http://www.zerohedge.com/fullrss2.xml en Refugees Expose Europe's Lack Of Decency http://www.zerohedge.com/news/2015-08-27/refugees-expose-europes-lack-decency <p><a href="http://www.theautomaticearth.com/2015/08/refugees-expose-europes-lack-of-decency/"><em>Submitted by Raul Ilargi Meijer via The Automatic Earth blog,</em></a></p> <p>I want to say something about the issue of the refugees -never ever again migrants- that are swamping Europe. So much has been said about them, and so much has happened since I made my first notes, but not a soul has put their finger on the sore spot, and the real story. At least not that I&rsquo;ve seen.</p> <p><strong>That real story is the painfully woefully inadequate -and I&rsquo;m being painfully polite here- failure of Brussels and Berlin and Paris in responding to what&rsquo;s been unfolding.</strong> And don&rsquo;t get me started about London; there&rsquo;s nothing coming from Britain these days that&rsquo;s even worth talking about. When you dare talk about a &lsquo;swarm of migrants&rsquo;, you&rsquo;re no longer part of the conversation.</p> <p>And it&rsquo;s not as if what Europe has perpetrated upon the Greek economy, and the Greek people who depend on it, isn&rsquo;t enough. It is more than enough. Only, nobody seems to be willing to understand this, to let it sink in to its fullest. But that&rsquo;s still kind of alright; <strong> financial policies are not the EUs biggest failure. </strong></p> <p>Even if even Varoufakis insists on being part of the EU -albeit a reformed one-. <strong>You can&rsquo;t reform the EU. It&rsquo;s allergic to any reform that would take even just a few of its powers away.</strong> That is embedded in its model. Varoufakis doesn&rsquo;t sufficiently get this: you can&rsquo;t any longer just change a few puppets in Brussels. Its alleged democracy is no longer anything but thin and peeling veneer.</p> <p>It&rsquo;s like the old Groucho joke, that he wouldn&rsquo;t want to be part on any club that would have him as a member. It&rsquo;s exactly that, actually.<strong> If you want to survive in Europe, let alone with dignity and values, it cannot be done inside the EU. And the refugee crisis tells us why, even more than the Greek crisis has.</strong></p> <p><u><strong>What Brussels lacks most of all is morals, decency and compassion.</strong></u> It is a bureaucracy that has no human values. And this is expressed, in a painful and deadly way, not only in the streets of Athens, though it&rsquo;s plenty glaringly clear there too, but even more in how the so-called Union &ldquo;deals with&rdquo; (that is, it doesn&rsquo;t) the Mediterranean refugee issue.</p> <p><strong>We can take a philosophical approach to this, which can be interesting, though it doesn&rsquo;t change a thing. </strong>We can for instance theorize about how a country, a society, a culture, that is hundreds or thousands of years old, and has gone through numerous natural and man-made disasters in its history, like so many in Europe, will have a response formulated for the next batch of mayhem, and on how to deal with those who are the victims of said mayhem.</p> <p><em><strong>That is what we see in how Italy and Greece have been trying to deal with the flood of refugees sailing off from Lybia and Turkey towards their shores. Both countries &ndash; or at least substantial segments of them &ndash; have gone out of their way to save refugees.</strong></em> Then late last year the EU -ostensibly- took over. But the EU has done next to nothing. It has paid lip service only. Which has cost thousands of human lives this year alone. And still nothing happens.</p> <p><strong>Now, now, some of them are waking up. </strong>The EU agency that is supposed to deal with it, Frontex, has announced it&rsquo;s going to step up efforts to halt refugees from entering Europe. Just like it did when it took over from Italy and Greece, and the main idea was to send in the military to blow up the boats of the ugly and evil people smugglers.</p> <p><em><strong>Hungary is building a wall. Macedonia fired tear gas and stun grenades. The Czechs have said they&rsquo;re going to send in the army. </strong></em>Police dogs and batons have become a common sight wherever the refugees are. Who are forced to walk a thousand miles or more, children and women and everyone. It&rsquo;s a picture of disgrace. And the disgrace belongs to all of us.</p> <p><u><strong>EC head Juncker, after breaking a months long silence on the topic, declared this week that there&rsquo;s no need for an Immigration Summit. </strong></u>All EU countries need to do is comply with existing regulations. Which, if I may remind you, were &lsquo;agreed&rsquo; upon in a time when there was no such thing as the present influx of people.</p> <p>What Europe should do, or rather should have done, because I guarantee you it&rsquo;s too late now, is send as many people as needed to make sure people would stop drowning. To make sure the media would stop using the term &lsquo;migrants&rsquo;. To show Europe cares, and it alleged leaders first of all. To make sure there would be space and provisions for all who undertook the perilous journey, women, children, men, every single one.</p> <p><strong>Europe instead has only tried to ignore the issue, hoping it would go away by itself. </strong><em>This has cost at least 17,000 lives so far. And they know it. Here is a picture of a 100-meter list of 17,306 migrants who have died attempting to reach Europe, a list which was recently unveiled at the EU Parliament:</em></p> <p><img src="http://www.theautomaticearth.com/wp-content/uploads/2015/08/DontLetThemDrown.jpg" style="border-width: 0px; border-style: solid; height: 752px; width: 600px;" /></p> <p><strong>They know, and they&rsquo;ve known for a long time. But still the UN said this week that Greece should do more. Greece? And Juncker says a summit is not needed</strong>. Juncker is supposed to be one of the main leaders of Europe. If we didn&rsquo;t already know before, we now know for sure he&rsquo;s no leader. Merkel? Haven&rsquo;t seen her until this week when she said the situation is unworthy of Europe. But if anything, it&rsquo;s unworthy of Merkel. She&rsquo;s supposed to be a leader in Europe, and she&rsquo;s very obviously not.</p> <p><strong>There&rsquo;s a huge amount of people in Brussels and various European capitals who are posing as &lsquo;leaders&rsquo;, and all of them have fallen way short.</strong> All of them, Merkel, first, need to shut up and act now. Not tell other nations, or her own co-Germans, that they should be ashamed. Merkel should be ashamed of herself first. And we know that there are elections coming up, but we&rsquo;re talking about human lives here, for sweet Jesus&rsquo;s sake. What&rsquo;s wrong with you, Angela, and all those like you? What part of you guys is even human anymore? Is only your ego left?</p> <p><u><strong>The EU, unlike Greece and Italy, has no history, no society, and above all no culture. </strong></u>The way it reacts to the refugee issue tells its entire empty story. All of it. Brussels doesn&rsquo;t do anything at all in the face of thousands of people drowning. It waits for Greece to deal with the problem, which is obviously far too great for the Greeks to solve by themselves. And besides, the EU a year ago insisted on taking over rescue operations from Rome and Athens. This has brought about a strange and eery and deadly kind of Mexican stand-off.</p> <p>The EU has already failed, dramatically and irreparably, in this regard. <strong>The only help refugees get is from Italy, Greece and private parties. It&rsquo;s so bad that if Greece would take &ldquo;full care&rdquo; of the refugees entering the country -and that&rsquo;s assuming it could-, there&rsquo;d be even much less hope of Brussels ever lifting a finger.</strong></p> <p>In this fashion,<strong> the EU doesn&rsquo;t just leave the refugees to their fate, it uses them as bait, as hostages, in its fight over financial and political power with Alexis Tsipras and the Syriza government.</strong> And though of course multiple voices try to lay the blame on Tsipras, that&rsquo;s not where it belongs. Even if he could, he couldn&rsquo;t. The only solution is for Greece to get out of the EU(ro) and restore dignity and humanity within its own borders.</p> <p><strong>For make no mistake, if you elect to remain part of the EU, and you let Juncker and Merkel speak in your name, then the blood of all those needlessly lost lives is also on your hands. That goes for every European citizen as much as it goes for the hapless heartless leaders they have elected.</strong></p> <p>For one thing, I can&rsquo;t for the life of me understand why there are not thousands of young Dutch and German and British and French people, organized and all, in Athens, and on the Greek islands. While there are plenty of them there to get a bloody suntan on their &ldquo;well-deserved vacation&rdquo; while people are perishing within eyesight, and complain about their holidays being spoiled. Not all of them, I know, but c&rsquo;mon, get a life! There are people dying every single day, and just because your so-called leaders let them drown doesn&rsquo;t mean you should too.</p> <p>Do you even know what &ldquo;a life&rdquo; is anymore, either yours or that of someone else? Have you ever known? A life means caring about other people. A life is not trying to make sure your own ass can sit as pretty as it can.