http://www.zerohedge.com/fullrss2.xml/article/article/%3Ca%20href%3D en Assange: "A Lot More Material" Will Be Released http://www.zerohedge.com/news/2016-07-26/assange-lot-more-material-will-be-released <p>One month ago, <a href="http://www.zerohedge.com/news/2016-06-13/julian-assange-warns-wikileaks-will-publish-enough-evidence-indict-hillary-clinton">when Wikileaks' Julian Assange told ITV's Richard Peston </a>that he would publish "enough evidence" to indict Hillary Clinton, few took him seriously. And while Hillary has not been indicted - yet - last Friday's leak has already managed to wreak havoc and has led to revelations of cronyism and collusion within the Democratic party and the media, the resignation of the DNC Chair Debbie Wasserman Schultz, as well as chaos on the first day of the Democratic convention. </p> <p>Hence, why we believe Assange will be taken more seriously this time. </p> <p>Earlier today, <strong>Assange told CNN that Wikileaks might release "a lot more material" relevant to the US electoral campaign</strong>. Assange <a href="http://www.cnn.com/2016/07/26/politics/julian-assange-dnc-email-leak-hack/">spoke to CNN </a>following the release of nearly 20,000 hacked Democratic National Committee emails.</p> <p>The topic then turned to the topic du jour: "<em>did Putin do it"?</em></p> <p>Assange refused to confirm or deny a Russian origin for the mass email leak, saying Wikileaks tries to create ambiguity to protect all its sources.</p> <p>"Perhaps one day the source or sources will step forward and that might be an interesting moment some people may have egg on their faces. But to exclude certain actors is to make it easier to find out who our sources are," Assange told CNN.</p> <p>The Kremlin has rejected allegations its behind the hacking, calling suggestions it ordered the release of the emails to influence US politics the "usual fun and games" of the US election campaigns, while the Russian foreign minister had an even simpler reaction to the same question: "<a href="http://www.zerohedge.com/news/2016-07-26/russia-foreign-minister-responds-allegation-it-behind-dnc-hack-i-dont-want-use-four-">I don't want to use four-letter words</a>." Dmitry Peskov, the Kremlin spokesman, added, "This is not really good for bilateral relations." </p> <p>All of this now appears to be irrelevant, and <a href="http://zerohedge.com/news/2016-07-26/maybe-putin-did-it-after-all-trail-emerges-linking-dnc-email-hack-russia">as we speculated earlier</a>, the "anti-Russia" narrative is now in motion and moments ago <a href="http://www.cnn.com/2016/07/26/politics/obama-possible-putin-trying-to-sway-vote-for-trump/index.html">Obama said </a>that it's 'possible' Putin is trying to sway vote for Trump. </p> <p>Which brings us to the next point: speaking from the Ecuadorian embassy in London, where he faces extradition over sexual assault allegations, Assange told CNN that Democratic Party officials were using the specter of Russian involvement <strong>to distract from the content of the emails, </strong>which have had tumultuous affect on the party at the start of its national convention, where it is expected to make Hillary Clinton its presidential nominee.</p> <p>"It raises questions about the natural instincts of Clinton that when confronted with a serious domestic political scandal, <strong>she tries to blame the Russians, blame the Chinese, et cetera," </strong>Assange told CNN.</p> <p>"Because if she does that while in government, it could lead to problems," he added.</p> <p>Actually Julian, she already <em><strong>has </strong></em>done that, most recently when the Inspector General accused her of violating State Department rules for maintaining a personal email server: her response - <a href="http://www.zerohedge.com/news/2016-05-25/hillary-accuses-state-department-report-having-anti-clinton-bias">blame the state department for having an "anti-Clinton</a>" bias, and use the oldest, or rather youngest, defense in the book, one used by young children everywhere: "<strong>others did it</strong>" (something which we <a href="http://www.people.com/article/hillary-clinton-emails-inspector-general-report-mean">subsequently learned was incorrect</a>).</p> <p>Then again, when the entire objective press is engaged in a full court press to crush the messenger (or the source), and ignore the message, none of this matters. </p> <p><em>Assange's full interview is below.</em></p> <p> <iframe src="https://www.youtube.com/embed/AtDu6529bKI" width="500" height="281" frameborder="0"></iframe></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="945" height="635" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/assange%20teaser.jpg?1469584913" /> </div> </div> </div> http://www.zerohedge.com/news/2016-07-26/assange-lot-more-material-will-be-released#comments Cronyism None Wed, 27 Jul 2016 02:08:58 +0000 Tyler Durden 567339 at http://www.zerohedge.com "We Live In A Dystopic, Orwellian Ball Of Crazy" http://www.zerohedge.com/news/2016-07-26/we-live-dystopic-orwellian-ball-crazy <p><a href="http://www.alt-market.com/articles/2963-every-week-gets-more-orwellian">Alt-Market's Brandon Smith</a> points out an interesting synopsis video by Melissa Dykes on the <strong>ever growing weirdness that is our world in 2016</strong>. </p> <p>Make no mistake,<a href="http://www.alt-market.com/articles/2963-every-week-gets-more-orwellian"> Smith reminds,</a> <strong><em>humanity is being put into a state of constant vertigo</em></strong>; a psychological daze meant to keep us completely<strong> distracted from the reality that our cultural collapse</strong> is by design and serves the interests of a select elitist minority. <em><strong> Think things are strange now?</strong></em> They are about to get far worse in the coming months, I guarantee it...</p> <p><iframe src="https://www.youtube.com/embed/DBYBbMwlVCc" width="560" height="315" frameborder="0"></iframe></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="418" height="244" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20160726_orwell.jpg?1469580447" /> </div> </div> </div> http://www.zerohedge.com/news/2016-07-26/we-live-dystopic-orwellian-ball-crazy#comments Reality Wed, 27 Jul 2016 01:40:00 +0000 Tyler Durden 567330 at http://www.zerohedge.com Might The Donald Be Good For Peace? http://www.zerohedge.com/news/2016-07-26/might-donald-be-good-peace <p><em><a href="http://www.strategic-culture.org/news/2016/07/25/might-the-donald-be-good-for-peace.html">Submitted by Brian Cloughley (former deputy head of UN military mission in Kashmir) via Strategic-Culture.org,</a></em></p> <p><strong>Donald Trump is erratic. We all know that. </strong>It is insulting to assert, in the&nbsp;<a href="http://www.huffingtonpost.co.uk/2015/12/09/boris-johnson-slams-donal_n_8758292.html" target="_blank">words</a>&nbsp;of Britain&rsquo;s new Foreign Secretary, the erratic Boris Johnson, that he is&nbsp;&laquo;frankly unfit to hold the office of President of the United States&raquo;,&nbsp;but he&rsquo;s certainly unpredictable and says some things that are, to put it mildly, intriguing. <em><strong>The fact remains that he could be next president of the United States, which makes it important to look at what he might do if that comes about, especially in the light of America&rsquo;s military catastrophes so far this century.</strong></em></p> <p><span style="text-decoration: underline;"><strong>Obama followed his predecessors in expanding America&rsquo;s iron fist as self-appointed global policeman.</strong></span> He vastly increased the US military presence around the world and intensified the Pentagon&rsquo;s aggressive confrontations with China and Russia.</p> <p>In <strong>China</strong>&rsquo;s case this was effected by&nbsp;<a href="http://www.reuters.com/article/us-southchinasea-china-usa-idUSKCN0YH11O" target="_blank">sending</a>&nbsp;US Naval E-P3 electronic surveillance aircraft on missions close to the mainland,&nbsp;<a href="https://theaviationist.com/2016/06/19/things-heat-up-near-south-china-sea-two-u-s-aircraft-carriers-b-52s-and-ea-18g-growler-detachment/" target="_blank">deploying</a>&nbsp;EA-18G Growler electronic attack aircraft to Clark Air Base in the Philippines, ordering B-52 nuclear bombers&nbsp;<a href="http://www.bbc.com/news/world-asia-34805899" target="_blank">to overfly</a>&nbsp;the South China Sea where the US Navy also carried out extended&nbsp;<a href="https://theaviationist.com/2016/06/19/things-heat-up-near-south-china-sea-two-u-s-aircraft-carriers-b-52s-and-ea-18g-growler-detachment/" target="_blank">manoeuvres</a>&nbsp;by massive strike groups of nuclear-armed aircraft carriers and guided missile cruisers. <strong>All this in a region where the US has not the slightest territorial interest or claim. </strong>China&rsquo;s Sea is 12,000 kilometres, 7,000 miles, from the American mainland, yet Washington considers it the sacred right and duty of the United States to act as a global gendarme and give orders to China about its posture in its own back yard, where there has not been one instance of interference with commercial shipping passing through that region.</p> <p><strong>As to confrontation with Russia, the US has ensured that its Brussels sub-office, the North Atlantic Treaty Organisation, will go on playing its toy-soldier games right up to Russia&rsquo;s borders.