http://www.zerohedge.com/fullrss2.xml/news/italy-expected-cut-growth-forecasts-further en Shoulda Called Huma... http://www.zerohedge.com/news/2016-08-28/shoulda-called-huma <p>Presented with no comment...</p> <p>&nbsp;</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2016/08/25/20160828_huma.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2016/08/25/20160828_huma_0.jpg" width="600" height="457" /></a></p> <p>&nbsp;</p> <p><a href="http://media.townhall.com/Townhall/Car/b/cb082516dAPC20160825074852.jpg"><em>Source: Townhall.com</em></a></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="687" height="523" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20160828_huma.jpg?1472415781" /> </div> </div> </div> http://www.zerohedge.com/news/2016-08-28/shoulda-called-huma#comments Mon, 29 Aug 2016 01:40:00 +0000 Tyler Durden 570888 at http://www.zerohedge.com What Preppers haven't Prepped for - the big gaping hole http://www.zerohedge.com/news/2016-08-28/what-preppers-havent-prepped-big-gaping-hole <p>Reading stories about Preppers is often more inspiring than reading about startups. &nbsp;Preppers dedicate their entire life to their new way of life, as it were. &nbsp;<a href="http://www.washingtonpost.com/sf/national/wp/2016/08/27/2016/08/27/a-fortress-against-fear/?hpid=hp_hp-top-table-main_americanredoubtnew630%3Ahomepage%2Fstory">Take for example this recent article in the Washington Post about the American Redoubt:</a></p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><em>Those migrating to the Redoubt are some of the most motivated members of what is known as the prepper movement, which advocates readiness and self-reliance in man-made or natural disasters that could create instability for years. It’s scenario-planning that is gaining adherents and becoming mainstream in what Redoubt preppers described as an era of fear and uncertainty. &nbsp;They are anxious about recent terrorist attacks from Paris to San Bernardino, Calif., to Orlando; pandemics such as Ebola in West Africa; potential nuclear attacks from increasingly provocative countries such as North Korea or Iran; and the growing political, economic and racial polarization in the United States that has deepened during the 2016 presidential election.</em></p> </blockquote> <p>Although the reasons for prepping are extremely varied, most dedicated preppers share several axioms of their prepping philosophy, such as:</p> <ul> <li>Being 'off the grid' or self-reliant, for food, power, medical needs, and any needs or wants</li> <li>Living in a secure, remote area</li> <li>DIY mentality (Do It Yourself)</li> <li>6 month - 2 year supply of food and other supplies</li> <li>Gold &amp; Silver for if/when the financial system collapses</li> </ul> <p>Before exposing the big gaping hole in the prepper's main doctrine, let's give uber-credit to this 'movement' if you want to call it that. &nbsp;Although many preppers are fueled by irrational fears, and some based on a low probability, high impact event statistic (for example, a meteor several miles wide can strike the Earth, causing widespread volcanoes, earthquakes, and other end of days scenarios, but the chance of this happening in next 100 years is very low, probably 1 in 100 million); their approach towards life is very American, in fact it was this type of survivalist gusto that made America what it was originally. &nbsp;The land was untamed, there were 'terrorists' (called in those days, American Indians) and Americans had to be self-reliant because well, there was no DHS to call. &nbsp;If your village was attacked by Indians or the British you had to defend yourself. &nbsp;There was also the chance of a lifetime - live in the West in the most beautiful property in the world basically for free - but you must do all yourself. &nbsp;Pioneers, Homesteaders, Tradesmen, Industrialists, all thrived and made America what it was. &nbsp;This essence seems to have been lost by the baby boomer generation that was convenience and consumer oriented (but of course, not completely). &nbsp;Anyway, preppers have ushered in a new age of Americanism based on their self-reliant approach. &nbsp;And many good lessons come with 'preparing' such as self-defense, making a robust plan (such as any organization, business or military should have), and keeping a stockpile of supplies in case of shortages. &nbsp;The previous generation, mostly not with us anymore, would appreciate all these values. &nbsp;During the war, they lived without many things. &nbsp;They 'prepped' because of war. &nbsp;Many preppers today will say that we are at war, it's just an information war, or assymetric war, or potential war. &nbsp;Being a prepper in many ways is being smart in today's world. &nbsp;Who knows what will happen tomorrow. &nbsp;</p> <p><strong>The big gaping hole: FINANCIAL PREPPING</strong></p> <p>Preface this by saying that - of course - like with anything - it's not 100%. &nbsp;But generally speaking, preppers have prepared for everything except for their finances.</p> <p><strong>Preppers are NOT financially prepared</strong>!</p> <p>Keeping physical gold and silver is a good idea - but it isn't a panacea. &nbsp;Also there are many risks associated with spending Gold and Silver such as theft, loss, and acceptance. &nbsp;Maybe in certain scenarios - no one would want silver, but they may want a beer?</p> <p>Yes, that's right. &nbsp;If you want a real currency to use in an end times scenario, stock up on cheap whiskey and gin. &nbsp;Growing Marijuana will be easy in such times (the reason it has the nickname 'weed' is because it grows like a weed), but making a still requires knowledge, time, a place which is safe and suitable, dedication, and materials. &nbsp;That's just one example. &nbsp;You can elaborate on this scenario with this lateral thinking.</p> <p>Other items of value in end times include tools of all kinds, and specifically tools that don't run with electricity, but those too. &nbsp;Dynamos, solar powered battery chargers, things like this - may be more valuable than gold or silver. &nbsp;</p> <p>And as gun lovers like to say:</p> <p><em><strong>The only real currency if society breaks down is accelerated lead.</strong></em></p> <p>Preppers should beef up their knowledge and understanding of the financial system. &nbsp;If the system collapses, the new society will need bankers too. &nbsp;An economic system must evolve, eventually. &nbsp;Even if humans are living as savages, at some point as we rebuild, preppers and survivors will need bankers too.</p> <p><img src="http://www.zerohedge.com/sites/default/files/images/user157767/imageroot/2016/08/29/DigitalCamoATL.jpg" width="500" height="282" /><br />(above: Camoflage as art, from ATL.)</p> <p>To learn more about the financial system as a whole, checkout <a href="http://www.splittingpennies.com">Splitting Pennies - your pocket guide to becoming a financial wizard!</a></p> <div class="field field-type-filefield field-field-image-blog"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_blog" width="1000" height="563" alt="" src="http://www.zerohedge.com/sites/default/files/images/user157767/imageroot/DigitalCamoATL.jpg?1472433089" /> </div> </div> </div> http://www.zerohedge.com/news/2016-08-28/what-preppers-havent-prepped-big-gaping-hole#comments Iran North Korea Mon, 29 Aug 2016 01:25:51 +0000 globalintelhub 570905 at http://www.zerohedge.com The Deep State (And The Rise Of The Unspeakable) http://www.zerohedge.com/news/2016-08-28/deep-state-and-rise-unspeakable <p><a href="http://jessescrossroadscafe.blogspot.com/2016/08/the-deep-state-mike-lofgren.html"><em>Via Jesse&#39;s Cafe Americain,</em></a></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&quot;<strong>The state within a state is hiding mostly in plain sight.</strong></p> <p>&nbsp;</p> <p>The pressure to conform to an authority figure or peer group can cause people to behave in shocking ways.</p> <p>&nbsp;</p> <p>It is<strong> not too much to say that Wall Street may be the ultimate owner of the Deep State and its strategies</strong>, if for no other reason than that it has the money to reward government operatives with a second career that is lucrative beyond the dreams of avarice - certainly beyond the dreams of a salaried government employee.</p> <p>&nbsp;</p> <p><strong>The corridor between Manhattan and Washington is a well-trodden highway for the personalities we have all gotten to know in the period since the massive deregulation of Wall Street</strong>.&quot;</p> <p>&nbsp;</p> <p>-Mike Lofgren</p> </blockquote> <p><iframe frameborder="0" height="360" src="https://www.youtube.com/embed/n3fYc5tQbNQ" width="480"></iframe></p> <p><a href="http://www.zerohedge.com/news/2016-08-20/can-deep-state-be-cured">As we noted previously</a>, <span style="text-decoration: underline;"><strong>the deep state seems to have grown, strengthened and tightened its grip.</strong></span>&nbsp;<em> Can a lack of real money restrain or starve it?&nbsp; I once thought so, and maybe I still do.&nbsp;</em><strong> But it doesn&rsquo;t use real money</strong>, but rather debt and creative financing to get that next new car, er, war and intervention and domestic spending program.&nbsp; Ultimately it&rsquo;s<strong> not sustainable,</strong> and just as unaffordable cars are junked, stripped, repossessed, and crunched up, <strong>so will go the way of the physical assets of the warfare&ndash;welfare state.</strong></p> <p><strong>Because <a href="http://www.theamericanconservative.com/articles/how-wartime-washington-lives-in-luxury/">inflated salaries</a>, <a href="http://www.cnbc.com/2016/04/19/buckle-up-stocks-could-drop-25-percent-or-more-commentary.html">inflated stock prices</a> and <a href="http://praxeology.net/libertariannation/a/f21l2.html">inflated ruling-class personalities</a> are month to month, these should evaporate more quickly, over a debris field <a href="http://top101news.com/2015-2016-2017-2018/news/society/richest-counties-us/">once known as some of richest counties</a> in the United States.&nbsp;</strong> Can I imagine the shabbiest of trailer parks in the dismal swamp, where high rises and government basilicas and abbeys once stood?&nbsp; I&rsquo;d certainly like to.&nbsp; But I&rsquo;ll settle for well-kept, privately owned house trailers, filled with people actually producing some small value for society, and minding their own business.</p> <p><strong>Can a lack of public support reduce the deep state, or impact it?&nbsp;</strong> Well, it would seem that this is a non-factor, except for the strange history we have had and are witnessing again today, with the odd successful popular and populist-leaning politician and their related movements.&nbsp; In my lifetime, only popular figures and their movements get assassinated mysteriously, with odd polka dot dresses, MKULTRA suggestions, threats against their family by their competitors (I&rsquo;m thinking Perot, but one mustn&rsquo;t be limited to that case), and always with concordant pressures on the sociopolitical seams in the country, i.e riots and police/military activations.&nbsp; The <a href="https://www.lewrockwell.com/2016/08/roger-stone/can-election-rigged/">bad dealings toward, and genuine fear of, Bernie Sanders within the Democratic Party&rsquo;s wing</a> of the deep state is matched or exceeded only by the genuine terror of Trump among the Republican deep state wing.&nbsp;&nbsp; This reaction to something or some person that so many in the country find engaging and appealing &mdash; an outsider who speaks to the growing political and economic dissatisfaction of a poorer, more indebted, and <a href="https://fee.org/articles/more-regulatory-jobs-means-fewer-real-jobs/">more regulated</a> population &ndash; is heart-warming, to be sure.