http://www.zerohedge.com/fullrss2.xml/%2A%7CARCHIVE%7C%2A en The End Game Of Bubble Finance - Political Revolt http://www.zerohedge.com/news/2016-06-27/end-game-bubble-finance-political-revolt <p><a href="http://davidstockmanscontracorner.com/the-end-game-of-bubble-finance-political-revolt/"><em>Submitted by David Stockman via Contra Corner blog,</em></a></p> <p>During Friday&rsquo;s bloodbath I&nbsp;heard a&nbsp;CNBC anchor lady assuring her (scant)&nbsp;remaining audience that Brexit wasn&rsquo;t a big sweat. That&rsquo;s because&nbsp;it is purportedly&nbsp;a<em><strong> political</strong> </em>crisis, not a <em><strong>financial</strong></em> one.</p> <p>Presumably in the rarified canyons of Wall Street, politics doesn&rsquo;t matter much. After all, when things get desperate enough, Washington caves and does &ldquo;whatever it takes&rdquo; to get the stock averages moving upward again.</p> <p><strong>Here&rsquo;s a news flash. That&rsquo;s all about to change.</strong></p> <p>The era of Bubble Finance was enabled by a political abdication&nbsp;nearly 50 years ago. But as Donald Trump rightly observed in the wake of Brexit, the voters are about to take back their governments, <strong>meaning that the financial elites of the world are in for a rude awakening.</strong></p> <p>To be sure, the apparent&nbsp;lesson of the&nbsp;first&nbsp;TARP vote when the bailout was rejected by the House&nbsp;in September 2008 was that politics didn&rsquo;t matter so much.</p> <p>Wall Street&rsquo;s 800 point hissy fit was all it took to prostrate the politicians.&nbsp;Indeed, the&nbsp;presumptive free market party then domiciled in the White House quickly shed its Adam Smith neckties and forced the congressional&nbsp;rubes from the red states to walk the plank a second time in order to reverse the decision.</p> <p><strong>There was a crucial&nbsp;predicate for this classic crony capitalist capture of the authority and purse of the state, however, that should not be overlooked.</strong> Namely, that in the mid-cycle period of the world&rsquo;s 20-year experiment in central bank driven Bubble Finance the rubes had not yet come to fully appreciate that they were getting the short end of the stick.</p> <p>Indeed, the earlier phases of the bubble era&nbsp;witnessed an enormous inflation of residential housing prices. For instance, between Greenspan&rsquo;s arrival at the Fed in August 1987 and the housing bubble peak in 2007,&nbsp;the value of residential housing rose&nbsp;from <em><strong>$5.5 trillion&nbsp;to $22.5 trillion or by 4X.&nbsp;</strong></em></p> <p>The greatest extent of the housing bubble occurred in the bicoastal precincts, of course. But it did lift handsomely&nbsp;the value of 50 million owner occupied homes in the&nbsp;flyover zone, as well.</p> <p>Accordingly, the latter&nbsp;did not yet&nbsp;see&nbsp;that the new regime was stacked&nbsp;in favor of the top 10%&nbsp;of the&nbsp;economic and wealth ladder, which owns 85% of the non-housing&nbsp;financial assets.&nbsp;Nor was it yet evident as to the degree to which&nbsp;massive money printing&nbsp;under conditions of Peak Debt&nbsp;almost exclusively stimulates Wall Street speculation, not main street production, jobs, incomes and spending.</p> <p><strong>In any event,&nbsp;by the eve of the great financial crisis, the&nbsp;GOP was actually controlled by the racketeers of the Beltway and the Wall Street gamblers, not the red state voters who had elected it.</strong></p> <p>In fact, Goldman&rsquo;s Sach&rsquo;s plenipotentiary to Washington, Hank&nbsp;Paulson,&nbsp;was in complete command of the elected side of government. At the same time,&nbsp;the Bush White House&nbsp;had populated the&nbsp;central banking branch of the state with proponents of monetary activism, who were more than ready to authorize &ldquo;heroic&rdquo; measures to reflate the bubble.</p> <p>Needless to say, the leader of the pack, Ben Bernanke, had been groomed for the role of chief bailster by none other than Milton Freidman. The latter, in turn, had led Nixon astray at Camp David 37&nbsp;year earlier when he persuaded Tricky Dick to&nbsp;default on the dollar&rsquo;s link to gold, thereby&nbsp;opening the door to fiat money, massive credit expansion and the modern era of Bubble Finance.</p> <p>There is a straight line of linkage from that great historical inflection point to&nbsp;Friday&rsquo;s Brexit uprising. Namely,&nbsp;Nixon&rsquo;s abandonment of the Bretton Woods gold exchange standard, as deficient as it had been, was also&nbsp;a profoundly political act.</p> <p><em><strong>It&nbsp;resulted in the abdication of economic and financial policy to an unelected elite and their eventual capture by Wall Street and the forces of speculation and financialization unleashed by unanchored central bank money and credit.</strong></em></p> <p>Nixon&rsquo;s destruction of Bretton Woods&nbsp;was the enabling event.&nbsp;It turned central bankers and financial officialdom loose to operate a&nbsp;dictatorship of bailouts, bubbles and financialization of economic life.&nbsp;And to spread this baleful regime to Europe, Japan and the rest of the world, too.</p> <p><strong>To be sure, it took&nbsp;more than two decades&nbsp;to fully materialize. </strong>There were deeply embedded institutional cultures and ideologies among policy-makers that restrained opened-ended resort to the printing press and financial bailouts.</p> <p>The Paul Volcker interlude in the US and the determined sound money regime of the Bundesbank are cases in point.</p> <p><strong>But eventually&nbsp;the old regime gave way.</strong> There&nbsp;emerged Greenspan&rsquo;s&nbsp;dotcom and housing&nbsp;bubbles, the&nbsp;rise of the ECB and the financial rulers of&nbsp;Brussels, the massive bailouts triggered by the&nbsp;global&nbsp;crisis of 2008-2009, the hideous expansion of central bank balance sheets during the era of QE and ZIRP, the emergence of the&nbsp;destructive &ldquo;whatever it takes&rdquo;&nbsp;regime of Draghi&nbsp;and the current financial lunacy of subzero interest rates across much of the planet.</p> <p><u><strong>But here&rsquo;s the thing. The rubes are on to the rig.</strong></u></p> <p>Twenty-years of Bubble Finance have made the City of London an oasis of splendor and prosperity, for example,&nbsp;but it has left the hinterlands of Britain hollowed-out&nbsp;industrially, resentful&nbsp;of the unearned&nbsp;prosperity of the elites and fearful of the open-ended flow if&nbsp;immigrants and imports enabled by the superstate in Brussels. As on observer put it, the geography of&nbsp;the vote said it all:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong>Look at the map of those results, and that huge island of &ldquo;in&rdquo; voting in London and the south-east; or those jaw-dropping vote-shares for remain in the centre of the capital:</strong> 69% in Tory Kensington and Chelsea; 75% in Camden; 78% in Hackney, contrasted with comparable shares for leave in such places as Great Yarmouth (71%), Castle Point in Essex (73%), and Redcar and Cleveland (66%). Here is a country so imbalanced it has effectively fallen over.</p> </blockquote> <p><u><strong>The rise of Trumpism in the US reflects the same social and economic fracture.</strong></u> To wit, Bubble Finance has also drastically unbalanced the US as between the bicoastal zones&nbsp;of prosperity it has enabled and the fly-over zones its has effectively left behind.</p> <p>It&nbsp;goes without saying that massive debt monetization and 90 months of zero interest rates has been a boon for the Imperial City. With almost no restraints on its ability to borrow and spend, the military/industry/security/surveillance complex has prospered like never before, as has the medical care cartel, the education syndicate and the lesser beltway rackets such as green energy and the&nbsp;farm subsidy/food stamp/ethanol alliance.</p> <p><strong>Likewise, asset gatherers, financial intermediaries, brokers, punters, financial engineers and corporate strip-miners&nbsp;have prospered enormously because the market has been rigged every since&nbsp;Black Monday in October 1987.</strong>&nbsp;That is, the cost of debt and carry trades have been falsified, downside hedging&nbsp;insurance in the casino has become dirt cheap and time after time the Fed&rsquo;s put has bailed-out speculations gone bust.</p> <p>Even what passes for entrepreneurial&nbsp; breakouts in the world of social media and new tech isn&rsquo;t really. It&rsquo;s just another variant of the dotcom bubble in which a few good innovations are being drastically over-valued (e.g. Uber)&nbsp;while a tsunami of worthless and pointless start-ups have become giant cash burning machines (e.g. Tesla).