</strong> The official&nbsp;<a href="http://www.nato.int/cps/en/natohq/official_texts_133169.htm" target="_blank">statement</a>&nbsp;after NATO&rsquo;s war drum-thumping conclave in Warsaw on July 8-9 is indicative of its determination to continue its attempts to menace Russia, which has not made the slightest move to threaten a single NATO member. It is absurd to claim that&nbsp;&laquo;the security situation has deteriorated&raquo;&nbsp;in the Black Sea and the Baltic because of Russian action.</p> <p><strong>These regions would be perfectly calm if it were not for constant provocations by US-NATO warships and combat and electronic warfare aircraft which deliberately trail their coats in attempts to incite reaction by Russian forces</strong>. NATO&rsquo;s Warsaw Declaration is a farrago of contrived accusations compiled to justify the existence of the farcical grouping that&nbsp;<a href="http://www.globalresearch.ca/the-destruction-of-libya-the-destabilization-of-a-nation-us-nato-crimes-against-humanity/5437027" target="_blank">destroyed</a>&nbsp;Libya and proved&nbsp;<a href="http://www.globalresearch.ca/natos-epic-fail-taliban-retake-major-hub-of-kunduz-in-afghanistan/5479084" target="_blank">incapable</a>&nbsp;of overcoming a few thousand raggy baggy insurgents in Afghanistan. So the military alliance is spending vast sums to&nbsp;<a href="https://www.theguardian.com/world/2016/jul/08/nato-summit-warsaw-brexit-russia" target="_blank">deploy</a>&nbsp;soldiers, aircraft, ships and missiles right up to Russia&rsquo;s borders in deliberate confrontation. As Russian spokesman Dmitry Peskov&nbsp;<a href="http://news.sky.com/story/nato-set-for-long-stand-off-with-russia-10496448" target="_blank">explained</a>&nbsp;&laquo;Russia is not looking&nbsp;[for an enemy]&nbsp;but it actually sees it happening. When NATO soldiers march along our border and NATO jets fly by, it&rsquo;s not us who are moving closer to NATO&rsquo;s borders&raquo;.</p> <p><strong>There&rsquo;s no answer to that, but the Obama-Pentagon administration is not going to relax its anti-China and anti-Russia attitude, and if Hillary Clinton becomes president &ndash; she of the infamous&nbsp;&laquo;We came; We saw; He died&raquo;&nbsp;<a href="https://www.youtube.com/watch?v=Fgcd1ghag5Y" target="_blank">giggling interview</a>&nbsp;in which she rejoiced in the savage murder of President Gaddafi of Libya &ndash; there will be more of the same</strong>. In fact, probably a lot more of the same, only harder, faster and of more financial benefit to US manufacturers of weapons systems. She&nbsp;<a href="http://www.dailymail.co.uk/news/article-3404459/Hillary-Clinton-explains-relationship-Vladimir-Putin-calling-bully-Democratic-debate.html" target="_blank">described</a>&nbsp;President Putin as&nbsp;&laquo;someone that you have to continuously stand up to because, like many bullies, he is somebody who will take as much as he possibly can unless you do. And we need to get the Europeans to be more willing to stand up&raquo;.</p> <p><span style="text-decoration: underline;"><strong>So might The Donald be different?</strong></span></p> <p><strong>He&rsquo;s arrogant and impulsive, but although the official Republican stance on China is predictably&nbsp;<a href="http://www.reuters.com/article/us-usa-election-china-idUSKCN10105Y" target="_blank">belligerent</a>, it isn&rsquo;t likely that The Donald will support confrontation by the nuclear-armed armadas that at the moment plough so aggressively around China&rsquo;s shores. And he isn&rsquo;t likely to endorse the Pentagon&rsquo;s happy fandangos concerning Russia, either.</strong></p> <p>His&nbsp;<a href="http://www.realclearpolitics.com/video/2016/03/27/trump_europe_is_not_safe_lots_of_the_free_world_has_become_weak.html" target="_blank">comments</a>&nbsp;about the US-contrived <strong>shambles in Ukraine</strong> are illuminating, in that he says&nbsp;&laquo;we&rsquo;re the ones always fighting&nbsp;[figuratively]&nbsp;on the Ukraine. I never hear any other countries even mentioned and we&rsquo;re fighting constantly. We&rsquo;re talking about Ukraine, get out, do this, do that. And I mean Ukraine is very far away from us. How come the countries near the Ukraine, surrounding the Ukraine, how come they&rsquo;re not opening up and they&rsquo;re not at least protesting? I never hear anything from anybody except the United States&raquo;.</p> <p>They&rsquo;re not protesting because they have to bow the knee to the Pentagon and its palatial branch office in Brussels (recently built at a cost of over a billion euros) &ndash; but The Donald made a good point: <em><strong>Why on earth does the US meddle in Ukraine? Has it benefited economically, politically, socially or culturally from its blatant interference?</strong></em></p> <p><u><em><strong>Not only that, but The Donald&nbsp;<a href="http://www.bbc.com/news/world-us-canada-36852805" target="_blank">says</a>&nbsp;that the United States has to &laquo;fix our own mess&raquo; before &laquo;lecturing&raquo; other nations on how to behave.</strong></em></u></p> <p>No matter how extreme he may be in some of his statements, that one strikes a truly sensible note. Why does America consider that it has the right to hector and lecture China and Russia and so many other countries?<strong> It is, of course, because, as Obama&nbsp;<a href="http://www.voanews.com/content/obama_tells_air_force_academy_us_is_one_indispensable_country_world_affairs/940158.html" target="_blank">announced</a>, America considers itself the&nbsp;&laquo;one indispensable nation in world affairs&raquo;.</strong></p> <p>What crass conceit. And Obama laboured the point in declaring that&nbsp;&laquo;I see an American century because no other nation seeks the role that we play in global affairs, and no other nation can play the role that we play in global affairs&raquo;.&nbsp;This comes from the president of the country that destroyed Iraq and Libya, and is now itself in chaos caused by deliberate killing of black people by police and a surge in black protests against such slaughter.</p> <p>Certainly The Donald shouts that he wants to &laquo;Make America Great Again&raquo; and such xenophobic nonsense &ndash; but that&rsquo;s for the sake of vote-catching. As he&nbsp;<a href="http://www.bbc.com/news/world-us-canada-36852805" target="_blank">rightly said</a>,&nbsp;&laquo;When the world sees how bad the United States is and we start talking about civil liberties, I don&#39;t think we are a very good messenger&raquo;.</p> <p>Then The Donald went further in common sense and&nbsp;<a href="http://abcnews.go.com/Politics/wireStory/trump-hedges-nato-protection-russian-aggression-40759666" target="_blank">suggested</a>&nbsp;that as president<strong> he might close some of the hundreds of US military bases abroad because&nbsp;&laquo;if we decide we have to defend the United States, we can always deploy&raquo;&nbsp;from American soil, which would be&nbsp;&laquo;a lot less expensive&raquo;.&nbsp;How very sensible.</strong></p> <p><strong>Hillary&nbsp;<a href="http://www.chicagotribune.com/news/nationworld/ct-trump-nato-allies-russia-20160721-story.html" target="_blank">came back</a>&nbsp;with the predictable rejoinder that the president of the United States&nbsp;&laquo;is supposed to be the leader of the Free World. Donald Trump apparently doesn&rsquo;t even believe in the Free World&raquo;.</strong>&nbsp;This is straight out of the Cold War vocabulary of divisive confrontation &ndash; and if she becomes president, there will be even more pugnacious patronising baloney about &laquo;leadership of the Free World&raquo; and &laquo;the one indispensable nation&raquo;. As The Donald&nbsp;<a href="http://www.upi.com/Top_News/US/2016/04/03/Donald-Trump-town-hall-Abortion-stance-correction-well-accepted-by-women/1231459729711/?spt=sec&amp;or=tn" target="_blank">said in April</a>,&nbsp;&laquo;How are we going to lecture when you see the riots and the horror going on in our own country&raquo;.</p> <p>So there might be hope for the future if The Donald drops his more outlandish ideas about Muslims and Mexicans and institutes a policy of rapprochement and live-and-let-live with China and Russia. He&rsquo;s a better bet on that score than confrontational Hillary.</p> <p><u><strong>It just might be that The Donald would be good for rapprochement and peace.</strong></u></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="541" height="327" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20160726_trump1.jpg?1469579824" /> </div> </div> </div> http://www.zerohedge.com/news/2016-07-26/might-donald-be-good-peace#comments Afghanistan China Donald Trump Iraq Ukraine Wed, 27 Jul 2016 01:10:00 +0000 Tyler Durden 567329 at http://www.zerohedge.com Dead 'Market' Walking: Chinese Stock Volatility Crashes Near Record Lows http://www.zerohedge.com/news/2016-07-26/dead-market-walking-chinese-stock-volatilty-crashes-near-record-lows <p>When Chinese authorities t<em>ook over </em>the day-to-day management and support of their collapsing stock market in August 2015, it was <strong>not just volume that died</strong>.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2016/07/25/20160726_china1.jpg"><img height="313" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2016/07/25/20160726_china1_0.jpg" width="600" /></a></p> <p>&nbsp;</p> <p>From over 110, short-term volatility in China&#39;s major stock market - Shanghai Composite - has <strong>collapsed to single-digits</strong> this week. This is among the <strong>least volatile period in the index&#39;s history</strong>, despite increased uncertainty around stimulus and economic transition.