http://www.zerohedge.com/fullrss2.xml en Unusually Massive Protests Erupt in Japan Against Forthcoming "War Legislation" http://www.zerohedge.com/news/2015-08-31/unusually-massive-protests-erupt-japan-against-forthcoming-war-legislation <p><a href="http://libertyblitzkrieg.com/2015/08/31/unusually-massive-protests-erupt-in-japan-against-forthcoming-war-legislation/"><em>Submitted by Mike Krieger via Liberty Blitzkrieg blog,</em></a></p> <p>In case you aren&rsquo;t up to speed on your Japanese history, the nation&rsquo;s post WWII Constitution prohibits military action unless it&rsquo;s in self-defense. Clearly a sensible approach, which is why the current Japanese government, led by the demonstrably insane and incompetent&nbsp;Prime Minister Shinzo Abe, wants to get rid of it.</p> <p>This story is very important. <strong>Not only will this action increase the likelihood of World War III in the Far East, but it&rsquo;s another important example of a government acting against the will of the people.</strong></p> <p>Polling has indicated the Japanese public is against a pivot toward militarization and war, but Prime Minister Shinzo Abe<em>&nbsp;</em>&nbsp;is pushing forward nonetheless. In fact, the current legislation to allow overseas military intervention has already passed the lower house of government. This prompted many Japanese to emerge from their decades long political apathy and get out into the streets.<strong> It&rsquo;s estimated these&nbsp;protests were the largest in recent memory.</strong></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/08-overflow/20150831_abeisacrazybastard.jpg"><img height="294" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/08-overflow/20150831_abeisacrazybastard.jpg" width="600" /></a></p> <p>&nbsp;</p> <p>The <a href="http://hosted.ap.org/dynamic/stories/A/AS_JAPAN_PROTEST?SITE=AP&amp;SECTION=HOME&amp;TEMPLATE=DEFAULT"><em>AP</em> reports</a>:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p class="ap-story-p"><em>TOKYO (AP) &mdash; Mothers holding their children&rsquo;s hands stood in the sprinkling rain, some carrying anti-war placards, while students chanted slogans to the beat of a drum against Prime Minister Shinzo Abe and his defense policies.</em></p> <p class="ap-story-p">&nbsp;</p> <p class="ap-story-p"><em>Japan is seeing new faces join the ranks of protesters typically made up of labor union members and graying leftist activists. Tens of thousands filled the streets outside Tokyo&rsquo;s parliament on Sunday to rally against security legislation expected to pass in September.</em></p> <p class="ap-story-p">&nbsp;</p> <p class="ap-story-p"><em>&ldquo;No to war legislation!&rdquo; &ldquo;Scrap the bills now!&rdquo; and &ldquo;Abe, quit!&rdquo; they chanted in one of the biggest protests in recent memory. The bills would expand Japan&rsquo;s military role under a reinterpretation of the country&rsquo;s war-renouncing constitution.</em></p> <p class="ap-story-p">&nbsp;</p> <p class="ap-story-p"><em>In Japan, where people generally don&rsquo;t express political views in public, such rallies have largely diminished since often-violent student protests in the 1960s.</em></p> <p class="ap-story-p">&nbsp;</p> <p class="ap-story-p"><em>The demonstrations started earlier this year and grew sharply after July, when Abe&rsquo;s ruling coalition <strong>pushed the legislation through the more powerful lower house despite polls showing a majority of Japanese were opposed.</strong></em></p> </blockquote> <p class="ap-story-p">Just like in Greece, the Japanese public is&nbsp;rapidly being forced to come to grips with the fact that their opinions don&rsquo;t matter and they are politically irrelevant. Of course, this is also the case in these United States. Recall:&nbsp;<strong><a href="http://libertyblitzkrieg.com/2014/04/16/new-report-from-princeton-and-northwestern-proves-it-the-u-s-is-an-oligarchy/" rel="bookmark" title="Permanent Link to New Report from Princeton and Northwestern Proves It: The U.S. is an Oligarchy">New Report from Princeton and Northwestern Proves It: The U.S. is an Oligarchy</a></strong></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p class="ap-story-p"><em>A group called Mothers Against War started in July and gained supporters rapidly via Facebook. It collected nearly 20,000 signatures of people opposed to the legislation which representatives tried unsuccessfully to submit to Abe&rsquo;s office last Thursday.</em></p> <p class="ap-story-p">&nbsp;</p> <p class="ap-story-p"><em>The security bills would permit the military to engage in combat for the first time since World War II in cases of &ldquo;collective defense,&rdquo; when Japan&rsquo;s allies such as the U.S. are attacked, but Japan itself is not.</em></p> <p class="ap-story-p">&nbsp;</p> <p class="ap-story-p"><em>Abe&rsquo;s government argues that the changes are needed for Japan to respond to a harsher security environment, including a more assertive China and growing terrorist threats, and to fulfill expectations that it will contribute more to global peacekeeping.</em></p> </blockquote> <p>&hellip;and to distract a disillusioned population from the disastrous economic policies of its&nbsp;government. Recall from earlier this year:</p> <p><em><a href="http://libertyblitzkrieg.com/2015/07/14/japans-economic-disaster-real-wages-lowest-since-1990-record-numbers-describe-hard-living-conditions/" rel="bookmark" title="Permanent Link to Japan’s Economic Disaster – Real Wages Lowest Since 1990, Record Numbers Describe “Hard” Living Conditions">Japan&rsquo;s Economic Disaster &ndash; Real Wages Lowest Since 1990, Record Numbers Describe &ldquo;Hard&rdquo; Living Conditions</a></em></p> <p><em>and&hellip;</em><br /><em><a href="http://libertyblitzkrieg.com/2015/04/07/the-stock-market-myth-and-how-the-japanese-middle-class-is-on-the-precipice-thanks-to-abenomics/" rel="bookmark" title="Permanent Link to The Stock Market Myth and How the Japanese Middle Class is on the Precipice Thanks to Abenomics"><br />The Stock Market Myth and How the Japanese Middle Class is on the Precipice Thanks to Abenomics</a></em></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p class="ap-story-p"><em>The topic has become almost a regular item in women&rsquo;s magazines, traditionally known more for covering entertainment, beauty, health, food and the Imperial family.</em></p> <p class="ap-story-p">&nbsp;</p> <p class="ap-story-p"><strong><em>Takashi Watanabe, a deputy editor-in-chief of Shukan Josei (Ladies Weekly), said there has been a growing appetite for social issues among readers, especially since Fukushima.</em></strong></p> </blockquote> <p class="ap-story-p">This is a great sign for Japan. However, when will Americans emerge from their&nbsp;political&nbsp;slumber? Will it take several decades of economic decay such as in Japan?</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p class="ap-story-p"><em>About half a century ago, 300,000 students, many of them Marxist ideologues, staged violent protests, repeatedly clashing with police, over revising the U.S.-Japan security treaty. Those protests played a role in driving <strong>Abe&rsquo;s grandfather, then-Prime Minister Nobusuke Kishi,</strong> out of office after his government approved the revision.</em></p> </blockquote> <p class="ap-story-p">Apparently, they&nbsp;love failed political dynasties in Japan as well.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p class="ap-story-p"><em>&ldquo;I&rsquo;m afraid the legislation is really going to reverse the direction of this country, where pacifism was our pride,&rdquo; said a 44-year-old architect who joined Sunday&rsquo;s rally with her 5-year-old son. <strong>&ldquo;I feel our voices are neglected by the Abe government.&rdquo;</strong></em></p> </blockquote> <p class="ap-story-p">You&rsquo;re not the only one&hellip;</p> <p class="ap-story-p">Of course, when it comes to Japan this has been a long time coming.&nbsp;Recall the following published in 2013:</p> <p class="ap-story-p"><em><a href="http://libertyblitzkrieg.com/2013/12/02/war-on-democracy-spain-and-japan-move-to-criminalize-protests/" rel="bookmark" title="Permanent Link to War on Democracy: Spain and Japan Move to Criminalize Protests">War on Democracy: Spain and Japan Move to Criminalize Protests</a></em></p> <p class="ap-story-p"><em><a href="http://libertyblitzkrieg.com/2013/05/02/how-japans-stealth-constitution-destroys-civil-rights-and-sets-the-stage-for-dictatorship/" rel="bookmark" title="Permanent Link to How Japan’s “Stealth Constitution” Destroys Civil Rights and Sets the Stage for Dictatorship">How Japan&rsquo;s &ldquo;Stealth Constitution&rdquo; Destroys Civil Rights and Sets the Stage for Dictatorship</a></em></p> <p><span style="text-decoration: underline;"><strong>Democracy is dead. Globally. If we fail to bring it back, history will see us as one of the most inept and spineless generations in history.</strong></span></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="1024" height="502" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20150831_abeisacrazybastard.jpg?1441056590" /> </div> </div> </div> http://www.zerohedge.com/news/2015-08-31/unusually-massive-protests-erupt-japan-against-forthcoming-war-legislation#comments Abenomics China Fail Greece Japan Mon, 31 Aug 2015 23:50:34 +0000 Tyler Durden 512669 at http://www.zerohedge.com How China Cornered The Fed With Its "Worst Case" Capital Outflow Countdown http://www.zerohedge.com/news/2015-08-31/how-china-cornered-fed-its-worst-case-capital-outflow-countdown <p>Last week, in "<a href="http://www.zerohedge.com/news/2015-08-27/what-chinas-treasury-liquidation-means-1-trillion-qe-reverse">What China’s Treasury Liquidation Means: $1 Trillion QE In Reverse</a>," we took a look at the potential size of the RMB carry trade, noting that according to BofAML, the unwind could, in the worst case scenario, be somewhere on the order of $1 trillion.&nbsp;</p> <p>Extrapolating from that and applying Citi’s take on the impact of EM reserve drawdowns on 10Y UST yields (which, incidentally, is based on "<em>Financing US Debt: Is There Enough Money in the World – and at What Cost?</em>", by John Kitchen and Menzie Chinn from 2011), <strong>we noted that potentially, if China were to use its FX reserves to offset the pressure on the yuan from the unwind of the great RMB carry, the effect could be to put more than 200bps of upward pressure on the 10Y yield.&nbsp;</strong></p> <p>Going farther, we also said that $1 trillion in FX reserve liquidation by the PBoC would essentially negate around 60% of QE3.<strong> In other words, China’s persistent FX interventions amount to reverse QE or, as Deutsche Bank calls is "<a href="http://www.zerohedge.com/news/2015-08-28/reason-chinas-crash-will-unleash-global-bond-shockwave">quantitative tightening</a>."&nbsp;</strong></p> <p><strong>Now, SocGen is out with a description of China's "impossible trinity" or "trilemma". Here's the critical passage:</strong></p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><em>The PBoC is caught in an awkward position: not letting the currency go requires significant FX intervention that will not prevent ongoing capital outflows but which will result in tightening domestic liquidity conditions; but letting the currency go risks more immense capital outflow pressures in the immediate short term, external debt defaults and possibly further domestic investment deceleration. Furthermore, it has to consider the painful repercussions globally that could result from any sharp RMB depreciation.</em></p> </blockquote> <p>In other words, because&nbsp;the new currency regime looks to have paradoxically created a situation where the market will play less of a role in determining the exchange rate for the yuan,&nbsp;China will be stuck liquidating its reserves and offsetting that resultant liquidity drain with reverse repos, RRR cuts, and a mishmash of short- and medium-term lending ops which, to the extent they're seen as net easing, will only exacerbate pressure on the yuan, necessitating still more interventions in a very non-virtuous loop until such a time as the PBoC either runs out of assets to sell or else throws in the towel and moves to a free float which would likely trigger an all-out short-term panic.&nbsp;</p> <p>Well, that's not entirely true. Everything could suddenly be "fixed", or, as SocGen describes it,&nbsp;"for the RMB to appreciate compared to its current value (6.40) will require a very positive environment for EM coupled with a cessation of capital outflows and a vibrant cyclical growth and an export recovery."&nbsp;</p> <p>Since it's difficult to imagine a situation that's further from what's currently playing out across emerging economies, we can rule that out, and because even if China can manage to&nbsp;mitigate outflows by "temporarily tighten[ing] (the implementation of capital controls," solving the puzzle here will, to quote SocGen again, "still entail large-scale FX intervention," we can move straight to a consideration of how dramatic the FX reserve liquidation may ultimately be. Here's SocGen's three scenarios:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><em>Logically, we should first make assumptions about the PBoC’s tolerance for currency volatility and FX reserves drawdown. However, practically, it still helps to envision likely scenarios of capital outflows and reverse-engineer the amount of FX reserves needed. <strong>We present a few scenarios over a one-year time horizon to gauge possible reserve usage.