http://www.zerohedge.com/fullrss2.xml en Recovery? 3 "Uncomfortable Truth" Charts http://www.zerohedge.com/news/2014-08-30/recovery-3-uncomfortable-truth-charts <p>Presented with little comment aside to suggest one scratch beneath the thinning veneer of record nominal stock prices every once in a while to take the temperature of the ugly reality that no one is talking about...</p> <p>&nbsp;</p> <p><span style="text-decoration: underline;"><strong>1) Stocks are at record highs because global growth is 'improving'...</strong></span></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/08/20140830_WTF1.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/08/20140830_WTF1_0.jpg" width="600" height="316" /></a></p> <p>&nbsp;</p> <p><strong>FACT: There is a record divergence between the 'market' and plunging growth expectations</strong></p> <p>*&nbsp; *&nbsp; *</p> <p><span style="text-decoration: underline;"><strong>2) Stocks are at record highs because employment is 'improving'...</strong></span></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/08/20140830_WTF2.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/08/20140830_WTF2_0.jpg" width="600" height="315" /></a></p> <p>&nbsp;</p> <p><strong>FACT: There is a record divergence between the 'market' and the employed population in America.</strong></p> <p>*&nbsp; *&nbsp; *</p> <p><span style="text-decoration: underline;"><strong>3) Stocks are at record highs because animal spirits are 'improving'..</strong></span></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/08/20140830_WTF3.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/08/20140830_WTF3_0.jpg" width="600" height="316" /></a></p> <p>&nbsp;</p> <p><strong>FACT: There is a record divergence between the exuberant 'rich' and crushed 'middle class'</strong></p> <p>*&nbsp; *&nbsp; *</p> <p><em>Bonus Chart: </em></p> <p><span style="text-decoration: underline;"><strong>Stocks are at record highs because... of The Fed!</strong></span></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/08/20140830_WTF4.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/08/20140830_WTF4_0.jpg" width="600" height="317" /></a></p> <p>&nbsp;</p> <p>And stocks have not been this far ahead of the Fed Balance Sheet since May 2013's Taper Tantrum correction began...</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="957" height="504" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20140830_WTF3.jpg?1409444071" /> </div> </div> </div> http://www.zerohedge.com/news/2014-08-30/recovery-3-uncomfortable-truth-charts#comments Reality recovery Sun, 31 Aug 2014 00:45:45 +0000 Tyler Durden 493734 at http://www.zerohedge.com US Foreign Policy Then & Now (In 1 Cartoon) http://www.zerohedge.com/news/2014-08-30/us-foreign-policy-then-now-1-cartoon <p>What a difference a year makes...</p> <p>&nbsp;</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/08/20140830_syria.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/08/20140830_syria.jpg" width="595" height="390" /></a></p> <p>&nbsp;</p> <p><em>Source: <a href="http://www.economist.com/news/world-week/21614241-kals-cartoon?fsrc=scn/tw/te/kal/aug30">KAL via The Economist</a></em><a href="http://www.economist.com/news/world-week/21614241-kals-cartoon?fsrc=scn/tw/te/kal/aug30"></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="595" height="390" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20140830_syria.jpg?1409442931" /> </div> </div> </div> http://www.zerohedge.com/news/2014-08-30/us-foreign-policy-then-now-1-cartoon#comments The Economist Sun, 31 Aug 2014 00:01:00 +0000 Tyler Durden 493733 at http://www.zerohedge.com Taupe: It’s Not Just For The Oval Office Anymore http://www.zerohedge.com/news/2014-08-30/taupe-it%E2%80%99s-not-just-oval-office-anymore <p><a href="http://markstcyr.com/2014/08/29/taupe-its-not-just-for-the-oval-office-anymore/"><em>Submitted by Mark St.Cyr,</em></a></p> <p>Whether it’s politics or business one thing remains the same: <strong>if you are designated or perceived as the leader, everything you say or do is viewed with an eye searching for obvious and hidden meanings.</strong> While at the same time the higher the level or more commanding the position, that search goes from the naked eye to one looking via an electron microscope.</p> <p>Words matter, the way they are said can matter even more, yet what is just as important is the posture, and yes – <strong>that can include even your choice of attire.</strong></p> <p><strong>Leadership can be very symbolic in its application for consumption.</strong> We hear all the time the running line “they wrap themselves in the flag” and so forth to describe politicians and others. So is it any wonder that when the leader of the free world takes to the podium during what by all credible standards is a world on the edge of unrest shows up wearing not the traditional dark suit and red or blue tie but – light tan, people from all walks say, “What the ____ is up with that?”</p> <p><strong>The reaction was near instantaneous across social media channels.</strong> The knee jerk over whelming first responses were (to be kind) a projection of weakness. The contrast between the surrounding stage set used in the press room and the tan suit was glaring. So much and so out-of-place did it seem that one couldn’t help to think of anything else but, why?&nbsp; Was this just some fashion faux pas? Personally I don’t think so.</p> <p><strong>If people will remember one of the first highly visible changes of note made for all the world to take notice, was the complete gelding of the oval office and all its symbolic tones of color with a complete overhaul to neutral. i.e., Taupe.</strong></p> <p><strong>It can’t be underestimated just how much of a message is being intentionally sent</strong> when one of the first acts is to take what is considered the most powerful and important office in the world, and completely change or strip away any essence of it and replace it with muted tones of taupe.</p> <p>The oval office today is now a more neutered, bland, unappealing a washed in hotel ballroom-esque neutral tones of beige. It’s not what many are accustomed to remembering.</p> <p>So bland is the office today that it seems we never see the president speak from it. In nearly 6 years I can only recall one. Taupe doesn’t make for good television, but the symbolic nature for people who are received in that office would be overwhelmingly obvious. The new red white and blue – is taupe.</p> <p>Whether one agrees or disagrees with this administration or not doesn’t matter. I’m not discussing policy here. What I am talking about applies to any and all leadership.</p> <p><strong>Symbolism matters</strong>, especially when you’re at the highest of levels trying to project or convey messages across oceans and cultures. And what I’m trying to convey is just my observations, for I’m in the “leadership” business per se.</p> <p>When businesses or executives find themselves unable to move their companies or people in the direction they want more often than not it boils right down to the what, and how the leader of that organization is presenting themselves, and what mixed messages he/she are sending. Even if the company has thousands of people. The leader is the avatar, and their public behavior (good or bad) is what will be amplified by the ranks. Period.</p> <p>The issue at hand is when this messaging gets mixed, or in other words, the very people you think know what you mean – take it as the opposite.</p> <p><strong>What makes matters even worse is when people who you believe won’t even notice , or you’ve overlooked their interpretation of it all together in your calculus amplify the worst of intended meanings. i.e., Not only did your intended audience read you wrong, but so too did everyone else with even more disdain.</strong></p> <p>Currently we have Russia by all accounts invading and engaging in real warfare with Ukraine. Add to this the threats from ISIS. (or ISIL if you prefer) China flexing its military in a thumbing of the nose fashion with air to air engagements with war planes along with telegraphed over tones of discontent with once seemingly undisputed areas of territory. (the islands near Japan and others) The ongoing and ever increasingly volatile Israel/Hamas engagement. Along with the myriad of other ongoing issues. e.g., cyber attacks, U.S. border challenges, civil unrest, just to name a few.</p> <p>This is where leaders of any stripe need to show and convey the message that they are either in control, or project an image of that control via words or symbolism. And on the world stage – every detail matters and conveys a message. And, this is where academia (or academics) get it wrong all the time.</p> <p>They play or convey their message as if only the people watching are the people they are trying to trying to speak to. They are stunningly tone-deaf and usually blindsided by responses to their messaging because they can’t see past their own noses. (just look to any Federal Reserve explanation of monetary policy as a reference)</p> <p><strong>I could be wrong but unlike most I don’t feel the donning of that taupe suit was a fashion faux pas. I believe it was a deliberate act for symbolic effect to telegraph a message they want remembered by whomever they were trying to reach.</strong></p> <p>From my way of thinking it fits if you look at it through what words or messaging accompanied it. Words and tones such as (I’m paraphrasing) “We have yet to define a strategy, Congress will be involved and they’re not due back till next week, we’re not sure if that is true,” and so on.</p> <p>With the United States on the eve of a major holiday I believe a signal was trying to be sent that resembled,” Hey, we’re not going to do anything provocative, remember I’m/we’re the guy’s that toned down the oval office, remember? It’s the same color as this suit, remember? I want to assure you we’re not going to do anything provocative during this long weekend, and we want to make sure you remember we want to “talk first.” Remember?</p> <p>This is the reason why I feel the color of choice for that press conference was taupe. (or subdued shades of beige if you prefer) <strong>It was sending a visual cue to all that we are not fiercely red, white, and blue. We are taupe.</strong> Just look at our most important room of honor and power to back this up was the messaging being conveyed in my opinion.</p> <p>The real issue and problem with this messaging is if the people who it was intended to reach (i.e., other world leaders) receive it and view it the same way as the people the president represents. <strong>As “weak and embarrassing.”