</p> <p>China&rsquo;s $6.2 trillion equity market was until recently <strong>best known for its violent price swings.</strong></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2016/07/25/20160726_shcomp.jpg"><img height="316" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2016/07/25/20160726_shcomp_0.jpg" width="600" /></a></p> <p>&nbsp;</p> <p>But, as Bloomberg reports,<strong> such wildness is past</strong>, with a gauge of volatility on the Shanghai Composite Index<span style="text-decoration: underline;"><strong> approaching the lowest level since 1992. </strong></span></p> <p>This complacency is happening despite a stock rebound that is faltering as improving economic data damp speculation for more stimulus, <em><strong>while the memory of last year&rsquo;s boom-bust deters investors from betting on sustained gains.</strong></em></p> <p>We suspect this episode will not end well, as <strong>almost half of the Shanghai Composite Index&rsquo;s members are flashing sell signals, up from 5 percent two weeks ago</strong>, moving average convergence-divergence data show.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2016/07/25/20160726_china2.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2016/07/25/20160726_china2_0.jpg" style="width: 600px; height: 301px;" /></a></p> <p><strong>The last time the proportion of bearish signs was this high in April, a 9 percent drop followed.</strong></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="966" height="509" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20160726_shcomp.jpg?1469577738" /> </div> </div> </div> http://www.zerohedge.com/news/2016-07-26/dead-market-walking-chinese-stock-volatilty-crashes-near-record-lows#comments China Volatility Wed, 27 Jul 2016 00:40:00 +0000 Tyler Durden 567327 at http://www.zerohedge.com "Too Simple" Energy-Economy Models Give Misleading Answers http://www.zerohedge.com/news/2016-07-26/too-simple-energy-economy-models-give-misleading-answers <p><a href="https://ourfiniteworld.com/2016/07/25/overly-simple-energy-economy-models-give-misleading-answers/"><em>Submitted by Gail Tverberg via Our Finite World blog,</em></a></p> <p>Does it make a difference if our models of energy and the economy are overly simple? I would argue that it depends on what we plan to use the models for. If all we want to do is determine approximately how many years in the future energy supplies will turn down, then a simple model is perfectly sufficient. But if we want to determine how we might change the current economy to make it hold up better against the forces it is facing, we need a more complex model that explains the economy&rsquo;s real problems as we reach limits.<strong> We need a <em>model that tells the correct shape of the curve</em>, as well as the approximate timing.&nbsp;</strong>I suggest reading my <a href="https://ourfiniteworld.com/2016/07/06/energy-limits-why-we-see-rising-wealth-disparity-and-low-prices/">recent post regarding complexity</a>&nbsp;and its effects as background for this post.</p> <p>The common lay interpretation of simple models is that <em>running out</em> of energy supplies can be expected to be our overwhelming problem in the future. A more complete model suggests that our problems as we approach limits are likely to be quite different: growing wealth disparity, inability to maintain complex infrastructure, and growing debt problems. <strong><em>Energy supplies that look easy to extract will not, in fact, be available because prices will not rise high enough.</em></strong> These problems can be expected to change the shape of the curve of future energy consumption to one with a fairly fast decline, such as the Seneca Cliff.</p> <div class="wp-caption aligncenter" id="attachment_40416" style="width: 549px;"><a href="https://gailtheactuary.files.wordpress.com/2015/11/senecacliff.jpg"><img alt="Figure 5. Seneca Cliff by Ugo Bardi" class="size-full wp-image-40416" src="https://gailtheactuary.files.wordpress.com/2015/11/senecacliff.jpg?w=640" /></a><br /> <p class="wp-caption-text">Figure 1. Seneca Cliff by <a href="http://cassandralegacy.blogspot.com/2011/08/seneca-effect-origins-of-collapse.html">Ugo Bardi</a>. This curve is based on writings in the 1st century C.E. by Lucius Anneaus Seneca, &ldquo;It would be of some consolation for the feebleness of our selves and our works if all things should perish as slowly as they come into being; but as it is, increases are of sluggish growth, but the way to ruin is rapid.&rdquo;</p> </div> <p>It is not intuitive, but complexity-related issues create a situation in which economies need to grow, or they will collapse. See my post,&nbsp;<a href="https://ourfiniteworld.com/2016/02/08/the-physics-of-energy-and-the-economy/">The Physics of Energy and the&nbsp;Economy</a>. The popular idea that we extract 50% of a resource before peak, and 50% after peak will be found not to be true&ndash;much of the second 50% will stay in the ground.</p> <p>Some readers may be interested in a new article that I assisted in writing, relating to the role that price plays in the quantity of oil extracted. The article is called, &ldquo;<a href="http://authors.elsevier.com/a/1TRCw1H%7Eczy5-y">An oil production forecast for China considering economic limits</a>.&rdquo; &nbsp;This article has been published by the academic journal Energy, and is available as a free download for 50 days.</p> <p><u><strong>A Simple Model Works If All We Are Trying to Do Is Make a Rough Estimate of the Date of the Downturn</strong></u></p> <p>Are we like the team that Dennis Meadows headed up in the early 1970s, simply trying to make a ballpark estimate of when natural resource limits are going to become a severe problem? (This analysis is the basis of the 1972 book, <a href="http://www.donellameadows.org/wp-content/userfiles/Limits-to-Growth-digital-scan-version.pdf">Limits to Growth</a>.) Or are we like M. King Hubbert, back in 1956, trying to warn citizens about energy problems in the fairly distant future? In the case of Hubbert and Meadows, all that was needed was a fairly simple model, telling roughly when the problem might hit, but not necessarily in what way.</p> <p>I <a href="https://gailtheactuary.files.wordpress.com/2014/02/tverberg_complexity-2016_final-pptx.pdf">have criticized Hubbert&rsquo;s model</a> for being deficient in some major respects: leaving out complexity, leaving out entropy, and assuming a nearly unlimited supply of an alternate fuel. Perhaps these issues were not important, however, if all he was trying to do was warn people of a distant future issue.</p> <div class="wp-caption aligncenter" id="attachment_41065" style="width: 650px;"><a href="https://gailtheactuary.files.wordpress.com/2016/07/29-hubbert-developed-model-based-on-assumption-of-no-complexity-no-entropy.png"><img alt="Slide 29 from my complexity presentation at the Biophysical Economics Conference. Hubbert's model omitted complexity, entropy." class="size-full wp-image-41065" height="479" src="https://gailtheactuary.files.wordpress.com/2016/07/29-hubbert-developed-model-based-on-assumption-of-no-complexity-no-entropy.png?w=640&amp;h=479" width="640" /></a><br /> <p class="wp-caption-text">Figure 2. Slide 29 from my <a href="https://gailtheactuary.files.wordpress.com/2014/02/tverberg_complexity-2016_final-pptx.pdf">complexity presentation</a> at the 2016 Biophysical Economics Conference. Hubbert&rsquo;s model omitted complexity, entropy.</p> </div> <p>The model underlying the 1972 book, Limits to Growth, was also quite simple.<a href="http://www.theoildrum.com/node/5528"> Ugo Bardi has used this image</a> by Magne Myrtveit to represent how the 1972 Limits to Growth model worked. It does not include a financial system or debt.</p> <div class="wp-caption aligncenter" id="attachment_41086" style="width: 455px;"><a href="https://gailtheactuary.files.wordpress.com/2016/07/romanempiremodel.png"><img alt="Figure 2. Image by Magne Myrtveit to summarize the main elements of the world model for Limits to Growth." class="size-full wp-image-41086" src="https://gailtheactuary.files.wordpress.com/2016/07/romanempiremodel.png?w=640" /></a><br /> <p class="wp-caption-text">Figure 3. Image by Magne Myrtveit to summarize the main elements of the world model for Limits to Growth.</p> </div> <p>As such, this model does not reflect the major elements of complexity, which I summarized as follows in a&nbsp;<a href="https://ourfiniteworld.com/2016/07/06/energy-limits-why-we-see-rising-wealth-disparity-and-low-prices/">recent post</a>:</p> <div class="wp-caption aligncenter" id="attachment_41029" style="width: 650px;"><a href="https://gailtheactuary.files.wordpress.com/2016/07/7-basic-elements-of-complexity.png"><img alt="Figure 3. Slide 7 from my recent complexity presentation. Basic Elements of Complexity" class="size-full wp-image-41029" height="435" src="https://gailtheactuary.files.wordpress.com/2016/07/7-basic-elements-of-complexity.png?w=640&amp;h=435" width="640" /></a><br /> <p class="wp-caption-text">Figure 4. Slide 7 from my <a href="https://gailtheactuary.files.wordpress.com/2014/02/tverberg_complexity-2016_final-pptx.pdf">recent complexity presentation</a>. Basic Elements of Complexity</p> </div> <p>Thus, the model does not forecast the problems that can be expected to occur with increasingly hierarchical behavior, including the problems that people who are at the bottom of the hierarchy can be expected to have getting enough resources for basic functions of life. These issues are important, because people at the bottom of the hierarchy are very numerous. They need to be fed, clothed, housed, and have transportation to work. All of these things take natural resources, including energy products. If the benefit of available natural resources doesn&rsquo;t make it all of the way down to the bottom of the hierarchy, death rates spike. This is one of the forces that can be expected to change the shape of the curve.