</p> <p><strong>As for finding a solution to the refugee issue, Europe has done nothing to find one. </strong>The EU still wants the problem to just go away, and it wants the refugees to just go away. But it won&rsquo;t and they won&rsquo;t.</p> <p>Yes, we have a mass migration on our hands. And these are invariably hard to deal with. But our first priority should always be to approach the people involved with decency and compassion. And that is not happening. We are approaching them with the opposite of decency. With stun grenades and police dogs. And with misleading terminology such as &lsquo;migrants&rsquo;.</p> <p><strong>The EU doesn&rsquo;t seem to have any idea what&rsquo;s causing the wave of refugees entering &lsquo;its&rsquo; territory. </strong>When the refugees themselves state <em>&ldquo;we&rsquo;re here because you destroyed our countries&rdquo;</em>, Brussels will simply say that is not true. That kind of admission is way beyond the consciousness of the &lsquo;leadership&rsquo;. But it&rsquo;s a denial that won&rsquo;t get them anywhere.</p> <p>Meanwhile, this issue, like so many others, is being used as a reason to plea for more EU:</p> <p style="margin-left: 20px;"><a href="http://www.reuters.com/article/2015/08/17/us-europe-migrants-nationalism-analysis-idUSKCN0QM0EG20150817" target="new"><span style="font-size: 13px; color: #ff2222; font-weight: bold;"> Summer Crisis Tests Europe&rsquo;s New Nationalisms</span> </a></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><em>Dimitris Avramopoulos, the EU home affairs commissioner, argued last week [that] the very reach of the migration crisis shows the limits of national solutions. That, he said, puts pressure on governments to agree in Brussels to collective measures &ndash; even, he stressed, when they are not popular.</em></p> </blockquote> <p>It&rsquo;s an empty hollow plea. Why agree to give up more sovereignty if Brussels only uses its growing powers to do nothing? Europeans who give in to this kind of thing give up much more than sovereignty; they give up their decency and human values too.</p> <p><strong>The refugee issue can and will not be solved by the EU, or inside the EU apparatus, at least not in the way it should.</strong> Nor will the debt issue for which Greece was merely an &lsquo;early contestant&rsquo;. The EU structure does not allow for it. Nor does it allow for meaningful change to that structure. It would be good if people start to realize that, before the unholy Union brings more disgrace and misery and death upon its own citizens and on others.</p> <p>However this is resolved and wherever the refugees end up living, we, all of us, have the obligation to treat them with decency and human kindness in the meantime. <em><u><strong>We are not.</strong></u></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="242" height="163" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20150827_ref.jpg?1440727192" /> </div> </div> </div> http://www.zerohedge.com/news/2015-08-27/refugees-expose-europes-lack-decency#comments Greece Hungary Italy Turkey Fri, 28 Aug 2015 06:00:00 +0000 Tyler Durden 512505 at http://www.zerohedge.com Lies You Will Hear As The Economic Collapse Progresses http://www.zerohedge.com/news/2015-08-27/lies-you-will-hear-economic-collapse-progresses <p><a href="http://www.alt-market.com/articles/2678-lies-you-will-hear-as-the-economic-collapse-progresses"><em>Submitted by Brandon Smith via Alt-Market.com,</em></a></p> <p>It is undeniable;<strong> the final collapse triggers are upon us</strong>, triggers alternative economists have been warning about since the initial implosion of 2008. In the years since the derivatives disaster, there has been<strong> no end to the absurd and ludicrous propaganda coming out of mainstream financial outlets</strong> and as the situation in markets becomes worse, the propaganda will only increase. This might seem counter-intuitive to many. You would think that the more obvious the economic collapse becomes, the more alternative analysts will be vindicated and the more awake and aware the average person will be. Not necessarily...</p> <p>In fact, the mainstream spin machine is going into high speed the more negative data is exposed and absorbed into the markets. <strong>If you know your history, then you know that this is a common tactic by the establishment elite to string the public along with false hopes so that they do not prepare or take alternative measures while the system crumbles around their ears.</strong> At the onset of the Great Depression the same strategies were used. Consider if you&#39;ve heard similar quotes to these in the mainstream news over the past couple months:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>John Maynard Keynes in 1927: <strong>&ldquo;We will not have any more crashes in our time.&rdquo;</strong></p> <p>&nbsp;</p> <p>H.H. Simmons, president of the New York Stock Exchange, Jan. 12, 1928: <strong>&ldquo;I cannot help but raise a dissenting voice to statements that we are living in a fool&rsquo;s paradise, and that prosperity in this country must necessarily diminish and recede in the near future.&rdquo;</strong></p> <p>&nbsp;</p> <p>Irving Fisher, leading U.S. economist, The New York Times, Sept. 5, 1929: <strong>&ldquo;There may be a recession in stock prices, but not anything in the nature of a crash.&rdquo; </strong>And on 17, 1929:<strong> &ldquo;Stock prices have reached what looks like a permanently high plateau. I do not feel there will be soon if ever a 50 or 60 point break from present levels, such as (bears) have predicted. I expect to see the stock market a good deal higher within a few months.&rdquo;</strong></p> <p>&nbsp;</p> <p>W. McNeel, market analyst, as quoted in the New York Herald Tribune, Oct. 30, 1929: <strong>&ldquo;This is the time to buy stocks. This is the time to recall the words of the late J. P. Morgan&hellip; that any man who is bearish on America will go broke. Within a few days there is likely to be a bear panic rather than a bull panic. Many of the low prices as a result of this hysterical selling are not likely to be reached again in many years.&rdquo;</strong></p> <p>&nbsp;</p> <p>Harvard Economic Society, Nov. 10, 1929: <strong>&ldquo;&hellip; a serious depression seems improbable; [we expect] recovery of business next spring, with further improvement in the fall.&rdquo;</strong></p> </blockquote> <p><strong>Here is the issue &ndash; as I have ALWAYS said, economic collapse is not a singular event, it is a process.</strong> The global economy has been in the process of collapse since 2008 and it never left that path. Those who were ignorant took government statistics at face value and the manipulated bull market as legitimate and refused to acknowledge the fundamentals. Now, with markets recently suffering one of the greatest freefalls since the 2008/2009 crash, they are witnessing the folly of their assumptions, but that does not mean they will accept them or apologize for them outright. If there is one lesson I have learned well during my time in the Liberty Movement, it is to never underestimate the power of normalcy bias.</p> <p><strong>There were plenty of &ldquo;up days&rdquo; in the markets during the Great Depression, and this kept the false dream of a quick recovery alive for a large percentage of the American population for many years.</strong> Expect numerous &ldquo;stunning stock reversals&rdquo; as the collapse of our era progresses, but always remember that it is the overall TREND that matters far more than any one positive or negative trading day (unless you open down 1000 points as we did on Monday), and even more important than the trends are the economic fundamentals.</p> <p><strong>The establishment has made every effort to hide the fundamentals from the public through far reaching misrepresentations of economic stats. </strong>However, the days of effective disinformation in terms of the financial system are coming to an end. As investors and the general public begin to absorb the reality that the global economy is indeed witnessing a vast crisis scenario and acknowledges real numbers over fraudulent numbers, the only recourse of central bankers and the governments they control is to convince the public that the crisis they are witnessing is not really a crisis. That is to say, the establishment will attempt to marginalize the collapse signals they can no longer hide as if such signals are of &ldquo;minimal&rdquo; importance.</p> <p>Just as occurred during the onset of the Great Depression, the lies will be legion the closer we come to zero hour. <strong>Here are some of the lies you will likely hear as the collapse accelerates...</strong></p> <p><u><strong>The Crisis Was Caused By Chinese Contagion</strong></u></p> <p>The hypocrisy inherent in this lie is truly astounding, to say the least, considering it is now being uttered by the same mainstream dirtbags who only months ago were claiming that China&#39;s financial turmoil and stock market upset were inconsequential and would have &ldquo;little to no effect&rdquo; on Western markets.</p> <p>I specifically recall <a href="http://www.fxstreet.com/analysis/strategic-currency-briefing/2015/07/27/">these hilarious quotes</a> from Barbara Rockefeller in July:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&ldquo;<em><strong>Something else that doesn&rsquo;t matter much is the Chinese equity meltdown&mdash;again. China may be big and powerful, but it lacks a retail base and fund managers experienced in price variations, never mind a true rout...