</strong></p> <p><strong>Agree or not with the policies, but the decision for that suit in my opinion was anything but a faux pas, it was intentional.</strong></p> <p>What really matters in the end will be just how much of an error in judgment it turns out to be. For all our sakes, I hope it winds up to be no more than a detail on a Joan Rivers Fashion Police™ tape.</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="629" height="597" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20140830_taupe.jpg?1409441098" /> </div> </div> </div> http://www.zerohedge.com/news/2014-08-30/taupe-it%E2%80%99s-not-just-oval-office-anymore#comments China Federal Reserve Israel Japan Monetary Policy Ukraine Sat, 30 Aug 2014 23:02:48 +0000 Tyler Durden 493732 at http://www.zerohedge.com 20,000 Pakistan Riot Police Unleash Tear Gas, Rubber Bullets As Protesters Breach PM's Residence, 230 Injured http://www.zerohedge.com/news/2014-08-30/20000-pakistan-riot-police-unleash-tear-gas-rubber-bullets-protesters-breach-pms-res <p><strong>UPDATE:&nbsp;*POLICE, PROTESTERS CLASH IN ISLAMABAD; AT LEAST 230 HURT: AFP</strong></p> <p>Against <a href="http://www.zerohedge.com/news/2014-08-19/meanwhile-pakistan">the background we initialliy explained here</a>, and <a href="http://www.zerohedge.com/news/2014-08-28/pakistan-faces-another-military-coup-pm-charged-murder">the escalation we discussed here</a>, Imran Khan's <strong>"Pakistan Spring" has grown dramatically</strong>. The former cricketing-legend and erstwhile opposition leader's call for people to take to the streets to demand new 'unrigged' elections has <strong>1000s of protesters breaching the Prime Minister's residence in Islamabad</strong>. Along with anti-government cleric Tahirul Qadri, Khan urged peaceful protest but, <a href="http://bigstory.ap.org/article/pakistani-protesters-head-toward-premiers-house">as AP reports</a>, an estimated <strong>20,000 police in riot gear are blocking the procession using tear gas and rubber bullets. Local hospitals report at least 100 injuries</strong>.</p> <p>&nbsp;</p> <blockquote class="twitter-tweet" lang="en"><p>I ask Pakistan to come out on Streets : Imrankhan <a href="http://t.co/BclmUiTrJg">pic.twitter.com/BclmUiTrJg</a></p> <p>— Ahmad Ali Warraich (@AhmadWarraich19) <a href="https://twitter.com/AhmadWarraich19/statuses/505792032430768128">August 30, 2014</a></p></blockquote> <script src="//platform.twitter.com/widgets.js"></script><blockquote class="twitter-tweet" lang="en"><p>qadri or imran ka naya pakistan <a href="http://t.co/iz5WyCNdmC">pic.twitter.com/iz5WyCNdmC</a></p> <p>— shahid razzaq (@shahidrazzaq7) <a href="https://twitter.com/shahidrazzaq7/statuses/505811760536776705">August 30, 2014</a></p></blockquote> <script src="//platform.twitter.com/widgets.js"></script><p>&nbsp;</p> <blockquote class="twitter-tweet"><p><a href="https://twitter.com/hashtag/StateTerroism?src=hash">#StateTerroism</a> by Police in <a href="https://twitter.com/hashtag/Pakistan?src=hash">#Pakistan</a> on peacrful protestors of <a href="https://twitter.com/hashtag/PAT?src=hash">#PAT</a> and <a href="https://twitter.com/hashtag/PTI?src=hash">#PTI</a><br /> <a href="https://twitter.com/hashtag/IslamabadMassacre?src=hash">#IslamabadMassacre</a> <a href="http://t.co/w2AWROrl4r">pic.twitter.com/w2AWROrl4r</a></p> <p>— Silent Reader (@KanezZahra) <a href="https://twitter.com/KanezZahra/statuses/505813653031890944">August 30, 2014</a></p></blockquote> <script src="//platform.twitter.com/widgets.js"></script><p>&nbsp;</p> <p>&nbsp;</p> <blockquote class="twitter-tweet" lang="en"><p>THIS IS NOT <a href="https://twitter.com/hashtag/GAZA?src=hash">#GAZA</a> THIS IS <a href="https://twitter.com/hashtag/iSLAMABAD?src=hash">#iSLAMABAD</a> <a href="https://twitter.com/hashtag/PAKISTAN?src=hash">#PAKISTAN</a> !</p> <p>NAWAZ SHARIF FIRING AT IT'S OWN PEOPLE. DOWN WITH THE GOVERNMENT! <a href="http://t.co/oLO4sboTTN">pic.twitter.com/oLO4sboTTN</a></p> <p>— President Speaking (@DrTster) <a href="https://twitter.com/DrTster/statuses/505813707394281472">August 30, 2014</a></p></blockquote> <script src="//platform.twitter.com/widgets.js"></script><p>&nbsp;</p> <blockquote class="twitter-tweet" lang="en"><p>ya hai imran khan ka naya pakistan <a href="http://t.co/EMlELZmbco">pic.twitter.com/EMlELZmbco</a></p> <p>— shahid razzaq (@shahidrazzaq7) <a href="https://twitter.com/shahidrazzaq7/statuses/505810771003990016">August 30, 2014</a></p></blockquote> <script src="//platform.twitter.com/widgets.js"></script><ul> <li><strong>*SOME PROTESTORS HAVE ENTERED P.M. HOUSE PREMISES: SAMAA TV</strong></li> <li><strong>*PAKISTAN POLICE FIRE TEAR GAS AT PROTESTORS: SAMAA TV</strong></li> <li><strong>*PAKISTAN POLICE FIRE RUBBER BULLETS AT PROTESTORS; 100 INJURED</strong></li> </ul> <p>&nbsp;</p> <p><a href="http://bigstory.ap.org/article/pakistani-protesters-head-toward-premiers-house"><em>As AP reports,</em></a></p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>Pakistani police fired tear gas at thousands of protesters as they tried to march toward the prime minister's home in the capital on Saturday, blanketing the route with clouds of white smoke and scattering demonstrators.</p> <p>&nbsp;</p> <p><strong>Police also fired rubber bullets to disperse the crowd, injuring some protesters</strong>, and at least a dozen were taken to a nearby hospital, police said.</p> <p>&nbsp;</p> <p><img src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/08/20140830_Pakistan2.jpg" width="460" height="306" /></p> <p>&nbsp;</p> <p><strong>Riot police initially showed restraint </strong>to Saturday's march but when the crowd started removing shipping containers used as barricades, they fired salvos of tear gas canisters that forced the crowds back. TV footage showed protesters, including women and children, scattering in retreat. Some fell to the ground and dozens were being treated in a hospital. Many, including two children, were shown being treated for effects of tear gas.</p> <p>&nbsp;</p> <p>P<strong>olice refused to give any estimates about the size of the crowd</strong> that had been headed toward the prime minister's residence.</p> <p>&nbsp;</p> <p>Police official Farman Ali said the injured have been shifted to a government hospital.</p> <p>&nbsp;</p> <p><strong>"They fired tear gas shells at us,"</strong> said Ahsanullah Fakhri, 28, who was bleeding from his leg, as he exited an ambulance with some seven other protesters who had multiple minor wounds.</p> <p>&nbsp;</p> <p>"I think they are also firing some bullets,<strong> I think rubber bullets,"</strong> he added.</p> <p>&nbsp;</p> <p><strong>Khan described the police's action against the crowd as illegal.</strong></p> <p>&nbsp;</p> <p><strong>Now we will show this government, we will call for countrywide agitation and we will jam the whole of Pakistan."</strong></p> <p>&nbsp;</p> <p>Interior Minister Nisar Ali Khan quickly visited the scene to boost police morale.</p> <p>&nbsp;</p> <p><strong>"A group wanted to capture the prime ministers house and other buildings. We are under oath, and the police as well, to protect the state assets."</strong></p> </blockquote> <p>*&nbsp; *&nbsp; *</p> <blockquote class="twitter-tweet" lang="en"><p><a href="https://twitter.com/BBCWorld">@BBCWorld</a> <a href="https://twitter.com/cnni">@cnni</a> <a href="https://twitter.com/FarhanKVirk">@FarhanKVirk</a> <a href="https://twitter.com/ABC">@ABC</a> watch what is in Pakistan <a href="https://twitter.com/hashtag/IslamabadMassacre?src=hash">#IslamabadMassacre</a> <a href="http://t.co/x7KS5chKWJ">pic.twitter.com/x7KS5chKWJ</a></p> <p>— MUHAMMAD TAUQEER (@Tauqeerm73) <a href="https://twitter.com/Tauqeerm73/statuses/505811736755056640">August 30, 2014</a></p></blockquote> <script src="//platform.twitter.com/widgets.js"></script><blockquote class="twitter-tweet" lang="en"><p>While Straight Bullets and Tear Gas Shells are being fired on Imran Khan's bus. He stands at top to lead Pakistan. <a href="http://t.co/eMDqjY3Uw5">pic.twitter.com/eMDqjY3Uw5</a></p> <p>— PTI (@PTIofficial) <a href="https://twitter.com/PTIofficial/statuses/505804273016655872">August 30, 2014</a></p></blockquote> <script src="//platform.twitter.com/widgets.js"></script><blockquote class="twitter-tweet" lang="en"><p>As a consequence of fraud elections, the unconstitutional &amp;unlawful PM press conference <a href="https://twitter.com/insafali">@insafali</a> <a href="https://twitter.com/hashtag/AwamiPressure?src=hash">#AwamiPressure</a> <a href="http://t.co/oNznWSJ1oo">pic.twitter.com/oNznWSJ1oo</a></p> <p>— MUHAMMAD TAUQEER (@Tauqeerm73) <a href="https://twitter.com/Tauqeerm73/statuses/505712424364683264">August 30, 2014</a></p></blockquote> <script src="//platform.twitter.com/widgets.js"></script><blockquote class="twitter-tweet" lang="en"><p>This is not <a href="https://twitter.com/hashtag/Gaza?src=hash">#Gaza</a>. This is <a href="https://twitter.com/hashtag/Islamabad?src=hash">#Islamabad</a>. <a href="https://twitter.com/hashtag/IslamabadMassacre?src=hash">#IslamabadMassacre</a> <a href="http://t.co/yyGtNVU6bi">pic.twitter.com/yyGtNVU6bi</a></p> <p>— Mariya Qadri ?? (@MariyaQadri92) <a href="https://twitter.com/MariyaQadri92/statuses/505801321556246528">August 30, 2014</a></p></blockquote> <script src="//platform.twitter.com/widgets.js"></script><p>*&nbsp; *&nbsp; *</p> <p>A collection of clips...</p> <p><iframe src="//www.dailymotion.com/embed/video/x24x5c2" width="480" height="270" frameborder="0"></iframe><br /><a href="http://www.dailymotion.com/video/x24x5c2_protestors-enter-parliament-house_news" target="_blank">Protestors enter Parliament House</a> <em>by <a href="http://www.dailymotion.com/GeoNews" target="_blank">GeoNews</a></em></p> <p><iframe src="//www.dailymotion.com/embed/video/x24x1u6" width="480" height="270" frameborder="0"></iframe><br /><a href="http://www.dailymotion.com/video/x24x1u6_masked-men-used-sling-shots-to-attack-police-in-islamabad_news" target="_blank">Masked men used sling shots to attack police in...</a> <em>by <a href="http://www.dailymotion.com/GeoNews" target="_blank">GeoNewsw</a></em></p> <p><iframe src="//www.dailymotion.com/embed/video/x24wx4z" width="480" height="270" frameborder="0"></iframe><br /><a href="http://www.dailymotion.com/video/x24wx4z_police-fire-teargas-rubber-bullets-at-pti-pat-marchers-geo-reports-30-aug-2014_news" target="_blank">Police fire teargas, rubber bullets at PTI, PAT...</a> <em>by <a href="http://www.dailymotion.com/GeoNews" target="_blank">GeoNews</a></em></p> <p>*&nbsp; *&nbsp; *</p> <p>At least this is something that could never happen in America... oh wait.