&nbsp; It is a sign that whether or not we do, the deep state thinks things might change.&nbsp;<em><strong> Thank you, Bernie and especially Donald, for revealing this much!&nbsp; And the &ldquo;republicanization&rdquo; of the Libertarian Party is also a bright indicator blinking out the potential of deep state movement and compromise in the pursuit of &ldquo;stability.&rdquo;</strong></em></p> <p><strong>Finally, what of those pinpricks of light, the honest assessments of the real death trail and consumption pit that the deep state has delivered?</strong>&nbsp; Well, it is growing and broadening.&nbsp; Wikileaks and Snowden are considered assets now to any and all competitors to the US deep state, from within and from abroad &ndash; the Pandora&rsquo;s box, assisted by technology, can&rsquo;t be closed now.&nbsp;<strong> The independent media has matured to the point of criticizing and debating itself/each other, as well as focusing harsh light on the establishment media.&nbsp; </strong>Instead of left and right mainstream media, we increasingly recognize state media, and delightedly observe its own struggle to survive in the face of a growing nervousness of the deep state it assists on command.</p> <p><span style="text-decoration: underline;"><strong>Maybe we will one day soon be able to debate how deep the deep state really is, or whether it was all just a dressed up, meth&rsquo;ed up, and eff&rsquo;ed up a sector of society that deserves a bit of jail time, some counseling, and a new start</strong></span>.&nbsp; Maybe some job training that goes beyond the printing of license plates.&nbsp; But given the destruction and mass murder committed daily in the name of this state, and the environmental disasters it has created around the world for the future generations, perhaps we will be no more merciful to these proprietors of the American empire as they have been to their victims. <strong><span style="text-decoration: underline;">The ruling class deeply fears our judgment, and in this dynamic lies the cure.</span></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="267" height="146" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20160828_deep.jpg?1472415596" /> </div> </div> </div> http://www.zerohedge.com/news/2016-08-28/deep-state-and-rise-unspeakable#comments Bernie Sanders Mon, 29 Aug 2016 01:10:00 +0000 Tyler Durden 570887 at http://www.zerohedge.com "If This Does Not Disqualify Hillary For The Presidency, It's Hard To Know What Will" http://www.zerohedge.com/news/2016-08-28/if-does-not-disqualify-hillary-presidency-its-hard-know-what-will <p>Even the <a href="http://www.wsj.com/articles/the-u-s-department-of-clinton-1472167746">traditionally &#39;establishment&#39; Wall Street Journal</a> is waking up to the utter incredulity of an<strong> American media (and citizenry) which appears capable of cognitive dissonance on an epic scale when it comes to Hillary Clinton</strong>. As<a href="http://www.wsj.com/articles/the-u-s-department-of-clinton-1472167746"> Kimberly Strassel explains </a>the latest emails show that State and the foundation were one seamless entity.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2016/08/25/20160828_clinton.jpg"><img height="359" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2016/08/25/20160828_clinton.jpg" width="457" /></a></p> <p><strong>This is the week that the steady drip, drip, drip of details about <a href="http://topics.wsj.com/person/C/Hillary-Clinton/6344">Hillary Clinton</a>&rsquo;s server turned into a waterfall. </strong>This is the week that we finally learned why Mrs. Clinton used a private communications setup, and what it hid. This is the week, in short, that we found out that the infamous server was designed to hide that Mrs. Clinton for three years served as the U.S. Secretary of the Clinton Foundation.</p> <p>In March this column argued that while Mrs. Clinton&rsquo;s mishandling of classified information was important, it missed the bigger point. <em><strong>The Democratic nominee obviously didn&rsquo;t set up her server with the express purpose of exposing national secrets&mdash;that was incidental. She set up the server to keep secret the details of the Clintons&rsquo; private life&mdash;a life built around an elaborate and sweeping money-raising and self-promoting entity known as the Clinton Foundation.</strong></em></p> <p>Had Secretary Clinton kept the foundation at arm&rsquo;s length while in office&mdash;as obvious ethical standards would have dictated&mdash;there would never have been any need for a private server, or even private email. The vast majority of her electronic communications would have related to her job at the State Department, with maybe that occasional yoga schedule. And those Freedom of Information Act officers would have had little difficulty&mdash;when later going through a state.gov email&mdash;screening out the clearly &ldquo;personal&rdquo; before making her records public. This is how it works for everybody else.</p> <p><strong>Mrs. Clinton&rsquo;s problem&mdash;as we now know from this week&rsquo;s release of emails from Huma Abedin&rsquo;s private Clinton-server account&mdash;was that there <em>was</em> no divide between public and private. </strong>Mrs. Clinton&rsquo;s State Department and her family foundation were one seamless entity&mdash;employing the same people, comparing schedules, mixing foundation donors with State supplicants. This is why she maintained a secret server, and why she deleted 15,000 emails that should have been turned over to the government.</p> <p>Most of the focus on this week&rsquo;s Abedin emails has centered on the disturbing examples of Clinton Foundation executive Doug Band negotiating State favors for foundation donors. But equally instructive in the 725 pages released by Judicial Watch is the frequency and banality of most of the email interaction. Mr. Band asks if Hillary&rsquo;s doing this conference, or having that meeting, and when she&rsquo;s going to Brazil. Ms. Abedin responds that she&rsquo;s working on it, or will get this or that answer. <u><em><strong>These aren&rsquo;t the emails of mere casual acquaintances; they don&rsquo;t even bother with salutations or signoffs. These are the emails of two people engaged in the same purpose&mdash;serving the State-Clinton Foundation nexus.</strong></em></u></p> <p><u><strong>The other undernoted but important revelation is that the media has been looking in the wrong place.</strong></u> The focus is on Mrs. Clinton&rsquo;s missing emails, and no doubt those 15,000 FBI-recovered texts contain nuggets. Then again, Mrs. Clinton was a busy woman, and most of the details of her daily State/foundation life would have been handled by trusted aides. This is why they, too, had private email. Top marks to Judicial Watch for pursuing Ms. Abedin&rsquo;s file from the start. A new urgency needs to go into seeing similar emails of former Clinton Chief of Staff Cheryl Mills.</p> <p><u><strong>Mostly, we learned this week that Mrs. Clinton&rsquo;s foundation issue goes far beyond the &ldquo;appearance&rdquo; of a conflict of interest. This is straight-up pay to play. </strong></u>When Mr. Band sends an email demanding a Hillary meeting with the crown prince of Bahrain and notes that he&rsquo;s a &ldquo;good friend of ours,&rdquo; what Mr. Band means is that the crown prince had contributed millions to a Clinton Global Initiative scholarship program, and therefore has bought face time. It doesn&rsquo;t get more clear-cut, folks.</p> <p>That&rsquo;s highlighted by the Associated Press&rsquo;s extraordinary finding this week that <strong>of the 154 outside people Mrs. Clinton met with in the first years of her tenure, more than half were Clinton Foundation donors</strong>. Clinton apologists, like Vox&rsquo;s Matthew Yglesias, are claiming that statistic is overblown, because the 154 doesn&rsquo;t include thousands of meetings held with foreign diplomats and U.S. officials.</p> <p>Nice try. As the nation&rsquo;s top diplomat, Mrs. Clinton was obliged to meet with diplomats and officials&mdash;not with others. Only a blessed few outsiders scored meetings with the harried secretary of state and, surprise, most of the blessed were Clinton Foundation donors.</p> <p>Mrs. Clinton&rsquo;s only whisper of grace is that it remains (as it always does in potential cases of corruption) hard to connect the dots.<strong> There are &ldquo;quids&rdquo; (foundation donations) and &ldquo;quos&rdquo; (Bahrain arms deals) all over the place, but no precise evidence of &ldquo;pros.&rdquo; </strong>Count on the Clinton menagerie to dwell in that sliver of a refuge.</p> <p><em><span style="text-decoration: underline;"><strong>But does it even matter?</strong></span></em> What we discovered this week is that one of the nation&rsquo;s top officials created a private server that housed proof that she continued a secret, ongoing entwinement with her family foundation - despite ethics agreements - and that she destroyed public records. <em><strong>If that alone doesn&rsquo;t disqualify her for the presidency, it&rsquo;s hard to know what would.</strong></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="457" height="359" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20160828_clinton.jpg?1472402176" /> </div> </div> </div> http://www.zerohedge.com/news/2016-08-28/if-does-not-disqualify-hillary-presidency-its-hard-know-what-will#comments Brazil Cognitive Dissonance Corruption Freedom of Information Act Judicial Watch Wall Street Journal Mon, 29 Aug 2016 00:55:00 +0000 Tyler Durden 570868 at http://www.zerohedge.com One Striking Chart Shows Why, According to MS, The Next Global Recession Begins In China http://www.zerohedge.com/news/2016-08-28/one-striking-chart-shows-why-according-ms-next-global-recession-begins-china <p>Much has been said about China in the past year. Now, courtesy of Morgan Stanley's Chetan Ahya, here is one additional data point revealing why China will be ground zero for the next global economic slowdown.</p> <p>As Ahya notes in his Sunday Start note, "several large economies in the world including but not limited to the US, euro area, China, Japan and UK <strong>are facing the 3D challenge of demographics, debt and disinflation. </strong>Among these economies, we believe that China, which currently accounts for 18% of global GDP and 27% of global manufacturing <strong>and contributes 45% to global growth, will be the biggest drag towards lower nominal GDP growth and consequently lower expected returns.</strong>"</p> <p>Surprisingly, unlike many other Chinese doomsayers, Morgan Stanley does not think the catalyst of China's upcoming "hard landing" will be financial, or debt-related:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>The key concern that investors have on China is that its debt build-up could result in a potential financial shock, which would be akin to the experience of the US in 2008 and emerging markets in the 1990s. However, we think that the macro set-up and policy preferences will mean that the risk of a financial shock in China is low. There are three key characteristics of China’s current macro set-up: i) Debt is being largely funded domestically, i.e., China is misallocating its own excess saving; ii) It remains a net creditor to the world (with a net international investment position of 14.7% of GDP) and it runs a current account surplus; and iii) It is facing significant disinflationary pressures, which will allow the central bank to inject liquidity to manage any potential risk-aversion in the domestic financial system. While there are non-performing loans in the banking system, policy-makers will likely have significant control of liquidity conditions to prevent a financial shock, in our view.