</p> <div class="wp-caption aligncenter" id="attachment_41039" style="width: 650px;"><a href="https://gailtheactuary.files.wordpress.com/2016/07/17-people-at-bottom-of-hierarchy-most-vulnerable.png"><img alt="Slide 17. People at the bottom of a hierarchy are most vulnerable." class="size-full wp-image-41039" height="471" src="https://gailtheactuary.files.wordpress.com/2016/07/17-people-at-bottom-of-hierarchy-most-vulnerable.png?w=640&amp;h=471" width="640" /></a><br /> <p class="wp-caption-text">Figure 5. Slide 17 from my complexity presentation. People at the bottom of a hierarchy are most vulnerable.</p> </div> <p>Dennis Meadows does not claim that the model that his group put together will show anything useful about the &ldquo;shape&rdquo; of the collapse. In fact, in <a href="https://ourfiniteworld.com/2015/08/26/deflationary-collapse-ahead/">an article about a year ago</a>, I cut off part of the well-known Limits to Growth forecast to eliminate the part that is likely not particularly helpful&ndash;it just shows what their simple model indicates.</p> <div class="wp-caption aligncenter" id="attachment_40103" style="width: 407px;"><a href="https://gailtheactuary.files.wordpress.com/2015/08/limits-to-growth-truncated.png"><img alt="Figure 4. Limits to Growth forecast, truncated shortly after production turns down, since modeled amounts are unreliable after that date." class="size-full wp-image-40103" src="https://gailtheactuary.files.wordpress.com/2015/08/limits-to-growth-truncated.png?w=640" /></a><br /> <p class="wp-caption-text">Figure 6. Limits to Growth forecast, truncated shortly after production turns down, since modeled amounts are unreliable after that date.</p> </div> <p><strong>Anthropologist Joseph Tainter&rsquo;s View of Collapse</strong></p> <p>If we read what anthropologist Joseph Tainter says in his book, the <a href="https://www.amazon.com/Collapse-Complex-Societies-Studies-Archaeology/dp/052138673X">Collapse of Complex Societies</a>, we find that he doesn&rsquo;t consider &ldquo;running out&rdquo; to be the cause of collapse. Instead, he sees growing complexity to be what leads an economy to collapse. These are two of the points Tainter makes regarding complexity:</p> <ul> <li><strong>Increased complexity carries with it increased energy costs per capita</strong>. In other words, increased complexity is itself a user of energy, and thus tends to drain away energy availability from other uses. Thus, in my opinion, complexity will make the system fail more quickly than the Hubbert model would suggest&ndash;the complexity part of the system will use part of the energy that the Hubbert model assumes will be available to fund the slow down slope of the economy.</li> <li><strong>Increased investment in complexity tends to reach declining marginal returns</strong>. For example, the first expressway added to a highway system adds more value than the 1000th one. Eventually, if countries are trying to create economic growth where little exists, governments may use debt to fund the building of <a href="https://spikejapan.wordpress.com/2010/07/25/in-praise-of%E2%80%A6the-ghost-highway/">expressways with practically no expected users</a>, simply to add job opportunities.</li> </ul> <p><a href="http://www.theoildrum.com/node/5528">Ugo Bardi quotes Joseph Tainter </a>as&nbsp;saying,</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><em>&ldquo;In&nbsp;ancient societies that I studied, for example the Roman Empire, the great problem that these economies faced was that they eventually would incur very high costs just to maintain the status quo. They would need to invest&nbsp;very high amounts to solve problems that didn&rsquo;t yield a net positive return; instead these investments simply allowed the economies to maintain the level that they were at. This increasing cost of maintaining the status quo decreased the net benefit of being a complex society.&rdquo;&nbsp;</em></p> </blockquote> <p><u><strong>View of Collapse Based on a Modeling Approach&nbsp;</strong></u></p> <p>In the book <a href="https://www.amazon.com/Secular-Cycles-Peter-Turchin/dp/0691136963">Secular Cycles</a>, Peter Turchin and Surgey Nefedov approach the problem of what causes civilizations to collapse using a modeling approach. According to their analysis, the kinds of things that caused civilizations to collapse very much corresponded to the symptoms of increasing complexity:</p> <ul> <li>Problems tended to develop when the population in an area outgrew its resource base&ndash;either the population rose too high, or the resources become degraded, or both. The leaders would adopt a plan, which we might consider adding &ldquo;complexity,&rdquo; to solve the problems. Such a plan might include raising taxes to be able to afford a bigger army, and using that army to invade another territory. Or it might involve a plan to build irrigation, so that the current land becomes more productive. A modern approach might be to increase tourism, so that the wealth obtained from tourists can be traded for needed resources such as food.</li> <li>According to Turchin and Nefedov, one problem that arises with the adoption of the new plan is increased wealth disparity. More leaders are needed for the new complex solutions. At the same time, it becomes more difficult for those at the bottom of the hierarchy (such as new workers) to obtain adequate wages. Part of the problem is the underlying problem of too many people for the resources. Thus, for example, there is little need for new farmers, because there are already as many farmers as the land can accommodate. Another part of the problem is that an increasing share of the output of the economy is taken by people in the upper levels of the hierarchy, leaving little for low-ranking workers.</li> <li>Food and other commodity prices may temporarily spike, but there is a limit to what workers can pay. Workers can only afford more, if they take on more debt.</li> <li>Debt levels tend to rise, both because of the failing ability of workers to pay for their basic needs, and because governments need funding for their major projects.</li> <li>Systems tend to collapse because governments cannot tax the workers sufficiently to meet their expanded needs. Also, low-ranking workers become susceptible to epidemics because they cannot obtain adequate nutrition with low wages and high taxes.</li> </ul> <p><u><strong>How Do We Fix an Overly Simple Model?&nbsp;</strong></u></p> <p>The image shown in Figure 3 in some sense shows only one &ldquo;layer&rdquo; of our problem. There is also a financial layer to the system, which includes both debt levels and price levels. There are also some refinements needed to the system regarding who gets the benefit of energy products: Is it the elite of the system, or is it the non-elite workers? If the economy is not growing very quickly, one major problem is that the workers at the bottom of the hierarchy tend to get squeezed out.</p> <div class="wp-caption aligncenter" id="attachment_40738" style="width: 650px;"><a href="https://gailtheactuary.files.wordpress.com/2016/03/workers-share-of-goods-and-services-keeps-falling.png"><img alt="Figure 7. Authors' depiction of changes to workers share of output of economy, as costs keep rising for other portions of the economy keep rising." class="size-full wp-image-40738" height="385" src="https://gailtheactuary.files.wordpress.com/2016/03/workers-share-of-goods-and-services-keeps-falling.png?w=640&amp;h=385" width="640" /></a><br /> <p class="wp-caption-text">Figure 7. Author&rsquo;s depiction of changes to non-elite workers&rsquo; share of the output of economy, as costs for other portions of the economy keep rising. The relative sizes of the various elements may not be correct; the purpose of this chart is to show a general idea, not actual amounts.</p> </div> <p>Briefly, we have several dynamics at work, pushing the economy toward collapse, rather than the resources simply &ldquo;running out&rdquo;:</p> <ol> <li>Debt tends to rise much faster than GDP, especially as increasing quantities of capital goods are added. Added debt tends to reach diminishing returns. As a result, it becomes increasingly difficult to repay debt with interest, creating a major problem for the financial system.</li> <li>The cost of resource extraction tends to rise because of diminishing returns. Wages, especially of non-elite workers, do not rise nearly as quickly. These workers cannot afford to buy nearly as many homes, cars, motorcycles, and other consumer goods. Without this demand for consumer goods made with natural resources, prices of many commodities are likely to fall below the cost of production. Or prices may rise, and then fall back, causing serious debt default problems for commodity producers.