http://www.zerohedge.com/fullrss2.xml en Futures Flat As Japan Tumbles, WTI Slides $90 For First Time In 17 Months http://www.zerohedge.com/news/2014-10-02/futures-flat-japan-tumbles-wti-slides-90-first-time-17-months <p>Following yesterday's acorss the board US stock market drubbing, equity futures are mostly unchanged awaiting today's key event which is the ECB's latest announcement in just over an hour and Draghi press conference 45 minutes later, both of which however are expected to be far more muted than last month's bombastic announcement (which has already led to new European cracks with Germany throwing up all over Draghi's proposal to buy Greek junk). Additionally there is initial claims and factory orders data, which however will hardly do much to change the recent sharp plunge in global economic momentum as <a href="http://www.zerohedge.com/news/2014-10-01/goldman-global-leading-indicator-drastically-revised-collapses-confirmed-slowdown">Goldman showed yesterday</a>.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/10/20141001_GLI.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/10/20141001_GLI_0.jpg" width="600" height="511" /></a></p> <p>So while equities are hugging the flatline, a bigger story was the overnight crash in the Nikkei225 and the Topix both of which plunged at the fast pace in months, with the Yen spiking, pushing the USDJPY as low as 108.35 after Japan's Vice Finance Minister, Nobuhide Minorikawa, earlier today told reporters that no further increases in the USDJPY wil be tolerated saying&nbsp; that "there are companies negatively affected by the weak yen." In other words, as we have been saying since December of 2012. </p> <p>But the biggest market development overnight is the plunge in crude, <strong>with both Brent and WTI plunging, the latter sliding under $90 for the first time in 17 months, extending yesterday's selloff after Saudi Aramco cut Arab Light OSP in Asia to 2008 levels</strong>. Brent drops to lowest since June 2012. This also confirms that the global slowdown whose can is kicked every so often in a new bout of money printing, is arriving fast. That, and the imminent crackdown on today's Hong Kong protest will likely be the biggest stories of the day, even as the spread of Ebola to the US is sure to keep everhone on edge. </p> <p>European equities traded in the red from the get-go at the cash open with the fallout of the US sell-off and declines in Asia weighing on investor sentiment. For anyone interested, an explanation detailing yesterday’s sharp declines can be viewed here. On a sector specific basis, energy names underpeform following the extension of the move lower in the energy complex with WTI dipping below USD 90/bbl. Of note for luxury names, LVMH trade higher by 1.2% after being raised at JP Morgan which is subsequently lifting the consumer discretionary sector.</p> <p>Looking at the day ahead, the main item on the European agenda is the ECB meeting. Beyond that we will also get the September change in Spanish unemployment, the UK construction PMI (expected in at 63.5) and the euro area August PPI (expected in at -0.1% MoM). In the US we will get initial jobless claims (expected at 297k) and the August factory orders (expected at -9.5%).</p> <p><strong>US Event Calendar</strong></p> <ul> <li>7:30am: Challenger Job Cuts y/y, Sept. (prior -20.7%)</li> <li>7:30am: RBC Consumer Outlook Index, Oct. (prior 52.4)</li> <li>8:30am: Initial Jobless Claims, Sept. 27, est. 297k (prior 293k), Continuing Claims, Sept. 20, est. 2.425m (prior 2.439m)</li> <li>9:45am:&nbsp; ISM New York, Sept. (prior 57.1)</li> <li>9:45am:&nbsp; Bloomberg Consumer Comfort, Sept. 28 (prior 35.5)</li> <li>10:00am: Factory Orders, Aug., est. -9.5% (prior 10.5%)</li> </ul> <p><strong>Bulletin Headline Summary from RanSquawk and Bloomberg</strong></p> <ul> <li>European equities follow on from their US and Asian counterparts after US equities reached their lowest levels since mid-August and the Nikkei 225 saw it sharpest fall since Aug. 8th.</li> <li>Energy names underperform in Europe after WTI crude futures broke below USD 90/bbl for the first time in 17 months.</li> <li>The USD-index trades with losses of around 0.3% which has subsequently boosted commodity currencies and seen USD/JPY break back below 109.00.</li> <li>Looking ahead, attention turns towards today’s ECB policy announcement where the ECB are unlikely to commit to further tools until after embarking on the newest policy - ABS and Covered Bond purchases.</li> </ul> <p><strong>ASIA</strong></p> <p>JGBs traded up 1 tick at 145.89 after paring earlier gains seen amid spill-over buying from yesterday’s rally across global fixed income markets, weighed on by today’s disappointing 10yr JGB auction. Asian equities traded lower across the board in tandem with the sharp sell-off in stocks markets across both sides of the Atlantic yesterday. The Nikkei traded down 2.6% in what was the largest decline in the index since Aug. 8th. As a reminder, mainland China and Hong Kong markets are closed today for National Day Holiday with Chinese bourses set to reopen next Wednesday and Hong Kong markets resuming on Friday. </p> <p><strong>FIXED INCOME </strong></p> <p>Fixed income markets have seen a relatively tentative session so far as participants await the ECB rate decision with Eurozone supply initially capping any potential upside alongside the softness in equities. In terms of this morning issuance, Spain saw a relatively inline auction of their modest 2020 and 2024 bonds, with record-low yields as has been the case in previous auctions. In terms of the French issuance, all three lines saw lower yields, with fixed income markets following suit with the moves in equity markets when both Spanish and French supply had been absorbed. </p> <p><strong>EQUITIES</strong></p> <p>European equities traded in the red from the get-go at the cash open with the fallout of the US sell-off and declines in Asia weighing on investor sentiment. For anyone interested, an explanation detailing yesterday’s sharp declines can be viewed here. On a sector specific basis, energy names underpeform following the extension of the move lower in the energy complex with WTI dipping below USD 90/bbl. Of note for luxury names, LVMH trade higher by 1.2% after being raised at JP Morgan which is subsequently lifting the consumer discretionary sector.</p> <p><strong>FX</strong></p> <p>Overnight, the USD-index extended on yesterday’s losses consequently supporting major USD pairs with commodity-linked currencies being the main beneficiaries. USD/CAD briefly broke below the 1.1100 handle to print a fresh weekly low while NZD/USD recovered all of Tuesday’s RBNZ FX intervention-inspired declines. AUD also strengthened further after AU building approvals surged to a 3-month high (3.0% vs. Exp. 1.0%) prompting AUD/USD to break above the 0.8800 handle. In terms of the European session, FX markets have traded in a largely rangebound manner with the USD-index continuing to dictate the state of play and GBP/USD pulling away from its highs after the beat on UK construction PMI (64.2 vs. Exp. 63.5).</p> <p>* * * </p> <p><strong>DB's Jim Reid concludes the overnight recap</strong></p> <p>In European equity markets the Euro Stoxx, FTSE 100 and DAX lost -1% whilst the CAC and FTSE MIB dropped -1.2% and -0.9% respectively. Over in the US the S&amp;P500 and NASDAQ closed down -1.3% and -1.6% respectively. In credit markets, European iTraxx Main and US CDX IG widened +0.6bps and +0.3bps respectively, whilst European iTraxx Xover widened only +1bps and US CDX HY was unchanged. European financial CDS indices actually ended the day tighter. The big performers yesterday were government bond markets as the US, German and UK 10Yr fell -8bps, -5bps and -7bps respectively.</p> <p>There were a few stories impacting markets yesterday. We had the after effects of the first reported Ebola case in the US which caused nervousness, especially in some travel and freight stocks. We also had lots of noise about the Russell 2000 now being 10% off its recent highs. Elsewhere we saw an increase in Russia-Ukraine worries after stories from Ukraine that a shell had killed four people at a school in the rebel-held east (BBC) in what remains a shaky ceasefire with continued flare-ups. The EU is set to keep sanctions against Russia in place as they have deemed the peace deal to not be full effective (BBC). Also we had weaker data on both sides of the pond. On this, whilst ADP US employment growth came in marginally ahead of expectation (+213k vs +205k expected), manufacturing PMI (57.5 vs 57.9 expected), manufacturing ISM (56.6 vs 58.5 expected) and construction spending (-0.8% MoM vs +0.5% MoM expected) all disappointed. </p> <p>In Europe, although Italian manufacturing PMI’s beat expectation at 50.7 (vs 49.5 expected) and the Spanish and French reads came in-line at 52.6 and 48.8 respectively, the German activity dropped to 49.9 (vs 50.3 expected) which brought the broader eurozone number below expectations at 50.3 (vs 50.5 expected). As DB European Economist Peter Sidorov wrote yesterday on the releases, ‚It is worth noting that the ‘periphery’ is now outperforming the ‘core’ euro countries in the manufacturing PMIs, which could help to partially offset its greater vulnerability on the domestic front. A reduction in fragmentation across countries should also make agreeing on common policy measures easier in the euro area, including the ECB’s easing and the European investment initiative proposals currently under discussion.?&nbsp; Although the market isn’t expecting any new policy action from the ECB today, asset purchases are set to start this month and the technical details of the ECB’s purchase programmes are set to be announced. More importantly any changes in ECB rhetoric will be closely watched as pressure has continued to build on the ECB to bring in full public QE. There will no doubt be questions about whether government bond purchases will be used if the ECB can't increase their balance sheet by the trillion Euros that Draghi has made a policy aspiration. </p> <p>In overnight news, Hong Kong’s pro-democracy student protestors have threatened to besiege government offices unless their demands for the resignation of the head of the HK government by Thursday night are met as protests have continued during China’s National Day holiday. This came as China’s Foreign Minister has described the protests as ‚illegal? (BBC). Looking at how markets have reacted overnight they seem largely to be mirroring yesterday’s European and US moves. As we write the Nikkei is down -2% whilst the MSCI Asia Pacific index had been down -0.6% before rallying back slightly to now sit around -0.2%. In credit the iTraxx Asia is wider by around +2bps whilst Japan and Australia’s 10Y government bonds have rallied -0.4bp and -7bps respectively.</p> <p> Looking at the day ahead, the main item on the European agenda is the ECB meeting. Beyond that we will also get the September change in Spanish unemployment, the UK construction PMI (expected in at 63.5) and the euro area August PPI (expected in at -0.1% MoM). In the US we will get initial jobless claims (expected at 297k) and the August factory orders (expected at -9.5%).