http://www.zerohedge.com/fullrss2.xml/PhoneBook/_http en The Three Lives Of Alan Greenspan... And Why The Third Won't Redeem The Second http://www.zerohedge.com/news/2017-02-19/three-lives-alan-greenspan-and-why-third-wont-redeem-second <p><a href="http://dollarcollapse.com/monetary-policy-2/three-seasons-greenspan-cant-save-rep/"><em>Submitted by John Rubino via DollarCollapse.com,</em></a></p> <p>When the history of these times is written, former Fed Chair <strong>Alan Greenspan will be one of the major villains, </strong>but also one of the greatest mysteries. This is so because <strong>he has, in effect, been three different people. </strong></p> <p><strong>He began public life brilliantly, as a libertarian thinker who said some compelling and accurate things about gold and its role in the world.</strong> An example from 1966:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>An almost hysterical antagonism toward the gold standard is one issue which unites statists of all persuasions. They seem to sense &ndash; perhaps more clearly and subtly than many consistent defenders of laissez-faire &ndash; that gold and economic freedom are inseparable, that the gold standard is an instrument of laissez-faire and that each implies and requires the other&hellip;</p> <p>&nbsp;</p> <p>&hellip;In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold [in 1934 under FDR]. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.</p> <p>&nbsp;</p> <p>This is the shabby secret of the welfare statists&rsquo; tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists&rsquo; antagonism toward the gold standard.</p> </blockquote> <p><strong>Awesome, right? But when put in charge of the Federal Reserve in the late 1980s, instead of applying the above wisdom &mdash; by for instance limiting the bank&rsquo;s interference in the private sector and letting market forces determine winners and losers &mdash; he did a full 180</strong>, intervening in every crisis, creating new currency with abandon, and generally behaving like his old ideological enemies, the Keynesians. Not surprisingly, debt soared during his long tenure.</p> <p><a href="http://i2.wp.com/dollarcollapse.com/wp-content/uploads/2017/02/US-total-debt-to-GDP-Feb-17.jpg"><img class="aligncenter size-full wp-image-14224" height="366" src="http://i2.wp.com/dollarcollapse.com/wp-content/uploads/2017/02/US-total-debt-to-GDP-Feb-17.jpg?resize=600%2C366" width="600" /></a></p> <p>Along the way he was instrumental in preventing regulation of credit default swaps and other derivatives that nearly blew up the system in 2008. His view of those instruments:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>The reason that growth has continued despite adversity, or perhaps because of it, is that these new financial instruments are an increasingly important vehicle for unbundling risks. These instruments enhance the ability to differentiate risk and allocate it to those investors most able and willing to take it. This unbundling improves the ability of the market to engender a set of product and asset prices far more calibrated to the value preferences of consumers than was possible before derivative markets were developed. The product and asset price signals enable entrepreneurs to finely allocate real capital facilities to produce those goods and services most valued by consumers, a process that has undoubtedly improved national productivity growth and standards of living.</p> </blockquote> <p>He cut interest rates to near-zero in the early 2000s, igniting the housing bubble &ndash; which he was unable to detect along the way. He even made it into the dictionary, as the &ldquo;Greenspan put&rdquo; became the term for government bailing out its Wall Street benefactors.</p> <p>From this the leveraged speculating community learned that no risk was too egregious and no profit too large, because government &ndash; that is, the Fed &ndash; had eliminated all the worst-case scenarios. Put another way, under Greenspan profit was privatized but loss was socialized.</p> <p><strong>Greenspan retired from the Fed in 2006 and, miraculously, began morphing back into his old libertarian self. </strong>A cynic might detect a desire to avoid the consequences of his past actions, while a neurologist might suspect senility. But either way the transformation is breathtaking. Consider this from yesterday:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><h2><a href="http://www.kitco.com/news/2017-02-17/Gold-Standard-Needed-Now-More-Than-Ever-Alan-Greenspan-Comments.html" target="_blank">Gold Standard Needed Now More Than Ever? &ndash; Alan Greenspan Comments</a></h2> <p>(Kitco News) &ndash; It would be best not to be short-sighted when it comes to gold; at least that is what one former Fed chair says.</p></blockquote> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&ldquo;[T]he risk of inflation is beginning to rise&hellip;Significant increases in inflation will ultimately increase the price of gold,&rdquo; noted Alan Greenspan, Federal Reserve chairman from 1987 to 2006, in an interview published in the World Gold Council&rsquo;s Gold Investor February issue.</p> <p>&nbsp;</p> <p>&ldquo;Investment in gold now is insurance. It&rsquo;s not for short-term gain, but for long-term protection.&rdquo;</p> <p>&nbsp;</p> <p>However, it is really the idea of returning to a gold standard that Greenspan focused on &mdash; a gold standard that he said would help mitigate risks of an &ldquo;unstable fiscal system&rdquo; like the one we have today.</p> <p>&nbsp;</p> <p>&ldquo;Today, going back on to the gold standard would be perceived as an act of desperation. But if the gold standard were in place today, we would not have reached the situation in which we now find ourselves,&rdquo; he said.</p> <p>&nbsp;</p> <p>&ldquo;We would never have reached this position of extreme indebtedness were we on the gold standard, because the gold standard is a way of ensuring that fiscal policy never gets out of line.&rdquo;</p> <p>&nbsp;</p> <p>To Greenspan, the reason why the gold standard hasn&rsquo;t worked in the past actually has nothing to do with the metal itself.</p> <p>&nbsp;</p> <p>&ldquo;[T]here is a widespread view that the 19th Century gold standard didn&rsquo;t work. I think that&rsquo;s like wearing the wrong size shoes and saying the shoes are uncomfortable!&rdquo; he said. &ldquo;It wasn&rsquo;t the gold standard that failed; it was politics.&rdquo;</p> </blockquote> <p><strong>One of the nice things about the information age is that public figures leave long paper trails and can&rsquo;t therefore easily escape their pasts. Greenspan&rsquo;s past, being perhaps the best documented of any central banker in history, will haunt him forever.</strong></p> <p>But hey, at least he&rsquo;s going out a gold bug.</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="276" height="142" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20170219_greengold.jpg?1487524507" /> </div> </div> </div> http://www.zerohedge.com/news/2017-02-19/three-lives-alan-greenspan-and-why-third-wont-redeem-second#comments Alan Greenspan Alan Greenspan Business Classical liberalism Copper Credit Default Swaps default Deficit Spending Economic liberalism Economy Faire Federal Reserve Freemen of the City of London Gold Gold standard Housing Bubble Laissez-faire Political philosophy Politics Purchasing Power Social philosophy US Federal Reserve World Gold Council World Gold Council Mon, 20 Feb 2017 01:20:00 +0000 Tyler Durden 588572 at http://www.zerohedge.com Trump Administration Toughens Asylum Rules, Speeds Deportation Process http://www.zerohedge.com/news/2017-02-19/trump-administration-toughens-asylum-rules-speeds-deportation-process <p>Amid judicial blockages, and <a href="http://www.zerohedge.com/news/2017-02-19/rogue-border-agents-resist-trump-orders-continue-obamas-catch-and-release-policy">rogue border agents,</a> it appears the Trump administration is still trying its best to follow through on its campaign promises to crackdown on illegal immigration. As<a href="http://www.reuters.com/article/us-usa-immigration-asylum-idUSKBN15Y04A"> Reuters reports</a>, The Department of Homeland Security has prepared <strong>new guidance for immigration agents aimed at speeding up deportations by denying asylum claims earlier in the process</strong>.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/02/13/20170214_ICE.jpg"><img height="380" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/02/13/20170214_ICE_0.jpg" width="600" /></a></p> <p><a href="http://www.zerohedge.com/news/2017-02-14/trump-begins-crackdown-dreamers-we-are-hoping-detention-was-mistake">Following last week&#39;s apparent crackdown on DREAMers</a>, <a href="http://www.reuters.com/article/us-usa-immigration-asylum-idUSKBN15Y04A">Reuters reports</a> new guidelines, contained in a draft memo dated February 17 but not yet sent to field offices, <strong>directs agents to only pass applicants who have a good chance of ultimately getting asylum</strong>, but does not give specific criteria for establishing credible fear of persecution if sent home.</p> <p><strong>The guidance instructs asylum officers to &quot;elicit all relevant information&quot; in determining whether an applicant has &ldquo;credible fear&rdquo; of persecution if returned home</strong>, the first obstacle faced by migrants on the U.S.-Mexico border requesting asylum.