</p> <p>&nbsp;</p> <p>Ideally<strong>, a quick adjustment approach following our five-step process of accepting lower potential growth, cutting excess capacity/recognising non-performing loans, recapitalising banks, cutting real interest rates and stimulating consumption with fiscal transfers to households for education and healthcare is needed to transition to a new productive growth cycle</strong>. </p> </blockquote> <p>That however, is unlikely for a country in which social tensions and rising unemployment are already the thing that keeps Beijing up at night: "However, considering the risks to social stability, <strong>a quick adjustment appears unlikely to us. </strong>Given its macro set-up and policy preference, we have long argued that the developments in China are more comparable to that of Japan in the 1990s."</p> <p>So in lieu of a quick adjustment, a "gradual adjustment approach" would leave us with the outcome of an <strong>extended period of excess capacity, disinflationary pressures and declining nominal growth and returns in the economy. </strong>At the current pace of new investment that China is taking up, the incremental return on capital employed will likely continue to deteriorate. </p> <p>Morgan Stanley calculates that "although China has slowed its investment since 2012, <strong>we expect it to invest 41% of its GDP (US$4.7 trillion) in 2016. This compares with the 24% of GDP which China should have been investing if it were to maintain the same capital efficiency as it did between 2000 and 2007. </strong>China currently needs new investment of 6.4pp of GDP to achieve 1pp of GDP growth, compared with the average of 3.6pp between 2000-07."</p> <p>It is this unsustainable trend of relentless capex spending and investment that MS believes is the reason "why China will weigh on the trend in global growth and returns."</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>In a globalised, integrated economy, the impact will extend well beyond China’s weight in the aggregates as it will also influence returns in other parts of the world via its role as a large market but, more importantly, as the marginal competitor. </p> </blockquote> <p>And here is the chart revealing what may be the most unsustainable trend in China, one that is even more dramatic than China relentless debt growth: <strong>accounted for 26% of global annual capex in 2015, compared with 9% in 2006 and 5% in 2000. </strong>Hence, as China continues to invest with low return expectations, that this will continue to weigh on the global returns on capital employed.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2016/08/27/china%20capex%20as%20%25%20of%20total.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2016/08/27/china%20capex%20as%20%25%20of%20total_0.jpg" width="500" height="292" /></a></p> <p>* * * </p> <p>So can the global economy grow out of China’s adverse impact like it did in the 1990s in the face of Japan’s structural slowdown then? </p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>According to Morgan Stanley, such an outcome seems unlikely. Back then, none of the large economies ex-Japan suffered from the 3D challenge. Indeed, until recently, <strong>the emergence of China (with sustained high productivity growth) and its integration into the global economy was itself a key factor which had helped to sustain the global growth dynamic post the structural slowdown in Japan. </strong>However, the state of the global economy excluding China today is much weaker and, <strong>with no large emerging market ready to replace China as an engine of global growth in the near future, we could well be stuck in a lower nominal returns world.</strong></p> </blockquote> <p>Who will suffer the most when China's plane if not crashes, then downshifts permanently? </p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>The impact from China will be most keenly felt in the industrial segment and, indeed, economies in Europe, Japan and Korea, which have both a higher share of industrial activity in their economic output and also closer trade links with China, will be most exposed, in our view. <strong>The disinflationary pressures, coupled with the depreciating RMB, will also weigh on the inflation trend in the DMs, particularly in the US, and this is one of the key external factors keeping the Fed on hold and Treasury yields low. </strong></p> </blockquote> <p>Needless to say, should the Fed proceed to hike and spike the dollar some more, all these adverse dynamics will accelerate that much more. </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="693" height="455" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/china%20teaser%20chart.jpg?1472432339" /> </div> </div> </div> http://www.zerohedge.com/news/2016-08-28/one-striking-chart-shows-why-according-ms-next-global-recession-begins-china#comments China Demographics Global Economy Japan Morgan Stanley Nominal GDP non-performing loans None Real Interest Rates Recession Unemployment Mon, 29 Aug 2016 00:44:17 +0000 Tyler Durden 570902 at http://www.zerohedge.com Merkel's Approval Continues To Slide: Half Of Germans Are Against Her Serving A Fourth Term http://www.zerohedge.com/news/2016-08-28/merkels-approval-continues-slide-half-germans-are-against-her-serving-fourth-term <p>The last time we checked on Angela Merkel's plunging support in the polls, <a href="http://www.zerohedge.com/news/2016-08-05/support-merkel-plunges-after-terrorist-attacks-germany">was in early August</a>, when right after the three most recent terrorist attacks on German soil all conducted by ISIS-affiliated refugees, popular support for the Chancellor had plunged by a whopping 12%, with her approval rating crashing to just 47%. This marked her second-lowest score since she was re-elected in 2013. In April last year, before the migrant crisis erupted she enjoyed backing of 75 percent. </p> <p>Nearly a month later, with the recent terrorist attacks having subsided from memory, a new Emnid poll reveals that the traditional bounce in Merkel's popularity has failed to <strong>materialize, and instead&nbsp; 50% of Germans are now against her serving a fourth term in office after a federal election next year. </strong></p> <p>&nbsp;</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2016/08/13/merkel%20companies_0.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2016/08/13/merkel%20companies_0.jpg" width="500" height="333" /></a></p> <p>According to <a href="http://www.reuters.com/article/us-germany-merkel-idUSKCN11306L?il=0">Reuters</a>, <strong>half of the 501 people questioned in the Emnid poll for the Bild am Sonntag newspaper were against Merkel staying in office beyond the 2017 election, with 42 percent wanting her to remain. </strong>In November, the last time Bild am Sonntag commissioned a survey on the issue, 45 percent had been in favor of Merkel serving a fourth term, with 48 percent against.</p> <p>When asked about her plans for the 2017 election in an interview with public broadcaster ARD on Sunday, Merkel said she would comment on this "in due course", but did not elaborate. Germany's political parties are gearing up for next year's election. Asked in the ARD interview when Germans would get tax relief given that Germany has a budget surplus, Merkel said that would come "in the next legislative period."</p> <p>Perhaps Merkel's lack of enthusiasm is due to the recent calculation by the head of Germany's Federal Office for Migration and Refugees (BAMF) who told Bild am sonntag that <a href="http://www.reuters.com/article/us-europe-migrants-germany-number-idUSKCN1120T8">he expected a maximum of 300,000 refugees to arrive in Germany this year</a>. While less than the 1 million refugees Germany accepted last year, judging by the recent social mood in Germany, this is about 300,000 too many.</p> <p>"We're preparing for 250,000 to 300,000 refugees this year," BAMF head Frank-Juergen Weise told Bild am Sonntag newspaper in comments due to be published on Sunday.</p> <p>Germans tend to use the word "refugee" to refer to both refugees and migrants who are seeking protection but do not have refugee status. </p> <p>Worse, Weise added that if more people were to come than estimated, his office would come under pressure but suggested he was not worried about such a scenario, saying it was instead likely that fewer&nbsp; than 300,000 would come this year. </p> <p>Actually, that depends: if the refugee deal that Germany cobbled together with Erdogan in March (and which cost Europe €3 billion) were to fall apart, Germany could face not 300,000 but 3,000,000 refugees in the near future.&nbsp; It would also mean the end of Merkel and her legacy. </p> <p>For now, however, there is some optimism: Weise said Germany took in fewer migrants in 2015 than previously thought because some were registered twice and others had moved on to other destinations. "We'll present the exact number soon but it's certain that less than one million people came to Germany last year," he said. Weise said it would take a long time and a lot of money to integrate the newcomers into the labor market. </p> <p>He said 70 percent of the migrants who had already arrived were fit for employment but added that the majority of them would be dependent on basic social security provision before they manage to get jobs. He estimated that around 10 percent of the new arrivals had university degrees while around 40 percent do not have formal vocational training but do have practical work experience, he said.</p> <p>Even so, few corporations have been willing to integrate the refugees into their workforce, <a href="http://www.zerohedge.com/news/2016-08-13/merkel-urges-german-ceos-hire-refugees">prompting Merkel to urge Germany</a>'s largest companies to hire migrants. So far this attempt at "persuasion" has not worked. </p> <p>Meanwhile, Germany remains on edge, and with every incremental terrorist attack on German soil, not only do Merkel's re-election chances slip away as her approval plumbs new lows, but the popularity of Germany's anti-Muslim AfD, <a href="http://www.zerohedge.com/news/2016-08-20/german-anti-immigrant-party-leader-urges-people-arm-themselves">whose leader last week urged Germans to arm themselves</a>, surges to <a href="http://www.zerohedge.com/news/2016-05-05/support-anti-muslim-afd-hits-record-high-60-agree-islam-does-not-belong-germany">new highs</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="460" height="276" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/merkel%20confused_0.jpg?1472429090" /> </div> </div> </div> http://www.zerohedge.com/news/2016-08-28/merkels-approval-continues-slide-half-germans-are-against-her-serving-fourth-term#comments Germany Newspaper Reuters Social Mood Mon, 29 Aug 2016 00:09:05 +0000 Tyler Durden 570901 at http://www.zerohedge.com Don't Think Armageddon, Think "A Thousand Balls Of Flame... And Then Crickets!" http://www.zerohedge.com/news/2016-08-28/dont-think-armageddon-think-thousand-balls-flame-and-then-crickets <p><a href="http://www.cluborlov.com/"><em>Authored by Dmitry Orlov, originally posted at ClubOrlov.com,</em></a></p> <p><strong>A whiff of World War III hangs in the air. </strong>In the US, Cold War 2.0 is on, and the anti-Russian rhetoric emanating from the Clinton campaign, echoed by the mass media, <strong>hearkens back to McCarthyism and the red scare</strong>. In response, many people are starting to think that Armageddon might be nigh - an all-out nuclear exchange, followed by nuclear winter and human extinction. It seems that many people in the US like to think that way. Goodness gracious!