China = Japan: China, like Japan in the early-1990s, has entered a secular period of significantly slower economic growth, compounded greatly by debt deflation; like Japan in the 1990s, Chinese asset prices, currency, banks (Chart 5) and capital flows will periodically cause severe disruptions to global financial markets, even if China does not itself cause a global recession.
With China now "murdering" Yuan shorts, markets are content that the Chinese debacle seems to be contained if only for a while, and so the attention of both traders and algos alike has focused on oil, which earlier in the session dragged global equities lower as it dropped by 3%, just shy of the $30 level, a new 11 year low, before staging another dramatic rebound in minutes, wiping out all losses in the aftermath of what appears to have been a deadly suicide bomber terrorist explosion on a square the middle of Istanbul's historic district.
The collapse of China's economy will have serious implications for India, the country's top investment banker warns. With exports in free fall and the government caught between fiscal retrenchment and the need to keep the economy afloat, it could be a rough year for the country Goldman swears will be a top economic performer in 2016.
- David Bowie, musical legend behind Ziggy Stardust, dies at 69 from cancer (Reuters)
- With No Powerball Winners, Jackpot Grows to Estimated $1.3 Billion (ABC)
- Stock Gains Short-Lived as Chinese Volatility Hurts Oil, Metals (BBG)
- China's yuan spikes higher, but stocks tumble (Reuters)
- Arch Coal Files for Bankruptcy (WSJ)
- Yuan Loan Rates Soar in Hong Kong as PBOC Halts Currency's Slide (BBG)
- China stocks close down at lowest level since September (Reuters)
- Fed Eyes Margin Rules to Bolster Oversight (WSJ)
In short, for oil prices to recover, US Production needs to drop to at the very least 6 million barrels per day for the market to rationalize in price.
An unseen bubble at the heart of the financial system is deflating with unknown consequences. When bubbles deflate, and here we are talking about one in the hundreds of trillions, bad debts are usually exposed. Even though much of the reduction in outstanding OTC derivatives is due to consolidation of positions following the Frank Dodd Act, much of it is not. When free markets reassert themselves, and they always do, the disruption promises to be substantial. We appear to be in the early stages of this event. If so, demand for physical gold can be expected to escalate rapidly as a financial crisis unfolds.
In the eyes of Western bankers, it was the perfect “scheme” – hence their label for the plan. In the eyes of any sane, rational, human being, it was/is the most naked, clumsy fraud that one could possibly imagine. But the corporate media assured us there was considerable enthusiasm amongst India’s population for this scam. However, in two weeks, out of a population of more than one billion people, holding an estimated 40 million pounds of gold, the Conspirators managed to steal less than 0.000002% of India’s privately held gold. So we’re now told that India’s government sees “temple gold” as its best/easiest target for stealing.
Once, there was a time when Hitler, Stalin, Mussolini and Tojo ruled almost all of Eurasia. And another time when a monolithic Sino-Soviet Communist bloc ruled from the Elbe to the Pacific. As those times are long gone, is it not time for an exhaustive review of the alliances we have entered into and the war guarantees we have issued, to fight for nations and interests other than our own?
The mainspring of Islamic extremism and militancy isn’t the moderate and democratic political Islam, because why would people turn to violence when they can exercise their right to choose their rulers? The mainspring of Islamic militancy is the despotic and militant political Islam of the Gulf variety. The Western powers are fully aware of this fact, then why do they choose to support the same forces that have nurtured jihadism and terroris?
"Demographics may not rule absolutely, but they likely will dominate investment markets and returns for the next few decades until the Boomer phenomena fades away. The 1% – in addition to the 99 – will need extra doses of Xanax, or additional slices of cake, to cope."
Will the scheme by the One Bank and India’s government to steal some/most/all of the 20,000 tonnes of privately held gold in India be successful?
For more than four decades Washington’s middle eastern policy has been dead wrong and increasingly counter-productive and destructive. Washington’s Mideast policy is predicated on the assumption that the answer to high oil prices and energy security is deployment of the Fifth Fleet to the Persian Gulf. And that an associated alliance with one of the most corrupt, despotic, avaricious and benighted tyrannies in the modern world is the lynch pin to regional stability and US national security. Nothing could be further from the truth. The House of Saud is a scourge on mankind that would have been eliminated decades ago, save for Imperial Washington’s deplorable coddling and massive transfer of arms and political support.
"It is time to accept that what we have done has worked brilliantly for twenty years but does not work anymore and move on. We are confident our process will eventually work again – for the laws of economics will never be repealed – but for now they are suspended and may be for some time; an indefinite period involving indeterminate levels of risk during which we think it would be wrong for us to be the stewards of your money."
As the Federal Reserve continues to prop up the highly leveraged debt based financial industry, the flow of U.S. gold heading East picked up significantly. According to the USGS most recently released survey, Hong Kong received 56% of total U.S. gold bullion exports in September.
Unfortunately, this is not a sustainable financial or economic business model for the West.