</li> <li>Because of growing complexity of the system, the &ldquo;overhead&rdquo; of the system (including educational costs, medical costs, the wages of managers, the cost of government programs, and the cost of resource extraction) tends to increase, leaving less for wages for the many non-elite workers of the world. With lower wages, the non-elite workers can afford less. This dynamic tends to push the system toward collapse as well.</li> </ol> <p>The following is a list of variables that might be added to the overly simple model.</p> <ul> <li><strong>Debt. </strong>As capital goods are added to work around resource shortages, debt levels will tend to rise quickly, because workers need to be paid before the benefit of capital goods can be obtained. Debt levels also rise for other reasons, such as government spending without corresponding tax revenue, and funding of purchases deemed to have lasting value, such as college educations and investments in research and development.</li> <li><strong>Interest rates</strong> are the major approach that politicians have at their disposal to try to influence debt levels. In general, the lower the interest rate, the cheaper it is to buy cars, homes, and factories on credit. Thus, the amount of debt can be expected to rise as politicians lower interest rates.</li> <li><strong>Wages of non-elite workers.</strong>&nbsp;Non-elite workers play a dual role: (a) they are the primary creators of the goods and services of the system, and (b) they are the primary buyers of the goods that are made using commodities, such as food, clothing, homes, and transportation services. Thus, their wages tend to determine whether the economy can grow. In general, we would expect wages of workers to rise, if their wages are being supplemented by more and more fossil fuel energy in the form of bigger and better machinery to help the workers produce more goods and services. If the wages of non-elite workers fall too low, we would expect the economy to slow, and commodity prices to fall. To some extent, rising debt (through manipulation of interest rates, or through government spending in excess of tax revenue) can be used to supplement the wages of non-elite workers to allow the economy to continue to grow, even if wages are stagnating.</li> <li><strong>The affordable price level for commodities in the aggregate</strong>&nbsp;depends primarily on the wage level of non-elite workers and debt levels. A particular commodity may increase in price, but in the aggregate, the total &ldquo;package&rdquo; of costs represented by commodity prices must remain affordable, considering wage and debt levels of workers. If wage levels of non-elite workers are rising, the overall affordable price level of commodities will tend to rise. But if wage levels of non-elite workers are falling, or if debt levels are falling, affordable price levels are likely to fall.</li> <li><strong>The required price level for commodity production in the aggregate to <em>continue to grow </em>at the previous rate.&nbsp;</strong>This required price level will depend on many considerations, including: (a) the rising cost of extraction, considering the impacts of depletion, (b) wage levels, (c) tax requirements, and (d) other needs, including payment of interest and dividends, and required funding for new development. Clearly, if the affordable price level falls below the required price level for very long, we can eventually expect total commodity production to start falling, and the economy to contract.</li> <li><strong>The energy needs of the &ldquo;overhead&rdquo; of the system</strong>. Increasing complexity tends to make the overhead of the system grow much faster than the system as a whole. Energy products of various kinds are needed to support this growing overhead, leaving less for other purposes, such as to increasingly leverage the labor of human workers. Some examples of growing overhead of the system include energy needed (a) to maintain the electric grid, internet, roads, and pipeline systems; (b) to fight growing pollution problems; (c) to support education, healthcare, and financial systems needed to maintain an increasingly complex society; (d) to meet government promises for pensions and unemployment insurance; and (e) to cover the rising energy cost of extracting energy products, water, and metals.</li> <li><strong>Available&nbsp;energy&nbsp;supply based on momentum and previous price levels. </strong>A few examples explain this issue.&nbsp;If a large oil project was started ten years ago, it likely will be completed, whether or not the oil is needed now. Oil exporters will continue to pump oil, as long as the price available in the marketplace is above their cost of production, because their governments need at least some tax revenue to keep their economies from collapsing. Wind turbines and solar panels that have been built will continue to produce electricity at irregular intervals, whether or not the electric grid actually needs this electricity. Renewable energy mandates will continue to add more wind turbines and solar panels to the electric grid, whether or not this electricity is needed.</li> <li><strong>Energy that can actually be added to the system, based on what workers can afford, considering wages and debt levels [demand based energy].&nbsp;</strong>Because matching of supply and demand takes place on a short-term basis (minute by minute for electricity), in theory we need a matrix of quantities of commodities of various types that can be purchased at various price levels for short time-periods, given actual wage and debt levels. For example, if more electricity is dumped on the electric grid than is needed, how much impact will a drop in prices have on the quantity of electricity that consumers are willing to buy? The intersections of supply and demand &ldquo;curves&rdquo; will determine both the price and quantity of energy added to the system.</li> </ul> <p>The output of the model would be three different estimates of whether we are reaching collapse:</p> <ol> <li>An analysis of whether repayment of debt with interest is reaching limits.</li> <li>An analysis of whether affordable commodity prices are falling below the level needed for commodity consumption to grow, likely leading to falling future commodity production.</li> <li>An analysis of whether net energy per capita is falling. This would reflect a calculation of the following amount over time: <a href="https://gailtheactuary.files.wordpress.com/2016/07/net-energy-per-capita-calculation.png"><img alt="Net energy per capita calculation" class="aligncenter size-full wp-image-41100" height="73" src="https://gailtheactuary.files.wordpress.com/2016/07/net-energy-per-capita-calculation.png?w=640&amp;h=73" width="640" /></a>If net energy per capita is falling, the ability to leverage human labor is falling as well. Thus productivity of human workers is likely to stop growing, or perhaps decline. The total amount of goods and services produced is likely to plateau or fall, leading to stagnating or declining economic growth.</li> </ol> <p>The important thing about the added pieces to this model is that they emphasize the<strong> one-way nature of the system</strong>.<strong> The economy needs to grow, or it collapses.</strong> The price of energy products cannot rise much at all, because wages of workers don&rsquo;t rise correspondingly. This means that any energy substitute must be very cheap. The system needs to keep adding debt, especially when capital goods are added. The benefit of this debt reaches diminishing returns. The combination of these diminishing returns with respect to investments made with debt, and the interest that needs to be paid on debt, means that it is very difficult for energy products based on capital goods to &ldquo;save&rdquo; the system.</p> <p><u><strong>Complexity Adds Unforeseen Problems</strong></u></p> <p>One issue that people working solely in the energy sector may not notice is that our current system for setting market-based electricity prices is not working very well, with the addition of feed-in tariffs and other subsidy programs. There is evidence that subsidizing renewable electricity tends to lead to&nbsp;<a href="http://www.pfbach.dk/firma_pfb/references/pfb_towards_50_pct_wind_in_denmark_2016_03_30.pdf">falling wholesale electricity prices</a>. In a sense, if we subsidize electricity prices for one type of electricity producer, we find it also necessary to subsidize electricity prices for other types of electricity producers. (Also in <a href="http://www.uters.com/article/us-california-energy-analysis-idUSKCN0YV0BX">California</a>.)</p> <div class="wp-caption aligncenter" id="attachment_40937" style="width: 514px;"><a href="https://gailtheactuary.files.wordpress.com/2016/06/residential-electricity-price.png"><img alt="Figure 8. Residential Electricity Prices in Europe, together with Germany spot wholesale price, from http://pfbach.dk/firma_pfb/references/pfb_towards_50_pct_wind_in_denmark_2016_03_30.pdf" class="size-full wp-image-40937" src="https://gailtheactuary.files.wordpress.com/2016/06/residential-electricity-price.png?w=640" /></a><br /> <p class="wp-caption-text">Figure 8. Residential Electricity Prices in Europe, together with Germany spot wholesale price, from <a href="http://pfbach.dk/firma_pfb/references/pfb_towards_50_pct_wind_in_denmark_2016_03_30.pdf" rel="nofollow">http://pfbach.dk/firma_pfb/references/pfb_towards_50_pct_wind_in_denmark_2016_03_30.pdf</a></p> </div> <p>Inadequate prices for electricity producers and a need for ever-rising subsidies for electricity production could, by themselves, cause the system to fail. In a sense, this pricing problem is a complexity-related outcome that economists have overlooked. Their models are also too simple!