en United States Of Newspeak – Obama Spins Executive Orders As "Presidential Memoranda" To Avoid Scrutiny <p><a href=""><em>Submitted by Mike Krieger via Liberty Blitzkrieg blog</em></a>,</p> <p>If there&rsquo;s one thing we have learned about Barack Obama, it&rsquo;s that he is a master of deception and absolutely loves to lie to the public. He seems to enjoy conning the plebs to such a degree, I think he actually receives blasts of dopamine every time he does it. The bigger the lie, the better the rush.</p> <p>The latest example relates to his&nbsp;issuance of executive orders, or lack thereof, something that Obama Inc. has actively attempted to portray as evidence of his restraint when it comes to executive power. Here are a few examples from <a href="">a <em>USA Today</em> article</a> published earlier today.</p> <p>First, from the man himself:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong><em>&ldquo;The truth is, even with all the actions I&rsquo;ve taken this year, I&rsquo;m issuing executive orders at the lowest rate in more than 100 years,&rdquo; Obama said<a href="" title="">&nbsp;in a speech in Austin last July</a>. &ldquo;So it&rsquo;s not clear how it is that Republicans didn&rsquo;t seem to mind when President Bush took more executive actions than I did.&rdquo;</em></strong></p> </blockquote> <p>Harry Reid also proudly chimed in:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong><em>In a&nbsp;<a href="" title="">Senate floor speech in July</a>, Majority Leader Harry Reid said, &ldquo;While Republicans accuse President Obama of executive overreach, they neglect the fact that he has issued far fewer executive orders than any two-term president in the last 50 years.&rdquo;</em></strong></p> </blockquote> <p>Finally, the message wouldn&rsquo;t be complete without some words from Bootlicker in Chief Jay Carney:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong><em>&ldquo;There is no question that this president has been judicious in his use of executive action, executive orders, and I think those numbers thus far have come in below what President George W. Bush and President Bill Clinton did,&rdquo;&nbsp;<a href="" title="">said Jay Carney, then the White House press secretary</a>, in February.</em></strong></p> </blockquote> <p>Nice spin, but what&rsquo;s the truth? Also <a href="">from<em> USA Toda</em>y</a>:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong><em>WASHINGTON &mdash; President Obama has issued a form of executive action known as the presidential memorandum more often than any other president in history &mdash; using it to take unilateral action even as he has signed fewer executive orders.</em></strong></p> <p>&nbsp;</p> <p><strong><em>Like executive orders, presidential memoranda don&rsquo;t require action by Congress. They have the same force of law as executive orders and often have consequences just as far-reaching.&nbsp;And some of the most significant actions of the Obama presidency have come not by executive order but by presidential memoranda.</em></strong></p> <p>&nbsp;</p> <p><strong><em>The Office of Legal Counsel &mdash; which is responsible for advising the president on executive orders and memoranda &mdash; says there&rsquo;s no difference between the two.</em></strong></p> </blockquote> <p>With that in mind, how does Obama&rsquo;s record stand up when you combine his issuance of executive orders and executive memoranda? Well, here you go:</p> <p><a href=""><img alt="Screen Shot 2014-12-17 at 11.31.49 AM" class="alignnone size-large wp-image-19970" src="" style="width: 600px; height: 643px;" /></a></p> <p>Oh, and let&rsquo;s not forget this guy still has two years left to further separate himself from the pack.</p> <p>More <a href="">from <em>USA Today</em></a>:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong><em>WASHINGTON &mdash; President Obama has issued a form of executive action known as the presidential memorandum more often than any other president in history &mdash; using it to take unilateral action even as he has signed fewer executive orders.</em></strong></p> <p>&nbsp;</p> <p><em>Obama has issued executive orders to give federal employees the day after Christmas off, to impose economic sanctions and to determine how national secrets are classified. He&rsquo;s used presidential memoranda to make policy on gun control, immigration and labor regulations. Tuesday, he used a memorandum to declare Bristol Bay, Alaska, off-limits to oil and gas exploration.</em></p> <p>&nbsp;</p> <p><strong><em>Like executive orders, presidential memoranda don&rsquo;t require action by Congress. They have the same force of law as executive orders and often have consequences just as far-reaching. And some of the most significant actions of the Obama presidency have come not by executive order but by presidential memoranda.</em></strong></p> <p>&nbsp;</p> <p><em>Obama has made prolific use of memoranda despite his own claims that he&rsquo;s used his executive power less than other presidents. &ldquo;The truth is, even with all the actions I&rsquo;ve taken this year, I&rsquo;m issuing executive orders at the lowest rate in more than 100 years,&rdquo; Obama said<a href="" title="">&nbsp;in a speech in Austin last July</a>. &ldquo;So it&rsquo;s not clear how it is that Republicans didn&rsquo;t seem to mind when President Bush took more executive actions than I did.&rdquo;</em></p> <p>&nbsp;</p> <p><em>Obama has issued 195 executive orders as of Tuesday. Published alongside them in the&nbsp;Federal Register&nbsp;are 198 presidential memoranda &mdash; all of which carry the same legal force as executive orders.</em></p> <p><em><strong>He&rsquo;s already signed 33% more presidential memoranda in less than six years than Bush did in eight. He&rsquo;s also issued 45% more than the last Democratic president, Bill Clinton,</strong> who&nbsp;assertively&nbsp;used memoranda to signal what kinds of regulations he wanted federal agencies to adopt.</em></p> <p>&nbsp;</p> <p><strong><em>Obama is not the first president to use memoranda to accomplish policy aims. But at this point in his presidency, he&rsquo;s the first to use them more often than executive orders.</em></strong></p> <p>&nbsp;</p> <p><em>So even as he&rsquo;s quietly used memoranda to signal policy changes to federal agencies, Obama and his allies have claimed he&rsquo;s been more&nbsp;restrained in his use of that power.</em></p> <p>&nbsp;</p> <p><em>In a&nbsp;<a href="" title="">Senate floor speech in July</a>, Majority Leader Harry Reid said, &ldquo;While Republicans accuse President Obama of executive overreach, they neglect the fact that he has issued far fewer executive orders than any two-term president in the last 50 years.