With the Japanese stock market fading fast and macro-economic data showing anything but the kinds of inspiring recovery that Abenomics promised, the leaders in Japan have turned to a new meme - that the economy will be fixed when companies start raising their wages. Day after day the mantra is repeated in the hopes that repetition will make it come true and every company that raises wages (by an average of 4 Big Macs per month) is heralded as heroic. But, as The Japan Times reports, the government (in all its newly socialist bravado) has threatened to take the unprecedented step of shaming big "uncooperative" companies that do not raise wages during the annual spring labor talks. Forget minimum wage adjustments, this is pay-by-mandate Maduro-style; we just wonder how Abe will cope when a nation used to 'full' employment sees joblessness surge.
Bill Gates recently gave an interview to Rolling Stone magazine. The vast majority of the interview focused on his philanthropic efforts, with a particular focus on poverty and climate change. However, several questions were brought up on illegal NSA surveillance in general, and Edward Snowden in particular. His answers reveal one of the biggest problems facing America today, which is the fact that the billionaire class as a whole does not question or rock the boat whatsoever. They criticize only when it is convenient or easy to do so, never putting themselves at risk for the sake of civil liberties and the Constitution.
In a rather concerning (though not entirely surprising) turn of events, the United Nations (which may well need to be renamed after this) is making headlines:
- *RUSSIA REJECTS U.S. DRAFT RESOLUTION ON UKRAINE, CHURKING SAYS
- *U.S. DRAFT DOES NOT DIRECTLY BLAME RUSSIA FOR CRISIS IN UKRAINE
- *RUSSIA VETOES UN SECURITY COUNCIL RESOLUTION ON UKRAINE CRISIS
- *CHINA ABSTAINS ON UN RESOLUTION ON UKRAINE
And then the US comes over the top:
- *POWER SAYS UN VOTE SHOWS RUSSIA 'ISOLATED, ALONE, WRONG'
Well "isolated and alone" with China?
With a day left until the critical, if widely expected, results from the Crimean referendum are revealed, it is worth recalling the main footnote in last night's State Department travel alert for Russia: "all U.S. citizens located in or considering travel to the border region, specifically the regions bordering Ukraine in Bryansk, Kursk, Belgorod, Voronezh, and Rostov Oblasts and Krasnodar Krai, should be aware of the potential for escalation of tensions, military clashes (either accidental or intentional)." See, for the purpose of a military provocation, "accidental" will do. It is therefore not surprising to learn that moments ago all major news wire blasted the following headline, quoting the Ukraine ministry of defense:
UKRAINIAN MILITARY REPELS ATTEMPT BY RUSSIAN FORCES TO ENTER REGION ADJACENT TO CRIMEA-UKRAINE'S DEFENCE MINISTRY
So the official line is that the Ukraine repelled a Russian "military force" in a region inside east Ukraine and out of Crimea the day after Russia's foreign minister Lavrov said Russia has no plans to Invade Ukraine? Call us cynical, but something tells us if Russians wanted to "penetrate" east Ukraine, the would have done so without "being repelled."
In the aftermath in the recent surge in China's renminbi volatility which saw it plunge at the fastest pace in years, many, us included, suggested that the immediate next step in China's "fight with speculators" (not to mention the second biggest trade deficit in history), was for the PBOC to promptly widen the Yuan trading band, something it hasn't done since April 2012, with the stated objective of further liberalizing its monetary system and bringing the currency that much closer to being freely traded and market-set. Overnight it did just that, when it announced it would widen the Yuan's trading band against the dollar from 1% to 2%.
Earlier today we reported that according to weekly Fed data, a record amount - some $105 billion - in Treasurys had been sold or simply reallocated (which for political reasons is the same thing) from the Fed's custody accounts, bringing the total amount of US paper held at the Fed to a level not seen since December 2012. While China was one of the culprits suggested to have withdrawn the near USD-equivalent paper, a far likelier candidate was Russia, which as is well-known, has had a modest falling out with the West in general, and its financial system in particular. Turns out what Russian official institutions may have done with their Treasurys (and we won't know for sure until June), it was merely the beginning. In fact, as the FT reports, in silent and not so silent preparations for what will be near-certain financial sanctions (which would include account freezes and asset confiscations following this Sunday's Crimean referendum) the Russians, read oligarchs, have already pulled billions from banks in the west thereby essentially making the biggest western gambit - that of going after the wealth of Russia's 0.0001% - moot.