</p> <p>But, you know, this is hardly unreasonable of them. <strong><em>The US is spiraling down into financial, economic and political collapse, losing its standing in the world and turning into a continent-sized ghetto full of drug abuse, violence and decaying infrastructure, its population vice-ridden, poisoned with genetically modified food, morbidly obese, exploited by predatory police departments and city halls, plus a wide assortment of rackets, from medicine to education to real estate&hellip; </em></strong>That we know.</p> <p>We also know how painful it is to realize that the US is damaged beyond repair, or to acquiesce to the fact that most of the damage is self-inflicted: the endless, useless wars, the limitless corruption of money politics, the toxic culture and gender wars, and the imperial hubris and willful ignorance that underlies it all&hellip; <strong>This level of disconnect between the expected and the observed certainly hurts, but the pain can be avoided, for a time, through mass delusion.</strong></p> <p><strong>This sort of downward spiral does not automatically spell &ldquo;Apocalypse,&rdquo; but the specifics of the state cult of the US - an old-time religiosity overlaid with the secular religion of progress - are such that there can be no other options: either we are on our way up to build colonies on Mars, or we perish in a ball of flame.</strong> Since the humiliation of having to ask the Russians for permission to fly the Soyuz to the International Space Station makes the prospect of American space colonies seem dubious, it&rsquo;s Plan B: balls of flame here we come!</p> <p><strong>And so, most of the recent American warmongering toward Russia can be explained by the desire to find anyone but oneself to blame for one&rsquo;s unfolding demise.</strong> This is a well-understood psychological move&mdash;projecting the shadow&mdash;where one takes everything one hates but can&rsquo;t admit to about oneself and projects it onto another. On a subconscious level (and, in the case of some very stupid people, even a conscious one) the Americans would like to nuke Russia until it glows, but can&rsquo;t do so because Russia would nuke them right back. But the Americans can project that same desire onto Russia, and since they have to believe that they are good while Russia is evil, this makes the Armageddon scenario appear much more likely.</p> <p><strong>But this way of thinking involves a break with reality. </strong>There is exactly one nation in the world that nukes other countries, and that would be the United States. It gratuitously nuked Japan, which was ready to surrender anyway, just because it could. It prepared to nuke Russia at the start of the Cold War, but was prevented from doing so by a lack of a sufficiently large number of nuclear bombs at the time. And it attempted to render Russia defenseless against nuclear attack, abandoning the Anti-Ballistic Missile Treaty in 2002, but has been prevented from doing so by Russia&rsquo;s new weapons. These include, among others, long-range supersonic cruise missiles (Kalibr), and suborbital intercontinental missiles carrying multiple nuclear payloads capable of evasive maneuvers as they approach their targets (Sarmat). All of these new weapons are impossible to intercept using any conceivable defensive technology. At the same time, Russia has also developed its own defensive capabilities, and its latest S-500 system will effectively seal off Russia&rsquo;s airspace, being able to intercept targets both close to the ground and in low Earth orbit.</p> <p><strong>In the meantime, the US has squandered a fantastic sum of money fattening up its notoriously corrupt defense establishment with various versions of &ldquo;Star Wars,&rdquo; but none of that money has been particularly well spent.</strong> The two installations in Europe of Aegis Ashore (completed in Romania, planned in Poland) won&rsquo;t help against Kalibr missiles launched from submarines or small ships in the Pacific or the Atlantic, close to US shores, or against intercontinental missiles that can fly around them. The THAAD installation currently going into South Korea (which the locals are currently protesting by shaving their heads) won&rsquo;t change the picture either.</p> <p>There is exactly one nuclear aggressor nation on the planet, and it isn&rsquo;t Russia. But this shouldn&rsquo;t matter. In spite of American efforts to undermine it, the logic of Mutual Assured Destruction (MAD) remains in effect. <strong>The probability of a nuclear exchange is determined not by anyone&rsquo;s policy but by the likelihood of it happening by accident.</strong> Since there is no winning strategy in a nuclear war, nobody has any reason to try to start one. Under no circumstances is the US ever going to be able to dictate its terms to Russia by threatening it with nuclear annihilation.</p> <p>If a nuclear war is not in the cards, how about a conventional one? The US has been sabre-rattling by stationing troops and holding drills in the Baltics, right on Russia&#39;s western border, installing ABM systems in Romania, Poland and South Korea, supporting anti-Russian Ukrainian Nazis, etc. All of this seems quite provocative; can it result in a war? And what would that war look like?</p> <p><strong>Here, we have to look at how Russia has responded to previous provocations.</strong> These are all the facts that we know, and can use to predict what will happen, as opposed to purely fictional, conjectural statements unrelated to known facts.</p> <p>When the US or its proxies attack an enclave of Russian citizens outside of Russia&#39;s borders, here are the types of responses that we have been able to observe so far:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong>1. The example of Georgia. </strong>During the Summer Olympics in Beijing (a traditional time of peace), the Georgian military, armed and trained by the US and Israel, invaded South Ossetia. This region was part of Georgia in name only, being mostly inhabited by Russian speakers and passport-holders. Georgian troops started shelling its capital, Tskhinval, killing some Russian peacekeeping troops stationed in the region and causing civilian casualties. In response, Russian troops rolled into Georgia, within hours completely eliminating Georgia&rsquo;s war-making capability. They announced that South Ossetia was de facto no longer part of Georgia, throwing in Abkhazia (another disputed Russian enclave) for good measure, and withdrew. Georgia&rsquo;s warmongering president Saakashvili was pronounced a &ldquo;political corpse&rdquo; and left to molder in place. Eventually he was forced to flee Georgia, where he has been declared a fugitive from justice. The US State Department recently gave him a new job, as Governor of Odessa in the Ukraine. Recently, Russian-Georgian relations have been on the mend.</p> <p>&nbsp;</p> <p><strong>2. The example of Crimea.</strong> During the Winter Olympics in Sochi, in Russia (a traditional time of peace) there occurred an illegal, violent overthrow of the elected, constitutional government of the Ukraine, followed by the installation of a US-picked puppet administration. In response, the overwhelmingly Russian population of the autonomous region of Crimea held a referendum. Some 95% of them voted to secede from the Ukraine and to once again become part of Russia, which they had been for centuries and until very recently. The Russians then used their troops already stationed in the region under an international agreement to make sure that the results of the referendum were duly enacted. Not a single shot was fired during this perfectly peaceful exercise in direct democracy.</p> <p>&nbsp;</p> <p><strong>3. The example of Crimea again. </strong>During the Summer Olympics in Rio (a traditional time of peace) a number of Ukrainian operatives stormed the Crimean border and were swiftly apprehended by Russia&#39;s Federal Security Service, together with a cache of weapons and explosives. A number of them were killed in the process, along with two Russians. The survivors immediately confessed to planning to organize terrorist attacks at the ferry terminal that links Crimea with the Russian mainland and a railway station. The ringleader of the group confessed to being promised the princely sum of $140 for carrying out these attacks. All of them are very much looking forward to a warm, dry bunk and three square meals of day, care of the Russian government, which must seem like a slice of heaven compared to the violence, chaos, destitution and desolation that characterizes life in present-day Ukraine. In response, the government in Kiev protested against &ldquo;Russian provocation,&rdquo; and put its troops on alert to prepare against &ldquo;Russian invasion.&rdquo; Perhaps the next shipment of US aid to the Ukraine should include a supply of chlorpromazine or some other high-potency antipsychotic medication.</p> <p>&nbsp;</p> <p>Note the constant refrain of &ldquo;during the Olympics.&rdquo; This is not a coincidence but is indicative of a certain American modus operandi. Yes, waging war during a traditional time of peace is both cynical and stupid. But the American motto seems to be &ldquo;If we try something repeatedly and it still doesn&#39;t work, then we just aren&rsquo;t trying hard enough.&rdquo; In the minds of those who plan these events, the reason they never work right can&rsquo;t possibly have anything to do with it being stupid. This is known as &ldquo;Level III Stupid&rdquo;: stupidity so profound that it is unable to comprehend its own stupidity.</p> <p>&nbsp;</p> <p><strong>4. The example of Donbass. </strong>After the events described in point 2 above, this populous, industrialized region, which was part of Russia until well into the 20th century and is linguistically and culturally Russian, went into political turmoil, because most of the locals wanted nothing to do with the government that had been installed in Kiev, which they saw as illegitimate. The Kiev government proceeded to make things worse, first by enacting laws infringing on the rights of Russian-speakers, then by actually attacking the region with the army, which they continue to do to this day, with three unsuccessful invasions and continuous shelling of both residential and industrial areas, in the course of which over ten thousand civilians have been murdered and many more wounded. In response, Russia assisted with establishing a local resistance movement supported by a capable military contingent formed of local volunteers. This was done by Russian volunteers, acting in an unofficial capacity, and by Russian private citizens donating money to the cause. In spite of Western hysteria over &ldquo;Russian invasion&rdquo; and &ldquo;Russian aggression,&rdquo; no evidence of it exists. Instead, the Russian government has done just three things: it refused to interfere with the work of its citizens coming to the aid of Donbass; it pursued a diplomatic strategy for resolving the conflict; and it has provided numerous convoys of humanitarian aid to the residents of Donbass. Russia&rsquo;s diplomatic initiative resulted in two international agreements&mdash;Minsk I and Minsk II&mdash;which compelled both Kiev and Donbass to pursue a strategy of political resolution of the conflict through cessation of hostilities and the granting to Donbass of full autonomy. Kiev has steadfastly refused to fulfill its obligations under these agreements. The conflict is now frozen, but continuing to bleed because of Ukrainian shelling, waiting for the Ukrainian puppet government to collapse.