European Union

Those waiting to see if the crude crash would lead to any sizable adverse impact on the US trade deficit in November, as lower production led to higher imports if only on paper, the answer is yes, but in the opposite direction: instead of increasing or dropping just marginally from October's $43.4 billion (to the $42 billion consensus estimate), the November trade deficit tumbled by 7.7% to $39 billion the lowest print since December 2013, as a result of a 2.2% drop in imports coupled with a 1% decline in exports. But it was shale crude once again that was the swing factor, which was massively produced as domestic producers scramble to offset declining prices with extra volume, because as the data showed, in November the US imported the smallest crude amount by notional since 1994, and the lowest cost crude since 2010.

It has been a busy few days for Germany. In the space of a week, they have warned Greece "there will be no blackmail," adding that a Greek exit from the euro was "manageable," only to hours later deny (clarify) these comments. This was then followed up with beggars-are-choosers Syriza demanding any ECB QE must buy Greek bonds (or else) - which Germany has flatly ruled out - only to see today that Syriza is practically guaranteed to win a "decisive victory" at the forthcoming snap election. So it with a wry smile that we note Bild reports tonight that the German government is preparing for a possible Greek exit, warning of financial system collapse, bank runs, and huge costs for the rest of the EU.

• Economists sceptical ECB bond-buying would revive eurozone (FT)
• Indonesia naval captain says may have located missing plane's tail section (Reuters)
• Oil hits five and a half year low under $55 (Reuters)
• Samaras Warns of Euro Exit Risk as Greek Campaign Starts (BBG)
• The death of active investing: Vanguard Sets Record Funds Inflow (WSJ) - thank you Fed
• Oil Downturn Has Many Wondering How Lone Star State Will Weather a Bust (WSJ)
• Hollande Says France Must Exceed 1% Economic Growth to Spur Jobs (BBG)

2014 may go down as the year when gold and silver conspiracy “theories” became conspiracy “facts” as banks globally were found to have conspired to rig the prices of gold, silver, currency and many other markets.

To complete monetary union we will ultimately have to deepen our political union further: to lay down its rights and obligations in a renewed institutional order.

The goal is always the same: if they can't have the run of the place, they make sure that nobody else can either, by setting up a conflict scenario that nobody there can ever hope to resolve. And so if you see Anglo-imperialists going out of their way and spending lots of money to poison the political well somewhere in the world, you can be sure that they are on their way out. Simply put, they don't spend lots of money to set up intractable problems for themselves to solve - it's always done for the benefit of others.

2014 is in the bag and there's something for everyone to celebrate. Here are the narratives that painted the past year - what’s real about them versus what we’re being told they are about.

However desirable it may be to protect the Earth from the dire consequences of a runaway climate the chances that the world will agree to cut its emissions quickly enough to stay below the 2C threshold are somewhere between zip, zilch and zero. (There’s also the question of whether cuts of the magnitude necessary would be politically, economically and technologically achievable if the world does agree, but we’ll leave it aside here.) Now imagine that you are one of the prominent politicians – Obama, Kerry, Merkel, Ban Ki-moon, Hollande, Cameron, Davey, whoever – who have publicly and repeatedly stated that climate change is the greatest threat facing the world, that the world is in serious trouble if nothing is done to stop it but that a solution is still within our reach. What do you tell people when next year’s make-or-break Paris climate talks show that it isn’t?

With Greek CDS surging to near post-bailout highs (and short-end bond yields back above 11%), it appears the market is anxious of the endgame as tomorrow's 3rd and final 'snap-election'-saving vote looms. Following Samaras fearmongering yesterday, it appears Germany is starting to fear the worst (and play down its effect), as Merkel's bloc states "the prospect of a Greek sovereign default is no longer a concern for euro member countries and financial markets," adding "hope that Greece’s international partners would pay if the country’s policymakers refuse to carry out necessary reforms is misplaced." However, as Bruno de Landevoisin notes, "what is at stake is none other than the prosperity of the common man pitted against the privilege of concentrated power."

On the old continent, this December 29th, a succinct political showdown is scheduled to take place which may well become a defining moment for our entirely unsettled new millenium. 

Two weeks ago, as the S&P was preparing to surge on the latest round of all time high market-goosing algo trickery by the FOMC, 60 prominent German personalities from the realms of politics, economics, culture and the media were less concerned with blinking red and green stock quotes and were focused on something far more serious to the future of the world: the threat of war with Russia. In a letter published by Die Zeit, numerous famous and respected Germans including a former president and former prime minister write "Wieder Krieg in Europa? Nicht in unserem Namen!", or, roughly translated, "War in Europe Again? Not in Our Names!" As the signatories note: "It is not about Putin. Heads of state come and go. What is at stake is Europe."

At present, the choice between the two available models on the planet seems stark indeed: Eurasian integration or a spreading empire of chaos. China and Russia know what they want, and so, it seems, does Washington.  The question is: What will the other moving parts of Eurasia choose to do? All these interlocked developments suggest a geopolitical tectonic shift in Eurasia that the American media simply hasn’t begun to grasp. Which doesn’t mean that no one notices anything.  You can smell the incipient panic in the air in the Washington establishment. So long to the unipolar moment... 2015 is "going to be a real hardcore year."

Following the start of Abenomics in 2012, Japan moved back to the center of attention of global financial markets. After two and a half decades of economic stagnation, hopes were high that Japan would escape its long stagnation and deflation. Plenty of economists around the globe hoped that, in so doing, Japan would show the western world, mainly the Eurozone, the way to do the same and avoid a similar long period of low growth and stagnating incomes. Conversely, the failure of Abe’s plan for Japan’s recovery would not only be a disaster for the country of the rising sun. It would also be very bad news for central bankers and politicians in the west as well. It would prove that Keynesian policies don’t work in a world of too much debt and shrinking populations.

Despite the authorities' best efforts to keep everything orderly, we know how this global Game of Geopolitical Tetris ends: "Players lose a typical game of Tetris when they can no longer keep up with the increasing speed, and the Tetriminos stack up to the top of the playing field. This is commonly referred to as topping out."

"I’m tired of being outraged!"