</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="713" height="472" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20140830_Pakistan5.jpg?1409430398" /> </div> </div> </div> http://www.zerohedge.com/news/2014-08-30/20000-pakistan-riot-police-unleash-tear-gas-rubber-bullets-protesters-breach-pms-res#comments Countrywide Twitter Twitter Sat, 30 Aug 2014 21:54:14 +0000 Tyler Durden 493731 at http://www.zerohedge.com Is There Capitalism After Cronyism? http://www.zerohedge.com/news/2014-08-30/there-capitalism-after-cronyism <p>Submitted by <a href="http://www.oftwominds.com/blogaug14/crony-capitalism8-14.html">Charles Hugh-Smith of OfTwoMinds blog</a>,</p> <p><font ><font ><font ><font ><i>The more the Status Quo pursues the same old Keynesian Cargo Cult script of central planning and <i>free money for financiers</i>, the more self-liquidating the system becomes.</i> </font></font></font></font></p> <p><font ><font ><font ><font ><b>Judging by the mainstream media, the most pressing problems facing capitalism are:</b> </font></font></font></font></p> <p><font ><font ><font ><font >1) income inequality, the basis of Thomas Piketty&rsquo;s bestseller <a href="http://www.amazon.com/gp/product/067443000X/ref=as_li_tl?ie=UTF8&amp;camp=1789&amp;creative=9325&amp;creativeASIN=067443000X&amp;linkCode=as2&amp;tag=charleshughsm-20&amp;linkId=XJTB732KAE23RFT3" target="resource">Capital in the Twenty-First Century</a>, and </font></font></font></font></p> <p><font ><font ><font ><font >2) the failure of laissez-faire markets to regulate their excesses, a common critique encapsulated by Paul Craig Roberts&rsquo; recent book <a href="http://www.amazon.com/gp/product/0986036250/ref=as_li_tl?ie=UTF8&amp;camp=1789&amp;creative=9325&amp;creativeASIN=0986036250&amp;linkCode=as2&amp;tag=charleshughsm-20&amp;linkId=U4S7RKUIGQOBO7N4" target="resource">The Failure of Laissez Faire Capitalism</a>. </font></font></font></font></p> <p><font ><font ><font ><b>These critiques (and many similar diagnoses) reach a widely shared conclusion:</b> capitalism must be reformed to save it from itself. </font></font></font></p> <p><font ><font ><font >The proposed reforms align with each analyst&rsquo;s basic ideological bent. Piketty&rsquo;s solution to rising wealth inequality is the ultimate in statist centralization: a global wealth tax. </font></font></font></p> <p><font ><font ><font >Roberts and others recommend reforming capitalism to embody social purpose and recognize environmental limits. Exactly how this economic reformation should be implemented is a question that sparks debates across the ideological spectrum, but the idea that capitalism can be reformed is generally accepted by left, right and libertarian alike. </font></font></font></p> <p><font ><font ><font ><b>Socio-economist Immanuel Wallerstein asks a larger question: can the current iteration of global capitalism be reformed, or is it poised to be replaced by some other arrangement?</b> </font></font></font></p> <p><font ><font ><font ><img align="middle" src="http://www.oftwominds.com/photos2014/wealth-pyramid2.gif" style="border-width: 0px; border-style: solid; height: 440px; width: 600px;" /> </font></font></font></p> <p><font ><font ><font >Wallerstein and four colleagues explored this question in <a href="http://www.amazon.com/gp/product/0199330859/ref=as_li_tl?ie=UTF8&amp;camp=1789&amp;creative=9325&amp;creativeASIN=0199330859&amp;linkCode=as2&amp;tag=charleshughsm-20&amp;linkId=VGAK33NH3TPP4FX6" target="resource">Does Capitalism Have a Future?</a> (Oxford University Press, 2013). </font></font></font></p> <p><font ><font ><font >Wallerstein is known as a proponent of world systems, the notion that each dominant economic-political arrangement eventually reaches its limits and is replaced by a new globally hegemonic system. </font></font></font></p> <p><font ><font ><font ><img align="middle" src="http://www.oftwominds.com/photos2014/wealth-inequality3-14a.jpg" style="border-width: 0px; border-style: solid; height: 327px; width: 600px;" /> </font></font></font></p> <p><font ><font ><font >Wallerstein draws his basic definition of the current dominant system--let&rsquo;s call it <b>Global Capitalism 1.0</b>--from his mentor, historian Fernand Braudel, who meticulously traced modern capitalism back to its developmental roots in the 15th century in an influential three-volume history, Civilization &amp; Capitalism, 15th to 18th Centuries: </font></font></font></p> <p><font ><font ><font ><a href="http://www.amazon.com/gp/product/0060148454/ref=as_li_tl?ie=UTF8&amp;camp=1789&amp;creative=9325&amp;creativeASIN=0060148454&amp;linkCode=as2&amp;tag=charleshughsm-20&amp;linkId=BQ5SGH7K2ZCNID5C" target="resource">The Structures of Everyday Life: Volume 1</a> </font></font></font></p> <p><font ><font ><font ><a href="http://www.amazon.com/gp/product/0060150912/ref=as_li_tl?ie=UTF8&amp;camp=1789&amp;creative=9325&amp;creativeASIN=0060150912&amp;linkCode=as2&amp;tag=charleshughsm-20&amp;linkId=X4HZQPPH65LPAAJQ" target="resource">The Wheels of Commerce: Vol. 2</a> </font></font></font></p> <p><font ><font ><font ><a href="http://www.amazon.com/gp/product/0060153172/ref=as_li_tl?ie=UTF8&amp;camp=1789&amp;creative=9325&amp;creativeASIN=0060153172&amp;linkCode=as2&amp;tag=charleshughsm-20&amp;linkId=5TL2REXVOSIBCWIU" target="resource">The Perspective of the World: Volume 3</a> </font></font></font></p> <p>&nbsp;</p> <p><font ><font ><font >From this perspective, there is a teleological path to global capitalism&rsquo;s expansion beneath the market&rsquo;s ceaseless cycle of boom-and-bust. This model of ever-larger systems of global dominance has been further developed by Braudel disciples such as Giovanni Arrighi (<a href="http://www.amazon.com/gp/product/1844673049/ref=as_li_tl?ie=UTF8&amp;camp=1789&amp;creative=9325&amp;creativeASIN=1844673049&amp;linkCode=as2&amp;tag=charleshughsm-20&amp;linkId=RWC4B4B2A2NEI7N2" target="resource">The Long Twentieth Century: Money, Power and the Origins of Our Times</a>). </font></font></font></p> <p><font ><font ><font ><b>It is this latest and most expansive iteration of capitalism</b>--one dominated by the mobility of global capital, state enforcement of privately owned rentier/cartel arrangements and the primacy of financial capital over industrial capital--that Wallerstein and his collaborators view as endangered. </font></font></font></p> <p><font ><font ><font >Amidst the conventional chatter of social spending countering markets gone wild--as if the only thing restraining rampant capitalism is the state--<b>Wallerstein clearly identifies the state&#39;s role as enforcer of private cartels.</b> </font></font></font></p> <p><font ><font ><font ><b>This is not just a function of regulatory capture by monied elites:</b> if the state fails to maintain monopolistic cartels, profit margins plummet and capital is unable to maintain its spending on investment and labor. Simply put, the economy tanks as profits, investment and growth all stagnate. </font></font></font></p> <p><font ><font ><font >This is why Wallerstein characterizes this iteration of capitalism as <i>&ldquo;a particular historical configuration of markets and state structures where private economic gain by almost any means is the paramount goal and measure of success.&rdquo;</i> </font></font></font></p> <p><font ><font ><font ><img align="middle" src="http://www.oftwominds.com/photos2014/real-median-income1-14a.png" style="border-width: 0px; border-style: solid; height: 360px; width: 600px;" /> </font></font></font></p> <p>&nbsp;</p> <p><font ><font ><font >Even those who reject this description of free markets and the self-interested pursuit of profit can agree that the prime directive of capitalism is the accumulation of capital: enterprises that fail to accumulate capital lose capital and eventually go bust. </font></font></font></p> <p><font ><font ><font >As economist Joseph Schumpeter recognized, capitalism is not a steady-state system but one constantly reworked by &ldquo;creative destruction,&rdquo; the process of the less efficient being replaced by the more efficient. </font></font></font></p> <p><font ><font ><font ><b>In Wallerstein&rsquo;s view, Global Capitalism 1.0 could end in the frustration of capitalists to continue reaping large and fairly secure profits.</b> If capital can no longer accumulate capital, this iteration of capitalism runs out of oxygen and creative destruction will usher in a new arrangement. (Wallerstein&rsquo;s chapter in the book is titled <i>why capitalists may no longer find capitalism rewarding.</i>) </font></font></font></p> <p><font ><font ><font >Though the status quo believes that amending the political-financial rules is all that&rsquo;s needed to maintain the current centralized arrangement, Wallerstein believes that following the old rules will actually intensify the coming structural crisis. </font></font></font></p> <p><font ><font ><font >As the state-cartel crony-capitalism that dominates the financial and political realms unravels on multiple levels, it&#39;s difficult not to agree with Wallerstein that the more the Status Quo pursues the same old Keynesian Cargo Cult script of central planning and <i>free money for financiers</i>, the more self-liquidating the system becomes.</font></font></font></p> <p>*&nbsp; *&nbsp; *<br /><i>This entry is drawn from an essay published in <a href="http://www.theamericanconservative.com/archive/sept-oct-2014/" target="resource"> The American Conservative Magazine</a>; <a href="http://www.amazon.com/gp/product/B0078NP9SU" target="resource"> a Kindle Edition is available for only $3.98/issue</a>.