</p> <p><strong>Taken altogether, they are&nbsp;funding a ephemeral complex of pseudo&nbsp;businesses, pseudo&nbsp;jobs and pseudo start-up networks that are attracting tens of billions in venture capital that amount to malinvestment.</strong></p> <p>Meanwhile, the main street economy has atrophied. The first round of Bubble Finance buried the middle class in debt, while the post-crisis intensification has turned the C-suites of America into a giant stock trading and financial engineering arena.</p> <p><strong>Contrary to the bubblevision patter, in fact, there has been no business deleveraging at all. </strong>On the eve of the crisis in Q4 2007, total non-financial business debt outstanding was $11 trillion, and it is now $13.5 trillion.</p> <p>But on the margin, ever dime of that massive swelling of the business debt burden represents real economic resources cycled out of the flyover zones and pumped back into the financial casino&rsquo;s and the bicoastal elites which fatten on them.</p> <p>The recent studies of the Census Bureau data which show that<strong> just 20 counties have generated half of all start-ups since the financial crisis provides another take on the underlying fissure</strong>:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>Americans in small towns and rural communities are dramatically less likely to start new businesses than they have been in the past, an unprecedented trend that jeopardizes the economic future of vast swaths of the country.</p> <p>&nbsp;</p> <p>The recovery from the Great Recession has seen a nationwide slowdown in the creation of new businesses, or start-ups. What growth has occurred has been largely confined to a handful of large and innovative areas, including Silicon Valley in California, New York City and parts of Texas, according to <a href="http://eig.org/recoverymap" target="_blank"><span style="text-decoration: underline;"><span style="color: #0089c4;">a new analysis</span></span></a> of Census Bureau data&nbsp;by the Economic Innovation Group, a bipartisan research and advocacy organization that was founded by the Silicon Valley entrepreneur Sean Parker and small group of investors.</p> <p>&nbsp;</p> <p>That concentration of start-up activity is unusual, economists say. In the early 1990s recovery, 125 counties combined to generate half the total new business establishments in the country. In this recovery, just&nbsp;20 counties have generated half the growth.</p> <p>&nbsp;</p> <p>The data suggest highly populated areas are not adding start-ups faster now than they did in the past; they appear simply to be treading water. But rural areas have seen their business formation fall off a cliff.</p> <p>&nbsp;</p> <p>Economists say the divergence appears to reflect a combination of trends, all of which have harmed small businesses in rural America. Those include the rise of big-box retailers such as Walmart, the loss of millions of manufacturing and construction jobs across the country and a pullback in business lending that appears to have stung small-town and rural borrowers particularly hard.</p> <p>The changes also reflect a fundamental shift over the past two decades in which workers and industries power the country&rsquo;s economic growth. That shift advantages highly educated urbanites at the expense of everyone else. Polling suggests it is one of the driving forces in the political unrest among working-class Americans &mdash; particularly rural white men &mdash; who have flocked to Republican Donald Trump&rsquo;s presidential campaign this year.</p> </blockquote> <p><u><strong>In short, Bubble Finance is a giant engine of reverse Robin Hood redistribution.</strong></u> It&nbsp;embodies a sweeping fiscal intervention in the natural flows of the free market that punishes savers, laborers, self-funded main street entrepreneurs and the retired populations in favor of speculators and the holders of existing financial assets.</p> <p><em><strong>Bubble Finance is an affront to both democratic governance and true prosperity. The Trump voters, the Brexit voters, the masses rallying to the populist banners throughout Europe above all else represent a reactivation of the political machinery in a last ditch campaign to stop the financial elite and their regime of Bubble Finance.</strong></em></p> <p>Yes, this time is different, and this time there will be no reflation of the financial bubble like there was after Black Monday, the S&amp;L bust, the dotcom crash and the great financial crisis of 2008-2009.</p> <p><strong>Needless to say, the Wall Street dip-buyers and perma-bulls who take their cues from the modern day financial ruling class are in for a shock. </strong>And today&rsquo;s statement by Martin Schulz, the President of the EU parliament good not more aptly explain why.</p> <p>Said Schulz,</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&ldquo;<strong>The British have violated the rules. It is not the EU philosophy that the crowd can decide its fate</strong>&ldquo;.</p> </blockquote> <p>We think not.</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="322" height="122" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20160627_contra.jpg?1467073444" /> </div> </div> </div> http://www.zerohedge.com/news/2016-06-27/end-game-bubble-finance-political-revolt#comments Ben Bernanke Ben Bernanke Census Bureau default Donald Trump Hank Paulson Hank Paulson Housing Bubble Housing Prices Japan Main Street Monetization New York City None Paul Volcker Recession recovery Rude Awakening TARP Tricky Dick White House Tue, 28 Jun 2016 01:45:00 +0000 Tyler Durden 564676 at http://www.zerohedge.com Some Bad And Some Worse News For Stock Buybacks http://www.zerohedge.com/news/2016-06-27/some-bad-and-some-worse-news-stock-buybacks <p>For those 17-year-old hedge fund managers used to BTFD on hopes corporate buybacks will "have their back" and provide the bid on which momentum-chasing HFT algos will piggyback, we have some bad news and some worse news. </p> <p>The <strong>bad </strong>news is that we are entering yet another quiet period for buybacks. This means that for the next 45 days, the biggest - <a href="http://www.zerohedge.com/news/2016-03-14/bloomberg-stumbles-only-one-buyer-keeping-bull-market-alive">and supposedly <em><strong>only </strong></em></a>- buyer of stocks will be mostly out of the market, and bank buyback desks will not be able to provide much needed support during distressed (read: more sellers than buyers) times.</p> <p>The <strong>worse </strong>news is that even without the buyback blackout period, following months of surging stock repurchasing activity by corporate treasurers... </p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2016/06/27/buybacks%20record.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2016/06/27/buybacks%20record_0.jpg" width="600" height="351" /></a></p> <p>... buybacks have now ground to a virtual halt. </p> <p>According to <a href="http://www.trimtabs.com/">TrimTabs</a>, stock buyback announcements by U.S. companies have fallen sharply, sending a longer-term negative signal for U.S. equities.</p> <p>“Corporate America announced $2.8 trillion in stock buybacks in the past five years, and these buybacks have provided a key source of fuel for the bull market,” said David Santschi, chief executive officer of TrimTabs.&nbsp; “<strong>Corporate actions this year suggest this support is going to diminish</strong>.”</p> <p>In a research note, <strong>TrimTabs reported that U.S. companies have announced a mere $11.8 billion in stock buybacks in June through Friday, June 24.&nbsp; <span style="text-decoration: underline;">This month’s pace is the lowest this year</span>.&nbsp; </strong>Only four companies have announced plans to repurchase at least $1 billion this month.</p> <p>“<strong>Even if some of the too-big-to-fails roll out buybacks after the release of the second part of the Fed’s stress test results, this month’s volume is likely to be among the lowest in the past three years</strong>,” noted Santschi. </p> <p>TrimTabs also explained that stock buyback announcements by U.S. companies have totaled $291.7 billion this year, which is 32% lower than the $432.0 billion in the same period last year.</p> <p><strong>“The sharp decline in buyback announcements suggests corporate leaders are becoming more cautious, and it doesn’t bode well for the U.S. stock market,” </strong>said Santschi.