</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="780" height="680" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/Swirlogram.jpg?1412245532" /> </div> </div> </div> http://www.zerohedge.com/news/2014-10-02/futures-flat-japan-tumbles-wti-slides-90-first-time-17-months#comments Bond CDS China Continuing Claims Crude Equity Markets Eurozone fixed Germany Hong Kong Initial Jobless Claims Investor Sentiment Japan Jim Reid NASDAQ Nikkei RANSquawk Russell 2000 Ukraine Unemployment Yen Thu, 02 Oct 2014 10:30:39 +0000 Tyler Durden 495090 at http://www.zerohedge.com Meanwhile In Hong Kong "Tonight Is Going To Get Messy" http://www.zerohedge.com/news/2014-10-02/meanwhile-hong-kong-tonight-going-get-messy <p>While overnight the <a href="http://www.bloomberg.com/news/2014-10-01/hong-kong-students-threaten-escalation-as-councilor-seeks-talks.html">massive student protest crowd </a>swelled to as much as 200,000 according to eyewitnesses as today's deadline for their demands that HK Chief Executive Leung Chun-ying resign arrives, the gathering was surprisingly peaceful. That may change at any moment. </p> <blockquote class="twitter-tweet" lang="en"><p>BREAKING: Hong Kong police warn of serious consequences if protesters charge government buildings</p> <p>— The Associated Press (@AP) <a href="https://twitter.com/AP/status/517592173391671296">October 2, 2014</a></p></blockquote> <script src="//platform.twitter.com/widgets.js"></script><p>As <a href="http://www.bloomberg.com/news/2014-10-01/hong-kong-students-threaten-escalation-as-councilor-seeks-talks.html">Bloomberg reports</a>, student leaders yesterday said they would escalate the protests and may surround Leung’s residence, which overlooks Central, if he didn’t resign today. This morning, about 100 police officers guarded the road outside the office, a rectangular low-rise block that’s part of the government headquarters complex in Admiralty, facing about 200 protesters wearing black T-shirts. </p> <p><a href="http://hosted.ap.org/dynamic/stories/A/AS_HONG_KONG_DEMOCRACY_PROTEST?SITE=AP&amp;SECTION=HOME&amp;TEMPLATE=DEFAULT">AP adds </a>that the Hong Kong police have warned of "serious consequences" if pro-democracy protesters try to charge or surround government buildings. </p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>Police spokesman Steve Hui said Thursday that authorities would not tolerate any illegal surrounding of government buildings. He urged the protesters, who want top leader Leung Chun-ying to resign, to remain calm and restrained.</p> <p>&nbsp;</p> <p>The protesters gave a midnight Thursday deadline for Leung to resign and for the government to respond to their demands for a change in political reform plans devised by Beijing.</p> </blockquote> <p>And according to one SCMP reporter, today's escalation may have already begun, and "tonight is going to get messy":</p> <blockquote class="twitter-tweet"><p>Tensions rising as a stream of police stream into Tamar with riot gear. Crowds jeering and chanting "shame on you!"</p> <p>— Bryan Harris (@bryanhimself) <a href="https://twitter.com/bryanhimself/status/517595967055355905">October 2, 2014</a></p></blockquote> <script src="//platform.twitter.com/widgets.js"></script><blockquote class="twitter-tweet" lang="en"> <p>Police entering through a very narrow between a stone wall and a wall of protesters. Getting intense. Police recording everything.</p> <p>— Bryan Harris (@bryanhimself) <a href="https://twitter.com/bryanhimself/status/517596369796624384">October 2, 2014</a></p></blockquote> <script src="//platform.twitter.com/widgets.js"></script><blockquote class="twitter-tweet" lang="en"> <p>Crowds pin police against wall, shouting "you can not enter". Police shuttling in huge wooden crates. More gas tonight?!</p> <p>— Bryan Harris (@bryanhimself) <a href="https://twitter.com/bryanhimself/status/517596889781649408">October 2, 2014</a></p></blockquote> <script src="//platform.twitter.com/widgets.js"></script><blockquote class="twitter-tweet" lang="en"> <p>Wow, crowds surging. Police trying to maintain supply line. Protesters are gearing up for gas - goggles are being passed around.</p> <p>— Bryan Harris (@bryanhimself) <a href="https://twitter.com/bryanhimself/status/517597510412410880">October 2, 2014</a></p></blockquote> <script src="//platform.twitter.com/widgets.js"></script><blockquote class="twitter-tweet" lang="en"> <p>Police are carrying a boxes labelled "batons" and metal "flammable" tins. Tonight is going to get messy.</p> <p>— Bryan Harris (@bryanhimself) <a href="https://twitter.com/bryanhimself/status/517597970074591232">October 2, 2014</a></p></blockquote> <script src="//platform.twitter.com/widgets.js"></script><blockquote class="twitter-tweet" lang="en"> <p>Hundreds of police entering Tamar. Crowds now screaming at cops. Student leader had the mike: "the police are liars" he screams.</p> <p>— Bryan Harris (@bryanhimself) <a href="https://twitter.com/bryanhimself/status/517599143879901184">October 2, 2014</a></p></blockquote> <script src="//platform.twitter.com/widgets.js"></script><p>&nbsp;</p> <blockquote class="twitter-tweet"><p>"Police, you are CYs condom," screams one student in English. Huge jeering of officers. Few gweilo cops around. Scuffles!</p> <p>— Bryan Harris (@bryanhimself) <a href="https://twitter.com/bryanhimself/status/517600180325994496">October 2, 2014</a></p></blockquote> <p>And the punchline:</p> <blockquote class="twitter-tweet" lang="en"><p>The wall the police are sandwiched against belongs to PLA barracks btw. They're looking down at the crowds.</p> <p>— Bryan Harris (@bryanhimself) <a href="https://twitter.com/bryanhimself/status/517599403675103233">October 2, 2014</a></p></blockquote> <script src="//platform.twitter.com/widgets.js"></script><p>Should the protest turn violent again, with tear gas and/or water cannon, keep a close eye on what the PLA will do: so far they have stayed out of it, but if the Police start losing control of the situation, things may escalate very quickly.</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="628" height="418" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/tear%20gas%20HK.jpg?1412240842" /> </div> </div> </div> http://www.zerohedge.com/news/2014-10-02/meanwhile-hong-kong-tonight-going-get-messy#comments Hong Kong Thu, 02 Oct 2014 09:06:49 +0000 Tyler Durden 495089 at http://www.zerohedge.com Nikkei Plunges 420 Points, Topix Tumbles 3%, Most Since March http://www.zerohedge.com/news/2014-10-02/nikkei-plunges-420-points-topix-tumbles-3-most-march <p>Define irony. Literally hours after financial entertainment outlet CNBC wrote an article in which it said that <em>"As fourth quarter kicks off, there's one market in Asia that has investors excited: <strong>Japan"</strong> </em>the Nikkei crashed.</p> <p>First, some more <a href="http://www.cnbc.com/id/102047110#.">humor from CNBC</a>, which quotes JPM who apparently does not realize that crushing your currency to generate nominal gains is a zero sum game, and instead of pitching Japan as the next big thing, he should be focusing on the "upside" in Venezuela or Argentina:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>The world's third largest economy may be struggling to shake off the drag from the sales tax hike that took effect in April, but a weakening yen, improving corporate profits and attractive valuations will likely power gains in equities in the coming months, say strategists. </p> <p>&nbsp;</p> <p><strong>"We are going to get a combination of value meeting growth – the Japanese market is cheap – so there's value, and on top of that we are going to get earnings growth," </strong>said Jesper Koll, head of Japanese equity research at JP Morgan Securities Japan. " </p> <p>&nbsp;</p> <p>Koll's optimism was shared by several other strategists.</p> <p>&nbsp;</p> <p>"We're overweight Japan. Abenomics is making progress, albeit slowly, the yen continues to weaken, which is good for stocks, and pension fund reform is a huge potential catalyst," said Simon Grose-Hodge, head of investment advisory, South Asia at LGT Bank.</p> </blockquote> <p>So yes, entertainment that is free <em><strong>and </strong></em>funny: a great combination. </p> <p>In the meantime, someone in Japan finally read Zero Hedge articles from early 2013 which were warning about precisely the kind of hyperstagflation that Japan is currently experiencing. That someone happens to be the former finance minister Hirohisa Fujii who in an interview yesterday, said that <strong>further falls in the yen may lead to market intervention. </strong></p> <p>You read that correct: not yen increases, <strong>falls!</strong> Which, coming just as the USDJPY touched 110 before plunging nearly 150 pips overnight, appears to have been heard loud and clear.</p> <p>Some of his other comments, which repeat everything we have said from Abenomics' Day1: </p> <ul> <li>BOJ’s policy of monetary easing leading to weak yen is mistaken</li> <li>Weaker yen hurts general public through high prices for imported food and fuel</li> <li>Delaying sales-tax rise would lead to a collapse in JGB market, rise in interest rates</li> </ul> <p>Ironic how all these people wait until they are "former" this and that before telling the truth. </p> <p>Perhaps it was these comments that forced Sumitomo Mitsui to admit that the USD/JPY is entering a correction phase this month, says Shinji Kureda, head of FX trading, and as a result it could decline to 108.26, the low on Sept. 23 and possibly even 107.39, the high on September. Or far, far lower once the failure of Abenomics is finally filtered through the skulls of the fat fingering momos that make up the Japanese market.</p> <p>And since the Nikkei stock market is nothing but a derivative of the Yen, what happened overnight puts the CNBC article above in a further amusing light because as of a few hours ago the Nikkei closed, plunging by more than 420 points, or down 2.6%, the biggest drop in months, with the Topix crashing as much as 3%, the most since March 14, on volume that was 26% above the average, and wiping out all of September's gains in one session. </p> <p>Something else those who acted on the CNBC article did not anticipate: all 33 industry groups down, led by real estate and glass/ceramics. The biggest decliners Tokuyama -7.1%, Nippon Electric Glass -5.7%, Suzuki -5.7%.</p> <p>And now we sit back and await news of another half a trillion plus fat finger as the Bank of Japan desperately struggles to preserve confidence in a crashing economy and market.</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="239" height="218" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/Abe%20sad.jpg?1412233904" /> </div> </div> </div> http://www.zerohedge.com/news/2014-10-02/nikkei-plunges-420-points-topix-tumbles-3-most-march#comments Abenomics Bank of Japan Hirohisa Fujii Japan Nikkei Real estate Yen Thu, 02 Oct 2014 07:14:31 +0000 Tyler Durden 495088 at http://www.zerohedge.com How Bad Could It Get? US Government Order Of 160,000 HazMat Suits Gives A Clue http://www.zerohedge.com/news/2014-10-01/how-bad-could-it-get-us-government-order-160000-hazmat-suits-gives-clue <p>Now that Ebola is officially in the US on an uncontrolled basis, the two questions on everyone's lips are i) who will get sick next and ii) how bad could it get? </p> <p>We don't know the answer to question #1 just yet, but when it comes to the second one, a press release three weeks ago from Lakeland Industries, a manufacturer and seller of a "comprehensive line of safety garments and accessories for the industrial protective clothing market" may provide some insight into just how bad the US State Department thinks it may get. Because when the US government buys 160,000 hazmat suits specifically designed against Ebola, just ahead of the worst Ebola epidemic in history making US landfall, one wonders: <strong>what do they know the we don't?</strong></p> <p>From <a href="http://www.prnewswire.com/news-releases/lakeland-industries-announces-global-availability-of-hazmat-suits-for-ebola-274892141.html">Lakeland Industries</a>:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>Lakeland Industries, Inc. (LAKE), a leading global manufacturer of industrial protective clothing for industry, municipalities, healthcare and to first responders on the federal, state and local levels, <strong>today announced the global availability of its protective apparel for use in handling the Ebola virus.