</strong></em></p> <ul> <li><strong>Base case: </strong>Current account surplus of $280bn over the next four quarters plus capital outflows (FDI + portfolio + other + NEOs) that are 50% greater than the previous year ($560bn) would equate to the PBoC needing to use $280bn of reserves over the next twelve months if it wanted to stabilize the RMB.</li> <li><strong>Moderately bad case: </strong>Current account surplus falls by 50% ($150bn) and capital outflows accelerate by a factor of two compared to the previous year ($750bn). The PBoC would need to absorb $600bn in outflows if its goal was no further RMB depreciation</li> <li><strong>Worst case: Foreigners exit all cumulative portfolio investment from the past five years ($260bn), five years worth of cumulative foreign inflows into trade credit/loans/deposits are reversed ($530bn), and locals accelerate outflows by a factor of two ($400bn). There could be $1.2trn in outflows. If the current figure halved over the next year to $140bn, net outflows would be around $1.04trn. There would be hardly any money left to leave after this, and the PBoC would be left with a meagre $2.5trn in reserves (chart 18).</strong></li> </ul> </blockquote> <p>Or, visually:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p style="padding-left: 30px;"><a href="http://www.zerohedge.com/sites/default/files/images/user92183/imageroot/2015/08/SocGenChinaReservesScenarios.png"><img src="http://www.zerohedge.com/sites/default/files/images/user92183/imageroot/2015/08/SocGenChinaReservesScenarios.png" width="412" height="298" /></a></p> </blockquote> <p>The chart above is important: what it shows is that not only is the Fed trapped in a corner domestically, on one hand dreading the launch of the tightening cycle (as can be seen by the endless drama and dithering about whether or not to hike rates) which will not only unleash even more asset selling and in the process tighten financial conditions even more, thus limiting what little inflationary impulse exists in the economy, while on the other risking complete loss of confidence if it were to postpone or cancel the tightening cycle, <strong>but now it is also trapped internationally, courtesy of China's August 11 announcement of its currency devaluation, which has started a T-minus 365 day countdown on the Fed's successful conclusion of its monetary policy implementation.</strong></p> <p>Furthermore, as SocGen explains vividly, the potential outcomes for China from this point on, are bad, worse and worst, and since China's recent "success" in effectively controlling its housing, credit, and last but not least, its stock market bubble, has demonstrated a worst case scenario is almost certainly the most probable one, what the above analysis means, is that while the Fed may be hoping for the best and expecting an even better outcome, the "reverse QE" that China launched less than three weeks ago, will make the Fed's job that much more difficult as its presents not only a timing constraint to Fed policy, but a monetary one as well in the form of what Deustche Bank dubs "Quantitative Tightening."</p> <p>In fact, one can argue that since there is no way resolve China's "impossible trinity" of pursuing a stable exchange rate, an open capital account and an independent interest rate policy all at the same time, the worst case scenario is very likely an optimistic one. This means that as the Fed debates whether or not to hike, and how much, the acceleration in Chinese capital outflows starting on August 11 has set the path for the Fed, and at this point any incremental delay in hiking merely adds more to the already vast cross-capital and currency confusion around the globe. <strong>However, no longer is the Fed's quandary open ended: with every passing day, China is suffering incremental tens of billions in capital flight, in reserve liquidation, and thus, tighter global financial conditions, as can be expected from the unwind of the world's largest depository of USD-denominated reserves.</strong></p> <p>Finally, what all of this really means, is that having pushed China to the point of dissociating itself from the USD peg officially, the more the Fed tightens, the more China will have to push back through devaluation or otherwise, and the more capital outflows it will be subject to, thereby amplifying the Fed's tightening posture around the globe. In this very unstable arrangement, suddenly the smallest policy error will reverberate exponentially, and result in the only possible outcome: <strong>the Fed's admission of policy failure by adopting a tightening bias, and ultimately launching another phase of monetary easing, be it QE4 or perhaps even the long-overdue and much anticipated Friedmanesque "helicopter money" episode.</strong></p> <p>In even simpler terms: China has just cornered the Fed: not just diplomatically, as observed when China's PBOC clearly demanded that Yellen's Fed not start a rate hiking cycle, but also mechanistically, as can be seen by the acute and sudden selloff across all asset classes in the past 3 weeks. Now Yellen has about 365 days or so to find a solution, one which works not only for the US, but also does not leave China a smoldering rubble of three concurrently burst bubbles. Good luck. &nbsp;&nbsp;</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="600" height="320" alt="" src="http://www.zerohedge.com/sites/default/files/images/user92183/imageroot/Countdown.png?1441063719" /> </div> </div> </div> http://www.zerohedge.com/news/2015-08-31/how-china-cornered-fed-its-worst-case-capital-outflow-countdown#comments Carry Trade China Deustche Bank Deustche Bank Deutsche Bank fixed Monetary Policy recovery SocGen Volatility Yuan Mon, 31 Aug 2015 23:24:41 +0000 Tyler Durden 512675 at http://www.zerohedge.com Monday Humor: Go 'West' Young Men http://www.zerohedge.com/news/2015-08-31/monday-humor-go-west-young-men <p>First Trump, now this...!?</p> <p>&nbsp;</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/08-overflow/20150831west.jpg"><img height="901" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/08-overflow/20150831west_0.jpg" width="600" /></a></p> <p><em>h/t @MaxwellStrachan</em></p> <p><u><strong>Relive the moment...</strong></u></p> <div style="background-color:#000000;width:520px;"> <div style="padding:4px;"><iframe frameborder="0" height="288" src="http://media.mtvnservices.com/embed/mgid:uma:video:mtv.com:1231121/cp~series%3D3200%26id%3D1737438%26vid%3D1231121%26uri%3Dmgid%3Auma%3Avideo%3Amtv.com%3A1231121" width="512"></iframe><br /> <p style="text-align:left;background-color:#FFFFFF;padding:4px;margin-top:4px;margin-bottom:0px;font-family:Arial, Helvetica, sans-serif;font-size:12px;">Get More:</p> </div> </div> <p>&nbsp;</p> <p>...and<strong> read on for the full transcript below</strong>:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&ldquo;<strong>Bro. Bro!</strong> Listen to the kids. First of all, thank you, Taylor, for being so gracious and giving me this award this evening.</p> <p>&nbsp;</p> <p>And I often think back to the first day I met you also. You know I think about when I&rsquo;m in the grocery store with my daughter and I have a really great conversation about fresh juice&hellip; and at the end they say, &rsquo;Oh, you&rsquo;re not that bad after all!&rsquo; And like I think about it sometimes. &hellip; It crosses my mind a little bit like when I go to a baseball game and 60,000 people boo me. Crosses my mind a little bit.</p> <p>&nbsp;</p> <p>And I think if I had to do it all over again what would I have done? Would I have worn a leather shirt? Would I have drank half a bottle of Hennessy and gave the rest of it to the audience? Ya&rsquo;ll know ya&rsquo;ll drank that bottle too! If I had a daughter at that time would I have went on stage and grabbed the mic from someone else&rsquo;s? You know, this arena tomorrow it&rsquo;s gonna be a completely different setup. Some concert, something like that. The stage will be gone. After that night, the stage was gone, but the effect that it had on people remained.</p> <p>&nbsp;</p> <p>The &hellip; The problem was the contradiction. The contradiction is I do fight for artists, but in that fight I somehow was disrespectful to artists. I didn&rsquo;t know how to say the right thing, the perfect thing. I just &hellip; I sat at the Grammys and saw Justin Timberlake and Cee-Lo lose. Gnarls Barkley and the FutureLove &hellip; SexyBack album &hellip; and Justin, I ain&rsquo;t trying to put you on blast, but I saw that man in tears, bro. You know, and I was thinking, like, &rsquo;He deserved to win Album of the Year!&#39;&rdquo;</p> <p>&nbsp;</p> <p>And this small box that we are as the entertainers of the evening &hellip; How could you explain that? Sometimes I feel like all this s&ndash;t they run about beef and all that? Sometimes I feel like I died for the artist&rsquo;s opinion. For artists to be able to have an opinion after they were successful. I&rsquo;m not no politician, <strong>bro</strong>!</p> <p>&nbsp;</p> <p>Look at that. You know how many times MTV ran that footage again? &rsquo;Cause it got them more ratings? You know how many times they announced Taylor was going to give me the award &rsquo;cause it got them more ratings? Listen to the kids, <strong>bro</strong>! I still don&rsquo;t understand awards shows. I don&rsquo;t understand how they get five people who worked their entire life &hellip; sold records, sold concert tickets to come stand on the carpet and for the first time in they life be judged on the chopping block and have the opportunity to be considered a loser! I don&rsquo;t understand it, <strong>bruh</strong>!</p> <p>&nbsp;</p> <p>I don&rsquo;t understand when the biggest album, or the biggest video &hellip; I&rsquo;ve been conflicted, bro. I just wanted people to like me more. &ldquo;But f&ndash;k that, <strong>bro</strong>! 2015! I will die for the art! For what I believe in. And the art ain&rsquo;t always gonna be polite! Ya&rsquo;ll might be thinking right now, &rsquo;Did he smoke something before he came out here?&rsquo; The answer is yes, I rolled up a little something. I knocked the edge off!</p> <p>&nbsp;</p> <p>I don&rsquo;t know what&rsquo;s gonna happen tonight, I don&rsquo;t know what&rsquo;s gonna happen tomorrow, bro. But all I can say to my artists, to my fellow artists: Just worry how you feel at the time, man. Just worry about how you feel and don&rsquo;t NEVER &hellip; you know what I&rsquo;m saying? I&rsquo;m confident. I believe in myself. We the millennials, <strong>bro</strong>. This is a new mentality. We&rsquo;re not gonna control our kids with brands. We not gonna teach low self-esteem and hate to our kids. We gonna teach our kids that they can be something. We gonna teach our kids that they can stand up for theyself! We gonna teach our kids to believe in themselves!&rdquo;</p> <p>&nbsp;</p> <p><strong>If my grandfather was here right now he would not let me back down! I don&rsquo;t know I&rsquo;m fittin&rsquo; to lose after this. It don&rsquo;t matter though, cuz it ain&rsquo;t about me. It&rsquo;s about ideas, bro. New ideas. People with ideas. People who believe in truth. And yes, as you probably could have guessed by this moment, I have decided in 2020 to run for president.&rdquo;</strong></p> </blockquote> <p>*&nbsp; *&nbsp; *</p> <p><u><strong>If you thought Kanye West&rsquo;s declaration that he would run for president in 2020 was a joke, guess again.</strong></u> <a href="http://mediaequalizer.com/brian-maloney/2015/08/ready-for-kanye-presidential-committee-now-officially-registered">As MediaEqualizer reports,</a></p> <p><strong>A Maryland Republican has already registered a pro-West committee with the federal government, Ready For Kanye.</strong> Eugene Craig III of White Marsh (shown above) <a href="http://docquery.fec.gov/cgi-bin/forms/C00585596/1023687/">submitted paperwork</a> to the Federal Election Commission this morning and was given FEC Committee ID number C00585596:</p> <p><a href="https://s3.amazonaws.com/medeq/files/uploads/2015/08/31125914/Ready-For-Kanye-FEC.jpg"><img alt="Ready For Kanye FEC" class="alignright size-large wp-image-5317" src="https://s3.amazonaws.com/medeq/files/uploads/2015/08/31125914/Ready-For-Kanye-FEC-1024x776.jpg" style="width: 600px; height: 455px;" /></a></p> <p>The rapper <a href="http://abcnews.go.com/Entertainment/2015-mtv-vmas-kanye-west-hell-run-president/story?id=33424047">made the announcement</a> during last night&rsquo;s VMA Awards.</p> <p><strong>Mr Craig has set up a <a href="https://www.facebook.com/pages/Ready-For-Kanye/1660658230816828">Ready For Kanye Facebook page</a>, which has attracted just four likes so far but is sure to grow from here.</strong></p> <p>Two T-shirt designs are featured there as well, appearing to have heavily borrowed from past campaigns including Mitt Romney&rsquo;s in 2012:</p> <p><a href="https://s3.amazonaws.com/medeq/files/uploads/2015/08/31130103/Ready-For-Kanye-FB.jpg"><img alt="Ready For Kanye FB" class="alignright size-large wp-image-5318" src="https://s3.amazonaws.com/medeq/files/uploads/2015/08/31130103/Ready-For-Kanye-FB-1024x753.jpg" style="width: 600px; height: 441px;" /></a></p> <p><a href="https://twitter.com/_EugeneCraig">Craig</a> is the Third Vice Chair of the Maryland Republican Party and Executive Director of The Bulldog Collegian.