&rdquo;</strong></em></p> <p>&nbsp;</p> <p>&ldquo;<em><strong>Doom-and-gloom types have been saying for a long time that we will get a stock market rout when the Fed finally does move to raise rates. But as we wrote last week, history doesn&rsquo;t bear out the thesis, not that you can really count on history when the sample size is one or two data points...&rdquo;</strong></em></p> </blockquote> <p>Yes, that is a bit embarrassing. One or two data points? There have been many central bank interventions in history. When has ANY central bank or any government ever used stimulus to manipulate markets through fiat infusion and zero interest fueled stock buybacks or given government the ability to monetize its own debt, and actually been successful in the endeavor? When has addicting markets to stimulus like a heroin dealer ever led to &ldquo;recovery&rdquo;? When has this kind of behavior ever NOT created massive fiscal bubbles, a steady degradation of the host society, or outright calamity?</p> <p>Suddenly, according to the MSM, China&#39;s economy does affect us. Not only that, but China is to blame for all the ills of the globally interdependent economic structure. And, the mere mention that the Fed might delay the end of near zero interest rates in September by a Federal Reserve stooge recently sent markets up 600 points after a week-long bloodbath; meaning, the potential for any interest rate increase no mater how small also has wider implications for markets.</p> <p>The truth is, the crash in global stocks which will undoubtedly continue over the next several months despite any delays on ZIRP by the Fed is a product of universal decay in fiscal infrastructure. Nearly every single nation on this planet, every sovereign economy, has allowed central and international banks to poison every aspect of their respective systems with debt and manipulation. This is not a &ldquo;contagion&rdquo; problem, it is a systemic problem to every economy across the world.</p> <p>China&#39;s crash matters not because it is causing all other economies to crash. It matters because China is the largest importer/exporter in the world and it is a litmus test for the financial health of every other country. If China is failing, it means we are not consuming, and if we are not consuming, then we must be broke. China&#39;s crash portends our own far worse economic conditions. THAT is why western markets have been crumbling along with China&#39;s despite the assumptions of the mainstream.</p> <p><u><strong>China&#39;s Rate Cuts Will Stop The Crash</strong></u></p> <p>No they won&#39;t. China has cut rates five times since last November and this has done nothing to stem the tide of their market collapse. I&#39;m not sure why anyone would think that a new rate cut would accomplish anything besides perhaps a brief respite from the continuing avalanche.</p> <p><u><strong>It&#39;s Not A Crash, It&#39;s Just The End Of A &ldquo;Market Cycle&rdquo; </strong></u></p> <p>This is the most ignorant non-explanation I think I have ever heard. There is no such thing as a &ldquo;market cycle&rdquo; when your markets are supported partially or fully by fiat manipulation. Our market is in no way a free market, thus, it cannot behave like a free market, and thus, it is a stunted market with no identifiable cycles.</p> <p>Swings in markets of up to 5%-6% to the downside or upside (sometimes both in a single day) are not part of a normal cycle. They are a sign of cancerous volatility that comes from an economy on the brink of disaster.</p> <p>The last few years have been seemingly endless market bliss in which any idiot day trader could not go wrong as long as he &ldquo;bought the dip&rdquo; while Fed monetary intervention stayed the course. This is also not normal, even in the so-called &ldquo;new normal&rdquo;. Yes, the current equities turmoil is an inevitable result of manipulated markets, false statistics, and misplaced hopes, but it is indeed a tangible crash in the making. It is in no way an example of a predictable and non-threatening &ldquo;market cycle&rdquo;, and the fact that mainstream talking heads and the people who parrot them had absolutely no clue it was coming is only further evidence of this.</p> <p><u><strong>The Fed Will Never Raise Rates</strong></u></p> <p>Don&#39;t count on it. Public statements by globalist entities like the IMF on China, for example, have argued that their current crisis is merely part of the &ldquo;new normal&rdquo;; a future in which stagnant growth and reduced living standards is the way things are supposed to be. I expect the Fed will use the same exact argument to support the end of zero interest rates in the U.S., claiming that the decline of American wealth and living standards is a natural part of the new economic world order we are entering.</p> <p>That&#39;s right, mark my words, one day soon the Fed, the IMF, the BIS and others will attempt to convince the American people that the erosion of the economy and the loss of world reserve status is actually a &ldquo;good thing&rdquo;. They will claim that a strong dollar is the <a href="http://www.bloomberg.com/news/articles/2015-08-26/from-manhattan-to-detroit-dollar-s-rally-spreads-economic-pain">cause of all our economic pain</a> and that a loss in value is necessary. In the meantime they will, of course, downplay the tragedies that will result as the shift toward dollar devaluation smashes down on the heads of the populace.</p> <p>A rate hike may not occur in September. In fact, as I <a href="http://www.alt-market.com/articles/2674-economic-crisis-goes-mainstream-what-happens-next">predicted in my last article</a>, the Fed is already hinting at a delay in order to boost markets, or at least slow down the current carnage to a more manageable level. But, they WILL raise rates in the near term, likely before the end of this year after a few high tension meetings in which the financial world will sit anxiously waiting for the word on high. Why would they raise rates? Some people just don&#39;t seem to grasp the fact that the job of the Federal Reserve is to destroy the American economic system, not protect it. Once you understand this dynamic then everything the central bank does makes perfect sense.</p> <p>A rate increase will occur exactly because that is what is needed to further destabilize U.S. market psychology to make way for the &ldquo;great economic reset&rdquo; that the IMF and Christine Lagarde are so fond of promoting. Beyond this, many people seem to be forgetting that ZIRP is still operating, yet, volatility is trending negative anyway. Remember when everyone was ready to put on their &#39;Dow 20,000&#39; hat, certain in the omnipotence of central bank stimulus and QE infinity? Yeah...clearly that was a pipe dream.</p> <p>ZIRP has run it&#39;s course. It is no longer feeding the markets as it once did and the fundamentals are too obvious to deny.</p> <p>The globalists at the Bank for International Settlements in spring openly deemed the existence of low interest rate policies a <a href="http://www.telegraph.co.uk/finance/economics/11479425/Low-rates-will-trigger-civil-unrest-as-central-banks-lose-control-BIS.html">potential trigger for crisis</a>. Their statements correlate with the BIS tendency to &ldquo;predict&rdquo; terrible market events they helped to create while at the same time misrepresenting the reasons behind them.</p> <p>The point is, ZIRP has done the job it was meant to do. There is no longer any reason for the Fed to leave it in place.</p> <p><u><strong>Get Ready For QE4 </strong></u></p> <p>Again, don&#39;t count on it. Or at the very least, don&#39;t expect renewed QE to have any lasting effect on the market if it is initiated.</p> <p>There is truly no point to the launch of a fourth QE program, but do expect that the Fed will plant the possibility in the media every once in a while to mislead investors. First, the Fed knows that it would be an open admission that the last three QE&#39;s were an utter failure, and while their job is to dismantle the U.S. economy, I don&#39;t think they are looking to take immediate blame for the whole mess. QE4 would be as much a disaster as the ECB&#39;s last stimulus program was in Europe, not to mention the past several stimulus actions by the PBOC in China. I&#39;ll say it one more time &ndash; fiat stimulus has a shelf life, and that shelf life is over for the entire globe. The days of artificially supported markets are nearly done and they are never coming back again.</p> <p>I see little advantage for the Fed to bring QE4 into the picture. If the goal is to derail the dollar, that action is already well underway as the IMF carefully sets the stage for the Yuan to enter the SDR global currency basket next year, threatening the dollar&#39;s world reserve status. China also continues to dump hundreds of billions in U.S. treasuries inevitably leading to a rush to a dump of treasuries by other nations. The dollar is a dead currency walking, and the Fed won&#39;t even have to print Weimar Germany-style in order to kill it.</p> <p><u><strong>It&#39;s Not As Bad As It Seems</strong></u></p> <p>Yes, it is exactly as bad as it seems if not worse. When the Dow can open 1000 points down on a Monday and China can lose all of its gains for 2015 in the span of a few weeks despite institutionalized stimulus measures lasting years, then something is very wrong. This is not a &ldquo;hiccup&rdquo;. This is not a correction which has already hit bottom. This is only the beginning of the end.