&rdquo;</em></p> <p>&nbsp;</p> <p><em>&ldquo;There is no question that this president has been judicious in his use of executive action, executive orders, and I think those numbers thus far have come in below what President George W. Bush and President Bill Clinton did,&rdquo;&nbsp;<a href="" title="">said Jay Carney, then the White House press secretary</a>, in February.</em></p> <p>&nbsp;</p> <p><em>Executive orders are numbered &mdash; the most recent, Executive Order 13683, modified three previous executive orders. <strong>Memoranda are not numbered, not indexed and, until recently, difficult to quantify.</strong></em></p> </blockquote> <p>That&rsquo;s precisely why Obama is utilizing them at a record clip.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong><em>Indeed, many of Obama&rsquo;s memoranda do the kinds of things previous presidents did by executive order.</em></strong></p> <p>&nbsp;</p> <p><em>&bull; In 1970, President Nixon issued&nbsp;<a href="" title="">an executive order</a>&nbsp;on unneeded federal properties. Forty years later, Obama issued a similar policy&nbsp;<a href="" title="">by memorandum</a>.</em></p> <p>&nbsp;</p> <p><em>Presidential scholar Phillip Cooper calls presidential memoranda &ldquo;executive orders by another name, and yet unique.&rdquo;</em></p> <p>&nbsp;</p> <p><em>The law does not define the difference between an executive order and a memorandum, but it does say that the president should publish in the&nbsp;Federal Register executive orders and other documents that &ldquo;have general applicability and legal effect.&rdquo;</em></p> <p>&nbsp;</p> <p><strong><em>There are subtle differences. Executive orders are numbered; memoranda are not. Memoranda are always published in the&nbsp;Federal Register&nbsp;after proclamations and executive orders. And under&nbsp;<a href="" title="">Executive Order 11030</a>, signed by President Kennedy in 1962, an executive order must contain a &ldquo;citation of authority,&rdquo; saying what law it&rsquo;s based on. Memoranda have no such requirement.</em></strong></p> <p>&nbsp;</p> <p><em>Whatever they&rsquo;re called, those executive actions are binding on future administrations unless explicitly revoked by a future president, according to legal opinion from the Justice Department.</em></p> <p>&nbsp;</p> <p><em>The Office of Legal Counsel &mdash; which is responsible for advising the president on executive orders and memoranda &mdash; says there&rsquo;s no difference between the two.</em></p> <p>&nbsp;</p> <p><em>Even the White House sometimes gets tripped up on the distinction. Explaining Obama&rsquo;s memoranda on immigration last month, Press Secretary Josh Earnest said the president would&nbsp;happily &ldquo;tear up his own executive order&rdquo; if Congress passes an immigration bill.</em></p> <p>&nbsp;</p> <p><em>Obama had issued no such executive order. Earnest&nbsp;later corrected himself. &ldquo;I must have misspoke. I meant executive actions. So I apologize,&rdquo; he said.</em></p> </blockquote> <p>Not to fear, we just found out that Jeb Bush will be running for President in 2016. There&rsquo;s always something to look forward to. For example:</p> <p>Here&rsquo;s your American &ldquo;democracy.&rdquo;</p> <p><img alt="Screen Shot 2014-12-17 at 11.44.13 AM" class="alignnone size-large wp-image-19975" src="" style="width: 600px; height: 445px;" /></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="581" height="447" alt="" src="" /> </div> </div> </div> Barack Obama President Obama White House Fri, 19 Dec 2014 03:50:28 +0000 Tyler Durden 499329 at Frenzied Chinese Stock Buyers Soak Up So Much Liquidity, Central Bank Forced To Intervene, Prevent Seizure <p>While today's rabid explosion in the S&amp;P500, coupled with a <a href="">literal break in the NY Fed/Citadel market boosting algo </a>which went haywire in the last moments of trading and pushed the S&amp;P up to 2130 in milliseconds via Kevin Henry's preferred SPY ETF, may be the stuff of market manipulating legends, nothing compares to the far more berserk situation China finds itself in, where a 50% surge in the Shanghai Composite over the past few months - not on improving fundamentals but just the opposite, hopes of massive liquidity injections to halt China's economic hard landing - has found the PBOC scrambling to find a way to, politely, burst the stock market bubble without causing too much pain. </p> <p>This is because <a href="">as reported overnight</a>, China's seven-day repurchase rate, a gauge of interbank funding availability in the banking system, surged 139 basis points, to a 10-month high of 5.28% in Shanghai, the biggest since Jan. 20. The reason for the sudden cash crunch, according to Bloomberg, is that subscriptions for the biggest new share sales of the year lock up funds. Twelve initial public offerings from today through Dec. 25 will draw orders of as much as 3 trillion yuan ($483 billion), Shenyin &amp; Wanguo Securities Co. estimated. In other words, the scramble to allocate capital into China's surest way of making money, IPOs, has led to a drying out of general liquidity in the entire market. </p> <p>This in turn forced the PBOC to intervene and inject short-term money loans to commercial lenders <strong>in order to prevent the kind of interbank liquidity lock up that emerged in China in June 2013 in the aftermath of the first Taper Tantrum </strong>(and which before all is said and done, will likely take place again) and which sent global capital markets around the globe reeling before China resumed its massive liquidity injections which are at the heart of China's debt-fuelled bubble in the first place.</p> <p><a href="">From Bloomberg</a>: “The IPOs are affecting the market, leading to cautious sentiment with fewer institutions willing to lend,” said Li Haitao, a Shanghai-based analyst at China Guangfa Bank Co. “<strong>Quite a few traders found it very difficult to meet their funding needs yesterday.”</strong></p> <p>Why? Because everyone wants to get rich quick so badly, they are risking collapsing the entire market. </p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>Lenders paid 4.65 percent for 60 billion yuan of three-month treasury deposits auctioned today by the PBOC, the most they’ve paid since January for such funds. The central bank also rolled over this week at least some of the 500 billion yuan of three-month loans granted to lenders in September, a government official said yesterday, declining to be identified as the details haven’t been made public.