</p> <p><strong>We asked Craig whether West would run as a Republican and why his candidacy should be taken seriously and are awaiting a response.</strong></p> <p>*&nbsp; *&nbsp; *</p> <p>Crazy or not,<strong> West, 38, scored the award show&#39;s top hashtag, #Kanye2020, according to social analytics company NetBase. </strong>The show became the most-tweeted television program since Nielsen began tracking Twitter TV activity in 2011, with some 21.4 million tweets sent in the United States alone.</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="359" height="539" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20150831west.jpg?1441042807" /> </div> </div> </div> http://www.zerohedge.com/news/2015-08-31/monday-humor-go-west-young-men#comments Nielsen ratings Twitter Twitter Mon, 31 Aug 2015 23:00:00 +0000 Tyler Durden 512666 at http://www.zerohedge.com Stocks Suffer Biggest Monthly Drop In Five Years As Oil Spikes Most Since 1990 http://www.zerohedge.com/news/2015-08-31/stocks-suffer-biggest-montly-drop-five-years-oil-spike-most-1990 <p>Only one thing for it really...</p> <p><iframe allowfullscreen="" frameborder="0" height="315" src="https://www.youtube.com/embed/AG7LjVCj50Y" width="560"></iframe></p> <p>&nbsp;</p> <p><strong>Forget stocks, today was all about crude oil again...</strong></p> <p>WTI pushed into the green for August!!!</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/08-overflow/20150831_EOD2.jpg"><img height="376" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/08-overflow/20150831_EOD2_0.jpg" width="600" /></a></p> <p>&nbsp;</p> <p>3 Bear markets and 3 Bull markets now in 2015 so far... perfectly tagging the 50-day moving-average today...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/08-overflow/20150831_EOD1.jpg"><img height="304" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/08-overflow/20150831_EOD1_0.jpg" width="600" /></a></p> <p>&nbsp;</p> <p>This is the biggest 3-day rise in WTI since 1990!!</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/08-overflow/20150831_WTI_1.jpg"><img height="305" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/08-overflow/20150831_WTI_1_0.jpg" width="600" /></a></p> <p>&nbsp;</p> <p>Oil Volatility and credit markets were not squeezed into euphoria at all...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/08-overflow/20150831_EOD3.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/08-overflow/20150831_EOD3_0.jpg" style="width: 600px; height: 622px;" /></a></p> <p>Trade accordingly!!</p> <p>*&nbsp; *&nbsp; *</p> <p><strong>Having got that out of the way...<u>Dow&#39;s worst monthly drop since May 2010.. </u></strong></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/08-overflow/20150831_EOD20.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/08-overflow/20150831_EOD20_0.jpg" style="width: 600px; height: 541px;" /></a></p> <p>&nbsp;</p> <p><strong><u>and had an ugly close...</u></strong></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/08-overflow/20150831_EOD19.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/08-overflow/20150831_EOD19_0.jpg" style="width: 600px; height: 401px;" /></a></p> <p>&nbsp;</p> <p>Stocks got some lift from the momo-igniters -but once NYMEX closed, it was over. Stocks traded in a relatiovely narrow range glued to VWAP after the overnight plunge...<strong> Small Caps outperformed as Nasdaq Underporformed...</strong></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/08-overflow/20150831_EOD14.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/08-overflow/20150831_EOD14_0.jpg" style="width: 600px; height: 418px;" /></a></p> <p>&nbsp;</p> <p>But were glued to VWAP all day... on no volume</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/08-overflow/20150831_EOD22.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/08-overflow/20150831_EOD22_0.jpg" style="width: 600px; height: 312px;" /></a></p> <p>&nbsp;</p> <p>Futures markets giveus a better idea of the moves...NOTE -0 this is from the beginning of Friday&#39;s pathetic EOD ramp...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/08-overflow/20150831_EOD13.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/08-overflow/20150831_EOD13_0.jpg" style="width: 600px; height: 495px;" /></a></p> <p>&nbsp;</p> <p>Once again complete chaos on VIX ETFs...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/08-overflow/20150831_EOD15.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/08-overflow/20150831_EOD15_0.jpg" style="width: 600px; height: 987px;" /></a></p> <p>&nbsp;</p> <p><u><strong>VIX had its biggest monthly jump in history...</strong></u></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/08-overflow/20150831_EOD17.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/08-overflow/20150831_EOD17_0.jpg" style="width: 600px; height: 303px;" /></a></p> <p>&nbsp;</p> <p>For the month, it&#39;s been a wild ride!! but just look at how clustered the moves were...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/08-overflow/20150831_EOD11.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/08-overflow/20150831_EOD11_0.jpg" style="width: 600px; height: 386px;" /></a></p> <p>&nbsp;</p> <p>Finacials &amp; Enmergy and Healthcare (Biotech) were worst performers in August...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/08-overflow/20150831_EOD16.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/08-overflow/20150831_EOD16_0.jpg" style="width: 600px; height: 315px;" /></a></p> <p>&nbsp;</p> <p><strong>For all the excitment over FANG - August was a mixed bunch for them with FB and AMZN notably red...</strong></p> <p>With all the craziness in stocks, Treasury yields at the long-end ended the month practically unch... 2Y rose 8bps...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/08-overflow/20150831_EOD8.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/08-overflow/20150831_EOD8_0.jpg" style="width: 600px; height: 315px;" /></a></p> <p>&nbsp;</p> <p>With some more notable weakness today (which was also seen in Bunds)...note once again selling weas in US session, buying in Asia and Europe...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/08-overflow/20150831_EOD7.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/08-overflow/20150831_EOD7_0.jpg" style="width: 600px; height: 314px;" /></a></p> <p>&nbsp;</p> <p>The USD ended the day lower with some major swings in CAD...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/08-overflow/20150831_EOD9.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/08-overflow/20150831_EOD9_0.jpg" style="width: 600px; height: 317px;" /></a></p> <p>&nbsp;</p> <p>As August&#39;s USD Index drop was the biggest in 4 months...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/08-overflow/20150831_EOD10.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/08-overflow/20150831_EOD10_0.jpg" style="width: 600px; height: 314px;" /></a></p> <p>&nbsp;</p> <p>Commodities were insane today - led obviously by crude!</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/08-overflow/20150831_EOD6.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/08-overflow/20150831_EOD6_0.jpg" style="width: 600px; height: 311px;" /></a></p> <p>&nbsp;</p> <p>And on the month... perhaps most notably, the perfect recoupling of crude and gold on the month!!??</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/08-overflow/20150831_EOD4.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/08-overflow/20150831_EOD4_0.jpg" style="width: 600px; height: 307px;" /></a></p> <p>&nbsp;</p> <p>But we note that Gold (+3.5%) had its best month since January even as Silver dropped</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/08-overflow/20150831_EOD5.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/08-overflow/20150831_EOD5_0.jpg" style="width: 600px; height: 887px;" /></a></p> <p>&nbsp;</p> <p><strong>Finally - amid all the chaos in August, it appears there is a safe-haven... Gold outperforms</strong></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/08-overflow/20150831_EOD18.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/08-overflow/20150831_EOD18_0.jpg" style="width: 600px; height: 308px;" /></a></p> <p>&nbsp;</p> <p><em>Charts: Bloomberg</em></p> <p><strong>Bonus Chart: We&#39;re gonna need Moar QE...</strong></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/08-overflow/20150831_EOD21.jpg"><strong><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/08-overflow/20150831_EOD21_0.jpg" style="width: 600px; height: 300px;" /></strong></a></p> http://www.zerohedge.com/news/2015-08-31/stocks-suffer-biggest-montly-drop-five-years-oil-spike-most-1990#comments Crude Crude Oil NASDAQ NYMEX Recoupling Volatility Mon, 31 Aug 2015 22:50:22 +0000 Tyler Durden 512661 at http://www.zerohedge.com Preparing For A Potential Economic Collapse In October http://www.zerohedge.com/news/2015-08-31/preparing-potential-economic-collapse-october <p><a href="http://www.internationalman.com/articles/preparing-for-a-potential-economic-collapse-in-october"><em>Submitted by Jeff Thomas via InternationalMan.com,</em></a></p> <p>There&rsquo;s no question that the world economy has been shaky at best since the crash of 2008.</p> <p>Yet, politicians, central banks, et al., have, since then, regularly announced that <strong><em>&ldquo;things are picking up.&rdquo; </em></strong>One year, we hear an announcement of &ldquo;green shoots.&rdquo; The next year, we hear an announcement of &ldquo;shovel-ready jobs.&rdquo;</p> <p><strong>And yet, year after year, we witness the continued economic slump.</strong> Few dare call it a depression, but, if a depression can be defined as &ldquo;a period of time in which most people&rsquo;s standard of living drops significantly,&rdquo; a depression it is.</p> <p>Many people are surprised that no amount of stimulus and low interest rates have resulted in creating more jobs or more productivity. Were they a bit more cognizant of the simple, understandable principles of classical economics (as opposed to the complex theoretical principles of Keynesian invention), they&rsquo;d recognise that, <strong><span style="text-decoration: underline;">when debt reaches the level that it cannot be repaid, a major re-set of some sort must take place.</span></strong></p> <p>The major economies of the world have reached and exceeded that point and the debt problem is no mere anomaly that can be papered over. It is, instead, <em>systemic</em>. There must be a major forgiveness of debt, a default, or an <a href="http://www.internationalman.com/articles/economic-collapse" target="_blank"><strong>economic collapse</strong></a>, or some combination of the three.</p> <p><strong>And so, those who recognise the inevitability of such an event have been storing their nuts away in preparation for an economic winter.</strong></p> <p>Those of us who warned of the 2008 crash in advance had been regarded as economic &ldquo;Chicken Littles.&rdquo; After the crash, we were largely resented as having made a &ldquo;lucky guess.&rdquo; Following that time, a moderate amount of credence has been allowed us, as we&rsquo;ve recommended investments in <a href="http://www.internationalman.com/articles/why-foreign-real-estate-is-an-internationalization-grand-slam" target="_blank"><strong>real estate</strong></a> and <a href="http://www.internationalman.com/articles/offshore-gold-storage" target="_blank"><strong>precious metals</strong></a> (outside of those jurisdictions that are most at risk). However, since the Great Gold Correction (2011-2015), that begrudging credence has worn away and been replaced with renewed contempt.</p> <p><strong>To the naysayers, the 2001-2011 gold boom has been relegated to the investment dustbin and, to most punters, gold is clearly &ldquo;over.&rdquo;</strong></p> <p>Just as importantly, the most significant events of the &ldquo;Greater Depression&rdquo; that we had been predicting have clearly not yet come to pass. They&rsquo;re still ahead of us. And, in this, we must confess that those of us who made this prediction did unquestionably believe that it would have taken place by now. We were wrong.</p> <p><strong>Or at least we were wrong on the timing, but most of us still believe, more than ever, in the <em>inevitability </em>of a collapse (again, this is true because the problem is <em>systemic,</em> not <em>symptomatic</em>).</strong></p> <p>All of the above is a preface of the coming of October, a month which, historically, has seen more than its fair share of negative economic events.</p> <p><u><strong>This time around, there are warning signs aplenty that, sometime around October of this year, we shall see a number of black swans on the wing, headed our way.</strong></u></p> <p>The greatest of these is that, once every five years, the International Monetary Fund (IMF) renews its membership structure (SDR quota, governors, and voting power.) This is significantly in question this year, as <a href="http://www.internationalman.com/articles/tag/china" target="_blank"><strong>China</strong></a> vies for a larger chair at the table.