en The WTO: Useless For Trade, Useful For The State <p><a href=""><em>Authored by Carmen Elena Dorob?? via The Mises Institute,</em></a></p> <p>This week WTO officials will gather in Buenos Aires for their 11<sup>th</sup>&nbsp;ministerial conference. <strong>There is very little hope that any of the deals on the agenda will be reached, as both the WTO&rsquo;s negotiations and its dispute settlement system have long been paralyzed by political bickering and a deep-seated inefficiency in the organization itself. </strong>Anxious WTO ministers (such as the EU&rsquo;s trade commissioner) are now grasping at straws and <a href="" target="_blank">blaming Trump</a> and his lack of support for the WTO&rsquo;s troubles.</p> <p><strong>Yet twenty-two years after its creation, the organization has almost nothing to show for it as far as trade liberalization is concerned.</strong> Juggling 164&nbsp;member countries, each with its own protectionist agenda, was never likely to bring about &lsquo;more open trade&rsquo;, &lsquo;more competitive markets&rsquo;, or &lsquo;market stability and predictability&rsquo;. Especially not after trade rules, services, intellectual property, and environmental protection were brought to the negotiations table alongside tariffs and non-tariff barriers. Countries started by holding agreements <a href="" target="_blank">hostage</a> to their demands, continued with <a href="" target="_blank">disregarding agreements</a> completely, and now end on quibbling over the language used in joint statements.</p> <p>An easy, albeit crude, depiction of WTO&rsquo;s failure can be seen in the figure below, <strong>where the world tariffs effectively applied (which include unilateral liberalization and preferential trade agreements) have been consistently lower than those achieved via multilateral negotiations</strong> (most favored nation) in the first twelve years after WTO&rsquo;s creation&mdash;when it was allegedly most successful.&nbsp;</p> <div class="ds-1col file file-image file-image-jpeg view-mode-wide_player clearfix"> <div class="img img-responsive"><img alt="world tariff rates.jpg" height="377" src="" width="570" /></div> </div> <p><a href=";isAllowed=y" target="_blank">Other research</a> offers the same story, and we&rsquo;ve seen in detail before the reason why bottom-up, <strong>unilateral trade liberalization tends to work, and top-down, multilateral trade agreements never do </strong>(<a href="">here</a>, <a href="">here</a>, and <a href="">here</a>).</p> <p><strong>The WTO&rsquo;s end seems nearer now, and not a moment too soon. </strong></p> <p>So it did a few years ago, though, and yet it lingers on because governments have a few reasons to keep it alive.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong>First of all, once bureaucratic spending machines are set in motion, there&rsquo;s little that can be done to rein them back in. </strong>The less efficient they are and the less they do, the more their budgets are increased for meetings, summits, and conferences meant to tackle precisely their inefficiencies. Had a private company been so utterly unproductive in its main activity, it would have long ago filed for bankruptcy. But the WTO, like the IMF, the World Bank, and all the other national and international governing bodies, does not operate on a profit and loss basis, but on political partisanship. As such, the WTO can easily reinvent itself during expensive lunches in exotic locations, and squander almost <a href="" target="_blank">$200 million</a> of taxpayers&rsquo; money every year.</p> <p>&nbsp;</p> <p><strong>Second, and more importantly, the WTO is actually useful to governments, even though it is detrimental to free trade and consumers.</strong> It provides a forum ripe with opportunities to satisfy domestic interest groups by hurting international competition, create political alliances with favored countries, or use trade as a strategic asset in a game of political tic-tac-toe.</p> </blockquote> <p><em><span style="text-decoration: underline;"><strong>Will we ever see the WTO dismantled? I&rsquo;m not holding my breath. It will continue, in other shapes or forms, to waste money and facilitate trade: not merchandise trade, mind you, but the exchange of political favors.</strong></span> </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="235" height="129" alt="" src="" /> </div> </div> </div> Business Crude Economy European Union Free trade International business International Monetary Fund International trade Ministerial Conference Mises Institute Mises Institute Non-tariff barriers to trade Preferential trading area Trade agreement World Bank World Bank World Trade Organization World Trade Organization Tue, 12 Dec 2017 10:00:00 +0000 Tyler Durden 608969 at Sweden: More Signs The World's Biggest Housing Bubble Is Cracking <p>We like to highlight that although Sweden&rsquo;s property bubble is not the longest running (that accolade goes to Australia at 55 years), it is probably the world&rsquo;s biggest, even though it gets relatively little coverage in the mainstream financial media.</p> <p><a href=""><img alt="" src="" style="width: 500px; height: 316px;" /></a></p> <p>A month ago, we noted that SEB&rsquo;s housing price indicator suffered its second biggest ever drop, falling by 39 points, only lagging a steeper fall from ten years earlier. This month the indicator, which shows the balance between households forecasting rising or falling prices, fell into negative territory, dropping to -5 from +11 in November. Households expecting prices to rise has almost halved from 66% In October, to 43% in November and 36% this month. The percentage of households expecting prices to fall has risen from 16% in October, to 32% in November and 41% this month.