</p> <p>Three sources familiar with the drafting of the guidance said the goal of the <strong>new instructions is to raise the bar on initial screening</strong>.</p> <p>The administration&#39;s plan is to<strong> leave wide discretion to asylum officers </strong>by allowing them to determine which applications have a &quot;significant possibility&quot; of being approved by an immigration court, the sources said.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/02/19/20170219_immigration2.jpg"><img height="1017" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/02/19/20170219_immigration2_0.jpg" width="600" /></a></p> <p>&nbsp;</p> <p>Furthermore, as <a href="https://www.wsj.com/articles/u-s-proposal-considers-prosecuting-parents-helping-children-entering-country-illegally-1487471291">The Wall Street Journal reports</a>, <strong>parents and others who help children travel illegally to the U.S. would be subject to deportation or prosecution under new Trump administration policies being completed,</strong> according to a second leaked memo prepared by the Department of Homeland Security.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>The draft memo also indicates people from countries other than Mexico trying to cross the southern U.S. border illegally could be returned to Mexico to await legal proceedings, while others would be held in detention centers.</p> <p>&nbsp;</p> <p><strong>The memo directs that those apprehended at the border be detained, or jailed, until their cases are heard, unless they first establishes a &ldquo;credible fear&rdquo; of persecution, or meet other limited exceptions.</strong></p> <p>&nbsp;</p> <p>Leon Fresco, who headed the Justice Department&rsquo;s Office of Immigration Litigation under President Barack Obama, predicted many of these policies would meet resistance from courts, which are already reviewing smaller changes implemented under the previous administration.</p> <p>&nbsp;</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/02/19/20170219_immigration3.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/02/19/20170219_immigration3_0.jpg" style="width: 600px; height: 376px;" /></a></p> <p>&nbsp;</p> <p>He said he was particularly struck by the change in how children would be handled.</p> <p>&nbsp;</p> <p><em><strong>&ldquo;It is a complete 180 to move from a policy that focused on unaccompanied minors being placed into safe locations while their removal proceedings were pending to placing the custodians of unaccompanied minors into removal proceedings,&rdquo; he said. Even the smaller Obama version &ldquo;is already the subject of pending litigation in Los Angeles federal court and is likely going to be viewed with great skepticism by that court.&rdquo;</strong></em></p> </blockquote> <p>*&nbsp; *&nbsp; *</p> <p>Of course, as a reminder, these immigrants are illegally entering the country and this is what the American people voted for.</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="1186" height="744" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20170219_immigration3.jpg?1487536095" /> </div> </div> </div> http://www.zerohedge.com/news/2017-02-19/trump-administration-toughens-asylum-rules-speeds-deportation-process#comments Barack Obama Credible fear Cultural globalization Demography Department of Homeland Security Illegal immigration to the United States Immigration to the United States Justice Department’s office of Immigration Litigation Law Mexico Politics Reuters Social Issues southern U.S. Trump Administration Unaccompanied minor Wall Street Journal Mon, 20 Feb 2017 00:50:00 +0000 Tyler Durden 588581 at http://www.zerohedge.com The AP Asked Trump's Supporters How Feel About His War With The Press: This Is What It Found http://www.zerohedge.com/news/2017-02-19/ap-asked-trumps-supporters-how-feel-about-his-war-press-what-it-found <p>While vocal critics of Donald Trump, many of them members of the media, saw in Trump's Thursday news conference, Friday tweet in which he claimed the press was the "enemy of the American people", and subsequent Saturday campaign speech, a combative, thin-skinned chief executive who continues to blame the media for the controversies roiling his administration, his supporters saw something else entirely: a champion of Middle America who is taking on the establishment and making good on his campaign promises to put the country first.</p> <p>The Associated Press <a href="http://bigstory.ap.org/article/f6fa3a4a09874532b9e610535ae463e9/trump-supporters-cheer-his-combative-stance-media">contacted Trump supporters across the country </a>to see how they viewed Trump's latest fued with press. Here are the views of some of those supporters:</p> <p>* * * </p> <p>Richelle Kirk of Logan, West Virginia, watched some of Trump's news conference on Thursday and didn't see any head-scratching comments from the president.</p> <p>"I back him 100 percent," said the 42-year-old stay-at-home mom. "You either love it or get out, is my opinion."</p> <p>During Barack Obama's presidency, her husband was laid off from his coal-mining job, a loss they blamed on Obama's environmental policies. She said they lost a home and "everything we owned."</p> <p>After West Virginia voters resoundingly rejected Obama during his 2012 re-election, "we didn't show our hind ends when Obama was re-elected," Kirk said. So she believes people shouldn't overreact to Trump, either.</p> <p>She particularly agreed with the president when he took credit for an optimistic business climate and a rising stock market, saying Trump is beginning to fulfill his campaign promise to put people back to work.</p> <p>Reporters, she said, "need to leave him alone. He's just doing what he said he's going to do."</p> <p>* * * </p> <p>Kevin Felty of Norfolk, Virginia, said it was the "most impressive presidential press conference" of his life. "Largely because it was so unorthodox," said Felty, 48, who works as a surgical assistant and sells life insurance. "It was hyper adversarial between the president and the press. And yet he was able to control the questioning and the tone and the mood in the room."</p> <p>Felty said the media needs to move on regarding Russia and former national security adviser Michael Flynn. "There was nothing illegal that General Flynn had done at that time," Felty said. "What he did do is make a mistake in not being accurate with the vice president."</p> <p>He also said he believes Trump is trustworthy as president. "He doesn't need the media to chide him to make the right decisions," Felty said. "It's something he's been doing well for decades."</p> <p>* * * </p> <p>Regina Lenoir of Picayune, Mississippi, enjoyed watching Trump's news conference and said the president "looked more relaxed." Lenoir, 69, said she was most interested in the president's comments about the alleged leaks that led to the resignation of Michael Flynn as national security adviser.</p> <p>"We don't know the conversation that happened between him and (Vice President Mike) Pence. Only they know. But the news media gets out there (and) says such and such with no corroboration," she said. "I'm sick of them making up stories. You know, we're intelligent people. We can make up our own mind on whether they're telling the truth."</p> <p>She agreed with Trump's take on how the media has covered his administration and campaign, saying those covering his administration are good reporters but biased. She said if people gave Trump a chance, "he might just surprise everyone.</p> <p>"He wasn't my first choice, but he is my president," Lenoir said. "I think he handled the news conference very well."</p> <p>* * * </p> <p>Joseph Gatlin of Virginia Beach, Virginia, said he did not watch the news conference but heard about the question a Jewish reporter asked Trump about a rise in anti-Semitic incidents around the country. Trump told the reporter to sit down and said it was not a simple or fair question before describing himself as "the least anti-Semitic person you've ever seen in your entire life."</p> <p>Gatlin, who is Jewish and who was born in Israel, said the media needs to move on from "asking the same question."</p> <p>"He's not a racist. He doesn't believe in racism," said Gatlin, who owns a flooring company. "He's not anti-Semitic at all."</p> <p>Gatlin pointed to the number of Jewish people in Trump's inner circle, including his son-in-law and White House adviser, Jared Kushner. He said the media instead should be asking Trump about terrorism and the economy.</p> <p>"I think that it's become ridiculous," Gatlin said. "He wants the serious questions. He wants people to ask him questions that people care about. You can't mention racism in every speech. They're looking at the wrong things."</p> <p>* * * </p> <p>Scott Hiltgen, a 66-year-old office furniture sales broker from River Falls, Wisconsin, said he was glad to see the president push back against the media. He said reporters have no proof Trump or anyone around him did anything wrong.</p> <p>"They're trying to make up a story that Trump worked with the Russians to rig the election," he said. "Now they're trying to make a big deal out of (former national security adviser) Mike Flynn. He was doing what he was supposed to do. He was talking to his counterparts. He was talking to the Russians. He got fired because he lied to (Vice President Mike) Pence. There's no story there. The left media is so excited. They think they took this guy down. No, he made a mistake. He just lied."