</p> <p><strong>Although China surpassed the US in 2014 as the world&rsquo;s largest manufacturing economy, it still has less than one-quarter of the voting power of the US and even has less than France or Germany. </strong>To say the IMF has been dragging its feet on a rebalancing of IMF member voting would be an understatement.</p> <p>In fairness, China should expect to be allotted significantly greater voting power in October. But we are discussing the IMF, which has never been known for fairness. It has, indeed, been infamous for its duplicity and self-serving inclinations (having been created at Bretton Woods in 1944 to allow the US hegemony over the world economy, its primary purpose is to assure US dominance).</p> <p><strong>Still, it would be difficult to imagine how the IMF could avoid a shift in its voting (diminishing the US and increasing China). Anything the IMF did at this point to derail the re-balance would be highly suspect.</strong></p> <p>And yet, that&rsquo;s exactly what the IMF has done. It has publicly questioned whether 2015 is the right year for the review. However, even it is worried enough about its presumptuousness that, rather than announce a delay, it has announced the <em>consideration</em> of a delay. It has run the possible delay up the flagpole to see whether it will fly or be torn down.</p> <p><strong>Clearly the IMF feels it&rsquo;s on shaky ground with its proposal. </strong>And it should be. In recent years, it has arrogantly pushed China away from the IMF table time after time, so the Chinese have taken matters into their own hands. They&rsquo;ve created their own international development bank, their own worldwide cable communication system, and even their own SWIFT system.</p> <p><strong>Very soon, they&rsquo;ll have the ability to run their own worldwide economic system, <em>independent</em> of the US/EU/IMF system.</strong> Early on, many of the world&rsquo;s governments recognised the future opportunities that this would bring to the world. First, <a href="http://www.internationalman.com/articles/tag/russia" target="_blank"><strong>Russia</strong></a> and the countries of Southeast Asia signed on, then South America, Africa, and, finally, some EU countries reached agreements with China.</p> <p>The IMF is in a jam, no member country more so than the US. If, in October, it allows China greater voting power, it will cast in stone China&rsquo;s increased economic influence over the world. However, if the IMF chooses to put off China another year, China may move ahead with its own economic system.</p> <h3><span style="text-decoration: underline;"><strong>Buying Time</strong></span></h3> <p><strong>There can be no doubt that the IMF is hoping to buy time.</strong> The question is whether it merely wishes to buy time to delay the inevitable, or whether it feels it has a card up its sleeve that it might be able to play, should it gain another year.</p> <p>If the US is arrogant (as it generally is), it&rsquo;ll employ its customary bravado and, in so doing, may well cause the Chinese to play hardball and dump some of their US Treasuries and/or dollars.</p> <p>In considering the above, the US/IMF may feel that China is in the throes of a major correction at present and cannot retaliate without feeling the pain itself. They&rsquo;d be correct. And so, the Chinese, known for being patient and choosing their moment carefully, may choose to swallow the IMF delay quietly, then, when they&rsquo;ve dumped some of their baggage and possibly rebounded in 2016, make an even firmer stand than they could now make. For that reason, US arrogance now would create a very short-lived gain, and a very foolish one.</p> <p><strong>So, what does this mean to the investor?</strong> It suggests that, once again in history, <em><strong>October promises to be a month when great economic change may well take place.</strong></em> When dramatic change looms, it&rsquo;s best to keep your powder dry, whilst keeping an eye open for opportunities as soon as events reveal the future. Until then, nut&ndash;gathering serves to provide an insurance policy against unpleasant economic surprises.</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="141" height="151" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20150831_depr.jpg?1441055942" /> </div> </div> </div> http://www.zerohedge.com/news/2015-08-31/preparing-potential-economic-collapse-october#comments Black Swans Central Banks China default France Germany Green Shoots International Monetary Fund Precious Metals Real estate SWIFT Mon, 31 Aug 2015 22:30:00 +0000 Tyler Durden 512667 at http://www.zerohedge.com Recession Odds Surge To 47%, Highest Since 2011 http://www.zerohedge.com/news/2015-08-31/recession-odds-surge-47-highest-2011 <p>Once upon a time, when the market actually discounted the future path of the economy instead of being a <a href="http://www.zerohedge.com/news/2015-08-25/its-not-us-economy-its-stocks">lagging indicator to not only underlying macroeconomic conditions</a>... </p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/08-overflow/20150825_eco.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/08-overflow/20150825_eco_0.jpg" width="600" height="314" /></a></p> <p>&nbsp;</p> <p>... or simply frontrunning central bank policy, economists would use it to anticipate key economic inflection points such as recessions and recoveries. Which is also why the recent correction in the market has spooked all those conventional economists who still believe there is a "market" instead of a centrally-planned "wealth effect" policy tool, whose only purposes is to react to every increase in the global $14 trillion central bank balance sheet.</p> <p>It is these economists, which also include the academics on the Fed's staff, who took one look at the tumble in stocks in the past two weeks and decided that a rate hike may not be such a hot idea after all. Because if the market is sliding, it surely is telegraphing that not all is well with the economy and therefore tightening financial conditions would be suicidal for any central bank. </p> <p>So assuming that after being wrong for 7 years about everything, economists are actually right about the market still having <strong>some </strong>discounting abilities left, what then is the market telegraphing? The answer, according to the Bank of America: <strong>the biggest surge in recessionary odds since 2011, which over the past few days have nearly hit a 50% probability of an economic slowdown</strong>.</p> <p>BofA explains:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong>Recession probability from stock prices shoots higher</strong>: The more interesting and difficult question is whether the equity correction is signaling a deeper economic malaise.<em><strong> Equity prices can be leading indicators of </strong><strong>recession. </strong></em>Indeed, Michael Hanson has developed a variety of probit models that use financial variables to estimate the risk of a recession. According to his model, <strong>the 15% annualized drop in the S&amp;P500 index (over the past six months) is signaling a 47% risk of recession starting sometime in the next 12 months. </strong>That sounds fairly grim; however, we wouldn’t take the signal too literally. As Paul Samuelson famously quipped in the late 1960s: “The stock market has called nine of the last five recessions.” Our probit model sends a lot of false signals. For example, in 2011 the model saw a 59% chance of recession (which we argued strongly against at the time).</p> </blockquote> <p>Here is the chart that BofA has created to track coincident recession odds based on market signals:</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2015/08/recession%20odds.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2015/08/recession%20odds_0.jpg" width="600" height="463" /></a></p> <p>Actually BofA is dead wrong about 2011 being a false positive: the only thing that <em><strong>delayed</strong></em> the 2011 recession, was the Fed's launch of Operation Twist in September of that year, coupled with the Fed's liquidity swap line bailout of Europe in November, and the commencement of the ECB's massive €1 trillion LTRO in December 2011. It was this liquidity avalanche that delayed the effects of what was a&nbsp; guaranteed recession, one <a href="https://www.businesscycle.com/ecri-reports-indexes/report-summary-details/u-s-economy-tipping-into-recession">which even the ECRI called. </a></p> <p>Delayed but not eliminated, and with every passing year that the world's central banks have kicked the can of the global business cycle's down phase, the more acute it will be when it finally launches. </p> <p>Finally, unlike 2011 this time not only is the Fed not planning any pro-cyclical liquidity interventions, but Yellen is actively considering tightening monetary conditions as soon as September with the start of the first rate hiking cycle in nearly a decade. </p> <p>Which is why while the market may or may not be correctly discounting a recession this time, or anything else for that matter, an economic recession is precisely what is coming, just because every single time when financial conditions were as adverse as they are now, the Fed would proceed to bailout if not the economy, then certainly the "market." </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="627" height="484" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/recession%20odds.jpg?1441056557" /> </div> </div> </div> http://www.zerohedge.com/news/2015-08-31/recession-odds-surge-47-highest-2011#comments Bank of America Bank of America Central Banks LTRO Paul Samuelson Recession Mon, 31 Aug 2015 21:59:57 +0000 Tyler Durden 512668 at http://www.zerohedge.com Sep 1 - Global Stocks Extend On Rout http://www.zerohedge.com/news/2015-08-31/sep-1-global-stocks-extend-rout <p class="MsoNormal" style="box-sizing: border-box; margin: 0px 0px 10px; color: #333333; font-family: 'Helvetica Neue', Helvetica, Arial, sans-serif; font-size: 14px; line-height: 1;"><span style="color: #1e439a; font-weight: bold; line-height: 1;"><a href="http://www.financialjuice.com/zerohedge">Follow The Market Madness with Voice and Text on FinancialJuice</a></span></p> <p class="MsoNormal" style="box-sizing: border-box; margin: 0px 0px 10px; color: #333333; font-family: 'Helvetica Neue', Helvetica, Arial, sans-serif; font-size: 14px; line-height: 1;"><strong style="box-sizing: border-box;">EMOTION MOVING MARKETS NOW:<span style="box-sizing: border-box; color: #cc0000;">&nbsp;14/100 EXTREME FEAR</span></strong></p> <p class="MsoNormal" style="box-sizing: border-box; margin: 0px 0px 10px; color: #333333; font-family: 'Helvetica Neue', Helvetica, Arial, sans-serif; font-size: 14px; line-height: 1;"><strong style="box-sizing: border-box;">PREVIOUS CLOSE:<span style="box-sizing: border-box; color: #c00000;">&nbsp;14/</span><span style="box-sizing: border-box; color: #cc0000;">100 EXTREME FEAR</span></strong></p> <p class="MsoNormal" style="box-sizing: border-box; margin: 0px 0px 10px; color: #333333; font-family: 'Helvetica Neue', Helvetica, Arial, sans-serif; font-size: 14px; line-height: 1;"><strong style="box-sizing: border-box;">ONE WEEK AGO:&nbsp;<span style="box-sizing: border-box; color: #cc0000;">3/100 EXTREME FEAR</span></strong></p> <p class="MsoNormal" style="box-sizing: border-box; margin: 0px 0px 10px; color: #333333; font-family: 'Helvetica Neue', Helvetica, Arial, sans-serif; font-size: 14px; line-height: 1;"><strong style="box-sizing: border-box;">ONE MONTH AGO:&nbsp;<span style="box-sizing: border-box; color: #c00000;">20/100&nbsp;EXTREME&nbsp;</span><span style="box-sizing: border-box; color: #cc0000;">FEAR</span></strong></p> <p class="MsoNormal" style="box-sizing: border-box; margin: 0px 0px 10px; color: #333333; font-family: 'Helvetica Neue', Helvetica, Arial, sans-serif; font-size: 14px; line-height: 1;"><strong style="box-sizing: border-box;">ONE YEAR AGO:<span style="box-sizing: border-box; color: #cc0000;">&nbsp;42/100 FEAR</span></strong></p> <p class="MsoNormal" style="box-sizing: border-box; margin: 0px 0px 10px; color: #333333; font-family: 'Helvetica Neue', Helvetica, Arial, sans-serif; font-size: 14px; line-height: 1;"><strong style="box-sizing: border-box;">Put and Call Options:<span style="box-sizing: border-box; color: #c00000;">&nbsp;EXTREME FEAR&nbsp;</span></strong>During the last five trading days, volume in put options has lagged volume in call options by 26.67% as investors make bullish bets in their portfolios. However, this is still among the highest levels of put buying seen during the last two years, indicating extreme fear on the part of investors.</p> <p class="MsoNormal" style="box-sizing: border-box; margin: 0px 0px 10px; color: #333333; font-family: 'Helvetica Neue', Helvetica, Arial, sans-serif; font-size: 14px; line-height: 1;"><strong style="box-sizing: border-box;">Market Volatility:<span style="box-sizing: border-box; color: #595959;">&nbsp;</span><span style="box-sizing: border-box; color: #c00000;">FEAR&nbsp;</span></strong>The CBOE Volatility Index (VIX) is at 28.43, 71.89% above its 50-day moving average and indicates that investors are concerned about the near-term values of their portfolios.