</i> </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="559" height="365" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20140830_chs.jpg?1409411549" /> </div> </div> </div> http://www.zerohedge.com/news/2014-08-30/there-capitalism-after-cronyism#comments Cronyism Fail Free Money Sat, 30 Aug 2014 20:58:54 +0000 Tyler Durden 493730 at http://www.zerohedge.com Were European Bonds Mispriced in 2012 or are they Now? http://www.zerohedge.com/news/2014-08-30/were-european-bonds-mispriced-2012-or-are-they-now <p style="margin: 0px; font-family: 'Times New Roman'; font-size: medium; line-height: normal;">By&nbsp;<a href="http://www.econmatters.com/search/label/EconMatters">EconMatters</a></p> <p class="separator" style="margin: 0px; font-family: 'Times New Roman'; font-size: medium; line-height: normal; clear: both; text-align: center;"><a href="http://2.bp.blogspot.com/-7gh7aCzKAfs/VAIHjCjGS2I/AAAAAAAAEK4/Jd_69_wTx_4/s1600/index44.jpg" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img src="https://images-blogger-opensocial.googleusercontent.com/gadgets/proxy?url=http%3A%2F%2F2.bp.blogspot.com%2F-7gh7aCzKAfs%2FVAIHjCjGS2I%2FAAAAAAAAEK4%2FJd_69_wTx_4%2Fs1600%2Findex44.jpg&amp;container=blogger&amp;gadget=a&amp;rewriteMime=image%2F*" width="200" height="128" border="0" style="cursor: move;" /></a></p> <p style="margin: 0px; font-family: 'Times New Roman'; font-size: medium; line-height: normal;">&nbsp;</p> <p style="margin: 0px; font-family: 'Times New Roman'; font-size: medium; line-height: normal;"><strong><span style="font-size: 12pt; line-height: 18.399999618530273px;">How to properly value European Bonds</span></strong></p> <div class="MsoNormal" style="font-family: 'Times New Roman'; font-size: medium; line-height: normal;"> <p style="margin: 0px;">&nbsp;</p> </div> <div class="MsoNormal" style="font-family: 'Times New Roman'; font-size: medium; line-height: normal;"> <p style="margin: 0px;">This seems to be the biggest question in financial markets for me right now because the math just doesn`t add up any way you slice it. When you look at&nbsp;<a href="http://www.econmatters.com/2014/08/european-bond-market-bubble-of-all.html">the pricing for European bonds</a>&nbsp;this conclusion jumps out from an analyst perspective, either European bonds were analyzed and incorrectly priced two years ago, or they are currently being analyzed and mispriced today! &nbsp;</p> <p style="margin: 0px;">&nbsp;</p> </div> <p style="margin: 0px; font-family: 'Times New Roman'; font-size: medium; line-height: normal;"><strong><span style="font-size: 12pt; line-height: 18.399999618530273px;">Possible Explanations for Large Valuation Gap&nbsp;</span></strong></p> <p class="separator" style="margin: 0px; font-family: 'Times New Roman'; font-size: medium; line-height: normal; clear: both; text-align: center;"><a href="http://1.bp.blogspot.com/-d9brv_RHtCI/VAIH2t8JlkI/AAAAAAAAELA/F7_YDJA7JNE/s1600/belgium-government-debt-to-gdp.png" style="margin-left: 1em; margin-right: 1em;"><img src="https://images-blogger-opensocial.googleusercontent.com/gadgets/proxy?url=http%3A%2F%2F1.bp.blogspot.com%2F-d9brv_RHtCI%2FVAIH2t8JlkI%2FAAAAAAAAELA%2FF7_YDJA7JNE%2Fs1600%2Fbelgium-government-debt-to-gdp.png&amp;container=blogger&amp;gadget=a&amp;rewriteMime=image%2F*" width="640" height="292" border="0" style="cursor: move;" /></a></p> <div class="MsoNormal" style="font-family: 'Times New Roman'; font-size: medium; line-height: normal;"> <p style="margin: 0px;"><strong><span style="font-size: 12pt; line-height: 18.399999618530273px;">&nbsp;</span></strong></p> <table class="tr-caption-container" style="padding: 6px; margin-bottom: 0.5em; margin-left: auto; margin-right: auto; text-align: center;" cellspacing="0" cellpadding="0" align="center"> <tbody> <tr> <td> <p style="margin: 0px;"><a href="http://1.bp.blogspot.com/-e-Ld3c9E5yI/VAIIJWamhZI/AAAAAAAAELI/HiKqNKKIOzM/s1600/belgium-government-bond-yield.png" style="margin-left: auto; margin-right: auto;"><img src="https://images-blogger-opensocial.googleusercontent.com/gadgets/proxy?url=http%3A%2F%2F1.bp.blogspot.com%2F-e-Ld3c9E5yI%2FVAIIJWamhZI%2FAAAAAAAAELI%2FHiKqNKKIOzM%2Fs1600%2Fbelgium-government-bond-yield.png&amp;container=blogger&amp;gadget=a&amp;rewriteMime=image%2F*" width="640" height="292" border="0" style="cursor: move;" /></a></p> </td> </tr> <tr> <td class="tr-caption" style="font-size: 12.727272033691406px; padding-top: 4px;"> <p style="margin: 0px;"><strong>Belgium 10 Year Bond Yield</strong></p> </td> </tr> </tbody> </table> </div> <div class="MsoNormal" style="font-family: 'Times New Roman'; font-size: medium; line-height: normal;"> <p style="margin: 0px;">One might say it is a little of both, the yields shouldn`t have been that high two years ago, and&nbsp;<a href="http://www.econmatters.com/2014/08/negative-real-rates-show-reach-for.html">they shouldn`t be this low right now</a>. However, the gap is just too large from a valuation standpoint to hold much water or relevance here. The next possible answer is that central banks have made interest rates for borrowing money so low that this has incentivized bondholders to accumulate more bonds in search of a yield vehicle to invest this&nbsp;<a href="http://www.econmatters.com/2014/07/the-counterfactual-case-against-zirp.html">ZIRPMoney</a>.&nbsp;</p> </div> <div class="MsoNormal" style="font-family: 'Times New Roman'; font-size: medium; line-height: normal;"> <p style="margin: 0px;">&nbsp;</p> <div style="text-align: center;"> <p style="margin: 0px;"><em>Read More &gt;&gt;&gt;&nbsp;<a href="http://www.econmatters.com/2014/08/even-mainstream-academia-worried-about.html">Even Mainstream Academia Worried about Massive Bubbles in Markets</a></em></p> </div> <div style="text-align: center;"> <p style="margin: 0px;">&nbsp;</p> </div> </div> <p class="separator" style="margin: 0px; font-family: 'Times New Roman'; font-size: medium; line-height: normal; clear: both; text-align: center;"><a href="http://3.bp.blogspot.com/-7wsaD5t6vOM/VAIIkhPjGgI/AAAAAAAAELQ/0ToL2b3GBFc/s1600/ireland-government-debt-to-gdp.png" style="margin-left: 1em; margin-right: 1em;"><img src="https://images-blogger-opensocial.googleusercontent.com/gadgets/proxy?url=http%3A%2F%2F3.bp.blogspot.com%2F-7wsaD5t6vOM%2FVAIIkhPjGgI%2FAAAAAAAAELQ%2F0ToL2b3GBFc%2Fs1600%2Fireland-government-debt-to-gdp.png&amp;container=blogger&amp;gadget=a&amp;rewriteMime=image%2F*" width="640" height="292" border="0" style="cursor: move;" /></a></p> <table class="tr-caption-container" style="padding: 6px; margin-bottom: 0.5em; font-family: 'Times New Roman'; margin-left: auto; margin-right: auto; text-align: center;" cellspacing="0" cellpadding="0" align="center"> <tbody> <tr> <td> <p style="margin: 0px;"><a href="http://1.bp.blogspot.com/-TjNYQypYna8/VAIIv1QHY0I/AAAAAAAAELY/ZRPMfhjLRZ0/s1600/ireland-government-bond-yield.png" style="margin-left: auto; margin-right: auto;"><img src="https://images-blogger-opensocial.googleusercontent.com/gadgets/proxy?url=http%3A%2F%2F1.bp.blogspot.com%2F-TjNYQypYna8%2FVAIIv1QHY0I%2FAAAAAAAAELY%2FZRPMfhjLRZ0%2Fs1600%2Fireland-government-bond-yield.png&amp;container=blogger&amp;gadget=a&amp;rewriteMime=image%2F*" width="640" height="292" border="0" style="cursor: move;" /></a></p> </td> </tr> <tr> <td class="tr-caption" style="font-size: 12.727272033691406px; padding-top: 4px;"> <p style="margin: 0px;">Ireland 10 Year Bond Yield</p> </td> </tr> </tbody> </table> <div class="MsoNormal" style="font-family: 'Times New Roman'; font-size: medium; line-height: normal;"> <p style="margin: 0px;">Also, the US QE Program of $85 Billion per month, much of this money may have found its way into the European banking and financial markets further incentivizing liquidity driven asset purchases of all kinds in Europe. But remember, Europe itself has done very little besides the main weapon of ZIRP compared with the United States, and these are European bonds we are talking about. But if it just comes down to ZIRP offering enough of an incentive to buy what were perceived as risky bonds for investors just two years ago, why weren`t these yields much lower as soon as ZIRP began in Europe?&nbsp;</p> </div> <div class="MsoNormal" style="font-family: 'Times New Roman'; font-size: medium; line-height: normal;"> <p style="margin: 0px;">&nbsp;</p> <div style="text-align: center;"> <p style="margin: 0px;"><em>Read More &gt;&gt;&gt;&nbsp;<a href="http://www.econmatters.com/2014/08/janet-yellen-needs-to-go.html">Jackson Hole: Janet Yellen Is The Wrong Chairperson For the Fed</a></em></p> </div> <div style="text-align: center;"> <p style="margin: 0px;">&nbsp;</p> </div> </div> <div class="MsoNormal" style="font-family: 'Times New Roman'; font-size: medium; line-height: normal;"> <p style="margin: 0px;">One answer might be that there was a scale issue regarding liquidity, and ultimately there was a lag effect, until liquidity reached a certain threshold, first of filling the deleveraging credit gap, then there is enough to spill over into alternative investments like chasing yield trades. However this two year period also happened to correspond with the $85 Billion&nbsp;<a href="http://www.econmatters.com/2014/01/federal-reserve-overstepped-bounds-with.html">QE policy in the United States</a>, and this seems to have been some of the catalyst for ditching investments like Gold in favor of Yield Investments. There is also this ‘Binary Mentality’ in financial markets in evaluating an investment risk or trading strategy, it is ‘Risk On’ or ‘Risk Off’, ‘Yield On’ or ‘Yield Off’, or European bonds are ‘Safe’ or really ‘Risky’.&nbsp;</p> </div> <div class="MsoNormal" style="font-family: 'Times New Roman'; font-size: medium; line-height: normal;"> <p style="margin: 0px;">&nbsp;</p> </div> <div class="MsoNormal" style="font-family: 'Times New Roman'; font-size: medium; line-height: normal;"> <p style="margin: 0px;"><strong><span style="font-size: 12pt; line-height: 18.399999618530273px;">Fundamentals in Europe Haven`t Changed</span></strong></p> </div> <div class="MsoNormal" style="font-family: 'Times New Roman'; font-size: medium; line-height: normal;"> <p style="margin: 0px;">&nbsp;</p> </div> <p class="separator" style="margin: 0px; font-family: 'Times New Roman'; font-size: medium; line-height: normal; clear: both; text-align: center;"><strong><a href="http://3.bp.blogspot.com/-czYw2jF_D1U/VAIJA__vQKI/AAAAAAAAELg/klm6t8gjEfU/s1600/italy-government-debt-to-gdp.png" style="margin-left: 1em; margin-right: 1em;"><img src="https://images-blogger-opensocial.googleusercontent.com/gadgets/proxy?url=http%3A%2F%2F3.bp.blogspot.com%2F-czYw2jF_D1U%2FVAIJA__vQKI%2FAAAAAAAAELg%2Fklm6t8gjEfU%2Fs1600%2Fitaly-government-debt-to-gdp.png&amp;container=blogger&amp;gadget=a&amp;rewriteMime=image%2F*" width="640" height="292" border="0" style="cursor: move;" /></a></strong></p> <p style="margin: 0px; font-family: 'Times New Roman'; font-size: medium; line-height: normal;">&nbsp;</p> <table class="tr-caption-container" style="padding: 6px; margin-bottom: 0.5em; font-family: 'Times New Roman'; margin-left: auto; margin-right: auto; text-align: center;" cellspacing="0" cellpadding="0" align="center"> <tbody> <tr> <td> <p style="margin: 0px;"><a href="http://2.bp.blogspot.com/--8Jb-xmmLQI/VAIJLDKN71I/AAAAAAAAELo/xAGnwK9SI1A/s1600/italy-government-bond-yield.png" style="margin-left: auto; margin-right: auto;"><img src="https://images-blogger-opensocial.googleusercontent.com/gadgets/proxy?url=http%3A%2F%2F2.bp.blogspot.com%2F--8Jb-xmmLQI%2FVAIJLDKN71I%2FAAAAAAAAELo%2FxAGnwK9SI1A%2Fs1600%2Fitaly-government-bond-yield.png&amp;container=blogger&amp;gadget=a&amp;rewriteMime=image%2F*" width="640" height="292" border="0" style="cursor: move;" /></a></p> </td> </tr> <tr> <td class="tr-caption" style="font-size: 12.727272033691406px; padding-top: 4px;"> <p style="margin: 0px;">Italy 10 Year Bond Yield</p> </td> </tr> </tbody> </table> <div class="MsoNormal" style="font-family: 'Times New Roman'; font-size: medium; line-height: normal;"> <p style="margin: 0px;">However when you look at the fundamentals and compare them to 2012 things haven`t really changed that much in Europe from a ‘getting their financial house in order’ standpoint, and their economies aren’t exactly booming, so these bonds seem as risky now as they ever have been from a solvency standpoint. I realize that the higher yields feed on themselves and make Europe`s outlook worse by some metrics, and that lower yields help alleviate near-term financing concerns from an interest on debt perspective, but the moves in these European bond yields just don`t make sense on a valuation standpoint, who would buy these bonds at current prices and yields? [Moreover, lower yields may be bad because it allows the governments to put off the much needing structural reforms that are necessary for fixing Europe in the long run.] The possible answer is that banks think that they can front run central banks, beg for QE, and get the central banks to take these bonds off their books.