</p> <p>After the housing price indicator was published, the Swedish krona fell as much as 0.7% versus the Euro to 10.0118, its lowest level since 5 December 2017.</p> <p>Not surprisingly, the focal point of Sweden&rsquo;s property boom has been Stockholm, where the decline in the housing price indicator in December 2017 was precipitous. According to Bloomberg.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>SEB says sharp drop in home-price expectations in Stockholm was main culprit behind the decline in its Swedish home-price indicator, with the indicator falling to -42 in the Swedish capital in Dec. from -6 in Nov. That means the Stockholm indicator is now close to the record low of -47 that was reached in Dec. 2008, at the height of the global financial crisis.</p> </blockquote> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>(SEB) says 63% of households in Stockholm now expect prices to decline in the coming year while only 21% expect an increase; that&rsquo;s &ldquo;a dramatic shift compared with only two months&rsquo; ago,&rdquo;</p> </blockquote> <p>Given the disproportionate rate of decline in December in Stockholm, SEB was minded to ask whether special factors are at work &ldquo;rather than general drivers such as fears over rising interest rates or a weak business cycle&rdquo;. Indeed, aside from south-eastern Sweden, the outlook in all other regions remains positive. With regard to Stockholm, the bank notes that a large increase in new supply of expensive residential property and what it terms &ldquo;very negative media reporting&rdquo; have had an impact. Whether that&rsquo;s a fair assessment, or whether it&rsquo;s realist reporting of a monumental asset bubble is a moot point. What is indisputable is that the number of Swedish homes for sale has surged in November 2017 compared with the same month last year.</p> <p><a href=""><img alt="" src="" style="width: 500px; height: 263px;" /></a></p> <p>SEB is still undecided on whether Stockholm is a leading indicator for Sweden in general, as Bloomberg notes.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>Differences between regions are &ldquo;unusually high and some of the factors that currently weigh on Stockholm could turn out to be of a more temporary nature, especially given a continued lack of housing, low rates and the strong labor market&rdquo;</p> </blockquote> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>The official HOX/Valueguard house price data for November 2017 will be published on 14 December. Last month, the weakness in SEB&rsquo;s housing price indicator preceded clear evidence of a decline in Swedish house prices and the likely end to the housing bubble. Average house prices for Sweden fell 3.0% in October versus the previous month, with Stockholm prices down 3.7%. SEB expects &ldquo;continued small sequential declines and as regards Stockholm also year-on-year&rdquo; when the data is published on Thursday.</p> </blockquote> <p><a href=""><img alt="" src="" style="width: 500px; height: 281px;" /></a></p> <p>Ahead of the data, some analysts are expecting a &ldquo;November Noir&rdquo; with the month-on-month decline comparable with or even worse than what was seen in October 2017. Previewing the announcement, <a href="">Bloomberg</a> explains.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>Anyone with a stake in Sweden&rsquo;s property market should make space for Thursday in their calendar. That&rsquo;s when they&rsquo;ll get fresh clues as to whether they are facing a temporary blip or the start of a full-blown crash&hellip;There are indications that the monthly drop will be as big - if not bigger - than October&rsquo;s, when prices fell 3 percent, the steepest decline since the global financial crisis of 2008.</p> </blockquote> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>Nordea Bank AB expects a &ldquo;November Noir,&rdquo; with home prices declining 3 percent on a monthly basis and 1 percent on an annual basis. Property-listings website Booli, which is owned by mortgage lender SBAB, said on December 7 that the average selling price for Swedish apartments last month fell 3 percent from the same period a year earlier, led by a 7 percent drop in Stockholm.</p> </blockquote> <p>While we wouldn&rsquo;t like to second guess the outcome of Thursday&rsquo;s data, we would strongly disagree that the fall in prices is already &ldquo;close to the bottom&rdquo;. Bloomberg found an analyst with an upbeat view.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>All told, there may still be a glimmer of hope. &ldquo;Looking only at developments over the past two weeks, prices have remained largely stable, both in the country as a whole and in Stockholm,&rdquo; Nordea&rsquo;s Andreas Wallstrom said on December 5. &ldquo;This could be a tentative signal that we are close to the bottom and that our forecast of largely stable prices ahead is on track.