en Affirmatively Destroying America's Neighborhoods In The War On Suburbia <p><a href=""><em>Submitted by Bob Livingston via</em></a>,</p> <p><strong>Few of us understand patient gradualism. </strong>We live and have our being within a few years and mostly in an unconscious automated state of mind.</p> <p><strong>But people in power are long-term planners. </strong>They absolutely understand human nature and how to channel it to the evolution and refinement of the authoritarian state.</p> <p><strong>Authoritarianism is based on long-term planning. </strong>Authoritarianism is a philosophy of collectivism. Some call it democracy. Some call it communism. Some call it fascism. Some call it National Socialism. But whatever you call it, it is all collectivism or authoritarianism; and in its ultimate form it is globalism.</p> <p><strong>The goal is perfect docility and perfect harmony with authoritarianism (economic, social and spiritual).</strong> Until the people accept collectivism under some pretext, they are not docile and completely subdued. Once they do, rebellion and confrontation are impossible. <strong>This is the ultimate goal of the globalists, and the American system is nearing this state.</strong></p> <p>As I told you last week in <a href="" rel="”nofollow”" target="_blank">&ldquo;Why is the war on the Confederacy still going on today?,&rdquo;</a> the dismantling of the middle class has become the appointed, full-time task of the largest government alphabet soup agencies and Wall Street on behalf of globalism.&nbsp;The purpose behind this is that if those big middle-class producers and consumers can be decimated once and for all, then they can join the ranks of low-wage workers and more readily accept government largess and, thereby, become &ldquo;hooked&rdquo; on collectivism.</p> <p><strong>Collectivism is a certain means of social, economic and religious control.</strong> Politicians regularly espouse individualism, human liberty and democracy at the same time. Impossible! Individualism and human liberty are opposite to democracy and any other form of collectivism. The collectivist mentality or the mass collective mind is the spirit of the New World Order.</p> <p>But something is standing in the way.<em><strong> Despite the years of indoctrination through the public (non)education system and mass programming by the national propaganda media and public (i.e., government) policy, rural Middle and Southern middle-class Americans &mdash; the &ldquo;Red States&rdquo; of &ldquo;flyover country&rdquo; &mdash; continue to resist the globalists&rsquo; dreams of a socialist/Marxist &ldquo;utopia&rdquo; and egalitarianism. </strong></em>That&rsquo;s because they are, by and large, more independent and more self-reliant and also demand equitable reward for their labor and product, placing them in competition for resources and goods with the global elite.</p> <p><strong>Efforts to remove this obstacle are behind the current war on the middle class and individual liberty and the spirit of individualism through the attempts to whitewash Southern culture from existence and distort the true nature of the Confederate cause by casting it and Confederate symbols as racist and treasonous.</strong> The bigoted elites in the District of Criminals and pointy-headed &ldquo;thinkers&rdquo; in the prestigious institutes of learning continually promulgate the meme that whites &mdash; rural whites in particular and Southern whites specifically &mdash; are backward, racist buffoons riding in trucks looking for blacks to lynch while ridiculously clinging to their guns and religion.</p> <p>The purpose is to stir up racial animosity and manipulate the people against one another. Manipulating minorities who are naturally drawn to socialism is basic political strategy to cover government crime and justify government politics and plunder.</p> <p><strong>The principle of government is that political power is maximized by forcibly leveling every individual to the same status of conformity, collectivism, egalitarianism and serfdom.</strong></p> <p>The truth goes deeper. Because of perceived social, cultural, racial and psychic inferiority, minorities desire to parasite on government force and socialism to subvert those they envy and wish to imitate. (This includes all so-called <a href="" rel="”nofollow”" target="_blank">minority groups</a>, not just racial minorities.)</p> <p>Last summer, there was an invasion of illegals from Central and South America stemming from the immigration policies and statements of President Barack Obama. Over the ensuing months, the Obama regime shipped those illegals into communities and cities across the country and immediately began efforts to grant them some sort of legal status in order to ultimately provide them with voting rights in a back-door effort to change the local demographics and, therefore, the voting outcomes in these communities from a conservative bent to one more socialistic.</p> <p><em><strong>Third World immigrants are attracted to cradle-to-grave nanny state socialism because it is what they know and all they have known. They are also more accepting of gun control and the police state. They have no understanding of or experience with individual liberty or the concept of natural rights.</strong></em></p> <p>Gaining voting &ldquo;rights&rdquo; for non-citizens is the main driver of the federal opposition to voter ID laws.</p> <p><strong>The Obama regime attempted but failed with a mass <a href="" rel="”nofollow”" target="_blank">social re-engineering</a> scheme in 2010. </strong>That effort, fueled by corruptocrat Sen. Chris Dodd (D-Conn.), sought to fulfill the United Nation&rsquo;s Agenda 21 plan, adopted at the Earth Summit in Rio de Janeiro in 1992 and signed onto by &ldquo;New World Order&rdquo; President George H.W. Bush.</p> <p>Using a typical government &ldquo;carrot-and-stick&rdquo; policy, the bill sought to award or deny grants from the federal treasury to cities based on their compliance with amending or passing zoning laws to restrict housing in rural areas and force the residents into city centers.</p> <p>The stick, in addition to denial of the funds, would be bad publicity generated by &ldquo;Green&rdquo; organizations working on behalf of the federal government criticizing local government officials for turning down free money and neglecting so-called &ldquo;Green&rdquo; initiatives.</p> <p><strong><u>Now comes Obama&rsquo;s speciously titled Affirmatively Furthering Fair Housing edicts from the Department of Housing and Urban Development. </u></strong>This extra-constitutional rule change has been in the works for more than two years, but has been largely glossed over by the MSM. It seeks to do the reverse of the Dodd bill. That is, rather than drive the suburbanites into the cities, it seeks to move inner-city minorities into the suburbs.</p> <p>The AFFH will have the federal government imposing preferred racial and ethnic composition on neighborhoods in exchange for federal funds provided or denied. It will change zoning laws, require a certain amount of government-subsidized housing in rural areas in order to achieve &ldquo;racial balance,&rdquo; control transportation and business development and remove the authority of state and local governments in the areas of zoning, transportation and education.</p> <p>As National Review&rsquo;s Stanley Kurtz <a href=";tid=1841" target="_blank">writes:</a></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>Fundamentally, AFFH is an attempt to achieve economic integration. Race and ethnicity are being used as proxies for class, since these are the only hooks for social engineering provided by the Fair Housing Act of 1968. Like AFFH itself, today&rsquo;s <a href="" target="_blank">Washington Post</a> piece blurs the distinction between race and class, conflating the persistence of &ldquo;concentrated poverty&rdquo; with housing discrimination by race. Not being able to afford a freestanding house in a bedroom suburb is no proof of racial discrimination. Erstwhile urbanites have been moving to rustic and spacious suburbs since Cicero built his villa outside Rome. Even in a monoracial and mono-ethnic world, suburbanites would zone to set limits on dense development. Emily Badger&rsquo;s piece in today&rsquo;s Washington Post focuses on race, but the real story of AFFH is the attempt to force integration by class, to densify development in American suburbs and cities, and to undo America&rsquo;s system of local government and replace it with a &ldquo;regional&rdquo; alternative that turns suburbs into helpless satellites of large cities. Once HUD gets its hooks into a municipality, no policy area is safe. Zoning, transportation, education, all of it risks slipping into the control of the federal government and the new, unelected regional bodies the feds will empower. Over time, AFFH could spell the end of the local democracy that Alexis de Tocqueville rightly saw as the foundation of America&rsquo;s liberty and distinctiveness.</p> </blockquote> <p><u><strong>To accomplish its goals, HUD will dig into the racial balance ZIP code by ZIP code looking for areas of segregation, with the segregation threshold being nonwhite populations of 50 percent or more.</strong></u> Federally funded cities deemed overly segregated will be pressured to change their zoning laws to allow construction of more subsidized housing in affluent areas in the suburbs and relocate inner-city minorities to those predominantly white areas. HUD&rsquo;s maps, which use dots to show the racial distribution or density in residential areas, will be used to select affordable-housing sites, according to the <a href="" target="_blank">New York Post</a>.</p> <p><strong><em>To employ this policy, the federal government has undertaken a massive Orwellian-style data collection initiative, prying into the medical records, credit card purchases, mortgage business records, IRS filings, employment records, educational records and local government policy initiatives searching for racial &ldquo;inequalities&rdquo; for the Justice Department to prosecute.