The whole story about how private equity firms and hedge funds have steamrolled into the residential home market to become this decade’s slumlords is a story we covered long before mainstream media even knew it was happening. We first identified the trend in January of last year in one of my most popular posts of 2013: America Meet Your New Slumlord: Wall Street. Since then, we've done my best to cover the various twists and turns in this fascinating and disturbing saga. With all that in mind, let’s now take a look at the latest article from Bloomberg, which points out that Blackstone’s home purchases have plunged 70% from their peak last year. Perhaps they overestimated the rental cash flow potential of indebted youth living in their parents’ basements?
You can't get blood out of a rock. Traditionally the United States has had a consumer-driven economy, but now years of declining incomes and rising debts are really starting to catch up with us. In order to have an economy that is dependent on consumer spending, you need to have a large middle class. Unfortunately, the U.S. middle class is steadily shrinking, and unless that trend is reversed we are going to see massive economic changes in this country. Incomes are going down, the cost of living is going up, and debts are skyrocketing. The following are 19 signs that the U.S. consumer is tapped out...
Thanks to the repression of the world's central banks, investors have exited cash and piled into "everything else," but while this is no surprise to most, Citi's Matt King warns of the possibility of an "entrance with no exit" as investors reach for yield has distorted primary and secondary markets, forced risk-averse investors into alternative asset classes, distorted markets beyond any fundamentals, and left markets incredibly illiquid. This, he concludes, sets up a problem that we are already seeing as investors are disillusioned one asset at a time...
“The risk of catastrophe will be very high. The nation could erupt into insurrection or civil violence, crack up geographically, or succumb to authoritarian rule. If there is a war, it is likely to be one of maximum risk and effort – in other words, a total war. Every Fourth Turning has registered an upward ratchet in the technology of destruction, and in mankind’s willingness to use it.”
The core elements of this Fourth Turning continue to propel this Crisis: debt, civic decay, global disorder. Central bankers, politicians, and government bureaucrats have been able to fashion the illusion of recovery and return to normalcy, but their “solutions” are nothing more than smoke and mirrors exacerbating the next bloodier violent stage of this Fourth Turning. The emergencies will become increasingly dire, triggering unforeseen reactions and unintended consequences. The civic fabric of our society will be torn asunder.
With Interfax reporting that Belarus has begun full-scale military drills in a "readiness check", and despite Lavrov's comments that:
RUSSIA HAS HAD AND CAN HAVE NO PLANS TO INVADE SOUTHEAST OF UKRAINE - LAVROV
Images from Russia and Ukraine suggest anything but with reports are pouring in from across Russia of even more firepower on the move.
We are sure it is just coincidence - and awkward combination of luck and suspicious timing - but Vedomosti reports that Viktor Zubkov, the Chairman of Russia's massive energy monopoly Gazprom, dumped his entire stake in the company just a few weeks before Vladimir Putin crossed the red line. Gazprom shares have dropped 25% in the last 3 weeks so his timing was impeccible.
One of the key lessons we can take away from history is that the global financial system changes… frequently. Since the end of World War II, the US dollar has been the dominant currency in the world. And even though Richard Nixon ended the dollar’s convertability to gold and unilaterally abandoned the US government’s obligations under the Bretton Woods system back in 1971, the world has still clung to the dollar for the past 43-years. But this is changing rapidly...
US Issues Travel Alert For Russia, Warns Of "Potential Military Clashes (Either Accidental Or Intentional)"Submitted by Tyler Durden on 03/14/2014 - 18:01
Just out from the State Department, which in the aftermath of the most recent failure by John Kerry to resolve the Ukraine situation, appears to be escalating to populism and engaging the general public. The best part in the warning is the following clarification: "all U.S. citizens located in or considering travel to the border region, specifically the regions bordering Ukraine in Bryansk, Kursk, Belgorod, Voronezh, and Rostov Oblasts and Krasnodar Krai, should be aware of the potential for escalation of tensions, military clashes (either accidental or intentional)." Somehow we have a feeling we may be seeing a spike in "accidental military clashes" over the next week.
"Had the thing been armed it would have let out a 200-metre blast...You could be talking about a major loss of life," one source noted as The Telegraph reports British military chiefs have launched a major investigation after a Royal Navy warship accidentally fired a torpedo at a nuclear dockyard. Workers watched in disbelief as the tube-shaped projectile flew through the air before blasting a hole in a security fence and slamming into a storage container. "Someone has obviously pushed the button, presumably by accident - the big question is who," as the Royal Navy stiff-upper-lippedly stated "during a training exercise, an inert Test Variant Torpedo unexpectedly jettisoned onto the wharf. There was no explosion and no casualties." Perhaps they should stay away from the Black Sea for a while - just in case.