</p> </blockquote> <p>“Banks have to prepare for quarter-end regulatory checks, including loan-to-deposit requirements, and hoard cash to meet year-end demand,” said Wang Ming, chief operations officer at Shanghai Yaozhi Asset Management LLP, which oversees 2 billion yuan of fixed-income investments. “With all these factors affecting the market, it’s no surprise it’s suffering more than during previous IPOs.” </p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>The cost of one-year interest-rate swaps, the fixed payment to receive the floating seven-day repo rate, rose five basis points to 3.38 percent, data compiled by Bloomberg show. </p> <p>&nbsp;</p> <p>The yield on China’s sovereign bonds due September 2024 fell two basis points to 3.78 percent, according to data from the National Interbank Funding Center. It’s increased 27 basis points this month.</p> <p>&nbsp;</p> <p>The PBOC is expected to cut lenders’ reserve requirements before the Lunar New Year holiday in February to top up the money supply as the prospect of U.S. interest-rate increases draws cash from China, according to Ding Shuang, senior China Economist at Citigroup Inc. in Hong Kong.</p> </blockquote> <p>And since the Chinese stock market is surging ever higher on momentum-driven euphoria, China which wants to if not burst its bubble than certainly tame it as it is already having adverse impacts on cross-asset classes, the last thing regulators want to do is risk a full blown slam in equities, which are now so far above their fair value, a Chinese market correction correction could have dramatic consequences on all other aspects of China's bubble economy. </p> <p>They better decide quick just how they will do this, becauase as Bloomberg also reported moments ago:</p> <ul> <li><strong>CHINA 7-DAY REPO RATE TOUCHES 5.81%, HIGHEST SINCE JAN.</strong></li> </ul> <p><a href=""><img src="" width="600" height="319" /></a></p> <p>Ironic, and very much reflexive: with all the "money on the sidelines" is being soaked up in the stock market, there is nothing left to keep the rest of the facade operating efficiently, which ultimately assures a stock market crash. </p> <p>Perhaps even in a time of pervasive central-planning, a Princeton economist can only pull the rubber band so far before it finally snaps.</p> Capital Markets China Citadel Citigroup fixed Hong Kong Market Crash Money On The Sidelines Money Supply SPY Yuan Fri, 19 Dec 2014 03:18:45 +0000 Tyler Durden 499335 at Berserk Rampathon Algo Just Bought The S&P At 2,130 <p>4 seconds before the close, one super-bullish algorithm exuberantly bought a massive <strong>$200 million worth of the S&amp;P 500 ETF up to a 2,130 level on the index in one second</strong>... and no -<em> it was not a fat finger!! It was 1,147 trades! </em><a href="">Now who do we know that is an 'expert' in ETF trading?</a><em><br /></em></p> <p>With 4 seconds to go in today's "market" day-session, this happened:</p> <p><a href=""><img src="" width="600" height="402" /></a></p> <p><em>Source: NanexLLC</em></p> <blockquote class="twitter-tweet" lang="en"><p><a href=";src=ctag">$SPY</a> ex-div tomorrow - did it play a role? Will they bust those trades before options close. tick.tick.tick.</p> <p>— Eric Scott Hunsader (@nanexllc) <a href="">December 18, 2014</a></p></blockquote> <script src="//"></script><blockquote class="twitter-tweet" lang="en"><p>Each dot is a stock trade. Notice the <a href=";src=ctag">$SPY</a> column of trades all the way up 3% <a href=""></a></p> <p>— Eric Scott Hunsader (@nanexllc) <a href="">December 18, 2014</a></p></blockquote> <script src="//"></script><blockquote class="twitter-tweet" lang="en"><p><a href=";src=ctag">$SPY</a> spike wasn't 1 trade. Or 10, or 100. It was 1,147 trades (610K shares): <a href=""></a></p> <p>— Eric Scott Hunsader (@nanexllc) <a href="">December 18, 2014</a></p></blockquote> <script src="//"></script><p>&nbsp;</p> <p><a href="">There's only one man "expert" enough in the use of ETFs to handle a job like that.</a> From his profile (<a href="">link</a>):</p> <p><a href=""><img src="" width="600" height="882" /></a></p> <p><a href=""><img src="" width="600" height="545" /></a></p> <p>&nbsp;</p> <p>But have no fear... those trades will be DK'd asap.</p> <ul> <li><strong>NASDAQ ISSUES E-MAILED STATEMENT ON 'SPY' TRADES</strong></li> <li><strong>POTENTIALLY ERRONEOUS `SPY' TRANSACTIONS BEING PROBED</strong></li> <li><strong>TRANSACTIONS WERE EXECUTED BETWEEN 15:59:00-16:00:00 ET</strong></li> </ul> <p>Or maybe not:<strong> ALL TRADES IN 'SPY' WILL STAND</strong></p> <p><strong><a href=""><img src="" width="600" height="279" /></a><br /></strong></p> <p>Probably because the Fed is willing to "eat" the losses rather than explain why it buys SPY, via Citadel, on DirectEdge.</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="1200" height="804" alt="" src="" /> </div> </div> </div> Citadel NASDAQ SPY Twitter Twitter Fri, 19 Dec 2014 02:55:40 +0000 Tyler Durden 499320 at More To Ruble's Collapse Than Meets The Eye? <p><a href=""><em>Submitted by Colin Chilcoat via</em></a>,</p> <p><strong>The ruble is dying, and fast.</strong> In what is now being dubbed &lsquo;Black Monday&rsquo; the ruble&rsquo;s value to the dollar dropped nearly 15 percent. Tuesday brought no respite and the ruble fell another 10 percent. The ruble&rsquo;s collapse follows a similar &ndash; though by no means as extreme &ndash; slump in oil prices. Still, the Russian economy&rsquo;s troubles are deeper than that and President Vladimir Putin will be hard-pressed to find an easy out. With a recession looming, state energy companies are struggling to stay afloat, if not directly contributing to the country&rsquo;s woes.</p> <p><strong>On the year, the ruble has lost more than 55 percent of its value against the dollar, breaking psychological barrier after psychological barrier.</strong> Tuesday&rsquo;s low of 80 <a href="">marks</a> a new record and harkens back to the period of hyperinflation that characterized post-Soviet Russia. Then, as now, citizens are seeing their material wealth disintegrate amid rising costs domestically.</p> <p>&nbsp;</p> <p><img alt="Ruble vs Dollar" src="" style="width: 600px; height: 375px;" /></p> <p><em>Source: <a href="">QZ</a></em></p> <p><strong>For its part, the Russian central bank has been unable to stop the slide.