</em></strong></p> <p><u><strong>The only way to resist this tyranny is for local governments to eschew all federal monies including Community Development Block Grants going forward.</strong></u> Of course, local residents always pressure their community leaders to accept government monies under the auspices that they have paid their &ldquo;taxes&rdquo; and want a return on their &ldquo;investment.&rdquo; But once the Feds get their hooks into the local community through the distribution of money from the federal treasury, they can exert total control over local government&rsquo;s functions regarding housing, zoning and regulations far more than they do already.</p> <p>The globalist agenda is the most comprehensive program for world fascism and world collectivism ever conceived. Its basis is esoteric deception, as carried out pragmatically by mass politics, international mass banking and the mass media. It operates as a whole &mdash; as an organism. <strong>Today&rsquo;s democratic globalists make the communists and the Nazis look like amateur totalitarians.</strong></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="780" height="623" alt="" src="" /> </div> </div> </div> Barack Obama Chris Dodd Demographics Free Money Medical Records New York Post Thu, 30 Jul 2015 02:15:00 +0000 Tyler Durden 510690 at Hackers Claim John McCain Knew ISIS Execution Videos Were Staged <p>In a rather stunning note, CyberBerkut, a Ukrainian group of hackers, claims to have <strong>hacked John McCain&rsquo;s laptop while he was in the Ukraine</strong>, and <a href="">as Techworm reports</a>, what they have released from his June visit <strong>appears to be a fully staged production of an ISIS execution video</strong>...</p> <p>&nbsp;</p> <p><a href="">As Techworm reports, according to the hackers</a>, <strong>they broke into the laptop of one of the American politicians, Senator McCain and after found a video with staged IS execution, which they decided to show to the world community.</strong></p> <p>It so happened that Senator John McCain had visited Ukraine on a official visit somewhere in the first week of June 2015. The hacktivists belonging to CyberBerkut somehow managed to access his laptop.</p> <p><a href="">Here is what CyberBerkut said to John McCain...</a></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&ldquo;We CyberBerkut received at the disposal of the file whose value can not be overstated!</p> <p>&nbsp;</p> <p>Dear Senator McCain! We recommend you next time in foreign travel, and especially on the territory of Ukraine, not to take confidential documents. In one of the devices of your colleagues, we found a lot of interesting things. Something we decided to put: <strong>this video should become the property of the international community!</strong>&rdquo;</p> </blockquote> <p>According to the hackers, they broke into the laptop of one of the American politicians, Senator McCain and after found a video with staged IS execution, which they decided to show to the world community.</p> <p>The video they released is below..<br /><iframe frameborder="0" height="360" src="" width="480"></iframe></p> <p><strong>From the video it can be seen that the entire set including the hostage is stage managed.&nbsp; An actor dressed as an executioner of IS is holding a knife to behead the prisoner, and the &ldquo;victim&rdquo; depicts to be suffering.</strong></p> <p>It may be recalled that IS have been repeatedly publishing the videos of the executions of hostages and if this video is true, the victims may in fact be alive.</p> <p><em>The authenticity of this video has not been independently verified.</em></p> <p>*&nbsp; *&nbsp; *</p> <p><a href=""> has attempted to debunk the hacker&#39;s claims</a>...</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong>The video shows a very brightly lit stage with simulated desert floor and a greenish backdrop.</strong> A film crew and multiple lights surround the stage, but they are strongly backlit. The video has no audio, and is very low resolution so no details can be made out. The kneeling man wears a head cover, to suggest that the head could be replaced by a computer generated image, or separately recorded video.</p> <p>&nbsp;</p> <p>The video appears to be an attempt to replicate one of the &quot;Jihadi John&quot; beheading videos of 2014. In particular it appears to be an attempt to replicate the video of James Foley. None of those videos show actual beheadings, and instead show Jihadi John sawing at the neck with no apparent blood, and then they cut to a shot of a decapitated head posed on top of a body.<strong> This led to speculation that the videos were faked.</strong></p> <p>&nbsp;</p> <p><strong>However we can tell it is not a video of the faking of any of the Jihadi John videos for a number of reasons.</strong></p> <p>&nbsp;</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 338px;" /></a></p> </blockquote> <p>*&nbsp; *&nbsp; *</p> <p>While it is easy to point the finger at the<strong> pro-Russian hacker collective (and consider their motives in damaging US - especially McCain - influence)</strong> and deny the video&#39;s truth, one can&#39;t help but wonder - given just how well produced the final videos were in many cases, just who is behind the scenes of the widely known to be funded by US sources ISIS... <strong>just another conspiracy theory?</strong></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="537" height="431" alt="" src="" /> </div> </div> </div> John McCain None Ukraine Thu, 30 Jul 2015 01:45:00 +0000 Tyler Durden 510682 at Chinese Stocks Open Lower As Margin Debt Tumbles To 4-Month Lows, Regulators Probe Officials' Sales <p>Following last night&#39;s afternoon session melt-up at the hands of a $100bn injection into China&#39;s sovereign rescue fund,<strong> Chinese stocks opened higher but faded fast, with no follow-through from yesterday&#39;s farce.</strong> With Warren Buffett&#39;s favorite indicator flashing red for China (and US) stocks, and so many rural Chinese citizens &quot;just hoping to get out at breakeven,&quot; any assistance in levitating the nation&#39;s stocks are simply being sold into as margined traders unwind their positions. One such leveraged &#39;citizen&#39; is none other than <strong>State-Owned-Enterprise GM Yang Shengjun</strong>, whose firm was ironically among the most vocal in blaming the crash on &quot;malicious foreign sellers trying tio start an economic war&quot; and is <strong>now under investigation for dumping his own shares</strong>... do as I say Chinese people, not as I do.</p> <p>A reminder of last night&#39;s farce...</p> <p><a href=""><img height="317" src="" width="600" /></a></p> <p>The good news...</p> <ul> <li><strong>*SHANGHAI EXCHANGE MARGIN DEBT DECLINES TO FOUR-MONTH LOW</strong></li> </ul> <p><a href=""><strong><img alt="" src="" style="width: 600px; height: 316px;" /></strong></a></p> <p>So at least - whether through forced liquidation or common sense - the leverage is being unwound.</p> <p>*&nbsp; *&nbsp; *</p> <p>And tonight, for now...</p> <ul> <li>*CHINA&#39;S CSI 300 INDEX SET TO OPEN DOWN 0.4% TO 3,915.78</li> <li>*CHINA SHANGHAI COMPOSITE SET TO OPEN DOWN 0.4% TO 3,773.79</li> </ul> <p>with no follow-through from yesterday&#39;s excitment...</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 314px;" /></a></p> <p>&nbsp;</p> <p><a href="">But, as Forbes notes,</a> Chinese stocks are as bubblicious as US stocks (or vice versa) according to Warren Buffett&#39;s favorite indicator of equity market valuation...</p> <p><img height="440" src="" width="600" /></p> <p>&nbsp;</p> <p>And do not forget the most important chart in China right now.... just as in The US - must keep stocks above 200DMA at all costs...</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 631px;" /></a></p> <p>There was at least one malicious seller...<a href=""><em> (as WSJ reports)</em></a></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><u><strong>A listed arm of China&rsquo;s state-owned aerospace and defense company and its two largest shareholders are under investigation for potential violation of stock-selling rules, according to the securities regulator.</strong></u></p> <p>AVIC Heibao Co., a manufacturing subsidiary of Aviation Industry Corp. of China, known as AVIC, said Wednesday that shareholders Jincheng Group and AVIC Investment Holdings had received notice of the investigation from the China Securities Regulatory Commission. The regulator didn&rsquo;t disclose further details of the investigation.</p> <p>In addition, AVIC Capital Co., <u><strong>AVIC Heibao&rsquo;s trading arm, dismissed General Manager Yang Shengjun on Wednesday, after AVIC Capital told the Shanghai Stock Exchange that AVIC Heibao is being probed by the regulator for selling shares on Tuesday.</strong></u></p> </blockquote> <p>The massive irony is...</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>The <u><strong>investigation comes after AVIC Chairman Lin Zuoming this month criticized foreign short sellers for deliberately instigating &ldquo;an economic war against China&rdquo; and pledged to prop up the market by buying shares. </strong></u>Short sellers bet that a stock&rsquo;s price will fall. AVIC couldn&rsquo;t immediately be reached for comment.</p> <p>&nbsp;</p> <p>AVIC Heibao said on June 30 that its top shareholder, Jincheng Group, had sold 3.39 million shares in the company for 78.8 million yuan ($12.7 million), while AVIC Investment Holdings, its second-largest shareholder, had shed all of its 16.8 million shares for 431.4 million yuan from June 5 to June 29. The two shareholders dumped a combined 5.86% of the company&rsquo;s total issued shares.</p> </blockquote> <p>Do as your leaders say Chinese people... not as they do.</p> <p>And amid all this carnage... USDCNY has been deadstick...