</p> <p>Stocks are not a predictive indicator. They do not follow positive or negative fundamentals. Stocks do not crash before or during the development of an ailing economy. Stocks crash after the economy has already gone comatose. Stocks crash when the system is no longer salvageable. Since 2008, nothing in the global financial structure has been salvaged and now the central banking edifice is either unable or unwilling (I believe both) to supply the tools to allow us even to pretend that it can be salvaged. <strong>We&#39;re going to feel the hurt now, all while the establishment tells us the whole thing is in our heads.</strong></p> <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="491" height="380" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20150827_eco.jpg?1440713793" /> </div> </div> </div> http://www.zerohedge.com/news/2015-08-27/lies-you-will-hear-economic-collapse-progresses#comments BIS China Federal Reserve Fisher Global Economy Great Depression John Maynard Keynes Maynard Keynes Meltdown New Normal New York Stock Exchange New York Times Reality Recession recovery Tribune Volatility Yuan Fri, 28 Aug 2015 02:15:00 +0000 Tyler Durden 512489 at http://www.zerohedge.com THe EMPReSS MoNeY PRiNTeR... http://www.zerohedge.com/news/2015-08-27/empress-money-printer <p><a href="https://www.flickr.com/photos/expd/20913223756/in/dateposted-public/" title="THE EMPRESS MONEY PRINTER"><img src="https://farm6.staticflickr.com/5739/20913223756_51d5bb0b8f_b.jpg" alt="THE EMPRESS MONEY PRINTER" width="1024" height="726" style="display: block; margin-left: auto; margin-right: auto;" /></a></p> <script src="//embedr.flickr.com/assets/client-code.js"></script> http://www.zerohedge.com/news/2015-08-27/empress-money-printer#comments Fri, 28 Aug 2015 02:14:09 +0000 williambanzai7 512506 at http://www.zerohedge.com The Scariest Number For The Oil Industry: $550 Billion http://www.zerohedge.com/news/2015-08-27/scariest-number-oil-industry-550-billion <p>Just over half a trillion dollars: that's how much cash oil industry companies will need to repay in maturing debt over the next 5 years. </p> <p>Specifically, according to BMI Research <a href="http://www.bloomberg.com/news/articles/2015-08-26/oil-industry-needs-to-find-half-a-trillion-dollars-to-survive">cited by Bloomberg</a>, there is $72 billion in oil-related debt maturing this year, $85 billion in 2016 and $129 billion in 2017, and a total of $550 billion in bonds and loans through 2020. </p> <p>This is a problem because while paying annual interest is one thing and easily manageable, rolling over debt when it is yielding over 10% - as is the case for over 168 global companies, or triple last year's number - is virtually impossible. It is an even bigger problem when considering the recent surge in energy company net debt/EBITDA (shown below in red) which has recently hit an all time high, surpassing the oil sector crisis of 1999, dragging energy sector credit risk and spreads with it to all time highs.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2015/08/20150827_EnergyLev.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2015/08/20150827_EnergyLev_0.jpg" width="600" height="314" /></a></p> <p>&nbsp;</p> <p>In fact, unless oil soars higher and miraculously concludes a second dead cat bounce, there will be hundreds of companies which are simply unable to refinance, and have no choice but to default. Considering that 20% of total debt due in 2015 belongs to US drillers (with Chinese companies coming in second with 12%), what was until last week perceived a junk bond crisis, and has been largely forgotten this week following the artificial, central-bank inspired price-action euphoria when in reality absolutely nothing has changed on the cash flow scene, expect the hangover of the post month-end window dressing orgy to come down like a ton of bricks.</p> <p>The reason: fundamentals continue to go from bad to worse, and its not just the fwd P/E chart we <a href="http://www.zerohedge.com/news/2015-08-17/what-happens-energy-stock-prices-if-sector-multiple-reverts-mean">won't tire of showing</a>...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2015/08/Energy%20PE%20vs%20price.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2015/08/Energy%20PE%20vs%20price_0.jpg" width="600" height="389" /></a></p> <p>... as Bloomberg adds, some earnings metrics are already breaching the lows of the 2008 financial crisis. The profit margin for the 108-member MSCI World Energy Sector Index, which includes Exxon Mobil Corp. and Chevron Corp., is the lowest since at least 1995, the earliest for when data is available.</p> <p>“There are several credits which simply won’t be able to refinance and extend maturities and they may need to raise additional equity,” said Eirik Rohmesmo, a credit analyst at Clarksons Platou Securities AS in Oslo. “The question is: would they be able to do that with debt at these levels?”</p> <p>The answer is no, as we <a href="http://www.zerohedge.com/news/2015-08-17/what-happens-energy-stock-prices-if-sector-multiple-reverts-mean">showed ten days ago</a>.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2015/08/fracking%20finance%20dries%20up.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2015/08/fracking%20finance%20dries%20up_0.jpg" width="600" height="419" /></a></p> <p>It gets worse:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>Some U.S. producers gained breathing space by leveraging their low-cost assets to raise funds earlier this year and repay debt, Goldman Sachs Group Inc. wrote in a Aug. 6 report. This helped companies shore up their capital and reduce debt-servicing costs.</p> <p>&nbsp;</p> <p>That may no longer be an option because energy companies have been the worst performers in the past year among 10 industry groups in the MSCI World Index.</p> <p>&nbsp;</p> <p>Credit-rating downgrades are putting additional strain on the ability of oil companies to raise money cheaply. Standard &amp; Poor’s cut the rating of Eni SpA, Italy’s biggest oil company, in April, while Moody’s Investors Service downgraded Tullow Oil Plc’s debt in March.<br />Spokesmen for Eni and Tullow declined to comment.</p> </blockquote> <p>It is the small companies who will face the creditor firing squad first:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>“Clearly, those companies with debt to pay will have one eye firmly on oil prices,” said Christopher Haines, a senior oil and gas analyst at BMI in London. “With revenues collapsing and debt soon to mature, a growing number of companies may find themselves unable to meet repayment schedules.”</p> </blockquote> <p>The only loophole: if oil somehow does rebound to $60 or above, which absent a Saudi collapse or a Chinese recovery, will not happen for a while. If not, the current period of calm, where companies are racing for the producing bottom, will very soon come to an end as will the disposable cash of the energy industry. At that point the administration will have to make a choice: bail out the energy sector or reap the consequences.</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="970" height="508" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/20150827_EnergyLev.jpg?1440723310" /> </div> </div> </div> http://www.zerohedge.com/news/2015-08-27/scariest-number-oil-industry-550-billion#comments Bond default Exxon goldman sachs Goldman Sachs Reality recovery Fri, 28 Aug 2015 01:45:19 +0000 Tyler Durden 512495 at http://www.zerohedge.com Yuan Strengthens Most Since March, China Unveils New Bailout Source After Rescue Fund Runs Out Of Fire-Power http://www.zerohedge.com/news/2015-08-27/china-strengthens-yuan-fix-most-march-bailout-fund-runs-out-fire-power-dong-leaks-lo <p><u><strong>Update: China readies new bailout mechanism - pooling CNY2 Trillion of Pension funds for &quot;investment&quot;</strong></u></p> <p><u><strong>Straight from Japan&#39;s playbook...</strong></u></p> <ul> <li><strong>*CHINA TO START PENSION FUNDS INVESTMENT AFTER FUNDS POOLED: MOF</strong></li> <li><strong>*CHINA DRAFTING RULES ON POOLING, TRANSFERRING PENSION FUNDS: YU</strong></li> <li><u><strong>*ABOUT 2T YUAN FROM CHINA PENSION FUNDS CAN BE INVESTED: YU</strong></u></li> <li><u><strong>*CHINA CAN ENSURE STABLE LONG TERM RETURN ON PENSION FUNDS: YU</strong></u></li> <li><strong>*CHINA TO CAP RISK EXPOSURE IN PENSION FUNDS INVESTMENT: YU</strong></li> <li><strong>*CHINA FINANCE MINISTRY OFFICIAL YU WEIPING COMMENTS AT BRIEFING</strong></li> </ul> <p><strong>How can we be so positive that this is another bailout - simple!</strong></p> <ul> <li><strong>*CHINA PENSION FUNDS&#39; ROLE IS NOT TO RESCUE STOCK MARKET: YU</strong></li> </ul> <p>They denied it was! Of course even more worrying - is this a Greece-esque pooling of pension funds in a desperate grab for cash across the nation?</p> <p><u><strong>We are sure that will work out great!!</strong></u></p> <p>*&nbsp; *&nbsp; *</p> <p>As we detailed earlier...