</strong> Neither periodic use of the dwindling foreign exchanges reserves nor interest rate hikes have proved effective. The latest interest rate increase &ndash; enacted under the cover of night Monday &ndash; brought the key rate to 17 percent, up from 10.5, in an effort to end investor speculation. Tuesday&rsquo;s trading demonstrated the speculation is far from over and the central bank is far from in control. The higher rates will further squeeze growth as the economy <a href="">heads</a> for a 4.5 percent retraction next year. Ill prepared to wait it out, the central bank is clearly a step behind the game and perhaps even out of its league. <strong><u>Black Monday suggested other powers might be at play.</u></strong></p> <p><strong>Monday was incidentally the day of an interesting 700 billion ruble liquidity auction. </strong>Prior to the auction, Rosneft <a href="">raised</a> 625 billion rubles (almost $11 billion) in a bond issue backed by the central bank. The central bank then quickly cleared the lower-yield bonds to serve as collateral for banks seeking liquidity in the auction. It&rsquo;s unclear who purchased the bonds, but Rosneft explicitly <a href="">stated</a> the proceeds will finance internal projects and will not touch the foreign exchange markets. <strong>Nevertheless, speculation has persisted and theories abound.</strong></p> <p><strong>It is within reason that Rosneft&rsquo;s subsidiaries and their respective banks were <em><a href="">prepared</a></em> &ndash; or financed by Rosneft that is &ndash; for the bond issue, after which they could refinance the bonds at the central bank for a 5 to 10 percent profit.</strong> A similar theory has been <a href="">suggested</a> for the bigger state banks like VTB and Sberbank, who would not <a href="">comment</a> on their involvement. The idea goes that they purchased the bonds, flipped them for foreign currency at the central bank, and then passed cash along to Rosneft through a currency swap. While complicit, the central bank has little control and, in either scenario, the money hitting the market from such a deal is certainly of the scale to <a href="">inflict</a> the damage we saw Monday.</p> <p><strong>The move highlights dire straits for Rosneft who must answer to $10.2 billion of debt in the fourth quarter, which includes a $6.88 billion loan from foreign banks due Dec. 21. </strong>The company &ndash; whose market value has <a href="">tumbled</a> 40 percent this year &ndash; has approximately $55 billion in net debt and has thus far been unsuccessful in its attempts to garner bailout money from the government. In its recently defined strategic development goals, the company stressed efficiency, gas production growth, and the localization of advanced technologies and equipment. In the meantime, all eyes at Rosneft are on the price of oil, which appears to be <a href="">undercutting</a> their expectations.</p> <p><strong>For Russia, the uncertainty is just as great. </strong>The Russian stock market has collapsed in tandem with the ruble and traders in the US anticipate stricter government controls as early as this week. While flows of money have thus far been <a href="">unimpeded</a>, capital controls such as limits on foreign exchange transactions appear ever more likely as the ruble continues to sink.</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="597" height="349" alt="" src="" /> </div> </div> </div> Bond Hyperinflation Recession Vladimir Putin Fri, 19 Dec 2014 02:50:56 +0000 Tyler Durden 499322 at Previewing 2015... And 2014, And 2013, And 2012, And 2011, And 2010 <p>Deja vu all over again... and investors remain ever full of faith...</p> <p>&nbsp;</p> <p><a href=""><img src="" width="534" height="590" /></a></p> <p>&nbsp;</p> <p><em>h/t @Stalingrad_Poor</em></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="534" height="590" alt="" src="" /> </div> </div> </div> Fri, 19 Dec 2014 02:50:52 +0000 Tyler Durden 499328 at Fog of War <p>&nbsp;</p> <p>I think this man must be worried. He has a huge weight on his shoulders. This is Thomas Jordan, the head of the Swiss National Bank.</p> <p>&nbsp;</p> <p style="text-align: center;"><a href=""><img alt="bil_02_st_machtnetz_01" class="aligncenter size-full wp-image-7694" height="388" src="" width="648" /></a></p> <p style="text-align: left;">&nbsp;</p> <p style="text-align: left;">Mr. Jordan has excellent academic credentials. He&#39;s a scholar, and a &#39;lifer&#39; at the SNB:</p> <p style="text-align: left; padding-left: 30px;">University of Berne, PHD Economics</p> <p style="text-align: left; padding-left: 30px;">Department of Economics at Harvard University,three-year post-doctoral research.</p> <p style="text-align: left; padding-left: 30px;">1997 SNB Economic Advisor in Department 1.</p> <p style="text-align: left; padding-left: 30px;">On 18 April 2012, appointed Chairman of the Governing Board of the SNB.</p> <p style="text-align: center;">&nbsp;</p> <p>Unfortunately, Mr. Jordan&#39;s academic prowess is not going to be of much help with the mess now on his desk. He needs to learn how to play - <em>and win</em> - heads up guts poker. In my experience that&#39;s a skill one is born with, or never acquires.</p> <p>Jordan is a General who has a war on his hands. It&#39;s a currency war; only financial blood will flow. But the stakes are high. Mr Jordon understands that more than the Swiss economy is at risk. The idea of the &quot;All Powerful Central Bank&quot; is being called into question. General Jordon is on the front lines of a conflict that could spread throughout Europe, and then to Japan.</p> <p>&nbsp;</p> <p><strong>Thomas Jordon has enormous power.</strong> He can print a biblical amount of money with a keystroke. He&#39;s pledged to do exactly that. But, <strong>Jordan also has some significant strategic weaknesses:</strong></p> <p>&nbsp;</p> <p>- Jordan has no allies in this war.</p> <p style="padding-left: 30px;">* The US Treasury has put the SNB on its watch list of &#39;currency manipulators&#39;. Don&#39;t look to the US Fed to get involved in this fight.</p> <p style="padding-left: 30px;">* The Japanese could care less about the Swiss war - they&#39;re trying to wage their own war.</p> <p style="padding-left: 30px;">* The SNB has no friends at the ECB either. If anything, Mario Draghi is working against the SNB.</p> <p>- Jordon inherited the Swiss Franc peg policy. He came in when Hildebrand was thrown out. For the first time in his tenure he&#39;s being called to fire his guns in anger. He&#39;s an academic, not a warrior.