</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 316px;" /></a></p> <p><em>Charts: Bloomberg</em></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="958" height="505" alt="" src="" /> </div> </div> </div> China None Warren Buffett Yuan Thu, 30 Jul 2015 01:18:15 +0000 Tyler Durden 510689 at If Spending Is Our Military Strategy, Our Strategy Is Bankrupt <p><a href=""><em>Submitted by Mark Mateski via The Mises Institute</em></a>,</p> <div class="body-content"> <p>Even today, few deny the long arm of US military might. After all, the US military exhausted the Soviet Union, crushed Saddam Hussein, and drove Osama bin Laden&rsquo;s al Qaeda into hiding.</p> <p><strong>To what should we attribute these triumphs? </strong>Some would say US planning and foresight. Others would mention the hard work and dedication of US soldiers, sailors, and airmen. Still others would point to the application of superior technology. All would be correct to some degree, but each of these explanations disregards the fact that for more than a lifetime, the United States has wildly outspent its military competitors.</p> <p><strong>For many years, the United States spent more on defense than the next ten big spenders combined. It turns out that&rsquo;s no longer true, according to <a href="" target="_blank"><em>Jane&rsquo;s</em></a> and <a href="" target="_blank"><em>PPGF</em></a>. But whether the current count is seven or nine, we must acknowledge that US dominance was purchased at a high cost.</strong></p> <h4><span style="text-decoration: underline;">The High Cost of Big Debts</span></h4> <p>The first cost is the accumulation of debt. While many will admit to the numbers, few will publicly concede the long-term threat they pose to national and international security. Among the few, Admiral Mike Mullen, former chairman of the Joint Chiefs of Staff, has for several years consistently <a href="" target="_blank">declared</a> that &ldquo;The single biggest threat to national security is the national debt.&rdquo; While US defense spending is currently declining, <a href="" target="_blank">these charts</a> illustrate that the US share of global defense spending has remained strong (1) regardless of the irregular ups and downs of external events and (2) largely independent of the debt burden.</p> <p>The second cost is the accumulation of commitments and expectations. Despite the drawdown of troops from Iraq and Afghanistan, senior US policy makers remain staunchly determined to maintain a high level of global engagement. If you doubt it, read the recently published <a href="" target="_blank">2015 U.S. National Military Strategy</a>. Among other things, it underscores the US commitment to countering agents of instability, whether &ldquo;violent extremist organizations (VEOs)&rdquo; or nation states, the standout examples being Russia and China. Not surprisingly, the strategy has prompted headlines such as &ldquo;<a href="" target="_blank">China Angered by New U.S. Military Strategy Report</a>,&rdquo; &ldquo;<a href="" target="_blank">Pentagon Concludes America Not Safe Unless It Conquers the World</a>,&rdquo; and &ldquo;<a href="" target="_blank">Pentagon&rsquo;s New Military Strategy Calls for Preserving US Dominion of the World</a>.&rdquo;</p> <p>Yes, these criticisms arrive from predictable quarters, but in this case the perception is reality, and the reality is that US policy makers continue to pursue a strategy laden with unavoidably expensive commitments &mdash; commitments guaranteed to antagonize Russia and China. (All of which stimulates a risky reinforcing feedback loop.) As Patrick Tucker at <em>Defense One</em> <a href="" target="_blank">quipped</a>, &ldquo;The United States is preparing for never-ending war abroad.&rdquo; Despite this, don&rsquo;t expect to find any references in the published strategy to &ldquo;debt,&rdquo; an oversight that ignores Mullen&rsquo;s warning and validates David Stockman&rsquo;s <a href="" target="_blank">statement</a> that &ldquo;We&rsquo;re blind to the debt bubble.&rdquo;</p> <h4><span style="text-decoration: underline;">Our Military &ldquo;Strategy&rdquo; Amounts to Little More than Big Spending Plans</span></h4> <p>The third cost &mdash; one we rarely discuss &mdash; is the dangerous yet unspoken conceit held by a generation of senior US officers and policy makers: the belief that they are innately superior strategists. Just ask the Soviet Union, Saddam Hussein, and Osama bin Laden! But what if in reality <em>spending</em> was the primary driver and arbiter of these outcomes?</p> <p>It is suggestive that in cases where the sheer weight of US firepower proved unable to secure a decisive victory (Korea and Vietnam are canonical examples), the United States&rsquo;s cash-poor but tactically savvy opponents still managed to frustrate and confound front-line US forces. As H. John Poole, a retired Marine colonel, combat veteran, and prolific author, has remarked:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>For America&rsquo;s wartime units, firepower has been and still is the name of the game. This game has some less-than-ideal ramifications. Since WWI, far too many units have not matched up well &mdash; tactically &mdash; with their Eastern counterparts. As unlikely as this may seem to today&rsquo;s active-duty community, it is nevertheless well documented. (<em>Global Warrior</em>, 2011, p. xxii)</p> </blockquote> <p>On this count, &ldquo;cyberwar&rdquo; is a prime illustration of another domain in which spending doesn&rsquo;t guarantee proportional dominance. The recent <a href="" target="_blank">OPM hack</a> is a painful example, and if practitioners like Richard Stiennon (<a href="" target="_blank"><em>There Will Be Cyberwar</em></a>) are correct, more is coming.</p> <p>As a rule, US policy makers minimize these counterexamples. Commentators like John Poole who point out weaknesses and alternatives tend to be written off by Washington apparatchiks as well-meaning but misguided zealots. And to be fair, from the mainstream perspective Washington&rsquo;s argument in support of the status quo is actually quite strong &mdash; as long as the money continues to flow. For those who discern the uncomfortable truth that the US debt addiction is unsustainable, the picture looks very different. Alternatives to spending-as-strategy exist, but they require policy makers and strategists to rethink their dearly held assumptions of economic and strategic superiority. It requires a unique mind and stout internal mettle to do this, and so far this decade, we have seen little evidence in Washington of this type of insight and character. Let&rsquo;s hope that the anticipation of crises yet-to-be pushes hitherto overlooked reformers to the front of the national security debate.</p> <p>I&rsquo;ll close by restating the problem via analogy: <em><span style="text-decoration: underline;"><strong>US global superiority in military affairs is actually the superiority of a rich kid who thinks he&rsquo;s really smart but in reality is merely just rich. When the seemingly endless flow of money slows (as it inevitably will), the mask of cleverness will fall. Everyone who resented the kid will be waiting at the edge of the playground for this day of reckoning, and because no one else will have been so dependent on spending-as-strategy, the erstwhile rich kid will find it tough going.</strong></span></em></p> </div> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="237" height="176" alt="" src="" /> </div> </div> </div> Afghanistan China headlines Iraq Mises Institute National Debt national security Reality Thu, 30 Jul 2015 01:15:00 +0000 Tyler Durden 510685 at Total Collapse: Greece Reverts To Barter Economy For First Time Since Nazi Occupation <p>Months ago, when Alexis Tsipras, Yanis Varoufakis, and their Syriza compatriots had just swept to power behind an ambitious anti-austerity platform and bold promises about a brighter future for the beleaguered Greek state, <a href="">we warned</a> that Greece was one or two vacuous threats away from being "digitally bombed back to barter status."</p> <p>Subsequently, the Greek economy began to deteriorate in the face of increasingly fraught negotiations between Athens and creditors, with Brussels blaming the economic slide on Syriza’s unwillingness to implement reforms, while analysts and commentators noted that relentless deposit flight and the weakened state of the Greek banking sector was contributing to a liquidity crisis and severe credit contraction.&nbsp;</p> <p>As of May, 60 businesses were closed and 613 jobs were lost <a href="">for each business day</a> that the crisis persisted without a resolution.&nbsp;</p> <p>On the heels of Tsipras’ referendum call and the imposition of capital controls, the bottom fell out completely as businesses found that supplier credit was increasingly difficult to come by, leaving Greeks to consider the possibility that the country would soon face a shortage of imported goods.&nbsp;</p> <p>On Tuesday, <a href="">we brought you the latest</a> on the Greek economy when we noted that according to data presented at an extraordinary meeting of the Hellenic Confederation of Commerce and Entrepreneurship, retail sales have fallen 70%, while The Athens Medical Association recently warned that 7,500 doctors have left the country since 2010.&nbsp;</p> <p>Now, the situation has gotten so bad that our prediction from February has come true. That is, <strong>Greece is reverting to a barter economy.</strong> Reuters <a href="">has more</a>:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><em>Wild boar and power cuts were Greek cotton farmer Mimis Tsakanikas' biggest worries until a bank shutdown last month left him stranded without cash to pay suppliers, and his customers without money to pay him.</em></p> <p>&nbsp;</p> <p><em>Squeezed on all sides, the 41-year-old farmer began informal bartering to get around the cash crunch. He now pays some of his workers in kind with his clover crop and exchanges equipment with other farmers instead of buying or renting machinery.