</p> <p class="MsoNormal" style="box-sizing: border-box; margin: 0px 0px 10px; color: #333333; font-family: 'Helvetica Neue', Helvetica, Arial, sans-serif; font-size: 14px; line-height: 1;"><strong style="box-sizing: border-box;">Stock Price Strength:&nbsp;<span style="box-sizing: border-box; color: #cc0000;">EXTREME FEAR</span></strong><span style="box-sizing: border-box; color: #cc0000;">&nbsp;</span>The number of stocks hitting 52-week lows is slightly greater than the number hitting highs and is at the lower end of its range, indicating extreme fear.</p> <p class="MsoNormal" style="box-sizing: border-box; margin: 0px 0px 10px; color: #333333; font-family: 'Helvetica Neue', Helvetica, Arial, sans-serif; font-size: 14px; line-height: 1;"><strong style="box-sizing: border-box;">PIVOT POINTS</strong></p> <p class="MsoNormal" style="box-sizing: border-box; margin: 0px 0px 10px; color: #333333; font-family: 'Helvetica Neue', Helvetica, Arial, sans-serif; font-size: 14px; line-height: 1;"><a href="https://rl110.infusionsoft.com/app/linkClick/6731/f08ed9caa6be07d3/2926455/e098c24b164bb9de" target="_blank" style="box-sizing: border-box; color: #428bca; background: transparent;"><strong style="box-sizing: border-box;">EURUSD</strong></a><strong style="box-sizing: border-box;">&nbsp;|&nbsp;</strong><a href="https://rl110.infusionsoft.com/app/linkClick/6733/f120db28af398c8c/2926455/e098c24b164bb9de" target="_blank" style="box-sizing: border-box; color: #428bca; background: transparent;"><strong style="box-sizing: border-box;">GBPUSD</strong></a><strong style="box-sizing: border-box;">&nbsp;|&nbsp;</strong><a href="https://rl110.infusionsoft.com/app/linkClick/6735/999299aca203c582/2926455/e098c24b164bb9de" target="_blank" style="box-sizing: border-box; color: #428bca; background: transparent;"><strong style="box-sizing: border-box;">USDJPY</strong></a><strong style="box-sizing: border-box;">&nbsp;|&nbsp;</strong><a href="https://rl110.infusionsoft.com/app/linkClick/6737/8f421bc417a3a5b6/2926455/e098c24b164bb9de" target="_blank" style="box-sizing: border-box; color: #428bca; background: transparent;"><strong style="box-sizing: border-box;">USDCAD</strong></a><strong style="box-sizing: border-box;">&nbsp;|&nbsp;</strong><a href="https://rl110.infusionsoft.com/app/linkClick/6739/6eb221c2468c90ac/2926455/e098c24b164bb9de" target="_blank" style="box-sizing: border-box; color: #428bca; background: transparent;"><strong style="box-sizing: border-box;">AUDUSD</strong></a><strong style="box-sizing: border-box;">&nbsp;|&nbsp;</strong><a href="https://rl110.infusionsoft.com/app/linkClick/6741/576b2f73a6bd51cb/2926455/e098c24b164bb9de" target="_blank" style="box-sizing: border-box; color: #428bca; background: transparent;"><strong style="box-sizing: border-box;">EURJPY</strong></a><strong style="box-sizing: border-box;">&nbsp;|&nbsp;</strong><a href="https://rl110.infusionsoft.com/app/linkClick/6743/b1c8460eb6a03907/2926455/e098c24b164bb9de" target="_blank" style="box-sizing: border-box; color: #428bca; background: transparent;"><strong style="box-sizing: border-box;">EURCHF</strong></a><strong style="box-sizing: border-box;">&nbsp;|&nbsp;</strong><a href="https://rl110.infusionsoft.com/app/linkClick/6745/27de57a2ae2375ce/2926455/e098c24b164bb9de" target="_blank" style="box-sizing: border-box; color: #428bca; background: transparent;"><strong style="box-sizing: border-box;">EURGBP</strong></a><strong style="box-sizing: border-box;">|&nbsp;</strong><a href="https://rl110.infusionsoft.com/app/linkClick/6747/e9ca834f9e67b821/2926455/e098c24b164bb9de" target="_blank" style="box-sizing: border-box; color: #428bca; background: transparent;"><strong style="box-sizing: border-box;">GBPJPY</strong></a><strong style="box-sizing: border-box;">&nbsp;|&nbsp;</strong><a href="https://rl110.infusionsoft.com/app/linkClick/6749/5a3026b02152a1c2/2926455/e098c24b164bb9de" target="_blank" style="box-sizing: border-box; color: #428bca; background: transparent;"><strong style="box-sizing: border-box;">NZDUSD</strong></a><strong style="box-sizing: border-box;">&nbsp;|&nbsp;</strong><a href="https://rl110.infusionsoft.com/app/linkClick/6751/8c3e5211896db7bd/2926455/e098c24b164bb9de" target="_blank" style="box-sizing: border-box; color: #428bca; background: transparent;"><strong style="box-sizing: border-box;">USDCHF</strong></a><strong style="box-sizing: border-box;">&nbsp;|&nbsp;</strong><a href="https://rl110.infusionsoft.com/app/linkClick/6753/7b152ee345958505/2926455/e098c24b164bb9de" target="_blank" style="box-sizing: border-box; color: #428bca; background: transparent;"><strong style="box-sizing: border-box;">EURAUD</strong></a><strong style="box-sizing: border-box;">&nbsp;|&nbsp;</strong><a href="https://rl110.infusionsoft.com/app/linkClick/6755/148ecdbf46ec01c7/2926455/e098c24b164bb9de" target="_blank" style="box-sizing: border-box; color: #428bca; background: transparent;"><strong style="box-sizing: border-box;">AUDJPY&nbsp;<br style="box-sizing: border-box;" /></strong></a><strong style="box-sizing: border-box;">&nbsp;</strong></p> <p class="MsoNormal" style="box-sizing: border-box; margin: 0px 0px 10px; color: #333333; font-family: 'Helvetica Neue', Helvetica, Arial, sans-serif; font-size: 14px; line-height: 1;"><a href="https://rl110.infusionsoft.com/app/linkClick/6757/2c2c377561de5584/2926455/e098c24b164bb9de" target="_blank" style="box-sizing: border-box; color: #428bca; background: transparent;"><strong style="box-sizing: border-box;">S&amp;P 500 (ES)</strong></a><strong style="box-sizing: border-box;">&nbsp;|&nbsp;</strong><a href="https://rl110.infusionsoft.com/app/linkClick/6759/0ccac59b63eff0c3/2926455/e098c24b164bb9de" target="_blank" style="box-sizing: border-box; color: #428bca; background: transparent;"><strong style="box-sizing: border-box;">NASDAQ 100 (NQ)</strong></a><strong style="box-sizing: border-box;">&nbsp;|&nbsp;</strong><a href="https://rl110.infusionsoft.com/app/linkClick/6761/e2e094b5c3818c0b/2926455/e098c24b164bb9de" target="_blank" style="box-sizing: border-box; color: #428bca; background: transparent;"><strong style="box-sizing: border-box;">DOW 30 (YM)</strong></a><strong style="box-sizing: border-box;">&nbsp;|</strong><a href="https://rl110.infusionsoft.com/app/linkClick/6763/846e85b92b377ceb/2926455/e098c24b164bb9de" target="_blank" style="box-sizing: border-box; color: #428bca; background: transparent;"><strong style="box-sizing: border-box;">&nbsp;RUSSELL 2000 (TF)&nbsp;</strong></a><strong style="box-sizing: border-box;">|&nbsp;</strong><a href="https://rl110.infusionsoft.com/app/linkClick/6765/9da50391ef71dbdc/2926455/e098c24b164bb9de" target="_blank" style="box-sizing: border-box; color: #428bca; background: transparent;"><strong style="box-sizing: border-box;">Euro (6E)</strong></a><strong style="box-sizing: border-box;">&nbsp;|</strong><a href="https://rl110.infusionsoft.com/app/linkClick/6767/411ca3be4f5d974b/2926455/e098c24b164bb9de" target="_blank" style="box-sizing: border-box; color: #428bca; background: transparent;"><strong style="box-sizing: border-box;">Pound (6B)</strong></a><strong style="box-sizing: border-box;">&nbsp;</strong></p> <p class="MsoNormal" style="box-sizing: border-box; margin: 0px 0px 10px; color: #333333; font-family: 'Helvetica Neue', Helvetica, Arial, sans-serif; font-size: 14px; line-height: 1;"><a href="https://rl110.infusionsoft.com/app/linkClick/6769/5c851955205b7510/2926455/e098c24b164bb9de" target="_blank" style="box-sizing: border-box; color: #428bca; background: transparent;"><strong style="box-sizing: border-box;">EUROSTOXX 50 (FESX)</strong></a><strong style="box-sizing: border-box;">&nbsp;|&nbsp;</strong><a href="https://rl110.infusionsoft.com/app/linkClick/6771/1900f5166e7adaf9/2926455/e098c24b164bb9de" target="_blank" style="box-sizing: border-box; color: #428bca; background: transparent;"><strong style="box-sizing: border-box;">DAX 30 (FDAX)</strong></a><strong style="box-sizing: border-box;">&nbsp;|&nbsp;</strong><a href="https://rl110.infusionsoft.com/app/linkClick/6773/add24f4bf6a97f86/2926455/e098c24b164bb9de" target="_blank" style="box-sizing: border-box; color: #428bca; background: transparent;"><strong style="box-sizing: border-box;">BOBL (FGBM)</strong></a><strong style="box-sizing: border-box;">&nbsp;|&nbsp;</strong><a href="https://rl110.infusionsoft.com/app/linkClick/6775/af252fffaa0a35a1/2926455/e098c24b164bb9de" target="_blank" style="box-sizing: border-box; color: #428bca; background: transparent;"><strong style="box-sizing: border-box;">SCHATZ (FGBS)</strong></a><strong style="box-sizing: border-box;">&nbsp;|&nbsp;</strong><a href="https://rl110.infusionsoft.com/app/linkClick/6777/c074f87c4a16713e/2926455/e098c24b164bb9de" target="_blank" style="box-sizing: border-box; color: #428bca; background: transparent;"><strong style="box-sizing: border-box;">BUND (FGBL)</strong></a><strong style="box-sizing: border-box;">&nbsp;</strong></p> <p class="MsoNormal" style="box-sizing: border-box; margin: 0px 0px 10px; color: #333333; font-family: 'Helvetica Neue', Helvetica, Arial, sans-serif; font-size: 14px; line-height: 1;"><a href="https://rl110.infusionsoft.com/app/linkClick/6779/79bfad437763a966/2926455/e098c24b164bb9de" target="_blank" style="box-sizing: border-box; color: #428bca; background: transparent;"><strong style="box-sizing: border-box;">CRUDE OIL (CL)</strong></a><strong style="box-sizing: border-box;">&nbsp;|&nbsp;</strong><a href="https://rl110.infusionsoft.com/app/linkClick/6781/4dbf8a4569838f41/2926455/e098c24b164bb9de" target="_blank" style="box-sizing: border-box; color: #428bca; background: transparent;"><strong style="box-sizing: border-box;">GOLD (GC)</strong></a><span class="MsoHyperlink" style="box-sizing: border-box;"><strong style="box-sizing: border-box;"></strong></span></p> <p class="MsoNormal" style="box-sizing: border-box; margin: 0px 0px 10px; color: #333333; font-family: 'Helvetica Neue', Helvetica, Arial, sans-serif; font-size: 14px; line-height: 1;"><strong style="box-sizing: border-box;">&nbsp;</strong></p> <p class="MsoNormal" style="box-sizing: border-box; margin: 0px 0px 10px; color: #333333; font-family: 'Helvetica Neue', Helvetica, Arial, sans-serif; font-size: 14px; line-height: 1;"><strong style="box-sizing: border-box;">MEME OF THE DAY&nbsp;–&nbsp;</strong><a href="http://www.financelol.com/view.aspx?c=c/635762772862959999.jpeg" style="box-sizing: border-box; color: #428bca; background: transparent;"><strong style="box-sizing: border-box;">I JUST LOVE MY NEW SWEATER</strong></a><strong style="box-sizing: border-box;"></strong></p> <p class="MsoNormal" style="box-sizing: border-box; margin: 0px 0px 10px; color: #333333; font-family: 'Helvetica Neue', Helvetica, Arial, sans-serif; font-size: 14px; line-height: 1;"><strong style="box-sizing: border-box;">&nbsp;</strong></p> <p class="MsoNormal" style="box-sizing: border-box; margin: 0px 0px 10px; color: #333333; font-family: 'Helvetica Neue', Helvetica, Arial, sans-serif; font-size: 14px; line-height: 1;"><strong style="box-sizing: border-box;"><span style="box-sizing: border-box; color: #c00000;">UNUSUAL&nbsp;</span>ACTIVITY</strong></p> <p class="MsoNormal" style="box-sizing: border-box; margin: 0px 0px 10px; color: #333333; font-family: 'Helvetica Neue', Helvetica, Arial, sans-serif; font-size: 14px; line-height: 1;"><strong style="box-sizing: border-box;"><span style="box-sizing: border-box;" lang="EN-US">MU</span></strong><span style="box-sizing: border-box;" lang="EN-US">&nbsp;SEP 20 CALL ACTIVITY @$.11 on OFFER 2400+ Contracts</span></p> <p class="MsoNormal" style="box-sizing: border-box; margin: 0px 0px 10px; color: #333333; font-family: 'Helvetica Neue', Helvetica, Arial, sans-serif; font-size: 14px; line-height: 1;"><strong style="box-sizing: border-box;"><span style="box-sizing: border-box;" lang="EN-US">FAST</span></strong><span style="box-sizing: border-box;" lang="EN-US">&nbsp;SEP 38 PUT ACTIVITY ON OFFER @$.70 2500+ Contracts</span></p> <p class="MsoNormal" style="box-sizing: border-box; margin: 0px 0px 10px; color: #333333; font-family: 'Helvetica Neue', Helvetica, Arial, sans-serif; font-size: 14px; line-height: 1;"><strong style="box-sizing: border-box;"><span style="box-sizing: border-box;" lang="EN-US">TWTR</span></strong><span style="box-sizing: border-box;" lang="EN-US">&nbsp;DEC 50 CALLS 1500+ @$.15 .. also activity in the DEC 40 calls</span></p> <p class="MsoNormal" style="box-sizing: border-box; margin: 0px 0px 10px; color: #333333; font-family: 'Helvetica Neue', Helvetica, Arial, sans-serif; font-size: 14px; line-height: 1;"><strong style="box-sizing: border-box;"><span style="box-sizing: border-box;" lang="EN-US">APLE</span></strong><span style="box-sizing: border-box;" lang="EN-US">&nbsp;EVP, Chief Legal Counsel P&nbsp;&nbsp;&nbsp; 5,592&nbsp; A&nbsp; $ 17.88</span></p> <p class="MsoNormal" style="box-sizing: border-box; margin: 0px 0px 10px; color: #333333; font-family: 'Helvetica Neue', Helvetica, Arial, sans-serif; font-size: 14px; line-height: 1;"><strong style="box-sizing: border-box;"><span style="box-sizing: border-box;" lang="EN-US">MTZ</span></strong><span style="box-sizing: border-box;" lang="EN-US">&nbsp;10% Owner Purchase 10,000 A $15.98 and Purchase 5,000 A $15.63</span></p> <p class="MsoNormal" style="box-sizing: border-box; margin: 0px 0px 10px; color: #333333; font-family: 'Helvetica Neue', Helvetica, Arial, sans-serif; font-size: 14px; line-height: 1;"><a href="http://www.unusualactivity.net/" style="box-sizing: border-box; color: #428bca; background: transparent;"><strong style="box-sizing: border-box;">More Unusual Activity…</strong></a><strong style="box-sizing: border-box;"></strong></p> <p class="MsoNormal" style="box-sizing: border-box; margin: 0px 0px 10px; color: #333333; font-family: 'Helvetica Neue', Helvetica, Arial, sans-serif; font-size: 14px; line-height: 1;"><strong style="box-sizing: border-box;">&nbsp;</strong></p> <p class="MsoNormal" style="box-sizing: border-box; margin: 0px 0px 10px; color: #333333; font-family: 'Helvetica Neue', Helvetica, Arial, sans-serif; font-size: 14px; line-height: 1;"><strong style="box-sizing: border-box;">HEADLINES</strong></p> <p class="MsoNormal" style="box-sizing: border-box; margin: 0px 0px 10px; color: #333333; font-family: 'Helvetica Neue', Helvetica, Arial, sans-serif; font-size: 14px; line-height: 1;">&nbsp;</p> <p class="MsoNormal" style="box-sizing: border-box; margin: 0px 0px 10px; color: #333333; font-family: 'Helvetica Neue', Helvetica, Arial, sans-serif; font-size: 14px; line-height: 1;">OIl Surges as OPEC Stands Ready To Talk Other Producers</p> <p class="MsoNormal" style="box-sizing: border-box; margin: 0px 0px 10px; color: #333333; font-family: 'Helvetica Neue', Helvetica, Arial, sans-serif; font-size: 14px; line-height: 1;">US EIA Reports Decline In Monthly Oil Output</p> <p class="MsoNormal" style="box-sizing: border-box; margin: 0px 0px 10px; color: #333333; font-family: 'Helvetica Neue', Helvetica, Arial, sans-serif; font-size: 14px; line-height: 1;">G20 Said To Not See Currency War As Major Issue</p> <p class="MsoNormal" style="box-sizing: border-box; margin: 0px 0px 10px; color: #333333; font-family: 'Helvetica Neue', Helvetica, Arial, sans-serif; font-size: 14px; line-height: 1;">US Chicago PMI (Aug): 54.4 (est. 54.5, prev. 54.7)</p> <p class="MsoNormal" style="box-sizing: border-box; margin: 0px 0px 10px; color: #333333; font-family: 'Helvetica Neue', Helvetica, Arial, sans-serif; font-size: 14px; line-height: 1;">US Dallas Fed Manufacturing Activity (Aug): -15.8 (est. -3.8, prev. -4.6)</p> <p class="MsoNormal" style="box-sizing: border-box; margin: 0px 0px 10px; color: #333333; font-family: 'Helvetica Neue', Helvetica, Arial, sans-serif; font-size: 14px; line-height: 1;">Global Stocks Extend On Rout Seen Through August</p> <p class="MsoNormal" style="box-sizing: border-box; margin: 0px 0px 10px; color: #333333; font-family: 'Helvetica Neue', Helvetica, Arial, sans-serif; font-size: 14px; line-height: 1;">Europe: stocks cap worst month since 2011 with drop</p> <p class="MsoNormal" style="box-sizing: border-box; margin: 0px 0px 10px; color: #333333; font-family: 'Helvetica Neue', Helvetica, Arial, sans-serif; font-size: 14px; line-height: 1;">Apple, Cisco Unveil Business Partnership</p> <p class="MsoNormal" style="box-sizing: border-box; margin: 0px 0px 10px; color: #333333; font-family: 'Helvetica Neue', Helvetica, Arial, sans-serif; font-size: 14px; line-height: 1;">Google, Sanofi join forces on Diabetes monitoring and treatment</p> <p class="MsoNormal" style="box-sizing: border-box; margin: 0px 0px 10px; color: #333333; font-family: 'Helvetica Neue', Helvetica, Arial, sans-serif; font-size: 14px; line-height: 1;">&nbsp;</p> <p class="MsoNormal" style="box-sizing: border-box; margin: 0px 0px 10px; color: #333333; font-family: 'Helvetica Neue', Helvetica, Arial, sans-serif; font-size: 14px; line-height: 1;"><strong style="box-sizing: border-box;">GOVERNMENTS/CENTRAL BANKS</strong></p> <p class="MsoNormal" style="box-sizing: border-box; margin: 0px 0px 10px; color: #333333; font-family: 'Helvetica Neue', Helvetica, Arial, sans-serif; font-size: 14px; line-height: 1;"><a href="http://www.livesquawk.com/#!members" target="_blank" style="box-sizing: border-box; color: #428bca; background: transparent;">G20 Said To Not See Currency War As Major Issue --BBG</a></p> <p class="MsoNormal" style="box-sizing: border-box; margin: 0px 0px 10px; color: #333333; font-family: 'Helvetica Neue', Helvetica, Arial, sans-serif; font-size: 14px; line-height: 1;"><a href="https://uk.news.yahoo.com/no-viable-%20%20alternative-qe-seen-130737868.html#uDq3Nhz" target="_blank" style="box-sizing: border-box; color: #428bca; background: transparent;">No 'viable' alternative to QE seen for the ECB --Reuters poll</a></p> <p class="MsoNormal" style="box-sizing: border-box; margin: 0px 0px 10px; color: #333333; font-family: 'Helvetica Neue', Helvetica, Arial, sans-serif; font-size: 14px; line-height: 1;"><a href="http://www.reuters.com/article/2015/08/31/us-eurozone-greece-bailout-finance-idUSKCN0R01EL20150831" target="_blank" style="box-sizing: border-box; color: #428bca; background: transparent;">Greece's 'invisible negotiator' may assuage bailout fears in election run-up --Rtrs</a></p> <p class="MsoNormal" style="box-sizing: border-box; margin: 0px 0px 10px; color: #333333; font-family: 'Helvetica Neue', Helvetica, Arial, sans-serif; font-size: 14px; line-height: 1;"><strong style="box-sizing: border-box;">FIXED INCOME</strong></p> <p class="MsoNormal" style="box-sizing: border-box; margin: 0px 0px 10px; color: #333333; font-family: 'Helvetica Neue', Helvetica, Arial, sans-serif; font-size: 14px; line-height: 1;"><a href="http://www.bloomberg.com/news/articles/2015-08-31/german-bonds-advance-with-inflation-acceleration-seen-elusive" target="_blank" style="box-sizing: border-box; color: #428bca; background: transparent;">German and US Bonds Drop as Inflation Expectations Show Recovery Sign --BBG</a></p> <p class="MsoNormal" style="box-sizing: border-box; margin: 0px 0px 10px; color: #333333; font-family: 'Helvetica Neue', Helvetica, Arial, sans-serif; font-size: 14px; line-height: 1;"><a href="https://www.ecb.europa.eu/mopo/implement/omo/html/index.en.html" target="_blank" style="box-sizing: border-box; color: #428bca; background: transparent;">ECB Bought EUR 1.937Bln Under Covered Bond Programme --ECB</a></p> <p class="MsoNormal" style="box-sizing: border-box; margin: 0px 0px 10px; color: #333333; font-family: 'Helvetica Neue', Helvetica, Arial, sans-serif; font-size: 14px; line-height: 1;"><a href="https://www.ecb.europa.eu/mopo/implement/omo/html/index.en.html" target="_blank" style="box-sizing: border-box; color: #428bca; background: transparent;">ECB Sold EUR 106mln under ABS purchase programme --ECB</a></p> <p class="MsoNormal" style="box-sizing: border-box; margin: 0px 0px 10px; color: #333333; font-family: 'Helvetica Neue', Helvetica, Arial, sans-serif; font-size: 14px; line-height: 1;"><a href="https://www.ecb.europa.eu/mopo/implement/omo/html/index.en.html" target="_blank" style="box-sizing: border-box; color: #428bca; background: transparent;">ECB Bought EUR 9.776bln under public sector purchase programme --ECB</a></p> <p class="MsoNormal" style="box-sizing: border-box; margin: 0px 0px 10px; color: #333333; font-family: 'Helvetica Neue', Helvetica, Arial, sans-serif; font-size: 14px; line-height: 1;"><strong style="box-sizing: border-box;">CURRENCIES, COMMODITIES, METALS</strong></p> <p class="MsoNormal" style="box-sizing: border-box; margin: 0px 0px 10px; color: #333333; font-family: 'Helvetica Neue', Helvetica, Arial, sans-serif; font-size: 14px; line-height: 1;"><a href="http://www.cnbc.com/2015/08/30/oil-prices-fall-on-profit-taking-rate-hike-uncertainty.html" target="_blank" style="box-sizing: border-box; color: #428bca; background: transparent;">Oil ends up 8.8%, at $49.20 a barrel; highest since July 21 --CNBC</a></p> <p class="MsoNormal" style="box-sizing: border-box; margin: 0px 0px 10px; color: #333333; font-family: 'Helvetica Neue', Helvetica, Arial, sans-serif; font-size: 14px; line-height: 1;"><a href="http://news.forexlive.com/!/opec-%20%20stands-ready-to-talk-to-other-producers-about-market---opec-publication-20150831" target="_blank" style="box-sizing: border-box; color: #428bca; background: transparent;">OPEC stands ready to talk to other producers about market --ForexLive</a></p> <p class="MsoNormal" style="box-sizing: border-box; margin: 0px 0px 10px; color: #333333; font-family: 'Helvetica Neue', Helvetica, Arial, sans-serif; font-size: 14px; line-height: 1;"><a href="http://www.marketwatch.com/story/oil-futures-spike-sharply-higher-after-eia-reports-monthly-output-%20%20declines-2015-08-31?mod=BreakingNewsMain" target="_blank" style="box-sizing: border-box; color: #428bca; background: transparent;">Oil futures spike sharply higher after EIA reports monthly output declines --MktWatch</a></p> <p class="MsoNormal" style="box-sizing: border-box; margin: 0px 0px 10px; color: #333333; font-family: 'Helvetica Neue', Helvetica, Arial, sans-serif; font-size: 14px; line-height: 1;"><a href="http://www.livesquawk.com/#!members" target="_blank" style="box-sizing: border-box; color: #428bca; background: transparent;">Citi: Crude price rally to be short-lived; prices should post another fresh leg lower - RTRS</a></p> <p class="MsoNormal" style="box-sizing: border-box; margin: 0px 0px 10px; color: #333333; font-family: 'Helvetica Neue', Helvetica, Arial, sans-serif; font-size: 14px; line-height: 1;"><a href="http://www.marketwatch.com/story/dollar-lower-against-yen-euro-amid-asia-stock-markets-slump-2015-08-31-11035722" target="_blank" style="box-sizing: border-box; color: #428bca; background: transparent;">USD: Euro, yen on track to post monthly gains vs. dollar --MarketWatch</a></p> <p class="MsoNormal" style="box-sizing: border-box; margin: 0px 0px 10px; color: #333333; font-family: 'Helvetica Neue', Helvetica, Arial, sans-serif; font-size: 14px; line-height: 1;"><a href="http://wbponline.com/Articles/View/52276/gbp-usd-unable-to-defend-gains-pound-slips-near-3-mth-low" target="_blank" style="box-sizing: border-box; color: #428bca; background: transparent;">GBP: Pound Slips Near 3-Mth Low Against USD --WBP</a></p> <p class="MsoNormal" style="box-sizing: border-box; margin: 0px 0px 10px; color: #333333; font-family: 'Helvetica Neue', Helvetica, Arial, sans-serif; font-size: 14px; line-height: 1;"><a href="http://wbponline.com/Articles/View/52277/eur-usd-buck-lacks-momentum-after-unremarkable-chicago-pmi" target="_blank" style="box-sizing: border-box; color: #428bca; background: transparent;">EUR: Buck Lacks Momentum After Unremarkable Chicago PMI --WBP</a></p> <p class="MsoNormal" style="box-sizing: border-box; margin: 0px 0px 10px; color: #333333; font-family: 'Helvetica Neue', Helvetica, Arial, sans-serif; font-size: 14px; line-height: 1;"><a href="http://wbponline.com/Articles/View/52275/usd-jpy-dollar-pares-morning-losses-amid-momentum-struggle" target="_blank" style="box-sizing: border-box; color: #428bca; background: transparent;">JPY: Dollar Pares Morning Losses Amid Momentum Struggle --WBP</a></p> <p class="MsoNormal" style="box-sizing: border-box; margin: 0px 0px 10px; color: #333333; font-family: 'Helvetica Neue', Helvetica, Arial, sans-serif; font-size: 14px; line-height: 1;"><a href="http://www.wsj.com/articles/gold-loses-some-%20%20luster-as-fed-decision-looms-1441016331" target="_blank" style="box-sizing: border-box; color: #428bca; background: transparent;">Gold Prices Fall as Traders Mull U.S. Monetary Policy --WSJ</a></p> <p class="MsoNormal" style="box-sizing: border-box; margin: 0px 0px 10px; color: #333333; font-family: 'Helvetica Neue', Helvetica, Arial, sans-serif; font-size: 14px; line-height: 1;"><strong style="box-sizing: border-box;">EQUITIES</strong></p> <p class="MsoNormal" style="box-sizing: border-box; margin: 0px 0px 10px; color: #333333; font-family: 'Helvetica Neue', Helvetica, Arial, sans-serif; font-size: 14px; line-height: 1;"><a href="http://www.bloomberg.com/news/articles/2015-08-30/stock-futures-drop-yen-rallies-after-fischer-talks-up-inflation" target="_blank" style="box-sizing: border-box; color: #428bca; background: transparent;">Global Stocks Extend August Rout--BBG</a></p> <p class="MsoNormal" style="box-sizing: border-box; margin: 0px 0px 10px; color: #333333; font-family: 'Helvetica Neue', Helvetica, Arial, sans-serif; font-size: 14px; line-height: 1;"><a href="https://next.ft.com/9ef92a4b-be26-3c88-b763-%20%206cd4dfe3817a" target="_blank" style="box-sizing: border-box; color: #428bca; background: transparent;">Europe: stocks cap worst month since '11 with a drop --FT</a></p> <p class="MsoNormal" style="box-sizing: border-box; margin: 0px 0px 10px; color: #333333; font-family: 'Helvetica Neue', Helvetica, Arial, sans-serif; font-size: 14px; line-height: 1;"><a href="http://uk.reuters.com/article/2015/08/31/uk-china-funds-idUKKCN0R00E820150831" target="_blank" style="box-sizing: border-box; color: #428bca; background: transparent;">China funds cut equity allocations to lowest on record- Reuters Poll</a></p> <p class="MsoNormal" style="box-sizing: border-box; margin: 0px 0px 10px; color: #333333; font-family: 'Helvetica Neue', Helvetica, Arial, sans-serif; font-size: 14px; line-height: 1;"><a href="http://www.marketwatch.com/story/google-sanofi-join-forces-on-diabetes-monitoring-and-treatment-2015-08-%20%2031" target="_blank" style="box-sizing: border-box; color: #428bca; background: transparent;">Google, Sanofi join forces on Diabetes monitoring and treatment --MktWatch</a></p> <p class="MsoNormal" style="box-sizing: border-box; margin: 0px 0px 10px; color: #333333; font-family: 'Helvetica Neue', Helvetica, Arial, sans-serif; font-size: 14px; line-height: 1;"><a href="http://www.wsj.com/articles/apple-cisco-unveil-business-partnership-1441044139" target="_blank" style="box-sizing: border-box; color: #428bca; background: transparent;">Apple, Cisco Unveil Business Partnership --WSJ</a></p> <p class="MsoNormal" style="box-sizing: border-box; margin: 0px 0px 10px; color: #333333; font-family: 'Helvetica Neue', Helvetica, Arial, sans-serif; font-size: 14px; line-height: 1;"><a href="http://www.marketwatch.com/story/netflix-%20%20passes-on-epix-content-deal-hulu-steps-in-2015-08-31" target="_blank" style="box-sizing: border-box; color: #428bca; background: transparent;">Netflix passes on Epix content deal, Hulu steps in --MktWatch</a></p> <p class="MsoNormal" style="box-sizing: border-box; margin: 0px 0px 10px; color: #333333; font-family: 'Helvetica Neue', Helvetica, Arial, sans-serif; font-size: 14px; line-height: 1;"><a href="http://www.reuters.com/article/2015/08/31/us-fiat-chrysler-gm-marchionne-idUSKCN0R00Z520150831" target="_blank" style="box-sizing: border-box; color: #428bca; background: transparent;">Fiat Chrysler's Marchionne says 'unconscionable' to give up on GM deal --Rtrs</a></p> <p class="MsoNormal" style="box-sizing: border-box; margin: 0px 0px 10px; color: #333333; font-family: 'Helvetica Neue', Helvetica, Arial, sans-serif; font-size: 14px; line-height: 1;"><a href="http://www.detroitnews.com/story/business/autos/chrysler/2015/08/31/jeep-recall/71471916/" target="_blank" style="box-sizing: border-box; color: #428bca; background: transparent;">Fiat Chrysler US is recalling approx. 