</p> <p>A busy night in AsiaPac before China even opens. <strong>Vietnam had a failed bond auction,</strong> Japanese data was mixed (retail sales good, household spending bad, CPI just right), <strong>Moody&#39;s downgrades China growth</strong> (surprise!), China re-blames US for global market rout, and then the big one hits - China&#39;s bailout fund needs more money (applies for more loans from banks) - in other words - <strong>The PBOC just got a margin call</strong>. China margin debt balance fell for 8th straight day (although the <strong>short-selling balance picked up to 1-week highs</strong>). China unveiled <strong>some economic reforms</strong> - lifting tax exemption and foreign real estate investment rules. <strong>PBOC fixesds the Yuan 0.15% stronger - most since March</strong>, but even with last night&#39;s epic intervention, <strong>SHCOMP looks set for its worst week since Lehman</strong>.</p> <p>&nbsp;</p> <p><span style="text-decoration: underline;"><strong>Vietnam </strong></span>is in trouble...</p> <ul> <li><strong>*VIETNAM FAILS TO SELL ANY OF 3T DONG BONDS OFFERED AUG. 27</strong></li> </ul> <p>The first of many failed auctions for EM we suspect.</p> <ul> <li>But Some good news:</li> <li><strong>*VIETNAM TO RELEASE 18,500 PRISONERS ON 70TH NATIONAL DAY</strong></li> </ul> <p>*&nbsp; *&nbsp; *</p> <p><strong><span style="text-decoration: underline;">Japanese </span></strong>data was mixed,..</p> <ul> <li><strong>*JAPAN JULY OVERALL CONSUMER PRICES RISE 0.2% Y/Y </strong>(in line)</li> <li><strong>*JAPAN JULY RETAIL SALES RISE 1.6% Y/Y </strong>(better than expedted)</li> <li><strong>*JAPAN JULY HOUSEHOLD SPENDING FELL 0.2% Y/Y</strong> (much worse than expedted rise)</li> </ul> <p>So Goldilocks - enough to keep BoJ in the game <a href="http://www.reuters.com/article/2015/08/28/us-japan-economy-cpi-idUSKCN0QX00X20150828"><em>(as Reuters reports)</em></a></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>Japan&#39;s core consumer inflation was flat in the year to July and household spending unexpectedly fell, <strong>casting deeper doubt on the central bank&#39;s forecast that a solid economic recovery will help accelerate inflation to its 2 percent target.</strong></p> <p>&nbsp;</p> <p>While the Bank of Japan has said it will look through the effect of slumping oil costs on inflation, the weak figures <strong>will keep it under pressure to expand its massive stimulus programme.</strong></p> <p>&nbsp;</p> <p><strong>Separate data showed household spending fell 0.2 percent in the year to July, confounding a median market forecast for a 1.3 percent rise and reinforcing concerns about the strength of Japan&#39;s recovery.</strong></p> </blockquote> <p><span style="text-decoration: underline;"><strong>And then there&#39;s China...</strong></span></p> <p>Before we get started, we thought the following comparison of two stock indices today was in order... <em><strong>one is from a totally manipulated market that proclaims itself &#39;open&#39; and &#39;free&#39; with nothing to fear because &quot;the underlying economy is doing great&quot;... and the other is China...</strong></em></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/08-overflow/20150827_Chinaopen1.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/08-overflow/20150827_Chinaopen1_0.jpg" style="width: 600px; height: 699px;" /></a></p> <p><em>Notice how the ramp was almost identical in style also - an initial burst, modst pull back, then big push, then rest, then final surge into close</em></p> <p><strong><a href="http://www.zerohedge.com/news/2015-08-26/time-pull-out-nasdaqchina-comparison-chart">But then again we already explained how past is prologue in this Nasdaq vs SHCOMP world.</a></strong></p> <p>And remember - it&#39;s not China&#39;s fault...</p> <ul> <li><strong>*CHINA STOCK ROUT NOT THE REASON FOR GLOBAL MKT PLUNGE:SEC. NEWS</strong></li> </ul> <p>And then Moody&#39;s did the unpossible...</p> <ul> <li><strong>*MOODY&#39;S CUTS CHINA &#39;16 GDP GROWTH FORECAST TO 6.3% FROM 6.5%</strong></li> </ul> <p><u><strong>But the biggest news is...</strong></u></p> <ul> <li><span style="text-decoration: underline;"><strong>*CHINA&#39;S RESCUE FUND APPLIES FOR MORE LOANS FROM BANKS: CAIXIN</strong></span></li> <li><span style="text-decoration: underline;"><strong>China Securities Finance may have applied for 1.4 trillion yuan ($219 billion) of borrowing in the interbank market, Caixin reported, citing unidentified bank officials. The government should adopt a proactive fiscal policy and further ease monetary policy, the Economic Daily wrote in a front-page commentary.</strong></span></li> </ul> <p>Which means the bailout fund needs a bailout after blowing its load last night.</p> <p>Deleveraging continues:</p> <ul> <li><strong>*SHANGHAI MARGIN DEBT BALANCE FALLS FOR EIGHTH STRAIGHT DAY</strong></li> <li><strong>*SHANGHAI MARGIN DEBT BALANCE FALLS TO LOWEST IN EIGHT MONTHS</strong></li> </ul> <p>Though we note that the short-selling balance rose to one-week highs.</p> <p>Even with last night&#39;s epic intervention, Chinese stocks look set for the worst week since Lehman...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/08-overflow/20150827_Chinaopen2.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/08-overflow/20150827_Chinaopen2_0.jpg" style="width: 600px; height: 302px;" /></a></p> <p>&nbsp;</p> <p>Although they are up at the open...extending gains from the US session...</p> <ul> <li><strong>*FTSE CHINA A50 SEPT. FUTURES RISE 1.7%</strong></li> </ul> <p>But are fading off early highs.</p> <p>And in what appears another reform aimed at improving the economy, China lifts some restrictions...</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong>China&#39;s central tax authority has published a list of tax breaks for which qualifying businesses and other enterprises will no longer be required to seek prior approval to enjoy.</strong></p> </blockquote> <p>And...</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong>The mainland has relaxed foreign investment restrictions in its once-sizzling real estate market as worries mount on capital flight in the wake of a weakening yuan and slowing economic growth.</strong></p> <p>&nbsp;</p> <p>Six governing ministries, including the central bank and the commerce ministry, issued a statement scrapping previous rules that required foreign property investors to pay the full amount of registered capital for their mainland entities to mainland authorities before borrowing any loans or applying for foreign exchange transactions.</p> <p>&nbsp;</p> <p><strong>&quot;The move seems to be aimed at discouraging capital outflow after the devaluation of the yuan,&quot; s</strong>aid Alan Chiang, head of residential in the Greater China region for global property consultancy DTZ.</p> </blockquote> <p>Which we are sure will not be<em> taken advantage </em>of.</p> <p>Finally <a href="http://www.zerohedge.com/news/2015-08-27/its-not-devaluation-if-ministry-truth-says-so-chinas-style-council-takes-currency-tr"><strong>The Yuan - which remember is not being devalued </strong></a>- was fixed 0.15% stronger...</p> <ul> <li><strong>*CHINA SETS YUAN REFERENCE RATE AT 6.3986 AGAINST U.S. DOLLAR</strong></li> <li><strong>*CHINA RAISES YUAN FIXING MOST SINCE MARCH</strong></li> </ul> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/08-overflow/20150827_Chinaopen3.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/08-overflow/20150827_Chinaopen3_0.jpg" style="width: 600px; height: 301px;" /></a></p> <p>&nbsp;</p> <p>Problems continue to mount for the Chinese economy...</p> <ul> <li><strong>*CHINA JULY INDUSTRIAL COMPANIES&#39; PROFIT FALLS 2.9% Y/Y</strong></li> </ul> <p>After a 0.3% drop in June, it&#39;s getting worse.</p> <p>*&nbsp; *&nbsp; *</p> <p><em>Charts: Bloomberg</em></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="962" height="484" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20150827_Chinaopen2.jpg?1440723488" /> </div> </div> </div> http://www.zerohedge.com/news/2015-08-27/china-strengthens-yuan-fix-most-march-bailout-fund-runs-out-fire-power-dong-leaks-lo#comments Bank of Japan Bond China Consumer Prices CPI fixed Goldilocks Japan Lehman Monetary Policy NASDAQ Real estate recovery Reuters Yuan Fri, 28 Aug 2015 01:20:18 +0000 Tyler Durden 512497 at http://www.zerohedge.com China Gets Creative, Turns To Swaps To Manage Yuan http://www.zerohedge.com/news/2015-08-27/china-gets-creative-turns-swaps-manage-yuan <p>Managing markets is hard - especially when you’re doing it on a daily basis while attempting to maintain some semblance of credibility in the face of accusations that, <strong>even in a centrally planned world, your particular brand of interventions are so egregious as to stray outside the bounds of manipulated market decorum.</strong></p> <p>That’s the rather precarious situation that China finds itself in while trying to manage a yuan devaluation that, on the surface anyway, was supposed to represent a move towards liberalization but in fact is requiring more intervention than ever and now threatens to drain the world’s largest store of FX reserves while simultaneously sucking liquidity from the market and working at cross purposes with multiple policy rate cuts.&nbsp;</p> <p>In situations like these, sometimes you have to get creative which is why we weren’t entirely surprised on Thursday when trader chatter indicated that at least one big Chinese bank (on behalf of the PBoC of course) was stomping around in the onshore swaps market and indeed, as you can see from the following chart, there's something odd going on here, and although we can't reconcile their numbers, we have included some commentary from WSJ as well.