</em></p> <p>&nbsp;</p> <p><strong><em>Tsakanikas is part of a growing barter economy that some Greeks deplore as a step backward from modernity, but others embrace as a practical means of short-term economic survival.</em></strong></p> <p>&nbsp;</p> <p><em>When he rented a field this month, he agreed to pay with part of his clover production.</em></p> <p>&nbsp;</p> <p><em>"It's a nightmare. I owe many people money now - gas stations and firms that service machinery. I have to go to the bank every single day, and the money I can take out is not enough," said Tsakanikas, who also grows vegetables and corn on 148 acres (60 hectares) of farmland.</em></p> <p>&nbsp;</p> <p><em>"I've begun bartering in some forms - it existed in the past but now it is growing... Times have become really tough, and friends and relatives help each other out."</em></p> </blockquote> <p>So Greece, the birthplace of Western civilization and democratic governance, is now literally sliding backwards in history. </p> <p>The nation - which has already suffered the humiliation of becoming the first developed country to default to the IMF and which was nearly reduced to accepting "<a href="">humanitarian aid</a>" from Brussels when a Grexit looked imminent a few weeks back - is now transacting in clover, hay, and cheese. Here’s <a href="">Reuters again</a>:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><em>Tradenow, a Website started three years ago to facilitate barter of everything from food to technology, says the number of users and the volume of transactions have doubled since capital controls came into effect on June 29.</em></p> <p>&nbsp;</p> <p><strong><em>"Before capital controls, we were reaching out to companies to encourage them to register," says Yiannis Deliyiannis, the company's chief executive.&nbsp;</em></strong></p> <p>&nbsp;</p> <p><strong><em>"Now companies themselves are getting in touch with us to get registered."</em></strong></p> <p>&nbsp;</p> <p><em>He rattles off a list of firms using the site to strike deals with suppliers: a car repairs shop that exchanged tyres with another firm for a new shower cubicle, a burglar alarm provider offering services in return for paper and advertising, an Athens butcher that trades daily meat supplies for services.</em></p> <p>&nbsp;</p> <p><em>In the lush yellow and green fields outside Lamia dotted with cotton, peanut and olive groves, barter is also flourishing on an informal basis outside the online platforms.</em></p> <p>&nbsp;</p> <p><em>Kostas Zavlagas, who produces cotton, wheat, and clover recounted how he gave bales of hay and machine parts to another farmer who did not have cash to pay him.</em></p> <p>&nbsp;</p> <p><strong><em>"He is going to pay me back in some sort of product when he is able to, maybe in cheese.”</em></strong></p> </blockquote> <p>Yes, "maybe in cheese", but certainly not in euros, especially if the <a href="">growing divisions</a> within Syriza render Athens unable to pass a third set of prior actions through parliament next week. </p> <p>Should the vote not pass, it’s not clear if Greece will be able to obtain the funds it needs to pay €3.2 billion to the ECB on August 20 - a missed payment would endanger the liquidity lifeline that is the only thing keeping any euros at all circulating in the Greek economy.</p> <p>On the bright side, "barter has been a part of everyday life for Greeks for a long time" economist Haris Lambropoulos told Reuters. The only difference is that now, "it is a more structured and organised phenomenon."</p> <p>Maybe so, but this is one "structured and ordered phenomenon" that many Greeks would likely just as soon do without and indeed, the new barter economy is drawing comparisons to a period in Greece’s history that has <a href="">gotten quite a bit of attention</a> over the course of the last few months, and on that note, we’ll give the last word to Christos Stamatis, who runs the barter website Mermix:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><em>"Of course, a barter economy is something that we shouldn't aspire to and should be a thing of the past - the last time we had it on a large scale was when we were under [Nazi] occupation."</em></p> </blockquote> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="483" height="285" alt="" src="" /> </div> </div> </div> Creditors default Greece Reuters Thu, 30 Jul 2015 00:43:21 +0000 Tyler Durden 510660 at In Latest Market-Rigging Scandal, ITG Busted For Frontrunning Clients In Its Dark Pool <p>Last year, first in the aftermath of NYAG's lawsuit against Barclays followed promptly by Michael Lewis' "Flash Boys" (which over a year later <a href="">is still a better seller </a>than "<em>GS Elevator's</em>" attempt to be this generation's Tucker Max) exposing High Frequency Trading for being nothing more than a sophisticated gimmick enabling market rigging and bulk order frontrunning while pretending to "provide liquidity", the revulsion against HFTs hit a fever pitch that forced Virtu to postpone its IPO. </p> <p>Several months later, because the market kept going higher, people quickly forgot why they were angry at a bunch of vacuum tubes, and Virtu not only re-IPOed (adding another year without a single trading day loss to its roster) but it was taken public by that "humanitarian" protagonist of Flash Boys, Goldman Sachs itself (which was so aghast at the scourge that is HFT it almost, almost, ended its own dark pool and HFT ambitions... before it <a href="">decided to double down on HFT</a>). </p> <p>However, since the market is once again on the verge of a terminal liquidity seizure with its associated side-effects (see China for details), the authorities needed to remind the "market" just who the scapegoat will be when the next crash finally does come. Which is why earlier today in an unexpected "preliminary second quarter guidance" release, ITG, owner of the Posit dark pool, was just busted with a $22.6 million potential SEC settlement for what appears to have been blatant frontrunning of company clients in its own prop trading pod.</p> <p>From the <a href=";p=irol-newsArticle&amp;ID=2072503">release</a>:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>During the second quarter of 2015, ITG commenced settlement discussions with the Staff of the Division of Enforcement of the SEC (the “SEC Enforcement Division”) in connection with the SEC’s investigation into a proprietary trading pilot operated within ITG’s AlterNet Securities, Inc. (“AlterNet”) subsidiary for sixteen months in 2010 through mid-2011. The investigation is focused on customer disclosures, Form ATS regulatory filings and customer information controls relating to the pilot’s trading activity, <strong>which included (a) crossing against sell-side clients in POSIT </strong>and <strong>(b) violations of ITG policy and procedures by a former employee. These violations principally involved information breaches for a period of several months in 2010 regarding sell-side parent orders flowing into ITG’s algorithms and executions by all customers in non-POSIT markets that were not otherwise available to ITG clients. </strong></p> </blockquote> <p>This would not be the first time a dark pool was busted for admitting it abused fragmented markets to frontrun clients. As <a href="">Bloomberg reminds </a>us, last year, the agency fined Liquidnet Holdings Inc. $2 million for not living up to client secrecy standards. In 2011, Pipeline Trading Systems LLC agreed to pay $1 million, in part because it had a proprietary trading unit that was secretly trading against client orders. Then there was of course NY AG Schneiderman's lawsuit against Barclays alleging the UK bank which has been busted for manipulating pretty much everything under the sun at least once falsely claimed that it closely monitored and shut off certain types of traders. </p> <p>Still, the $22 million proposed settlement would be a record for a private Wall Street trading platform, surpassing the $14.4 million that UBS Group AG agreed to pay in January. More importantly, as Bloomberg also observes, the latest lawsuit "shows the steps authorities are taking against alternative trading systems such as dark pools."</p> <p>In other words, everyone now knows HFTs are fair game for rigging and manipulation, and with the banks having already been bled dry by over a quarter trillion in litigation charges, it is now the HFTs' turn to pay their kickbacks to the government for allowing them to frontrun sheep for 7 years since the advent of Reg NMS.</p> <p>What is particularly amusing in this case is that while everyone knows that when it comes to HFT's, it is never called "rigging" - the proper nomenclature is "glitch", so now we learn a new term to use instead of "criminal frontrunning" - drumroll... <strong>trading experiment</strong>, or as it is known in legal parlance "<em><strong>proprietary trading pilot.</strong></em>"</p> <p>From Bloomberg:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>ITG disclosed the discussions and potential fine in a statement Wednesday, saying the situation concerned an <strong>experimental market-making unit that a subsidiary ran in 2010 and 2011. </strong>The division traded using information not available to other customers of ITG’s private stock-trading system, which is against Securities and Exchange Commission rules.</p> <p>&nbsp;</p> <p>ITG Chief Executive Officer Bob Gasser said the firm shut the <strong>trading experiment </strong>and hasn’t run a similar one since.</p> </blockquote> <p>So let's get this straight: ITG had an in house prop trading group, or "pilot", which operated for nearly two years, whose only signal was client order flow, which it would frontrun, and make millions in profits. In other words, once again precisely what we have claimed since 2009. But oh yes, not everyone is guilty of such manipulation. Only Liquidnet... and Pipeline... and ITG... and countless other ATS and HFT firms for whom clients are better known as either "easy money" or muppets.