&nbsp;</p> </div> <div class="MsoNormal" style="font-family: 'Times New Roman'; font-size: medium; line-height: normal;"> <p style="margin: 0px;">&nbsp;</p> <div style="text-align: center;"> <p style="margin: 0px;"><em>Read More &gt;&gt;&gt;&nbsp;<a href="http://www.econmatters.com/2014/08/the-bond-market-explained-for-mohamed.html">The Bond Market Explained for Mohamed El-Erian</a></em></p> </div> </div> <div class="MsoNormal" style="font-family: 'Times New Roman'; font-size: medium; line-height: normal;"> <p style="margin: 0px;"><strong><span style="font-size: 12pt; line-height: 18.399999618530273px;"><br /></span></strong><strong><span style="font-size: 12pt; line-height: 18.399999618530273px;">How Big can the ECB Balance Sheet Really Get?</span></strong></p> </div> <div class="MsoNormal" style="font-family: 'Times New Roman'; font-size: medium; line-height: normal;"> <p style="margin: 0px;">&nbsp;</p> </div> <p class="separator" style="margin: 0px; font-family: 'Times New Roman'; font-size: medium; line-height: normal; clear: both; text-align: center;"><strong><a href="http://3.bp.blogspot.com/-bQ8PrjlTpyM/VAIJo_hjxUI/AAAAAAAAELw/LMVQxVaE09M/s1600/spain-government-debt-to-gdp.png" style="margin-left: 1em; margin-right: 1em;"><img src="https://images-blogger-opensocial.googleusercontent.com/gadgets/proxy?url=http%3A%2F%2F3.bp.blogspot.com%2F-bQ8PrjlTpyM%2FVAIJo_hjxUI%2FAAAAAAAAELw%2FLMVQxVaE09M%2Fs1600%2Fspain-government-debt-to-gdp.png&amp;container=blogger&amp;gadget=a&amp;rewriteMime=image%2F*" width="640" height="292" border="0" style="cursor: move;" /></a></strong></p> <p style="margin: 0px; font-family: 'Times New Roman'; font-size: medium; line-height: normal;">&nbsp;</p> <table class="tr-caption-container" style="padding: 6px; margin-bottom: 0.5em; font-family: 'Times New Roman'; margin-left: auto; margin-right: auto; text-align: center;" cellspacing="0" cellpadding="0" align="center"> <tbody> <tr> <td> <p style="margin: 0px;"><a href="http://1.bp.blogspot.com/--L5plt4QuTk/VAIJzltie9I/AAAAAAAAEL4/rXlSfVY-QPI/s1600/spain-government-bond-yield.png" style="margin-left: auto; margin-right: auto;"><img src="https://images-blogger-opensocial.googleusercontent.com/gadgets/proxy?url=http%3A%2F%2F1.bp.blogspot.com%2F--L5plt4QuTk%2FVAIJzltie9I%2FAAAAAAAAEL4%2FrXlSfVY-QPI%2Fs1600%2Fspain-government-bond-yield.png&amp;container=blogger&amp;gadget=a&amp;rewriteMime=image%2F*" width="640" height="292" border="0" style="cursor: move;" /></a></p> </td> </tr> <tr> <td class="tr-caption" style="font-size: 12.727272033691406px; padding-top: 4px;"> <p style="margin: 0px;">Spain 10 Year Bond Yield</p> </td> </tr> </tbody> </table> <div class="MsoNormal" style="font-family: 'Times New Roman'; font-size: medium; line-height: normal;"> <p style="margin: 0px;">But remember Europe hasn`t really done any bond buying program, and it really seems like a big risk to take with your only real out being that Mario Draghi can convince policy makers to buy European bonds in any sizeable scale to make all these bonds good values here. The scale is enormous because the amount of debt that Europe needs to sustain their deficit spending weak economies that are not very competitive from a global standpoint outside of Germany is enormous each year. Furthermore, the ECB is really going to buy “all of these European bonds” from Italy to Belgium? The math doesn`t add up, just think about the Fed`s 4.5 Trillion dollar balance sheet, how big would the ECB balance sheet need to be to have any real impact in buying all these bonds from the banks that currently hold them?&nbsp;</p> </div> <div class="MsoNormal" style="font-family: 'Times New Roman'; font-size: medium; line-height: normal;"> <p style="margin: 0px;">&nbsp;</p> </div> <div class="MsoNormal" style="font-family: 'Times New Roman'; font-size: medium; line-height: normal;"> <p style="margin: 0px;"><strong><span style="font-size: 12pt; line-height: 18.399999618530273px;">What Will Germany Sign Off On?</span></strong></p> </div> <div class="MsoNormal" style="font-family: 'Times New Roman'; font-size: medium; line-height: normal;"> <p style="margin: 0px;">&nbsp;</p> </div> <div class="MsoNormal" style="font-family: 'Times New Roman'; font-size: medium; line-height: normal;"> <p style="margin: 0px;">Would Germany really sign off on this even if it was potentially possible to buy even half the bonds of these European countries? This just seems ludicrous and I hope this isn`t a real investment rationale for buying all these European bonds, that the ECB is going to take them off their hands regardless of price. The other explanation is that these bond investors think they can get out quick enough, make enough money before ZIRP and the market reverses itself, and basically dump these bonds back onto the market without getting hurt.&nbsp;</p> </div> <div class="MsoNormal" style="font-family: 'Times New Roman'; font-size: medium; line-height: normal;"> <p style="margin: 0px;">&nbsp;</p> <div style="text-align: center;"> <p style="margin: 0px;"><em>Read More &gt;&gt;&gt;&nbsp;<a href="http://www.econmatters.com/2014/05/european-bonds-front-running-ecb-setup.html">European Bonds Front Running ECB Setup for Disappointment</a></em></p> </div> <div style="text-align: center;"> <p style="margin: 0px;">&nbsp;</p> </div> </div> <div class="MsoNormal" style="font-family: 'Times New Roman'; font-size: medium; line-height: normal;"> <p style="margin: 0px;">However, when you calculate the magnitude of how many bonds were bought all across Europe with deficit spending needed to sustain largess social governments, taking yields down from such heights just two years ago, this is a lot of bonds that will have to be dumped onto the market, what effect is this going to have regarding a tremendous spike in yields during this process?&nbsp;</p> </div> <div class="MsoNormal" style="font-family: 'Times New Roman'; font-size: medium; line-height: normal;"> <p style="margin: 0px;">&nbsp;</p> </div> <div class="MsoNormal" style="font-family: 'Times New Roman'; font-size: medium; line-height: normal;"> <p style="margin: 0px;"><strong><span style="font-size: 12pt; line-height: 18.399999618530273px;">Paper Gains on Bank`s Balance Sheets Likely to Reverse to Actual Losses Again</span></strong></p> </div> <div class="MsoNormal" style="font-family: 'Times New Roman'; font-size: medium; line-height: normal;"> <p style="margin: 0px;">&nbsp;</p> </div> <p class="separator" style="margin: 0px; font-family: 'Times New Roman'; font-size: medium; line-height: normal; clear: both; text-align: center;"><strong><a href="http://2.bp.blogspot.com/-J9KO-8h7a0I/VAIKRavfoSI/AAAAAAAAEMA/E9hTU-DIllM/s1600/portugal-government-debt-to-gdp.png" style="margin-left: 1em; margin-right: 1em;"><img src="https://images-blogger-opensocial.googleusercontent.com/gadgets/proxy?url=http%3A%2F%2F2.bp.blogspot.com%2F-J9KO-8h7a0I%2FVAIKRavfoSI%2FAAAAAAAAEMA%2FE9hTU-DIllM%2Fs1600%2Fportugal-government-debt-to-gdp.png&amp;container=blogger&amp;gadget=a&amp;rewriteMime=image%2F*" width="640" height="292" border="0" style="cursor: move;" /></a></strong></p> <p style="margin: 0px; font-family: 'Times New Roman'; font-size: medium; line-height: normal;">&nbsp;</p> <table class="tr-caption-container" style="padding: 6px; margin-bottom: 0.5em; font-family: 'Times New Roman'; margin-left: auto; margin-right: auto; text-align: center;" cellspacing="0" cellpadding="0" align="center"> <tbody> <tr> <td> <p style="margin: 0px;"><a href="http://1.bp.blogspot.com/-QtPZB_IhWZU/VAIKad6uctI/AAAAAAAAEMI/qS1WPD_0gso/s1600/portugal-government-bond-yield.png" style="margin-left: auto; margin-right: auto;"><img src="https://images-blogger-opensocial.googleusercontent.com/gadgets/proxy?url=http%3A%2F%2F1.bp.blogspot.com%2F-QtPZB_IhWZU%2FVAIKad6uctI%2FAAAAAAAAEMI%2FqS1WPD_0gso%2Fs1600%2Fportugal-government-bond-yield.png&amp;container=blogger&amp;gadget=a&amp;rewriteMime=image%2F*" width="640" height="292" border="0" style="cursor: move;" /></a></p> </td> </tr> <tr> <td class="tr-caption" style="font-size: 12.727272033691406px; padding-top: 4px;"> <p style="margin: 0px;">Portugal 10 Year Bond Yield</p> </td> </tr> </tbody> </table> <div class="MsoNormal" style="font-family: 'Times New Roman'; font-size: medium; line-height: normal;"> <p style="margin: 0px;">Remember so far these banks and financial players have gained ‘paper gains’ on their books, they of course book the yield profits, but these are small relative to the price moves in these bonds. However the bonds are still on their books and nothing has changed in Europe and in reality many of these ‘paper gains’ on the books will reverse themselves. In many cases any financial institution who bought bonds over the last year in Europe at extremely high historical prices relative to recent history and the dire fundamentals of Europe from a debt to GDP standpoint is going to incur massive losses on these bonds that make the banks themselves extremely vulnerable to collapse. Basically needing to be bailed out all over again, i.e., the collapse of the Spanish Real Estate market, and the after effects of all this bad debt on bank`s balance sheets who had exposure to the overbuilding in Spain.