</p> <p>It is unclear if the dramatic slowdown is due to a shift in corporate strategy, due to a desire by the C-suite to stockpile cash, or simply because creditors are no longer willing to fund bonds whose "use of proceeds" is to buyback stock, no matter how high the yield. </p> <p>In any case, the sudden disappearance of this cost-indiscriminate, and biggest by far, stock buyer in the market will be certain to have a substantial impact on risk pricing in the coming weeks and months; just in case the market didn't have enough things to worry about...</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="234" height="215" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/snake%20cyckle_3.png?1467062054" /> </div> </div> </div> http://www.zerohedge.com/news/2016-06-27/some-bad-and-some-worse-news-stock-buybacks#comments Creditors HFT Stress Test TrimTabs Tue, 28 Jun 2016 01:18:20 +0000 Tyler Durden 564669 at http://www.zerohedge.com After Brexit, Ron Paul Asks "Can We Exit A Few Things Too?" http://www.zerohedge.com/news/2016-06-27/after-brexit-ron-paul-asks-can-we-exit-few-things-too <p><a href="http://ronpaulinstitute.org/archives/featured-articles/2016/june/27/after-brexit-can-we-exit-a-few-things-too/"><em>Submitted by Ron Paul via The Ron Paul Institute for Peace &amp; Prosperity,</em></a></p> <p>Last week&rsquo;s UK vote to leave the EU may have come as a shock to many, but <strong>the sentiment that led British voters to reject rule from Brussels is nothing unique</strong>. In fact it is growing sentiment worldwide. Frustration with politics as usual, with political parties that really do not differ in philosophy, with an economy that serves the one percent at the expense of the rest of society is a growing phenomenon throughout Europe and in the United States as well. The Bernie Sanders and Donald Trump phenomena are but one example of a frustrated public sensing something is very wrong with society and looking for a way out.</p> <p><strong>What is happening in the UK, in Europe, and in the US, is nothing less than a breakdown of the entire system. </strong>The EU was meant to be a customs union where post-World War II Western Europe could rebuild itself through free trade and a reduction in bureaucracy. Through corruption and political ambition it became an unelected bully government in Brussels, where the well-connected were well compensated and insulated from the votes of mere citizens.</p> <p>Whatever happens in the near future &ndash; and it is certainly not assured that the vote to &ldquo;Brexit&rdquo; will actually end in the UK&rsquo;s departure from the EU &ndash; a line has been crossed that supporters of more personal liberty should celebrate.<strong> Rule from London is preferable to liberty-minded Britons than rule from Brussels. </strong>Just as Texans should prefer rule from Austin to rule from Washington. That doesn&rsquo;t make either option perfect, just more likely to produce more freedom.</p> <p><strong>Is Brexit the first victory in a larger freedom movement?</strong> <em>Can we get out of a system that creates money out of thin air to benefit the ruling class while impoverishing the middle class? Can we get out of a central bank that finances the wars that make us less safe? Can we exit Executive Orders? Can we exit the surveillance state? The PATRIOT Act? Can we exit NDAA and indefinite detention? Can we exit the US worldwide drone program, that kills innocents overseas and makes us ever-more hated?</em></p> <p><strong>Getting out of NATO would be a good first move. </strong>This Cold War relic survives only by stirring up conflict and then selling itself as the only option to confront the conflict it churned up. Wouldn&rsquo;t it be better to not go looking for a fight in the first place? Do we really need still another NATO military exercise on the Russian border? It should be no surprise that NATO Secretary General Jens Stoltenberg was fear-mongering on the eve of the Brexit vote, warning UK citizens that if they vote to leave they could face increased terrorism.</p> <p><strong>Likewise, the US would do well to exit the various phony &ldquo;free trade&rdquo; agreements that provide advantage to the well-connected elites while harming the rest of us.</strong></p> <p><span style="text-decoration: underline;"><strong>The act of exit is liberating.</strong></span> We should make a longer list of those things we would like to get out of. I am only getting started.</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="223" height="66" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20160627_exit.jpg?1467071039" /> </div> </div> </div> http://www.zerohedge.com/news/2016-06-27/after-brexit-ron-paul-asks-can-we-exit-few-things-too#comments Bernie Sanders Corruption Donald Trump Ron Paul Tue, 28 Jun 2016 00:55:00 +0000 Tyler Durden 564675 at http://www.zerohedge.com The First Casualty Of Brexit: Italy Prepares €40 Billion Bank Bailout http://www.zerohedge.com/news/2016-06-27/first-casualty-brexit-italy-prepares-%E2%82%AC40-billion-bank-bailout <p>Barely has the market had time to digest last week's Brexit vote by the UK, a vote which may never actually be implemented if the "<em>sturm und drang</em>" campaign unleashed by the EU and the ECB on UK capital markets succeeds in changing the mind of enough "Leavers" to the point that the entire referendum is called off and Boris Johnson never triggers the Article 50 clause, and already Europe's most financially troubled nation, Italy, is using Brexit as a pretext to unleash a €40 billion ($44 billion) bailout of its insolvent banks.</p> <p>As the <a href="http://www.wsj.com/articles/rome-mulls-capital-injection-to-support-italian-banks-after-brexit-shock-1467021718">WSJ reported earlier</a>, the Italian government is considering a capital injection for the country’s banking system, after Italian lenders were hit by a sharp selloff in banking stocks Friday, triggered by Britain’s vote to leave the European Union. Of course, Brexit has nothing to do with it: instead, as everyone knows by now, Italy's banks are beset with €360 billion (and rising) in bad loans, some 18% of total bank balance sheets, chronically poor profitability amid record-low interest rates, thin capital buffers and high costs. It was precisely these concerns that the recently created Atlante "bad bank" was supposed to address until it became painfully obvious that its total war chest of €4.25 was woefully inadequate to put even the smallest dent on Italian bank insolvency.</p> <p>According to <a href="http://www.telegraph.co.uk/business/2016/06/27/italy-eyes-40bn-bank-rescue-as-first-brexit-domino-falls/">Ambrose Evans-Pritchard</a>, the country is the first serious casualty of Brexit contagion and a reminder that the economic destinies of Britain and the rest of Europe are intimately entwined. Morgan Stanley warned in a new report that eurozone GDP would contract by almost as much as British GDP in a "high stress scenario".&nbsp; “When Britain sneezes, Italy catches a cold. It is the weakest link in the European chain,” said Lorenzo Codogno, former director-general of the Italian treasury and now at LC Macro Advisors.</p> <p>So, in the spirit of never letting a Brexit crisis go to waste, Italy has decided to use the British referendum as the scapegoat and demand nearly ten time as much in new capital to be used (and abused) as Italy's banks see fit. As the <a href="http://www.telegraph.co.uk/business/2016/06/27/italy-eyes-40bn-bank-rescue-as-first-brexit-domino-falls/">Telegraph adds</a>, an Italian government task force is watching events hour by hour, pledging all steps necessary to ensure the stability of the banks. “Italy will do everything necessary to reassure people,” said premier Matteo Renzi. “This is the moment of truth we have all been waiting for a long time. We just didn’t know it would be Brexit that set the elephant loose,” said a top Italian banker.</p> <p>According to the WSJ, the chairman of Lower House’s Finance Commission, Maurizio Bernardo, confirmed that the government is studying options to support the banking sector, including a capital injection, and said a law decree “with measures going in that direction” could be approved by the end of this week. So far no decision has been taken as the government is monitoring how markets respond after Friday’s steep downturn.</p> <p>They said how such an intervention would be implemented is unclear at this stage.