</p> <p>- Jordon is playing defense. He has promised to hold a line in the sand regardless of the consequences. So Jordon must now stand and take on all comers. The circumstances in Switzerland are today 180 degrees opposite to that of England twenty-years ago. That said, this story is looking a hell of a lot like the devaluation of the Pound. Who can really say, <em>&quot;I&#39;ll take em all on at once!&quot;</em></p> <p>- There is a &quot;stink&#39; feature to the CHF peg policy. The benefits to the Swiss economy from the peg are at the expense of the French, Italian and Spanish economies.</p> <p>- The peg policy has the support of the Swiss Parliament - <span style="text-decoration: underline;">for now</span>.</p> <p>- The Macro story outside of Switzerland is piling up on the SNB:</p> <p style="padding-left: 30px;">* Draghi has promised that a decent sized bazooka will go off at the next ECB meeting (1/22/15). One of Draghi&#39;s objectives will be to cheapen the Euro - <span style="text-decoration: underline;">exactly what Jordon does not want to hear.</span></p> <p style="padding-left: 30px;">* The ongoing Russian story is a factor that increases the need for a safe haven for hot money. Zurich and Geneva have always been a destination for money looking for a safe harbor.</p> <p style="padding-left: 30px;">* Greece is going to go down to the wire on December 29 with the final vote. <strong>It will be very close.</strong> There is a real possibility that GREXIT comes back onto the table. This development would bring with it huge pressure on the EURCHF.</p> <p style="padding-left: 30px;">* The Yen is the worst place to hold reserves. Some of the money leaving Japan is headed to Switzerland. There is no safe haven left - but the CHF still comes close. All those Francs will have to be sold by Mr. Jordon - there are no other sellers.</p> <p>&nbsp;</p> <p>The one thing that Jordan can&#39;t do in this war is appear to be weak. He has to be decisive if he is to win. He has to take on the FX market and beat it to submission. <span style="text-decoration: underline;"><strong> Mr. Jordon is off to a bad start - I think he pulled a weak move this morning.</strong></span></p> <p>The SNB <a href="">announced</a> that it was going NIRP. For a few minutes there was some market shock and awe. But the new SNB rate will be -0.5% - <strong>that&#39;s nothing!</strong> The new SNB measures will not take effect until 1/22/15. This coincides with the Draghi bazooka. What the SNB has done is create a beacon that is shining on a date that is only sixteen trading days from today. The SNB should have made the measures immediate, and more costly if it wanted to win a skirmish in the war.<span style="text-decoration: underline;"> But it chose to let the players off easy.</span></p> <p>EURCHF forward swap bids got hit this morning with the news of negative interest rates. The swap is the cost of being short the EURCHF. As of the close in NY the two month forward EURCHF swap was a crummy 8 ticks!</p> <p>&nbsp;</p> <p><a href=""><img alt="Screen Shot 2014-12-18 at 5.26.53 PM" class="aligncenter size-full wp-image-7696" height="52" src="" width="616" /></a></p> <p>&nbsp;</p> <p><strong>This is not a penalty at all.</strong> 8 ticks goes by the spot market in seconds. This cost is not going to keep the players at bay. It&#39;s an incentive versus a disincentive. Round One was a disappointing draw for the SNB. Round Two will start in January.</p> <p>&nbsp;</p> <p style="text-align: center;"><a href=""><img alt="images" class="aligncenter wp-image-7697" height="282" src="" width="424" /></a></p> <p>&nbsp;</p> <p>&nbsp;</p> Greece Japan Swiss Franc Swiss National Bank Switzerland Yen Zurich Fri, 19 Dec 2014 02:42:28 +0000 Bruce Krasting 499334 at Cheap Oil: Too Much Of A Good Thing? <div class="article-body"> <p><a href=""><em>Submitted by Jay Bajpai,</em></a></p> <p>The 40% drop in oil prices over the past 6 months has garnered a lot of attention recently, most of it focused on the economic stimulus lower oil prices should provide the global economy, the impact on currency and fixed-income markets and the increase in economic pain suffered by exporters such as Iran and Russia. In this article, I draw on historical data to<strong> assess the potential increase in geopolitical tail risk that lower oil prices may represent</strong>. I believe this is an <strong>overlooked consequence of lower oil prices that, while low probability, would have an outsize impact on the global economy</strong> - a classic &quot;fattening of the tail&quot;. I look at monthly and aggregate data to smooth out daily fluctuations and avoid having us mistake the forest for the trees.</p> <p><strong>The data shows that in the 1980s, the most-cited oil price war, the average price of oil dropped from approximately $28/barrel in 1985 to a low of $11.58/barrel in July 1986</strong> (US Energy Information Administration data for monthly average front month futures contract price). This would be analogous to a drop from $60/barrel to $25/barrel in 2014 prices, using the US Bureau of Labor Statistics CPI calculator. Prices subsequently rebounded almost 60% from that July 1986 low, ranging between $16/barrel and $20/barrel for the rest of the 1980s. (There were a few months in that 4 year timespan where the average dropped below $15/barrel, but I want to focus on the big picture in this article.) Inflation-adjusted to 2014 price levels, oil prices ranged between $29/barrel and $37/barrel.</p> <p><strong>Then something dramatic happened.</strong> Between July 1990 and October 1990, prices nearly doubled from approximately $18.50/barrel to $36/barrel. You have probably deduced by now that <strong>this was when Iraq invaded Kuwait.</strong> For the next 3 years, $20/barrel went from being a ceiling for oil prices to being a floor. Subsequently, prices dropped in the rest of the 1990s until doubling and then tripling in the 2000s for reasons that are beyond the scope of this article.</p> <p><strong>Fast forward 25 years and we are again seemingly in the middle of a price war with no bottom in sight. </strong>This time, though, it may indeed be different. It would be foolish to assume the Russians do not remember the impact of the 1980s oil price collapse on the Soviet Union, then one of the largest producers in the world. At over 10 million barrels per day, Russia today rivals Saudi Arabia in terms of production, with each country representing approximately 10% of global supply. Iranian oil exports, which had only just begun to recover thanks to the loosening of sanctions, are now being hit by lower prices. <strong>At 2+ million bpd of exports, a $40/barrel drop in price means Iran is &quot;losing&quot; over $25 billion/year in badly-needed revenue. This is not small potatoes for a country whose GDP the World Bank estimated was only $366 billion in 2013.