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user92183/imageroot/2015/08/20150827_YuanSwap1.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user92183/imageroot/2015/08/20150827_YuanSwap1_0.jpg" width="600" height="312" /></a></p> <p>From <a href="http://www.wsj.com/articles/pboc-uses-forex-swaps-to-tame-yuan-expectations-1440669634">WSJ</a>:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><em>The People’s Bank of China intervened in the market for U.S. dollar-yuan foreign-exchange swaps, causing their price to fall sharply, a movement that implies a stronger Chinese currency and lower interest rates in the world’s No. 2 economy in the future, said the people.</em></p> <p>&nbsp;</p> <p><strong><em>Thanks to what each of the three people described as “massive” orders from a few commercial banks acting on the PBOC’s behalf, the so-called one-year dollar-yuan swap spread—in rough terms, a measure of the implied future differential between Chinese and U.S. interest rates—plunged to 1200 points from 1730 points Wednesday.</em></strong></p> <p>&nbsp;</p> <p><em>In the offshore market, the spread dropped to 1950 points from 2310 points Tuesday, following the onshore move.</em></p> <p>&nbsp;</p> <p><em>A drop in the spread for dollar-yuan swaps, which consist of a spot trade and an offsetting forward transaction, would also imply a weaker spot exchange rate at a predetermined future date.</em></p> <p>&nbsp;</p> <p><em><strong>“The central bank chose a rarely used tool this time—the FX swaps—to intervene and it did so via a couple of midsize banks, instead of the usual big state lenders that serve as its agent banks,” </strong>one of the people said.</em></p> <p>&nbsp;</p> <p><em>“In a way, it’s more effective for the central bank to manage people’s outlook of the yuan in the swap market due to the latter’s forward-looking nature,” said one of the people. “It’s likely partly in response to aggressive yuan selloffs in the offshore market.”</em></p> </blockquote> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="962" height="501" alt="" src="http://www.zerohedge.com/sites/default/files/images/user92183/imageroot/20150827_YuanSwap1.jpg?1440722135" /> </div> </div> </div> http://www.zerohedge.com/news/2015-08-27/china-gets-creative-turns-swaps-manage-yuan#comments China Yuan Fri, 28 Aug 2015 01:10:35 +0000 Tyler Durden 512496 at http://www.zerohedge.com The Great Wall Of Money http://www.zerohedge.com/news/2015-08-27/great-wall-money <p><a href="https://hindesightletters.com/blog/great-wall-money-ben-davies/"><em>Excerpted from Hindesight Letters (authored by Ben Davis),</em></a></p> <h2><span style="text-decoration: underline;">The Great Wall Of Money.</span></h2> <p><strong>China is in severe trouble and that trouble has already been reverberating around EM exporters for a number of years.</strong> It is just one of many dollar currency peg countries that have experienced tightening conditions because of higher US interest rate guidance and dollar strength. An unwelcome addition to their own domestic issues, but always a circular outcome, as they are inextricably linked to the US by their Bretton Woods II relationship. By devaluing and thus de-stabilising the &#39;nominal&#39; anchor for Asian exchange rates,<strong> they will crush the growth engine of the developed countries on whose consumption they so rely on.</strong></p> <p><strong>Since 2009, we have forecast and documented the unwinding of the Bretton Woods II currency system. </strong>Financialisation of our economies and markets, which escalated post-2008 at the instigation of governments and central bankers, is going to go into full reverse for all asset classes. Economies and markets are so entwined that a drop in asset classes will lead the world back into recession. In 2013, we believed the odds had tilted firmly towards increasing debt deflation at the hands of China. Large current account deficits had led to unsustainable debt creation, and as a consequence the trade deficit countries were the first to experience a severe financial crisis. However, on the other side of the equation, the surplus countries were now experiencing their reaction to the crisis.</p> <p><em>In November 2013, we wrote: <strong>&quot;The deleveraging process which began in 2008 has been a slow burner but is likely now in full swing. The deflationary risks are very high. China is the driver. All eyes on China.&quot;</strong></em></p> <p><strong>We conceive that this slow-burner of deleveraging, which has occurred since the 2008 crisis, is potentially about to engulf all asset prices. </strong>We are beginning to think the unthinkable &ndash; that just maybe asset prices will back up 20 to 30% and fast and that through the autumn we could experience even greater price depreciation.</p> <p>Almost 8 years on from the GFC, the Dow Jones Industrials are perched on the edge of a sharp drop. <strong>Will the Ghost of 1937 revisit us eight years on from the Great Crash of 1929, when U.S. stocks and the world economy got roiled all over again?</strong> This is already unfolding as we speak. Sean Corrigan&#39;s macro analysis in our &lsquo;MidWeek Macro Musings and Money, Macro and Markets&rsquo; at HindeSightletters.com has highlighted where the fissures are opening in the global economy and markets. We are posting samples of our work from May to July in this letter to share with you how we began to believe that a global asset crash was at hand.</p> <p><strong>The Yuan movement may well send more Chinese capital floating across the globe into financial assets and real estate, such as those at Pink Floyd&#39;s and London&#39;s iconic Battersea Power Station, <u>but it will be short-lived.</u></strong> The debt deleveraging which has been engulfing Emerging Markets has just begun to turn into a ranging inferno, which will eventually burn down all, especially overpriced global assets.</p> <p>Since the GFC, &#39;The Great Wall of Money&#39; that Bretton Woods II has furnished via its vendor-financing relationship, has masked the deleveraging of our world economy. <strong>The Great Wall is about to collapse and fall.</strong></p> <p>*&nbsp; *&nbsp; *</p> <p><em><strong><a href="https://hindesightletters.com/home/">The full article is available and ready to download from Hindesight&#39;s homepage</a>, or simply click&nbsp;the front cover below for the PDF</strong></em></p> <p><a href="https://hindesightletters.com/documents/128/HindeSight_Investor_Letter_Aug__2015_The_Great_Wall_of__Money_TR_1.pdf"><img height="542" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/08-overflow/20150827_greatwall.jpg" width="498" /></a></p> <p><strong>In it we discuss the following in a load more detail:</strong></p> <p><strong>A Probable Trinity</strong> - In October 2010, we began our oft repeated narrative about the vulnerability of the Bretton Woods II monetary system in the provocatively entitled letter - <a href="http://www.hindecapital.com/docs/hil_reports/HindeSight%20Investor%20Letter%20October%202010%20The%20World%20Monetary%20Earthquake.pdf">&#39;The World Monetary Earthquake - The Dash from Cash&#39; (The Orient Perspective)</a>.</p> <hr /> <p><strong>Yuan More Time</strong> - Despite PBoC protestations, this Chinese currency move is not a one off event. There will be many more devaluations because, as you will read, FX reserves can abate rapidly. Besides which, we believe the markets have them on the back foot.</p> <hr /> <p><strong>Taels from Cathay</strong> - As Sean (Corrigan) put it in the July/Aug <a href="https://hindesightletters.com/letters/macro-letter/">Money Macro &amp; Markets (MMM)</a>: &quot;Wherever you look around the fringes of China&mdash;and, by extension, Greater Asia&mdash;it is hard to avoid evidence of the woes being suffered.</p> <hr /> <p><strong>The Great Wall of Money FALLS</strong> - We wrote in a recent Investor Letter: &quot;What is increasingly evident is that market participants are increasingly embroiled in a reflexive relationship between central bank actions, guidance and price action. The more the market moves contrary to central bank desires &ndash; i.e. downwards - the more the central bank injects the bubble money and reassures markets with the promise of more infusions of its rich elixir.&rdquo;</p> <hr /> <p><strong>Anglo Saxon APP&#39;mosphere Polluted</strong> - A strong dollar currency has created headwinds for the U.S. economy through a range of channels. The latest actions of the Chinese central bank will intensify the negative impact by fostering more dollar appreciation. The U.S. already runs a significant trade deficit with China that will only be exacerbated now. The dollar has already become too restrictive and the global carry trade, which borrowed capital from the East (and lately Europe), was parked in the U.S. and other safe Anglo-Saxon currencies and markets. This capital is very vulnerable.</p> <hr /> <p><strong>Chinese Smog Pollutes Albion</strong> - The resource sector collapse and the likely end of a 32-year-cycle in 2011 has signalled that these countries are near the end of receiving the foreign capital with which they balance their books. Bar a flurry of Chinese flight capital, housing prices will begin to revert to their mean as the debt deleveraging impulse sends the Chinese smog over Albion and its commonwealth compadres.</p> <hr /> <p><strong>ReMeBer Gold?