&nbsp; it is also unclear how such a direct state recapitalization of Italian banks using public funds would be permitted by current EU and ECB regulations, which prohibit state bailouts of insolvent banks, although Europe has a long and illustrious history of finding massive loopholes to that particular prohibition. Last but not least it is unclear how existing stakeholders, shareholders, bondholders and uninsured depositors, would be impaired under such a bailout.&nbsp;</p> <p>Italian officials are studying a direct state recapitalization of the banks, to be funded by a special bond issue, the Telegraph adds. They also want a moratorium of so-called ‘bail-in’ rules and bondholder write-downs, but these steps are impossible under EU laws. Mr Renzi raised the subject urgently at a meeting with German Chancellor Angela Merkel and French president Francois Hollande at a Brexit summit in Berlin on Monday.&nbsp; <strong>“There has to be a suspension of the bail-in rules and state aid rules at the highest political level in the EU, otherwise I don’t see how this can work,” </strong>said Mr Codogno.</p> <p>The new bail-in reform this year has brought matters to a head, catching EU authorities off guard. It was intended to protect taxpayers by ensuring that creditors suffer major losses first if a bank gets into trouble, but was badly designed and has led to a flight from bank shares. The Bank of Italy has called for a complete overhaul of the bail-in rules.</p> <p>The WSJ adds that the government could invoke an exception to this rule under European law during exceptional market conditions. “I believe the measures could include a mix of public and private funds,” Mr. Bernardo said.</p> <p>Meanwhile, Italy has certainly picked a great catalyst on which to blame the crisis that has been sweeping its banking system for the better part of the decade. The aftershocks of the U.K.’s vote to leave the EU in a referendum Thursday continued to rattle financial markets Monday, sending European shares sharply lower, with bank and travel stocks leading the declines.</p> <p>Banca Monte dei Paschi di Siena SpA shares were down 12.2% on Monday, while Intesa Sanpaolo SpA was down 12.5%. Italy’s FTSE MIB lost 12.5% on Friday, with banking stocks the worst hit.</p> <p>To be sure, yet another bailout would be a welcome move for banks which have been struggling to reduce their massive exposures to soured loans. As reported previously, investors have so far been unwilling to pay the prices banks were asking to sell their bad loans meaning Italian banks are stuck: they can't mark their bad loan to market without taking a massive hit to capital, and there are no willing buyers at current prices.&nbsp;</p> <p>How did Italy arrive at the €40 billion numbers? Just like in the case of Neil Kashkari's "back of the napkin" TARP calculation which <a href="http://blogs.wsj.com/deals/2009/12/07/neel-kashkaris-fuzzy-math/">estimated US bank needs at $700 billion or 5% of the total $14 trillion in residential and commercial mortgages</a>, so Italy is using a similar rule of thumb.&nbsp; Consultants have calculated that to bring around €200 billion of bad loans—the gross amount of soured loans where debtors are considered insolvent—closer to market values, the banking system would need a collective write-down of bad loans of about €40 billion. Some estimates place the write-down needed at roughly €30 billion.</p> <p>And there's your €40 billion bailout total.</p> <p>Banks have so far refused to take such a drastic action as they believe the market price of bad loans should be higher, in particular considering the value of collateral backing part of those bad loans. The problem is that in recent weeks most potential hedge fund buyers have balked at these bank offer prices.</p> <p>For now Italy pretends to be in denial:</p> <blockquote><p>“Italian banks have the capacity to face this crisis on their own,” said Giovanni Sabatini, general manager of Italian banking association ABI, commenting on the option of government support to the sector.</p> </blockquote> <p>However, following the next near-death experience of an Italian bank, the official narrative will quickly change.</p> <p>Currently, it is practically impossible for Italian banks to raise capital. They are caught in a pincer as the ECB simultaneously demands compliance with tougher capital adequacy buffers, in some case demanding fresh infusions of capital three or four times.&nbsp; The banking squeeze has become politically explosive in Italy after thousands of small depositors were wiped out at four regional banks late last year. They were classified as junior bondholders, even though most of them were just ordinary savers who did not realize what was being done with their money.</p> <p>Curiously, according to Codogno, the ECB is "unwittingly destabilizing the banks in an overzealous attempt to make Europe’s banks safer." It is almost as if Mario Draghi had greenlighted Brexit as the designated "crisis" that would be used to enable the circuitous bailout of Italian banks, the same banks of which Draghi was regulator during his tenure in the Bank of Italy, and whose actions have led to numerous lawsuits questioning the legality of the central bank under Draghi.</p> <p>Italy is now paralyzed under the existing eurozone structure. Analysts say it desperately needs a US-style bank rescue along the lines of the ‘TARP’ in 2008, which used federal funds to mop up bad assets and stabilize the banks. This is forbidden by the eurozone. The likely outcome is that Italy's PM Renzi will be "forced" to take matters into his own hands and enact a unilateral sovereign rescue of the Italian banking system in defiance of the EU, unless he wins concessions soon from Brussels. Those who know him say he will not go down in flames for the sake of European ideological purity.</p> <p>As a result, Brexit will be just the scapegoat used by Renzi and Italy to circumvent any specific eurozone prohibitions. And if it fails, all Renzi has to do is hint at a referendum of his own. Then watch as Merkel scrambles to allow Italy to do whatever it wants, just to avoid the humiliation of a potential "Italeave."</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="833" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/Draghi%20Satan_30.jpg?1467067089" /> </div> </div> </div> http://www.zerohedge.com/news/2016-06-27/first-casualty-brexit-italy-prepares-%E2%82%AC40-billion-bank-bailout#comments Bad Bank Bond Capital Markets Creditors European Union Eurozone Evans-Pritchard Italy Market Conditions Morgan Stanley Regional Banks TARP Tue, 28 Jun 2016 00:27:16 +0000 Tyler Durden 564672 at http://www.zerohedge.com South China Sea: Storm In A "Far Larger" Indian Ocean Teacup http://www.zerohedge.com/news/2016-06-27/south-china-sea-storm-far-larger-indian-ocean-teacup <p><a href="http://bawerk.net/2016/06/27/south-china-sea-storm-in-an-indian-ocean-teacup/"><em>Submitted by Eugen von Bohm-Bawerk via Bawerk.net,</em></a></p> <p>With global attention focused on BREXIT calamity, <strong>potentially more important questions are being overlooked, and especially in the South China Sea where storms are currently brewing between China and a range of littoral states for strategic control of territorial waters.</strong></p> <p>To be clear, our long term geostrategic position remains unchanged; <em>China will gradually secure control of the South China and East China Seas through its so called &lsquo;nine dash&rsquo; line, with the eventual battle for geo-maritime ascendency playing out in the Indian Ocean into the 2030s between China on the one hand, and America on the other</em>. <strong>That much remains inexorable, but it&rsquo;s what happens along the way to that eventual outcome where all the residual risks remains.</strong></p> <p><a href="http://i0.wp.com/bawerk.net/wordpress/wp-content/uploads/2016/06/China-disputed.png"><img alt="China disputed" class="aligncenter size-full wp-image-766" src="http://i0.wp.com/bawerk.net/wordpress/wp-content/uploads/2016/06/China-disputed.png?resize=730%2C494" style="width: 600px; height: 406px;" /></a></p> <p>&nbsp;</p> <p><strong>The most proximate trigger currently relates to pending legal rulings in The Hague that&rsquo;s almost certain to rule in favour of Philippines legal claims towards the Spratly Islands.