</p> <p>And yes, we get the "trading experiment" narrative: calling it "<em>criminal market manipulation and order frontrunning scheme" </em>just does not sound like something the Modern Markets Initiative would spend millions of dollars to get Congressmen to agree on.</p> <p>But where the ITG client frontrunning case goes truly surreal and takes the cake, is that in addition to the fine, it also announced that one of its directors, Kevin O'Hara resigned effective immediately. This is <a href="">what he said</a>:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>Dear Maureen:</p> <p>This letter serves to inform you that, effective immediately, I resign from the Board of Directors (“Board”) of Investment Technology Group, Inc. (“ITG”), and the attendant Board committees of which I am a member: Compensation, Technology, and Capital. </p> <p>&nbsp;</p> <p>It has been my pleasure and an honor to serve the shareholders, clients, and employees of ITG, and to work alongside fellow directors over the last number of years. And, those years have witnessed ITG weather the slings and arrows of existential challenges: the 2008-09 financial crisis (and, subsequent, “Great Recession”), industry hyper-competition, and a highly dynamic regulatory environment. </p> <p>&nbsp;</p> <p><strong>However, as you know, over the last several months, continuous fundamental, strategic and vital differences of opinion and direction have transpired at the Board level and, in particular, between me and the Board’s leadership.</strong> Although I believe in the importance of the governance concept of “loyal opposition,” alas, to everything there is a season. I do hope that my service in such role has, at the very least, furthered and continues to further the breadth of substantive deliberation and the process of decision-making by the Board. </p> <p>&nbsp;</p> <p>I wish the very best for ITG and its employees. </p> <p>&nbsp;</p> <p>Best Regards, </p> <p>&nbsp;</p> <p>Kevin J.P. O'Hara</p> </blockquote> <p>So some board member quit the day his company was busted by the SEC for more market rigging and frontrunning its clients. Is that the punchline? </p> <p>No. <a href="">This is</a>:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong>Mr. O’Hara worked in the Division of Enforcement of the U.S. Securities and Exchange Commission and as Special Assistant United States Attorney at the U.S. Department of Justice</strong></p> <p>&nbsp;</p> <p><img src="" width="600" height="411" /></p> </blockquote> <p>And now proceed to laugh, or cry.</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="146" height="220" alt="" src="" /> </div> </div> </div> B+ Barclays China dark pools Dark Pools Department of Justice goldman sachs Goldman Sachs HFT High Frequency Trading High Frequency Trading Liquidnet Market Manipulation Pipeline Trading Prop Trading Reg NMS Securities and Exchange Commission Trading Systems United States Attorney Thu, 30 Jul 2015 00:36:57 +0000 Tyler Durden 510688 at Meanwhile In Venezuela... The Socialist Paradise Has Arrived <p><a href="">As we recently warned,</a> the <strong>hyperinflationary collapse in Venezuala is reaching its terminal phase</strong>. With inflation soaring at least 65%, murder rates the 2nd highest in the world, and chronic food (and toilet paper shortages), the <strong>following disturbing clip</strong> shows what is rapidly becoming major social unrest in the Maduro&#39;s socialist paradise... and perhaps more importantly, Venezuela shows us <strong>what the end game for <em>every</em> fiat money system looks like</strong> (and perhaps Janet and her colleagues should remember that).</p> <p>&nbsp;</p> <p><iframe allowfullscreen="" frameborder="0" height="360" src="" width="480"></iframe></p> <p>&nbsp;</p> <p><a href=""><em>As we previously concluded, </em></a>and seemingly confirmed by the above video,</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong>Venezuela&rsquo;s hyperinflation is reaching its final stages.</strong> It is probably already far too late for the government to stop the complete collapse of its currency. The bolivar is in the process of transforming from a medium of exchange to tinder for wood-stoves. <strong>Venezuelans who had the presence of mind to convert their savings into gold or foreign currency in good time are likely to survive the conflagration intact.</strong></p> <p>&nbsp;</p> <p>Those who bought stocks on the Caracas stock exchange seem to have successfully side-stepped the effects of the devaluation as well, but they need a plan for the post-inflation adjustment crisis, which will bankrupt a great many companies very quickly. Also,<strong> the government can simply close the market down at any time if it doesn&rsquo;t like what is happening there, so there is the ever-present danger of even more government interference as well.</strong></p> <p>&nbsp;</p> <p>It is quite fascinating to see that in spite of numerous examples throughout history, <strong>governments never seem to learn. They all believe they can somehow overrule economic laws by <em>diktat</em>.</strong> This is not only true of Venezuela&rsquo;s government, but of practically every government in today&rsquo;s world. Central planning of money has been adopted everywhere. Venezuela merely shows us what the end game for <em>every</em> fiat money system looks like.</p> <p>&nbsp;</p> <p><strong>At some point the State is overwhelmed by the promises it has made to its citizens.</strong> When it can no longer pay by means of confiscating private wealth, the printing press is <em>always</em> the last resort. Recently one actually gets the impression that it is often the first, rather than the last resort.</p> </blockquote> <p><strong>In developed countries, people believe that the planners have everything in hand, and that their &ldquo;price stabilization&rdquo; rules will protect them from such outcomes.</strong> However, it should be clear that these rules will simply be abandoned <em>in extremis</em>. The independence of central banks exists only on paper &ndash; it will mean nothing in a perceived &ldquo;emergency&rdquo;. It is almost comical in this context that gold is being sold while most of the world&rsquo;s major central banks are seemingly hell-bent on aping John Law&rsquo;s <em>Banque Générale Privée. </em></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="801" height="592" alt="" src="" /> </div> </div> </div> Central Banks Hyperinflation Thu, 30 Jul 2015 00:19:00 +0000 Tyler Durden 510671 at 4 Mainstream Media Articles Mocking Gold That Should Make You Think <p><a href=""><em>Submitted by Mike Krieger via Liberty Blitzkrieg blog</em></a>,</p> <p><em>For those of you who have been reading my stuff since all the way back to my Wall Street years at Sanford Bernstein, thanks for staying along for the ride. I appreciate your support immensely&nbsp;considering that I essentially no longer write about financial markets at all, and for many of you, that remains your profession and primary area of interest.</em></p> <p><em>There are many reasons why I stopped commenting on markets, but the main reason is that I started to recognize I wasn&rsquo;t getting it right. In fact, in some cases I was getting it spectacularly wrong. Whenever this happens, I try to isolate the problem and fix it. In this case there was no fix, because much of why I was no longer getting it right was rooted in the fact that my heart, soul and passion had moved onto other things. My interests had expanded, and I started a blog to express myself on myriad other matters I deemed important. Providing relevant market information needs intense focus, and my focus had shifted elsewhere. I recognized that&nbsp;I wasn&rsquo;t intellectually interested enough in centrally planned markets to provide insightful analysis, and so I stopped.</em><span id="more-25872"><em> </em></span></p> <p>This doesn&rsquo;t mean I won&rsquo;t start up again. <strong>When central planners do lose control, I may indeed become far more interested in opining on such matters.</strong> Time will tell. In the interim, financial markets do still&nbsp;play an important role in the bigger picture of social, political and economic trends I passionately care about. The stability and increase in financial assets (stocks and bonds) is of huge importance to the propaganda machine, in particular keeping the non-oligarchic, non-politically connected 1% in line and believing the hype (see:&nbsp;<strong><a href="" rel="bookmark" title="Permanent Link to The Stock Market: Food Stamps for the 1%">The Stock Market: Food Stamps for the 1%</a></strong>).</p> <p>So while I won&rsquo;t claim to know when the paradigm shift will begin in earnest, I do rely on people who have gotten macro forecasts right, and there is no one better than <a href="">Martin Armstrong</a>. Years ago, he was saying that nothing goes up in a straight line and that gold would experience a severe correction before beginning its real bull market. We are seeing his prediction unfold before our very eyes. What he also said is that as gold approached the $1,000 per/oz mark or even below, everyone would proclaim that &ldquo;gold is dead&rdquo; and start making comically bearish statements. <strong>In a nutshell, negative sentiment would plunge to levels not seen in years, if not more than a decade. We are starting to see this now.</strong></p> <p><strong>Here are four mainstream media articles that provide some evidence we may be approaching a sentiment low. Some of them I&rsquo;m sure you&rsquo;ve seen, others perhaps not. What amazes me is how they&rsquo;ve all come out within the last two weeks.</strong></p> <p><u><strong>1) From the Wall Street Journal:&nbsp;<a href="">Let&rsquo;s Be Honest About Gold: It&rsquo;s a Pet Rock&nbsp;</a></strong></u></p> <p>Here are a few choice excerpts:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><em>Gold is supposed to be a haven amid hard times and soft money. So why, even as Greece has defaulted, the euro has sunk against the dollar, and the Chinese stock market has stumbled, has <strong>gold been sitting there like a pet rock?