• EconMatters
    11/30/2015 - 16:21
    The ISIS group sells most of its crude directly to independent traders at the wellhead for $20-$45 a barrel earning the group an average of $1.5 million a day.


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How China Broke The World's "Bubble Machine"

China can’t allow its industrial economy to sink without a fight. It will have to devalue the renminbi to try to get more market share for its exports. It still has 80% of its workers earning less than $10 a day. A lower renminbi will reduce real wages further and make China’s exports cheaper than ever. And then, what about the rest of the world? As the renminbi goes down, the dollar, yen, and euro will have to go up. Commodities – priced in dollars – will stay down. U.S. corporate profits will fall. The stock market “tape” will go down. Consumer prices, too, will remain low... or go negative. Deflation. Deflation. Deflation.

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The Most Devious Liars In The Room

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.

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2.1 Million Greeks Face Blackout As Public Power Company Unpaid Bills Soars

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.


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Frontrunning: November 5

  • BOE Stays Cautious on Rate-Hike Timing as Inflation Outlook Cut (BBG)
  • China Enters Bull Market (WSJ)
  • Britain says Islamic State likely brought down Russian plane (Reuters)
  • Dollar jumps as markets fix on December rate expectations (Reuters)
  • Activist Investor Bill Ackman Plays Defense (WSJ)
  • BOJ Survey Data Reveals Signs of Growing Inequality in Japan (BBG)
  • UAW Warns of General Motors Strike If Workers Fail to Approve Contract (WSJ)
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Desperate-To-Hike Fed Admits "Inflation Is Not As Low As You Think"

Following this morning's basic admission by Janet Yellen that "no matter what" The Fed is raising rates in December (which was then solemnly supported by an obedient Bill Dudley who "100% agrees with Yellen"), Fed Vice-Chair Stan Fischer, speaking tonight, reaffirmed this belief by, as we detailed previously, telling investors to ignore weak inflation. After San Fran Fed's Williams admission that "there's something going on here we don't understand," Fischer tonight admitted "US inflation is not as low as you think," at once contradicting Yellen's earlier comments and the various market-based measures, while confirming our previous detailed solving of the mystery of the hidden inflation.

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How The Global Debt Bubble Is Crushing Commodity Prices

Why is the price of oil so low now? In fact, why are all commodity prices so low? We see the problem as being an affordability issue that has been hidden by a growing debt bubble. As this debt bubble has expanded, it has kept the sales prices of commodities up with the cost of extraction (Figure 1), even though wages have not been rising as fast as commodity prices since about the year 2000. That period is ending as the productivity of additional debt is falling.

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The Fed Desperately Tries To Maintain The Status Quo

The production structure has long since adapted to ZIRP and “short-term gambling, punting on momentum-driven moves, on levered buybacks” are further lifting the opportunity costs of abandoning it. In order to try to rescue its credibility, the Fed may decide to try some timid, quarter-point increases. But what will they do if markets really crash?

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Hugh Hendry Says "Don't Panic"; Here Is Paul Singer Explaining Why You May Want To

"The "bailout culture" often coincides with sustained weak growth because, among other consequences, successful companies have to compete with companies who are alive only because of cheap credit. Overcapacity and inefficient production are engendered by such policies, causing price and profit declines. Failure is an essential element of capitalism, and if failure is politically denied, the most effective, efficient and innovative solutions cannot "win" over the "living dead" who clutter markets and consumer baskets."

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18 Bullets Showing That A Global Recession Is Already Here

The stock market has been soaring, but all of the hard economic numbers are telling us that a major global recession is here.  This is so reminiscent of what happened back in 2008.  Back then, all of the fundamentals were screaming “recession” by the middle of that year, but the equity markets didn’t respond until later.  It appears that a similar pattern is playing out right now. Just like in 2008, the irrational optimists are going to keep chanting their happy mantras for as long as they possibly can.

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Peter Schiff On QE's Creeping Communism: Washington Joins Tokyo On The Road To Leningrad

So this is the endgame of QE: Exploding debt, financial distortion, prolonged stagnation, recurring recession, and the eventual government takeover of industry and the economy. This appears to be the preferred alternative of politicians and bankers who simply refuse to let the free markets function the way they are supposed to. If interest rates were never manipulated by central banks and QE had never been invented, the markets could have purged themselves years ago of the speculative bubbles and mal-investments. Sure we could have had a deeper recession, but it also could have been much shorter, and it could have been followed by a far more robust and sustainable recovery. Instead Washington has joined Tokyo on the road to Leningrad.
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The Essence Of Modern Economics: Garbage In, Garbage Out

The fundamental problem facing today’s economy is the flagrant contempt by governments the world over for the free exchange of goods and services and private stewardship of property. Perhaps it is power and control governments are after. Maybe they believe they are improving the economy and making the world a better place for all. No one really knows for sure. But what is lucidly clear is the muddled disorder modern day economic policies have wrought upon us.

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US Factory Orders Miss Again, Drops Year-Over-Year For 11th Month In A Row

It's just factory orders...ignore it. For the 11th month in a row, US Factory Orders have fallen year-over-year, re-acclerating the most recent drop to -6.9%, something that has not happened outside of a recession in history. In fact, adjusting for the one-off Boeing surge in July 2014 this is biggest Y/Y drop since October 2008. Month-over-month, orders fell 1.0% (more than expected), down for the 11th month in the last 14. The good news is that inventories dropped 0.4% (for the 3rd month in a row) but that will further hurt GDP, but, unfortunately, inventories-to-shipments remain at 1.35x cycle highs.

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Bring On 'Operation Switch' - Bill Gross Calls For A Reverse 'Operation Twist' To "Benefit Savers And The Economy"

"But they won’t, you know. Yellen and Draghi believe in the Taylor model and the Phillips curve. Gresham’s law will be found in the history books, but his corollary has little chance of making it into future economic textbooks. The result will likely be a continued imbalance between savings and investment, a yield curve too flat to support historic business models, and an anemic 1-2% rate of real economic growth in even the most robust developed countries."

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Forget China: This Extremely "Developed" Country Just Suffered Its Biggest Money Outflow Ever

While understandably all eyes have been fixed on every monthly capital outflow update from China (even the ones that the Politburo is clearly massaging), few have noticed that one of the biggest total outflows currently in the global developed economy is taking place right in America's own back yard.

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