</p> <p>&nbsp;</p> <p>To complete the picture, let us include Russia&rsquo;s recent military action in Syria, where it came to the defense of the embattled Syrian government and quickly demolished a large part of ISIS/ISIL/Daesh/Islamic Caliphate, along with various other terrorist organizations active in the region. The rationale for this action is that Russia saw a foreign-funded terrorist nest in Syria as a direct threat to Russia&rsquo;s security. Two other notable facts here are that Russia acted in accordance with international law, having been invited by Syria&rsquo;s legitimate, internationally recognized government and that the military action was scaled back as soon as it seemed possible for all of the legitimate (non-terrorist) parties to the conflict to return to the negotiating table. These three elements&mdash;using military force as a reactive security measure, scrupulous adherence to international law, and seeing military action as being in the service of diplomacy&mdash;are very important to understanding Russia&rsquo;s methods and ambitions.</p> </blockquote> <p><strong>Turning now to US military/diplomatic adventures, we see a situation that is quite different. </strong>US military spending is responsible for over half of all federal discretionary spending, dwarfing most other vitally important sectors, such as infrastructure, public medicine and public education. It serves several objectives. Most importantly, it is a public jobs program: a way of employing people who are not employable in any actually productive capacity due to lack of intelligence, education and training. Second, it is a way for politicians and defense contractors to synergistically enrich themselves and each other at the public&rsquo;s expense. Third, it is an advertising program for weapons sales, the US being the top purveyor of lethal technology in the world. <strong>Last of all, it is a way of projecting force around the world, bombing into submission any country that dares oppose Washington&rsquo;s global hegemonic ambitions, often in total disregard of international law. Nowhere on this list is the actual goal of defending the US.</strong></p> <p>None of these justifications works vis-à-vis Russia. In dollar terms, the US outspends Russia on defense hands down. However, viewed in terms of purchasing parity, Russia manages to buy as much as ten times more defensive capability per unit national wealth than the US, largely negating this advantage. Also, what the US gets for its money is inferior: the Russian military gets the weapons it wants; the US military gets what the corrupt political establishment and their accomplices in the military-industrial complex want in order to enrich themselves. In terms of being an advertising campaign for weapons sales, watching Russian weaponry in action in Syria, effectively wiping out terrorists in short order through a relentless bombing campaign using scant resources, then seeing US weaponry used by the Saudis in Yemen, with much support and advice from the US, being continuously defeated by lightly armed insurgents, is unlikely to generate too many additional sales leads. Lastly, the project of maintaining US global hegemony seems to be on the rocks as well.<strong> Russia and China are now in a de facto military union. Russia&rsquo;s superior weaponry, coupled with China&rsquo;s almost infinitely huge infantry, make it an undefeatable combination.</strong> Russia now has a permanent air base in Syria, has made a deal with Iran to use Iranian military bases, and is in the process of prying Turkey away from NATO. As the US military, with its numerous useless bases around the world and piles of useless gadgets, turns into an international embarrassment, it remains, for the time being, a public jobs program for employing incompetents, and a rich source of graft.</p> <p>In all, it is important to understand how actually circumscribed American military capabilities are. <strong>The US is very good at attacking vastly inferior adversaries.</strong> The action against Nazi Germany only succeeded because it was by then effectively defeated by the Red Army&mdash;all except for the final mop-up, which is when the US came out of its timid isolation and joined the fray. Even North Korea and Vietnam proved too tough for it, and even there its poor performance would have been much poorer were it not for the draft, which had the effect of adding non-incompetents to the ranks, but produced the unpleasant side-effect of enlisted men shooting their incompetent officers&mdash;a much underreported chapter of American military history. <strong>And now, with the addition of LGBTQ people to the ranks, the US military is on its way to becoming an international laughing stock.</strong> Previously, terms like &ldquo;faggot&rdquo; and &ldquo;pussy&rdquo; were in widespread use in the US military&rsquo;s basic training. Drill sergeants used such terminology to exhort the &ldquo;numb-nuts&rdquo; placed in their charge to start acting like men. I wonder what words drill sergeants use now that they&rsquo;ve been tasked with training those they previously referred to as &ldquo;faggots&rdquo; and &ldquo;pussies&rdquo;? The comedic potential of this nuance isn&rsquo;t lost on Russia&rsquo;s military men.</p> <p><strong>This comedy can continue as long as the US military continues to shy away from attacking any serious adversary, because if it did, comedy would turn to tragedy rather quickly</strong>.</p> <ul> <li>If, for instance, US forces tried to attack Russian territory by lobbing missiles across the border, they would be neutralized in instantaneous retaliation by Russia&rsquo;s vastly superior artillery.</li> <li>If Americans or their proxies provoked Russians living outside of Russia (and there are millions of them) to the point of open rebellion, Russian volunteers, acting in an unofficial capacity and using private funds, would quickly train, outfit and arm them, creating a popular insurgency that would continue for years, if necessary, until Americans and their proxies capitulate.</li> <li>If the Americans do the ultimately foolish thing and invade Russian territory, they would be kettled and annihilated, as repeatedly happened to the Ukrainian forces in Donbass.</li> <li>Any attempt to attack Russia using the US aircraft carrier fleet would result in its instantaneous sinking using any of several weapons: ballistic anti-ship missiles, supercavitating torpedos or supersonic cruise missiles.</li> <li>Strategic bombers, cruise missiles and ballistic missiles would be eliminated by Russia&rsquo;s advanced new air defense systems.</li> </ul> <p><strong>So much for attack; but what about defense? </strong>Well it turns out that there is an entire separate dimension to engaging Russia militarily. You see, Russia lost a huge number of civilian lives while fighting off Nazi Germany. Many people, including old people, women and children, died of starvation and disease, or from German shelling, or from the abuse they suffered at the hands of German soldiers. On the other hand, Soviet military casualties were on par with those of the Germans. This incredible calamity befell Russia because it had been invaded, and it has conditioned Russian military thinking ever since. The next large-scale war, if there ever is one, will be fought on enemy territory. <strong><em>Thus, if the US attacks Russia, Russia will counterattack the US mainland. Keeping in mind that the US hasn&rsquo;t fought a war on its own territory in over 150 years, this would come as quite a shock.</em></strong></p> <p>Of course, this would be done in ways that are consistent with Russian military thinking. Most importantly, the attack must be such that the possibility of triggering a nuclear exchange remains minimized. Second, the use of force would be kept to the minimum required to secure a cessation of hostilities and a return to the negotiating table on terms favorable to Russia. Third, every effort would be made to make good use of internal popular revolts to create long-lasting insurgencies, letting volunteers provide the necessary arms and training. <strong>Lastly, winning the peace is just as important as winning the war, and every effort would be made to inform the American public that what they are experiencing is just retribution for certain illegal acts</strong>. From a diplomatic perspective, it would be much more tidy to treat the problem of war criminals running the US as an internal, American political problem, to be solved by Americans themselves, with an absolute minimum of outside help. This would best be accomplished through a bit of friendly, neighborly intelligence-sharing, letting all interested parties within the US know who exactly should be held responsible for these war crimes, what they and their family members look like, and where they live.</p> <p>The question then is, <u><em><strong>What is the absolute minimum of military action&mdash;what I am calling &ldquo;a thousand balls of fire,&rdquo; named after George Bush Senior&rsquo;s &ldquo;a thousand points of light&rdquo;&mdash;to restore peace on terms favorable to Russia? </strong></em></u>It seems to me that 1000 &ldquo;balls of fire&rdquo; is just about the right number. These would be smallish explosions&mdash;enough to demolish a building or an industrial installation, with almost no casualties. This last point is extremely important, because the goal is to destroy the system without actually directly hurting any of the people. It wouldn&rsquo;t be anyone else&rsquo;s fault if people in the US suffer because they refuse to do as their own FEMA asks them to do: stockpile a month&rsquo;s worth of food and water and put together an emergency evacuation plan. In addition, given the direction in which the US is heading, getting a second passport, expatriating your savings, and getting some firearms training just in case you end up sticking around are all good ideas.</p> <p>The reason it is very important for this military action to not kill anyone is this: there are some three million Russians currently residing in the US, and killing any of them is definitely not on strategy. There is an even larger number of people from populous countries friendly to Russia, such as China and India, who should also remain unharmed. <strong>Thus, a strategy that would result in massive loss of life would simply not be acceptable.</strong> A much better scenario would involve producing a crisis that would quickly convince the Russians living in the US (along with all the other foreign nationals and first-generation immigrants, and quite a few of the second-generation immigrants too) that the US is no longer a good place to live. Then all of these people could be repatriated&mdash;a process that would no doubt take a few years. Currently, Russia is the number three destination worldwide for people looking for a better place to live, after the US and Germany. Germany is now on the verge of open revolt against Angela Merkel&rsquo;s insane pro-immigration policies. The US is not far behind, and won&rsquo;t remain an attractive destination for much longer. And that leaves Russia as the number one go-to place on the whole planet. That&rsquo;s a lot of pressure, even for a country that is 11 time zones wide and has plenty of everything except tropical fruit and people.