</strong></em></p> <p>&nbsp;</p> <p><em>Many people may have bought gold for the wrong reasons: because of its glittering 18.7% average annual return between 2002 and 2011, because of its purportedly magical inflation-fighting properties, because it is supposed to shine in the darkest of days. But gold&rsquo;s long-term returns are muted, it isn&rsquo;t a panacea for inflation, and it does well in response to unexpected crises&mdash;but not long-simmering troubles like the Greek situation. <strong>And you will put lightning in a bottle before you figure out what gold is really worth.</strong></em></p> <p>&nbsp;</p> <p><em>With greenhorns in gold starting to figure all this out, the price has gotten tarnished.<strong> It is time to call owning gold what it is: an act of faith.</strong> As the Epistle to the Hebrews defined it forevermore, &ldquo;Faith is the substance of things hoped for, the evidence of things not seen.&rdquo; Own gold if you feel you must, but admit honestly that you are relying on hope and imagination.</em></p> <p>&nbsp;</p> <p><em>Recognize, too, that <strong>gold bugs</strong>&mdash;the people who believe in owning the yellow metal no matter what&mdash;<strong>often resemble the subjects of a laboratory experiment on the psychology of cognitive dissonance.</strong></em></p> <p>&nbsp;</p> <p><em>So, if buying gold is an act of faith, how much money should you put on the line?</em></p> <p>&nbsp;</p> <p><em>Anything much above that is more than an act of faith; it is a leap in the dark. Not even gold&rsquo;s glitter can change that.</em></p> </blockquote> <p>Think about some of the words and phrases used in this WSJ article:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><em>&ldquo;Pet rock.&rdquo;</em></p> <p>&nbsp;</p> <p><em>&ldquo;Greenhorns in gold</em> (greenhorn means&nbsp;a person who lacks experience and knowledge).<em>&rdquo; </em></p> <p>&nbsp;</p> <p><em>&ldquo;It is time to call owning gold what it is: an act of faith.&rdquo;</em></p> <p>&nbsp;</p> <p><em>&ldquo;Gold bugs</em>&nbsp;<em>often resemble the subjects of a laboratory experiment on the psychology of cognitive dissonance </em>(this is actually true in many ways).&rdquo;</p> </blockquote> <p><strong>Condescending as the entire article is to gold owners, he even goes so far to quote the Hebrew Bible!</strong></p> <p>Moving on.</p> <p><u><strong>2) From the <em>Washington Post</em>:&nbsp;<a href="">Gold is Doomed</a></strong></u></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><em>When you think about it, a bet on gold is really a bet that the people in charge don&rsquo;t know what they&rsquo;re doing. Policymakers missed yesterday&rsquo;s financial crisis, so maybe they&rsquo;re missing tomorrow&rsquo;s inflation, too. That, at least, is what a cavalcade&nbsp;of charlatans, cranks, and armchair economists have been shouting for years now, from the penny ads that run on the bottom of websites &mdash; did you know that the $5 bill&nbsp;<a href="" target="_blank">proves</a>&nbsp;the stock market is on the cusp of crashing? &mdash; to Glenn Beck infomercials and even hedge fund conferences. Indeed, John Paulson, who made more fortunes than you can count betting against subprime, has been piling into gold for six years now, because he&nbsp;<a href="" target="_blank">thinks</a>&nbsp;&ldquo;the consequences of printing money over time will be inflation.&rdquo; They all do. Goldbugs act like the Federal Reserve&rsquo;s public balance sheet is a secret only they have discovered, and that it&rsquo;s only a matter of time until prices explode like they did in the 1970s United States, if not 1920s Germany.</em></p> <p>&nbsp;</p> <p><em>But economists do, for the most part, know what they&rsquo;re doing. Sure, they missed the crash coming in 2008, but that wasn&rsquo;t because they didn&rsquo;t&nbsp;understand how bank runs work. It was because they didn&rsquo;t understand that unregulated lenders had become vulnerable to runs. And the economists who haven&rsquo;t forgotten their history knew that this inflation fear mongering was all wrong too. Specifically,&nbsp;there&rsquo;s a difference between the central bank buying bonds, a.k.a. printing money, when interest rates are zero and when they&rsquo;re not. In the first case, money and short-term bonds both pay the same amount of interest &mdash; none &mdash; so, as&nbsp;<a href="" target="_blank">Paul Krugman</a>&nbsp;has explained over and over again, printing one to buy the other won&rsquo;t change anything. Banks won&rsquo;t lend out any&nbsp;new money, and will just sit on it as a store of value instead. That&rsquo;s what happened when interest rates fell to zero in 2000s Japan, and it&rsquo;s what is happening now in the U.S., U.K., Japan, and Europe.</em></p> <p>&nbsp;</p> <p><em>It almost makes you feel bad for the goldbugs, until you remember that some substantial number&nbsp;of them are just trying to&nbsp;<a href="" target="_blank">scare seniors</a>&nbsp;out of their money. But the ones who aren&rsquo;t really thought the 1970s showed that gold went up when inflation did, so the fact that gold was going up now meant inflation couldn&rsquo;t be&nbsp;far behind. They didn&rsquo;t understand that the price of gold doesn&rsquo;t depend on how much inflation there is, but rather on how much inflation there is&nbsp;relative to interest rates. So now that rates are rising, gold, as you can see below, is falling. Wait a minute, rates are rising? Well, yes.&nbsp;The Federal Reserve hasn&rsquo;t actually raised rates yet, but it has talked about it enough that markets have&nbsp;<a href="" target="_blank">reacted</a>&nbsp;as if it already did. That&rsquo;s been enough to make real rates&nbsp;<a href="" target="_blank">positive again</a>.</em></p> </blockquote> <p>While I agree that many gold bugs do deserve the criticism they get, it&rsquo;s interesting to see the way in which the <em>Washington Post</em> demonizes them as:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong>&ldquo;J<em>ust trying to&nbsp;scare seniors&nbsp;out of their money.&rdquo;&nbsp;</em></strong></p> </blockquote> <p>But the purpose of the above article is less about demonizing gold bugs, and more about&nbsp;praising the existing system of crank central planners that no one other than starry eyed&nbsp;pundits and thieving oligarchs actually support (see:&nbsp;<a href="" rel="bookmark" title="Permanent Link to “Revolution is Coming” – The Top 20 Responses to Jon Hilsenrath’s Idiotic WSJ Article">&ldquo;<strong>Revolution is Coming&rdquo; &ndash; The Top 20 Responses to Jon Hilsenrath&rsquo;s Idiotic WSJ Article</strong></a>).</p> <p>Here are some examples:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong><em>But economists do, for the most part, know what they&rsquo;re doing.</em></strong></p> <p>&nbsp;</p> <p><strong><em><a href="" target="_blank">Paul Krugman</a>&nbsp;has explained over and over again, printing one to buy the other won&rsquo;t change anything.&nbsp;</em></strong></p> </blockquote> <p>This&nbsp;story is far from over, as the Fed has yet to raise interest rates. Talk to me about victory when rates normalize.</p> <p>Moving along to the next article:</p> <p><strong><u>3) From <em>Bloomberg</em>:&nbsp;<span class="lede-headline__highlighted"><a href="">Gold Is Only Going to Get Worse</a></span></u></strong></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><em>The problem for gold isn&rsquo;t just that prices are dropping. For many,<strong> the metal also has lost its charisma.</strong></em></p> <p>&nbsp;</p> <p><em>Prices will drop to $984 an ounce before January, according to the average estimate in a Bloomberg News survey of 16 analysts and traders. That would be the lowest since 2009 and a 10 percent retreat from Tuesday&rsquo;s settlement. <strong>Speculators are shorting the metal for the first time since U.S. government data began in 2006</strong>, and holders of exchange-traded products are selling at the fastest pace in two years.</em></p> <p>&nbsp;</p> <p><em><strong>&ldquo;Gold is out of fashion like flared trousers: no one wants it,&rdquo;</strong> said Robin Bhar, an analyst at Societe Generale SA in London. &ldquo;It&rsquo;s not going to collapse, but we think it is going to be at a lower level in the not-too-distant future.&rdquo;</em></p> <p>&nbsp;</p> <p><em><strong>&ldquo;Gold is a weird relic of antiquity,&rdquo;</strong> said Brian Barish, who helps oversee about $12.5 billion at Denver-based Cambiar Investors LLC. &ldquo;It&rsquo;s not a commodity that has much fundamental demand. It&rsquo;s pretty, so people use it for jewelry. But it&rsquo;s unlike iron ore or oil, or copper, or corn. There&rsquo;s not specific end-use for it. People just like it, so it becomes a discussion about fervor.&rdquo;</em></p> </blockquote> <p>Let&rsquo;s once again highlight some of the terminology used.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><em>The metal also has lost its charisma</em></p> </blockquote> <p>So now it&rsquo;s magically turned into a human being as opposed to a pet rock.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><em>Speculators are shorting the metal for the first time since U.S. government data began in 2006</em></p> <p>&nbsp;</p> <p><em>&ldquo;Gold is out of fashion like flared trousers: no one wants it.</em></p> <p>&nbsp;</p> <p>&ldquo;Gold is a weird relic of antiquity.&rdquo;</p> </blockquote> <p>Finally, for the last article. This one takes on more of the tone from the WSJ article, basically just calling gold buyers imbeciles.</p> <p><strong><u>4) From <em>Market Watch</em>:&nbsp;<a href=";rss=1">Two Reasons Why Gold May Plunge to $350 an Ounce</a>.