Wall Street Journal
Never waste a good crisis. While we already knew a major reason for The West chasing into Africa was to leverage its relatively low credit levels as the last bastion of Keynesian-stimulus-hope in the world (estimated at between $5 and $10 trillion in secured debt, using its extensive untapped resources as first-lien collateral). And so it is little surprise that, as The WSJ reports, The International Monetary Fund on Thursday warned the West African Ebola epidemic requires a "large scale" global intervention to control a crisis that is ravaging economies in the region. All three major Ebola-suffering countries were already in bailout programs ($200mm loan in 2012 for Guinea, $100mm loan for Sierra Leone, and $80mm credit facility for Liberia) but with the "world community taking forever to respond," The IMF is happy to step in and secure some assets / lend over $100mm more to each nation to fill financing gaps.
For a mass of people so easily terrified by guys in caves funded and armed by our intelligence services and “allies” in the Persian Gulf, the American public talks with such armchair bravado when it comes to launching bombs from drones and sending other people’s children to die. Makes you wonder though, which one is it? Is the American public actually the tough guy soldier it pretends to be when cheering overseas military interventions, or is it really a scared, propagandized, coward hiding in one of our nation’s endless cubicle rows? Unfortunately, based on recent opinion polls demonstrating approval for military action against ISIS, it appears to be the latter. The former is merely a front put on by that terrified, economically insecure, silently suffering automaton.
Just when we thought that the Fed is pulling an Obama and has "no strategy" to deal with what not some fringe blog but Deutsche Bank itself proclaimed was the bubble to end, or rather extend, all bubbles, when it said that "the bubble probably needs to continue in order to sustain the current global financial system" they surprise us once again when they report that, drumroll, the Fed has formed a committee led by the former head of the Bank of Israel - best known for using de novo created fiat money to buy AAPL stock as part of "prudent monetary policy" - Vice Chairman Stanley Fischer, to monitor financial stability, which according to Bloomberg is "reinforcing the Fed's efforts to avoid the emergence of asset-price bubbles."
Recent comments from FOMC participants on the forward guidance and the appropriate timing of the first hike of the fed funds rate suggest, Goldman warns, a greater clustering of FOMC participants' views around a mid-2015 'liftoff' in rates. Similarly, private sector forecasts for the first hike are becoming more centered on mid-2015 rather than August to September.
What will $1 million buy in New York City? A diamond-encrusted Cartier men’s watch. A small fleet of 2014 Bentley Continentals. Or maybe your very own parking spot in SoHo... "Parking is in serious demand and has proven an excellent investment with no sign of a decline."
Mission Accomplished, military-industrial complex scaremongers...
We have recently noted the increasing pressure on the Swiss National Bank (SNB) over its peg to the EUR in the midst of a capital flood from Europe. The slow bleed strengthening of CHF against EUR had many concerned the SNB would be forced (by exogenous factors) to adjust the peg. But, this morning, it appears they tried to draw a red line... CHF has plunged after SNB's Mosler said negative interest rates remain an option should its minimum exchange rate (peg) come under threat. So, first NIRP in Europe, then in Japan (as per our overnight discussion), and now the Swiss warning NIRP is coming there next...
While the Japanification of markets has been a much-discussed topic in recent years, the two nations share another disturbing trend. In 2012, the land of the rising sun saw sales of adult diapers exceed those of baby diapers... and as the following chart from The Wall Street Journal shows, that trend is rapidly occurring in the land of the free...
As President Obama prepares to unleash his ISIS 'defeat' strategery tomorrow, we thought it appropriate to gather together what we know so far about the terrorist organization. While their annual report (as we noted here), is chock full of ugly details of a well-organized and well-funded entity, the following brief clip from WSJ explains how The Islamic State is operating like a government, with a bureaucratic hierarchy; and how it is structured.
Europe's leaders, we assume under pressure from Washington, appear to be making a big weather-related bet with their taxpayers' lives this winter. As they unleash funding sanctions on Russia's big energy producers, Europe has pumped a record volume of natural gas into underground inventories in an effort to 'outlast' Russia and mitigate any Napoleonic "Winter War" scenario. The plan appears to be to starve Russian energy firms of cashflow - as flows to Europe are already plunging - and remove their funding ability, potentially forcing severe hardship on Russia's key economic drivers. There appears to be 3 potential problems with this plan...
Google "grocery prices last 12 months" and it's post after post beginning with "Consumer prices rise" or "Rising food prices bite." One person who is happy about this is the New York Times’ Paul Krugman, for instead of being like Europe, that is “clearly in the grip of a deflationary vortex,” America only teeters on the edge of a general price plunge. “And there but for the grace of Bernanke go we,” writes the voice of Grey Lady economics wisdom. However, Mr. Krugman shouldn’t declare defeat to the deflationists just yet. Bankers are learning to say ‘yes’ again, and that means velocity and price increases.
At the end of the day, everything the Fed has done has been focused on propping up a broken system. Eventually the Fed’s efforts will fail at which point so will the Fed (just as the last two Central Banks in the US failed).
Just weeks after defaulting (yet again) on its debt (whether technically or not), and shortly after raising the minimum wage by 31% (to $523 a month) amid runaway inflation, it appears Argentina has gone full-Venezuela. As WSJ reports, the great minds that 'run' Argentina have decided to pass legislation (dubbed "the supply law") letting the government regulate private-sector prices, profit margins and production levels. The opposition is up in arms, "this is absolutely ridiculous. It's part of a very primitive ideology that says government officials should decide what people should make, how much they should make and how much they should charge," adding that "we already know exactly what it is like to suffer from these kind of interventionist economic policies," in Venezuela.
Back in 2009 we first warned that the market is now just a "market" where between the direct manipulation of all asset-prices by the firehose Fed and its peers, and the explicit rigging of stock prices by the HFTs, there is no such thing as a market left. Back then, we were called tinfoil something or another. Now that everyone admits the Fed's only purpose is to push asset prices higher, and the topic of HFT's rigging of markets is now a blockbuster book, those accusations have grown silent. In fact, the only thing that remains are the very loud screams as increasingly more often, some unknown or well-known trader and/or investor, with a several year delay, stumbles on our conclusion and realizes that the game (i.e., market) is so rigged, manipulated and broken, that the only winning move was not to play in the first place. Today's case in point Andrew Cunagin, the founder of Rinehart Capital Partners LLC, a hedge fund backed by hedge-fund veteran Lee Ainslie and specialized in emerging-markets stock-picking, and who as the Wall Street Journal reported earlier, is closing. The closure is not news: what Cunagin blames the closure on, however, is.
Washington’s strategy in Iraq is in shambles, but not just because America’s spanker-in-chief is really a wimp at heart. The problem is far more generic. To wit, the geographic territory of Iraq is not a nation; it is an arbitrary series of lines on a map drawn 100 years ago by dandies in the foreign offices of two fading empires (the British and the French) - which lines encircled numerous tribes, ethnicities and religious confessions which had no interest in sharing a common statehood.