</p> <p><u><strong>Conclusion</strong></u></p> <p>It is easy to rely on too-simple models. <strong>Perhaps the biggest issue that is missed is that energy prices can&rsquo;t rise endlessly.</strong> Because of this, a large share of natural resources, including oil and other energy products, will be left in the ground. Furthermore, because prices do not rise very high, energy products that are expensive to produce can&rsquo;t be expected to work, either, no matter how they are disguised. Substitutes that cannot be inexpensively integrated into the electric grid are not likely to work either.</p> <p><strong>I talked about low-ranking workers being a vulnerable part of the system. </strong>It is clear from Joseph Tainter&rsquo;s comments that another vulnerable part of our current system is the various &ldquo;connectors&rdquo; that allow us to have our modern economy. These include the electric grid, roads and bridges, the pipeline systems, the water and sewer systems, the internet, the financial system, and the international trade system. Even government organizations such as the Eurozone might be considered vulnerable connecting systems.<strong> The energy cost of maintaining these systems can be expected to continue to rise. Rising costs for these systems are part of what makes it difficult to maintain our current economic system.</strong></p> <p>The focus on &ldquo;running out&rdquo; has led to a focus on finding ways to extend our energy supply with small quantities of high-priced alternatives.<strong> This approach doesn&rsquo;t really get us very far. What we need to keep the economy from collapsing is a growing supply of cheap-to-produce energy and other natural resources. </strong>Ideally, these new resources should require little debt, and not cause pollution problems. These requirements are exceedingly difficult to meet in a finite world.</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="466" height="332" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20160726_gail.jpg?1469576413" /> </div> </div> </div> http://www.zerohedge.com/news/2016-07-26/too-simple-energy-economy-models-give-misleading-answers#comments B+ China default Eurozone Fail Germany Roman Empire Tax Revenue Unemployment Unemployment Insurance Wed, 27 Jul 2016 00:15:00 +0000 Tyler Durden 567325 at http://www.zerohedge.com Two Birds, One M4: As NYPD Gears Up for Summer Of Chaos, Mayor de Blasio Secures Re-Election http://www.zerohedge.com/news/2016-07-26/concerned-mayor-or-cunning-campaigner <p>It's no secret to New Yorkers that Mayor de Blasio has a "strained" relationship with the NYPD and its Commissioner, William Bratton.&nbsp; <strong>Mayor de Blasio and Commissioner Bratton have publicly butted heads over a whole host of issues</strong> from Black Lives Matter, to the size of the police force, to the effectiveness of the City Council.&nbsp; Early last year the NYPD famously turned their backs on Mayor de Blasio as he delivered the eulogy for a fallen police officer. </p> <p>Therefore,<strong> it shouldn't be that shocking that Commissioner Bratton surprised Mayor de Blasio yesterday with an article in the <a href="http://www.nytimes.com/2016/07/26/nyregion/william-bratton-new-york-city-police-commissioner.html">New York Times </a>declaring that he didn't plan to stick around if Mayor de Blasio was elected to a second term</strong>, saying “There’s never a good time to leave something you love doing, but there’s a right time.”&nbsp; The announcement left many to speculate to what extent Bratton's exit would impair Mayor de Blasio's re-election odds.</p> <p><strong>Ironically - and conveniently - for the Mayor, the NYPD <a href="http://nypdnews.com/2016/07/every-nypd-patrol-officer-to-be-equipped-with-heavy-ballistic-vests-and-helmets/">announced</a> today that they had received funding, from none other than City Hall, to bulk up on heavy ballistic vests and helmets</strong> for officers in preparation for future terrorist attacks and and active shooter situations.&nbsp; The plan calls for the purchase of 20,000 ballistic helmets and 6,000 heavy ballistic vests among other equipment and training resources.&nbsp; Commissioner Bratton, said:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>“Now, more than ever, society is asking its police officers to go into harm’s way and to face grave danger.&nbsp; The department is fortunate to have the financial support to ensure that as they do, they have the best equipment and protection available."</p> </blockquote> <p>As <a href="http://nypdnews.com/2016/07/every-nypd-patrol-officer-to-be-equipped-with-heavy-ballistic-vests-and-helmets/">NYPDnews adds, </a>"more than $320 million has been secured to fund a broad spectrum of equipment and training since 2014, including: <strong>ballistic vests; helmets and vehicles; tactical escape hoods and belt-worn trauma kits; M4 rifles, OC spray and Tasers; smartphones and tablets</strong>; along with a host of training initiatives to complement the equipment and prepare officers for the challenges they face. Much of this funding has been provided by City Hall, the City Council, the New York County District Attorney, among others."</p> <p><iframe src="https://www.youtube.com/embed/CzRrvngaYBU" width="500" height="281" frameborder="0"></iframe></p> <p>Mayor de Blasio made the following comment: “New Yorkers depend on our brave men and women in uniform to keep us safe every day, and particularly in the wake of Dallas, Baton Rouge and Kansas City, we need to make smart investments to keep our officers safe in return.”</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>“Every NYPD officer will be equipped with a new helmet and heavy armored vests so that they are better prepared, and better able to protect themselves and others, in a dangerous situation. This is the latest in a series of investment designed to ensure that the NYPD remains the strongest, most professional police force in the world.”</p> </blockquote> <p>Like all the other "coincidences" in American politics (a certain tarmac meeting comes to mind) we're sure this was an earnest effort by a concerned Mayor to protect his police force in a turbulent time and certainly not an effort to rebuild burned bridges with an alienated police force, using taxpayer money, in an effort to protect a re-election campaign.</p> <p><img src="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/2016/07/26/NYPD_0.jpeg" alt="NYPD" width="500" height="333" /></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2016/07/21/image-13-1024x683.jpeg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2016/07/21/image-13-1024x683_0.jpeg" width="500" height="333" /></a></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="1024" height="683" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/image-12-1024x683.jpeg?1469575969" /> </div> </div> </div> http://www.zerohedge.com/news/2016-07-26/concerned-mayor-or-cunning-campaigner#comments New York Times None Tue, 26 Jul 2016 23:48:01 +0000 Tyler Durden 567303 at http://www.zerohedge.com What The Sudden Spike In The TED-Spread Really Means http://www.zerohedge.com/news/2016-07-26/what-sudden-spike-ted-spread-really-means <p>Historically, blowing out short-term funding rates, whether measured by the TED Spread (the difference between LIBOR and 3 month TSYs), or the 3 month FRA-OIS spread, have been an indicator of funding stress and heightened systemic risk. This had been the case as long as <a href="http://www.zerohedge.com/article/surging-libor-ois-and-cross-currency-basis-swaps-indicate-europes-response-too-little-too-la">2010, around the time of the first Greek bailout</a>, when rapid moves in such spreads suggested that the ECB was losing the war (it was, until Draghi's infamous "<em>Whatever it takes" speech</em>), and as recently as last December, when as a result of the tumultuous moves in China, the <a href="http://www.zerohedge.com/news/2015-12-21/bank-counterparty-risk-surges-4-year-high">TED Spread </a>blew out to multi-year wides. </p> <p>The reason this is once again topical is because as the chart below shows, the TED-spread, which barely moved in the aftermath of Brexit, has moved sharply wider over recent days, prompting some to ask if despite record highs in the S&amp;P500, there isn't yet another unnoticed troubling liquidity or funding situation developing behind the scenes. </p> <p><a href="http://zerohedge.com/sites/default/files/images/user5/imageroot/2016/07/21/20160726_TED.jpg"><img src="http://zerohedge.com/sites/default/files/images/user5/imageroot/2016/07/21/20160726_TED_0.jpg" width="500" height="261" /></a></p> <p>&nbsp;</p> <p>However, as we discussed previously when we <a href="http://www.zerohedge.com/news/2016-07-26/why-swap-spreads-are-suddenly-blowing-out-and-why-good-treasuries">observed the sharp move </a>in swap spreads, this may be the one time when the move wider in funding indicators happens to be perfectly inocuous and has to do with a change in the regulatory encironment instead of indicating some unseen liquidity threat. </p> <p>As Goldman's Elad Pashtan writes, in the aftermath of the United Kingdom’s vote to leave the European Union, investors and policymakers have kept a close watch on funding markets for any signs of financial stress. These fears did not materialize - courtesy of the rapid promises by central banks to intervene and propr up asset prices - and most global equity markets, including those in the US, have since more than recovered their post-Brexit losses. However, Goldman cautions, in recent days indicators of financial stress have perked up notably. For example, the 3-month FRA/OIS spread—a gauge measuring the difference between forward 3-month Libor and OIS rates—rose sharply, reaching its highest levels since the depths of the European sovereign debt crisis (Exhibit 1, left scale). Other measures of dollar funding costs, including commercial paper rates and cross-currency basis swap spreads, have also turned higher (Exhibit 1, right scale).