</p> <p>We must also keep in mind that Israel&mdash;which is, let&rsquo;s face it, a US protectorate temporarily parked on Palestinian land&mdash;wouldn&rsquo;t last long without massive US support. <strong>Fully a third of Israeli population happens to be Russian. </strong>The moment Project Israel starts looking defunct, most of these Russian Jews, clever people that they are, will no doubt decide to stage an exodus and go right back to Russia, as is their right. This will create quite a headache for Russia&rsquo;s Federal Migration Service, because it will have to sift through them all, letting in all the normal Russian Jews while keeping out the Zionist zealots, the war criminals and the ultra-religious nutcases. This will also take considerable time.</p> <p><strong>But actions that risk major loss of life also turn out to be entirely unnecessary, because an effective alternative strategy is available: destroy key pieces of government and corporate infrastructure, then fold your arms and wait for the other side to crawl back to the negotiating table waving a white rag.</strong> You see, there are just a few magic ingredients that allow the US to continue to exist as a stable, developed country capable of projecting military force overseas. They are: the electric grid; the financial system; the interstate highway system; rail and ocean freight; the airlines; and oil and gas pipelines. Disable all of the above, and it&rsquo;s pretty much game over. How many &ldquo;balls of flame&rdquo; would that take? Probably well under a thousand.</p> <p><u><strong>Disabling the electric grid is almost ridiculously easy, because the system is very highly integrated and interdependent, consisting of just three sub-grids, called &ldquo;interconnects&rdquo;: western, eastern and Texas.</strong></u> The most vulnerable parts of the system are the Large Power Transformers (LPTs) which step up voltages to millions of volts for transmission, and step them down again for distribution. These units are big as houses, custom-built, cost millions of dollars and a few years to replace, and are mostly manufactured outside the US. Also, along with the rest of the infrastructure in the US, most of them are quite old and prone to failure. There are several thousand of these key pieces of equipment, but because the electric grid in the US is working at close to capacity, with several critical choke points, it would be completely disabled if even a handful of the particularly strategic LPTs were destroyed. In the US, any extended power outage in any of the larger urban centers automatically triggers large-scale looting and mayhem. Some estimate that just a two week long outage would push the situation to a point of no return, where the damage would become too extensive to ever be repaired.</p> <p><u><strong>Disabling the financial system is likewise relatively trivial. </strong></u>There are just a few choke points, including the Federal Reserve, a few major banks, debit and credit card company data centers, etc. They can be disabled using a variety of methods, such as a cruise missile strike, a cyberattack, electric supply disruption or even civil unrest. It bears noting that the financial system in the US is rigged to blow even without foreign intervention. The combination of runaway debt, a gigantic bond bubble, the Federal Reserve trapped into ever-lower interest rates, underfunded pensions and other obligations, hugely overpriced real estate and a ridiculously frothy stock market will eventually detonate it from the inside.</p> <p><u><strong>A few more surgical strikes can take out the oil and gas pipelines, import terminals, highway bridges and tunnels, railroads and airlines.</strong></u> A few months without access to money and financial services, electricity, gasoline, diesel, natural gas, air transport or imported spare parts needed to repair the damage should be enough to force the US to capitulate. If it makes any efforts to restore any of these services, an additional strike or two would quickly negate them.</p> <p>The number of &ldquo;balls of flame&rdquo; can be optimized by taking advantage of destructive synergies: a GPS jammer deployed near the site of an attack can prevent responders from navigating to it; taking out a supply depot together with the facility it serves, coupled with transportation system disruptions, can delay repairs by many months; a simple bomb threat can immobilize a transportation hub, making it a sitting duck instead of a large number of moving targets; etc.</p> <p><strong>You may think that executing such a fine-tuned attack would require a great deal of intelligence, which would be difficult to gather, but this is not the case. </strong>First, a great deal of tactically useful information is constantly being leaked by insiders, who often consider themselves &ldquo;patriots.&rdquo; Second, what hasn&rsquo;t been leaked can be hacked, because of the pitiable state of cybersecurity in the US. Remember, Russia is where anti-virus software is made&mdash;and a few of the viruses too. The National Security Agency was recently hacked, and its crown jewels stolen; if it can be hacked, what about all those whose security it supposedly protects?</p> <p>You might also think that the US, if attacked in this manner, could effectively retaliate in kind, but this scenario is rather difficult to imagine. Many Russians don&rsquo;t find English too difficult, are generally familiar with the US through exposure to US media, and the specialists among them, especially those who have studied or taught at universities in the US, can navigate their field of expertise in the US almost as easily as in Russia. <strong>Most Americans, on the other hand, can barely find Russia on a map, can&rsquo;t get past the Cyrillic alphabet and find Russian utterly incomprehensible.</strong></p> <p><strong>Also consider that Russia&rsquo;s defense establishment is mainly focused on... defense. </strong>Offending people in foreign lands is not generally seen as strategically important. &ldquo;A hundred friends is better than a hundred rubles&rdquo; is a popular saying. And so Russia manages to be friends with India and Pakistan at the same time, and with China and Vietnam. In the Middle East, it maintains cordial relations with Turkey, Syria, Israel, Saudi Arabia, Yemen, Egypt and Iran, also all at the same time. Russian diplomats are required to keep channels of communication open with friends and adversaries alike, at all times. Yes, being inexplicably adversarial toward Russia can be excruciatingly painful, but you can make it stop any time! All it takes is a phone call.</p> <p>Add to this the fact that the vicissitudes of Russian history have conditioned Russia&rsquo;s population to expect the worst, and simply deal with it. &ldquo;They can&rsquo;t kill us all!&rdquo; is another favorite saying. If Americans manage to make them suffer, the Russian people would no doubt find great solace in the fact they are making the Americans suffer even worse, and many among them would think that this achievement, in itself, is already a victory. Nor will they remain without help; it is no accident that Russia&rsquo;s Minister of Defense, Sergei Shoigu, previously ran the Emergencies Ministry, and his performance at his job there won him much adulation and praise. In short, if attacked, the Russians will simply take their lumps&mdash;as they always have&mdash;and then go on to conquer and win, as they always have.</p> <p><strong>It doesn&rsquo;t help matters that most of what little Americans have been told about Russia by their political leaders and mass media is almost entirely wrong</strong>. They keep hearing about Putin and the &ldquo;Russian bear,&rdquo; and so they are probably imagining Russia to be a vast wasteland where Vladimir Putin keeps company with a chess-playing, internet server-hacking, nuclear physicist, rocket scientist, Ebola vaccine-inventing, polyglot, polymath bear. Bears are wonderful, Russians love bears, but let&rsquo;s not overstate things. Yes, Russian bears can ride bicycles and are sometimes even good with children, but they are still just wild animals and/or pets (many Russians can&rsquo;t draw that distinction). And so when the Americans growl about the &ldquo;Russian bear,&rdquo; the Russians wonder, Which one?</p> <p><u><strong>In short, Russia is to most Americans a mystery wrapped in an enigma, and there simply isn&rsquo;t a large enough pool of intelligent Americans with good knowledge of Russia to draw upon, whereas to many Russians the US is an open book. </strong></u><em>As far as the actual American &ldquo;intelligence&rdquo; and &ldquo;security&rdquo; services, they are all bloated bureaucratic boondoggles mired in political opportunism and groupthink that excel at just two things: unquestioningly following idiotic procedures, and creatively fitting the facts to the politics du jour. &ldquo;Proving&rdquo; that Iraq has &ldquo;weapons of mass destruction&rdquo;&mdash;no problem! Telling Islamist terrorists apart from elderly midwestern grandmothers at an airport security checkpoint&mdash;no can do!</em></p> <p><u><strong>Russia will not resort to military measures against the US unless sorely provoked. </strong></u>Time and patience are on Russia&rsquo;s side. With each passing year, the US grows weaker and loses friends and allies, while Russia grows stronger and gains friends and allies. The US, with its political dysfunction, runaway debt, decaying infrastructure and spreading civil unrest, is a dead nation walking. It will take time for each of the United States to neatly demolish themselves into their own footprints, like those three New York skyscrapers did on 9/11 (WTC #1, #2 and #7) but Russia is very patient. <em><u><strong>Russia is ready to respond to any provocation, but the last thing the Russians want is another war. And that, if you like good news, is the best news you are going to hear. But if you still think that there is going to be a war with Russia, don&rsquo;t think &ldquo;Armageddon&rdquo;; think &ldquo;a thousand balls of flame,&rdquo; and then&mdash;crickets!</strong></u></em></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="469" height="336" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20160828_putin.jpg?1472410584" /> </div> </div> </div> http://www.zerohedge.com/news/2016-08-28/dont-think-armageddon-think-thousand-balls-flame-and-then-crickets#comments B+ Bond China Corruption ETC Federal Reserve Germany India Iran Iraq Israel Japan Mars Middle East Mutual Assured Destruction national security Natural Gas None North Korea Overpriced Real Estate Poland Real estate Reality Romania Saudi Arabia Turkey Ukraine Vladimir Putin Sun, 28 Aug 2016 23:40:00 +0000 Tyler Durden 570880 at http://www.zerohedge.com $oRo$ (Part III) http://www.zerohedge.com/news/2016-08-28/oro-part-iii <p><a href="https://www.flickr.com/photos/expd/29257222166/in/dateposted-public/" title="$ORO$"><img src="https://c7.staticflickr.com/9/8386/29257222166_7ecfe72f03_b.jpg" alt="$ORO$" width="1024" height="576" style="display: block; margin-left: auto; margin-right: auto;" /></a></p> <script src="//embedr.flickr.com/assets/client-code.js"></script> http://www.zerohedge.com/news/2016-08-28/oro-part-iii#comments Sun, 28 Aug 2016 23:31:12 +0000 williambanzai7 570900 at http://www.zerohedge.com The Script: Ocwen Lawyer Spoon-Fed Foreclosure Questions and Answers to Robo-Witnesses http://www.zerohedge.com/news/2016-08-28/script-ocwen-lawyer-spoon-fed-foreclosure-questions-and-answers-robo-witnesses <p style="text-align: center;"><a href="http://4closurefraud.org/" target="_blank"><img src="http://4closurefraud.org/wp-content/uploads/2012/09/Ocwen.jpg" alt="Ocwen" width="963" height="571" class="alignnone size-full wp-image-53181" /></a></p> <p style="text-align: center;"><span style="color: #000000;"><em><strong>"My conclusion is that it's pretty clear—from what she's saying and the document that she attaches—that they've been doing what I've been saying they were doing all along: telling clients want to say. These are listed out for the attorneys to ask the witness, and the answers that the witness needs to give are right there. I find that to be extremely telling. It's exactly what we thought was going on. When they talk about training of the witness, they're teaching them what to say at trial, and it doesn't matter whether it's true or not."