</strong>&nbsp; In response to the increasing demand for specialty protective suits to be worm by healthcare workers and others being exposed to Ebola, Lakeland is increasing its manufacturing capacity for these garments and includes proprietary processes for specialized seam sealing, a far superior technology for protecting against viral hazards than non-sealed products. </p> <p>&nbsp;</p> <p>"<strong>Lakeland stands ready to join the fight against the spread of Ebola</strong>," said Christopher J. Ryan, President and Chief Executive Officer of Lakeland Industries.&nbsp; "We understand the difficulty of getting appropriate products through a procurement system that in times of crisis favors availability over specification, and we hope our added capacity will help alleviate that problem.&nbsp; <strong>With the U.S. State Department alone putting out a bid for 160,000 suits, we encourage all protective apparel companies to increase their manufacturing capacity for sealed seam garments so that our industry can do its part in addressing this threat to global health</strong>.</p> </blockquote> <p>Of course, purchases by the US government are bought and paid for by taxpayers. For everyone else <a href="http://www.dotmed.com/listing/hazardous-materials/lakeland-industries/80640-l/class-a-hazmat-suit/1715976">there's $1200 mail-order delivery</a>:</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2014/09/Lakeland_1.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2014/09/Lakeland_1_0.jpg" width="600" height="545" /></a></p> <p>&nbsp;</p> <p>That said... 160,000 HazMats for a disease that is supposedly not airborne? Mmmk.</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="320" height="400" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/lakeland%20teaser.jpg?1412176650" /> </div> </div> </div> http://www.zerohedge.com/news/2014-10-01/how-bad-could-it-get-us-government-order-160000-hazmat-suits-gives-clue#comments Thu, 02 Oct 2014 06:17:21 +0000 Tyler Durden 495054 at http://www.zerohedge.com Gold Is “Universally Acceptable” and Why China Is Buying - Greenspan http://www.zerohedge.com/news/2014-10-02/gold-%E2%80%9Cuniversally-acceptable%E2%80%9D-and-why-china-buying-greenspan <p><span id="docs-internal-guid-1fb59452-cf73-aa1a-b853-095adbb47f75"><span style="font-size: 19px; font-family: Calibri; font-weight: bold; vertical-align: baseline; white-space: pre-wrap; background-color: transparent;"><a href="http://www.goldcore.com/goldcore_blog/Gold_Is_Universally_Acceptable_and_Why_China_Is_Buying_Greenspan">Gold Is “Universally Acceptable” and Why China Is Buying &nbsp;- Greenspan</a><br /><span style="font-size: 15px; font-weight: normal; font-style: italic; vertical-align: baseline; background-color: transparent;"><br />Alan Greenspan</span><span style="font-size: 15px; font-weight: normal; vertical-align: baseline; background-color: transparent;">, former Chairman of the Fed, had an article entitled </span><span style="font-size: 15px; font-weight: normal; font-style: italic; vertical-align: baseline; background-color: transparent;">“Golden Rule - Why Beijing Is Buying”</span><span style="font-size: 15px; font-weight: normal; vertical-align: baseline; background-color: transparent;"> published in </span><span style="font-size: 15px; font-weight: normal; font-style: italic; vertical-align: baseline; background-color: transparent;">Foreign Policy,</span><span style="font-size: 15px; font-weight: normal; vertical-align: baseline; background-color: transparent;"> the journal of the influential Council on Foreign Relations in which he extols the virtues of gold as “universally acceptable.”</span></span></span></p> <p style="line-height: 1; margin-top: 0pt; margin-bottom: 0pt;" dir="ltr"><span style="font-size: 15px; font-family: Calibri; color: #000000; background-color: transparent; font-weight: normal; font-style: normal; font-variant: normal; text-decoration: none; vertical-align: baseline; white-space: pre-wrap;"><br class="kix-line-break" /></span><span style="font-size: 15px; font-family: Calibri; color: #000000; background-color: transparent; font-weight: normal; font-style: normal; font-variant: normal; text-decoration: none; vertical-align: baseline; white-space: pre-wrap;"><img src="https://lh6.googleusercontent.com/r4Iow5PMBBuDzVXuyA2ttHpHaSPd4m8gN-Jx3vmYOKVyhmf5W8rhIF5Z9mM7jHFOilFgtKjy7lUKclLRwwQOfV3djhAQ7GqvtCZ2WrdcqAUf9V9UnYc3y2mFeydJa5wuCw" width="249px;" height="89px;" style="border: none; transform: rotate(0.00rad);" /></span><span style="font-size: 15px; font-family: Calibri; color: #000000; background-color: transparent; font-weight: normal; font-style: normal; font-variant: normal; text-decoration: none; vertical-align: baseline; white-space: pre-wrap;"><br class="kix-line-break" /></span><span style="font-size: 15px; font-family: Calibri; color: #000000; background-color: transparent; font-weight: normal; font-style: normal; font-variant: normal; text-decoration: none; vertical-align: baseline; white-space: pre-wrap;"><br class="kix-line-break" /></span><span style="font-size: 15px; font-family: Calibri; color: #000000; background-color: transparent; font-weight: normal; font-style: normal; font-variant: normal; text-decoration: none; vertical-align: baseline; white-space: pre-wrap;">Greenspan, former Chairman of the Federal Reserve Board of the United States from 1987 to 2006, and a key architect in the global financial crisis, points out that if the world’s largest gold consumer, China, used a portion of its massive $4 trillion foreign exchange reserves to buy enough gold bullion it could displace the U.S. as the world’s largest holder of gold bullion. &nbsp;The U.S. holdings are believed to be just over 8,500 tonnes with an estimated value of just $328 billion as of spring 2014. &nbsp;</span></p> <p><span><span style="font-size: 19px; font-family: Calibri; font-weight: bold; vertical-align: baseline; white-space: pre-wrap; background-color: transparent;"><strong id="docs-internal-guid-7af171d0-cf74-137d-9fba-4dcd8282366e" style="font-weight: normal;"><br /></strong></span></span></p> <p style="line-height: 1; margin-top: 0pt; margin-bottom: 0pt;" dir="ltr"><span style="font-size: 15px; font-family: Calibri; color: #000000; background-color: transparent; font-weight: normal; font-style: normal; font-variant: normal; text-decoration: none; vertical-align: baseline; white-space: pre-wrap;"><img src="https://lh4.googleusercontent.com/5GMyrIPTalBGe1qhcjreJxipNIrbCyNv6UxOBpfv-rmlEsyPKRG4f3inFcmFePGn5jxSeyx5NlD7d0YOdcG6-_chjEGdW_AqDCdJXPePkbl181ukd0F5VFEMWL2bwY4iNA" width="600px;" height="594px;" style="border: none; transform: rotate(0.00rad);" /></span><span style="font-size: 15px; font-family: Calibri; color: #000000; background-color: transparent; font-weight: normal; font-style: normal; font-variant: normal; text-decoration: none; vertical-align: baseline; white-space: pre-wrap;"><br class="kix-line-break" /></span><span style="font-size: 15px; font-family: Calibri; color: #000000; background-color: transparent; font-weight: normal; font-style: normal; font-variant: normal; text-decoration: none; vertical-align: baseline; white-space: pre-wrap;"><br class="kix-line-break" /></span><span style="font-size: 15px; font-family: Calibri; color: #000000; background-color: transparent; font-weight: normal; font-style: normal; font-variant: normal; text-decoration: none; vertical-align: baseline; white-space: pre-wrap;"><br class="kix-line-break" /></span><span style="font-size: 15px; font-family: Calibri; color: #000000; background-color: transparent; font-weight: normal; font-style: normal; font-variant: normal; text-decoration: none; vertical-align: baseline; white-space: pre-wrap;">Greenspan points out how gold is the ultimate form of money in the world and is “universally acceptable”.</span><span style="font-size: 15px; font-family: Calibri; color: #000000; background-color: transparent; font-weight: normal; font-style: normal; font-variant: normal; text-decoration: none; vertical-align: baseline; white-space: pre-wrap;"><br class="kix-line-break" /></span><span style="font-size: 15px; font-family: Calibri; color: #000000; background-color: transparent; font-weight: normal; font-style: normal; font-variant: normal; text-decoration: none; vertical-align: baseline; white-space: pre-wrap;"><br class="kix-line-break" /></span><span style="font-size: 15px; font-family: Calibri; color: #000000; background-color: transparent; font-weight: normal; font-style: normal; font-variant: normal; text-decoration: none; vertical-align: baseline; white-space: pre-wrap;">He concedes that “a return to the gold standard in any form is not on anybody’s horizon” right now but points out that if sovereign governments have financial crises, their fiat currencies may not be accepted as payment.</span><span style="font-size: 15px; font-family: Calibri; color: #000000; background-color: transparent; font-weight: normal; font-style: normal; font-variant: normal; text-decoration: none; vertical-align: baseline; white-space: pre-wrap;"><br class="kix-line-break" /></span><span style="font-size: 15px; font-family: Calibri; color: #000000; background-color: transparent; font-weight: normal; font-style: normal; font-variant: normal; text-decoration: none; vertical-align: baseline; white-space: pre-wrap;"><br class="kix-line-break" /></span><span style="font-size: 15px; font-family: Calibri; color: #000000; background-color: transparent; font-weight: normal; font-style: normal; font-variant: normal; text-decoration: none; vertical-align: baseline; white-space: pre-wrap;">He highlights that bullion holds special properties that no currency can claim, except maybe silver. The fiat currencies and moving exchange rates that make up our monetary system of today are backed by the tax raising abilities of government’s of sovereign nations. &nbsp;However, gold bullion for over 2000 years has been an “unquestioned acceptance as payment”, writes Greenspan.</span></p> <p><span><span style="font-size: 19px; font-family: Calibri; font-weight: bold; vertical-align: baseline; white-space: pre-wrap; background-color: transparent;"><strong style="font-weight: normal;"><br /></strong></span></span></p> <p style="line-height: 1; margin-top: 0pt; margin-bottom: 0pt;" dir="ltr"><span style="font-size: 15px; font-family: Calibri; color: #000000; background-color: transparent; font-weight: normal; font-style: italic; font-variant: normal; text-decoration: none; vertical-align: baseline; white-space: pre-wrap;">“No questions are raised when gold or direct claims to gold are offered in payment of an obligation; it was the only form of payment, for example, that exporters to Germany would accept as World War II was drawing to a close.”</span><span style="font-size: 15px; font-family: Calibri; color: #000000; background-color: transparent; font-weight: normal; font-style: italic; font-variant: normal; text-decoration: none; vertical-align: baseline; white-space: pre-wrap;"><br class="kix-line-break" /></span><span style="font-size: 15px; font-family: Calibri; color: #000000; background-color: transparent; font-weight: normal; font-style: italic; font-variant: normal; text-decoration: none; vertical-align: baseline; white-space: pre-wrap;"><br class="kix-line-break" /></span><span style="font-size: 15px; font-family: Calibri; color: #000000; background-color: transparent; font-weight: normal; font-style: italic; font-variant: normal; text-decoration: none; vertical-align: baseline; white-space: pre-wrap;">“Today, the acceptance of fiat money -- currency not backed by an asset of intrinsic value -- rests on the credit guarantee of sovereign nations endowed with effective taxing power, a guarantee that in crisis conditions has not always matched the universal acceptability of </span><span style="font-size: 15px; font-family: Calibri; color: #000000; background-color: transparent; font-weight: normal; font-style: normal; font-variant: normal; text-decoration: none; vertical-align: baseline; white-space: pre-wrap;">gold.”