</strong></p> <p><strong><u>Note that both Russia and Iran have shown a willingness to act unilaterally at great cost.</u></strong> From annexing Crimea to visibly increasing bomber patrols in Northern Europe and the US Gulf Coast, the Russians have proven they are no wilting flowers. Indeed, some would say they rely on European dependence on Russian natural gas to get their way. The Iranians have consistently refused to actually dismantle existing nuclear facilities. There has been a great deal of talk about talking, but centrifuges continue to spin.</p> <p><strong><u>It does not take a rocket scientist to deduce that any increase in geopolitical instability which increases the price of oil benefits Russia and Iran.</u></strong> It is worth pondering the implications of that statement. I am emphatically not stating that the two countries will act irresponsibly to raise the price of oil. I am just pointing out that, for both countries, lower oil prices may have subtly shifted their calculus and their thinking around the risk-reward of their actions.</p> <p><strong>We do not need to ascribe nefarious intentions to large oil producers to understand how low prices can have significant geopolitical impacts.</strong> Smaller producers such as Venezuela and Nigeria, battling social instability at home, are being hit hard too. As much as the two countries may seem removed from mainstream Western consciousness, the world does not need a new source of volatility in Latin America or increased volatility in a West African region already grappling with Islamic militancy. Lower oil revenues do not help the Nigerian army, guardians of millions of barrels per day of light sweet oil, to procure weapons and train troops to combat secessionists and Islamic militants.</p> <p>Of course, prices may drop another $30/barrel. <strong>The broader point of this article is that lower oil prices have potentially &quot;fattened the tail&quot; by altering probabilities, risk-reward calculations and, as the global economy adjusts to lower prices, the impact of an increase in the price of oil from here. </strong>Wearing my trading and portfolio management hat, I personally would not buy oil futures or even outright buy long-dated calls. The probabilities, in my mind, are not high enough to justify the potential losses. But I have begun looking at low-cost, high-payoff options structures such as vertical call spreads and butterflies to see if they make sense as tail hedges in a potentially more geopolitically volatile world. Note that these are not trading recommendations in any way, shape or form. Just a way of articulating my thoughts.</p> <p><strong>So, is cheap oil too much of a good thing?</strong> In terms of raw numbers, it is a very good thing. <strong>In terms of fat tails, perhaps not.</strong></p> </div> <p>&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="583" height="565" alt="" src="" /> </div> </div> </div> Bureau of Labor Statistics CPI Global Economy Iran Iraq Kuwait Natural Gas Saudi Arabia Volatility World Bank Fri, 19 Dec 2014 02:20:52 +0000 Tyler Durden 499327 at Artist's Impression Of Obama's Iran Nuclear Policy <p>With all eyes firmly distracted in Cuba (or Sony or Russia or Ukraine), we thought a brief reminder worthwhile...</p> <p>&nbsp;</p> <p><a href=""><img src="" width="600" height="410" /></a></p> <p>&nbsp;</p> <p><a href=""><em>Source: Investors</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="794" height="542" alt="" src="" /> </div> </div> </div> Iran Ukraine Fri, 19 Dec 2014 01:50:06 +0000 Tyler Durden 499326 at Leaked Internal CIA Document Admits US Drone Program “Counterproductive” … Obama Did It ANYWAY <div class="entry-content"> <p style="text-align: center;"><em><img alt="" class="shrinkToFit decoded" height="621" src="" width="790" />Painting by <a href="" target="_blank" title="Anthony Freda">Anthony Freda</a>.</em></p> <h3 style="color: #000099;">&nbsp;</h3> <p>Previously-leaked documents showed that <a href="" title="the CIA warned Obama that funding rebels doesn’t work … but Obama decided to fund the Syrian rebels anyway">the CIA warned Obama that funding rebels doesn&rsquo;t work &hellip; but Obama decided to fund the Syrian rebels <em>anyway</em></a> for cynical political gain.</p> <p>Top CIA officers say that <a href="" target="_blank" title="drone strikes increase terrorism"><em>drone strikes</em> increase terrorism</a> (and <a href="" target="_blank" title="see this">see this</a>). Indeed, virtually all aspects of the American &ldquo;war on terror&rdquo; strategy&nbsp;<a href="" title="creates more terrorists and weakens our national security">creates more terrorists and weakens our national security</a>. And <a href="" title="see this">see this</a>.</p> <p>Now, a leaked internal CIA memo shows that the Agency told Obama that drone strikes might be counter-productive.&nbsp; The Sydney Morning Herald <a href="" target="_blank" title="reports">reports</a> today:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>According to a leaked document by the CIA&rsquo;s Directorate of Intelligence, &ldquo;high value targeting&rdquo; (HVT) involving air strikes and special forces operations against insurgent leaders can be effective, but can also have <strong>negative effects including increasing violence and greater popular support for extremist groups</strong>.</p> <p>&nbsp;</p> <p>The leaked document is classified secret and &ldquo;NoForn&rdquo; (meaning not to be distributed to non-US nationals) and reviews attacks by the United States and other countries engaged in counter-insurgency operations over the past 50&nbsp;years.</p> <p>&nbsp;</p> <p>***</p> <p>&nbsp;</p> <p>The 2009 CIA study lends support to critics of US <strong>drone strikes</strong> in Afghanistan, Iraq, Pakistan, Somalia and Yemen by warning that such operations &ldquo;<strong>may increase support for the insurgents</strong>, particularly if these strikes enhance insurgent leaders&rsquo; lore, if non-combatants are killed in the attacks, if legitimate or semi-legitimate politicians aligned with the insurgents are targeted, or if the government is already seen as overly repressive or violent&rdquo;.</p> <p>&nbsp;</p> <p>***</p> <p>&nbsp;</p> <p>The CIA also warns that <strong>targeting insurgent leaders &ldquo;may, by eroding the rules of the game between the government and insurgents, escalate the level of violence in a conflict, which may or may not be in a government&rsquo;s interest</strong>.