&nbsp;</p> </div> <div class="MsoNormal" style="font-family: 'Times New Roman'; font-size: medium; line-height: normal;"> <p style="margin: 0px;">&nbsp;</p> </div> <div class="MsoNormal" style="font-family: 'Times New Roman'; font-size: medium; line-height: normal;"> <p style="margin: 0px;"><strong><span style="font-size: 12pt; line-height: 18.399999618530273px;">The Problem with Accumulating Assets without regard to Fundamental Value means these Assets are Forever Stuck on the Bank`s Books – Nobody will buy them when they need to sell</span></strong></p> </div> <div class="MsoNormal" style="font-family: 'Times New Roman'; font-size: medium; line-height: normal;"> <p style="margin: 0px;">&nbsp;</p> </div> <p class="separator" style="margin: 0px; font-family: 'Times New Roman'; font-size: medium; line-height: normal; clear: both; text-align: center;"><strong><a href="http://2.bp.blogspot.com/-DEMut2kxTh4/VAIK0mqJ2rI/AAAAAAAAEMQ/hW8lCQ3YWyM/s1600/france-government-debt-to-gdp.png" style="margin-left: 1em; margin-right: 1em;"><img src="https://images-blogger-opensocial.googleusercontent.com/gadgets/proxy?url=http%3A%2F%2F2.bp.blogspot.com%2F-DEMut2kxTh4%2FVAIK0mqJ2rI%2FAAAAAAAAEMQ%2FhW8lCQ3YWyM%2Fs1600%2Ffrance-government-debt-to-gdp.png&amp;container=blogger&amp;gadget=a&amp;rewriteMime=image%2F*" width="640" height="292" border="0" style="cursor: move;" /></a></strong></p> <p style="margin: 0px; font-family: 'Times New Roman'; font-size: medium; line-height: normal;">&nbsp;</p> <table class="tr-caption-container" style="padding: 6px; margin-bottom: 0.5em; font-family: 'Times New Roman'; margin-left: auto; margin-right: auto; text-align: center;" cellspacing="0" cellpadding="0" align="center"> <tbody> <tr> <td> <p style="margin: 0px;"><a href="http://1.bp.blogspot.com/-rW9xHY4jGE8/VAILDJZekKI/AAAAAAAAEMY/woy1bkYpuF8/s1600/france-government-bond-yield.png" style="margin-left: auto; margin-right: auto;"><img src="https://images-blogger-opensocial.googleusercontent.com/gadgets/proxy?url=http%3A%2F%2F1.bp.blogspot.com%2F-rW9xHY4jGE8%2FVAILDJZekKI%2FAAAAAAAAEMY%2Fwoy1bkYpuF8%2Fs1600%2Ffrance-government-bond-yield.png&amp;container=blogger&amp;gadget=a&amp;rewriteMime=image%2F*" width="640" height="292" border="0" style="cursor: move;" /></a></p> </td> </tr> <tr> <td class="tr-caption" style="font-size: 12.727272033691406px; padding-top: 4px;"> <p style="margin: 0px;">France 10 Year Bond Yield</p> </td> </tr> </tbody> </table> <div class="MsoNormal" style="font-family: 'Times New Roman'; font-size: medium; line-height: normal;"> <p style="margin: 0px;">But based just on the fact that bond investors have no real clue what any of these bonds should be priced at just in a two year period, I have no confidence that their models over a ten year time period have any validity or insight regarding valuations and sound investment decisions. It seems more likely that somebody in Europe is going to have to take huge haircuts on these bond positions, as unlike Japan Europe relies on external funding for these bonds. It seems like the likely scenario is that yields start rising slowly at first with the extinction of the massive US QE program in October by the Federal Reserve. And pick up steam as the ECB cannot deliver relative to the expectations already priced into European Bonds, and then the technicals take over fueled by the reality that Europe was never fixed. This leads to the same scenario for these bonds getting ‘re-priced’ back into the bond market that we had just two short years ago. That most of these bondholders will have to take massive haircuts on these positions, and in two to five years European bonds are back pushing the upper limits of yield once again on an increased insolvency risk profile or EU breakup entirely.</p> </div> <div class="MsoNormal" style="font-family: 'Times New Roman'; font-size: medium; line-height: normal;"> <p style="margin: 0px;">&nbsp;</p> </div> <div class="MsoNormal" style="font-family: 'Times New Roman'; font-size: medium; line-height: normal;"> <p style="margin: 0px;">&nbsp;<strong><span style="font-size: 12pt; line-height: 18.399999618530273px;">The German Bund is a Long-Term Short over 10-Year Duration</span></strong></p> </div> <div class="MsoNormal" style="font-family: 'Times New Roman'; font-size: medium; line-height: normal;"> <p style="margin: 0px;">&nbsp;</p> </div> <div class="MsoNormal" style="font-family: 'Times New Roman'; font-size: medium; line-height: normal;"> <p style="margin: 0px;">But the one thing that is certain is European bonds are not properly priced today on any scenario. There is a high probability that these bonds are completely worthless in ten years for some of these countries, the math just doesn’t work out in some of these peripheral countries. The German Bund also looks like a short at least back to 1.2% from the current 0.88 % yield for the 10-year duration as the market has really gotten ahead of itself in a slow summer, and as markets often do overshoot based upon one-sided momentum trading.&nbsp;</p> </div> <div class="MsoNormal" style="font-family: 'Times New Roman'; font-size: medium; line-height: normal;"> <p style="margin: 0px;">&nbsp;</p> </div> <div class="MsoNormal" style="font-family: 'Times New Roman'; font-size: medium; line-height: normal;"> <p style="margin: 0px;"><strong><span style="font-size: 12pt; line-height: 18.399999618530273px;">European Bonds Biggest Bubble in a World of Mispriced Assets</span></strong></p> </div> <div class="MsoNormal" style="font-family: 'Times New Roman'; font-size: medium; line-height: normal;"> <p style="margin: 0px;">&nbsp;</p> </div> <div class="MsoNormal" style="font-family: 'Times New Roman'; font-size: medium; line-height: normal;"> <p style="margin: 0px;">I would also reiterate that most of these European bonds are massive shorts, just take positions, be able to stay in these markets for ten years, and most of these bonds are going to ‘re-price’ back to the fundamentals of Europe and a sustainable risk profile. Any investor buying European bonds at these prices is going to lose money on this investment when they have to sell these same bonds in an escalating yield environment.&nbsp;</p> </div> <div class="MsoNormal" style="font-family: 'Times New Roman'; font-size: medium; line-height: normal;"> <p style="margin: 0px;">&nbsp;</p> </div> <div class="MsoNormal" style="font-family: 'Times New Roman'; font-size: medium; line-height: normal;"> <p style="margin: 0px;"><strong><span style="font-size: 12pt; line-height: 18.399999618530273px;">More Money Has Been Lost Chasing Yield the last 10 Years than any other Investment Strategy – Yet it Remains one of the most popular – so much for “Prudential Regulation” Janet Yellen as being an Effective Tool for Containing Risk to the Financial System</span></strong></p> </div> <div class="MsoNormal" style="font-family: 'Times New Roman'; font-size: medium; line-height: normal;"> <p style="margin: 0px;">&nbsp;</p> </div> <div class="MsoNormal" style="font-family: 'Times New Roman'; font-size: medium; line-height: normal;"> <p style="margin: 0px;">Remember you haven`t made money on a trade until the position is officially closed out, good luck buying European bonds in the biggest bubble of the vast universe of bubbles that currently exist in the financial universe that we find ourselves in due to incompetent Central Banks, matched only by incompetent governments who spend more than they can possibly take in regarding revenue, all cheered on by irresponsible banks who want their investment risk subsidized by others. I am a finance guy, and the math ultimately has to make sense, and it just doesn`t make any sense in Europe, and unlike the United States, the margin of error for Europe is not nearly as big to fall back on!</p> </div> <p style="margin: 0px; font-family: 'Times New Roman'; font-size: medium; line-height: normal;">&nbsp;</p> <p style="margin: 0px; font-family: 'Times New Roman'; font-size: medium; line-height: normal;">©&nbsp;<a href="http://www.econmatters.com/">EconMatters</a>&nbsp;All Rights Reserved |&nbsp;<a href="http://www.facebook.com/EconMatters">Facebook</a>&nbsp;|&nbsp;<a href="http://twitter.com/#!/EconMatters">Twitter</a>&nbsp;|&nbsp;<a href="http://feedburner.google.com/fb/a/mailverify?uri=EconForecast">Email Subscribe</a>&nbsp;|&nbsp;<a href="http://astore.amazon.com/econforecast-20?_encoding=UTF8&amp;node=80">Kindle</a></p> http://www.zerohedge.com/news/2014-08-30/were-european-bonds-mispriced-2012-or-are-they-now#comments 10 Year Bond Belgium Bond Central Banks Deficit Spending Federal Reserve fixed France Front Running Germany Ireland Italy Janet Yellen Japan Portugal Real estate Reality Twitter Twitter Sat, 30 Aug 2014 20:36:16 +0000 EconMatters 493729 at http://www.zerohedge.com This Is How ISIS Is Building An Airforce http://www.zerohedge.com/news/2014-08-30/how-isis-building-airforce <p>The Islamic State is nothing if not ambitious. Despite <a href="http://www.zerohedge.com/news/2014-06-17/isis-stunner-terrorist-organizations-annual-reports-unveiled-reveal-full-investment-">no record of current &#39;airplane&#39; assets in their annual reports</a>, <strong>ISIS has begun detaining and forcing Syrian pilots to train militant fighters to fly stolen aircraft</strong>. <a href="http://english.alarabiya.net/en/News/middle-east/2014/08/30/ISIS-says-it-forces-abduct-pilots-to-train-fighters.html">According to CNN Arabic</a>, the pilots (and their planes and helicopters) were abducted when the terrorist group gained control of Tabqa military base. It appears that if beheadings, executions, and whippings are not enough to strike fear into the hearts of the locals, then (just as America is tryiung to do), an air assault will greatly demoralize. We can only imagine how this changes Obama&#39;s strategy (and just where are all the rest of Syria and Iraq&#39;s airplanes stored?)</p> <p>&nbsp;</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/08/20140830_ISIS2.jpg"><img height="378" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/08/20140830_ISIS2_0.jpg" width="600" /></a></p> <p>&nbsp;</p> <p><a href="http://english.alarabiya.net/en/News/middle-east/2014/08/30/ISIS-says-it-forces-abduct-pilots-to-train-fighters.html"><em>Via Al Arabiya,</em></a></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong>The Islamic State of Iraq and Syria said in a recent tweet it is forcing detained Syrian pilots to train militant fighters to fly stolen aircraft,</strong> CNN Arabic reported on Saturday.</p> <p>&nbsp;</p> <p>In an account reportedly associated with the militant group, ISIS said in a tweet <strong>the pilots were abducted when the group gained control over the Tabqa military airbase in Raqqa Province.