206K vehicles --Detroit News</a></p> <p class="MsoNormal" style="box-sizing: border-box; margin: 0px 0px 10px; color: #333333; font-family: 'Helvetica Neue', Helvetica, Arial, sans-serif; font-size: 14px; line-height: 1;"><a href="http://www.marketwatch.com/story/gt-advanced-technologies-to-cut-staff-operating-expenses-by-about-40-%20%202015-08-31" target="_blank" style="box-sizing: border-box; color: #428bca; background: transparent;">GT Advanced Technologies to cut staff, operating expenses by about 40% --MktWatch</a></p> <p class="MsoNormal" style="box-sizing: border-box; margin: 0px 0px 10px; color: #333333; font-family: 'Helvetica Neue', Helvetica, Arial, sans-serif; font-size: 14px; line-height: 1;"><a href="http://www.bloomberg.com/news/articles/2015-08-31/pemex-investors-face-crude-reality-with-credit-%20%20downgrade-threat" target="_blank" style="box-sizing: border-box; color: #428bca; background: transparent;">Pemex Investors Face Crude Reality With Credit Downgrade Threat --BBG</a></p> <p class="MsoNormal" style="box-sizing: border-box; margin: 0px 0px 10px; color: #333333; font-family: 'Helvetica Neue', Helvetica, Arial, sans-serif; font-size: 14px; line-height: 1;"><strong style="box-sizing: border-box;">EMERGING MARKETS</strong></p> <p class="MsoNormal" style="box-sizing: border-box; margin: 0px 0px 10px; color: #333333; font-family: 'Helvetica Neue', Helvetica, Arial, sans-serif; font-size: 14px; line-height: 1;"><a href="http://www.reuters.com/article/2015/08/31/us-china-economy-housing-idUSKCN0R016J20150831" target="_blank" style="box-sizing: border-box; color: #428bca; background: transparent;">China eases housing investment rules again to boost economy --Rtrs</a></p> <p class="MsoNormal" style="box-sizing: border-box; margin: 0px 0px 10px; color: #333333; font-family: 'Helvetica Neue', Helvetica, Arial, sans-serif; font-size: 14px; line-height: 1;"><a href="http://www.bloomberg.com/news/videos/2015-08-%20%2031/china-markets-end-volatile-august-in-continued-slide" target="_blank" style="box-sizing: border-box; color: #428bca; background: transparent;">China Markets End Volatile August in Continued Slide --BBG</a></p> <p style="box-sizing: border-box; margin: 0px 0px 10px; color: #333333; font-family: 'Helvetica Neue', Helvetica, Arial, sans-serif; font-size: 14px; line-height: 1;">&nbsp;</p> <p class="MsoNormal" style="box-sizing: border-box; margin: 0px 0px 10px; color: #333333; font-family: 'Helvetica Neue', Helvetica, Arial, sans-serif; font-size: 14px; line-height: 1;"><a href="http://www.bloomberg.com/news/articles/2015-08-31/argentina-central-bank-assets-can-t-be-seized-by-%20%20bondholders" target="_blank" style="box-sizing: border-box; color: #428bca; background: transparent;">Argentine Central Bank Assets Can?t Be Seized by Bondholders --BBG</a></p> <p class="MsoNormal" style="box-sizing: border-box; margin: 0px 0px 10px; color: #333333; font-family: 'Helvetica Neue', Helvetica, Arial, sans-serif; font-size: 14px; line-height: 1;"><a href="http://www.financialjuice.com/zerohedge"><img src="http://www.zerohedge.com/sites/default/files/images/user22400/imageroot/2013/08/ZH.png" style="max-width: 100%; height: auto;" /></a></p> http://www.zerohedge.com/news/2015-08-31/sep-1-global-stocks-extend-rout#comments Apple Bond CBOE Central Banks Chicago PMI China Chrysler Crude Crude Oil Dallas Fed Detroit fixed Google headlines Monetary Policy NASDAQ Nasdaq 100 OPEC Reality recovery Reuters Russell 2000 Volatility Yen Mon, 31 Aug 2015 21:39:17 +0000 Pivotfarm 512670 at http://www.zerohedge.com If The Fed Is Always Wrong, How Can Its Policies Ever Be Right? http://www.zerohedge.com/news/2015-08-31/if-fed-always-wrong-how-can-its-policies-ever-be-right <p><a href="http://www.forbes.com/sites/ralphbenko/2015/08/15/if-the-fed-is-always-wrong-how-can-its-policies-ever-be-right/"><em>Submitted by Ralph Benko via Forbes.com,</em></a></p> <p>One of the most curiously persistent surrealisms of Washington, DC is the <strong>reflexive deference given the Federal Reserve System</strong>. The Washington elite tends to <strong>accord more infallibility to the Fed than do Catholics the Pope.</strong></p> <p>Now comes one of the world&rsquo;s top monetary reporters, Ylan Q. Mui, to make a delicate observation at the<span class="Apple-converted-space">&nbsp;</span><em>Washington Post&rsquo;s Wonkblog</em>, in<span class="Apple-converted-space">&nbsp;</span><a href="http://www.washingtonpost.com/news/wonkblog/wp/2015/06/15/why-nobody-believes-the-federal-reserves-forecasts/%20" target="_blank"><em>Why nobody believes the Federal Reserve&rsquo;s forecasts</em></a>. Mui:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&ldquo;The market recognizes that the Fed has repeatedly erred on the optimistic side,&rdquo; said Eric Lascelles, chief economist at RBC Global Asset Management. &ldquo;Fool me 50 times, but not 51 times.&rdquo;</p> <p>Even the government&rsquo;s official budget forecasters are&nbsp;dubious of the Fed&rsquo;s own forecast.</p> </blockquote> <p>This is a theme that Mui has touched on before. In 2013, she wrote<span class="Apple-converted-space">&nbsp;</span><a href="http://www.washingtonpost.com/news/wonkblog/wp/2013/03/19/is-the-feds-crystal-ball-rose-colored/" target="_blank"><em>Is the Fed&rsquo;s crystal ball rose-colored?</em></a>:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>The big question is whether Fed officials can get it right after years in which they have regularly predicted a stronger economy than the one that materialized. In January 2011, Fed officials predicted that GDP would grow around 3.7 percent that year.&nbsp;It clocked in at 2 percent. In January 2012, they anticipated growth of about 2.5 percent. We ended up with 1.6 percent.</p> </blockquote> <p>To give Ms. Mui&rsquo;s competition its due, Dr. Richard Rahn at the<span class="Apple-converted-space">&nbsp;</span><a href="http://www.washingtontimes.com/news/2015/apr/20/richard-rahn-low-interest-rates-have-failed-to-sti/" target="_blank"><em>Washington Times</em></a><span class="Apple-converted-space">&nbsp;</span>last April crisply noted:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>The Federal Reserve had forecast the U.S. economy to grow about 4 percent near the beginning of each year for the last five years. But during each year, the Fed was forced to reduce its forecast until it got to the actual number of approximately 2 percent. (Other government<a><span class="Apple-converted-space">&nbsp;</span></a>agencies have been making equally bad forecasts.) These mammoth errors clearly show that the forecast models the official agencies use are mis-specified and contain incorrect assumptions.</p> </blockquote> <p><u><strong>What&rsquo;s going on here?</strong></u></p> <p>A good bet would be that there&rsquo;s a problem with the Fed&rsquo;s reliance on an arcane art.&nbsp; This art is designated &ldquo;Dynamic Stochastic General Equilibrium&rdquo; modeling.</p> <p>Sound scientific? Well.</p> <p>With admirable intellectual honesty an assistant vice president in the Federal Reserve Bank of New York&rsquo;s Research and Statistics Group, Marco Del Negro, Wharton Ph.D. student Raiden Hasegawa and University of Pennsylvania professor of economics Frank Schorfheide (speaking for themselves and not the Fed) open a two part analysis at the NY Fed&rsquo;s own excellent<span class="Apple-converted-space">&nbsp;</span><em>Liberty Street Economics,<span class="Apple-converted-space">&nbsp;</span><a href="http://libertystreeteconomics.newyorkfed.org/2015/03/combining-models-for-forecasting-and-policy-analysis.html#.VczLHc7SjbU%20" target="_blank">Choosing the Right Policy in Real Time (What That&rsquo;s Not Easy)</a></em>:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>Model uncertainty is pervasive. Economists, bloggers, policymakers all have different views of how the world works and what economic policies would make it better. These views are, like it or not, models. Some people spell them out in their entirety, equations and all. Others refuse to use the word altogether, possibly out of fear of being falsified. No model is &ldquo;right,&rdquo; of course, but some models are worse than others, and we can have an idea of which is which by comparing their predictions with what actually happened.</p> </blockquote> <p>The authors go on to conclude in the<span class="Apple-converted-space">&nbsp;</span><a href="http://libertystreeteconomics.newyorkfed.org/2015/03/choosing-the-right-policy-in-real-time-why-thats-not-easy.html#.VTwEzKbSjbU%20" target="_blank">second part</a><span class="Apple-converted-space">&nbsp;</span>of their analysis:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><em><u><strong>In the end, we have shown that policy analysis in the very oversimplified world of DSGE models is a pretty difficult business. Contrary to what it may sometimes appear from listening to talking heads, deciding which policy is best is very rarely a slam dunk.</strong></u></em></p> </blockquote> <p>Dynamic Stochastic General Equilibrium modeling sure sounds amazing.&nbsp; That said let&rsquo;s be blunt.&nbsp; If NASA suffered from comparable inaccuracy the manned spaceflight program would have been shut down by an endless series of Challenger-type catastrophes many years ago.&nbsp;&nbsp; With monetary forecasts this bad is it any wonder the American economy continually crashes and burns?</p> <p>As I have noted before, yet it bears repeating, Prof. Reuven Brenner powerfully has<span class="Apple-converted-space">&nbsp;</span><a href="http://atimes.com/2015/04/bernanke-summers-krugman-the-high-priests-of-macro-strology-part-i/%20" target="_blank">called our current system to account</a>:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>[M]acro-economics is now [astrology&rsquo;s] modern incarnation: Only instead of stars, macro-economists look at &ldquo;aggregates&rdquo; gathered religiously by governments&rsquo; statistical agencies &ndash; never mind if the country has a dictatorial regime, be it left, right or anything in between, or has large black markets, as Italy and Greece do, where tax evasion has long been the main national sport. So let us first forget about this &ldquo;macro&rdquo; stuff, whose beginnings are almost a century old, and offer a simple alternative for shedding light on the situation today and on possible solutions, hopefully demolish this modern pseudo-&rdquo;science&rdquo; once and for all.</p></blockquote> <p>Classical liberal economist Axel Kaiser anticipated this line of argument in his book<span class="Apple-converted-space">&nbsp;</span><em><a href="http://www.hacer.org/?page_id=1586" target="_blank">Intervention and Misery: 1929 &ndash; 2008</a></em><span class="Apple-converted-space">&nbsp;</span>by c<em><strong>alling for the &ldquo;end of the mystery [which] implies the end of the witch doctors and the definite defeat of the economic astrology that has prevailed in recent decades.&rdquo;</strong></em></p> <p>This line of criticism, while apparently alien to the Fed, is nothing new. Hayek, in his Nobel Prize acceptance speech<span class="Apple-converted-space">&nbsp;</span><a href="http://www.nobelprize.org/nobel_prizes/economic-sciences/laureates/1974/hayek-lecture.html" target="_blank"><em>The Pretence of Knowledge</em></a><span class="Apple-converted-space">&nbsp;</span>tartly observed:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>We have indeed at the moment little cause for pride: as a profession we have made a mess of things.</p> <p>&nbsp;</p> <p>It seems to me that this failure of the economists to guide policy more successfully is closely connected with their propensity to imitate as closely as possible the procedures of the brilliantly successful physical sciences &mdash; an attempt which in our field may lead to outright error. It is an approach which has come to be described as the &ldquo;scientistic&rdquo; attitude &mdash; an attitude which,<span class="Apple-converted-space">&nbsp;</span><a href="http://store.mises.org/Counter-Revolution-of-Science-The-P415.aspx" target="_blank">as I defined it some thirty years ago</a>, &ldquo;is decidedly unscientific in the true sense of the word, since it involves a mechanical and uncritical application of habits of thought to fields different from those in which they have been formed.