&rdquo;</p> <p>&nbsp;</p> <p>&ldquo;Israeli HVT efforts from 2000 to 2002 strengthened solidarity between terrorist groups and bolstered popular support for hard-line militant leaders, according to US Embassy officials in Jerusalem and clandestine reporting,&rdquo; the study says.</p> </blockquote> <p>Common Dreams <a href="" target="_blank" title="notes">notes</a>:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>Here&rsquo;s a link to the document, titled <strong><em><a href="" target="_blank" title="Best Practices in Counterinsurgency: Making High-Value Targeting Operations an Effective Counterinsurgency Toolocument">Best Practices in Counterinsurgency: Making High-Value Targeting Operations an Effective Counterinsurgency Toolocument</a> </em></strong>(pdf).</p> <p>&nbsp;</p> <p>***</p> <p>&nbsp;</p> <p>Wikileaks points out that this internal prediction &ldquo;has been proven right&rdquo; in the years since the internal review was conducted near the outset of President Obama&rsquo;s first term. And despite those internal warnings&mdash;which have been loudly shared by human rights and foreign policy experts critical of the CIA&rsquo;s drone and assassination programs&mdash;Wikileaks also notes that <strong>after the internal review was prepared, &ldquo;US drone strike killings rose to an all-time high.&rdquo;</strong></p> <p>&nbsp;</p> <p>***</p> <p>&nbsp;</p> <p>According to a <a href="" target="_blank" title="statement">statement</a> released by Wikileaks:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>The report discusses assassination operations (by various states) against the Taliban, al-Qa&rsquo;ida, the FARC, Hizbullah, the PLO, HAMAS, Peru&rsquo;s Shining Path, the Tamil&rsquo;s LTTE, the IRA and Algeria&rsquo;s FLN. Case studies are drawn from Chechnya, Libya, Pakistan and Thailand.</p> <p>&nbsp;</p> <p>The assessment was prepared by the CIA&rsquo;s Office of Transnational Issues (OTI). Its role is to provide &ldquo;the most senior US policymakers, military planners, and law enforcement with analysis, warning, and crisis support&rdquo;. The report is dated 7 July 2009, six months into Leon Panetta&rsquo;s term as CIA chief &hellip;.</p> </blockquote> </blockquote> <p>Heck of a job, boyz ...</p> </div> <p>&nbsp;</p> Afghanistan Iraq national security President Obama Somalia Fri, 19 Dec 2014 01:48:44 +0000 George Washington 499333 at Who Will Be Tomorrow's Superpower? <p><a href=""><em>Submitted by Charles Hugh-Smith via Peak Prosperity</em></a>,</p> <div class="content clearfix"> <p>There&rsquo;s a popular geopolitical parlor game called <em>Who will be the next superpower?</em></p> <p>While the game excels at triggering a mind-fogging tsunami of nationalistic emotions, it doesn&rsquo;t shed much light on the really consequential question: <em>What is power?</em></p> <p>These are important questions to ponder as, around the world, unsustainable policies from the 20th century are beginning to fail in earnest. What will the future geopolitical landscape look like in their aftermath?</p> <h2><u>What Is Power?</u></h2> <p>In geopolitics, the conventional view is that <em>Power is the capacity to coerce others to serve your interests at the detriment of their own</em>.</p> <p>This is a scale-invariant definition, meaning that it applies equally to the school bully, the drug lord, the dictator, or the Emperor. Each has the power to coerce others to do things that are counter to their own interests to serve the interests of the powerful.</p> <p>While there is certainly truth in this definition, at the geopolitical scale it leaves much to be desired. General and Emperor Napoleon Bonaparte was well-positioned to understand the limits of coercive power, limits which he described in this truculent phrase: <em>&quot;Do you know what amazes me more than anything else? The impotence of force to organize anything.&quot;</em></p> <p><strong>The greater power than coercion, it turns out, is the power to align others&rsquo; interests with one&rsquo;s own</strong>, so they willingly submit to your authority as a means of furthering their own interests. To do this effectively and sustainably, power must organize the transnational flow of capital and labor in ways that offer benefits to all participants.</p> <p>The great superpower of the ancient world, the Roman Empire, showcased this form of <em>inclusive organizational power</em>: though the Legions were available to suppress outright rebellions, Rome&rsquo;s long Golden Era was characterized not by perpetual wars of rebellion but by widespread peace and prosperity for even the far-flung members of the Empire.</p> <p>This is not to gloss over the institutional slavery and oppression that enforced the Ancient Rome&rsquo;s grip, but the point is that free participants accepted the dominance of Rome because it protected their opportunities to better themselves in relative safety, providing they did not undermine the Empire&rsquo;s interests.</p> <p>Even so-called Barbarians benefited from trade with Rome. Many tribes intermarried with peoples under Rome&rsquo;s sway, and by the end of the Empire, the line between Barbarian and those living under Roman rules blurred.</p> <p>Even as political and military control eroded and was lost, the organizational system created by Rome&rsquo;s power&mdash;of roadways, waterworks, money, trade and commerce&mdash;continued to hold former dominions together. It was only when that complex system fell to pieces (for many reasons, a good deal of them resource-related) that the Empire expired.</p> <p>There is a third form of power that is often overlooked, perhaps because it&rsquo;s so obvious in functioning systems we don&rsquo;t even notice it: <em>the power to solve problems</em>. <strong>The power to solve problems with the resources at hand is perhaps the greatest power</strong>, far greater than coercive power and ultimately more powerful than organizational power, which erodes if power cannot solve problems with the available resources.</p> <p>How does power solve problems? &nbsp;Though the answer is complex, we can discern a few generalities:</p> <ol> <li>Power must accumulate capital and invest it productively</li> <li>Power must invest the capital where it has long-term leverage (i.e. in systems that conserve resources, labor and capital over the lifespan of the system)</li> <li>Power must enable the free flow of intellectual capital/knowledge and encourage experimentation as a means of solving new or emerging problems</li> </ol> <p>The ancient world empires tended to accumulate capital in two ways: by taxing their own citizens, and by conquering the wealth of other regimes. Modern-day great powers tend to accumulate capital by taxing their own citizens and fashioning economic arrangements for profitable commerce and credit that attract capital, talent and profits that can be taxed.