Archive - Mar 2015 - Story

In his first TV interview in 20 years, SocGen's Albert Edwards unleashes his brutal honesty on Raoul Pal in this excellent RealVisionTV discussion. From "what Japan is doing is absolutely off the scale," warnings about money-printing to the awkward reality that "policy makers cannot eliminate the business cycle," warnings instead that "they will make the eventual downturn far worse than it otherwise would be..." Edwards' discussion ranges from the UK and US "choosing lunatic policies" to describing Alan Greenspan as "a prospective economic war criminal," the SocGen strategist concludes, rather ominously, if policy-makers keep handing out free money, it will create massive problems, "there is a trigger point where you can create inflation. I don't know where that is. The central banks don't know where that is."

Location, location, location...

The belief that the market economy requires “steering” by altruistic central bankers, who make decisions influencing the entire economy based on their personal epiphanies, has rarely been more pronounced than today... Whether this is seen as good or bad by the average citizen is not even up for debate: it is simply what the political and bureaucratic elites have long ago decided is good for the citizenry, since they think they know best.

We need to look at the concept of a reserve currency differently, because it is important. We need to look at it as a privilege and a responsibility and not as a weapon we can use against the rest of the world. If we abolish, or even lessen, legal tender laws and allow the process of price discovery to reveal the best sound money, if we allow our US dollar to become the best money it can - a truly sound money - then the chances of our personal and collective prosperity are greatly enhanced. We all have the same interest. We all want to have the highest standard of living for ourselves and our families. A sound money reserve currency offers us the best chance of achieving our shared goal; therefore, we should rally around every effort to make it so.

In what could be a prelude to a Presidential run in 2016, on Friday Joe Biden released to the public both e-mails that he has written while serving as Vice-President for the past six years...

"This has been what I'm now calling the 'cruelest' winter I've ever seen," exclaims the CEO of one California ski resort... and he is right. According to official records, California's snowpack is the lowest on record for this time of year at around a mere 20% of the average since records began.

"Today, if you own an asset, say stocks or a home, and it went up in price, you do not perceive it as permanent. You fear it could go back down and you spend none of that money. You are not going to alter your investment decisions or your business decisions. That is why the QE-programs did not work. The goal of the Fed was to push up asset prices. With that in mind, they do not want asset prices to go down because they think it will create a reverse wealth effect. QE has been all about pushing up markets and they are not going to throw that to the wind.... By pushing up asset prices ECB president Draghi is going to make the same mistake as the Fed."

It wasn't even a full 24 hours after Greece raided at least some of the funds of its pension and other public entities in order to make a €310 payment to the IMF, the first of four this month (the balance is 350 million on March 13, 580 million on March 16 and another 350 million on March 20), that the insolvent country resumed doing what it does best: dispensing hollow threats. This time it was its foreign minister and leader of the Independent Greeks party - Syriza's junion coalition partner - Nikos Kotzias, who showed how to bluff like the best of them, when he threatened that "there will be tens of millions of immigrants and thousands of jihadists, if you take out Greece" the minister said on before EU foreign ministers meeting in Riga.

For Lord Rothschild, preserving wealth has "become increasingly difficult," recently, as he warns, rather ominously, "we are faced with a geopolitical situation as dangerous as any we have faced since World War II." Furthermore Lord Rothschild summarizes his thoughts briefly, eloquently, and ominously... as he touches on the global debasement of fiat currencies, disappointing growth (in light of massive monetary stimulus), and extreme stock market valuations. As Rothschild Wealth Management noted last year, equities are not well supported by current valuations, while monetary policy is limited by high debt levels and interest rates that are already close to zero... exposing equities to a potentially sharp correction.

Two men from Russia’s southern region of the North Caucasus, have been detained, according to FSB chief Aleksandr Bortnikov, suspected of the murder of Boris Nemtsov. As Reuters reports, The Investigative Committee, the state body leading the investigation, named the two men as Anzor Gubashev and Zaur Dadayev, and said they were "involved in the organization and execution of the killing," of Nemtsov. Opposition politicians fear scapegoating once again as past high-profile killings in Russia have led to people being jailed for pulling the trigger - often hired hitmen from the Caucasus - while investigators have failed to track down those who ordered the assassinations.

Hedge funds are still useful for one thing: observing where the fast money herd is parked, and doing precisely the opposite in advance of the herd dispersing. Because in a market as illiquid as this one, any and all fast, sudden moves by even the smallest group of traders results in dramatic price movement outliers.

Government interference gone mad... "Do It For Denmark"

In the early hours of this morning, yet another oil-carrying freight train derailed. Canadian National Railways says a fire continues to burn after a train carrying crude oil derailed  in Northern Ontario (near Gogama). As yet no injuries have been rported and a team of specialists are on the scene. This is the fourth derailment for CN Rail in Northern Ontario this year.

"...everybody knows there's something seriously wrong but they don’t know what is really happening."

This 'world order' may be coming to an end, he believes: "It's the collapse of that structure that was built in the 1940s that is behind all of these problems that are popping up in financial markets and economies around the world."

The US had a credit bubble, China has a credit bubble. The US had a housing bubble, China has a housing/investment bubble. Will China eventually have to go down the same path as the U.S., and the Eurozone? The answer: yes.