</strong> We&rsquo;ll leave all the legal complexities aside, where this is essentially adjudicating on the technical basis of UNCLOS claims rather sovereignty <em>per se</em>. But suffice to say, China will not only reject the findings, it will up the ante with sabre rattling and maritime movements around the Spratly&rsquo;s with further land reclamation around Scarborough Shoal. It&rsquo;s also possible China will initiative targeted sanctions against Manila (a nice welcome message for the incoming President Duterte) to prove its point. Anyone willing to stand in the way of Chinese geopolitical pull, will be pushed off the edge of a &lsquo;geo-economic atoll&rsquo;, at least when it comes to creeping Chinese consolidation of its nine dash line.</p> <p><strong>Right on cue, the Chinese have just leant heavily on Cambodia to retreat a joint ASEAN statement against Beijing&rsquo; claims in the South China Sea, as a classic Chinese tactic to keep any disputes purely on a bilateral divide and rule basis with Vietnam, Indonesia, Philippines, and to a lesser extent, Malaysia. </strong>Coincidently, this is where China has all the economic leverage (see chart). That will take some of the heat off the pending ASEAN Regional Forum, not to mention Chinese G20 meetings in September. But the overall rules of the game are clear: If or when, China faces any geopolitical opposition to its maritime claims, it won&rsquo;t hesitate to wield a large geo-economic stick to beat smaller starts into submission. Needless to say, <em>exactly</em> the same story applies closer to North East Asian home when it comes to maritime tussles with Japan over the Senkakus, and South Korea over Takeshema. <strong>China will continue to divide and rule competing littoral states, using geo-economic strength to rail through new geo-maritime facts on the ground.</strong></p> <p><a href="http://i1.wp.com/bawerk.net/wordpress/wp-content/uploads/2016/06/Export-to-China.png"><img alt="Export to China" class="aligncenter size-full wp-image-767" src="http://i1.wp.com/bawerk.net/wordpress/wp-content/uploads/2016/06/Export-to-China.png?resize=730%2C444" style="width: 600px; height: 365px;" /></a></p> <p>The real question isn&rsquo;t whether Japan, South Korea, Vietnam, Philippines, Indonesia or Malaysia occasionally play up and push back against Chinese actions, <em><u><strong>but ultimately where the US is going to draw the line to put a serious finger in China&rsquo;s &lsquo;nine dash&rsquo; dyke? </strong></u></em>While it&rsquo;s true America is overseeing a fundamental reboot of the 7<sup>th</sup> fleet, shifting 60% of its naval and maritime assets to Asia by 2020 with far more &lsquo;tit for tat&rsquo; maritime measures being taken against Chinese when it comes to patrols, carrier movements and coast guard co-operation. It also comes with an <strong>added push from the Obama Administration to get a last minute Trans Pacific Partnership deal through to give America some kind of viable retort to AIIB onslaughts from China</strong>.</p> <p>But at the end of the day, <strong>as much as Washington wants to be credible in Asia, it doesn&rsquo;t want to be credible at any price</strong>, and especially not over a bunch of rocks and islands that are high symbolism, but very low on genuine strategic worth. While it&rsquo;s possible Shinzo Abe will drag America to the brink of conflict with China before his LDP term is up in 2019,<u><strong> when the time comes, not only will America stand down in North East Asia and ASEAN, it&rsquo;s going to consume most of its political capital trying to get its supposed Asian allies to play nice together rather than drawing a serious line against Chinese naval expansion.</strong></u></p> <p>At the end of the day, the only geopolitical relationship that globally matters over the next decade is the US-China G2 nexus, with all the geo-strategic, geo-maritime, and ultimately geo-economic (currency) complexity that brings. For us, that&rsquo;s precisely why <strong>the US is going to put on a &lsquo;brave face&rsquo; in North East Asia and ASEAN containment, but ultimately cuts its losses and concede to Beijing&rsquo;s local dominance</strong>. Yet by precisely the same token, it&rsquo;s also why the long term battle lines for maritime supremacy will ultimately be drawn in the Indian Ocean between the US and China towards 2030. Seen like that, the South China Sea is important, but it&rsquo;s ultimately a storm in a far larger Indian Ocean teacup&hellip;</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="687" height="443" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20160627_scs.jpg?1467068360" /> </div> </div> </div> http://www.zerohedge.com/news/2016-06-27/south-china-sea-storm-far-larger-indian-ocean-teacup#comments China Japan Obama Administration Tue, 28 Jun 2016 00:05:00 +0000 Tyler Durden 564674 at http://www.zerohedge.com Jordanian Intelligence Has Been Stealing US Arms Intended For Syrian Rebels http://www.zerohedge.com/news/2016-06-27/jordanian-intelligence-has-been-stealing-us-arms-intended-syrian-rebels <p>It&#39;s no secret that the US has a long and storied past when it comes to running guns illegally, and subsequently <a href="http://www.zerohedge.com/news/2016-04-09/obama-administration-doesn%E2%80%99t-care-anymore-releases-fast-and-furious-documents">completely losing control of them</a>. In its most recent debacle, a joint investigation by the New York Times and Al Jazeera has <strong>revealed that millions of dollars worth of weapons sent by the CIA</strong> and Saudi Arabia to Jordan intended for Syrian rebels was<strong> stolen by Jordanian intelligence officials and sold on the black market.</strong></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user51698/imageroot/2016/06/27/20160627_arms_0.JPG"><img height="334" src="http://www.zerohedge.com/sites/default/files/images/user51698/imageroot/2016/06/27/20160627_arms_0.JPG" width="600" /></a></p> <p>In a separate scheme than was administered by the Pentagon, <strong>the CIA-run program code named Timber Sycamore reportedly began in 2013, and the plan called for large shipments of CIA and Saudi arms including Kalashnikov assault rifles, mortars and rocket-propelled grenades to be delivered to Jordan, where Jordanian intelligence would then finish the job and deliver the arms to Syrian rebels</strong>. While the budget for the program remains classified, it was learned that the biggest contributors to the program included the US and Saudi Arabia, along with other US allies in the region.</p> <p>As mentioned, following the delivery to Jordan, the CIA relied upon the General Intelligence Directorate to transport the weapons to Syrian rebels, however often times the weapons disappeared midway. <strong>As RT <a href="https://www.rt.com/usa/348513-stolen-cia-arm-syria-rebels/">reports</a>, Jordanian officials told the publications that the theft was apparently perpetrated by officers with direct access to cargo, who &quot;regularly siphoned truckloads&quot; of weapons while still delivering some to the designated drop-off&#39;s.</strong></p> <p>The stolen weapons were then sold on the black market in Jordan, and those involved in the scheme worth millions of dollars, used the profits to purchase expensive SUVs, electronics, and other luxury goods. Unfortunately, as was the case in<a href="http://www.zerohedge.com/news/2016-04-09/obama-administration-doesn%E2%80%99t-care-anymore-releases-fast-and-furious-documents"> Operation Fast and Furious</a> (and presumably countless other operations),<strong> it is also believed that some of the stolen weapons were used to kill two Americans and three others at a police training facility shooting in Amman in November</strong>.</p> <p>The investigation also revealed that senior Jordanian officers had knowledge of the theft and - surprise, surprise - systematically covered up for the lower ranking officers that did the actual smuggling. Only after the Americans and Saudi&#39;s started to complain of the theft did the Jordanian intelligence agency allegedly arrest several dozen officers, including a lieutenant colonel running the operation. <strong>According to Jordanian officials, a number of the officers were fired from the service but were allowed to keep their pensions and profits from the scheme</strong>.</p> <p>* * *</p> <p>Alas, don&#39;t ever be concerned that America isn&#39;t exporting, as those official military exports are understated by the number of gun running operations that are being done behind the scenes - <strong>rest assured that Made In The USA stamp is on weapons being used by everyone around the globe</strong>.