally, improving relations with Russia and the European Union. Below we outline the policy agendas of the candidates and assess the probable scenarios of further political development.

Monetary central planning at the zero bound embodies a destructive internal contradiction. It inherently generates rampant speculation in real estate and financial assets because ZIRP massively subsidizes the cost of carry. At the same time, its practitioners are institutionally disposed to bubble denial because they falsely believe that their policies are what is keeping the real economy advancing - even if currently it is at a sub-normal pace by historical standards. Without fail, therefore, monetary central planners keep their feet on the accelerator to the very end, boasting that the “in-coming data” shows the macro-economy approaching the nirvana of full-employment. What they are actually doing, however, is driving the financial system to unsustainable extremes of valuation and speculation - and eventually to a crash landing. We have had two of these processions of the lemmings - that is, Fed driven cycles of bubble inflation and bust - already in this century. Now we are at the asymptote of the third.

While US central bankers shudder at the idea of admitting their could be a bubble in real estate or stocks (unless its obvious in hindsight); and England's Bank of England explains 'if there is a bubble, it's not their fault, but there isn't so there'; it appears the Chinese are more comfortable with the truth. As Bloomberg BusinessWeek reports, China's central bank Governor Zhou Xiaochuan said, China may have a housing bubble only in “some cities,” - an issue that’s difficult to resolve with a single nationwide policy. As concerns mount of dramatic over-supply on the back of extrapolated urbanization dreams, Zhou notes, “The economy has slowed down a bit, but not very much," adding that "we should keep vigilance on whether it continues to slow down." Which is odd because US talking heads have made up their minds that China is fixed...

It seems that no market tops until the bag has been fully passed to retail muppets, and we appear to be in the process of that happening right now. The retail investor is getting back into the stock market and is seemingly focused on the riskiest types of shares; unlisted penny stocks. They aren’t just dipping their toes in either, the pace exceeds that of the tech boom of the late 1990?s and has just hit the highest amount on record.

Yes, U.S. capital markets have officially gone "Full Seinfeld"; As ConvergEX's Nick Colas notes, Tuesday’s selloff over “Nothing” reversed higher Wednesday throuygh Friday for similarly non-specific reasons. So, today we will go a little further afield and talk about words and what they tell us about shifting societal priorities and norms. Wonder what the most commonly searched word might be on the Merriam-Webster website?  It is “Pragmatic”... which seems incredibly ironic given the total lack of pragmatism that appears to be shown in world markets.