</span><span style="font-size: 15px; font-family: Calibri; color: #000000; background-color: transparent; font-weight: normal; font-style: normal; font-variant: normal; text-decoration: none; vertical-align: baseline; white-space: pre-wrap;"><br class="kix-line-break" /></span><span style="font-size: 15px; font-family: Calibri; color: #000000; background-color: transparent; font-weight: normal; font-style: normal; font-variant: normal; text-decoration: none; vertical-align: baseline; white-space: pre-wrap;"><br class="kix-line-break" /></span><span style="font-size: 15px; font-family: Calibri; color: #000000; background-color: transparent; font-weight: normal; font-style: italic; font-variant: normal; text-decoration: none; vertical-align: baseline; white-space: pre-wrap;">“If the dollar or any other fiat currency were universally acceptable at all times, central banks would see no need to hold any gold. The fact that they do indicates that such currencies are not a universal substitute. Of the 30 advanced countries that report to the International Monetary Fund, only four hold no gold as part of their reserve balances. Indeed, at market prices, the gold held by the central banks of developed economies was worth $762 billion as of December 31, 2013, comprising 10.3 percent of their overall reserve balances. (The IMF held an additional $117 billion.) “</span><span style="font-size: 15px; font-family: Calibri; color: #000000; background-color: transparent; font-weight: normal; font-style: italic; font-variant: normal; text-decoration: none; vertical-align: baseline; white-space: pre-wrap;"><br class="kix-line-break" /></span><span style="font-size: 15px; font-family: Calibri; color: #000000; background-color: transparent; font-weight: normal; font-style: italic; font-variant: normal; text-decoration: none; vertical-align: baseline; white-space: pre-wrap;"><br class="kix-line-break" /></span><span style="font-size: 15px; font-family: Calibri; color: #000000; background-color: transparent; font-weight: normal; font-style: italic; font-variant: normal; text-decoration: none; vertical-align: baseline; white-space: pre-wrap;">“If, in the words of the British economist John Maynard Keynes, gold were a “barbarous relic,” central banks around the world would not have so much of an asset whose rate of return, including storage costs, is negative.”</span><span style="font-size: 15px; font-family: Calibri; color: #000000; background-color: transparent; font-weight: normal; font-style: italic; font-variant: normal; text-decoration: none; vertical-align: baseline; white-space: pre-wrap;"><br class="kix-line-break" /></span><span style="font-size: 15px; font-family: Calibri; color: #000000; background-color: transparent; font-weight: normal; font-style: normal; font-variant: normal; text-decoration: none; vertical-align: baseline; white-space: pre-wrap;"><br class="kix-line-break" /></span><span style="font-size: 15px; font-family: Calibri; color: #000000; background-color: transparent; font-weight: normal; font-style: normal; font-variant: normal; text-decoration: none; vertical-align: baseline; white-space: pre-wrap;">In the article, he also suggests that China will find it hard to compete with the U.S. in the long term as China is an authoritarian, one party state and does not have free markets.</span><span style="font-size: 15px; font-family: Calibri; color: #000000; background-color: transparent; font-weight: normal; font-style: normal; font-variant: normal; text-decoration: none; vertical-align: baseline; white-space: pre-wrap;"><br class="kix-line-break" /></span><span style="font-size: 15px; font-family: Calibri; color: #000000; background-color: transparent; font-weight: normal; font-style: normal; font-variant: normal; text-decoration: none; vertical-align: baseline; white-space: pre-wrap;"><br class="kix-line-break" /></span><span style="font-size: 15px; font-family: Calibri; color: #000000; background-color: transparent; font-weight: normal; font-style: normal; font-variant: normal; text-decoration: none; vertical-align: baseline; white-space: pre-wrap;">This comparison is questionable given that many are concerned that the U.S. markets are no longer free. Markets see daily interventions and manipulations and are increasingly influenced by corporate and banking monopolies including the Federal Reserve itself and its continuing massive intervention in financial markets and the monetary system. </span><span style="font-size: 15px; font-family: Calibri; color: #000000; background-color: transparent; font-weight: normal; font-style: normal; font-variant: normal; text-decoration: none; vertical-align: baseline; white-space: pre-wrap;"><br class="kix-line-break" /></span><span style="font-size: 15px; font-family: Calibri; color: #000000; background-color: transparent; font-weight: normal; font-style: normal; font-variant: normal; text-decoration: none; vertical-align: baseline; white-space: pre-wrap;"><br class="kix-line-break" /></span><span style="font-size: 15px; font-family: Calibri; color: #000000; background-color: transparent; font-weight: normal; font-style: normal; font-variant: normal; text-decoration: none; vertical-align: baseline; white-space: pre-wrap;">There are also concerns that the U.S. is jettisoning many of the civil liberties, civil rights and freedoms that the Founding Fathers fought for and achieved and the emerging surveillance state has the hallmarks of a potentially authoritarian one or two party, corporate state.</span></p> <p><span><span style="font-size: 19px; font-family: Calibri; font-weight: bold; vertical-align: baseline; white-space: pre-wrap; background-color: transparent;"><span style="font-weight: normal;"><br /><span style="font-size: 15px; vertical-align: baseline; background-color: transparent;">The article shows that senior monetary officials and policy makers continue to see gold as an important part of our modern financial and monetary system and as an important strategic assset. Influential global policy makers do not see gold as a “barbarous relic” as many of Keynes ardent disciples of today, including Paul Krugman, would have people believe.</span><span style="font-size: 15px; vertical-align: baseline; background-color: transparent;"><br class="kix-line-break" /></span><span style="font-size: 15px; vertical-align: baseline; background-color: transparent;"><br class="kix-line-break" /></span><span style="font-size: 15px; vertical-align: baseline; background-color: transparent;">While &nbsp;he says that gold is important and the Chinese are right to accumulate it, he appears be warning the Chinese government that accumulating too much gold might lead to a very strong yuan on international markets which could lead to deflation and a recession in China’s export dependent economy.</span><span style="font-size: 15px; vertical-align: baseline; background-color: transparent;"><br class="kix-line-break" /></span><span style="font-size: 15px; vertical-align: baseline; background-color: transparent;"><br class="kix-line-break" /></span><span style="font-size: 15px; vertical-align: baseline; background-color: transparent;"><img src="https://lh5.googleusercontent.com/tzCQPcZouw6euZ3ewt7UW4a8eew3__jKqH8JLVF08tcgbqgyF045sSflkfxCpYr-BbqAmbohL3E3h36mFl3UurLZwdWMrEkJ0uJdUlpT8AJwB2PR2BRyM3VyEPqDxh-teQ" width="403px;" height="275px;" style="border-style: none; transform: rotate(0rad);" /></span><span style="font-size: 15px; vertical-align: baseline; background-color: transparent;"><br class="kix-line-break" /></span><span style="font-size: 15px; vertical-align: baseline; background-color: transparent;"><br class="kix-line-break" /></span><span style="font-size: 15px; vertical-align: baseline; background-color: transparent;"><br class="kix-line-break" /></span><span style="font-size: 15px; vertical-align: baseline; background-color: transparent;">The Council on Foreign Relations may be concerned about the ramifications of China accumulating larger gold reserves than those that the U.S. has and the People’s Bank of China (PBOC) giving the yuan some form of gold backing. This would pose serious challenges to the dollar as global reserve currency and thus to U.S. hegemony.</span><span style="font-size: 15px; vertical-align: baseline; background-color: transparent;"><br class="kix-line-break" /></span><span style="font-size: 15px; vertical-align: baseline; background-color: transparent;"><br class="kix-line-break" /></span><span style="font-size: 15px; vertical-align: baseline; background-color: transparent;">Greenspan has on a few occasions warned that the U.S. needs to be careful not to debase the dollar and engage in fiat money ‘extremis.’ If that happens fiat dollars would no longer be accepted on global markets with attendant difficult financial and economic consequences.</span><span style="font-size: 15px; vertical-align: baseline; background-color: transparent;"><br class="kix-line-break" /></span></span></span></span></p> <p><span id="docs-internal-guid-7af171d0-cf78-49f5-6628-aa15cb617006"><span style="font-size: 15px; font-family: Calibri; font-weight: bold; vertical-align: baseline; white-space: pre-wrap;">RECEIVE BREAKING NEWS AND UPDATES </span><a href="http://info.goldcore.com/goldcore_email_subscription_preferences"><span style="font-size: 15px; font-family: Calibri; color: #0000ff; font-weight: bold; vertical-align: baseline; white-space: pre-wrap; background-color: #f8f8f9;">HERE</span></a></span><span><span style="font-size: 19px; font-family: Calibri; font-weight: bold; vertical-align: baseline; white-space: pre-wrap; background-color: transparent;">&nbsp;</span></span></p> http://www.zerohedge.com/news/2014-10-02/gold-%E2%80%9Cuniversally-acceptable%E2%80%9D-and-why-china-buying-greenspan#comments Alan Greenspan Central Banks China Federal Reserve Germany International Monetary Fund John Maynard Keynes Krugman Maynard Keynes Paul Krugman Recession Reserve Currency Yuan Thu, 02 Oct 2014 06:07:51 +0000 GoldCore 495087 at http://www.zerohedge.com Why Is the U.S. Government Dictatorial Towards Dissenters ... But Welcoming Ebola Carriers With Open Arms? http://www.zerohedge.com/news/2014-10-02/why-us-government-dictatorial-towards-dissenters-%E2%80%A6-casual-towards-ebola-carriers <p><a href="http://www.washingtonsblog.com/2014/09/u-s-supreme-court-justice-brave-new-world-capable-orwellian-world.html" title="3 Supreme Court justices, ">3 Supreme Court justices, </a><a href="http://www.washingtonsblog.com/2014/09/u-s-supreme-court-justice-brave-new-world-capable-orwellian-world.html" title="2 top level NSA executives">2 top level NSA executives</a><a href="http://www.washingtonsblog.com/2014/09/u-s-supreme-court-justice-brave-new-world-capable-orwellian-world.html" title=", numerous Democratic and Republican Congress members">, numerous Democratic and Republican Congress members</a> and other top American officials have said that we&rsquo;re basically in a police state.</p> <p>Obama has <a href="http://www.washingtonsblog.com/2012/04/obama-has-prosecuted-more-whistleblowers-than-all-other-presidents-combined.html" title="prosecuted more whistleblowers than all other presidents combined">prosecuted more whistleblowers than <em>all other presidents <strong>combined</strong></em></a>.&nbsp; Indeed, the Obama administration is literally treating whistleblowers <a href="http://www.newrepublic.com/article/112554#" target="_blank" title="being treated as terrorists">as <em>terrorists</em></a>. Dissent is also treated as terrorism, and the massive spy apparatus is <a href="http://www.washingtonsblog.com/2014/05/spying-meant-crush-dissent-terrorism.html" title="focused on crushing dissent">focused on crushing dissent</a>.