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user51698/imageroot/2016/06/27/20160627_weaponsexports_0.JPG"><img height="568" src="http://www.zerohedge.com/sites/default/files/images/user51698/imageroot/2016/06/27/20160627_weaponsexports_0.JPG" width="600" /></a></p> <p>Also let&#39;s not forget that it is absolutely no surprise that the Saudi&#39;s are in bed with the US in this effort, <a href="http://www.zerohedge.com/news/2016-06-17/untold-story-behind-mutiny-state-department-where-dozens-demand-war-syria">as it is the Saudi&#39;s who may be truly calling the shots</a> at the end of the day when it comes to what ultimately happens in Syria.</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="717" height="399" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20160627_arms.JPG?1467067961" /> </div> </div> </div> http://www.zerohedge.com/news/2016-06-27/jordanian-intelligence-has-been-stealing-us-arms-intended-syrian-rebels#comments Kalashnikov New York Times Saudi Arabia Mon, 27 Jun 2016 23:40:00 +0000 Tyler Durden 564673 at http://www.zerohedge.com Jim Rogers: Brexit Blowback "Worse Than Any Bear Market You've Ever Seen" http://www.zerohedge.com/news/2016-06-27/jim-rogers-brexit-blowback-worse-any-bear-market-youve-ever-seen <p>When it comes to being direct and offering up some truth, one can rest assured that Jim Rogers is a prime candidate to do both.</p> <p>In an interview with <a href="http://finance.yahoo.com/news/jim-rogers-on-brexit---worse-than-any-bear-market-you-ve-seen-in-your-lifetime-154317566.html#">Yahoo! Finance</a>, the legendary investor had some candid and quite unnerving things to say about the global market in the aftermath of Brexit.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&quot;<strong>This is going to be worse than any bear market that you&#39;ve seen in your lifetime</strong>. <span style="text-decoration: underline;">2008 was pretty bad because of debt, well the debt all over the world is much, much higher now</span>. Stocks in the US for instance have been going sideways for 18 months, 24 months. That&#39;s called distribution by many people, so when you have distribution for a year and a half, it usually leads to bad things.&quot;</p> </blockquote> <p>If that was too upbeat, Rogers unveils his bear scenario:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&quot;The bear scenario, the bad scenario is that Scotland now leaves and takes the oil money, the city of London gets whacked by Europe, they lose a lot of income. <strong>The UK already has huge international debts, and it has balance of trade problems, budget problems, so the bear case is the pound disappears and England becomes Spain, or Poland, or Italy or something.</strong>&quot;</p> <p>&nbsp;</p> <p>&quot;It won&#39;t happen anytime soon but the deterioration will continue, it makes stocks go down a lot. Remember, stock markets are anticipating the future, they see that happening it will now lead to many other separatist moments in the EU. <strong>This is going to encourage a lot of separatist movement, I&#39;m not saying it&#39;s good or bad I&#39;m just telling you what&#39;s going to happen, or what the bear case is, that if all that happens we all should be very worried</strong>.&quot;</p> </blockquote> <p>Regarding where EU will be five years from now, Rogers doesn&#39;t believe it will even exist:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&quot;<strong>The EU as we know it now will not exist, the Euro as we know it will not exist.</strong>&quot;</p> </blockquote> <p>On how to play this market now,</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&quot;I&#39;ll tell you what I&#39;m doing, people have to make their own decisions, going into this <strong>I&#39;m long the US Dollar, I&#39;m short US stocks, I own some Chinese shares, I own agriculture around the world. These are things that might do well no matter what happens going forward</strong>. <span style="text-decoration: underline;">These are going to be perilous times</span>, I hope I get it right.&quot;</p> </blockquote> <p><iframe frameborder="0" height="355" scrolling="no" src="http://finance.yahoo.com/video/jim-rogers-brexit-worse-bear-161022772.html?format=embed" width="600"></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="632" height="356" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20160627_jimrogers.JPG?1467049934" /> </div> </div> </div> http://www.zerohedge.com/news/2016-06-27/jim-rogers-brexit-blowback-worse-any-bear-market-youve-ever-seen#comments Bear Market Italy Jim Rogers Poland Mon, 27 Jun 2016 23:15:00 +0000 Tyler Durden 564654 at http://www.zerohedge.com US Navy To Begin Testing Powerful 150-Kilowatt Laser Weapon System http://www.zerohedge.com/news/2016-06-27/us-navy-begin-testing-powerful-150-kilowatt-laser-weapon-system <p>It&#39;s always good advice to be preparing for the future, especially in the case of the United States military as the US <a href="http://www.zerohedge.com/news/2016-05-27/china-warns-world-america-greatest-threat-peace-stability">continuously provokes</a> other nations.</p> <p>As Popular Science <a href="http://www.popsci.com/watch-navy-fire-laser-persian-gulf">reported</a> back in 2014, the US Navy had developed a 30-kilowatt laser and mounted it on the USS Ponce, which was stationed in the Persian Gulf at the time. The laser was part of the US Navy&#39;s new Laser Weapon System (LaWS) program, and with a videogame-like controller it had been successfully tested.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user51698/imageroot/2016/06/27/20160627_laser_0.JPG"><img height="395" src="http://www.zerohedge.com/sites/default/files/images/user51698/imageroot/2016/06/27/20160627_laser_0.JPG" width="600" /></a></p> <p>&nbsp;</p> <p>In this video, the laser will engage and destroy multiple targets including a drone in mid-air.</p> <p><iframe frameborder="0" height="355" src="//www.dailymotion.com/embed/video/x3tw2vn" width="600"></iframe><br /><a href="http://www.dailymotion.com/video/x3tw2vn_navy-laser-weapon-system_lifestyle" target="_blank">Navy Laser Weapon System</a> <em>by <a href="http://www.dailymotion.com/PopSci" target="_blank">PopSci</a></em></p> <p>* * *</p> <p>&quot;Laser weapons are powerful, affordable and will play a vital role in the future of naval combat operations. <strong>We ran this particular weapon, a prototype, through some extremely tough paces, and it locked on and destroyed the targets we designated with near-instantaneous lethality.</strong>&quot; Rear Adm. Matthew L. Klunder said at the time.</p> <p>A <a href="http://www.popsci.com/watch-navy-fire-laser-persian-gulf">press release</a> went on to say that that not only is the laser lethal, it&#39;s relatively cheap to use as well: <em>&quot;At less than a dollar per shot, there&#39;s no question about the value LaWS provides. With affordability a serious concern for our defense budgets, this will more effectively manage resources to ensure our Sailors and Marines are never in a fair fight.&quot;</em></p> <p>After watching the video, one would assume that a 30-kilowatt laser would suffice, however that isn&#39;t the case. <strong>As PopSci <a href="http://www.popsci.com/navy-is-going-to-test-big-laser-soon?dom=rss-default&amp;src=syn">reports</a>, the Navy is going to go bigger, much bigger.The US Navy will now be performing tests of a 150-kilowatt laser, in an effort to upgrade capability and eventually to become part of every service platform.</strong></p> <p><a href="http://www.nationaldefensemagazine.org/blog/Lists/Posts/Post.aspx?ID=2233">National Defense Magazine</a> has more on the high powered laser:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>The U.S. Navy, which has already developed a 30-kilowatt laser that has been used operationally, <strong><span style="text-decoration: underline;">will soon test a new directed energy weapon that is five times more powerful</span>,</strong> said the vice chief of naval operations July 23.</p> <p>&nbsp;</p> <p><strong>The Office of Naval Research &ldquo;will perform a shipboard test of a 150-killowatt laser weapon system in the near future,&rdquo;</strong> said Adm. Bill Moran during a speech at Booz Allen Hamilton&rsquo;s Directed Energy Summit, which was held in Washington, D.C.</p> <p>&nbsp;</p> <p>The Navy&rsquo;s 30-kilowatt laser weapon is currently onboard the USS Ponce. The system, which has been used operationally in the Persian Gulf, offers military leaders precision accuracy at a low cost, Moran said.</p> <p>&nbsp;</p> <p><strong>The laser weapon system, or LaWs, &quot;has an extremely low-cost per engagement ratio,&rdquo; he said. &ldquo;We&rsquo;re spending pennies on the dollars &hellip; every time we use that capability.