</p> <p>Hiltgen said he remains squarely behind the billionaire president because he has done what he said he would do on the campaign trail.</p> <p>"He's accomplished more in, whatever, three weeks, regarding the stuff he talked about," Hiltgen said. "That's what people voted for. I can't believe there's actually a politician doing what he says he would do. That never happens."</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="1150" height="667" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/trump%20supporter.jpg?1487522186" /> </div> </div> </div> http://www.zerohedge.com/news/2017-02-19/ap-asked-trumps-supporters-how-feel-about-his-war-press-what-it-found#comments American people of German descent American television Business Climate change skepticism and denial Donald Trump Donald Trump Donald Trump presidential campaign Foreign policy of Donald Trump Israel Jared Kushner Michael T. Flynn national security Political positions of Donald Trump Politics of the United States The Apprentice Trump: The Art of the Deal West Virginia White House White House WWE Hall of Fame Mon, 20 Feb 2017 00:41:53 +0000 Tyler Durden 588562 at http://www.zerohedge.com Fukushima Aborts Latest Robot Mission Inside Reactor; Radiation At "Unimaginable" Levels http://www.zerohedge.com/news/2017-02-19/fukushima-aborts-latest-robot-mission-inside-reactor-radiation-unimaginable-levels <p><a href="http://www.zerohedge.com/news/2015-04-12/contained-robot-dies-3-hours-after-entering-fukushima-reactor">Two years after sacrificing one robot</a>, TEPCO officials have<strong> aborted their latest robot mission inside the Fukushima reactor after the &#39;scorpion&#39; became unresponsive </strong>as it investigated the <a href="http://www.zerohedge.com/news/2017-02-03/tepco-admits-fukushima-radiation-levels-reach-record-highs-hole-reactor-discovered">previously discovered hole where the core is believed to have melted</a>.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/02/19/20170219_fuku1.jpg"><img height="318" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/02/19/20170219_fuku1.jpg" width="490" /></a></p> <p><strong>A &quot;scorpion&quot; robot sent into a Japanese nuclear reactor to learn about the damage suffered in a tsunami-induced meltdown had its mission aborted after the probe ran into trouble</strong>, Tokyo Electric Power company said Thursday. <a href="https://phys.org/news/2017-02-scorpion-robot-mission-fukushima-reactor.html">As Phys.org reports, </a>TEPCO, the operator of the Fukushima nuclear plant, sent the remote-controlled device into the No. 2 reactor where radiation levels have recently hit record highs.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>The &quot;scorpion&quot; robot, so-called because it can lift up its camera-mounted tail to achieve better viewing angles, is also designed to crawl over rubble inside the damaged facility.</p> <p>&nbsp;</p> <p>But it could not reach its target destination beneath a pressure vessel through which nuclear fuel is believed to have melted because the robot had difficulty moving, a company spokeswoman said.</p> <p>&nbsp;</p> <p><strong>&quot;It&#39;s not immediately clear if that&#39;s because of radiation or obstacles,&quot;</strong> she said, adding that TEPCO is checking what data the robot was able to obtain, including images.</p> <p>&nbsp;</p> <p>...</p> <p>&nbsp;</p> <p>The robot, 60 centimetres (24 inches) long, is made by Toshiba and equipped with two cameras and sensors to gauge radiation levels and temperatures.</p> <p>&nbsp;</p> <p><strong>&quot;Scorpion&#39;s mission is to take images of the situation and collect data inside the containment vessel,&quot;</strong> TEPCO spokesman Shinichi Nakakuki said earlier.</p> <p>&nbsp;</p> <p>&quot;Challenges include enduring high levels of radiation and moving on the rough surface,&quot; he said.</p> <p>&nbsp;</p> <p><strong>Radiation levels inside the reactor were estimated last week at 650 sieverts per hour at one spot, which can effectively shut down robots in hours.</strong></p> </blockquote> <p><a href="http://www.zerohedge.com/news/2015-04-12/contained-robot-dies-3-hours-after-entering-fukushima-reactor">This is not the first robot to become disoriented</a> under the extreme stress of the Fukushima environment...</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong>The robot sent to inspect a reactor&#39; containment vessel at the Fukushima Daiichi nuclear power plant stopped responding three hours into the operation.</strong></p> <p>&nbsp;</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/04/20150412_fuku1.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/04/20150412_fuku1_0.jpg" style="width: 600px; height: 325px;" /></a></p> <p>&nbsp;</p> <p>TEPCO hoped to take a look inside the vessel containing one of the three reactors, which underwent a meltdown in the 2011 nuclear disaster.</p> <p>&nbsp;</p> <p>A group of approximately 40 workers sent the remotely-controlled device, <strong>allegedly capable of withstanding high levels of radiation,</strong> into the vessel at 11:20 a.m. The robot stopped functioning after covering two thirds of the route at approximately 2:10 p.m., according to the Tokyo Electric Power Co.</p> </blockquote> <p><a href="http://endoftheamericandream.com/archives/northern-hemisphere-potentially-in-great-danger-as-fukushima-radiation-spikes-to-unimaginable-levels"><em>But as Michael Snyder recently noted</em></a>, <strong>radiation inside one of the damaged reactors at the Fukushima nuclear power facility has reached an &ldquo;<a href="https://www.theguardian.com/environment/2017/feb/03/fukushima-daiichi-radiation-levels-highest-since-2011-meltdown" target="_blank" title="unimaginable">unimaginable</a>&rdquo; level according to experts.</strong> Because so much nuclear material from Fukushima escaped into the Pacific Ocean, there are many scientists that believe that it was the worst environmental disaster in human history, but most people in the general population seem to think that since the mainstream media really doesn&rsquo;t talk about it anymore that everything must be under control. Unfortunately, that is not true at all. In fact, PBS reported just last year that &ldquo;<a href="http://www.pbs.org/newshour/updates/fukushima-radiation-continues-to-leak-into-the-pacific-ocean/" target="_blank" title="it is incorrect to say that Fukushima is under control when levels of radioactivity in the ocean indicate ongoing leaks">it is incorrect to say that Fukushima is under control when levels of radioactivity in the ocean indicate ongoing leaks</a>&ldquo;. And now we have just learned that the radiation level inside reactor 2 is so high that no human could possibly survive being exposed to it.</p> <p>According to <a href="http://www.japantimes.co.jp/news/2017/02/03/national/fukushima-radiation-level-highest-since-march-11/#.WJfCufKEVka" target="_blank" title="the Japan Times">the Japan Times</a>, the level of radiation inside the containment vessel of reactor 2 is now estimated to be &ldquo;530 sieverts per hour&rdquo;&hellip;</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>The radiation level in the containment vessel of reactor 2 at the crippled Fukushima No. 1 power plant has reached a maximum of <strong>530 sieverts per hour</strong>, the highest since the triple core meltdown in March 2011, Tokyo Electric Power Co. Holdings Inc. said.</p> <p>&nbsp;</p> <p>Tepco said on Thursday that the blazing radiation reading was taken near the entrance to the space just below the pressure vessel, which contains the reactor core.</p> <p>&nbsp;</p> <p>The high figure indicates that some of the melted fuel that escaped the pressure vessel is nearby.</p> </blockquote> <p>It is hard to find the words to convey how serious this is.</p> <p>If you were exposed to a radiation level of just 10 sieverts per hour, that would mean almost certain death. So 530 sieverts per hour is simply off the charts. According to <a href="https://www.theguardian.com/environment/2017/feb/03/fukushima-daiichi-radiation-levels-highest-since-2011-meltdown" target="_blank" title="the Guardian">the Guardian</a>, <strong>this recent measurement is being described by scientists as &ldquo;unimaginable&rdquo;&hellip;</strong></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>The recent reading, described by some experts as &ldquo;unimaginable&rdquo;, is far higher than the previous record of 73 sieverts an hour in that part of the reactor.</p> <p>&nbsp;</p> <p>A single dose of one sievert is enough to cause radiation sickness and nausea; <strong>5 sieverts would kill half those exposed to it within a month, and a single dose of 10 sieverts would prove fatal within weeks</strong>.</p> </blockquote> <p>And the really bad news is that there appears to be a 2 meter hole that was created by melted nuclear fuel <a href="http://www.japantimes.co.jp/news/2017/02/03/national/fukushima-radiation-level-highest-since-march-11/#.WJfCufKEVka" target="_blank" title="“in the metal grating under the pressure vessel in the reactor’s primary containment vessel”">&ldquo;in the metal grating under the pressure vessel in the reactor&rsquo;s primary containment vessel&rdquo;</a>.