</strong></p> <p>&nbsp;</p> <p>ISIS seized the airbase earlier this month. <strong>The major airfield houses warplanes, helicopters, tanks and other artillery and ammunition, which were also confiscated by ISIS, according to several media reports.</strong></p> <p>&nbsp;</p> <p>ISIS did not provide any information about the nature of the training, according to CNN Arabic.</p> </blockquote> <p>*&nbsp; *&nbsp;&nbsp; *</p> <p><a href="http://www.nytimes.com/2014/08/25/world/middleeast/isis-militants-capture-air-base-from-syrian-government-forces.html?_r=0">As NYTimes reported</a>,</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>The fall of the Tabqa air base followed the group&rsquo;s seizing of two other Syrian military bases and gave it effective control of Raqqa Province, which abuts the Turkish border and whose capital city, Raqqa, has long served as the group&rsquo;s de facto headquarters.</p> <p>&nbsp;</p> <p>Photographs posted Sunday on Twitter accounts sympathetic to ISIS showed <strong>bearded fighters in the air base, standing next to a destroyed fighter jet and appearing to cut the head off a dead soldier.</strong></p> </blockquote> <p>*&nbsp; *&nbsp; *</p> <p>Some more of the &#39;loot&#39;</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/08/20140830_ISIS3.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/08/20140830_ISIS3_0.jpg" style="width: 600px; height: 377px;" /></a></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/08/20140830_ISIS1.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/08/20140830_ISIS1_0.jpg" style="width: 600px; height: 379px;" /></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="1006" height="633" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20140830_ISIS2.jpg?1409429013" /> </div> </div> </div> http://www.zerohedge.com/news/2014-08-30/how-isis-building-airforce#comments Iraq Twitter Twitter Sat, 30 Aug 2014 20:04:38 +0000 Tyler Durden 493728 at http://www.zerohedge.com Past Fear, Present Fear http://www.zerohedge.com/news/2014-08-30/past-fear-present-fear <p style="line-height: 1.714285714; margin: 0px 0px 1.714285714rem; color: #444444; font-family: 'Open Sans', Helvetica, Arial, sans-serif; font-size: 14px;"><em><a href="http://slopeofhope.com/">From Slope of Hope</a></em>: I was looking at the entire history of the volatility index (the oft-cited "VIX') and found an interesting parallel. Take note of this chart</p> <p style="line-height: 1.714285714; margin: 0px 0px 1.714285714rem; color: #444444; font-family: 'Open Sans', Helvetica, Arial, sans-serif; font-size: 14px;"><img src="http://slopeofhope.com/wp-content/uploads/2014/08/0831-oldfix.png" alt="0831-oldfix" width="641" height="638" style="border-top-left-radius: 3px; border-top-right-radius: 3px; border-bottom-right-radius: 3px; border-bottom-left-radius: 3px; box-shadow: rgba(0, 0, 0, 0.2) 0px 1px 4px; max-width: 100%; height: auto;" class="alignnone size-full wp-image-37795" /></p> <p style="line-height: 1.714285714; margin: 0px 0px 1.714285714rem; color: #444444; font-family: 'Open Sans', Helvetica, Arial, sans-serif; font-size: 14px;">So what we have here is:</p> <p style="line-height: 1.714285714; margin: 0px 0px 1.714285714rem; color: #444444; font-family: 'Open Sans', Helvetica, Arial, sans-serif; font-size: 14px; padding-left: 30px;">+&nbsp;<strong>Cyan</strong>&nbsp;tint - a grinding, multi-year slide following the bursting of a gigantic bubble. In this instance, it was the bursting of the Internet bubble, and during Greenspan's deliberate inflation of the housing bubble, investors got calmer...........and calmer.</p> <p style="line-height: 1.714285714; margin: 0px 0px 1.714285714rem; color: #444444; font-family: 'Open Sans', Helvetica, Arial, sans-serif; font-size: 14px; padding-left: 30px;">+&nbsp;<strong>Yellow</strong>&nbsp;tint - The slide seemed to be over, and there was a period where fear seemed to be coming back. However, it really never seemed to take hold.</p> <p style="line-height: 1.714285714; margin: 0px 0px 1.714285714rem; color: #444444; font-family: 'Open Sans', Helvetica, Arial, sans-serif; font-size: 14px; padding-left: 30px;">+&nbsp;<strong>Magenta</strong>&nbsp;tint - Just when it seemed that fear was forever outlawed, and the VIX cracked briefly to lows never seen before (<strong>Grey</strong>&nbsp;tint), there was a sudden burst higher in volatility. In the case of February&nbsp;2007, it was when the Chinese stock market made a brief tumble.</p> <p style="line-height: 1.714285714; margin: 0px 0px 1.714285714rem; color: #444444; font-family: 'Open Sans', Helvetica, Arial, sans-serif; font-size: 14px; padding-left: 30px;">+&nbsp;<strong>Green</strong>&nbsp;tint - Nope, the fear index falls back again to similar levels it has been grinding around at for a while. The "VIX fix" seems to be permanent.</p> <p style="line-height: 1.714285714; margin: 0px 0px 1.714285714rem; color: #444444; font-family: 'Open Sans', Helvetica, Arial, sans-serif; font-size: 14px;">Now take a look at more recent history, and apply every single one of those descriptions to the chart below. The only difference I see is that the most recent burst (Magenta) was muted compared to the one from 2007.</p> <p style="line-height: 1.714285714; margin: 0px 0px 1.714285714rem; color: #444444; font-family: 'Open Sans', Helvetica, Arial, sans-serif; font-size: 14px;"><a href="http://slopeofhope.com/wp-content/uploads/2014/08/0831-newvix.png" style="color: #21759b; outline: none;"><img src="http://slopeofhope.com/wp-content/uploads/2014/08/0831-newvix.png" alt="0831-newvix" width="633" height="635" style="border-top-left-radius: 3px; border-top-right-radius: 3px; border-bottom-right-radius: 3px; border-bottom-left-radius: 3px; box-shadow: rgba(0, 0, 0, 0.2) 0px 1px 4px; max-width: 100%; height: auto;" class="alignnone size-full wp-image-37794" /></a></p> <p style="line-height: 1.714285714; margin: 0px 0px 1.714285714rem; color: #444444; font-family: 'Open Sans', Helvetica, Arial, sans-serif; font-size: 14px;">Of course, after nearly six years of this nonsense, even someone like me starts to worry that, for the first time in the history of the universe,&nbsp;<em>It&nbsp;Really&nbsp;<strong>Is</strong>&nbsp;Different This Time</em>. But, ummm, that's kind of what they&nbsp;<em>want</em>&nbsp;us to think, isn't it?</p> http://www.zerohedge.com/news/2014-08-30/past-fear-present-fear#comments Housing Bubble Slope of Hope Volatility Sat, 30 Aug 2014 19:25:41 +0000 Tim Knight from Slope of Hope 493727 at http://www.zerohedge.com It's Settled: Central Banks Trade S&P500 Futures http://www.zerohedge.com/news/2014-08-30/its-settled-central-banks-trade-sp500-futures <p>Based on the unprecedented collapse in trading volumes of cash products over the past 6 years, one thing has become clear: retail, and increasingly, institutional investors and traders are gone, probably for ever and certainly until the Fed's market-distorting central planning ends. However, one entity appears to have taken the place of conventional equity traders: central banks. </p> <p>Courtesy of an observation by <a href="https://twitter.com/nanexllc/status/505480919655141377/photo/1">Nanex's Eric Hunsader</a>, we now know, with certainty and beyond merely speculation by tinfoil fringe blogs, that central banks around the world trade (and by "trade" we mean <em>buy</em>) S&amp;P 500 futures such as the E-mini, in both futures and option form, as well as full size, and micro versions, in addition to the well-known central bank trading in Interest Rates, TSY and FX products. </p> <p>In fact, central banks <em>are such active traders</em>, that the CME Globex has its own "Central Bank Incentive Program", designed to "incentivize" central banks to provide market liquidity, i.e., limit orders, by paying them (!) tiny rebates on every trade. Because central banks can't just print whatever money they need, apparently they need the CME to pay them to trade.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2014/08/CB%20incentive%20Program.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2014/08/CB%20incentive%20Program_0.jpg" width="600" height="1297" /></a></p> <p>&nbsp;</p> <p>So the next time you sell some E-minis, ask yourself: is the ECB on the other side? Or the BOE? Or, perhaps, you are selling S&amp;P 500 futures to Kuroda. Who knows: there is no paper trail anywhere, although a FOIA request and/or the discovery from a lawsuit, class action or otherwise, of the CME's central bank incentive program would likely yield some stunning results.</p> <p>But the only place where "discovery" would be by far the most interesting, is for the CME to disclose just which central banks provide, or take such as at 8am every morning when one market sell order takes out the entire bid staack, the most liquidity when it comes to central bank trades in "Metals Futures Contracts (Physicals)." </p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2014/08/CB%20incentive%20Program%20gold.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2014/08/CB%20incentive%20Program%20gold_0.jpg" width="600" height="142" /></a></p> <p>Because imagine the shock and awe if and when it is uncovered that the biggest <em><strong>active</strong></em> manipulators of gold are not some junior-level traders out of Britain's criminal bank cartel, but the central banks themselves.</p> <p>Finally, while the list above deals with international central banks "providing" ES liquidity, those wondering why the NY Fed is not on the list and just how the Fed's active trading team participates in the market without breaking the law, we have just one word: Citadel.