&nbsp; Even trying to protect oneself from spying is <a href="http://www.washingtonsblog.com/2014/07/nsa-targets-extremists-people-try-avoid-intrusive-spying-using-privacy-tools.html" title="treated as&amp;nbsp; extremism">treated as&nbsp; extremism</a>. And investigative journalism has been <a href="http://www.washingtonsblog.com/2014/03/veteran-new-york-times-reporter-obama-administration-greatest-enemy-press-freedom-encountered-least-generation.html" title="criminalized investigative reporting">criminalized by the Obama administration</a>.</p> <p>And yet the government is allowing people from Ebola-infected countries like Liberia visit America &hellip; <a href="http://thehill.com/policy/healthcare/219492-white-house-no-ebola-travel-restrictions" target="_blank" title="even after">even <em>after</em></a> a Liberian brought Ebola to Dallas.</p> <p>Why don&rsquo;t we enforce a travel ban &hellip; just until the African epidemic ends?</p> <p>In July, Congressman Alan Grayson <a href="http://www.voanews.com/content/obama-administration-asked-to-impose-ebola-travel-ban-to-us/1968617.html" target="_blank" title="called for a travel ban">called for a travel ban</a> from Liberia and other hot zone countries, to be lifted 90 days after the last case of Ebola is reported.</p> <p><a href="https://www.internationalsos.com/ebola/index.cfm?content_id=435&amp;language_id=ENG" target="_blank" title="Scores of African nations">Scores of African nations</a> have enacted Ebola travel restrictions.</p> <p>Kit Daniels <a href="http://www.infowars.com/will-obama-finally-halt-flights-from-ebola-stricken-countries/" target="_blank" title="notes">notes</a>:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>In mid-August, <a href="http://www.usatoday.com/story/todayinthesky/2014http://www.usatoday.com/story/todayinthesky/2014/08/15/korean-air-suspends-kenya-flights-as-ebola-precaution/14101227//08/15/korean-air-suspends-kenya-flights-as-ebola-precaution/14101227/" target="_blank" title="Korean Air">Korean Air</a> and <a href="http://www.reuters.com/article/2014/08/16/us-health-ebola-kenya-airways-idUSKBN0GG0F520140816" target="_blank" title="Kenya Airways">Kenya Airways</a> announced they were halting flights to the West African countries ravaged by Ebola, and <a href="http://www.dailymail.co.uk/travel/travel_news/article-2735875/British-Airways-halts-flights-two-Ebola-hit-nations-rest-year-amid-growing-concerns-worst-outbreak-ever.html" target="_blank" title="British Airways">British Airways</a> and <a href="http://mashable.com/2014/08/27/air-france-ebola/" target="_blank" title="Air France">Air France</a> also decided to suspend service to the Ebola hot zone a few weeks later.</p> <p>&nbsp;</p> <p>&ldquo;France is recommending that its citizens leave Sierra Leone and Liberia, two of the countries hardest hit by the worst ever outbreak of the disease,&rdquo; Jessica Plautz reported for <a href="http://mashable.com/2014/08/27/air-france-ebola/" target="_blank" title="Mashable">Mashable</a>. &ldquo;The government said the increasing spread of the disease prompted its request that the airline to suspend flights.&rdquo;</p> <p>&nbsp;</p> <p>Yet the Obama administration made no such request to U.S. airlines and government flights</p> </blockquote> <p>Indeed, there&rsquo;s not only open travel for people from hot zone countries, but there are limited screening procedures at airports, and doctors <a href="http://www.usatoday.com/story/news/nation/2014/10/01/hospital-ebola-patient/16527143/" target="_blank" title="aren’t screening very vigorously">aren&rsquo;t screening very vigorously</a> either.</p> <p>While the Centers for Diseases Control are talking as if they are confident, the reality is different:</p> <ul> <li>The CDC&rsquo;s <a href="http://www.huffingtonpost.com/2014/10/01/ebola-cdc-budget_n_5913844.html" target="_blank" title="budget has been slashed">budget has been slashed</a></li> </ul> <ul> <li>As Dr. Sanjay Gupta <a href="http://www.cnn.com/2014/08/01/health/ebola-outbreak/index.html?hpt=hp_inthenews" target="_blank" title="notes">notes</a>, there have been lapses in safety at the Centers for Disease Control and U.S. hospitals in treating infectious diseases</li> </ul> <p>American government officials are acting arrogantly - and may be putting us all at risk - in the same way that:</p> <ul> <li>U.S. economic officials thought that the U.S. had the world&#39;s strongest financial system - and that they had <a data-mce-="" href="http://img.timeinc.net/time/magazine/archive/covers/1999/1101990215_400.jpg">figured out</a> how to permanently stabilize the economy in a prosperous utopia&nbsp; - but their models were&nbsp; <a data-mce-="" href="http://www.washingtonsblog.com/2012/06/mainstream-economics-is-a-cult.html">completely flawed</a>, and made <a data-mce-="" href="http://www.washingtonsblog.com/2010/03/greenspan-the-financial-crisis-was-caused-by-a-once-in-a-century-event-%E2%80%A2-taleb-any-pilot-who-doesnt-know-about-storms-shouldnt-be-in-the-cockpit.html">wildly</a> erroneous <a data-mce-="" href="http://www.washingtonsblog.com/2012/06/the-biggest-myth-preventing-an-economic-recovery.html">assumptions</a></li> </ul> <ul> <li>The Japanese had the reputation as being the world&#39;s most technologically sophisticated and conscientious country ... but their arrogance and <a data-mce-="" href="http://www.washingtonsblog.com/2012/10/tepco-admits-it-knew-of-problems-at-fukushima-before-the-earthquake-hit.html">attempt to underplay</a> the dangers of nuclear power caused them to take <a data-mce-="" href="http://www.washingtonsblog.com/2013/11/tepco-destroyed-the-natural-seawall-which-would-have-protected-fukushima-from-the-tsunami.html">incredibly</a> <a data-mce-="" href="http://www.washingtonsblog.com/2011/11/engineers-knew-fukushima-might-be-unsafe-but-covered-it-up-and-now-the-extreme-vulnerabilty-of-new-u-s-plants-is-being-covered-up.html">risky</a> <a data-mce-="" href="http://www.bloomberg.com/news/2011-03-23/fukushima-engineer-says-he-covered-up-flaw-at-shut-reactor.html">actions</a> which let Fukushima melt down</li> </ul> <p>The government is <em>much</em> more focused on bombing yet more Arabs in yet more wars than stopping a pandemic which could turn into the modern equivalent of the Great Plague.&nbsp;</p> <p>But stupid government policy is <a data-mce-="" href="http://www.washingtonsblog.com/2013/11/stunning-reasons-americans-afraid-government-terrorists.html">more dangerous than terrorism</a>.</p> <p><em>Postscript:&nbsp; Here&#39;s the <em><em><a href="http://www.washingtonpost.com/news/to-your-health/wp/2014/10/01/why-hasnt-the-u-s-closed-its-airports-to-travelers-from-ebola-ravaged-countries/" target="_blank" title="See this">contrary and mainstream</a></em></em> view.</em></p> http://www.zerohedge.com/news/2014-10-02/why-us-government-dictatorial-towards-dissenters-%E2%80%A6-casual-towards-ebola-carriers#comments Alan Grayson France Grayson Nuclear Power Obama Administration Reality SPY Thu, 02 Oct 2014 04:43:36 +0000 George Washington 495086 at http://www.zerohedge.com Former Czech President Blasts "The West's Lies About Russia Are Monstrous" http://www.zerohedge.com/news/2014-10-01/former-czech-president-blasts-wests-lies-about-russia-are-monstrous <p><em>Authored by <a href="http://www.spectator.co.uk/features/9322652/europe-needs-systemic-change/">Neil Clark, originally posted at The Spectator</a>,</em></p> <p><strong>Václav Klaus has made a habit of saying things others shy away from saying, but it doesn’t seem to have done him much harm in the popularity stakes. </strong>Quite the opposite: the 73-year-old ardently Eurosceptic free-marketeer has legitimate claims to be regarded as the most successful ‘true blue’ conservative politician in Europe over the past 25 years. He was, after all, <strong>prime minister of the Czech Republic from 1992 to 1998 and then his country’s president for a further ten years, from 2003 to 2013.</strong></p> <p>So when we meet after a typically hearty Serbian lunch — at the International Science and Public Conference in Belgrade — I am keen to ask if he has any advice for David Cameron and the British Conservative party.</p> <p>‘I was invited to a conference last year in Windsor which was called the Conservative Renewal Conference,’ he says. ‘I made a speech in which I asked the question: “Do you really need a renewal — or don’t you think it would be sufficient to have a return?” My speech stressed the need to return to standard conservative ideas and approaches. I am afraid the current leadership of the Conservative party are not exactly doing that.’</p> <p>Klaus’s message clearly resonates more with activists than with the serial ‘modernisers’ at the top of the party. ‘After I had finished my speech, two or three older ladies came up to me and said, “It was like Maggie’s speech!” So I find the Conservative party now rather confused in its ideas. The party is playing with the green ideas in a way I can’t accept.’</p> <p>Klaus is not too keen — to say the least — about another element of the ‘modernising’ agenda. ‘The same-sex marriages and all that stuff about family, to put it broadly, is for me another tragic misunderstanding by the current leaders of the party and I am very sorry about that.’</p> <p><span style="text-decoration: underline;"><strong>We move on, inevitably, to Europe. </strong></span><strong>What effect does Klaus think a British referendum on EU membership — and the prospect of a UK withdrawal — might have for the Continent? ‘It would send a strong signal.</strong> I was very angry, even in the communist era, looking at Britain from the outside, from behind the Iron Curtain, that Britain decided to leave EFTA to join the EEC in the early 1970s.’</p> <p>It was a Conservative prime minister, Edward Heath, who took that momentous step. What, I wonder, does Klaus think of the present Conservative leader’s line on Europe? <strong>‘I have met Mr Cameron several times and I am not so sure about his credentials on the EU. I understand he must somehow reflect the division in the whole country and in his party, but nevertheless I don’t think that in a secret ballot in a referendum that he would vote yes [for Britain to remain in the EU] — but this is only my guesstimate.’</strong></p> <p><span style="text-decoration: underline;"><strong>Listen to Klaus in full flow on the absurdities of the EU and it’s hard to think why any sane individual — on left or right — would want their country to stay in it.</strong></span> ‘A few days ago I studied the names of the EU commissioners under Mr Juncker, and their portfolios. We in my country say that 16 is already too high for having meaningful portfolios. But the EU now has 28, more than in any country in our part of the world. If you look at the names of those portfolios, I really don’t believe my eyes. The former Estonian prime minister is a commissioner for digital markets. As an economist I really don’t know what the term “digital markets” means. Plus there is another, a German politician, Günther Oettinger, who is the commissioner for “digital economy and society”. We would laugh in the communist era to have such names for the members of our cabinet.<strong> I can’t imagine what these commissioners are doing</strong>.’</p> <p>I put it to Klaus that in the bloated and bureaucratic EU economic model, we have the worst of all worlds — one which pleases neither genuine socialists, nor Thatcherite free-marketers, and he readily agrees. <strong>‘What we have in Europe now is not the German Soziale Marktwirtschaft — the social market economy — but the German model deteriorated by another adjective, “ecological”.’</strong></p> <p>‘I started my political career after the fall of communism with a well-known slogan: “I want to introduce markets without adjectives.” There was a big fight in the country about this phrase. They said, “Klaus wants to introduce markets without social policy.” “No,” I said. “There can be a social policy, but the slogan means a market economy with an additional social policy and not a social market.”The sequence of the words is all important. At present we are going deeper and deeper and deeper into the ecological and social market economy.’