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/02/01/20170203_fuku2.jpg"><img height="253" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/02/01/20170203_fuku2.jpg" width="600" /></a></p> <p>The following comes <a href="https://www.bloomberg.com/news/articles/2017-01-31/japan-homes-in-on-lost-nuclear-fuel-with-fukushima-reactor-pic" target="_blank" title="from Bloomberg">from Bloomberg</a>&hellip;</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>New photographs show what may be melted nuclear fuel sitting under one of Japan&rsquo;s wrecked Fukushima reactors, a potential milestone in the search and retrieval of the fuel almost six years after it was lost in one of the worst atomic disasters in history.</p> <p>&nbsp;</p> <p>Tokyo Electric Power Co. Holdings Inc., Japan&rsquo;s biggest utility, <a href="http://www.tepco.co.jp/nu/fukushima-np/handouts/2017/images1/handouts_170130_01-j.pdf" rel="nofollow noopener" target="_blank" title="Tepco presentation">released</a> images on Monday showing a grate under the Fukushima Dai-Ichi No. 2 reactor covered in black residue. The company, better known as Tepco, may send in a scorpion-like <a href="http://www.toshiba.co.jp/about/press/2015_06/pr3001.htm" rel="nofollow noopener" target="_blank" title="Toshiba">robot</a> as soon as February to determine the temperature and radioactivity of the residue.</p> </blockquote> <p>If that isn&rsquo;t frightening enough, one Japanese news source <a href="http://mainichi.jp/english/articles/20170131/p2a/00m/0na/007000c" target="_blank" title="is reporting">is reporting</a> that this melted nuclear fuel &ldquo;has since come in contact with underground water flowing from the mountain side&rdquo;&hellip;</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong>The melted fuel has since come in contact with underground water flowing from the mountain side, generating radioactively contaminated water every day</strong>. In order to dismantle the reactor, it is necessary to take out the melted fuel, but high radiation levels inside the reactor had hampered work to locate the melted debris.</p> </blockquote> <p>If this disaster was just limited to Japan, the entire northern hemisphere would not be at risk.</p> <p>But that is not the case.</p> <p>Most of the nuclear contamination from Fukushima ended up in the Pacific Ocean, and from there it was literally taken around the rest of the planet. The following was reported <a href="http://www.pbs.org/newshour/updates/fukushima-radiation-continues-to-leak-into-the-pacific-ocean/" target="_blank" title="by PBS">by PBS</a>&hellip;</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong>More than 80 percent of the radioactivity from the damaged reactors ended up in the Pacific</strong> &mdash; far more than reached the ocean from Chernobyl or Three Mile Island. Of this, a small fraction is currently on the seafloor &mdash; the rest was swept up by the Kuroshio current, a western Pacific version of the Gulf Stream, and carried out to sea where it mixed with (and was diluted by) the vast volume of the North Pacific.</p> </blockquote> <p>We don&rsquo;t know if there is a connection, but it is extremely interesting to note that fisheries up and down the west coast of the United States are failing because of a dramatic decrease in fish populations. Just check out the following excerpt from a story <a href="http://www.noaa.gov/news/commerce-secretary-pritzker-declares-fisheries-disasters-for-nine-west-coast-species" target="_blank" title="that was posted on January 18th">that was posted on January 18th</a>&hellip;</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>U.S. Secretary of Commerce Penny Pritzker today determined there are commercial fishery failures for nine salmon and crab fisheries in Alaska, California and Washington.</p> <p>&nbsp;</p> <p>In recent years, each of these fisheries experienced sudden and unexpected large decreases in fish stock biomass or loss of access due to unusual ocean and climate conditions. This <a href="http://www.fisheries.noaa.gov/sfa/management/disaster/index.html" target="_blank" title="decision">decision</a> enables fishing communities to seek disaster relief assistance from Congress.</p> </blockquote> <p>Things are particularly bad <a href="http://www.alaskajournal.com/2017-01-18/commerce-secretary-declares-pink-salmon-disaster#.WJfHIPKEVkb" target="_blank" title="up in Alaska">up in Alaska</a>, and biologists are &ldquo;stumped&rdquo; as to why this could be happening&hellip;</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>In 2016, the pink salmon harvests in Kodiak, Prince William Sounds, Chignik and lower Cook Inlet came in <a href="http://www.alaskajournal.com/2016-10-06/disastrous-harvest-pink-salmon#.WIfTdPM66Tl" target="_blank" title="woefully under forecast">woefully under forecast</a> and stumped biologists as to why.</p> <p>&nbsp;</p> <p><strong>The estimated value of Kodiak&rsquo;s 2016 haul was $2.21 million, compared to a five-year average of $14.64 million, and in Prince William Sound the ex-vessel value was $6.6 million, far less that the $44 million five-year average</strong>. The total state harvest was the smallest since the late 1970s.</p> <p>&nbsp;</p> <p>Although state biologists weren&rsquo;t ready to declare a cause for the poor pink salmon performance, the Commerce Department press release attributed the disasters to &ldquo;unusual ocean and climate conditions.&rdquo;</p> </blockquote> <p>Further south, it was being reported last month that <a href="http://translate.google.co.uk/translate?hl=en&amp;sl=es&amp;tl=en&amp;u=http%3A%2F%2Fwww.soychile.cl%2FChiloe%2FSociedad%2F2017%2F01%2F27%2F443572%2FQuemchi-varan-millones-de-sardinas-en-playa-de-Aucho.aspx&amp;sandbox=1" target="_blank" title="millions of dead sardines">millions of dead sardines</a> are washing up on the shores of Chile.</p> <p>I could go on and on with a lot more examples like this, but hopefully you get the point.</p> <p>Something really strange is happening in the Pacific, and a lot of people believe that there is a link to Fukushima.</p> <p>Not too long ago, I wrote about how the elite of Silicon Valley are &ldquo;<a href="http://themostimportantnews.com/archives/now-it-is-the-elite-that-are-feverishly-prepping-for-the-collapse-of-society" target="_blank" title="feverishly prepping">feverishly prepping</a>&ldquo;, but the truth is that all of us should be. If you need some tips on how to get started, you can find my prepping book <a href="http://amzn.to/2kIeabd" target="_blank" title="right here">right here</a>. Our planet is becoming increasingly unstable, and the Fukushima nuclear disaster is just one piece of the puzzle.</p> <p>But it is definitely a very important piece. The nuclear material from Fukushima is continuously entering the food chain, and once that nuclear material gets into our bodies it will slowly irradiate our organs for years to come. The following is an excerpt from an absolutely outstanding opinion piece by Helen Caldicott that was published <a href="http://www.guardian.co.uk/environment/2011/apr/11/nuclear-apologists-radiation" target="_blank" title="in the Guardian">in the Guardian</a>&hellip;</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>Internal radiation, on the other hand, emanates from radioactive elements which enter the body by inhalation, ingestion, or skin absorption. Hazardous radionuclides such as iodine-131, caesium 137, and other isotopes currently being released in the sea and air around Fukushima bio-concentrate at each step of various food chains (for example into algae, crustaceans, small fish, bigger fish, then humans; or soil, grass, cow&rsquo;s meat and milk, then humans). <strong>After they enter the body, these elements &ndash; called internal emitters &ndash; migrate to specific organs such as the thyroid, liver, bone, and brain, where they continuously irradiate small volumes of cells with high doses of alpha, beta and/or gamma radiation, and over many years, can induce uncontrolled cell replication &ndash; that is, cancer</strong>. Further, many of the nuclides remain radioactive in the environment for generations, and ultimately will cause increased incidences of cancer and genetic diseases over time.</p> </blockquote> <p>Are you starting to understand the gravity of the situation?</p> <p>Sadly, this crisis is going to be with us for a very, very long time.</p> <p><strong>According to <a href="https://www.bloomberg.com/news/articles/2017-01-31/japan-homes-in-on-lost-nuclear-fuel-with-fukushima-reactor-pic" target="_blank" title="Bloomberg">Bloomberg</a>, they are not even going to start removing melted nuclear fuel from these reactors until 2021, and it is being projected that the overall cleanup &ldquo;may take as long as 40 years&rdquo;&hellip;</strong></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>Decommissioning the reactors will cost 8 trillion yen ($70.4 billion), according to an estimate in December from the Ministry of Economy, Trade and Industry. Removing the fuel is one of the most important steps in a cleanup that may take as long as 40 years.</p> <p>&nbsp;</p> <p>The unprecedented nature of the Fukushima disaster means that Tepco is pinning its efforts on technology not yet invented to get the melted fuel out of the reactors.</p> <p>&nbsp;</p> <p>The company aims to decide on a fuel removal procedure for the first reactor during the fiscal year ending March 2019, and to begin removing fuel in 2021.</p> </blockquote> <p>A lot of people that end up dying as a result of this crisis may never even know that it was Fukushima that caused their deaths.