No one can predict accurately at what point slower growth will start producing political turmoil on a scale that’s unprecedented in the China that Deng made, what the magic number is, or even whether there’s an iron connection between economic and political crises. Yet the increase in capital flight from China and soaring applications for American and European residential visas by well-heeled Chinese suggest that the elite is hedging its bets. Some may be overstating things, but the rebalancing camp is too sanguine.This much is certain: China’s leaders are in uncharted waters, and because of the diminishing utility of the established formula for rapid growth their maps may be of questionable value.
With the bloodiest weekend since the ouster of Mubarak, it seems the supposed coup-less people's revolution appears to be edging ever closer to civil war. Egypt lies at the heart of the Arab revolution, even if the original spark occurred in Tunisia. But Egypt – with its strategic location, stable borders, large population, and ancient history – has been the principal power of the Arab world for centuries, defining the movement of history there like no other. This implies that the overthrow of Egypt’s democratically elected president, Mohamed Morsi, will have much broader repercussions. Europe's bloody revolutions of the 19th century changed the status quo forever and while the Arab world might not be so deeply affected, the near future there will certainly be neither peaceful nor stable.
Facts are treasonous and dangerous in an empire of lies, fraud and propaganda. It is maddening to watch the country spiral downward, driven to ruin by a psychotic predator class, while the plebs choose to remain willfully ignorant of reality and distracted by their lust for cheap Chinese crap and addicted to the cult of techno-narcissism. We are a country running on heaping doses of cognitive dissonance and normalcy bias, an irrational belief in our national exceptionalism, an absurd trust in the same banking class that destroyed the finances of the country, and a delusionary belief that with just another trillion dollars of debt we’ll be back on the exponential growth track. The American empire has been built on a foundation of cheap easily accessible oil, cheap easily accessible credit, the most powerful military machine in human history, and the purposeful transformation of citizens into consumers through the use of relentless media propaganda and a persistent decades long dumbing down of the masses through the government education system. This national insanity is not a new phenomenon. Friedrich Nietzsche observed the same spectacle in the 19th century: “In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule.”
For the first time, France's Front National party (described by some as 1930s Social Nationalism) is running level with the two governing parties in post-war France - the Socialists and the Gaullistes. With all around 21%, the Front is rapidly gaining support as its leader, Marine Le-Pen exclaims, "Europe is just a great bluff. One side there is the immense power of sovereign peoples, and on the other side are a few technocrats." As The Telegraph reports, following a massive victory securing 46% of the vote in a recent by-election, her anti-euro sentiment is clearly gathering attention. "The euro ceases to exist the moment that France leaves, and that is our incredible strength. What are they going to do, send in tanks?"
Russia, Greece, Turkey, Kazakhstan and Azerbaijan expanded their gold reserves for a seventh straight month in April, buying bullion to diversify foreign exchange reserves due to concerns about the dollar and the euro. Russia’s steady increase in its gold reserves saw its holdings, the seventh-largest by country, climb another 8.4 metric tons to 990 tons, taking gains this year to 3.4% after expanding by 8.5% in 2012, International Monetary Fund data show. Kazakhstan’s reserves grew 2.6 tons to 125.5 tons, taking the increase to 8.9% this year after a 41% expansion in 2012, data on the website showed. Turkey’s holdings rose 18.2 tons to 427.1 tons in April, increasing for a 10th month as it accepted gold in its reserve requirements from commercial banks. Belarus’s holdings expanded for a seventh month as did Azerbaijan’s. Interestingly, Greece’s gold holdings climbed for a fourth month, according to the IMF data. This could be a sign of rising economic nationalism in Greece or that the Greek central bank realises that if Greece leaves the euro and is forced back onto the drachma that gold reserves will offer a modicum of protection. Only a modicum, because Greece’s gold reserves remain miniscule especially considering the scale of their debts.
Sparked by the police shooting of a machete-wielding 69 year-old man, traditionally calm-and-collected Sweden is suffering amid its third night of riots. It seems underlying tensions from high youth unemployment and rising nationalism against the nation's large immigrant population have been catalyzed by this seemingly unrelated event. As the Daily Mail notes, immigrant ghettos have been created where unemployment is high and there are few opportunities for residents with left-leaning commenters adding that the riots represented a 'gigantic failure' of government policies, which had underpinned the rise of ghettos in the suburbs - "We have failed to give many of the people in the suburbs a hope for the future." An anti-immigrant party, the Sweden Democrats, has risen to third in polls ahead of a general election due next year, reflecting unease about immigrants among many voters. What is driving this tension? After decades of practicing the 'Swedish model' of generous welfare benefits, the country has been reducing the role of the state since the 1990s, spurring the fastest growth in inequality of any advanced OECD economy. Given Sweden's 24.7% youth unemployment, we wonder just what will happen to the 60% of unemployed youths in Greece and Spain when school lets out this summer?