</u></strong></p> <div> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div> <p><em>CHAPEL HILL, N.C. (MarketWatch) &mdash; Gold bugs, who have just begun to digest bullion&rsquo;s more than $100 drop over the past month, need to prepare for the possibility of an even bigger decline.</em></p> <p><em>That, at least, is the forecast of Claude Erb, a former commodities manager at fund manager TCW Group, and co-author (with Campbell Harvey, a Duke University finance professor) of&nbsp;<a class="icon " href="" target="_new">a mid-2012 study that forecast a plunging gold price</a>. They deserve to be listened to, therefore, since &mdash; unlike many latter-day converts to the bearish thesis &mdash; they forecast a long-term gold bear market when it was only just beginning.</em></p> <p>&nbsp;</p> <p><em>You might think that, with gold now trading more than $500 lower than when the study was released, Erb would declare victory and leave well enough alone. But Erb is doing nothing of the sort. <strong>Earlier this week, he told me that the gold community now needs to consider the distinct possibility that gold will trade for as low as $350 an ounce.</strong></em></p> <p>&nbsp;</p> <p><em>Erb uses the five well-know stages of grief to characterize where the gold market currently stands. Those stages are denial, anger, bargaining, depression and acceptance, and he argues that the gold-bug community currently is in the &ldquo;bargaining&rdquo; stage.</em></p> <p>&nbsp;</p> <p><em>Erb imagines them saying the functional equivalent of: <strong>&ldquo;So long as gold stays above $1,000 an ounce, I&rsquo;ll go to church every Sunday.&rdquo;</strong></em></p> <p>&nbsp;</p> <p><em>Over shorter terms measured in years, according to their research, you must take seriously the possibility that gold won&rsquo;t just drop below $1,000 an ounce but, eventually, to a far, far lower price as well.</em></p> </blockquote> </div> <p>Some choice quotes to think about:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><em>The gold community now needs to consider the distinct possibility that gold will trade for as low as $350 an ounce.</em></p> <p>&nbsp;</p> <p><em>Erb uses the five well-know stages of grief to characterize where the gold market currently stands. </em></p> <p>&nbsp;</p> <p><em>&ldquo;So long as gold stays above $1,000 an ounce, I&rsquo;ll go to church every Sunday.&rdquo;</em></p> </blockquote> <p><strong><u>This is pretty much peak condescension, </u>and once again, notice&nbsp;the religious imagery.</strong></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><em>Gold won&rsquo;t just drop below $1,000 an ounce but, eventually, to a far, far lower price as well.</em></p> </blockquote> <p><strong>I didn&rsquo;t write this article to &ldquo;call the bottom in gold&rdquo; or anything like that.</strong> I merely want to flag these four articles due to the hyperbolic nature of some of the statements made (they are exhibiting pretty much exactly the same behavior as the gold bugs they mock do). <u><strong>I do think that something is happening on the sentiment front that warrants we are closer to the bottom that the mid-stages of a bear market.</strong></u></p> <p><em>While I certainly accept that gold prices could fall further from here, I don&rsquo;t think they will go anywhere near $350/oz, or $500/oz. If&nbsp;Claude Erb cares to make a public bet with me on that, he can find me <a href="">here</a>.</em></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="302" height="232" alt="" src="" /> </div> </div> </div> Bear Market Bloomberg News Cognitive Dissonance Copper Federal Reserve Germany Glenn Beck Gold Bugs Goldbugs Greece Japan John Paulson Krugman Martin Armstrong None Paul Krugman Wall Street Journal Thu, 30 Jul 2015 00:15:00 +0000 Tyler Durden 510684 at Presenting Jeremy Grantham's "10 Topics To Ruin Your Summer" <p>When last we checked in with Jeremy Grantham, the GMO co-founder was <a href="">still bubble watching</a>, reiterating his <a href="">outlook from November</a> that although stocks can always go higher in the "strange, manipulated world" that we call the "new paranormal", "bubble territory" probably isn’t far off given that the Yellen Fed is "bound and determined" to facilitate the inexorable rise of asset prices.&nbsp;</p> <p>More specifically, bubble territory for Grantham is around S&amp;P 2250, and because "the Greenspan/ Bernanke/Yellen .. Fed historically did not stop its asset price pushing until fully- fledged bubbles had occurred, as they did in U.S. growth stocks in 2000 and in U.S. housing in 2006," there’s no good reason to think we won’t reach a bubble-defining two sigma event before all is said and done, even if that means launching QE4 in the event liftoff's first 25bps baby steps result in a&nbsp;<a href="">1937 redux</a>. </p> <p>Grantham also bemoaned the lack of capex spending and the myopia exhibited by corporate management teams, noting the "current extreme reluctance to make new investments in plant and equipment (how old-fashioned that sounds these days) rather than [plowing money] into stock buybacks, which may be good for corporate officers and stockholders, but bad for GDP growth and employment."</p> <p><strong>In GMO’s latest quarterly missive, Grantham is back with another dose of inconvenient truthiness, this time in the form of "ten quick topics to ruin your summer."</strong> </p> <p>In short, this is a list of what Grantham - who points out how fortunate he is to "have an ideal job [with] no routine day-to-day responsibilities [which leaves him] free to obsess about anything that seems both relevant and interesting" - thinks you should worry about going forward:</p> <ol> <li><span style="font-size: 1em; line-height: 1.3em;">A new era of lower trend GDP growth</span></li> <li><span style="font-size: 1em; line-height: 1.3em;">Resource scarcity</span></li> <li><span style="font-size: 1em; line-height: 1.3em;">Oil</span></li> <li><span style="font-size: 1em; line-height: 1.3em;">The environment</span></li> <li><span style="font-size: 1em; line-height: 1.3em;">Food shortages</span></li> <li><span style="font-size: 1em; line-height: 1.3em;">Income inequality</span></li> <li><span style="font-size: 1em; line-height: 1.3em;">The death of “majoritarian electoral democracy”&nbsp;</span></li> <li><span style="font-size: 1em; line-height: 1.3em;">The Fed</span></li> <li><span style="font-size: 1em; line-height: 1.3em;">Asset bubbles</span></li> <li><span style="font-size: 1em; line-height: 1.3em;">The limits of humankind&nbsp;</span></li> </ol> <p>Here are some excerpts from Grantham’s thoughts on each topic:<span style="white-space: pre;"> </span></p> <p>* &nbsp;* &nbsp;*&nbsp;</p> <p><em>From GMO</em></p> <p><strong>1. Pressure on GDP growth in the U.S. and the balance of the developed world: count on 1.5% U.S. growth, not the old 3%&nbsp;</strong><span style="font-size: 1em; line-height: 1.3em; white-space: pre;"> </span></p> <ul> <li><span style="font-size: 1em; line-height: 1.3em;">Factors potentially slowing long-term growth:</span><span style="font-size: 1em; line-height: 1.3em; white-space: pre;"> </span><span style="font-size: 1em; line-height: 1.3em;"> </span><span style="font-size: 1em; line-height: 1.3em; white-space: pre;"> </span></li> <li><span style="font-size: 1em; line-height: 1.3em;">Slowing growth rate of the working population</span><span style="font-size: 1em; line-height: 1.3em; white-space: pre;"> </span><span style="font-size: 1em; line-height: 1.3em;"> </span><span style="font-size: 1em; line-height: 1.3em; white-space: pre;"> </span></li> <li><span style="font-size: 1em; line-height: 1.3em;">Aging of the working population</span><span style="font-size: 1em; line-height: 1.3em; white-space: pre;"> </span><span style="font-size: 1em; line-height: 1.3em;"> </span><span style="font-size: 1em; line-height: 1.3em; white-space: pre;"> </span></li> <li><span style="font-size: 1em; line-height: 1.3em;">Resource constraints, especially the lack of cheap $20/barrel oil</span></li> <li><span style="font-size: 1em; line-height: 1.3em;">Rising income inequality</span></li> <li><span style="font-size: 1em; line-height: 1.3em;">Disappointing and sub-average capital spending, notably in the U.S.</span><span style="font-size: 1em; line-height: 1.3em; white-space: pre;"> </span><span style="font-size: 1em; line-height: 1.3em; white-space: pre;"> </span></li> <li><span style="font-size: 1em; line-height: 1.3em;">Loss of low-hanging fruit: Facebook is not the new steam engine</span><span style="font-size: 1em; line-height: 1.3em; white-space: pre;"> </span><span style="font-size: 1em; line-height: 1.3em; white-space: pre;"> </span></li> <li><span style="font-size: 1em; line-height: 1.3em;">Steadily increasing climate difficulties</span><span style="font-size: 1em; line-height: 1.3em; white-space: pre;"> </span><span style="font-size: 1em; line-height: 1.3em;"> </span><span style="font-size: 1em; line-height: 1.3em; white-space: pre;"> </span></li> </ul> <p>Partially dysfunctional government, particularly in economic matters that fail to maximize growth opportunities, especially in the E.U. and the U.S.</p> <p>Mainstream economists, with their emphasis on highly theoretical models, have been perplexed by the recent chain of disappointments in productivity and GDP growth and would disregard all or most of these factors as theoretically unsatisfactory.&nbsp;</p> <p><strong>2. The age of plentiful, cheap resources is gone forever</strong><span style="font-size: 1em; line-height: 1.3em; white-space: pre;"> </span></p> <p>After every historical major rally in commodity prices, there has been the predictable reaction whereby capacity is increased. Given the uncertainties of guessing other firms’ expansion plans, the usual result is a period of excess capacity and weaker prices as everyone expands simultaneously.&nbsp;</p> <p>In agriculture, we also had a global sell-off following three consecutive years in which extremely hostile grain-growing weather had driven prices to panic levels of triple and quadruple their previous lows.