&rdquo; I want today to begin by explaining how some of the gravest errors of recent economic policy are a direct consequence of this scientistic error.</p> </blockquote> <p>That said, nobody, not even the great Hayek, nailed the problem better than did Hans Christian Anderson in<span class="Apple-converted-space">&nbsp;</span><a href="http://www.gutenberg.org/files/1597/1597-h/1597-h.htm#link2H_4_0001" target="_blank"><em>The Emperor&rsquo;s New Clothes:</em></a></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>One day, two rogues, calling themselves weavers, made their appearance. They gave out that they knew how to weave stuffs of the most beautiful colors and elaborate patterns, the clothes manufactured from which should have the wonderful property of remaining invisible to everyone who was unfit for the office he held, or who was extraordinarily simple in character.</p> <p>&nbsp;</p> <p>&ldquo;These must, indeed, be splendid clothes!&rdquo; thought the Emperor. &ldquo;Had I such a suit, I might at once find out what men in my realms are unfit for their office, and also be able to distinguish the wise from the foolish! This stuff must be woven for me immediately.&rdquo;</p> <p>&nbsp;</p> <p>&hellip;</p> <p>&nbsp;</p> <p>And now the Emperor himself wished to see the costly manufacture, while it was still in the loom. &hellip;</p> <p>&nbsp;</p> <p>&ldquo;Is not the work absolutely magnificent?&rdquo; said the two officers of the crown, already mentioned. &ldquo;If your Majesty will only be pleased to look at it! What a splendid design! What glorious colors!&rdquo; and at the same time they pointed to the empty frames; for they imagined that everyone else could see this exquisite piece of workmanship.</p> <p>&nbsp;</p> <p>&ldquo;How is this?&rdquo; said the Emperor to himself. &ldquo;I can see nothing! This is indeed a terrible affair! Am I a simpleton, or am I unfit to be an Emperor?</p> <p>&nbsp;</p> <p>&hellip;</p> <p>&nbsp;</p> <p>So now the Emperor walked under his high canopy in the midst of the procession, through the streets of his capital; and all the people standing by, and those at the windows, cried out, &ldquo;Oh! How beautiful are our Emperor&rsquo;s new clothes! &hellip;</p> <p>&nbsp;</p> <p>&ldquo;But the Emperor has nothing at all on!&rdquo; said a little child.</p> </blockquote> <p><u><em><strong>If the Fed is making policy based on consistently wrong predictions how good can its policy consistently be? If its forecasts consistently are wrong &mdash; as now is undeniable &mdash; on what is it basing policy? Guesswork (more pretentiously phrased as &ldquo;discretion&rdquo;)?</strong></em></u></p> <p>America deserves some candor. A frank admission of &ldquo;guesswork&rdquo; &mdash; even educated guesswork &mdash; would better our understanding of why American workers have been for the past 15 years, and are today, engaged in painful belt-tightening. And, forgive the heresy, just maybe there is a better way than guesswork.</p> <p>Ylan Mui is, as she ought to be, far too politic to be so blunt. Thus it falls to me, in my role as the simpleton on this beat, to declare: The Emperor has no clothes.</p> <p>I&rsquo;d welcome being set straight if the Board of Governors is prepared to contest this simpleton. Surely Chair Yellen or Vice Chair Fischer &mdash; both first rate economists and authentically honorable public servants &mdash; will support the<span class="Apple-converted-space">&nbsp;</span><a href="https://www.congress.gov/bill/114th-congress/house-bill/2912/text+" target="_blank">Brady-Cornyn Centennial Monetary Commission legislation</a><span class="Apple-converted-space">&nbsp;</span>lately approved by Chairman Hensarling&rsquo;s House Financial Services Committee.</p> <p>So let the Fed set me straight by entering the beautiful canopy of this Commission to make the case for the exceptional beauty of its handiwork. If, rather, the Fed raises objections to a Commission (to which it will appoint an ex officio commissioner)&hellip; perhaps my declaration is not, after all, that of a simpleton. In the event of Fed opposition Congress should be even more eager to enact this Monetary Commission.</p> <p><u><strong>I say the Emperor has no clothes. If clad, high time to parade their exceptional beauty.<span class="Apple-converted-space">&nbsp;</span></strong></u></p> <p><u><strong>Pass the Centennial Monetary Commission. Let&rsquo;s see the Emperor&rsquo;s clothes.</strong></u></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="183" height="180" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20150831_naked.jpg?1441053738" /> </div> </div> </div> http://www.zerohedge.com/news/2015-08-31/if-fed-always-wrong-how-can-its-policies-ever-be-right#comments Bank of New York Federal Reserve Federal Reserve Bank Federal Reserve Bank of New York Greece House Financial Services Committee Italy Mon, 31 Aug 2015 21:30:00 +0000 Tyler Durden 512665 at http://www.zerohedge.com Exposed: The New American Way Of Life http://www.zerohedge.com/news/2015-08-31/exposed-new-american-way-life <p>It's enough to make you cry... <strong><em>or scream.</em></strong></p> <p>&nbsp;</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/08-overflow/20150831_america.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/08-overflow/20150831_america_0.jpg" width="600" height="574" /></a></p> <p>&nbsp;</p> <p><a href="http://hopelesslysane.blogspot.com/2015/08/its-enough-to-make-you-cry_31.html"><em>Source: The Lonely Libertarian</em></a></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="180" height="39" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20150831_scream.jpg?1441046457" /> </div> </div> </div> http://www.zerohedge.com/news/2015-08-31/exposed-new-american-way-life#comments Mon, 31 Aug 2015 21:00:00 +0000 Tyler Durden 512664 at http://www.zerohedge.com When Every Option In The Financial System Is Grounded In Absurdity, It's Time To Look Elsewhere http://www.zerohedge.com/news/2015-08-31/when-every-option-financial-system-grounded-absurdity-its-time-look-elsewhere <p>Submitted by Simon Black via SovereignMan.com,</p> <p><strong>If you&rsquo;ve ever picked up a copy of <em>The Economist</em> magazine, you&rsquo;ve probably heard of the Big Mac Index.</strong></p> <p>This is an interesting tool where a bunch of reporters from around the world are forced to go into McDonalds and find out the price of a Big Mac in local currency.</p> <p>In Santiago, Chile, for example, a Big Mac runs 2,100 Chilean pesos, which is around $3. Meanwhile the average price for a Big Mac in the United States is $4.79.</p> <p>This suggests that the US dollar is substantially overvalued against the Chilean peso.</p> <p>It&rsquo;s the same story across most of the world. In Russia, a Big Mac costs 107 rubles, which is just over $1.50.</p> <p><strong>The reason <em>The Economist</em> uses the Big Mac is because it&rsquo;s basically the same product no matter where you go in the world.</strong></p> <p>There are some subtle differences, but McDonalds generally serves the same pink foam disguised as beef wherever you go. So in theory it should all cost the same.</p> <p>When a Big Mac is too cheap or too expensive, this suggests that the currency is either undervalued or overvalued against the US dollar.</p> <p><span style="text-decoration: underline;"><strong>Now I&rsquo;d like to add a new way of comparing currencies: airfare.</strong></span></p> <p>As I travel around the world, I often buy what are known as round-the-world tickets (RTW).</p> <p>RTW tickets are issued by airline alliances like OneWorld or Star Alliance, and they&rsquo;re typically very cost effective.</p> <p>RTW is just like it sounds. You fly, for example, from London to Chicago to Shanghai to Dubai and back to London, all for one special fare.</p> <p>It&rsquo;s a cheap, easy way to see the world.</p> <p>But I&rsquo;ll let you in on a little secret that I&rsquo;ve picked up over the years: the price of a RTW ticket varies dramatically depending on the city where you start.</p> <p><strong>As an example, I just researched a OneWorld RTW ticket with the following itinerary:</strong></p> <p><strong>Los Angeles &ndash; Sydney &ndash; Bangkok &ndash; Hong Kong &ndash; Johannesburg &ndash; London &ndash; Los Angeles.</strong></p> <p>Six different cities around the world on five continents.</p> <p><span style="text-decoration: underline;"><strong>Now, if I start and stop that itinerary in Los Angeles, the price for a business class ticket is $14,164.60.</strong></span></p> <p>That&rsquo;s not a bad price for a business class experience. But if we experiment a little bit, something interesting happens.</p> <p>Starting and stopping the journey in Los Angeles means that OneWorld prices my ticket in US dollars.</p> <p>But it&rsquo;s also possible to fly the same route by shifting the cities. For example, instead of starting/stopping in LA, I can start/stop in Sydney.</p> <p>So the route becomes Sydney- Bangkok &ndash; Hong Kong &ndash; Johannesburg &ndash; London &ndash; Los Angeles &ndash; Sydney.</p> <p>It&rsquo;s the same flights to the same six cities, I just start/stop in a different place.</p> <p><strong>Here&rsquo;s what&rsquo;s crazy: if I start/stop in Sydney instead, the price changes. Now instead of $14,164.60, it&rsquo;s $15,272 Australian dollars, which is about $10,900 USD.</strong></p> <p><strong>So the same six flights now cost you 23% less.</strong></p> <p>Note that the RTW ticket is always priced in the local currency of the city where you start.</p> <p>And unlike the Big Mac Index where the results are skewed by the costs of ingredients, property, and labor, here you&rsquo;re comparing the exact same product.</p> <p>I did the same with each city on the list, and the most incredible difference came when I started and stopped the trip in Johannesburg.</p> <p>Johannesburg &ndash; London &ndash; Los Angeles &ndash; Sydney &ndash; Bangkok &ndash; Hong Kong &ndash; Johannesburg.</p> <p><strong>Flying to the exact same cities, the price is now 81,395 South African Rand.</strong></p> <p><strong>Based on current exchange rates, this is just barely over $6,000.</strong></p> <p>In other words, you pay over $14,000 by starting/stopping in LA, and just $6,000 to start/stop in South Africa, even though you&rsquo;re visiting the exact same six cities on the exact same flights in the exact same business class cabin.</p> <p>What&rsquo;s even more amazing is that if you do the exact same itinerary from LA in economy class, the price is $7,545.</p> <p>So that means that if someone flies from LA, they&rsquo;ll pay more to fly in coach than someone starting in Johannesburg pays to fly in business.</p> <p>Clearly, you&rsquo;d be better off buying a separate ticket to South Africa and beginning your RTW journey from there.</p> <p><strong>Or you could spend about $200 and get a ticket to Vancouver, and start a RTW from Vancouver, which costs about $10,000 in business class and gives you a $4,000 savings.</strong></p> <p>Now, I&rsquo;m not here to tell you about how to save money on airfare (though I hope you give it a try).</p> <p><span style="text-decoration: underline;"><strong>The bigger idea is that it&rsquo;s clear that the US dollar is painfully overvalued against nearly every currency in the world.</strong></span></p> <p><strong>Right now the dollar appears to be the &ldquo;safe&rdquo; place to put your money. However, this isn&rsquo;t based on anything.</strong></p> <p>The fundamentals for the US dollar are terrible, but people keep dumping money into it like trained monkeys simply because nothing else in financial markets makes any sense.</p> <p><strong>To be clear, I fully expect the dollar to get even stronger as even more trained monkeys pile into US dollar assets.</strong></p> <p><strong>But it&rsquo;s important to show that this perception of &lsquo;safety&rsquo; is based on a complete myth.</strong> Every credible fundamental suggests that the dollar is dangerously overvalued.</p> <p>In the long run these things tend to equalize, and the dollar&rsquo;s strength may end up being the biggest bubble of all.</p> <p>Of course, it raises the question&ndash;<em><strong> if not the US dollar, then which currency is the safe haven? The euro is garbage, the Chinese are fighting a depression, Japan is a disaster.</strong></em></p> <p>And that&rsquo;s precisely the point.</p> <p><span style="text-decoration: underline;"><strong>When every option in the financial system is grounded in absurdity, the only solution is to start looking for safety outside of it.</strong></span></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="169" height="158" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20150831_usd.jpg?1441046182" /> </div> </div> </div> http://www.zerohedge.com/news/2015-08-31/when-every-option-financial-system-grounded-absurdity-its-time-look-elsewhere#comments Big Mac Index Dubai Hong Kong Japan McDonalds The Economist Mon, 31 Aug 2015 20:36:36 +0000 Tyler Durden 512663 at http://www.zerohedge.com