The fundamentals of the platinum and palladium markets are beginning to receive market attention and not before time. The positive supply demand dynamics are leading to increased investment demand as seen in the ETF data and Chinese demand rising again due to both industrial and jewellery demand.
In chapter 8 of David Stockman's new book The Great Deformation, the power-that-be-turned-anti-establishment-reality-seeker explains his perspective on the myths of the New Deal Recovery: "The new deal was a political gong show, not a golden era of enlightened economic policy. It shattered the foundation of sound money and inaugurated a régime of capricious fiscal and regulatory activism that inexorably fueled the growth of state power and the crony capitalism which thrives on it. But it did not end the Great Depression or save capitalism from the alleged shortcomings which led to the crash. In fact, the New Deal introduced a severe dose of economic nationalism and autarky at a time when the only hope for speedy recovery was a reopening of world trade and reestablishment of a stable international monetary régime.... in reality, the notion that the New Deal had pioneered a road map to recovery by means of countercyclical fiscal policy is mostly a postwar academic legend."
An overview of this week's drivers.
While Kyle Bass notably remarks that pinpointing the end of a 70-year debt super-cycle is naive, the combination of the resurgence of nationalism (impacting trade with China) and the dreadful impact of the earthquake/tsunami (drastically changing Japan's supply chain) has secularly shifted Japan's trade balance for the worst at a time when the current account is already negative. "They are all in denial," Bass notes as the government has failed to deal with its problems over the last 20 years. Simply put, Japan needs a Schumpeterian 'creative destruction' moment instead of the constant rolling of debts and expanding of government balance sheets to paper over the cracks. The 'moment' feels like it is now, he notes, expanding that "JPY could hit 200," as they lose control; following two decades of volatility-smoothing, the chance of a disorderly collapse are high. Critically, he fears, "the social fabric of Japan will tear," as with one-third of the nations at retirement age, the fallout from the policies of Abe-Kuroda could cause them to "lose 30-50% of their life savings." What is perhaps even more concerning, he adds, "you are starting to see the central banks not trust each other." At a certain point in time, "nationalist interest takes over the global [G7] kumbaya," and that is occurring now. "The insidious nature of a runaway inflation is that it bankrupts the middle class... leading to social unrest globally."
Whenever discussion over North Korea arises in Western circles, it always seems to be accompanied by a strange mixture of sensationalism and indifference. The mainstream media consistently presents the communist nation as an immediate threat to U.S. national security, conjuring an endless number of hypothetical scenarios as to how they could join forces with Al-Qaeda and attack with a terroristic strategy. In the midst of the latest tensions with the North Koreans, I have found that most people are barely tracking developments and that, when confronted by the idea of war, they shrug it off as if it is a laughable concept. “Surely” they claim, “The North is just posturing as they always have," creating a social and political atmosphere surrounding our relations with the Asian nation that places both sides of the Pacific in great danger. The skeptics argue that we will never get to this point, though, because North Korea has brandished and blustered many times before, all resulting in nothing. We see recent events being far different and more urgent than in the past. All that is needed to instigate an event on the Korean Peninsula are tightened sanctions.
The European Crisis is now accelerating right as Germany becomes increasingly uninterested in funding bailoutsSubmitted by Phoenix Capital Research on 04/01/2013 14:56 -0400
The key point here is that European Crisis is now accelerating right as Germany becomes increasingly uninterested in funding additional bailouts.
With Angela Merkel and her vassal at the ECB Mario Draghi seemingly in control of markets on the European continent, there is a temptation to pull a George W. Bush and unfurl the “Mission Accomplished” banner. However, that was a PR blunder for Bush the Younger and it would be a blunder for Merghi as well. There are a couple of items that have hit the tape recently that seem to indicate the ground upon which the Euro is based is shaking. Perhaps you believe Draghi’s open-ended commitment to do, “...whatever it takes,” to bail out Europe’s broken banking system will be enough to stabilize things for good. Could be. On the other hand, the Merghi doctrine of open-ended support depends upon the sovereigns of Europe voting more or less along traditional lines. I feel pretty confident saying this will not happen. Over 25% of the people in two of Europe’s largest, best educated, richest, most populous countries are already saying they reject the status quo.
German Chancellor Angela Merkel has walked a tightrope over the last few years of keeping the EU together without infuriating the German populace to the point of having to abandon ship. What happens if she loses her political "balance"?
In news that is hardly welcome to Chancellor Merkel and her September reelection hopes, German Focus magazine revealed that a substantial 26% of all Germans would back a party that wants to quit the euro. Even more disturbing is that a whopping 40% of all Germans in the prime 40-49 age group are tired of supporting a failed monetary regime and will just say "nein" to the European globalist experiment at preserving the status quo if just given the opportunity. The Italian virus is spreading: the question is which "clown" will show up on the cover of the Economist in six short months, when at least one person will appear on the political scene to take advantage of the populist protest at endless German-backed bail outs, and what as Dylan Grice so eloquently explained earlier, is merely a reaction to central banker central planning manifesting itself in ongoing social breakdown.