</strong></em></span></p> <p style="text-align: left;">~</p> <h3 style="text-align: left;"><a href="http://4closurefraud.org/2016/08/23/the-script-ocwen-lawyer-spoon-fed-foreclosure-questions-and-answers-to-robo-witnesses/" target="_blank">Ocwen Lawyer Spoon-Fed Questions and Answers to Robo-Witnesses</a></h3> <p> Excerpted from <a href="http://www.dailybusinessreview.com/id=1202726876952/Thomas-Ice-Ocwen-Lawyer-SpoonFed-Questions-and-Answers-to-RoboWitnesses">The DBR</a>...</p> <p style="padding-left: 30px;">A Royal Palm Beach attorney alleges an attorney for embattled mortgage servicer Ocwen Financial Corp. improperly spoon-fed questions and answers to unqualified witnesses testifying in foreclosure cases against Florida homeowners.</p> <p style="padding-left: 30px;">Foreclosure defense attorney Thomas Ice said he's uncovered a script that was provided to Atlanta-based Ocwen witnesses to crush homeowner defenses and allegations of robo-witnesses by financial services sector employees who have no first-hand knowledge of mortgage details.</p> <p style="padding-left: 30px;">Ice represents St. Lucie County homeowner Thomas Rolle in foreclosure litigation brought by Deutsche Bank National Trust Co.</p> <p style="padding-left: 30px;">Ocwen took over servicing the mortgage in early 2013, and the lenders initially brought in national law firm Quintairos Prieto Wood &amp; Boyer to handle the litigation.</p> <p style="padding-left: 30px;">Attorneys for both sides exchanged exhibits during trial preparation, but Ice said <strong>a group of documents inadvertently emailed during the exchange exposed an in-house strategy to feed witnesses a list of prepared questions and answers.</strong></p> <p style="padding-left: 30px;">In several documents, former Quintairos Prieto Wood &amp; Boyer attorney Erin Prete outlined litigation tactics in a series of emails to colleagues addressing foreclosure defenses and strategies for debunking them. In one email thread, she provided a list of questions focused on default notices sent to homeowners to begin the foreclosure process.</p> <p style="margin: 12px auto 6px; font-family: Helvetica,Arial,sans-serif; font-style: normal; font-variant: normal; font-weight: normal; font-size: 14px; line-height: normal; font-size-adjust: none; font-stretch: normal; display: block; text-align: center;"><strong> <a href="https://www.scribd.com/document/321976234/NOD-NJT-Q-s#from_embed" title="View NOD NJT Q's on Scribd" style="text-decoration: underline;">NOD NJT Q's</a></strong></p> <p><iframe src="https://www.scribd.com/embeds/321976234/content?start_page=1&amp;view_mode=scroll&amp;access_key=key-IJJDHh01SDi5q1ZKq24W&amp;show_recommendations=true" width="100%" height="600" frameborder="0" scrolling="no"></iframe></p> <p style="padding-left: 30px;">Those notices have proven pesky for lenders, who have repeatedly been tripped up in court by sloppy paperwork, incorrect mailing addresses and other administrative slipups during mortgage transfers, giving homeowners handy defenses at trial.</p> <p style="padding-left: 30px;">In addition to questions on default notices, <strong>Prete provided answers and a witness preparation form</strong>, which Ice said "provides all the documents that will be exhibits at trial to the witness."</p> <blockquote style="padding-left: 30px;"><p style="padding-left: 30px;">"This is the exact opposite of the relationship that they pretend to have in the courtroom—that the witness is the records custodian who culled through the bank's records and provided the relevant ones to the attorney," Ice said.</p> </blockquote> <p> <a href="http://4closurefraud.org/wp-content/uploads/2016/08/ocwen-witness-prep.png"><img src="http://4closurefraud.org/wp-content/uploads/2016/08/ocwen-witness-prep.png" alt="ocwen witness prep" width="784" height="548" style="display: block; margin-left: auto; margin-right: auto;" class="aligncenter wp-image-65160" /></a></p> <p style="padding-left: 30px;">Prete, who left Quintairos Prieto to join Gasdick Stanton Early in Orlando, did not respond to requests for comment by deadline. Her emails to other attorneys indicate an attempt to ensure testimony by Ocwen employees on mortgage transfers and so-called document boarding would overcome hearsay objections, Ice said.</p> <p style="padding-left: 30px;">Courts consider testimony from servicers describing mortgage transfer documents to be hearsay unless servicer employees testify to a fact-checking process to verify the information in the documents.</p> <p style="padding-left: 30px;">"I have been working with Ocwen <strong>on ensuring their witnesses have the information necessary to testify</strong> to the boarding process at Ocwen. I received confirmation today that the witnesses have been provided this information," Prete wrote in a Nov. 26, 2013, email to several attorneys. "As a reminder, I have attached case law and sample trial questions to ask for all prior servicer business records that we may need the witness to testify to. Please feel free to use these questions or create your own based off the case law requirements. I have also attached prior emails I have sent on this topic for anyone who didn't receive them before."</p> <p> <a href="http://4closurefraud.org/wp-content/uploads/2016/08/prete-email.png"><img src="http://4closurefraud.org/wp-content/uploads/2016/08/prete-email.png" alt="prete email" width="967" height="504" style="display: block; margin-left: auto; margin-right: auto;" class="aligncenter wp-image-65162" /></a></p> <p style="margin: 12px auto 6px; font-family: Helvetica,Arial,sans-serif; font-style: normal; font-variant: normal; font-weight: normal; font-size: 14px; line-height: normal; font-size-adjust: none; font-stretch: normal; display: block; text-align: center;"><strong> <a href="https://www.scribd.com/document/321977508/Ocwen-Trial-Questions#from_embed" title="View Ocwen Trial Questions on Scribd" style="text-decoration: underline;">Ocwen Trial Questions</a></strong></p> <p><iframe src="https://www.scribd.com/embeds/321977508/content?start_page=1&amp;view_mode=scroll&amp;access_key=key-0j5AHAGMwcneBOKZ4W1I&amp;show_recommendations=true" width="100%" height="600" frameborder="0" scrolling="no"></iframe></p> <p style="text-align: left; padding-left: 30px;">Among the questions:</p> <p style="text-align: left; padding-left: 60px;">• Is this boarding process routinely followed by Ocwen? Yes.<br /> • Do you have any reason to believe the information provided by the prior servicer is not trustworthy? No.<br /> • Are these records made at or around the time the event occurred by a person with knowledge? Yes.</p> <p style="text-align: left; padding-left: 30px;">"My conclusion is that it's pretty clear—from what she's saying and the document that she attaches—<strong>that they've been doing what I've been saying they were doing all along: telling clients want to say,"</strong> Ice said. "These are listed out for the attorneys to ask the witness, <strong>and the answers that the witness needs to give</strong> are right there. I find that to be extremely telling. It's exactly what we thought was going on. When they talk about training of the witness, <strong>they're teaching them what to say at trial, and it doesn't matter whether it's true or not.</strong>"</p> <p style="margin: 12px auto 6px; font-family: Helvetica,Arial,sans-serif; font-style: normal; font-variant: normal; font-weight: normal; font-size: 14px; line-height: normal; font-size-adjust: none; font-stretch: normal; display: block; text-align: center;"><strong> <a href="https://www.scribd.com/document/321978943/Ocwen-Transfer-Project-Management-Plan#from_embed" title="View Ocwen Transfer Project Management Plan on Scribd" style="text-decoration: underline;">Ocwen Transfer Project Management Plan</a></strong></p> <p><iframe src="https://www.scribd.com/embeds/321978943/content?start_page=1&amp;view_mode=scroll&amp;access_key=key-6KiTZ1qTP7ohu45HfUj5&amp;show_recommendations=true" width="100%" height="600" frameborder="0" scrolling="no"></iframe></p> <p style="text-align: left; padding-left: 30px;"><strong>Thin Line</strong></p> <p style="text-align: left; padding-left: 30px;">Attorneys not involved in the litigation say there's a thin line between witness preparation and unethical coaching, especially when trying to establish the foundation for business records to be admitted into evidence as an exception to the hearsay rule.</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p style="text-align: left; padding-left: 30px;">"I do not feel it is appropriate for any attorney in any case to sit down with a client and give them a canned answer," said Kelly Kronenberg partner Adam Barnett."</p> </blockquote> <p style="text-align: left; padding-left: 30px;">"The act of witness preparation is leveling the playing field so that the witness can tell what he or she knows against a skilled professional who is trained to turn every careless word to his or her client's advantage," said Fort Lauderdale attorney Thomas Messana of Messana P.A. "Testimony is not a conversation. It is a highly stylized, precise question-and-answer format in a strange language and very unnatural setting—all very different from everyday life."</p> <p style="text-align: left; padding-left: 30px;">Messana saw no unethical behavior if Prete listened to the client representative's rendition of the facts before trial, prepared a script based on her understanding of that statement and then sent it to the witness for confirmation.</p> <p style="text-align: left; padding-left: 30px;">"Now <strong>if the lawyer, never having met with the client representative, prepared a script of suggested testimony, that is a big problem,</strong>" he said.