Turkey

It appears to be rapidly shifting from bad to worse in Turkey...

Over a week into "Occupy Taksim", the Turkish situation is nowhere near resolution. In fact, judging by the capital markets response to news that hundreds of police stormed Taksim Square this morning using tear gas to disperse protesters, where the lira declined overnight to the weakest level since December 2011, bond yields dropped 29 bps, Turkish CDS rose wider than Russia, and where even the central bank has warned it may start engaging in tightening operations, things are going to get much worse. Finally, a big demonstration is due in a few hours: will Taksim Square June 2013 be the "Waddel and Reed/May 2010" Syntagma Square flash crash equivalent? Find out shortly.

Emerging markets have tanked but some of the reasons for their underperformance will prove overblown, providing opportunities for long-term investors.

The United States is estimated to have anything from 700 military bases around the world to more than 1000. Hans-Hermann Hoppe asks "how can democracy be a stable equilibrium if it is possible that it be transformed democratically into a dictatorship, i.e., a system which is considered not stable?" Empirically, democracies are anything but stable. Concluding it may be better to heed the advice of Erik von Kuehnelt-Leddihn and, instead of aiming to make the world safe for democracy, we try making it safe from democracy - everywhere, but most importantly in the United States.

Today, there is almost zero truth in mainstream media. The fascist corporate-banking-government machine has ensured that mainstream media has now become the official department of propaganda, not only in political news, but also regarding nearly all financial news as well.

Here is what is shaping the global capital markets.

Back in 2010 we started an annual series looking at the (re)distribution in the wealth of nations and social classes. What we found then (and what the media keeps rediscovering year after year to its great surprise) is that as a result of global central bank policy, the rich got richer, and the poor kept on getting poorer, even though as we predicted the global political powers would, at least superficially, seek to enforce policies that aimed to reverse this wealth redistribution from the poor to the rich (a doomed policy as the world's legislative powers are largely in the lobby pocket of the world's wealthiest who needless to say are less then willing to enact laws that reduce their wealth and leverage). Now that the topic of wealth distribution (or rather concentration) is once again in vogue, below we present the latest such update looking at a global portrait of household wealth. The bottom line: 29 million, or 0.6% of those with any actual assets under their name, own $87.4 trillion, or 39.3% of all global assets.

Here are four things that seem to be dominating the weekend discussions.  

As violent protests persist across Turkey, and spread from Istanbul to the capital Ankara, and Izmir, here is a visual summary of what is going on courtesy of Reuters.

While most of the headlines this week have centered on Syria, Sweden (and Switzerland), Turkey has been cooking and today has broken into full-scale riots. As Reuters reports, Turkish police fired tear gas and water cannon on Friday at demonstrators in central Istanbul, wounding scores of people and prompting rallies in other cities in the fiercest anti-government protests for years. The growing unrest centers on disquiet at the authoritarianism of Prime Minister Tayyip Erdogan and his Islamist-rooted Justice and Development Party (who just visited Obama). "We do not have a government, we have Tayyip Erdogan ... Even AK Party supporters are saying they have lost their mind, they are not listening to us." The protests somewhat surprisingly were sparked by the uprooting of trees but rapidly escalated (as seen below) into riot police, water cannon, and tear gas battles as protesters exclaim, "we're fed up... we don't like the direction the country is heading."

A Proxy War Is Raging In Syria

First a big caveat: the following comes from CNN, the world's farce leader, so take it with a quarry of salt. That said, CNN's household access is pervasive and when it comes to setting the social mood based on a news report, be it completely fabricated or not, the news organization is second to none. Which may be precisely why it is CNN that is reporting that in Syria - a place just itching for the proverbial match to be struck on a mountain of geopolitical gunpowder involving all the key actors: from the US, to Russia, Europe, China, and of course Israel, said match may have just been lit. To wit: "Syrian state-run television reported Thursday that forces loyal to President Bashar al-Assad killed three Westerners, including an American woman and a British national, who they claim were fighting with the rebels and were found with weapons and maps of government military facilities."

Gold edged higher today supported by strong physical demand internationally and especially in Asia.

Demand in the physical market continued to hold prices near $1,400/oz as the recent drops in the spot market encourage buyers internationally to accumulate bullion.

Moments ago, the British foreign secretary William Hague tweeted that the arms embargo to the Syrian rebels has officially ended. The irony is that as has been known for a long time, and as the FT itself reported ten days ago, the Syrian "rebels" who actually have been Qatari mercenaries, have been receiving weapons shipments for years from the wealthy Persian Gulf country, with the implicit knowledge of both Europe and the US. So why the rush by France and Britain to allow weapons armaments to resume by official channels, even if it means even more weaponization of the Assad regime by Russia and China, more bloodshed, and more death?

Simple: natural gas.

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.