</p> <p><em>Source: <a href="http://sirt.cftc.gov/sirt/sirt.aspx?Topic=TradingOrganizationRulesAD&amp;Key=28693">Modifications to Central Bank Incentive Program. CME/CBOT/NYMEX/COMEX #14-038</a></em></p> http://www.zerohedge.com/news/2014-08-30/its-settled-central-banks-trade-sp500-futures#comments BOE Central Banks Citadel FOIA Institutional Investors NYMEX World Trade Sat, 30 Aug 2014 19:11:06 +0000 Tyler Durden 493726 at http://www.zerohedge.com French President Says "There Is Risk Of War" As Europe Plans Additional Russia Sanctions http://www.zerohedge.com/news/2014-08-30/french-president-says-there-risk-war-europe-plans-additional-russia-sanctions <p>For months Europe had thought that mere verbal (and hollow) threats, populist posturing and propaganda would be enough to force Russia's Putin to back off and withdraw from the endless Ukraine escalation, into a Kremlin cocoon with his tail between his legs. What they didn't anticipate was that Putin would in no way back down (as that would be seen as defeat and weakness by his numerous internal foes), nor would have have to: with Russia providing a third of European gas and with winter approaching, Russia had all the trumps cards from day one. Furthermore, as a result of escalating trade wars it is not Russia's economy that is hurting but Europe, which is on the verge of a historic triple-dip recession, only unlike 2010 and 2012, this time it is Europe's growth dynamo, Germany, itself which is leading the lemmings into the abyss. </p> <p>Now, finally, Europe has realized that its "strategy" (if it ever had one, red: Obama's 'strategy' on dealing with ISIS) was flawed. It is with this mindset that European Union leaders met in Brussels earlier today and while, as usual, the the threat of new and improved sanctions to Russia was present, suddenly Europe's leaders seem far more "fearful of a new Cold War and self-inflicted harm to their own economies" and instead decided to give Moscow another chance to make peace according to Reuters.</p> <p>Confirming Europe's realization just how serious events are, and how far down the rabbit hole Europe's bureaucrats have gone, French President Francois Hollande, while stressing that a failure by Russia to reverse a flow of weapons and troops into eastern Ukraine would force the bloc to impose new economic measures i.e., nothing new, it is what he said just after that indicated a dramatic change in rhetoric:<strong> "Are we going to let the situation worsen, until it leads to war?</strong>" Hollande said at a news conference. <strong>"Because that's the risk today. There is no time to waste</strong>."</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2014/08/poroshenko%20gollum.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2014/08/poroshenko%20gollum.jpg" width="554" height="390" /></a></p> <p>Because when Europe, the cradle of both World War I and II talks war, it is a good idea to listen. </p> <p>Of course, the problem of hypocrisy promptly emerges, because it is France whose mistral amphibious assault ship is being delivered to Russia over the objections of both Germany (whose own military export complex has quite a few pending RFPs to the Kremlin) and of course Washington. That, and the fact that it is Europe's actions that have led the situation to the bring of another world war. Actions such as the expansion of NATO to Russia's borders which the Kremlin, justifiably, sees as yet another offensive intrusion by the west into purely regional matters, because last time anyone checked, Ukraine was neither a member of NATO nor the European Union. </p> <p>The paradoxical hypocrisy continued when none other than British PM, who has been teasing with pulling the UK out of Europe for months over the election of Jean-Claude "<em>You have to lie pretty much all the time in Europe</em>" Juncker, also spoke on behalf of a united Europe. <a href="http://www.reuters.com/article/2014/08/30/us-eu-summit-idUSKBN0GU0C220140830">From Reuters</a>:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>British Prime Minister David Cameron said: "<strong>We have to address the completely unacceptable situation of having Russian troops on Ukrainian soil. Countries in Europe shouldn't need to think long before realising just how unacceptable that </strong>is. We know that from our history.</p> <p>&nbsp;</p> <p>"So consequences must follow if that situation continues."</p> </blockquote> <p>Consequences such as pushing Germany into outright depression, which in turn would lead to a global economic contraction? Sure, go ahead, but keep in mind that once again Putin has done his homework. Unless, of course, the entire premise is to launch another round of global coordinated QEasing, and this time blame the Kremlin as the "scapegoat" for thrusting the world into at least one more year of unprecedented Reverse Robin Hood wealth redistribution by way of central banks.</p> <p>Meanwhile, Europe's hawkish warmongers had free reign today to tell the world how they really feel:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>The president of formerly Soviet Lithuania, an outspoken critic of Vladimir Putin and of EU hesitation to challenge him, called for urgent military supplies to Kiev and a tougher arms embargo on Russia. Dalia Grybauskaite said Moscow, by attacking Ukraine, was effectively "in a state of war against Europe".</p> <p>&nbsp;</p> <p>But large Western countries are wary of damaging their own economies through sanctions. Those include Germany, Britain and France, as well as Italy, which is heavily dependent on Russian gas and expects to secure the post of EU foreign affairs chief. Poroshenko gave short shrift to Moscow's denials by denouncing the past week's incursion of thousands of troops with hundreds of armoured vehicles and said he expected the summit to order the European Commission to prepare a new set of sanctions.</p> <p>&nbsp;</p> <p>But, like Commission President Jose Manuel Barroso, he used their joint news conference to stress a will to find a political solution to a crisis that President Putin blames on Kiev's drive to turn the ex-Soviet state away from its former master Moscow and toward a Western alliance with the EU and NATO.</p> <p>&nbsp;</p> <p>He said he was not looking for foreign military intervention and expected progress toward peace as early as Monday - because failure could push the conflict to a point of no return: "Let's not try to spark the new flame of war in Europe," he said.</p> <p>&nbsp;</p> <p><strong>Barroso also warned of the risk of a "point of no return" in stressing that EU leaders wanted to defuse the confrontation with their nuclear-armed neighbour.</strong></p> <p>&nbsp;</p> <p><strong>"It makes no sense to have ... a new Cold War," </strong>Barroso said. Further conflict would hurt all of Europe, he said, adding that sanctions were meant to push Moscow to talk. His Commission already had prepared a number of options for further measures.</p> </blockquote> <p>Europe may be shocked to learn that the Cold War never went away, but simply was on hiatus until the Russian bear and the Chinese dragon felt strong enough they can finally ascend to global superpower status, in the process sweeping away the insolvent west, and its reserve currency status. </p> <p>All that said, no pun intended, there was nothing actually decided today in Brussels, nor was any action taken, as is generically the case in Europe. In fact, the only thing that did happen is that as was known in advance, moments ago Polish Prime Minister Donald Tusk replaced Haiku-spewing, unelected Gollum lookalike Herman Van Rompuy, a well-known figurehead from the days when Europe was actively fighting for its survival.</p> <blockquote class="twitter-tweet" lang="en"><p>Elected. The European Council has elected PM Donald Tusk as the next President of the European Council &amp; Euro Summits <a href="https://twitter.com/hashtag/EUCO?src=hash">#EUCO</a> <a href="https://twitter.com/premiertusk">@premiertusk</a></p> <p>— Herman Van Rompuy (@euHvR) <a href="https://twitter.com/euHvR/statuses/505768578852069376">August 30, 2014</a></p></blockquote> <script src="//platform.twitter.com/widgets.js"></script><p>With Tusk, a conservative easterner, replacing the Belgian Van Rompuy, Italian Foreign Minister Federica Mogherini from the centre left would take over as the bloc's foreign policy chief, replacing Briton Catherine Ashton.</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>In overall charge of the executive Commission, in succession to Barroso, will be conservative former Luxembourg premier Jean-Claude Juncker, appointed at a stormy summit two months ago.</p> <p>&nbsp;</p> <p><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2014/08/mogherini_0.jpg" width="554" height="381" /></p> <p>&nbsp;</p> <p>Eastern leaders, alarmed by a resurgent Moscow, had resisted the appointment of Mogherini at that time. At 41 and in government only since February, they saw her as lacking the political experience and weight to stand up to the Kremlin and also handicapped by Italy's dependence on Russian energy.</p> </blockquote> <p>In fact, while Europe's powerlessness to do anything to halt Putin's advance is well-known, the most interesting aspect of today's meeting that left Belgian caterers that much richer, was the horsetrading of hollow, bureaucratic figureheads at the top: something Europe also excels at.</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>Britain, France, Germany and other countries are competing to see their nominees secure important portfolios in Juncker's team, such as in economic affairs, trade and energy supply.</p> <p>&nbsp;</p> <p>The horse-trading over jobs underlines the power of rival national governments over the supranational institutions of the EU. Proponents of a strong political leadership in Brussels that can inspire and rally an increasingly sceptical European public behind the common project may again be left disappointed.</p> <p>&nbsp;</p> <p>Italian Prime Minister Matteo Renzi said on Friday he would propose a meeting to discuss tackling the "really worrying" economic situation across Europe, with growth and jobs elusive and fears of a new crisis for the euro currency.</p> <p>&nbsp;</p> <p>The leaders agreed to schedule that summit for Oct. 7, according to the draft statement.</p> </blockquote> <p>And so on. </p> <p>To summarize: more worthless power moves, more hollow rhetoric and threats, more verbal escalation; nothing else. </p> <p>In fact, the most notable comment all day today came from Hungarian Premier Viktor Orban <strong>who said that EU sanctions on Russia haven’t worked and it’s "self-delusion" to think they’ll help resolve the crisis in Ukraine. </strong></p> <p>Well, if there is anything Europe, and its allegedly unlimited but certainly very limited amount of <a href="http://www.zerohedge.com/news/2013-04-04/mario-draghi-responds-zero-hedge-there-no-plan-b">political capital </a>spent to preserve an unsustainable, artificial union, excels in it is "self-delusion."</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="554" height="390" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/poroshenko%20gollum.jpg?1409421741" /> </div> </div> </div> http://www.zerohedge.com/news/2014-08-30/french-president-says-there-risk-war-europe-plans-additional-russia-sanctions#comments Central Banks European Union France Germany Italy Lithuania None Recession Reserve Currency Reuters Trade Wars Ukraine Vladimir Putin Sat, 30 Aug 2014 18:03:25 +0000 Tyler Durden 493725 at http://www.zerohedge.com