</p> <p>Whatever we decide to call the current system, he adds, it clearly isn’t working for Europe.<strong> ‘I am really shocked to see leading EU and European politicians pretending that everything is OK, which is ridiculous and funny,’ </strong>Klaus says. ‘I recently read an article by a well-known German economist, Professor Sinn, who has studied the situation in Italy. He presented statistical data which showed that GDP in Italy has declined by 9 per cent since 2000. It’s unimaginable! I don’t think communist Czechoslovakia would have survived such a long-term decline. At the same time, industrial output declined in the same period by 25 per cent! One quarter of the economy simply disappeared.’</p> <p><span style="text-decoration: underline;"><strong>Klaus believes the EU is beyond reform and has called for it to be replaced with an ‘Organisation of European States’ — a simple free trade association which would not pursue political integration.</strong></span> He recalls his own experience at the forefront of Czechoslovakia’s Velvet Revolution in 1989. ‘When we started to change my country we quite deliberately did not use the term “reform” — we used the word “transformation”, because we wanted a systemic change. Such a systemic change is needed in Europe today.’</p> <p>It’s not just on the economy that Europe has got it wrong, says Klaus.<strong> He doesn’t agree with the western elite’s current hostility towards Russia, which he believes is based on a false and outdated view of the country.</strong> ‘I remember one person in our country who at one moment was minister of foreign affairs, telling me that he hated communism so much that he was not even able to read Dostoevsky. I have remembered that statement for decades and I am afraid that the current propaganda against Russia is based on a similar argument and way of thinking. I spent most of my life in a communist Czechoslovakia under Soviet domination. <strong>But I differentiate between the Soviet Union and Russia. Those who are not able to understand the difference are simply not looking with open eyes. I always argue with my American and British friends that although the political system in Russia is different from the system in our countries and we wouldn’t be happy to live in such a system, to compare the current Russia with Leonid Brezhnev’s Soviet Union is stupid.’</strong></p> <p><span style="text-decoration: underline;"><strong>He says, with finality: ‘The US/EU propaganda against Russia is really ridiculous and I can’t accept it.’</strong></span></p> <p><strong>Klaus wants to transfer other democratic decision-making powers back to the nation states.</strong> ‘I’m not just criticising the EU arrangements — at the same time I’m very critical of global governance and the shift to transnationalism. A week ago I was in Hong Kong and I criticised the naive opening up of countries without keeping or maintaining the anchoring of the nation state. Doing this leads either to anarchy, or to global governance. <strong>My vision for Europe is a Europe of sovereign nation states</strong>, definitely. <strong>But we have already gone well beyond simply economic integration. The EU is a post-democratic and post-political system</strong>.’</p> <p>Klaus has spent his political career standing up for sovereignty and rejecting the dominant orthodoxies of the day. Unlike other leaders in the former Soviet bloc countries, he did not feel inhibited about criticising western policies when the Berlin Wall came down. He was one of the few to oppose the Clinton/Blair ‘humanitarian’ bombardment of Yugoslavia in 1999 (he was also strongly critical of the Iraq war).</p> <p><span style="text-decoration: underline;"><strong>Yet he feels the freedom to hold — and express — ‘unfashionable’ views in the West is now under increasing threat.</strong></span> </p> <p><span style="text-decoration: underline;"><strong>‘If you ask me whether I think liberty is under huge attack in Europe now, I would say yes. I feel repressed by not being allowed to express my views.</strong></span> I have permanent troubles with this. Suddenly I have discovered, for the first time in 20 years, having been invited to be a keynote speaker at a conference, that the organisers find out I have reservations about the EU, about same-sex marriages, about the Ukraine crisis, and they say, “We are very sorry, we have already found a different keynote speaker, thank you very much.” This is something I had experienced in the communist era but not in so-called free Europe. <span style="text-decoration: underline;"><strong>Only a very narrow range of opinions is now considered politically correct.’</strong></span></p> <p><strong>It’s to fight this worrying trend that Klaus has decided to launch a new project.</strong> ‘I am planning, if we can get the money and people together, to start a new quarterly journal in 2015 called Europe and Liberty.’</p> <p><em>It’s hard not to wish him well. In the not too distant past, Europe did have leaders who had clear and distinct visions: on the left, the likes of Sweden’s Olof Palme and Austria’s Bruno Kreisky; on the right, de Gaulle and Margaret Thatcher. You could agree or disagree but you could never say you didn’t know what they believed in, or that the views they held were not sincere. But they’ve been replaced by a generation of bland, uninspiring, consistently ‘on-message’ politicians.</em></p> <p><em>Václav Klaus is different, a throwback to the days when our leaders did stand for something and weren’t afraid to speak their minds. Let’s hope he does not turn out to be Europe’s last conviction politician.</em></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="262" height="338" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20141001_klaus.jpg?1412195519" /> </div> </div> </div> http://www.zerohedge.com/news/2014-10-01/former-czech-president-blasts-wests-lies-about-russia-are-monstrous#comments Czech Hong Kong Iraq Italy Ukraine Thu, 02 Oct 2014 03:32:20 +0000 Tyler Durden 495077 at http://www.zerohedge.com The Ethics Of Disease Control http://www.zerohedge.com/news/2014-10-01/ethics-disease-control <p><em>Submitted by <a href="http://mises.ca/posts/blog/the-ethics-of-disease-control/">Logan Albright via Mises Canada</a>,</em></p> <p>As the threat of the ebola virus looms large and the Center for Disease Control issues what are undoubtedly hyperbolic projections of over a million casualties to the disease by January, <strong>we owe it to ourselves as libertarians to ask a few questions about the ethics of disease control</strong>. Is it acceptable to use force to isolate a person with a contagious disease from society, and if so, under what circumstances? How far are we permitted to go in the invasion of another person’s personal liberty in order to secure a safe environment for the rest of us?</p> <p>We start, as always, with the Non-Aggression Principle, which states that it is impermissible to use force against another except in self-defense against an actual or threatened attack on another’s life or property. <strong>The fundamental issue with disease control, then, becomes whether or not exposing others to a disease qualifies as such an attack.</strong></p> <p><strong>Clearly, the intentional infection of another human being would qualify.</strong> Jamming a hypodermic needle into someone’s skin would be an attack even in the absence of any virus. So would mailing someone an envelope filled with anthrax. So would intentional sexual contact while knowingly carrying a sexually transmitted disease. In all these cases, the intent to cause harm is clear, as well as the actual harm caused, and self-defense to prevent this harm would be entirely justified.</p> <p><strong>But what about the murkier case where a person carries a disease, with no wish to spread it to anyone else, but with the knowledge that going about his day to day life may result in others becoming exposed?</strong></p> <p>Philosophers typically try to come to grips with these dilemmas by resorting to analogy. One might argue that going about with a dangerous disease is akin carrying a gun which may at any moment randomly fire. Clearly, if a person were to go about with such a gun (suppose it is strapped to his body and cannot be removed) this would constitute a threat to others, and he would be obligated to take precautions to minimize the risk. But this analogy fails because someone would have had to arrange the gun in the first place, and their agency would bear part of the responsibility. Viruses are, after all, simply very small animals that happen to be quite dangerous. There is no one at fault for the affliction, as there would be for the weapon contrived above.</p> <p>Another analogy might concern a man forced to go about chained to a vicious dog. By entering into society, the man with the dog endangers others, and it would be justified to prevent him from doing so. But again, the analogy fails because keeping a dog or any pet involves an act of conscious choice. We are responsible for the actions of our pets, but not for those of wild animals. If the dog merely chose to follow the man wherever he went, it would hardly seem just to confine him to his house for the safety of others, for he has not violated anyone’s rights. It is not his fault that the wild dog has a particularly strong attraction to him.</p> <p>This last analogy may come closest to the truth of the virus situation – an uncontrollable organism attaches itself to us against our will, and thereby poses a threat to others.</p> <p>From a technical standpoint, the afflicted person is not, through any means of his agency, aggressing against anyone else by going out in public with a communicable disease. The disease consists of autonomous creatures who act on their own, and while they lack will in the sense that man has will, they are still capable of acting without being directed, unlike a gun or a knife, or any other traditional instrument of aggression. It is unclear how the mere action of going outside violates anyone else’s rights, or why he should bear responsibility for the organisms temporarily using his body as a host.</p> <p><strong>Does intent matter? </strong>I think it is clear that it does. To return to the sexually transmitted disease example from earlier, this was clearly a violation of a partner’s rights by taking deliberate action to cause an infection, even if the disease may technically operate on its own. Contrast this with the virus sufferer who merely wants to get on with his daily life without harming anyone. Yet in the latter case the necessity for forceful quarantine is taken as given.</p> <p>Let us examine this topic from another angle. Suppose instead of a disease like ebola, against which most people have little in the way of defenses, we concern ourselves with a mostly benign virus, to which only 1 in 10,000 people have a fatal susceptibility. Now, for residents of large cities, it is difficult to go about one’s daily business without coming into contact with a great number of people, and the odds are high that at least one would exhibit this sensitivity. <em><strong>Does this mean that carriers of this mostly benign virus are in violation of the rights of others by going outside? Should they be compelled to stay in their homes or move to the country? And if so, should the wearers of perfumes and the eaters of peanuts to whom some percentage of citizens have serious allergies be subject to the same treatment?</strong></em> If we were to apply this rule as a broad principle, covering every circumstance, it would be the rare individual indeed who be permitted any sort of independent activity.