Archive - Sep 2015 - Story

Back in early 2014, when IRS director Lois Lerner pleaded the Fifth, it became clear that not all is well with the official narrative. Fast forward to this week when another prominent democrat caught up in another email scandal has just indicated they would plead the Fifth. And no, its not Hillary Clinton, at least not yet, but her former staffer, Bryan Pagliano, who oversaw her private email server. As reported by Politico, he too plans to invoke his Fifth Amendment right not to answer incriminating questions before the House Benghazi Committee, according to a letter his lawyer sent the panel.

While the market nervously eyes the petrodollar reserves of Saudi Arabia and the UAE as the countries juggle domestic expenditures, dollar pegs, and the cost of war, Yemen itself is coming apart at the seams - literally. As WSJ reports, it now looks as though the country may in fact split, as Aden residents have eschewed the red, white and black for the flag of South Yemen, which existed as an independent republic for more than two decades.

We live in a Fiat economy where growth is fuelled by debt, and less and less from productivity and demographics. This takes place in a closed circuit with the US dollar as the reserve currency. The problem now is that the economy can not get restarted without changes to one or several parameters. Simply put, this fiat economy is unsustainable and must change, and we must adjust to slower growth and start actually producing.

Leading Republican presidential nominee Donald Trump appears to have just gone 'all-in'...

*TRUMP SAYS HE'S SIGNED PLEDGE NOT TO RUN AS 3RD PARTY CANDIDATE

And while he was at it, he took a jab at Hillary as "the worst secretary of state in the history of the world." . Maybe The Economist is on to something.

"The opening of the new units will feed an artificially created confrontation. [This is] the logic of the Cold War. It runs counter to genuine interests of the European and regional security." - Alexander Grushko, Russian ambassador to NATO.

"If we accepted everyone, we would be larger than Iceland." – Liberland founder, Vit Jedlicka

This Friday appears to be make or break for the Fed's data dependency, as the FOMC's September rate decision looms.

Confused why the blistering rally off the open following Draghi's uber-dovish commentary has completely faded? The following note from BMO's Mark Steele should explain it.

For years, many had mocked both European and US stress tests as futile exercises in boosting investor and public confidence, which instead of being taken seriously repeatedly failed to highlight failing banks such as Dexia, Bankia and all the Greek banks, in the process rendering the exercise a total farce.  The implication of course, is that regulators, thus central bankers, openly lied to the public over and over just to preserve what little confidence in the system has left.  Now we know that this is precisely the policy intent: as Reuters reports citing a paper co-authored by a Bundesbank economist, "banking supervisors should withhold some information when they publish stress test results to prevent both bank runs and excessive risk taking by lenders."

In other words: lie.

How did the world manage to go from one acute crisis to mutliple acute crises in the space of seven years despite trillions in central bank asset purchases, you ask? Here's the crisis contagion roadmap to help explain.

The US economy was not “decoupled” in the slightest during the expansion of the great global monetary boom that has now crested. Nor will it uncouple during the deflationary bust that must necessarily ensue. The ultimate worldwide hit to US exports is evident in the 20% drop in shipments to Brazil, and that’s just for starters because its economic depression is just getting underway. Likewise, the panicked flight of hot dollars from Brazil now besetting the global financial markets is only indicative of the turmoil to come as the massive “dollar short” unwinds on a global basis. So this is not a retest. We are in the midst of an unprecedented global deflation. A real live bear market is once again at hand.

Three years ago, we noted the dumbification of America was accelerating as SAT scores hit record lows. It appears the need for the Derek Zoolander Center For Kids Who Can't Read Good And Wanna Learn To Do Other Stuff Good Too has never been greater as Bloomberg reports that students in the high school class of 2015 turned in the lowest critical reading score on the SAT college entrance exam in more than 40 years, with all three sections declining from the previous year.

The volatile sell-off in global equities from Thursday August 20th through Tuesday August 24th, alongside a relatively muted diversification benefit from fixed income, led many risk parity funds to suffer a sudden and sharp drawdown over the four-day period. The performance drawdown and subsequent spike in the volatility of risk parity funds likely triggered a significant deleveraging in their assets.

An assistant professor from the U.S. Military Academy at West Point recently declared that professionals critical of the “War on Terror” constitute a “treasonous” opposition that should be subject to military force.

The risk-off tide is rising, and sand castles of QE will only hold the tide back for a brief period of apparent calm.