</p> <p>In other words: power solves problems by attracting capital and talent, and then enabling their productive use in a system that is effectively organized to solve problems.</p> <p>Capital and talent are two forms of wealth that don&rsquo;t respond well to coercion. Capital and talent both flee dictatorial control; and in today&#39;s world, both are increasingly mobile. So the source of modern power&rsquo;s wealth is not coercion so much as being more attractive to those with capital and talent than the alternatives.&nbsp;</p> <p>This has two facets:</p> <ul> <li>enabling people to serve their own interests within the dominant power structure, and</li> <li>maintaining an inclusive system that is organized to optimize solutions</li> </ul> <p>If the system is too chaotic or rapacious to enable solutions to be implemented, capital and talent are both fruitlessly squandered.</p> <p>If capital must be spent suppressing rebellion, there is less available for productive investments.&nbsp; The empire soon collapses under its own inefficiency. This is why empires based on coercion burn out quickly. And why empires without inclusive, well-organized systems also fail.</p> <h2><u>The Roman Example</u></h2> <p>The Roman Empire offers some useful examples of problem-solving via productive investment. Rome&rsquo;s expansion of durable roadways and fresh water supplies were critical to the growth of trade and the expansion of healthy urban centers that fostered innovation, the sharing of knowledge, and the accumulation of capital.</p> <p>Rome&rsquo;s suppression of piracy enabled the free flow of grain from North Africa to Europe, and the extension of trade routes to faraway Britain.&nbsp;</p> <p>Technologies such as engineered concrete aqueducts and metalworking spread throughout the Empire due to the sharing of technologies and expertise.</p> <p>Roman coinage enabled low-risk commerce all throughout its boundaries.</p> <p>While the occasional drama of slave revolts and rebellions against Imperial might are the natural subjects of movie dramas, the day-to-day reality was spectacularly mundane: without the advantages of fossil fuels, Rome managed to extend relative peace and prosperity over much of the human world.</p> <p>The same can be said of the Tang Empire in China: providing additional validation that security, commerce, a unified money system and widespread prosperity go hand in hand.</p> <h2><u>What System Is Best Able to Solve Problems?</u></h2> <p>Virtually every nation and trading bloc faces the same set of entrenched problems: demographics, debt, energy and currency.&nbsp; The problems created by aging populations afflict the entire developed world, and fast-growing developing nations face the opposite problem: not enough work for their burgeoning cohort of youth.</p> <p>Debt has long been the solution to all problems: just borrow more money (or borrow it into existence) and throw it at the problem of the day. But since debt accumulates interest, and interest siphons off productive capital, this &ldquo;solution&rdquo; has run into rapidly diminishing returns.</p> <p>The foundation of the modern global economy is abundant, cheap energy. And the traditional source of that abundant cheap energy&mdash;fossil fuels&mdash;is no longer cheap (despite the recent drop in price, the production cost for oil remains near all-time highs), or it comes with real-world limits on its expansion.&nbsp; Declining supply and rising costs crimp growth of consumption and the expansion of capital, the twin foundations of the status quo arrangement.</p> <p>Currency&mdash;paper money&mdash;is the financial basis of that arrangement.&nbsp; The ease and appeal of printing money (or credit) becomes increasingly compelling as diminishing returns set in, but the rampant expansion of money and credit undermine the system just as fatally as the decline in cheap, abundant fuels.</p> <p>The temptation is to create money out of thin air to solve the other problems: just create money (or borrow it into existence) to pay for old-age social security, youth unemployment, higher energy costs, and every other problem facing the status quo.</p> <p>But this &ldquo;solution&rdquo; generates its own problem.&nbsp; Even more damaging, issuing money and credit doesn&rsquo;t actually solve any of the other structural problems; it simply papers them over, allowing them to fester behind the façade of freshly printed money and debt.</p> <h2><u>Power and Superpower</u></h2> <p>We can now formulate a preliminary answer to the parlor game question <em>Who will be the next superpower?</em></p> <p>Any nation or trading bloc that sustainably solves its pressing structural problems will qualify as a Great Power, simply by avoiding the consequences of not solving these problems, i.e. collapse. <em>Muddling through </em>is not a sustainable solution.</p> <p>There is no law or rule that mandates the existence of superpowers.&nbsp; The world can go on quite well without a dominant global power.&nbsp; That said, what qualifies a nation or trading bloc to be labeled a superpower?</p> <p>Within the context outlined above, the answer is: <em>the solutions organized by the superpower become the dominant global system because they are far more effective, efficient, resilient, flexible and sustainable than the solutions organized by other nations and trading blocs</em>.</p> <p><em>In <a href="" target="_blank">Part 2: Who Will Dominate This Century?</a>, we look at the key requirements for sustainable power in this new century and which countries are best-positioned to exert their influence going forward.</em></p> <p><em>That long-standing geopolitical relationships are changing is a given at this point. The question is: is the world ready for what&#39;s coming next?</em></p> <p><em><a href="" target="_blank">Click here to access Part 2</a> of this report (free executive summary; <a href="" target="_blank">enrollment </a>required for full access)</em></p> </div> <p>&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="318" height="215" alt="" src="" /> </div> </div> </div> China Demographics Fail Global Economy Napoleon New Century Reality Roman Empire Unemployment Fri, 19 Dec 2014 01:20:47 +0000 Tyler Durden 499325 at