A society that is given the option to protect itself is not a fearful society, it is a prudent one. The victims of Paris were never allowed the option to protect their lives, nor were they fortunate to have armed defenders present or trained combatants to stop the attack before it reached them. People need the opportunity to secure their own safety since, as the past twelve years has shown, the State will fail them.
It had been a relatively quiet session overnight when as reported previously, the geopolitical situation in the middle east changed dramatically in a moment, when NATO-member country Turkey downed a Russian fighter jet allegedly over Turkish territory even though the plane crashed in Syria, and whose pilots may have been captured by local rebel forces. The news promptly slammed Turkish assets and FX, sending the Lira tumbling, pushing lower European stocks and US equity futures while sending 2 Year German Bunds to record negative yields.
As Europe grapples with political turmoil in the periphery stemming partly from voters' collective frustration with years of austerity, RBS takes a look at the history of European expenditure cuts and how they correlate to anti-government demonstrations, riots, assassinations, general strikes, and attempted revolutions.
Where did Europe's Q3 weakness come from? It was broad based and pronounced led by Germany, the currency area’s exporting powerhouse, while Italian economic growth also eased. There were fresh contractions in Greece, Finland and Estonia, while Portugal’s economy stagnated.
For once, the overnight session was not dominated by weak Chinese economic data (which probably explains why the Shanghai Composite dropped for the second day in a row, declining 1.4%, and ending an impressive run since the beginning of November) and instead Europe took the spotlight with its own poor data in the form of Q3 GDP which printed below expectations at 0.3% Q/Q, down also from the 0.4% increase in Q2, with several key economies rolling over including Germany, Italy, and Spain while Europe's poster child of "successful austerity" saw Q3 GDP stagnate, far worse than the 0.5% growth consensus expected.
First the good news: with a cold winter about to slam Europe where thousand of refugees make their way north every day, and where many of these migrants have been scrambling to find any form of lodging ahead of the first snow, Finland has decided to generously provide much needed housing facilities.
The bad news: said facilities are empty shipping containers and tents. Neither has heating.
“Normally, policemen are not allowed on the tarmac. Recently, they’re being asked to spend nights beneath jets.”
Bernie Sanders supporters seem to be everywhere. 49% of Democrats now have a favorable view towards socialism. This is scary. And sad. No matter how it is wrapped, socialism is still the belief that we can raise people out of poverty by taking money out of the hands of those who have learned how to produce. And it has never worked. Socialism always fails because at some point people realize they don’t have to work as hard to get the same amount of stuff. It takes all the incentive away to really succeed.
Based on the overnight market prints which are an oddly reddish shade of green, it took algos about 12 hours to realize that the reason they soared for most of October, namely hopes of an easier Fed which were launched with the terrible September jobs report and continued with increasingly worse US economic report in the past month, can not be the same reason they also soared yesterday after the announcement of a more hawkish than expected Fed statement which envisioned a stronger US economy and a removal of foreign considerations, which even more curiously took place on even worse data than the Fed's far more dovish September statement.
At a time when the US and China are practically at arms over the artificial islands in the South China Seas, with the US sending warships on location to patrol (despite White House Spokesman Josh Earnest saying on Oct. 8 that U.S. warships "should not provoke significant reaction from the Chinese") and a stunned China responding "What On Earth Makes Them Think We Will Tolerate This", the last thing we thought we would see right now was three Chinese warships about to port in Florida's Naval Station Mayport. And yet according to USNI that is precisely what is about to happen.
Tomorrow morning Mario Draghi is widely expected to if not announce an extension, or expansion, of the ECB's QE program, than to at least jawbone sufficiently, and push the EURUSD lower from its recently anchored level in the 1.10-1.20 range. But what are the specifics of Draghi's announcement: will he merely expand the monetization limit per security, as he did in early September, will he increase the universe of eligibile securities, or will he simply extend the maturity of the non-open ended QE from September 2016 to some indefinite date? The following list, courtesy of Bloomberg, summarizes what the sellside universe believes Draghi will unveil in just under 12 hours.
In the beginning of 2008, a US dollar could buy only €0.65 euros. Today, on average through 2015, one US dollar can buy €0.91 euros. With European demographics getting more challenging by the year, and deflation stalking the eurozone, problems don’t seem to be going away for the euro. The crises in Ukraine and Greece continue on without much resolved, and the ECB is continuing on with its QE program. Meanwhile, the Refugee Crisis has created another political distraction that has its own challenges for the people of Europe. Will the shrinking euro be able to revert its course, or is Europe doomed to become the next Japan?
Russia can be seen as maneuvering to split OPEC into two blocs, with Russia, although not a member, persuading the “Russian bloc” to isolate Saudi Arabia and the Gulf Arab OPEC members within OPEC. This might persuade the Saudis to seek a compromise with the have nots.
Whereas some central banks have become more forthcoming on where they claim their official gold reserves are stored, many of the world’s central banks remain secretive in this regard, with some central bank staff saying that they are not allowed to provide this information, and some central banks just ignoring the question when asked.
Neoliberal economics is blind to reality and serves to justify the destruction of the economic prospects of the Western World. It remains to be seen if Russia and China can develop a different economics or whether these rising superpowers will fall victim to the “junk economics” that has destroyed the West. With so many Chinese and Russian economists educated in the US tradition, the prospects of Russia and China might not be any better than ours. The entire world could go down the tubes together.