Reality

Nearly all empires end due to over-extension. If brave people from Ottawa to Baghdad simply say “enough” within a brief space of time, hopefully this empire can dissolve relatively peacefully like the Soviet Empire did, leaving its host civilization intact, instead of dragging that civilization into oblivion along with it like the Roman Empire did. But beware, the imperial war party will not go quietly into the night, unless we in their domestic tax base insist that there is no other way. Russia’s entry into Syria has thrown all of the neocons’ schemes into disarray, as even Jordan, that favorite proxy force in Israel’s dreams of regional dominance, has begun coordinating with Russia, in spite of its billion dollars a year of annual aid from Washington. Et tu Jordan?!

We live in an era of illusion: the illusion of understanding, and the illusion of control. The net result is nonsensical policies that fail to achieve their stated objectives.

If there's no risk of a systemic event, why are regulators moving to implement rules that would make it so firms and funds can freeze your money in the event of a crisis?

Following Marc Faber's reality check on China recently, Hayman Capital's Kyle Bass took a swing tonight noting that "China's 7% GDP growth is a farce," and adding that, just as we detailed previously, China's credit cycle has begun and non-performing loans will rise rapidly leading to an emerging Asia banking crisis ahead. Japanese markets continue to entertain with "someone" insta-ramping NKY Futs 100 points at the open only to give it all back as USDJPY slides back towards 120.00 (and 10Y JGB yields drop below 30bps for the first time in 6 months).

"Investors are now facing the second most extreme episode of equity market overvaluation in U.S. history (current valuations on similar measures already exceed those of 1929). The belief that zero interest rates offer no alternative but to accept risk in stocks is valid only if one believes that stocks cannot experience profoundly negative returns. We know precisely how similar valuation extremes have worked out for investors over the completion of the market cycle, and those outcomes have never been deferred indefinitely. The only question at present is how many grains are left in the hourglass."

On the heels of the nuclear deal and Tehran's ground operation in Syria, Iran is stepping up efforts to prove that contrary to Western rhetoric, it is not in fact "isolated." According to the country's economy minister, Iran is now set to join the BRICS bank and step up its cooperation with Brazil. This is symptomatic of Washington's waning ability to exert American influence on global affairs both political and economic.

In the event of a systemic European banking crisis, however, laws could be changed at the stroke of a pen and “bail-in” mechanisms could become fully operational. Also, the comforting guarantee of €100,000 ($100,000 or £80,000) would likely be reduced in such a crisis.

Today, JS Kim of SmartKnowledgeU discusses why Ounces Over Dollars is the proper and only valuation methodology for physical gold and physical silver.

While 'zombies' may be the personification of our darkest fears, they embody the government’s paranoia about the citizenry as potential threats that need to be monitored, tracked, surveilled, sequestered, deterred, vanquished and rendered impotent. Why else would the government feel the need to monitor our communications, track our movements, criminalize our every action, treat us like suspects, and strip us of any means of defense while equipping its own personnel with an amazing arsenal of weapons? For years now, the government has been carrying out military training drills with 'zombies' as the enemy. “We the people” or, more appropriately, “we the zombies” are the enemy in the eyes of the government.

Having previously explained President Obama's recovery in charts, we thought words and pictures would be a better indicator of the dire situation facing so many Americans that get missed by the business media's spotlight. With 9.4 million more Americans below the poverty line than before the crisis, as The LA Times reports, it's disturbing to see so many people so destitute - even if they're working - that they've resorted to selling body fluids to make ends meet. The going rate for plasma donation, which can take a couple of hours, is about $25 or $30. But Octapharma is offering $50 for the first five visits, "when you get that $50, you feel good," one plasma 'seller' said, "I paid my gas bill."

Accounting fraud remains at the heart of the fix instituted by Ben Bernanke and the ploy has been copied by authorities throughout the global financial system, including the central banks of China, Japan, and the European Community. That it seemed to work for the past seven years in propping up global finance has given too many people the dangerous conviction that reality is optional in economic relations. The recovery of equity markets from the disturbances of August has apparently convinced the market players that stocks are invincible. Complacency reigns at epic levels. Few are ready for what is coming.

Why is the deal particularly notable? Because Zell has traditionally had a very keen nose about such things as "market peaks": the 74 years old is credited with calling the top of the real-estate market in 2007, when he sold another of his companies, Equity Office Properties Trust, to Blackstone for $23 billion. Soon after, the commercial-property market crashed as prices fell and debt defaults surged when it became apparent that subprime was not contained.

The inherent problem of "eternal bullishness" is the "wilfull blindness" to the underlying data in an effort to chase short-term returns. This leads to the unfortunate problem of being "all-in" on every hand which has a devastating consequence when a mean reverting event occurs. In the end, it does not matter IF you are "bullish" or "bearish." The reality is that both "bulls" and "bears" are owned by the "broken clock" syndrome during the full-market cycle. However, what is grossly important in achieving long-term investment success is not necessarily being "right" during the first half of the cycle, but by not being "wrong" during the second half.

Polling for the GOP presidential primary has begun to stretch even the most flexible limits of reality and credibility.

"Investors should (and most don't) realize China is a credit bubble of epic proportions," warns an anxious Marc Faber during a brief Bloomberg TV interview. "China is not just a country, it's an empire," Faber adds, and warns that while some sectors may have growth ("just ask Yum Brands" he jokes), "but other very important sectors like industrial production aren't  growing at the present time." In fact, Faber warns "I don't think China's economy is growing at all," and while policy-makers may be able to "cushion the downturn somewhat," he warns that achieving any soft-landing will be "very difficult," even as he expects China to continue devaluing the Yuan.