</p> <p>Personally, I am <strong>convinced that this is the greatest environmental crisis that humanity has ever experienced, and if the latest reading from reactor 2 is any indication, things just took a very serious turn for the worse.</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="490" height="318" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20170219_fuku1.jpg?1487531864" /> </div> </div> </div> http://www.zerohedge.com/news/2017-02-19/fukushima-aborts-latest-robot-mission-inside-reactor-radiation-unimaginable-levels#comments Alpha Congress Containment building Department of Commerce Energy Environment Fukushima Daiichi nuclear disaster Fukushima Daiichi Nuclear Power Plant Japan Meltdown Ministry of Economy, Trade and Industry Nuclear and radiation accidents and incidents Nuclear meltdown Nuclear Power Nuclear power Nuclear reactor Nuclear technology radiation Scorpion's mission Three Mile Island Tokyo Electric Power Company West Coast Yen Mon, 20 Feb 2017 00:40:00 +0000 Tyler Durden 588577 at http://www.zerohedge.com America Is No Longer Top Dog: Chinese Military "Reaching Near-Parity" With The West http://www.zerohedge.com/news/2017-02-19/america-no-longer-top-dog-chinese-military-reaching-near-parity-west <p><a href="http://www.shtfplan.com/headline-news/america-is-no-longer-top-dog-chinese-military-reaching-near-parity-with-the-west_02182017"><em>Submitted by Daniel Lang via SHTFPlan.com,</em></a></p> <p><strong>The United States military is without a doubt the most technologically advanced force on the planet, and has been since at least World War II.</strong> Most Western nations are likewise, heavily dependent on advanced technology. When the West wins wars, it&rsquo;s not because of moxy or numbers or cunning. It&rsquo;s because we can detonate our enemies from miles away on a whim.</p> <p>In response, our rivals have spent decades trying to compensate with those aforementioned traits.<strong> They&rsquo;re the ones who rely on fighting spirit, cannon fodder, and clever underhanded tactics. </strong>They, which includes Russia, China, and lord knows how many insurgents and terrorists, have mastered the domain of unconventional warfare. And they&rsquo;ve done so by necessity. We&rsquo;re a wealthy nation with an unbelievably massive military budget.<strong><em> They could never conduct enough scientific research or build enough advanced war machines to compete with us in a conventional war.</em></strong></p> <p><span style="text-decoration: underline;"><em><strong>Or could they?</strong></em></span></p> <p><strong><a href="http://www.businessinsider.com/chinas-military-near-parity-west-2017-2">It appears that China might be able to</a></strong>. Or at least that&rsquo;s what the International Institute for Strategic Studies (IISS) thinks. They&rsquo;re a British think tank that&rsquo;s been around since 1958, and they have countless members who formerly worked for the British and American governments. The IISS specializes in researching geopolitical issues, and every year they publish the Military Balance report, which examines the military capabilities of the world&rsquo;s nations. Their latest issue should give the American defense establishment pause.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&ldquo;Western military technological superiority, once taken for granted, is increasingly challenged,&rdquo; Dr. John Chipman, Director-General and Chief Executive of IISS, said in a statement.<em><strong> </strong></em></p> <p>&nbsp;</p> <p><em><strong>&ldquo;We now judge that in some capability areas, particularly in the air domain, China appears to be reaching near-parity with the West.&rdquo;</strong></em></p> <p>&nbsp;</p> <p>Instead of its usual practice of working on systems that imitate Soviet and Russian technology, China has shifted its efforts (and budget) to domestic research and development. Its Navy is currently working on three new advanced cruisers, 13 destroyers, and outfitting other ships with better radar.</p> </blockquote> <p><strong>Most shocking were the claims that China is making fast gains in the air war domain. </strong>This is an arena that Western nations have dominated since World War II. It could be argued that the United States hasn&rsquo;t won any war since the 1940&rsquo;s without that advantage. Now they&rsquo;re catching up, partly with their own domestic military research, and partly with research that they&rsquo;ve stolen from us.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/02/19/20170219_china.jpg"><img height="327" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/02/19/20170219_china.jpg" width="549" /></a></p> <p><em><strong>So the question is, what happens if a nation that has already <a href="http://freebeacon.com/national-security/russia-china-iran-waging-unconventional-warfare-report-says/">mastered unconventional warfare</a> also reaches parity with the United States when it comes to conventional warfare?</strong></em> Let&rsquo;s just say that the results won&rsquo;t be pretty for us should we come to blows with China. Perhaps the Trump and his administration should tread lightly in East Asia, if they want to avoid a rather embarrassing conflict in that region.</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="549" height="327" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20170219_china.jpg?1487535059" /> </div> </div> </div> http://www.zerohedge.com/news/2017-02-19/america-no-longer-top-dog-chinese-military-reaching-near-parity-west#comments Aggression Behavior China Conventional warfare East Asia International Institute for Strategic Studies International Institute for Strategic Studies Military navy Politics Unconventional warfare United States military War War Mon, 20 Feb 2017 00:20:00 +0000 Tyler Durden 588579 at http://www.zerohedge.com How A Major Bank "Calculated" That 20x P/E Is Now "Fair Value" http://www.zerohedge.com/news/2017-02-19/how-major-bank-calculated-20x-pe-now-fair-value <p>Carbon-based traders of a certain vintage - which excludes today's 20-year-old hedge fund managers - may recall a time when a 15x P/E was considered "fair." Not any more. In fact, according to a new analysis by Barclays' equity strategist Keith Parker, which tries to factor in so-called "animal spirits" as a driver of valuation has found that 20x P/E is perfectly normal and fair for the current market, further demonstrating just how deep into the goalseeking rabbit hole US capital markets have fallen.</p> <p>First, to prove we are not joking, here is Barclays explaining why it is important to quantify animal spirits as a input factor of "permanently high plateaued" P/E multiples:</p> <blockquote><p><strong>Core drivers of the P/E multiple and animal spirit indicators </strong></p> <p>&nbsp;</p> <p>In order to estimate the effects of “animal spirits”, or the potential effects of some of President Trump’s agenda, we first model the S&amp;P 500 P/E using the core fundamental drivers of equity valuations. We then compare the residual from the model (actual minus fitted P/E) to various indicators of “animal spirits” or potential policy changes, including: tax policy, credit spreads, inflation, macro volatility, long-term growth expectations and corporate/consumer sentiment data.</p> <p>&nbsp;</p> <p><strong>Rates, growth and payouts are the core drivers of the P/E.</strong> Using a dividend discount framework, an equity price is the present value of future dividends. Dividing both sides of the equation by earnings, the P/E multiple is equal to the dividend payout ratio divided by the cost of capital minus the growth rate. Accordingly, the US 10y yield, US real GDP yoy and the dividend payout ratio explain 57% of the movement in the S&amp;P 500 trailing P/E multiple from 1955 to 1997. We use the 1955-97 sample period because confiscatory tax policies prior to 1955 distorted returns to equity holders (excess profit taxes, etc), and thus affected valuations, while the 1998-2001 tech bubble would also distort results.</p> <p>&nbsp;</p> <p><strong>Other “animal spirits” indicators also affect the P/E, even controlling for the core drivers</strong>. Including the US 10y, real GDP and dividend payout ratio variables in each regression, we assess the statistical significance of other variables as it relates to the S&amp;P 500 P/E.</p> </blockquote> <p>The punchline: "<strong>Based on our findings we incrementally add other variables to build a more comprehensive P/E model, to better evaluate the potential effects of “animal spirits” on equity valuations</strong>"</p> <p>At this point Barclays provides numerous pages of tortured, goalseek "empirical evidence" to extract the result it is after. What it "finds" is that what was once a "fair" 15x P/E is now really 20x P/E thanks to, drumroll, animal spirits.</p> <blockquote><p>Post-election rally closed the valuation gap with the P/E now near “fair”. The current fitted S&amp;P 500 trailing P/E of 19.6x reflects the historical average of 15.2x adjusted for lower rates (+3x), lower dividend taxes (+2x), slightly higher analyst long-term EPS growth (1.4x), lower macro vol (+0.5x), lower dividend payout ratios (-2.6x) and the net of credit spreads and growth (+0.3x). <strong>Accordingly, the current P/E of 19.4x, although high by historical standards, is far from pricing excessive optimism, based on our model. </strong></p> </blockquote> <p>Here is Barclays' rationalization:</p> <blockquote><p>It is difficult to discern how the fundamental drivers are impacting equity valuations using current values, let alone trying to assess the potential ramifications of policy changes. As a starting point, we lay out how the variables in our model are affecting the fitted P/E relative to the historical average (Figure 14).