</p> <p style="text-align: left;">&nbsp;</p> <h2 style="text-align: left;"><span style="color: #000000;"><a href="http://www.4closureFraud.org" title="www.4closureFraud.org">www.4closureFraud.org</a></span></h2> <p><span style="color: #000000;"><br /></span></p> <p style="margin: 12px auto 6px; font-family: Helvetica,Arial,sans-serif; font-style: normal; font-variant: normal; font-weight: normal; font-size: 14px; line-height: normal; font-size-adjust: none; font-stretch: normal; display: block; text-align: center;"><strong> <a href="https://www.scribd.com/document/321979576/Foreclosure-Judge-Won-t-Seal-Docs-in-Witness-Coaching-Case#from_embed" title="View Foreclosure Judge Won't Seal Docs in Witness-Coaching Case on Scribd" style="text-decoration: underline;">Foreclosure Judge Won't Seal Docs in Witness-Coaching Case</a></strong></p> <p><iframe src="https://www.scribd.com/embeds/321979576/content?start_page=1&amp;view_mode=scroll&amp;access_key=key-dAkurIP5e9CdahSlkN0T&amp;show_recommendations=true" width="100%" height="600" frameborder="0" scrolling="no"></iframe></p> <p style="margin: 12px auto 6px; font-family: Helvetica,Arial,sans-serif; font-style: normal; font-variant: normal; font-weight: normal; font-size: 14px; line-height: normal; font-size-adjust: none; font-stretch: normal; display: block; text-align: center;"><strong> <a href="https://www.scribd.com/document/321980028/Seal-Order#from_embed" title="View Seal Order on Scribd" style="text-decoration: underline;">Seal Order</a></strong></p> <p><iframe src="https://www.scribd.com/embeds/321980028/content?start_page=1&amp;view_mode=scroll&amp;access_key=key-w0m0zxbbdqxcNollmbnK&amp;show_recommendations=true" width="100%" height="600" frameborder="0" scrolling="no"></iframe></p> http://www.zerohedge.com/news/2016-08-28/script-ocwen-lawyer-spoon-fed-foreclosure-questions-and-answers-robo-witnesses#comments default Deutsche Bank Florida Testimony Sun, 28 Aug 2016 23:24:17 +0000 4closureFraud 570856 at http://www.zerohedge.com Why The Fed Will Never Reduce Its $4.5 Trillion Balance Sheet Again http://www.zerohedge.com/news/2016-08-28/why-fed-will-never-reduce-its-45-trillion-balance-sheet-again <p>Back in early April, one of the foremost experts on the practical applications of QE (there are many more "experts" on the discredited theoretical framework of QE, most of whom are career economists), Credit Suisse's Zoltan Pozsar wrote a note titled "What Excess Reserves", in which the former NY Fed analyst made a very clear case for why the Fed's balance sheet will never shrink again (particularly in the context of the broken Fed Funds market). Some of the note's highlights:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>Instead of asking when the Fed will shrink its balance sheet, it’s about time the market gets used to the idea that we are witnessing a structural shift in the amount of reserves the U.S. banks will be required to hold, where reserves replace bonds as the primary source of banks’ liquidity. And that this shift will underwrite demand for a large Fed balance sheet.</p> <p>&nbsp;</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2016/08/27/Poszar%20reserves.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2016/08/27/Poszar%20reserves_0.jpg" width="500" height="407" /></a></p> </blockquote> <p>Back in April, ge also laid out the role of the Fed's massively expanded balance sheet in the context of the prime money fund shrinkage as a result of the October 14 money market reform deadline:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>[W]e are witnessing a structural shift in the amount of reserves held by foreign banks as well. Gone are the days when foreign banks settled their Eurodollar transactions with deposits held at correspondent money center banks in New York. <strong>Under the new rules, interbank deposits do not count as HQLA, and foreign banks are increasingly settling Eurodollar transactions with reserve balances at the Fed</strong>. Foreign banks’ demand for reserves as HQLA to back Eurodollar deposits and as ultimate means of settlement for Eurodollar transactions will underwrite the need for a large Fed balance sheet as&nbsp; well. Prime money fund reform is a very important yet grossly under-appreciated aspect of this, one with geo-strategic relevance for the United States. </p> <p>&nbsp;</p> <p>Prime money funds have been providing the overwhelming portion of funding for foreign banks’ reserve balances. <strong>If the prime money fund complex shrinks dramatically after the October 14th reform deadline, funding these reserve balancees will become structurally more expensive</strong>. This in turn means that for foreign banks across the globe running Eurodollar businesses – lending Eurodollars and taking Eurodollar deposits – will become structurally more expensive. Why? Because if the LCR requires banks to hold more reserves as the preferred medium for settling Eurodollar transactions and the funding ofthese balances become more expensive, funding the liquidity portfolio corresponding to Eurodollar books may become a negative trade<strong>. Will that somewhat diminish the dollar’s pre-eminence as the global reserve currency and play into China’s hand? You bet</strong>…</p> </blockquote> <p>Naturally, the loss of the dollar's reserve status has to be avoided. But Pozsar's conclusion was simple: the size of the Fed's balance sheet isn't going down, and the Fed will have to accept and admit it:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>with the private sector's ability to issue money market claims sharply limited by Basel III, money can only find a home on the sovereign's balance sheet: either through the Treasury bill market or through the Fed's o/n RRP facility. <strong>Either option will mean that demand for a large Fed balance sheet will remain: reserves will not be eliminated, but swapped into other liabilities – larger cash balances for the U.S. Treasury (and on the flipside more bills for institutional cash pools) and more o/n RRPs for money funds (and on the flipside safer money funds for institutional cash pools). </strong></p> <p>&nbsp;</p> <p>Oddly, however, the Fed keeps emphasizing that the o/n RRP is not there for the long haul or to meet money funds’ demand for safe assets, but to put a floor under interest rates. </p> <p>We disagree. Quantities matter again, in ways the Fed has yet to appreciate.</p> </blockquote> <p>Well, after this weekend's Jackson Hole symposium it is clear that quite a few of the Fed members have read the Pozsar piece and are now appreciating that it is very unlikely that the Fed's balance sheet will ever shrink again.</p> <p>To be sure, that's not quite framed as policy just yet<a href="https://www.kansascityfed.org/~/media/files/publicat/sympos/2016/econsymposium-potter-handout.pdf?la=en">. In a presentation by the head of the NY Fed's capital markets head</a>, Simon Potter, he projected that the Fed's SOMA Holdings of domestic securities would begin declining between 2018 and 2020. Granted, this is long after the December 2014 forecast, which anticipated that the Fed's balance sheet would have declined substantially by now.&nbsp; It did not. </p> <p><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2016/08/27/fed%20balance%20sheet%20forecast_0.jpg" width="500" height="367" /></p> <p>The head of the PPT <a href="https://www.newyorkfed.org/newsevents/speeches/2016/pot160826">then said the following prepared remarks</a>:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>Today, many advanced economy central banks find themselves in a situation where their policy rate is at or close to zero, and policy accommodation is being added or maintained by asset purchases and forward guidance. For example, the FOMC has indicated that it will continue reinvestment of principal payments on its portfolio until normalization of the fed funds rate is well underway.<strong> As can be seen in Figure 7, market estimates of when the SOMA portfolio will start to normalize have moved out from the end 2015 to the middle of 2018 or even later.</strong></p> </blockquote> <p>In retrospect, this appears to be merely padding to a Fed which realizes it will never be able to unwind its balance sheet again.&nbsp; As <a href="https://ca.news.yahoo.com/fed-nears-rate-hikes-policymakers-plan-brave-world-005117150--business.html">Reuters commented overnight</a>, "policymakers think new tools might be needed in an era of slower economic growth and a potentially giant and long-lasting trove of assets held by the Fed. And they are convinced the time to vet them is now, while rates look to be heading up."</p> <p>"Central banking is in a brave new world," Atlanta Fed President Dennis Lockhart said in an interview on the sidelines of the conference.</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong>At the center of the Fed's discussions is its $4.5 trillion balance sheet, built up by bond-buying sprees to combat the 2007-09 recession but which has been criticized by many lawmakers.</strong></p> </blockquote> <p><strong>&nbsp;</strong>While policymakers have maintained the Fed should eventually reduce its bond holdings, <strong>Lockhart said some officials were closer to accepting that they needed to learn to live with them.</strong>&nbsp; "I suspect there are colleagues who are contemplating at least maybe a statically large balance sheet is just going to be a fact of life and be central to the toolkit," he said.</p> <p>So far the official narrative has been that the balance sheet will shrink only very slowly, a process that would take years and would not begin until interest rate increases are well underway. Progress could be made only in a very long-lived economic expansion. "<strong>I am sure everyone in the audience would be happy if this were the reality. I certainly would be," </strong>Simon Potter, the New York Fed's markets chief, said during the conference. </p> <p>Instead of expecting balance sheet shrinkage, think more QE: Yellen, in her speech on Friday, <strong>said balance sheets would likely swell again in future recessions as the Fed snaps up assets to stimulate the economy</strong>. </p> <p>But whether or not the Fed's balance sheet ever srhinks again (it won't), there are bigger issues, as noted earlier: the conference presented a menu of more exotic proposals. <strong>This included a Fed takeover of short-term debt markets and abolishing cash in order to charge negative interest rates.</strong> </p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>Many of the more radical proposals, including one to abandon monetary policy altogether and focus on urging runaway deficit-spending, were seen as ivory tower musings. <strong>Most policymakers, including Yellen, said it was likely the tools the Fed used to fight the last crisis, including rate cuts, bond purchases and jawboning on rate expectations, will be adequate.</strong></p> </blockquote> <p>Still, she said, "future policymakers might choose to consider some additional tools that have been employed by other central banks," including buying a wider range of assets or raising the inflation target. She also cited the possibility of targeting the average level of prices in the economy rather than their rate of change. </p> <p>Her laundry list of possible tools did not include negative rates, an idea that has been nearly universally panned by Fed officials. She said the Fed is not actively considering additional policy tools but participants at the conference suggested the process is already well underway. "<strong>You are seeing an exploration of how are we going to operate in a quite different world than before the crisis," </strong>Lockhart said.</p> <p>A world, incidentally, where the Fed's $4.5 trillion holdings of government debt are seen as perfectly normal. Which is why our advice for anyone who is asking how the Fed continues to spin the current monetary policy as tightening when it still is pregnant with trillions in debt which will never be reduced (and can barely muster a 25 bps rate hike every year), is to stop asking silly questions and move on.</p> <p>&nbsp;</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="843" height="687" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/Poszar%20reserves.jpg?1472420898" /> </div> </div> </div> http://www.zerohedge.com/news/2016-08-28/why-fed-will-never-reduce-its-45-trillion-balance-sheet-again#comments Bond Capital Markets Central Banks Dennis Lockhart EuroDollar Excess Reserves Monetary Policy Rate of Change Reality Recession Reserve Currency Reuters Sun, 28 Aug 2016 23:08:17 +0000 Tyler Durden 570895 at http://www.zerohedge.com