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.
Having closed the Friday session less than 1 pip above the hugely important 1.2000 level below which there lay many stops, following this weekend's news onslaught which seemed like a deja vu of the newsflow from the fall of 2011, where the main catalyst was the Reuters report that Germany is preparing to let Greece go once and for all (with the subsequent attempts at retraction barely noticed), or maybe just because someone wanted to price in a little more of the more than fully priced in by now ECB QE - which very well may not happen - the moment the EURUSD opened for trading it took out not only the critical 1.2000 stops, but within milliseconds the Euro found itself bidless and crashed to a low of 1.1864, promptly taking out the lows set in May 2010 when the first Greek bailout took place, and tumbled to a level not seen since March of 2006!
The problem is inherent in the knowing “that it will end badly” and yet turning a blind eye and making money anyway. For that’s what a good Wall Street aficionado does after all, right? I mean, who cares about arguing about real economics or fundamentals. Who cares – I’m up 8%!! As if that’s all that now matters. For if that’s all that matters why don’t we embrace crony capitalism, embrace stagnant wages, embrace the 99% vs the 1% as that’s the best it’ll ever be. Who cares, as long as we’re getting ours. This disgusting bloated behemoth of an adulterated Central Bank infused market is now getting downright scarier.
Those outside Greece could not understand why any responsible politician would sign on the dotted line when they couldn’t deliver and our credibility suffered. The cost ultimately fell on those who were unable to shield themselves from amendments passed on the sly, directives that only the most savvy could possibly understand; in short, it fell on the taxpayers, who were bled dry. It’s time for citizens and the media to grow up. To pressure politicians for the truth and not to ostracize those who dare to tell it like it is. If we opt for comforting rhetoric, knowing how phony it is, we will be digging our own graves.
The investment climate is being shaped by four forces:
1. De-synchronized business cycle with the US ahead of the pack
2. The prospects of sovereign bond purchases by the ECB, amid political uncertainty sparked by Geece's snap election
3. The continued drop in energy prices is a stimuluative writ large but poses challenges for oil producers and the leveraged eco-system that has been built on the premise of high oil prices forever.
It’s high time for a new model and for new people. But the old ones, and their utterly and dramatically failed economies, hold the power, the media, the money, everything. So what other way out is there but mass fighting, mass casualties, a complete overthrow of everything that exists today, probably nuclear bombs dropping, and in the end a world none of us would recognize, let alone be able to survive in? It’ll take a while yet to get there, and it won’t be a pretty while by any stretch of the imagination. The powers that be are not done yet pretending to rule the universe and playing God. We should kick ‘em all out today, but we won’t. Because we’re all too much like them.
Today, concerned that Tsipras' ascent to power will mean precisely that, namely more "blackmail" by Greece of Germany and the Eurozone, as a Grexit opens the way for a collapse of the monetary union and a return to the DEM which would cost Germany far more than continuing the annual charade of keeping Greece in the Euro, Spiegel is out with another piece saying "Bundesregierung hält Ausscheiden Griechenlands aus dem Euro für verkraftbar", or loosely translated, the Federal Government considers Greece's exit from the euro manageable. Why is this coming out today? Because moments ago, Tsipras made it quite clear just what he will demand once he gets the power: "Germany had most of nominal value of debt written off in 1953, same should be done for Greece in 2015", adding that Greece wants writedown on nominal value of Greek debt. And so the gloves come off, and the real bluffing begins.
With Western economic sanctions against Russia, Iran, and Cuba in the news, Ken Rogoff thought it was a good time to take stock of the debate on just how well such measures work. The short answer is that economic sanctions usually have only modest effects at best. In a world where nuclear proliferation has rendered global conventional war unthinkable, economic sanctions and sabotage are likely to play a large role in twenty-first-century geopolitics. Rather than preventing conflict, Pericles’s sanctions in ancient Greece ultimately helped to trigger the Peloponnesian War. One can only hope that in this century, wiser heads will prevail, and that economic sanctions lead to bargaining, not violence.
Commodities broke first because there was the direct link to actual rather than imagined activity; inflation breakevens next; followed by the yield curve in November 2013. Either stocks have permanently decoupled, continuing exclusively within the realm of central bank omniscience that has been rebuked time and again, or there will be a period soon where full harmony is restored; that is everyone’s greatest fear.
As bonds rally and EUR slumps near 1.20 (the figure) following moar Draghi jawboning and suggestions of sovereign QE from the ECB, Germany has come out swinging to remind the world that it won't stand idly by as the nation's taxpayers are thrown under the bailout-the-EU-or-else bus. Michael Fuchs, deputy parliamentary floor leader of Angela Merkel's Christian Democrats, told Deutschlandfunk radio on Friday: "We shouldn't pump extra money into these states, but rather make sure they continue along the reform path." As Reuters reports, Fuchs further added, "I'd be grateful if (ECB President Mario) Mr Draghi would make statements along these lines."
Draghi Launches New Year With More QE Jawboning, Sending Euro To New 4 Year Low, Yields Lower, US Futures HigherSubmitted by Tyler Durden on 01/02/2015 07:00 -0500
The new year has officially started because it wasn't even a day in and Mario Draghi was once again out and about, jawboning the Euro to a lower level than where it was when he said back in 2012 he would do "whatever it takes" to push it higher. The reason, as Reuters reports, why the Euro sank to a nearly 5 year low against the USD, was "clear indications that the European Central Bank will soon embark on outright money-printing." Actually, it was on just more hollow rhetoric by Draghi, who told German Handelsblatt that "the risk that we don’t fulfill our mandate of price stability is higher than it was six months ago." He also added that "it’s difficult to say” how much the institution will have to spend on government-bond purchases.
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.
"The Greek political turmoil is likely to complicate matters for the ECB’s preparation of a sovereign QE programme. The prospect of the ECB potentially incurring severe losses is likely to intensify the debate within the Governing Council, where sovereign QE remains controversial. It could also make the start of a buying programme already on January 22 even more ambitious. In addition, the spectre of default could create new limitations on any sovereign QE design."
As investors and market participants become increasingly aware of the regulatory failures that allowed for manipulation of LIBOR, FOREX, municipal bond bidding and certain commodities markets, regulatory sources are increasingly expressing concern that they have paid too little attention to potential manipulations of an arguably larger, more systemically important and less regulated market – the CDS market as self-governed, through ‘regulatory license’, by the International Swaps and Derivatives Association (ISDA).
Dr Marc Faber, respected economic historian and author of the respected monthly newsletter, the ‘Gloom, Boom and Doom Report’, has warned that 2015 is set to be very volatile, urged international diversification and owning “physical precious metals stored outside the U.S.”