</p> <p>&nbsp;</p> <p>By separating out the drivers of the multiple, we are then better able to assess how policy changes may impact each variable and thus the P/E. The historical average trailing P/E is 15x.</p> <ul> <li>The US 10y yield at ~2.5% is much lower than the in sample average of 7%, which leads to a fitted P/E of 18x, all else equal. </li> <li>Lower dividend taxes than the historical average adds another 2x. </li> <li>Long-term EPS growth expectations using IBES data are now ~40bp above the historical average, which adds another 1.4x. </li> <li>Earnings flat-lined since 2014 and EPS moved slightly below trend, which adds 0.5x to the trailing P/E. </li> <li>Finally, inflation and IP volatility have been below historical averages, which adds another 0.5x. </li> </ul> <p>&nbsp;</p> <p>On the negative side, dividend payout ratios are much lower than the historical average, which in turn reduces the fitted P/E by 2.6x. Real GDP growth is below average and is a 0.2x offset to the fitted P/E&nbsp; value. Lastly, credit spreads are near the historical average.</p> <p>&nbsp;</p> <p>Overall, the current fitted P/E is 19.6x based on the macro drivers of the multiple, compared to 19.4x for the actual P/E using broker adjusted earnings.</p> </blockquote> <p>And here is Barclays' goalseeking exercise distilled to its undisputed visual glory:</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/02/08/Barclays%20GDP%20goalseek.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/02/08/Barclays%20GDP%20goalseek_0.jpg" width="500" height="235" /></a></p> <p>And that, ladies and gentlemen is how sellside analysts use "animal spirits" to explain that a market which is valued 33% higher than historical average, is really "fairly valued."</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="1034" height="487" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/Barclays%20GDP%20goalseek.jpg?1487543520" /> </div> </div> </div> http://www.zerohedge.com/news/2017-02-19/how-major-bank-calculated-20x-pe-now-fair-value#comments Barclays Business Capital Markets Consumer Sentiment Cost of capital Dividend payout ratio Economy ETC Finance Financial capital Financial ratios Fundamental analysis Money Price–earnings ratio S&P 500 Stock market Stock valuation Valuation Volatility Sun, 19 Feb 2017 23:48:37 +0000 Tyler Durden 588588 at http://www.zerohedge.com "Bucket Economics" For Global Macro Investing http://www.zerohedge.com/news/2017-02-19/bucket-economics-global-macro-investing <p><em style="line-height: 20.8px;"><span style="color: #800000;">By Chris at&nbsp;<a href="https://capitalistexploits.at/signup/">www.CapitalistExploits.at</a></span></em></p> <p>I was recently sent a research piece by one of my LPs. </p> <p>The piece was from the principal of a well known hedge fund and this particular manager has grave concerns for the US stock market. In the article to clients he laid out all the reasons why fundamentally none of it makes much sense. I can't and won't disagree with the primary analysis.</p> <p>He's not the only one. </p> <p>Many of my friends and colleagues in this industry are saying similar things. In fact, quite a few of my friends and LP's have asked, <em>"Why are you not short?"</em></p> <p>A very good question I'll try explain by way of <strong>"Bucket Economics"</strong> (trademarked). Distinctly different to <em>"Fu**it Economics",</em> which is what you get when you get it all wrong. </p> <h3><span style="color: #008000;"><strong>Reasons to Be Bearish the US Equity Market</strong></span></h3> <p> <a href="https://twitter.com/jtepper2/status/828599652694032385" title="https://twitter.com/jtepper2/status/828599652694032385">https://twitter.com/jtepper2/status/828599652694032385</a> </p> <p> Geez... </p> <p> And this from John Hussman at Hussman Funds: </p> <p> <a href="https://twitter.com/hussmanjp/status/825752513508958208" title="https://twitter.com/hussmanjp/status/825752513508958208">https://twitter.com/hussmanjp/status/825752513508958208</a> </p> <p> These are all sharp smart investors and I've taken just two as a sampling, and they're clearly bearish. </p> <p> While this is taking place in the land of apple pie across the pond we have... </p> <h3><span style="color: #008000;"><strong>A Spanner in the Works</strong></span></h3> <p> Here we see France's risk premium rising. Franco-German bond spreads blow out as the market attempts to come to terms when&nbsp;Le Pen unveiled her party's manifesto (see my article earlier this week on <a href="https://capitalistexploits.at/2017/02/world-whack-oh-yeah/" target="_blank">this very topic).</a> </p> <p> <img src="https://capitalistexploits.at/wp-content/uploads/2017/02/http-www.ft_.com-fastft-files-2017-02-Frenchgerman1.png" width="550" height="373" style="display: block; margin-left: auto; margin-right: auto;" class="aligncenter wp-image-16394" /> </p> <p> I've written about the problems in Europe till my fingers bleed so I'll not be revisiting it now. Curious or forgetful readers can simply scour the <a href="https://capitalistexploits.at" target="_blank">site.</a></p> <p>Europe has some serious issues in front of them, not least of which is <a href="https://capitalistexploits.at/2016/08/easiest-short-history/" target="_blank">how the euro breaks up</a>&nbsp;and the multiple ramifications both socially and economically. Not to mention how the bureaucrats in Brussels are going to deal with&nbsp;<a href="https://capitalistexploits.at/2017/02/world-whack-oh-yeah/" target="_blank">member states refusing to pay debts.</a> </p> <p> In a nutshell, Europe looks a lot worse than the US right now. A LOT worse. </p> <p> Ok, so now let me throw out<strong> why I'm unprepared to short the US stock market.</strong> </p> <p> Here's how I think about it. </p> <p> Capital typically has 3 places to live. </p> <p> <img src="https://capitalistexploits.at/wp-content/uploads/2017/02/Screenshot-2017-02-17-19.57.29-1024x339.png" width="550" height="182" style="display: block; margin-left: auto; margin-right: auto;" class="aligncenter wp-image-16396" /></p> <p>Think of these as investment buckets, where you will keep your investments&nbsp;in the most favourable bucket or buckets at any one time. </p> <p> In a stable goldilocks economy where inflation is neither to high nor too low, where debt is low and manageable, and where faith in currency is not in question we could argue that investors would&nbsp;be OK with the above setup (not trying to be too fancy - bear with me). </p> <p> What about when inflation is rising sharply? How do investors re-allocate? </p> <p> Simplistically, like this:</p> <p><img src="https://capitalistexploits.at/wp-content/uploads/2017/02/Screenshot-2017-02-17-20.15.47-1024x377.png" width="550" height="203" style="display: block; margin-left: auto; margin-right: auto;" class="aligncenter wp-image-16397" /> </p> <p> How about a strong deflationary environment?</p> <p>Simplistically like this: </p> <p> <img src="https://capitalistexploits.at/wp-content/uploads/2017/02/Screenshot-2017-02-17-20.19.47-1024x357.png" width="550" height="192" style="display: block; margin-left: auto; margin-right: auto;" class="aligncenter wp-image-16398" /> </p> <p> Now, let me ask you to consider that as investors we have the entire world in front of us&nbsp;into which we can allocate our investment capital.</p> <p>One thing I've learned over the last 20 odd years in finance is that capital flows are extremely&nbsp;important and have become increasingly important as globalisation has taken hold. As such, <strong>it's not just equities but equities in what country. Ditto bonds and currencies.</strong></p> <p>The ease and speed with which we can allocate capital not only into multiple sectors, but into multiple currencies and indeed countries means that not only do the above buckets apply to the 3 categories listed but they apply to countries and currencies of countries. So cash, for example, can be USD, JPY, EUR, RUB, CNY, and a whole range of others, or a basket of them.</p> <p>So I want to ask you a question:</p> <p>When allocating capital, imagine for a minute you're managing a few billion dollars (as I know some of you are). Now let me ask you where you're going to allocate looking out over the next couple of years? </p> <ul> <li>Europe? Looks to be on the precipice and uncertainty is rising, not falling</li> <li>Emerging markets? Lost $60 billion in December and are typically considered more of a "risk on" trade</li> <li>The US?</li> </ul> <p> A blow up in Europe, which looks more and more inevitable with each passing day, will see capital flee to the land of warm apple pie.</p> <p>This will have to go somewhere, and so much of it will go into treasuries causing the dollar to strengthen and stoke inflationary fears. </p> <p> Much will head into equities too.</p> <p>This too will stoke fears of inflation and the <del>clowns</del> Fed who are way behind the curve already will scurry to catch up, raising rates. Ironically, raising rates will further exacerbate the spreads between US and non-US paper&nbsp;causing more capital to head to the US, creating a self perpetuating&nbsp;cycle.