</p> <p><a href="http://zerohedge.com/sites/default/files/images/user5/imageroot/2016/07/21/fra%20ois%20gs.jpg"><img src="http://zerohedge.com/sites/default/files/images/user5/imageroot/2016/07/21/fra%20ois%20gs_0.jpg" width="500" height="224" /></a></p> <p>&nbsp;</p> <p>And while unexpected increases in banks’ dollar funding costs can be a sign of financial market stress, other market indicators paint a more sanguine picture. For example, credit default swap rates for the Libor panel banks have actually edged down in recent days, and remain well below levels that prevailed during the European sovereign debt crisis (Exhibit 2).</p> <p><a href="http://zerohedge.com/sites/default/files/images/user5/imageroot/2016/07/21/bank%20cds.jpg"><img src="http://zerohedge.com/sites/default/files/images/user5/imageroot/2016/07/21/bank%20cds_0.jpg" width="500" height="285" /></a></p> <p>&nbsp;</p> <p>As <a href="http://www.zerohedge.com/news/2016-07-26/why-swap-spreads-are-suddenly-blowing-out-and-why-good-treasuries">noted earlier in the day</a>, rather than signaling dollar funding stress, the recent increases in money market rates likely relate to soon-to-be enacted money market regulation. </p> <p><strong>On October 14, 2a-7 money fund reforms will require some prime money market mutual funds (those that invest in non-government issued assets) to float their net asset value (NAV) or, under certain circumstances, to impose redemption gates and liquidity fees on redemptions. </strong>Rather than face these regulatory constraints, many investors have started pulling assets from prime funds, and a number of prime funds have converted to government-only funds (which are exempt from these regulations). <strong>Since late-2015 alone, prime fund assets have declined by nearly $450 billion</strong>, reducing the supply of dollars that funded private sector short-term liabilities (Exhibit 3).</p> <p><a href="http://zerohedge.com/sites/default/files/images/user5/imageroot/2016/07/21/prime%20shift.jpg"><img src="http://zerohedge.com/sites/default/files/images/user5/imageroot/2016/07/21/prime%20shift_0.jpg" width="500" height="219" /></a></p> <p>&nbsp;</p> <p>Adding to the impact of the decline in prime fund assets, the behavior of the remaining prime funds has also pressured shorter-tenor funding rates. As part of the 2a-7 reforms, prime funds are required to hold at least 30% of their assets in securities that are convertible to cash within 5 business days, or otherwise face either liquidity fees and/or redemption gates. In anticipation of these changes, many prime funds have lowered the weighted average maturities (WAM) of their assets in recent months, reducing the supply of dollars available at longer tenors (Exhibit 4).</p> <p><a href="http://zerohedge.com/sites/default/files/images/user5/imageroot/2016/07/21/WAM%20prime.jpg"><img src="http://zerohedge.com/sites/default/files/images/user5/imageroot/2016/07/21/WAM%20prime_0.jpg" width="500" height="283" /></a></p> <p>Goldman's conclusion:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>We do not think recent money market volatility will worry policymakers at this stage. <strong>However, Fed officials are likely to keep close tabs on how the 2a-7 reforms impact the usage of the RRP facility. </strong>As money market assets continue to shift into government-only mutual funds—many of which have access to RRP—it is likely that facility usage will rise. <strong>Indeed, we think that these money fund reforms are a key reason why Fed officials have yet to cap the RRP facility, despite previous communications suggesting discomfort with currently uncapped levels</strong>. Accordingly, we do not expect the Fed to announce a cap to the RRP facility until after the October 14 2a-7 compliance deadline, at the earliest.</p> </blockquote> <p>In this specific case, we agree with Goldman, however the implication is somewhat disturbing. Now the regulatory intervention is set to pressure what have traditionally been reliable metrics indicative of funding stress and systemic risk, among them swap spreads, the TED-Spread and the FRA-OIS spread, the market is about to lose perhaps the last metric indicative of underlying tensions. After all, with central bank intervention having broken all conventional signalling pathways (recall that as of this moment global <a href="http://www.zerohedge.com/news/2016-07-26/global-central-banks-are-all-qe-running-record-180-billion-month-and-rising">is QE Running At Record $180 Billion Per Month and Rising</a>), including equities, corporate bonds and Treasuries, there will no longer be any reliable sources hinting at fundamental risk in the market, certainly for the short-term and perhaps over an indefinite amount of time.</p> <p>We can only hope that central banks don't make a mess of things in the near future, as differentiating between the signal of real market stress and the noise resulting from the shift due to 2a-7 reform, will now be impossible, and thus it will also be impossible to gauge if there is something truly broken with the market, at least until such a "breakage" becomes all too apparent for everyone to see.</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="965" height="503" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/20160726_TED.jpg?1469574414" /> </div> </div> </div> http://www.zerohedge.com/news/2016-07-26/what-sudden-spike-ted-spread-really-means#comments Central Banks China Commercial Paper default Equity Markets European Union LIBOR Sovereign Debt TED Spread Volatility Tue, 26 Jul 2016 23:23:48 +0000 Tyler Durden 567320 at http://www.zerohedge.com Hillary Makes History As First Female Presidential Nominee http://www.zerohedge.com/news/2016-07-26/hillary-makes-history-first-female-presidential-nominee <p>Moments ago, Hillary Clinton made history by becoming the first woman to head the ticket of a major party when moments after Bernie Sanders moved to nominate Hillary by acclimation...</p> <blockquote class="twitter-tweet"><p dir="ltr" lang="en">WATCH: The moment Bernie Sanders moved to nominate Hillary Clinton by acclimation.<a href="https://t.co/yI8afwrpW7">https://t.co/yI8afwrpW7</a></p> <p>— VICE News (@vicenews) <a href="https://twitter.com/vicenews/status/758076686231416832">July 26, 2016</a></p></blockquote> <script src="//platform.twitter.com/widgets.js"></script><p> ... she secured the Democratic Party's 2016 nomination for the White House on Tuesday.</p> <blockquote class="twitter-tweet"><p dir="ltr" lang="en">BREAKING: Hillary Clinton becomes Democratic nominee; 1st woman to secure a major party's presidential nomination. <a href="https://t.co/RsmAzvJCur">https://t.co/RsmAzvJCur</a></p> <p>— ABC News (@ABC) <a href="https://twitter.com/ABC/status/758073435847217152">July 26, 2016</a></p></blockquote> <script src="//platform.twitter.com/widgets.js"></script><p>In a symbolic show of party unity, Clinton's former rival, Bernie Sanders told the chairwoman from the convention floor that Clinton should be selected as the party's nominee during a state-by-state roll call at the Democratic convention in Philadelphia.</p> <p>&nbsp;</p> <p>The former first lady, New York senator and secretary of state, cleared the penultimate hurdle in her second run for president after Vermont, the home state of her opponent Bernie Sanders, carried her over the 2,383 threshold. There were huge cheers on the floor of the Democratic convention as Mrs Clinton officially became the nominee, ending what had been a bitter and unexpectedly close battle over the past year with the socialist Mr Sanders.</p> <p>Earlier, delegates from South Dakota had given Clinton 15 votes, ensuring that she had more than the 2,383 votes needed to win the nomination. She emerged with a total of 2,842 votes to Sanders' 1,865 votes. </p> <p>Delegates chanted "Hillary, Hillary" as U.S. Senator Barbara Mikulski of Maryland formally put forward Clinton's name for the alphabetical roll-call vote. </p> <p>"Yes, we do break barriers, I broke a barrier when I became the first Democratic woman elected to the Senate in her own right," Mikulski said. "So it is with a full heart that I'm here today to nominate Hillary Clinton to be the first woman president," Mikulski said. </p> <p>As the FT reports, the mood on the convention floor was electric as Stephanie Rawlings-Blake, the mayor of Baltimore and secretary of the convention, called on the states to announce their primary votes. As the Oklahoma delegation declared their results, just minutes before Mrs Clinton clinched the nomination, one woman in the group who was born in 1929, nine years after women were given the right to vote, said: “I never thought that I would live to see this day.” </p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>But while each delegation cheered loudly as their states were called, many Sanders fans remained dismayed at the outcome of the primary, which they said had been rigged against the Vermont senator.