&rdquo;</strong></p> <p>&nbsp;</p> <p><span style="text-decoration: underline;">While the U.S. military is developing laser weapons that can be installed on platforms across the Army, Air Force, Navy and Marine Corps, military leaders must be cognizant that potential adversaries are as well,</span> Moran said.</p> <p>&nbsp;</p> <p>&ldquo;These technologies are being developed and fielded by a growing number of countries all around the world, it&rsquo;s not just us,&rdquo; he said. &ldquo;If we don&rsquo;t get ahead of that capability by our adversaries, we&rsquo;re going to find ourselves in a very difficult position in the future.&rdquo;</p> <p>&nbsp;</p> <p>As the Navy considers its future fleet design, laser weapons must be a part of the equation, Moran said.</p> <p>&nbsp;</p> <p>&ldquo;If we have to continue to rely on projectiles, propellant-driven projectiles, we will run out of our ability to defend ourselves over time,&rdquo; he said. &ldquo;This capability in directed energy is incredibly important.&quot;</p> </blockquote> <p>* * *</p> <p>So the future of warfare has now arrived, and it looks like it will be US high powered lasers vs Russian <a href="http://www.zerohedge.com/news/2016-06-12/russia-developing-gliders-guarantee-penetration-any-missile-defense-system">hypersonic glide vehicles</a> at some point in the future. And by some point in the future we mean sooner rather than later if the global economy continues to melt down, because as every knows, after the central bank money printing game is up, the next play in the elitist playbook is war.</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="494" height="325" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20160627_laser.JPG?1467050383" /> </div> </div> </div> http://www.zerohedge.com/news/2016-06-27/us-navy-begin-testing-powerful-150-kilowatt-laser-weapon-system#comments Global Economy Washington D.C. Mon, 27 Jun 2016 22:50:00 +0000 Tyler Durden 564658 at http://www.zerohedge.com Why Did The UK Enter The EU In The First Place? http://www.zerohedge.com/news/2016-06-27/why-did-uk-enter-eu-first-place <p><a href="https://mishtalk.com/2016/06/26/why-did-the-uk-enter-the-eu-in-the-first-place/"><em>Submitted by Michael Shedlock via MishTalk.com,</em></a></p> <p>Looking back, one really has to wonder why the UK <strong>subjected itself to all the inane EU nannycrat rules and regulations in the first place</strong>.<span id="more-38963"> </span></p> <p><strong>I can explain.</strong> Many readers sent me this explanation, but I also used it before on my blog long ago.</p> <p><em><strong>Please consider this clip from the British TV show &ldquo;Yes Minister&rdquo;.</strong></em></p> <p><iframe allowfullscreen="" frameborder="0" height="360" src="https://www.youtube.com/embed/37iHSwA1SwE" width="480"></iframe></p> <p>The clip is amazingly funny. Play it.</p> <p><a href="https://mishgea.files.wordpress.com/2016/06/union-jack.png"><img alt="Union Jack" class="alignnone size-large wp-image-38964" height="349" src="https://mishgea.files.wordpress.com/2016/06/union-jack.png?w=529&amp;h=349" width="529" /></a></p> <p><strong>Email Comments </strong></p> <p>From Pater Tenebrarum at the <a href="http://www.acting-man.com/" target="_blank">Acting Man</a> blog.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>I recently wrote this to my totally Europhile European email group, which has hedge fund managers, economists, journalists, insurance and pension fund asset managers, and even a few politicians from across Europe (every country from the UK to Latvia has a few people in the group, and a few fund managers from the US, Australia and Israel are also members).</p> <p>&nbsp;</p> <p><strong>A few days before the Brexit, they had all written paeans on the EU, and expressed both their expectation and hope that the UK would remain, while chiding the &ldquo;leave&rdquo; campaign for its intellectual inferiority. I was incredibly busy (still am) and didn&rsquo;t find the time to properly join the debate. But one day before the referendum I felt I simply had to say SOMETHING to disrupt this love-fest.</strong></p> <p>&nbsp;</p> <p>So I wrote this (I was very polite, but it was met with speechlessness for a little moment. I did get several very friendly and well thought out replies after a while though. You must understand, these people are my friends, and I like them and they like me, generally. They know of course that my opinions on these things are very different from those of most of the European elite):</p> <p>&nbsp;</p> <p><strong>Leaving aside the &ldquo;we&rsquo;re doing it for peace&rdquo; argument, which wily EU politicians tacked on out of the blue 40 or 50 years after the EEC was founded in order to cartelize the then state-owned coal and steel industries, what exactly are the advantages of being in the EU?</strong> If we want to have free trade, do we really need a bureaucratic Leviathan in Brussels regulating every nook and cranny of our lives? NO. We need the back of a napkin, on which we could write: &ldquo;Henceforth, there will be no more tariffs between us&rdquo;.</p> <p>&nbsp;</p> <p><strong>Today the EU primarily serves a tone-deaf bureaucratic and political class, which lives a high life on the back of people it nothing but aggravates. </strong>But surely not everything is bad? Indeed, the EU is looking after us&hellip;.one might well ask, what would we do without it? I give you a few random examples of the great things the EU does for us citizens:</p> <p>&nbsp;</p> <p><strong>1. We sleep like babies:</strong></p> <p>There are 109 EU regulations concerning pillows, 5 EU regulations concerning pillow cases, and 50 EU laws regulating duvets and sheets.</p> <p>&nbsp;</p> <p><strong>2. You shall have shiny teeth, citizen!</strong></p> <p>Our toothbrushes are regulated by 31 EU laws.</p> <p>&nbsp;</p> <p><strong>3. Best apples in the world, man &ndash; the Class 1 EU regulated apple &ndash; no-one will ever manage to deceive you again about the color of the apple he&rsquo;s trying to sell you:</strong></p> <p>In order to class a &ldquo;Red Variety&rdquo; apple as &ldquo;class 1&rdquo;, 50% of its surface must be red. To class a &ldquo;Mixed red coloring variety&rdquo; of apple as a &ldquo;class 1&rdquo; apple, 33% of its surface must be red, and so it goes for the 3 quality classes and 287 individually named apple varieties. The only slight drawback: due to the protectionist agricultural policies of the &ldquo;free market supporting&rdquo; EU, that class 1 apple costs at least 40% more than it otherwise would. The same goes for every other fruit and vegetable you buy.</p> <p>&nbsp;</p> <p><strong>4. The fight against culinary WMDs</strong></p> <p>Will you please stop looking for that jug of olive oil at the dinner table? That dangerous culinary WMD has been regulated away.</p> <p>&nbsp;</p> <p><strong>5. The planet is finally saved!</strong></p> <p>The EU is saving the planet! One emasculated vacuum cleaner and toaster, dead incandescent light bulb, muzzled shower-head, and shrunken flush tank at a time! Enjoy your modern morgue lighting citizen, and work that plunger a bit &ndash; it&rsquo;s for a good cause!</p> <p>&nbsp;</p> <p><strong>6. Conquering the digital realm!</strong></p> <p>In exchange for paying EU bureaucrats a small fortune (an MEP can earn up to 10 times the average EU citizen&rsquo;s salary, commissioners earn a whole lot more still), citizens can at least be sure that Europe will conquer the digital realm! The indomitable digital commissar Oettinger is on the case! Admittedly, he looks suspiciously like Beavis (of Beavis &amp; Butthead fame), but a more qualified person couldn&rsquo;t have been found to lead the EU into modernity. He&rsquo;s practically the second coming of Steve Jobs!</p> <p>&nbsp;</p> <p>His very first proposal upon getting the job immediately showed how much he cares&hellip;.he wants to protect us from unfair competition! According to him, economically illiterate and hence dangerous normal citizens should be forced by law to stick with their internet service providers for seven years, come hell or high water. This is going to give these poor companies more &ldquo;security for their investment planning&rdquo;. That would be to the benefit of all of us! You&rsquo;ll see, if you live long enough!</p> <p>&nbsp;</p> <p>Also, Oetti wisely supports introducing an EU-wide surcharge for hard disk drives &ndash; as a pre-crime fine for all that illegal downloading citizens are apt to do on the intertubes.