Greece

There were a few different stories coming out over the last few days that reveal the true nature of government and the apparatchiks who use disinformation, devious machinations, fraudulent accounting, and taxpayer money to cover up their criminality, lies, and the true state of the American economy. The use of government accounting tricks to obscure the truth about our dire financial straits is designed to keep the masses sedated and confused.

Greece’s Public Power Company is angry. The amount of unpaid bills by its customers has reached the astronomic EUR 2.5 billion. The PPC is so angry that it plans to cut the power to those without outstanding debts as soon as possible - a whopping 2.1 million Greeks face darkness.

Following today's mauiling of the short end, few were expecting a strong 2 Year auction. They did not get it. As widely expected, the yield of 0.824% jumped from 0.699% a month ago to a level seen in April of 2010. The good news: it wasn't as bad as it could have been: the When Issued was trading at 0.825% at 1pm. The Bid to Cover was ugly too, because at 3.013 this was the lowest implied demand for 2Y paper since May of 2010.

• Euro zone growth weak in October, China services rally (Reuters)
• Stocks Rise With European Bonds on Stimulus Outlook; Euro Falls (BBG)
• VW Sinks Deeper Into Crisis as Scandal Spreads to More Cars (BBG)
• Republicans ask IRS to audit Clinton charity's finances (Reuters)
• PBOC Inadvertently Boosts Stocks With Dated Zhou Comments (BBG)
• As China’s Economy Slows, Consumers Pick Up Some of the Slack (WSJ)
• Plane crashes in South Sudan, witnesses say dozens killed (Reuters)

"Yesterday we held five funerals, but there are still 55 bodies at the morgue," exclaims Lesbos' mayor Spyros Galinos, adding "Who could have anticipated such a carnage in the Aegean?"

"It is ironic that we are perhaps best known for advising “that you panic”. However, if you are anxious at the wrong time it can prove very painful. Today, we would advise that you don’t panic!
... by withdrawing the “Greenspan put” and using their asset purchase schemes to eviscerate any notion of value, the authorities have paradoxically created a safer yet more paranoid market."

- Hugh Hendry

People are genetically biased against change, because change means potential danger. People are also genetically biased against acknowledging this bias, because they wish to see themselves as being able to cope with both change and danger. Put together, this means that when changes come, people are largely unprepared or underprepared. This little bit of psychology 101 may seem redundant, but it is indispensable if we wish it to recognize the implications of Europe -and the entire world with it, in its slipstream- having already entered a period of change so profound it is impossible to predict what the impact will be. This ignorance and denial threatens to lead to a needless increase in nationalism, fascism, violence, misery, death and warfare. If we were to acknowledge that the change is inevitable, and prepare ourselves accordingly, much of this could be avoided.

• Baffle with BS: German Bonds Decline Along With Peers as Draghi Cools QE Talk (BBG)
• And yet... ECB's Nowotny says low inflation forces ECB to act (Reuters)
• Stocks fall on China data, but stronger euro zone lifts gloom (Reuters)
• Global factories struggle as stimulus fails to spur (Reuters)
• Russian airline rules out technical fault, pilot error in Egypt crash (Reuters)
• Turkey returns to single-party rule in boost for Erdogan (Reuters)

On a day full of Manufacturing/PMI surveys from around the globe, the numbers everyone was looking at came out of China, where first the official, NBS PMI data disappointed after missing Mfg PMI expectations (3rd month in a row of contraction), with the Non-mfg PMI sliding to the lowest since 2008, however this was promptly "corrected" after the other Caixin manufacturing PMI soared to 48.3 in October from 47.2 in September - the biggest monthly rise of 2015 - and far better than the median estimate of 47.6, once again leading to the usual questions about China's Schrodinger economy, first defined here, which is continues to expand and contract at the same time.

As per the fixing limits established as part of the August 11 Yuan devaluation, moments ago the PBOC announced that it had set the Yuan at a USDCNY fixing of 6.3154, a strengthening of a massive 0.54% - the most since 2005 - following the manic end of trading PBOC intervention on Friday that sent the Yuan soaring some 300 pips from 6.3475 to 6.3175.

From best bank to totally broke and freezing clients’ accounts in less than one year. Could this happen in the US?

These banks, 6 years after the global financial crisis, are still facing shortcomings on their balance sheets... How scary is that?!

It was 77 years ago this week that Orson Welles struck terror into the hearts of Americans with his live radio broadcast of the HG Wells classic War of the Worlds. What struck me while watching the PBS retrospective were the similarities between then and now. The gullibility of the masses, the power of fear, the overreaction by the media, busy bodies calling for the government to do something, and the effectiveness of propaganda are all commonalities between that Fourth Turning and today’s Fourth Turning.

Today we got yet another tortured admission of just how ugly Greek balance sheets are, the ECB has admitted what we knew months ago, namely that more than  half of all Greek loans are now nonperforming, and that as much as 57% of the loans made by Piraeus Bank the bank which fared worst, are at risk with the other Greek banks not much better off.