</p> <p><strong>To the defenders of the quarantines, then, this question appears to be one of a degrees. </strong>It would be wrong to prevent someone with the common cold from getting on a train, but completely justified if the disease were instead smallpox. Both are contagious, and both are capable of killing, but the relative probability of death is what makes the difference. But if the unintentional spread of disease violates the Non-Aggression Principle, why should this not apply to all diseases, even if they are never lethal? After all, it is still assault to hit someone with a wiffle bat, even if there is no chance of killing them.</p> <p><strong>As one final point, I’d like to address the element of pre-crime inherent in any attempts at forcible quarantine. </strong>A person who goes about with a potentially deadly virus, yet who has not yet infected anyone, and who indeed may never do so, for infection is not certain, has violated no one’s rights. Nor is he making any active and explicit threat to do so. To use force on him, therefore, is to punish him for a crime he has not, and may never have, committed. This sort of preemptive strike is usually condemned by the advocates of liberty as unjust.</p> <p><span style="text-decoration: underline;"><strong>So where does all this leave us?</strong></span> It seems clear that a broad application of the Non-Aggression Principle to all communicable diseases would paralyze society’s function and result in the forcible and permanent internment of a great many otherwise innocent citizens not consistent with the ethics of liberty. On the other hand, permitting people to go about with extremely deadly diseases seems equally destructive, even if we cannot justify imprisoning them against their will.</p> <p>I regret that I cannot provide a more definite resolution to these questions, but this remains one of those thorny areas of libertarian thought that, like the issue of children’s rights, requires more debate and discussion. <span style="text-decoration: underline;"><strong>At present I am inclined against the use of coercive force to implement quarantines, as I believe the potential for abuse and government overreach is simply too great to be tolerated.</strong></span></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="345" height="262" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20141001_Mquar.jpg?1412205655" /> </div> </div> </div> http://www.zerohedge.com/news/2014-10-01/ethics-disease-control#comments Thu, 02 Oct 2014 02:38:37 +0000 Tyler Durden 495085 at http://www.zerohedge.com Meet The 17-Year-Old Leader Of The Hong Kong Protests http://www.zerohedge.com/news/2014-10-01/meet-17-year-old-leader-hong-kong-protests <p>Joshua Wong is <strong>too young to drive or buy a drink in a bar</strong> – let alone vote – yet, as <a href="http://www.theguardian.com/world/2014/oct/01/joshua-wong-teenager-public-face-hong-kong-protests">The Guardian reports</a>, has become the <strong>face of the pro-democracy protests in Hong Kong</strong> and an inspiration to citizens three times his age.</p> <p>&nbsp;</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/10/20141001_HK1.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/10/20141001_HK1_0.jpg" width="600" height="408" /></a></p> <p>&nbsp;</p> <p><em><a href="http://www.theguardian.com/world/2014/oct/01/joshua-wong-teenager-public-face-hong-kong-protests">Via The Guardian</a>:</em></p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>With his floppy hair, baggy shorts and stripy T-shirt, accessorised with a yellow ribbon around each skinny wrist, the only thing distinguishing the 17-year-old from the other teenagers on Wednesday was the bank of television cameras facing him.</p> <p>&nbsp;</p> <p><strong>Joshua Wong is too young to drive or buy a drink in a bar – let alone vote – yet has become the face of the pro-democracy protests in Hong Kong and an inspiration to citizens three times his age.</strong></p> <p>&nbsp;</p> <p><span style="text-decoration: underline;"><strong>The co-founder of Scholarism, the student movement which kickstarted the demonstrations, is already a veteran activist.</strong></span> At 15, he battled against plans to introduce “national education”, which critics attacked as pro-Beijing “brainwashing”. Scholarism’s campaign brought more than 100,000 people on to the streets in protest; the proposals were duly shelved and Wong became something of a celebrity. He is probably the first mass protest leader who has had to call a press conference to discuss his exam results (he met university entrance requirements, though he has said in the past: “Teachers have always said my only strength is talking and that I talk very fast.”)</p> <p>&nbsp;</p> <p><strong>But his 40-hour detention from Friday, along with others who stormed into the blocked-off government complex at Admiralty, kickstarted large-scale protests and catapulted him to global attention. </strong>The arrests galvanised those previously indifferent to last week’s student protests and sparked the wider civil disobedience movement that has paralysed a large part of downtown Hong Kong.</p> <p>&nbsp;</p> <p><strong>The sudden fascination with Wong’s role is not entirely to his satisfaction. </strong>“If a mass movement turns into worshipping a particular person, that’s a great problem,” he warned in 2012, after the campaign against national education. More recently, asked about his own heroes, he stressed: “You don’t need role models to be part of a social movement as long as you care about the issues.”</p> <p>&nbsp;</p> <p>...</p> <p>&nbsp;</p> <p>"He’s so young but so wise that you can’t help but have a lot of time for him … <strong>He is every mother’s son – filial, polite, principled, hard-working.”</strong></p> <p>&nbsp;</p> <p>...</p> <p>&nbsp;</p> <p>His greatest success as a campaigner may have been to prove that his role has its limits, because so many more people have been drawn in.</p> <p>&nbsp;</p> <p><strong>“Many citizens have said to me that ‘Hong Kong relies on you’ and some even called me a hero,”</strong> he wrote in an essay posted on his Facebook page on Wednesday.</p> <p>&nbsp;</p> <p>“I feel uncomfortable and even irritated when I hear this praise. When you were suffering pepper spray and teargas but decided to stay for the protest despite the repression from the government, I was not able to do anything other than stare at a meal box and the blank walls of the detention room and feel powerless.</p> <p>&nbsp;</p> <p><strong>“The hero of the movement is every single Hong Kong citizen.”</strong></p> <p>&nbsp;</p> <p>...</p> <p>&nbsp;</p> <p><span style="text-decoration: underline;"><strong>Chinese state media have attacked Scholarism as extremists and a pro-Beijing Hong Kong-based paper claimed that “US forces” had worked to cultivate Wong as a “political superstar” – accusations Wong has dismissed.</strong></span></p> </blockquote> <p>*&nbsp; *&nbsp; *</p> <p>Yeah but how good is he at 'Call of Duty'?</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="795" height="540" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20141001_HK1.jpg?1412205577" /> </div> </div> </div> http://www.zerohedge.com/news/2014-10-01/meet-17-year-old-leader-hong-kong-protests#comments Hong Kong Thu, 02 Oct 2014 02:00:57 +0000 Tyler Durden 495084 at http://www.zerohedge.com Gold, Global Growth, & The Schism In The High Church Of Bernanke http://www.zerohedge.com/news/2014-10-01/gold-global-growth-schism-high-church-bernanke <p><a href="http://www.salientpartners.com/epsilontheory/post/2014/10/01/Going-Gray"><em>Submitted by Ben Hunt via Salient Partners&#39; Epsilon Theory blog,</em></a></p> <div><span><img height="434" src="http://www.salientpartners.com/epsilontheory/post/2014/10/01/FILES%2f2014%2f10%2fgoinggray1.jpg.axdx" style="display: block; margin-left: auto; margin-right: auto;" width="313" /></span></div> <p>&nbsp;</p> <div style="margin-bottom: 14px; border: dashed 1px #858585; padding: 20px 20px 5px 20px; background-color: #fbfbfb;"> <p><span><strong>Everything under the sun is in chaos. The situation is excellent.</strong><br /><em>&ndash; Mao Zedong (1893 &ndash; 1976) </em></span></p> </div> <div style="margin-bottom: 14px; border: dashed 1px #858585; padding: 20px 20px 5px 20px; background-color: #fbfbfb;"> <p><span><strong>Forget it, Jake. It&rsquo;s Chinatown.</strong><br /><em>&ndash; Chinatown (1974) </em></span></p> </div> <div style="margin-bottom: 14px; border: dashed 1px #858585; padding: 20px 20px 5px 20px; background-color: #fbfbfb;"> <p><span><strong>Language is conceived in sin and science is its redemption.</strong><br /><em>&ndash; W.V.O. Quine (1908 &ndash; 2000) </em></span></p> </div> <div style="margin-bottom: 14px; border: dashed 1px #858585; padding: 20px 20px 5px 20px; background-color: #fbfbfb;"> <p><span><strong>I am, as I am; whether hideous, or handsome, depends upon who is made judge.</strong><br /><em>&ndash; Herman Melville (1819 &ndash; 1891) </em></span></p> </div> <div style="margin-bottom: 14px; border: dashed 1px #858585; padding: 20px 20px 5px 20px; background-color: #fbfbfb;"> <p><span><strong>All -ism&rsquo;s end up in schisms.</strong><br /><em>&ndash; Huston Smith (b. 1919) </em></span></p> </div> <div style="margin-bottom: 14px; border: dashed 1px #858585; padding: 20px 20px 5px 20px; background-color: #fbfbfb;"> <p><span><strong>What Asians value may not necessarily be what Americans or Europeans value. Westerners value the freedoms and liberties of the individual. As an Asian of Chinese cultural background, my values are for a government which is honest, effective and efficient.</strong><br /><em>&ndash; Lee Kuan Yew (b. 1923)</em></span></p> </div> <p><span>Two years ago, the new seven-member Standing Committee of the Chinese Communist Party Politburo &ndash; the most powerful political entity in the country &ndash; was introduced to great fanfare. All seven men walked on stage wearing a dark suit and a red tie, but to me the most striking aspect of their appearance was their hair. Yes, their hair. Their dark, immaculately coifed, powerful hair. Despite an average age of 65, not one of these men has EVER been seen in public without sporting a mane that would make their grandsons proud.</span></p> <p>On the other hand, consider this handsome man, Bo Xilai. Once the princeling of princelings, the son of a Long March vet, Bo was enormously popular for his Redder-than-Thou politics and enormously rich from his mayoral &ldquo;crackdown&rdquo; on organized crime in Chongqing, a municipality with about the same urban population as New York City. <strong>To put Bo Xilai in a US context, he was richer than Michael Bloomberg and more politically ambitious than Rudy Giuliani, if either of those two qualities can be imagined.</strong> And of course, this 65 year old politician had the luxurious jet-black hair as befits a man of his position.</p> <div style="text-align: center;"><span><img src="http://www.salientpartners.com/epsilontheory/post/2014/10/01/FILES%2f2014%2f10%2fgoinggray2.png.axdx" /></span></div> <p><span>But alas, Bo&rsquo;s political reach exceeded his political grasp. Undone publicly for abuse of office and a murder conspiracy, privately for his creation of a top-notch intelligence operation that spied on his fellow Politburo princelings (again to put in a US context, imagine if a mega-billionaire mayor of New York City created his own electronic FBI that could monitor everyone&rsquo;s market activities &hellip; crazy, right?), Bo found himself on the wrong end of a show trial and is currently living out the rest of his days in a Madoff-style cell. How do we know that Bo is gone for good, that he has lost whatever political support he formerly commanded? <strong>Because they took away his hair dye.</strong> He&rsquo;s &ldquo;gone gray&rdquo;, as they say in the Chinese political lingo, portrayed to the world as a frail old man who not only lost his freedom but <em>much</em> more importantly lost his mojo.