</p> <p>&nbsp;</p> <p>Anyway, Oetti is the man! He knows what he&rsquo;s doing&hellip;.as he himself once said, he&rsquo;s &ldquo;going online every day&rdquo;! Apple, Google, Facebook, etc. should cower in fear&hellip;.with Oetti as our mastermind, the age of EU digital domination has begun!!!</p> <p>&nbsp;</p> <p>And we&rsquo;re getting all this at the every-day low base salary of approx. &euro;250,000 per year (nearly tax-free&hellip;for Oetti, anyway), plus an annual &ldquo;residence allowance&rdquo; of &euro;37,500, an &ldquo;entertainment allowance&rdquo; of approx. &euro;10,000, a family allowance of &euro;7000 plus &euro;7,500 in &ldquo;education and child support&rdquo; for every child, free haircuts, 240 liters of free petrol per month, a &euro;4300 allowance for traveling abroad (there is an extra allowance for &ldquo;traveling at home&rdquo; too), a daily &ldquo;I&rsquo;m actually here today&rdquo; allowance of &euro;304 for signing in, and a &ldquo;general allowance&rdquo; of &euro; 4300 p.a. for secretarial expenses&hellip;and a bit of free health, theft and casualty insurance. Much cheaper than, say, the CEO of Google!</p> <p>&nbsp;</p> <p><strong>I could go on and on and on, but I don&rsquo;t have the time at the moment&hellip;hence this somewhat random list with its strange focus on Beavis the digital wonder at the end (I&rsquo;ve picked him as an especially bizarre example of the EU nomenklatura).</strong></p> <p>&nbsp;</p> <p>Absurd regulations? If I made a complete list, this mail would be longer than the distance from the earth to the moon.</p> <p>&nbsp;</p> <p>In closing I just want to say: obviously, THERE IS NO ALTERNATIVE for Britain! It must remain!</p> </blockquote> <h2><u><strong>Unfree Trade</strong></u></h2> <p>As I have frequently stated, we do not need an EU to have free trade. <strong>EU Membership is the very epitome of unfree trade.</strong></p> <p>If the EU wanted to do something that made sense, it would scrap 100% of its rules and regulations, to be replaced with three sentences:</p> <ol> <li>&ldquo;Effective immediately all tariffs and subsidies are forever revoked&rdquo;.</li> <li>&ldquo;There is freedom of movement within the EU, not into the EU by non-EU countries&rdquo;.</li> <li>&ldquo;Each country is free to set its own tax policies and social benefits as it sees fit, subject to rule number 1 on tariffs.&rdquo;</li> </ol> <p>There needs to be some rules on what it takes to get into the EU, or be kicked out of the EU, but those are the three key rules that apply once in.</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="763" height="403" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20160627_eu.jpg?1467034194" /> </div> </div> </div> http://www.zerohedge.com/news/2016-06-27/why-did-uk-enter-eu-first-place#comments Apple Australia ETC Google Israel Latvia Steve Jobs Mon, 27 Jun 2016 22:25:00 +0000 Tyler Durden 564657 at http://www.zerohedge.com Americans Are Now The Top Silver Investors In The World http://www.zerohedge.com/news/2016-06-27/americans-are-now-top-silver-investors-world <p><img src="https://srsroccoreport.com/wp-content/uploads/SRSroccoReport-Logo-230x123-px.png" height="123" width="230" alt="SRSrocco" /></p> <p>By the <strong><a href="https://srsroccoreport.com/">SRSrocco Report</a></strong>,</p> <p>According to the figures in the 2016 World Silver Survey, Americans now lead the world in physical silver investment.&nbsp; This is quite an interesting change as India has been the number one market for silver bar demand in the past.</p> <p>For example, Indians purchased more than 100 million oz (Moz) of silver bar in 2008 of the approximate world total of 125 Moz.&nbsp; However, silver bar demand is only one segment of total global physical silver investment.&nbsp; There is also Official Coin demand.</p> <p>If we look at the data for 2015, India continues to rank as the largest source of silver bar investment int he world:</p> <p style="text-align: center;"><img src="https://srsroccoreport.com/wp-content/uploads/2016/06/Global-Silver-Bar-Demand-2015NEW.png" height="358" width="500" alt="Global Silver Bar Demand" style="vertical-align: middle;" /></p> <p>India purchased 82.5 Moz of silver bar in 2015 while the U.S. ranked second with 51.8 Moz, Europe came in third with 12.7 Moz and China placed last at 3.8 Moz. (2016 World Silver Survey, pg. 22 &amp; 23).</p> <p><span style="color: #800000;"><strong>The United States experienced a huge increase in silver bar demand in 2015 due to the inclusion of "Private rounds and bars" now in the data</strong></span>.&nbsp; So, all private silver bar and rounds sold are lumped into the Silver Bar category.</p> <p>Even though India ranked first place when it comes to silver bar demand, if we include Official Coin sales, the U.S. is now the global leader of physical silver investment:</p> <p style="text-align: center;"><img src="https://srsroccoreport.com/wp-content/uploads/2016/06/Global-Physical-Silver-Investment-Demand-2015NEW.png" height="358" width="500" alt="Global Silver Investment Demand" style="vertical-align: middle;" /></p> <p>In 2015, the U.S. Mint sold 48.6 Moz of Official Silver coins while India ranked fifth at 8.9 Moz.&nbsp; <span style="color: #800000;"><strong>If we add silver bar demand to these figures, the U.S. was the leader at 100.4 Moz while India came in second at 91.4 Moz.</strong></span> (2016 World Silver Survey, pg. 25).&nbsp; The rest of the world accounted for the remaining 100.5 Moz of the total 292.3 Moz of Silver Bar &amp; Coin demand.</p> <p>I could not break down Silver Bar &amp; Coin demand in the 'Rest of World" category because there isn't enough data.&nbsp; The World Silver Survey's do a much better job than the CPM Group's Silver Yearbook in reporting silver investment figures.&nbsp; However, they only publish the amount of Silver Coins sold by each of the Official mints, not the actual demand.</p> <p>There is no way of knowing how many U.S. Silver Eagles end up in foreign hands, or how many Canadian Maples or Australian Kangaroos are purchased by Americans.&nbsp; The data is not that accurate.&nbsp; However, I do believe Indians purchased the overwhelming majority of their own Official Silver coins.</p> <p>Furthermore, the Silver Bar &amp; Coin demand of 100.4 Moz for the United States may be quite conservative.&nbsp; Why?&nbsp; <span style="color: #800000;"><strong>Because,&nbsp;Americans buy a heck of a lot more foreign Official Silver Coins to more than make up for the amount of U.S. Silver Eagles exported abroad.</strong></span>&nbsp; We must remember, Americans don't have to pay a vat tax when they buy silver.</p> <p>What is also interesting about the data is that China ranked fourth behind Europe in silver bar demand.&nbsp; Even if we assume that the Chinese purchased all of their Official Silver coin sales of 10.7 Moz in 2015, their total Silver Bar &amp; Coin demand would only be 14.5 Moz.&nbsp; While the Chinese are the biggest buyers of gold in the world, silver still hasn't caught on as it has in the U.S. or India.</p> <p>Lastly, according to the data from the 2016 World Silver Survey, Indians purchase their silver bar as a short-term investment vehicle by taking advantage of lower prices or to profit from any differences in the spot or futures market.&nbsp; However, the majority of Americans purchase their silver for a long term BUY &amp; HOLD strategy.</p> <p><span style="color: #800000;"><strong>Which means as the Chinese consume most of the gold in the world, Americans are now the biggest silver investors.</strong></span></p> <p><span style="color: #800000;"><span style="color: #000000;">Please check out our new </span><a href="https://srsroccoreport.com/precious-metals-investing/" target="_blank"><span style="color: #0000ff;"><strong><span style="text-decoration: underline;">PRECIOUS METALS INVESTING</span></strong></span></a><span style="color: #000000;"> section or our new </span><a href="https://srsroccoreport.com/lowest-cost-precious-metals-storage/" target="_blank"><span style="color: #0000ff;"><strong><span style="text-decoration: underline;">LOWEST COST PRECIOUS METALS STORAGE</span></strong></span></a><span style="color: #000000;"> page.</span><br /></span></p> <p>Check back for new articles and updates at the SRSrocco Report.&nbsp; </p> http://www.zerohedge.com/news/2016-06-27/americans-are-now-top-silver-investors-world#comments China Futures market India Precious Metals Mon, 27 Jun 2016 22:01:59 +0000 SRSrocco 564670 at http://www.zerohedge.com