</p> <p>This will actually be highly&nbsp;contractionary for the global economy as it will cause further dollar funding shortages (read my piece on the <a href="https://capitalistexploits.at/2016/12/eurodollar-market-it-all-starts-here/" target="_blank">eurodollar market</a>&nbsp;for more on this topic). </p> <p> As the rest of the world contracts, the US will seemingly appear to be the only safe place to park capital. More self perpetuating capital influx.</p> <p>Note that this capital flowing into the US will have nothing to do with US corporate profits and none of this will really have anything to do with policies enacted by the Trump administration (though you can bet your bottom dollar Trump will be sure to take credit for it, misunderstanding what is actually taking place and why). </p> <p> Aaaand so.... </p> <p> Is the US equity market overvalued? Yes! </p> <p> Do I want to be short the US equity market? No! </p> <p> There are many pieces to this puzzle and I don't pretend to know them all or how they will interact with one another.</p> <p>What I do know is that global capital flows often overwhelm any "fundamental valuations" (I never used to think like this as for years I was firmly in the fundamental value camp).</p> <p>I also know is that globally we've never before been so inter-connected than we are today.</p> <p>Furthermore, I do believe that we're rapidly running out of road down which&nbsp;the can will&nbsp;been kicked. Europe first and the consequences of that favour Trumplandia. </p> <p> - Chris </p> <p> <em>"There is only one difference between a bad economist and a good one: the bad economist confines himself to the&nbsp;visible&nbsp;effect; the good economist takes into account both the effect that can be seen and those effects that must be&nbsp;</em><em>foreseen." —</em>&nbsp;Frederic Bastiat</p> <p style="text-align: center;"><span style="font-size: 13.008px; line-height: 20.0063px;">--------------------------------------</span></p> <p style="text-align: center;">Liked this article?&nbsp;<a href="https://capitalistexploits.at/signup/">Don't miss our future missives and podcasts, and</a></p> <p style="text-align: center;"><a href="https://capitalistexploits.at/signup/">get access</a>&nbsp;<a href="https://capitalistexploits.at/signup/" style="line-height: 20.8px; font-size: 1em;">to free subscriber-only content here.</a></p> <p style="text-align: center;"><span style="font-size: 13.008px; line-height: 20.0063px;">--------------------------------------</span></p> http://www.zerohedge.com/news/2017-02-19/bucket-economics-global-macro-investing#comments Apple Bond Bond Business Deflation Economy EuroDollar Global Economy Goldilocks Inflation Investment John Hussman None Risk Premium Trump Administration Twitter Twitter US Federal Reserve Sun, 19 Feb 2017 23:20:55 +0000 Capitalist Exploits 588590 at http://www.zerohedge.com 'Rogue' Border Agents Resist Trump Orders, Continue Obama's 'Catch-And-Release' Policy http://www.zerohedge.com/news/2017-02-19/rogue-border-agents-resist-trump-orders-continue-obamas-catch-and-release-policy <p><a href="http://www.lifezette.com/polizette/exclusive-rogue-border-agents-resist-trump-policies/"><em>Authored by Brendan Kirby, originally posted at Lifezette.com,</em></a></p> <p><strong>Some border patrol stations have been slow to carry out President Donald Trump&rsquo;s <a href="http://www.lifezette.com/polizette/trump-begins-immigration-enforcement-overhaul/">immigration enforcement executive order</a> and instead have continued former President Barack Obama&rsquo;s <a href="http://www.lifezette.com/polizette/catch-and-release/">&ldquo;catch-and-release&rdquo; policies</a>, according to a union official.</strong></p> <p><strong><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/02/19/20170219_border.jpg"><img height="339" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/02/19/20170219_border.jpg" width="563" /></a></strong></p> <p>Brandon Judd, president of the National Border Patrol Council, told LifeZette that he <strong>raised concerns Thursday with U.S. Border Patrol Chief Ronald Vitiello. </strong>He said he is confident that issue soon will be corrected.</p> <p>But Judd said as recently as Thursday, some border patrol stations were still releasing border-jumpers, often without even issuing notices to appear in immigration court hearings. Obama&rsquo;s policy was to release anyone claiming to have been living continuously in the United States since before Jan. 1, 2014, if they did not have criminal records or active warrants.</p> <p><em><strong>&ldquo;We&rsquo;re still walking people out the door,&rdquo; Judd said. &ldquo;The catch-and-release policy is still in place in some sectors.&rdquo;</strong></em></p> <p>Judd said it was a minority of sectors that have been resisting Trump&rsquo;s new directives. He laid the blame at the feet of U.S. Border Patrol managers, not front-line officers.</p> <p><em><strong>&ldquo;This is not the administration&rsquo;s fault. This is Border Patrol&rsquo;s fault,&rdquo; he said. &ldquo;It varies from sector to sector. Some sectors still are operating under the Obama administration&rsquo;s policies. And that&rsquo;s troubling &hellip; It&rsquo;s just been very willy-nilly.&rdquo;</strong></em></p> <p>Asked about the status of Trump&rsquo;s marching orders, Customs and Border Protection spokesman Carlos Diaz wrote in an email to LifeZette, &ldquo;CBP has worked towards implementing the measures mandated by the Executive Orders since they were signed.&rdquo;</p> <p>Judd said some managers have been waiting for specific written guidelines to filter down from the Department of Homeland Security. He said he considers that unnecessary since the president&rsquo;s executive order is crystal clear. He said anyone apprehended by border patrol agents should be turned over to Immigration and Customs Enforcement authorities. That agency and immigration judges are charged with deciding whether someone should be deported.</p> <p>Jessica Vaughan, director of policy studies at the Center for Immigration Studies, said she was not aware that the president&rsquo;s executive order had not been fully implemented three weeks after he issued it.</p> <p><em><strong>&ldquo;It actually surprises me. But if that&rsquo;s the case, certainly the administration is going to need to look into that if they&rsquo;re going to be undermined,&rdquo; she said. &ldquo;That&rsquo;s got to be nipped in the bud.&rdquo;</strong></em></p> <p>Vaughan, a former U.S. Foreign Service officer, said it often takes time for new policies to be fully embraced. This especially is true during the transition from one administration to the next, she said, because the outgoing administration often has promoted managers who agree with its policy goals.</p> <div class="midpoint">&nbsp;</div> <p>She noted that Obama, himself, faced bumps in the road on the way to implementing enforcement directives mandating a lighter hand. She said union officials enforced the letter of their collective bargaining agreement requiring training before new policies are adopted.</p> <p><em><strong>&ldquo;It&rsquo;s not unusual for people who are in disagreement with change to dig in their heels and take a stand,&rdquo; she said. &ldquo;I certainly saw that at the State Department where implementation of law and policies could differ based on the views of different managers and different posts.&rdquo;</strong></em></p> <p>Joseph Guzzardi, a spokesman for Californians for Population Stabilization, said it was disappointing that some border patrol officials appear not be onboard with the new policies.</p> <p><em><strong>&quot;It would be surprising to me because Border Patrol has been hugely in support of Trump when he ran,&quot; he said. &quot;I have been down to the border and talked to Border Patrol agents and got the clear impression that they were eager to enforce immigration law.&quot;</strong></em></p> <p>Judd said he expects a &quot;compete change&quot; after his conversation with Vitiello but added that the policies already should be fully implemented.</p> <p>&quot;It should not have had to be me who informed him,&quot; he said.</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="563" height="339" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20170219_border.jpg?1487534766" /> </div> </div> </div> http://www.zerohedge.com/news/2017-02-19/rogue-border-agents-resist-trump-orders-continue-obamas-catch-and-release-policy#comments Barack Obama Borders of the United States Center for Immigration Studies Department of Homeland Security Department of State Donald Trump Government Immigration to the United States Mexico–United States border National Border Patrol Council Obama Administration Obama administration Politics U.S. Foreign Service U.S. Immigration and Customs Enforcement United States United States Border Patrol United States Department of Homeland Security Sun, 19 Feb 2017 23:20:00 +0000 Tyler Durden 588578 at http://www.zerohedge.com The "Russia Scare" Coalition: ISIL's "Useful Idiots"? http://www.zerohedge.com/news/2017-02-19/russia-scare-coalition-isils-useful-idiots <p><a href="http://nationalinterest.org/feature/the-%E2%80%9Crussia-scare%E2%80%9D-coalition-isils-%E2%80%9Cuseful-idiots%E2%80%9D-19502"><em>Via The National Interest,</em></a></p> <p><em><strong>Victory by the &#39;Russia scare&#39; coalition will limit America&rsquo;s ability to fight ISIL, complicate efforts to win UNSC support for tough enforcement of the Iran nuclear deal and give China more leverage over both Moscow and Washington.