</strong> This year, I spoke to <a href="https://realvisiontv.com/">RealVision TV</a> and stated that the market was trend-ready in gold and that, as managers of a long-only gold fund, we were trying to be agnostic and position ourselves for a break either way. I did, however, mention that when our models are trend-ready, we often get a false sharp break one way first, only to see a snap back within a few days or weeks.</p> <hr /> <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="498" height="542" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20150827_greatwall.jpg?1440713121" /> </div> </div> </div> http://www.zerohedge.com/news/2015-08-27/great-wall-money#comments Carry Trade China Currency Peg Global Economy Housing Prices Price Action Real estate Recession Trade Deficit Yuan Fri, 28 Aug 2015 01:00:00 +0000 Tyler Durden 512487 at http://www.zerohedge.com US Automaker Panic Button Looms After China's Top Carmaker Warns Of "Grim" Outlook http://www.zerohedge.com/news/2015-08-27/us-automaker-panic-button-looms-after-chinas-top-carmaker-warns-grim-outlook <p><a href="http://www.zerohedge.com/news/2015-08-14/are-automakers-about-hit-panic-button">Just two weeks ago we explained in a few simple charts why US auotmakers have a major problem looming over them.</a> Today, <a href="http://www.reuters.com/article/2015/08/27/saic-motor-results-idUSL4N1122UN20150827">as Reuters reports</a>, that <strong>&quot;if we build them, they will come&quot; strategy has imploded</strong> as China&#39;s largest automaker warns <strong><em>&quot;the domestic market situation in the second half of the year remains grim.&quot; </em></strong>With Q2 US GDP driven by a massive inventory surge, and the majority of that from autos, any hope for a sales rebirth to burn through that over-burden is a long-lost dream now as SAIC sees little to no growth over 2014.</p> <p>As we previously noted, <strong>Automakers just unleashed a massive production surge</strong> to keep the dream alive...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/08/20150814_IP3.jpg"><img height="282" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/08/20150814_IP3.jpg" width="600" /></a></p> <p>&nbsp;</p> <p><strong>With inventories at record highs </strong>(having risen for 61 straight months)...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/08/20150813_autoinv.jpg"><img height="301" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/08/20150813_autoinv.jpg" width="600" /></a></p> <p>&nbsp;</p> <p><strong>Which would be fine if sales were keeping up - but they are not...</strong></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/08/20150811_recess1.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/08/20150811_recess1.jpg" style="width: 601px; height: 314px;" /></a></p> <p>&nbsp;</p> <p><a href="http://www.zerohedge.com/news/2015-08-13/dont-look-now-subprime-auto-bubble-may-be-bursting"><strong>And now the subprime auto loan market is set to collapse...</strong></a><strong> </strong>And further, exactly as we warned, the region where sales were supposed to soar is collapsing...<a href="http://www.reuters.com/article/2015/08/27/saic-motor-results-idUSL4N1122UN20150827"> As Reuters reports,</a></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong>China&#39;s largest automaker SAIC Motor Corp Ltd warned on Thursday of a grim outlook for the overall vehicle market in the second half of the year, </strong>as the slowest economic growth in 25 years and a downturn in the stock market puts off buyers.</p> <p>&nbsp;</p> <p><strong>Vehicle sales in China, the world&#39;s largest car market, rose a meagre 0.4 percent in the first seven months and are predicted to grow 3 percent this year, less than half the 2014 growth rate,</strong> the China Association of Automobile Manufacturers said.</p> <p>&nbsp;</p> <p>The forecast by SAIC, which has joint ventures with Volkswagen AG and General Motors Co in addition to making its own brand of vehicles, follows similar warnings of a slowdown in sales from several automakers.</p> <p>&nbsp;</p> <p><strong>&quot;In the short term, although the domestic market situation in the second half of the year remains grim, </strong>following the macro economy&#39;s stabilized recovery, there are still structural growth opportunities,&quot; the company said in its earnings statement.</p> <p>&nbsp;</p> <p>SAIC forecast overall sales of passenger and commercial vehicles in China to total 24.1 million this year, <strong>a slight increase from 2014.</strong> It did not elaborate.</p> </blockquote> <p>*&nbsp; *&nbsp; *<br />We&#39;re gonna need a bigger bailout...</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="577" height="318" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20150827_autos.jpg?1440708312" /> </div> </div> </div> http://www.zerohedge.com/news/2015-08-27/us-automaker-panic-button-looms-after-chinas-top-carmaker-warns-grim-outlook#comments China General Motors recovery Reuters Volkswagen Fri, 28 Aug 2015 00:30:00 +0000 Tyler Durden 512473 at http://www.zerohedge.com It's Official: China Confirms It Has Begun Liquidating Treasuries, Warns Washington http://www.zerohedge.com/news/2015-08-27/its-official-china-confirms-it-has-begun-liquidating-treasuries-warns-washington <p>On Tuesday evening, <a href="http://www.zerohedge.com/news/2015-08-26/what-would-happen-if-everyone-joins-china-dumping-treasurys">we asked</a> what would happen if emerging markets joined China in dumping US Treasurys. For months we’ve documented the PBoC’s liquidation of its vast stack of US paper. Back in July for instance, we noted that China <a href="http://www.zerohedge.com/news/2015-07-17/china-dumps-record-143-billion-us-treasurys-three-months-belgium">had dumped</a> a record $143 billion in US Treasurys in three months via Belgium, <a href="http://www.zerohedge.com/news/2015-07-21/chinas-record-dumping-us-treasuries-leaves-goldman-speechless">leaving Goldman speechless</a> for once.&nbsp;</p> <p>We followed all of this up this week by noting that thanks to the new FX regime (which, in theory anyway, should have required less intervention), <strong>China has <a href="http://www.zerohedge.com/news/2015-08-25/devaluation-stunner-china-has-dumped-100-billion-treasurys-past-two-weeks">likely sold</a> somewhere on the order of $100 billion in US Treasurys in the past two weeks alone </strong>in open FX ops to steady the yuan. Put simply, as part of China's devaluation and subsequent attempts to contain said devaluation, China has been purging an epic amount of Treasurys.&nbsp;</p> <p>But even as the cat was out of the bag for Zero Hedge readers and even as, to mix colorful escape metaphors, the genie has been out of the bottle since mid-August for China which, thanks to a steadfast refusal to just float the yuan and be done with it, will have to continue selling USTs by the hundreds of billions, the world at large was slow to wake up to what China’s FX interventions actually implied until Wednesday when two things happened: i) Bloomberg, citing fixed income desks in New York, noted "substantial selling pressure" in long-term USTs emanating from somebody in the "Far East", and ii) Bill Gross asked, in a tweet, if China was selling Treasurys. </p> <p>Sure enough, on Thursday we got confirmation of what we’ve been detailing exhaustively for months. Here’s <a href="http://www.bloomberg.com/news/articles/2015-08-27/china-said-to-sell-treasuries-as-dollars-needed-for-yuan-support">Bloomberg</a>:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong><em>China has cut its holdings of U.S. Treasuries this month to raise dollars needed to support the yuan in the wake of a shock devaluation two weeks ago, according to people familiar with the matter.</em></strong></p> <p>&nbsp;</p> <p><em>Channels for such transactions include China selling directly, as well as through agents in Belgium and Switzerland, said one of the people, who declined to be identified as the information isn’t public. <strong><span style="text-decoration: underline;">China has communicated with U.S. authorities about the sales</span>,</strong> said another person. They didn’t reveal the size of the disposals.</em></p> <p>&nbsp;</p> <p><em>The latest available Treasury data and estimates by strategists suggest that China controls $1.48 trillion of U.S. government debt, according to data compiled by Bloomberg. That includes about $200 billion held through Belgium, which Nomura Holdings Inc. says is home to Chinese custodial accounts.</em></p> <p>&nbsp;</p> <p><em><img src="http://www.zerohedge.com/sites/default/files/images/user92183/imageroot/2015/08/ChinaUSTHoldings.png" width="353" height="344" /><br /></em></p> <p>&nbsp;</p> <p><em><strong>The PBOC has sold at least $106 billion of reserve assets in the last two weeks, including Treasuries, according to an estimate from Societe Generale SA. </strong>The figure was based on the bank’s calculation of how much liquidity will be added to China’s financial system through Tuesday’s reduction of interest rates and lenders’ reserve-requirement ratios. The assumption is that the central bank aims to replenish the funds it drained when it bought yuan to stabilize the currency.