</p> </blockquote> <p>To some, Sanders' act was the ultimate show of unity. </p> <p><a href="http://www.ft.com/cms/s/0/e1a7a856-5382-11e6-befd-2fc0c26b3c60.html">Others disgreed</a>. Jill Dunham, an AT&amp;T project manager from Michigan who supports Mr Sanders, said she had been disappointed by the lack of unity in the Democratic Party, and angered that Mrs Clinton’s supporters had not done more to recognise Mr Sanders’ primary achievements. </p> <p>“I was really hoping that we could have unity. In my head, I know that we need to vote for Hillary, but my heart is having trouble getting there,” said Ms Dunham, 56. “But the attitude of the delegates is making it worse&thinsp;.&thinsp;.&thinsp;.&thinsp;It is just hurtful when people don’t respect and appreciate all that Bernie has done.”</p> <p>Elsewhere in the Michigan delegation, two delegates held up banners reading “Election Fraud”. Yet overall the mood appeared calmer than the previous night when virtually no convention speaker had been able to endorse Mrs Clinton without prompting jeers from some corners of the hall.</p> <p>And now that history has been made, it is up to Hillary to catch up to Trump.</p> <p>Clinton had been leading Trump in national opinion polls in recent weeks but the New York businessman got a boost from the Republican National Convention in Cleveland where he was formally nominated last week.&nbsp; </p> <p>Trump had a 2-point lead over Clinton in a Reuters/Ipsos opinion poll released on Tuesday, the first time he has been ahead since early May.&nbsp; The <a href="http://www.reuters.com/article/us-usa-election-poll-idUSKCN1062MC?feedType=RSS&amp;feedName=topNews&amp;utm_source=twitter&amp;utm_medium=Social">July 22-26 poll found </a>that 39 percent of likely voters supported Trump, 37 percent supported Clinton and 24 percent would vote for neither. The poll had a credibility interval of 4 percentage points, meaning that the two candidates should be considered about even in support.</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="600" height="338" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/hillary%20nomination.jpg?1469575313" /> </div> </div> </div> http://www.zerohedge.com/news/2016-07-26/hillary-makes-history-first-female-presidential-nominee#comments ABC News Bernie Sanders Michigan Nomination Oklahoma Reuters White House Tue, 26 Jul 2016 23:22:02 +0000 Tyler Durden 567323 at http://www.zerohedge.com "An Extraordinary Development": Record Swiss Gold Flow Into The United States http://www.zerohedge.com/news/2016-07-26/extraordinary-development-record-swiss-gold-flow-united-states <p><em>Submitted by the <a href="https://srsroccoreport.com/whats-going-on-record-swiss-gold-flow-into-the-united-states/">SRSrocco Report</a></em></p> <p><strong>Record Swiss Gold Flow Into The United States</strong></p> <p>There was a huge trend change in U.S. gold investment in May.&nbsp; Something quite extraordinary took place which hasn&rsquo;t happened for several decades.&nbsp; While Switzerland has been a major source of U.S. gold exports for many years, the tables turned in May as the Swiss exported a record amount of gold to the United States.</p> <p>How much gold?&nbsp; A lot.&nbsp; The Swiss exported 50 times more gold in May than their monthly average (0.4 mt) since 2015:</p> <p><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2016/07/21/U.S.-Gold-Imports-From-Switzerland-Montly_0.png" style="width: 500px; height: 358px;" /></p> <p>As we can see, the Swiss gold exports to the United States are normally less than 0.5 metric ton a month.&nbsp; And for many months there weren&rsquo;t any gold exports.&nbsp; However, something big changed in May as Swiss gold exports surged to 20.7 mt (665.500 oz).</p> <p>The overwhelming majority of gold flows from the U.S. have been exports to Switzerland and the United Kingdom (U.K.):</p> <p><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2016/07/21/Top-U.S.-Gold-Exports-2001-2013_0.gif" style="width: 500px; height: 360px;" /></p> <p>Furthermore, as I have mentioned in precious articles, the U.S. has been exporting more gold than it produces and imports.&nbsp; However, this changed in May as the Swiss exported more gold to the U.S. in one month than they have every year going back until 2000:</p> <p><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2016/07/21/U.S.-Gold-Imports-From-Swittzerland-Aunnual_0.png" style="width: 500px; height: 358px;" /></p> <p>Why the big change?&nbsp; Could this have had something to do with the huge gold price since the beginning of 2016, or maybe was it due to political changes such as the upcoming BREXIT vote in June?&nbsp; Of course the BREXIT vote is now history as the British citizens voted to leave the European Union.</p> <p>However, something motivated this huge trend change in normal gold movements to Switzerland.&nbsp; Moreover, total U.S. gold imports in may shot up to 50 metric tons, almost double the 26.5 mt figure in April.&nbsp; In addition, total U.S. gold exports hit a low May as only 20.2 mt were shipped to foreign countries.&nbsp; Total U.S. gold exports Jan-May 2016 of 139 mt are down 28% compared to 195 mt exported during the same period in 2015.</p> <p>So what&rsquo;s going on here?&nbsp; Why the declining U.S. gold exports or surging gold imports from Switzerland?&nbsp; Are foreign countries demand less gold??&nbsp; I doubt it.&nbsp; Or how about the massive increase in supposed gold flows into the Global Gold ETFs &amp; Funds??&nbsp; While there is no way of knowing how much gold these Gold ETFs &amp; Funds hold, something seriously changed in May as the Swiss exported more gold to the U.S. in one month than they have every year for several decades.</p> <p>Are wealthy Americans finally acquiring a lot more gold?</p> <p>It will be interesting to see that data for the next few months when the USGS releases their Gold Mineral Industry Surveys.</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="643" height="461" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/U.S.-Gold-Imports-From-Swittzerland-Aunnual.png?1469574140" /> </div> </div> </div> http://www.zerohedge.com/news/2016-07-26/extraordinary-development-record-swiss-gold-flow-united-states#comments European Union Switzerland United Kingdom Tue, 26 Jul 2016 22:58:44 +0000 Tyler Durden 567317 at http://www.zerohedge.com Global Central Banks Are All-In: QE Running At Record $180 Billion Per Month (And Rising) http://www.zerohedge.com/news/2016-07-26/global-central-banks-are-all-qe-running-record-180-billion-month-and-rising <p>The monetary policy beatings will continue until morale improves. Eight long years after monetary policy experimentation went extreme, <a href="http://www.reuters.com/article/global-cenbank-qe-idUSL8N1AC5PK">Reuters reports</a> <strong>the amount of QE stimulus being pumped into the world financial system has never been higher</strong>... and it&#39;s about to get bigger.</p> <p>As Jamie McGeever reports, The European Central Bank and Bank of Japan are<strong> buying around $180 billion of assets a month, according to Deutsche Bank, a larger global total than at any point since 2009</strong>, even when the Federal Reserve&#39;s QE programme was in full flow.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2016/07/25/20160726_WTFQE1.jpg"><img height="439" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2016/07/25/20160726_WTFQE1_0.jpg" width="600" /></a></p> <p>&nbsp;</p> <p><strong>And if market consensus proves accurate, that total is about to rise by billions more</strong> -- with the ECB, BOJ and even Bank of England all expected to expand their QE programmes soon to try and bolster fragile growth and lift stubbornly low inflation.</p> <p>The $180 billion total is roughly split down the middle between the ECB and BOJ, according to Deutsche, and is measured on a rolling 12-month basis. <strong>But against GDP, Japan is the biggest &#39;loser&#39;...</strong></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2016/07/25/20160726_WTFQE2.jpg"><img height="465" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2016/07/25/20160726_WTFQE2_0.jpg" width="600" /></a></p> <p>&nbsp;</p> <p>And that is why stock markets around the world have soared since February amid a collapse in everything fundamental...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2016/07/25/20160726_WTFQE3.jpg"><img height="316" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2016/07/25/20160726_WTFQE3_0.jpg" width="600" /></a></p> <p>&nbsp;</p> <p><em>Charts: Reuters, DB, and Bloomberg</em></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="958" height="504" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20160726_WTFQE3.jpg?1469566804" /> </div> </div> </div> http://www.zerohedge.com/news/2016-07-26/global-central-banks-are-all-qe-running-record-180-billion-month-and-rising#comments Bank of England Bank of Japan Central Banks Deutsche Bank European Central Bank Federal Reserve Japan Monetary Policy Reuters Tue, 26 Jul 2016 22:35:00 +0000 Tyler Durden 567311 at http://www.zerohedge.com