&nbsp;</p> <p>All in all I am still very confident, unfortunately, that the old regime of irregularly falling commodity prices is gone forever.</p> <p><strong style="font-size: 1em; line-height: 1.3em;">3. Oil</strong><span style="font-size: 1em; line-height: 1.3em; white-space: pre;"> </span></p> <p>Among commodities, oil has been king and still is. For a while longer. Oil has driven our civilization to where it is today. It created the surplus in our economic system that allowed for scientific research and rapid growth. Now, as we are running out of oil that is cheap to recover, the economic system is becoming stressed and growth is slowing. </p> <p><strong style="font-size: 1em; line-height: 1.3em;">4. Climate Problems</strong></p> <p><span style="font-size: 1em; line-height: 1.3em;">Both the actual climate and the associated politics seem to be changing more rapidly these days, with the seriousness of the situation becoming better appreciated. Visible changes in the climate have also been accelerating, with many more records than normal of droughts, floods, and, most particularly, heat. Last year was the hottest year ever recorded, and this year, helped by an El Nin?o, has gotten off to a dreadful start. January was the second hottest January ever. February and March were outright records. April was in third place, but both May and June were back in first place. This consistency with volatile climate is unusual and ominous. If kept up, 2015 will be the hottest by a lot.</span></p> <p><strong style="font-size: 1em; line-height: 1.3em;">5. Global food shortages</strong><span style="font-size: 1em; line-height: 1.3em; white-space: pre;"> </span></p> <p>The world’s population continues to grow, and the increasing middle class of the emerging countries, especially China, is rapidly increasing its meat consumption. Both trends put steady pressure on our grain and soy producing capabilities at a time when productivity gains have been irregularly slowing for several decades and show every sign of continuing to slow.7 Both overland and underground water supplies are stressed. Weather for farming becomes increasingly destabilized with increased droughts and radically increased flooding events. Flooding particularly increases soil erosion, which still continues at 1% a year, close to 100 times natural replacement rates. Insects and weeds are apparently becoming resistant to chemicals faster than chemists can respond.&nbsp;</p> <p><strong style="font-size: 1em; line-height: 1.3em;">6. Income inequality</strong><span style="font-size: 1em; line-height: 1.3em; white-space: pre;"> </span></p> <p>Over the last few years, we have been presented with data showing that the U.S. is the most unequal society (or one of the two or three worst) in both income and wealth in the developed world. It is also one of the less economically mobile ones, especially for mobility out of the poorest quintile. Neither situation applied or even nearly applied 40 years ago. </p> <p><strong style="font-size: 1em; line-height: 1.3em;">7. Trying to understand deficiencies in democracy and capitalism</strong><span style="font-size: 1em; line-height: 1.3em; white-space: pre;"> </span></p> <p><em>Democracy<span style="font-size: 1em; line-height: 1.3em; white-space: pre;"> </span></em></p> <p>"The central point that emerges from our research is that economic elites and organized groups representing business interests have substantial independent impacts on U.S. government policy, while mass-based interest groups and average citizens have little or no independent influence." This is the killer conclusion of a paper last fall by Gilens and Page.11 Based on the study of almost 1,800 policy issues for which income breakdowns were available, and defining the “Elite” generously as those above the 90th percentile, it finds that “majoritarian electoral democracy” is largely a thing of the past.&nbsp;<span style="font-size: 1em; line-height: 1.3em; white-space: pre;"> </span></p> <p><em>Capitalism: a failure to be inclusive (and feathering the corporate officers’ nests)</em><span style="font-size: 1em; line-height: 1.3em; white-space: pre;"> </span></p> <p>I have previously gone on at length about the critical, perhaps even deadly, deficiency in capitalism in dealing with long-term issues of the commons – damages to our common air, water, and soil. I would now like to take a swipe at capitalism’s increasing failure to be inclusive. Capitalism has steadily dropped its baggage of stakeholders, with the exception of senior corporate officers in first place and stockholders in second. Interest in local communities, cities, states, and countries of origin has been largely put aside as has the previous jewel in the crown of responsibilities to workers, the defined benefit pension fund. At a time of provable abnormally high corporate profits as a percent of GDP, corporations have argued that defined benefit pensions are not affordable. That they are dropping them should come as no surprise, for defined contribution plans (in general less attractive to employees than defined benefit plans) are much cheaper and easier on accounting predictability. What is surprising is why they adopted defined benefit plans in the first place, when they did not have to. And why did they have, in the 1935 to 1985 window, a sense of a social contract, suggesting that other things mattered besides maximizing short-term profits? Good ethics but bad capitalism? Actually, my colleague, James Montier, argues that a single-minded emphasis on relatively short-term share value maximization is a bad business idea; and I agree. Loyalty from workers, community, and country and an image as a company with worthwhile values is very probably a better business proposition. A longer-term focus certainly is. The best strategy, as Montier argues, is probably to concentrate on the highest possible customer satisfaction at a reasonable profit.</p> <p><strong style="font-size: 1em; line-height: 1.3em;">8. Deficiencies in the Fed</strong><span style="font-size: 1em; line-height: 1.3em; white-space: pre;"> </span></p> <p>A counter-productive job description, badly executed.&nbsp;</p> <p><strong style="font-size: 1em; line-height: 1.3em;">9. Investment bubbles in a world that is, this time, interestingly different</strong><span style="font-size: 1em; line-height: 1.3em; white-space: pre;"> </span></p> <p>Two significant items seem to be different this time. First, profit margins in the U.S. seem to have stopped mean reverting in the old, normal way, and second, some real estate markets have bubbled up and then stayed there at high prices. Both seem surprising events, even against what I would call “the laws of nature,” or at least the usual laws of capitalism. What is going on?&nbsp;</p> <p><strong style="font-size: 1em; line-height: 1.3em;">10. Limitations of homo sapiens&nbsp;</strong><strong style="font-size: 1em; line-height: 1.3em;"><span style="white-space: pre;"> </span></strong><span style="font-size: 1em; line-height: 1.3em;"> </span><span style="font-size: 1em; line-height: 1.3em; white-space: pre;"> </span><span style="font-size: 1em; line-height: 1.3em;"> </span><span style="font-size: 1em; line-height: 1.3em; white-space: pre;"> </span><span style="font-size: 1em; line-height: 1.3em;"> </span><span style="font-size: 1em; line-height: 1.3em; white-space: pre;"> </span></p> <p>After reading all of this you may think that I am particularly pessimistic. It is not true: It is all of you who are optimistic! Not only does our species have a strong predisposition to be optimistic (or bullish) – it is probably a useful survival characteristic – but we are particularly good at listening to agreeable data and avoiding unpleasant data that does not jibe with our beliefs or philosophies. Facts, whether backed by 97% of scientists as is the case with man-made climate change, or 99.9% as is the case with evolution, do not count for nearly as much as we used to believe. <span style="white-space: pre;"> </span> <span style="white-space: pre;"> </span> <span style="white-space: pre;"> </span> <span style="white-space: pre;"> </span><span style="font-size: 1em; line-height: 1.3em; white-space: pre;"> </span></p> <p>For that matter, we do a terrible job of planning for the long term, particularly in postponing gratification, and we are wickedly bad at dealing with the implications of compound math. All of this makes it easy for us to forget about the previously painful market busts; facilitates our pushing stocks and markets on occasion to levels that make no mathematical sense; and allows us, regrettably, to ignore the logic of finite resources and a deteriorating climate until the consequences are pushed up our short-term noses.&nbsp;</p> <div><em><a href="">Full letter&nbsp;(PDF)</a></em></div> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="415" height="257" alt="" src="" /> </div> </div> </div> China Fail James Montier Jeremy Grantham Real estate Wed, 29 Jul 2015 23:45:21 +0000 Tyler Durden 510686 at Bill Gross Explains (In 90 Seconds) How It's All A Big Shell Game <p><em>"There is no doubt that the price of assets right now is a question mark... and<strong> ultimately when Central Banks stop manipulating markets where that price goes is up for grabs... and probably points down</strong>"</em></p> <p>&nbsp;</p> <p>As Gross tweeted...</p> <blockquote class="twitter-tweet"><p dir="ltr" lang="en">Gross: All global financial markets are a shell game now. Artificial prices, artificial manipulation. Where's the real pea (price)?</p> <p>— Janus Capital (@JanusCapital) <a href="">July 29, 2015</a></p></blockquote> <script src="//"></script><p>This clip carries a public wealth warning...</p> <p>&nbsp;</p> <p><iframe src="" width="480" height="360" frameborder="0"></iframe></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="613" height="553" alt="" src="" /> </div> </div> </div> Bill Gross Central Banks Janus Capital Wed, 29 Jul 2015 23:23:00 +0000 Tyler Durden 510668 at