</em></p> </blockquote> <p>Now that what has been glaringly obvious for at least six months has been given the official mainstream stamp of fact-based approval, the all-clear has been given for rampant speculation on what exactly this means for US monetary policy. Here’s Bloomberg again:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><em>China selling Treasuries is “not a surprise, but possibly something which people haven’t fully priced in,” said Owen Callan, a Dublin-based fixed-income strategist at Cantor Fitzgerald LP. <strong>“It would change the outlook on Treasuries quite a bit if you started to price in a fairly large liquidation of their reserves over the next six months or so as they manage the yuan to whatever level they have in mind.”</strong></em></p> <p>&nbsp;</p> <p><em>“By selling Treasuries to defend the renminbi, <strong>they’re preventing Treasury yields from going lower despite the fact that we’ve seen a sharp drop in the stock market,</strong>” David Woo, head of global rates and currencies research at Bank of America Corp., said on Bloomberg Television on Wednesday. “China has a direct impact on global markets through U.S. rates.”</em></p> </blockquote> <p>As we discussed on Wednesday evening, we do, thanks to a review of the extant academic literature undertaken by Citi, have an idea of what foreign FX reserve liquidation means for USTs. "Suppose EM and developing countries, which hold $5491 bn in reserves, <strong>reduce holdings by 10% over one year - this amounts to 3.07% of US GDP and means 10yr Treasury yields rates rise by a mammoth 108bp ,"</strong> Citi said, in a note dated earlier this week.&nbsp;</p> <p>In other words, for every $500 billion in liquidated Chinese FX reserves, there's an attendant 108bps worth of upward pressure on the 10Y. Bear in mind here that thanks to the threat of a looming Fed rate hike and a litany of other factors including plunging commodity prices and idiosyncratic political risks, EM currencies are in free fall which means that it's not just China that's in the process of liquidating USD assets.&nbsp;</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user92183/imageroot/2015/08/20150826_EMFX.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user92183/imageroot/2015/08/20150826_EMFX_0.jpg" width="600" height="300" /></a></p> <p>The clear takeaway is that there's a substantial amount of upward pressure building for UST yields and that is a decisively undesirable situation for the Fed to find itself in going into September. On Wednesday we summed the situation up as follows: "one of the catalysts for the EM outflows is the looming Fed hike which, when taken together with the above, means that if the FOMC raises rates, they will almost surely accelerate the pressure on EM, triggering further FX reserve drawdowns (i.e. UST dumping), resulting in substantial upward pressure on yields and prompting an immediate policy reversal and perhaps even QE4."&nbsp;</p> <p>Well now that China's UST liquidation frenzy has reached a pace where it could no longer be swept under the rug and/or played down as inconsequential, and now that Bill Dudley has <a href="http://www.zerohedge.com/news/2015-08-26/dudley-says-we-are-long-way-additional-qe">officially opened the door</a> for "additional quantitative easing", it would appear that the only way to prevent China and EM UST liquidation from, as Citi puts it, "choking off the US housing market," and exerting a kind of forced tightening via the UST transmission channel, will be for the FOMC to usher in QE4.</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="571" height="321" alt="" src="http://www.zerohedge.com/sites/default/files/images/user92183/imageroot/GreatWall.png?1440673611" /> </div> </div> </div> http://www.zerohedge.com/news/2015-08-27/its-official-china-confirms-it-has-begun-liquidating-treasuries-warns-washington#comments Bank of America Bank of America Belgium Bill Dudley Bill Gross China fixed Housing Market Monetary Policy Nomura Quantitative Easing Renminbi Switzerland Yuan Fri, 28 Aug 2015 00:27:29 +0000 Tyler Durden 512411 at http://www.zerohedge.com Global Grain Stocks At 30 Year Highs Mean Food Deflation Is Next http://www.zerohedge.com/news/2015-08-27/global-grain-stocks-30-year-highs-mean-food-deflation-next <p>Everywhere you look there’s still more evidence that the world economy is grappling with a &nbsp;global deflationary supply glut.</p> <p>To be sure, this wasn’t supposed to happen.&nbsp;</p> <p><strong>Trillions in central bank cash and seven years of ZIRP across DMs was supposed to give a defibrillator shock to global demand and trade.</strong> Instead, the wealth effect never trickled down (surprise!) and wide open capital markets only served to keep insolvent producers in business, contributing to still more supply as everyone hangs on until the bitter end. As China’s slowdown continues unabated, the commodity hoarding becomes more evident and indeed on Thursday, <strong>The International Grains Council reported that global grain stocks are forecast to hit 447 million metric tons, the highest level in 29 years.&nbsp;</strong></p> <p>From the report:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><em>End-season grain stocks in 2015/16 (aggregate of respective local marketing years) are now placed at 447m t, up fractionally y/y. While carryovers of wheat, barley, sorghum and oats are expected to increase, maize inventories are seen retreating slightly from last year’s levels. Trade in the year ending June 2016 is forecast to be down by 2% y/y. As China has recently been a heavy importer of feedstuffs, including sorghum, barley and DDG, traders are wary of potential changes to state support mechanisms, which could alter buying patterns.</em>&nbsp;</p> </blockquote> <p>And more from <a href="http://www.bloomberg.com/news/articles/2015-08-27/world-grain-stockpiles-at-3-decade-high-after-harvests-spur-glut">Bloomberg</a>:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><em><strong>Wheat and corn futures in Chicago are heading for a third year of losses after back-to-back bumper global harvests and world wheat production this year will match last season’s record 720 million tons, the IGC said.</strong> European wheat crops escaped damage from heat this summer, and prospects for the U.S. corn harvest have improved, said Amy Reynolds, a senior economist at the council.</em></p> <p>&nbsp;</p> <p><strong><em>Corn futures declined 6.2 percent this year on the Chicago Board of Trade and wheat slipped 17 percent. The commodity is trading about 6 percent above a five-year low set in May.</em></strong></p> <p>&nbsp;</p> <p><em>France, the European Union’s largest wheat grower, will harvest 41 million tons of the grain, the IGC said. That’s higher than FranceAgriMer’s outlook earlier this month for a record 40.4 million tons. Surging supplies of grain have filled up silos in Rouen and Dunkirk and sent futures in Paris to a nine-month low.</em></p> </blockquote> <p><a href="http://www.zerohedge.com/sites/default/files/images/user92183/imageroot/2015/08/20150827_comms3.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user92183/imageroot/2015/08/20150827_comms3_0.jpg" width="600" height="314" /></a></p> <p>So in the end, it's simply more oversupply in the face of still depressed demand with no hope of a turnaround on the horizon as China lands hard and consumers are constrained by lackluster wage growth and subpar DM economic "recoveries."&nbsp;</p> <p>We'll close with what we said on Sunday in "<a href="http://www.zerohedge.com/news/2015-08-23/global-trade-freefall-container-freight-rates-asia-europe-crash-60-three-weeks">Global Trade In Freefall: Container Freight Rates From Asia To Europe Crash 60% In Three Weeks</a>":</p> <p>For now, however, printing money no longer equates to boosting global trade. In fact, easy monetary policy now appears to be backfiring, as even the "market" has figured out.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2015/08/2015823_worldtrade.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2015/08/2015823_worldtrade_0.jpg" width="499" height="264" /></a></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2015/08/20150823_trade2.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2015/08/20150823_trade2_0.jpg" width="501" height="256" /></a></p> <p>&nbsp;</p> <p>So, sarcasm aside, what really happens next, to both shipping, trade, the global economy and markets? Sadly, unless central planning finally <em>works</em> after 7 years of failing ever upward... this.</p> <p><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2015/08/maersk%202.jpg" width="500" height="353" /></p> <p>* &nbsp;* &nbsp;*</p> <p>Full IGC report:</p> <p style="margin: 12px auto 6px auto; font-family: Helvetica,Arial,Sans-serif; font-style: normal; font-variant: normal; font-weight: normal; font-size: 14px; line-height: normal; font-size-adjust: none; font-stretch: normal; display: block;"> <a href="https://www.scribd.com/doc/276565615/gmrsumme" title="View gmrsumme on Scribd" style="text-decoration: underline;">gmrsumme</a></p> <p><iframe src="https://www.scribd.com/embeds/276565615/content?start_page=1&amp;view_mode=scroll&amp;show_recommendations=true" width="100%" height="600" frameborder="0" scrolling="no"></iframe></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="962" height="503" alt="" src="http://www.zerohedge.com/sites/default/files/images/user92183/imageroot/20150827_comms3.jpg?1440721603" /> </div> </div> </div> http://www.zerohedge.com/news/2015-08-27/global-grain-stocks-30-year-highs-mean-food-deflation-next#comments Capital Markets China France Global Economy Monetary Policy Fri, 28 Aug 2015 00:26:59 +0000 Tyler Durden 512494 at http://www.zerohedge.com