</span><br />&nbsp;</p> <div style="text-align: center;"><span><img src="http://www.salientpartners.com/epsilontheory/post/2014/10/01/FILES%2f2014%2f10%2fgoinggray3.jpg.axdx" /></span></div> <p>&nbsp;</p> <p><span>Patrick Henry famously said, &ldquo;Give me liberty or give me death!&rdquo;, a sentiment that makes sense in Western political culture but is met with puzzled looks in the East. Personal liberty is, in an important sense, <em>everything</em> in Western political culture. In Chinese political culture &hellip; not so much.&nbsp; On the other hand, signifiers of personal potency &ndash; like maintaining dark hair &ndash; have enormous meaning in China and, at times, a diametrically opposed meaning in the West.&nbsp; </span><br />&nbsp;</p> <div style="text-align: center;"><span><img height="175" src="http://www.salientpartners.com/epsilontheory/post/2014/10/01/FILES%2f2014%2f10%2fgoinggray4.jpg.axdx" width="293" /></span><img height="176" src="http://www.salientpartners.com/epsilontheory/post/2014/10/01/FILES%2f2014%2f10%2fgoinggray5.jpg.axdx" width="262" /></div> <div style="text-align: center;">&nbsp;</div> <div style="text-align: center;">&nbsp;</div> <div style="text-align: center;"><strong>*********************************************************************</strong></div> <div style="text-align: center;">&nbsp;</div> <p><span><span style="text-decoration: underline;"><strong>Okay, Ben, kinda interesting in a cultural anthropology sort of way, but what in the world does this have to do with investing?</strong></span> </span></p> <p><span>Simply this, and it&rsquo;s a <a href="http://www.salientpartners.com/epsilontheory/post/2013/06/01/epsilon-theory-manifesto">core Epsilon Theory tenet</a>: <strong>the meaning of events and market signals differ hugely from country to country, tribe to tribe, generation to generation.</strong> Ferguson does not <em>mean</em> the same thing as Hong Kong. Hong Kong does not <em>mean</em> the same thing as Tahrir Square or even Tiananmen Square. Monetary policy does not <em>mean</em> the same thing in Beijing as monetary policy <em>means</em> in Washington, which in turn does not <em>mean</em> the same thing as monetary policy in Paris or Rome. <strong>But we have an innate tendency to act as if these signals DO mean the same thing, and we can totally wrong-foot our investments as a result. </strong></span></p> <p><strong>The biggest thing happening in the world today is the growing divergence between US monetary policy and everyone else&rsquo;s monetary policy.</strong> There is a schism in the High Church of Bernanke, with His US acolytes ending the QE experiment in no uncertain terms, and His European and Japanese prelates looking to keep the faith by continued balance sheet expansion.</p> <p><span>That divergence plays out mostly in exchange rates, and it has <span style="text-decoration: underline;"><strong>three HUGE implications, one for investment strategy selection, one for global growth, and one for &hellip; (gulp!) gold.</strong></span></span></p> <p><span style="text-decoration: underline;"><strong>First, this is great news for global macro strategies and their low-cost, populist cousins, so-called &ldquo;alternative beta&rdquo; strategies.</strong></span> Global macro performance has been absolutely atrocious over the past five years, driven primarily by a coordinated global monetary policy regime that squeezed out the historical patterns of difference between geographies and asset classes. Now that monetary policy is uncoordinated, with every major economic region essentially fending for itself, global macro and alternative beta strategies have &ldquo;room&rdquo; to work. To be sure, some of these strategies will still be confounded by an investment regime where monetary policy trumps economic fundamentals at every turn, but the sine qua non for ANY active investment strategy is distinction and dispersion. For the first time in more than five years, we can see this sort of distinction and dispersion in regional macroeconomic policies, giving traditional global macro strategies at least a chance of success. Vive la difference!</p> <p><span style="text-decoration: underline;"><strong>Second, this divergence in regional monetary policy creates enormous strains on the tectonic plates of modern international trade &ndash; currency exchange rates.</strong></span> In the absence of a re-convergence of monetary policy I don&rsquo;t see any compelling reason why recent dollar appreciation should slow down, much less reverse itself, with the obvious consequences for US S&amp;P 500 earnings (negative), commodity prices and commodity-related securities (negative), most EM markets (negative), and European and Japanese earnings (positive). But the greatest risk for global economic stability from a dollar on steroids is, for my money, China. Why? Because as I&rsquo;ve tried to point out in prior Epsilon Theory notes (<a href="http://www.salientpartners.com/epsilontheory/post/2014/07/01/stalking-horse2">here</a>, <a href="http://www.salientpartners.com/epsilontheory/post/2014/03/09/Rosebud">here</a>, and <a href="http://www.salientpartners.com/epsilontheory/post/2014/02/28/The-Power-of-Why-Exhibit-4512-in-a-Continuing-Series">here</a>), <strong>China&rsquo;s political stability depends on economic growth &ndash; it&rsquo;s the mojo of the Party just as surely as jet-black hair is the mojo of Party leaders &ndash; and Chinese growth depends on exports.</strong> So long as the yuan is effectively tethered to the dollar, a stronger dollar means a stronger yuan, which means weaker exports to Europe, Japan, and EM&rsquo;s. Sure, it&rsquo;s cheaper now to buy more iron ore and copper, so I suppose you could build another ghost city or two to keep the growth train on track, but the Politburo&rsquo;s only serious answer to the politically existential question of growth is to sell more advanced products to more people, most of whom don&rsquo;t live in China. That means selling medical devices to Japan and telecom equipment to Germany, tasks made much more difficult by a stronger dollar/yuan. To be clear, I do NOT see some imminent economic collapse in China. <strong>But growth is much less <em>certain</em> in China today, and that&rsquo;s a <em>political</em> problem that the Politburo will stop at nothing to fix.</strong> I expect the 180-degree shift in Chinese monetary policy that began this January and paused this summer to accelerate again, which in turn will accelerate political tensions abroad with the US and Japan, as well as political tensions domestically with the mega-rich princeling families. And speaking of domestic political tensions &hellip;</p> <p>Look, I don&rsquo;t think the <em>meaning</em> of Hong Kong &ndash; even to the participants &ndash; is some pro-democracy uprising a la the Arab Spring or any of the &ldquo;color revolutions&rdquo; our media is so quick to christen. Maybe if we start to see fewer English-language signs and fewer teenagers lifting their smartphone &ldquo;candles&rdquo; I&rsquo;ll change my mind, but right now it seems a lot more like a <a href="http://www.salientpartners.com/epsilontheory/post/2014/09/15/Finest-Worksong">tepid expression of political identity</a> than a determined effort by determined citizens to change the political system at a fundamental level. This isn&rsquo;t a release-the-hounds moment like Deng believed Tiananmen Square to be, and it looks like the Gang of Seven in Beijing have decided as much with new orders to pull the police back and let the protesters block traffic and annoy everyone in the city who just wants to get back to business.</p> <div style="text-align: center;"><span><img src="http://www.salientpartners.com/epsilontheory/post/2014/10/01/FILES%2f2014%2f10%2fgoinggray6.jpg.axdx" /></span></div> <div style="text-align: center;"><span><img src="http://www.salientpartners.com/epsilontheory/post/2014/10/01/FILES%2f2014%2f10%2fgoinggray7.jpg.axdx" /></span></div> <p><span><strong>But I do think there&rsquo;s a deeper implication of the Hong Kong protests, one likely to be missed by Western investors who want to project a Western meaning on the events taking place.</strong> I think the most important lesson that mainland leaders in the CCP and PLA will take away from the Hong Kong protests is not that the population must be brought to heel, but that they can&rsquo;t be trusted, that they&rsquo;re not really one of us. And that&rsquo;s okay to a certain degree &hellip; the potential of &ldquo;contagion&rdquo; from Hong Kong to, say, Chongqing seems really remote given the State&rsquo;s control over media and information flow &hellip; but it&rsquo;s not okay if the &ldquo;transmission wires&rdquo; of Hong Kong&rsquo;s financial system can&rsquo;t be trusted. Hong Kong is an indispensable financial intermediary for the Chinese State, and I have zero doubt that Beijing will move to cement their control over the sinews of real power here, by any means necessary. One of those sinews of real power is the Hong Kong dollar, which means that Hong Kong monetary policy and the Hong Kong Currency Board &ndash; already reduced to a semi-independent satrap &ndash; is about to make the transition to full-fledged puppet. This lesson won&rsquo;t be lost on the mega-rich Chinese princelings, either. <strong>The days of parking your mainland wealth in Hong Kong are now over, as it&rsquo;s no longer a safe haven from the long arm of the CCP.</strong> <a href="http://www.salientpartners.com/epsilontheory/post/2014/07/01/stalking-horse2">Let the capital flight begin, and watch out below for the Hong Kong dollar.</a></span></p> <p><span style="text-decoration: underline;"><strong>As for my third point &ndash; the implications of monetary policy divergence on gold</strong></span> &ndash; I&rsquo;m always reticent to write about gold because it incites such passion (and I don&rsquo;t just mean the gold bug camp &hellip; poke pretty much any academically-trained economist and you will unleash a furious anti-gold tirade). To be clear, I believe that <a href="http://www.salientpartners.com/epsilontheory/post/2013/06/30/how-gold-lost-its-luster-how-the-all-weather-fund-got-wet-and-other-just-so-stories">the meaning of gold today is NOT as a store of value</a> but as an insurance policy against central banks losing control. <a href="http://www.salientpartners.com/epsilontheory/post/2014/09/08/The-Ministry-of-Markets">With market faith in the Narrative of Central Bank Omnipotence at an asymptotic top</a>, the price of that insurance policy &ndash; call it $1,200/oz &ndash; is as low as it&rsquo;s going to go. <strong>And now with a schism in the High Church of Bernanke, monetary policy divergence, and growing pressures on the tectonic plates of exchange rates we have catalysts for both a generic and geographically specific central bank loss of control.</strong></p> <p><u><em><strong><span>Now I understand that gold means different things to different people, and to the degree that gold trades as a commodity or a dollar-denominated store of value it can trade cheaper as the dollar advances. I get that. But I don&rsquo;t think that&rsquo;s been the principal meaning of gold for the past 5+ years, and if you think as I do that this is the beginning of the end for the Golden Age of the Central Banker (or at least the end of the beginning), gold is pretty interesting here.</span></strong></em></u></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="559" height="548" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20141001_diverge.jpg?1412198899" /> </div> </div> </div> http://www.zerohedge.com/news/2014-10-01/gold-global-growth-schism-high-church-bernanke#comments B+ Central Banks China Copper Epsilon FBI Germany Hong Kong Japan Monetary Policy New York City Third Point Yuan Thu, 02 Oct 2014 01:42:05 +0000 Tyler Durden 495080 at http://www.zerohedge.com