</strong></em></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/02/17/20170219_isis1.jpg"><img height="343" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/02/17/20170219_isis1_0.jpg" width="600" /></a></p> <p>The turmoil surrounding Lt. Gen. Michael Flynn&rsquo;s resignation and wider allegations of links between President Donald Trump, his campaign and Russia seems to have made a strong impression in Moscow. Many there had already calibrated initially unrealistic expectations after Mr. Trump&rsquo;s initial weeks in office; recent events have tempered even these more limited ambitions.<strong> Hopes have long faded that Washington would become a Russian ally in Syria, pursue cooperative military action against ISIL, or delink the conflict in Ukraine from the wider U.S.-Russia relationship.</strong></p> <p>Still, until recently, sober voices on Russia&rsquo;s television talk shows were a clear minority. Arguing that Russia would have to demonstrate its commitment to working with the United States through concrete actions, and that Moscow could not seek a new beginning while continuing to deny its involvement in the fighting in the Donbas and to engage in dangerous close encounters in the air and at sea, was unpopular. <strong>In the last few days, however, the optimistic view that Trump will simply &ldquo;deliver the goods&rdquo; to Russia has largely disappeared.</strong></p> <p><strong>As Soviet media used to say, this is not accidental</strong>. <a href="https://www.bloomberg.com/politics/articles/2017-02-16/kremlin-said-to-tell-media-to-cut-back-on-fawning-trump-coverage" style="text-decoration: none;" target="_blank"><span style="text-decoration: underline;">According</span></a> to Western news reports, the Kremlin has encouraged Russian media to scale back their coverage of America&rsquo;s new president and his administration. While President Putin&rsquo;s press spokesman Dmitry Peskov has denied any such instruction, Russia&rsquo;s media have in fact redirected their attention to other issues, giving scant air time to Mr. Trump&rsquo;s comments about Russia during his latest press conference and to separate meetings between Secretary of State Rex Tillerson and Chairman of the Joint Chiefs of Staff General Joseph Dunford with their Russian counterparts. That said, Mr. Peskov may not have been involved in issuing directions like this&mdash;though such a directive could come only from Russia&rsquo;s presidential administration.</p> <p>Since Russian President Vladimir Putin has been more pragmatic than euphoric in his personal statements about Mr. Trump and U.S.-Russia relations, diminished enthusiasm in the Russian media may serve primarily to manage expectations more carefully. <strong>Nevertheless, if reduced enthusiasm slides into suspicion and belligerence&mdash;which can easily become mutually reinforcing&mdash;any window of opportunity in U.S.-Russia relations could close rapidly.</strong> Russia&rsquo;s Deputy Prime Minister Dmitry Rogozin has already complained about a statement by Defense Secretary James Mattis that NATO should be open to dialogue &ldquo;from a position of strength&rdquo; by touting Russia&rsquo;s military capabilities. Defense Minister Sergey Shoigu similarly criticized the Mattis comments. Some in Washington and in Moscow likely hope that exchanges like this will slow or prevent efforts to cooperate.</p> <p><strong>Those in the Congress and the media who seek to browbeat Mr. Trump over his purported Russian connection may well accomplish this and may thus have cause to celebrate their political and public relations victories. But any such triumph will be short-lived;</strong> as President Trump observed, a &ldquo;business-as-usual&rdquo; Russia policy would only help him politically. Getting tough on Mr. Putin would quickly disarm his critics and enable the White House to pursue other priorities without the ballast of a perceived Russian connection. Yet, victory by the &ldquo;Russia scare&rdquo; coalition will limit America&rsquo;s ability to fight ISIL, complicate efforts to win UN Security Council support for tough enforcement of the Iran nuclear deal, facilitate Russian support for Iran if Washington opts for military action, and give China more leverage over both Moscow and Washington. <strong>That innocent Americans might die as a result of these developments seems untroubling to those who view recognition of strategic priorities as a sign of defeatism. Mr. Trump should not be shy in making this point.</strong> Should these be the consequences of the enduring U.S.-Russian hostility they advocate, the president will be able to point to today&rsquo;s accusers as <em>de facto </em>protectors and enablers of both ISIL and Iran&rsquo;s ayatollahs&mdash;and as &ldquo;useful idiots&rdquo; providing support to Beijing&rsquo;s superpower ambitions.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/02/17/20170219_isis.jpg"><img height="339" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/02/17/20170219_isis.jpg" width="600" /></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="609" height="344" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20170219_isis.jpg?1487543152" /> </div> </div> </div> http://www.zerohedge.com/news/2017-02-19/russia-scare-coalition-isils-useful-idiots#comments Business China Congress Dmitry Peskov Donald Trump Iran James Mattis Politics Politics Rex Tillerson Rex Tillerson U.N. Security Council Ukraine Vladimir Putin White House White House Sun, 19 Feb 2017 22:20:00 +0000 Tyler Durden 588575 at http://www.zerohedge.com Barclays: "Equities Rushed To Price In The Reagan 1986 Tax Cuts Before Crashing In 1987" http://www.zerohedge.com/news/2017-02-19/barclays-equities-rushed-price-reagan-1986-tax-cuts-crashing-1987 <p>With concerns rising that the market has gotten well ahead of itself over the practical reality of Trump tax cuts - most recently <a href="http://www.zerohedge.com/news/2017-02-18/goldman-investors-will-soon-realize-they-were-too-optimistic">voiced by Goldman </a>which over the weekend said that "<em>we are approaching the point of maximum optimism and S&amp;P 500 will give back recent gains as investors embrace the reality that tax reform is likely to provide a smaller, later tailwind to corporate earnings than originally expected</em>" - Barclays decided to look at one of recent history's most notable tax regime changes: the Reagan tax cuts.</p> <p>What it found was interesting. </p> <p>First, the market wastes no time in factoring in any to corporate taxes and according to Barclays calculations, corporate tax cuts get 85-90% priced in very short order. As an example, Barclays points out that the Reagan 1986 tax cuts showed that equities price in the benefits quickly. Perhaps too quickly. </p> <p>There were some other notable similarities between the current tax-regime transition and 1986, namely "the oil collapse and growth cycle were also issues in 1986." In any case, a harbinger of the current market rally driven by Trump tax cut hopes, "<strong>the S&amp;P 500 rallied 40% pricing in the tax plan before it was really even implemented in July 1987.</strong>"</p> <p>The S&amp;P then infamously crashed in October of 1987, for a variety of reasons, one of which, Barclays suggests, was the rapid pricing in of the Reagan tax cuts. In fact, seen this way, the infamous Black Monday crash may have been - in addition to all the other noted catalysts - a very vivid example of "<em>sell the news</em>."</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/02/08/barc%20tax%20cut%202.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/02/08/barc%20tax%20cut%202_0.jpg" width="500" height="301" /></a></p> <p>There was also good news: for those who survived the 30% drawdown, though the post-1987 period was marred by the crash, S&amp;P 500 EPS actually rose 55% compared to 1986 levels. Barclays foresee a similar dynamic likely playing out whereby the market multiple prices in the first order effects of a tax plan very quickly, once known. </p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/02/08/barc%20tax%20cut%203.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/02/08/barc%20tax%20cut%203_0.jpg" width="500" height="307" /></a></p> <p>One could perhaps add that the market has already priced most of the tax cut without even knowing the details. On the other hand, Barclays notes, second order effects such as rates and growth will also affect the multiple. Two notable difference between the Reagan and Trump tax cuts, as the level of government indebtedness - far greater now than it was 30 years ago - and the Fed's tightening cycle, which for the time being are seen as bullish although inevitably the market will realize that tighter financial conditions inevitably lead to lower risk prices.</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="772" height="464" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/barc%20tax%20cut%202.jpg?1487538454" /> </div> </div> </div> http://www.zerohedge.com/news/2017-02-19/barclays-equities-rushed-price-reagan-1986-tax-cuts-crashing-1987#comments American Presbyterians Barclays Barclays Business California Clan Barclay Conservatism in the United States Economy Reagan tax cuts Reality Ronald Reagan S&P 500 Tax United States US Federal Reserve Sun, 19 Feb 2017 21:48:15 +0000 Tyler Durden 588583 at http://www.zerohedge.com