&rdquo;</p> </blockquote> <p><a href=""><img alt="" src="" style="width: 500px; height: 309px;" /></a></p> <p>What we are finding harder to fathom are the schizophrenic views of the normally glum looking Riksbank Governor, Stefan Ingves, who has presided over Sweden&rsquo;s property boom for more than a decade. Bloomberg reports him arguing that a slowdown is &ldquo;not a big concern&rdquo;, which contrasts sharply the grave warning he gave to the <a href="">Financial Times</a> in October 2016.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>But despite a lack of drama so far, Mr Ingves remains worried about a bad ending due to risks over financial stability.</p> </blockquote> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>He said: <strong>&ldquo;It remains an issue because we are mismanaging our housing market. Our housing market isn&rsquo;t under control, in my view.&rdquo;</strong> The ratio of household debt to disposable income in Sweden is one of the highest in the world at more than 180 per cent and the Riksbank estimates it will continue to rise in the coming years.</p> </blockquote> <p>We have more sympathy with the latter.<br />&nbsp;</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="550" height="412" alt="" src="" /> </div> </div> </div> Australia Business eastern Sweden Economic bubble Economy Financial crises Financial crisis of 2007–2008 Geography of Europe Geography of Sweden Great Recession Housing Bubble Housing Market Real estate bubble Stockholm Sveriges Riksbank Sweden Tue, 12 Dec 2017 09:15:00 +0000 Tyler Durden 608898 at Finally, Gold Speculators Start To Bail, Setting Up A Big Q1 2018 <p>&nbsp;</p> <p><a href=""><br /></a></p> <h1><a href=""><span style="text-decoration: underline; color: #3366ff;"><em><strong>Finally, Gold Speculators Start To Bail, Setting Up A Big Q1 2018</strong></em></span></a></h1> <p><a href=""><span style="text-decoration: underline; color: #3366ff;"><em><strong>Posted with permission and written by John Rubino, Dollar Collapse</strong></em></span><span style="text-decoration: underline; color: #3366ff;"><em><strong>&nbsp;</strong></em></span></a></p> <p>&nbsp;</p> <div class="post-thumbnail"> <img src="" alt="Finally, Gold Speculators Start To Bail, Setting Up A Big Q1 2018 - John Rubino" class="thumbnail" /> </div> <div class="mp-content std fix-me"> <p>&nbsp;</p> <p>It took a lot longer than it should have, but gold futures traders have finally started behaving “normally.” The speculators who were extremely, stubbornly long – and who are usually wrong when they’re this excited — had maintained their over-optimistic bets when they should have been stampeding for the exits, making the last few months both boring and depressing for gold bugs and related investors. </p> <p>&nbsp;</p> <p>This departure from the familiar script raised questions about whether the action in futures (aka paper gold) was still relevant in the age of Chinese physical gold exchanges and cryptocurrency. The jury’s still out on that one, but for now the numbers are reassuring. </p> <p>&nbsp;</p> <p>The following table (courtesy of <a href="" target="_blank" rel="noopener"><strong>GoldSeek</strong></a>) shows speculators cutting way back on long bets and adding to short bets, while the “commercials” – who tend to be right at sharp turns — did the opposite, going a lot less short. </p> <p>&nbsp;</p> <p> <a href=""><img src=";ssl=1" style="max-width: 600px;" class="aligncenter size-full wp-image-17705" /></a> </p> <p>&nbsp;</p> <p>Same thing only more so in silver, where another week like the last one will bring net positions into balance for both groups, which has historically been extremely bullish. </p> <p>&nbsp;</p> <p><a href=""><img src=";ssl=1" style="max-width: 600px;" class="aligncenter size-full wp-image-17706" /></a> </p> <p>&nbsp;</p> <p>Here’s the same data depicted graphically for gold: Note how both the speculators (silver columns) and the commercials (red columns) held their positions from spring into fall, producing the previously-mentioned boredom and depression. Also note the sharp drop in the most recent reporting week. </p> <p>&nbsp;</p> <p><a href=""><img src=";ssl=1" style="max-width: 600px;" class="aligncenter size-full wp-image-17707" /></a> </p> <p>&nbsp;</p> <p>The numbers we’re seeing here are as of Tuesday the 5th, and the final three days of last week were a bloodbath for precious metals, so it’s highly likely that the next COT numbers – due out on Friday the 15th – will show absolute panic among speculators, leading to an even bigger swing in the right direction. </p> <p>&nbsp;</p> <p>If history is still reliable, January will be a great month to own precious metals and mining stocks. </p> <p>&nbsp;</p> <p>&nbsp;</p> <p><em style="box-sizing: border-box; font-variant: inherit; font-weight: inherit; font-stretch: inherit; font-size: inherit; line-height: inherit; font-family: inherit;"><span style="box-sizing: border-box; font-style: inherit; font-variant: inherit; font-weight: inherit; font-stretch: inherit; font-size: 20.3333px; line-height: 17.3333px; font-family: &quot;Lucida Grande&quot;, Verdana, sans-serif;">Questions or comments about this article? Leave your thoughts <a href=""><span style="text-decoration: underline;"><strong>HERE</strong></span></a>.</span></em></p> <p>&nbsp;</p> <p>&nbsp;</p> <p>&nbsp;</p> <p>&nbsp;</p> <h1><a href=""><span style="text-decoration: underline; color: #3366ff;"><em><strong>Finally, Gold Speculators Start To Bail, Setting Up A Big Q1 2018</strong></em></span></a></h1> <p><a href=""><span style="text-decoration: underline; color: #3366ff;"><em><strong>Posted with permission and written by John Rubino, Dollar Collapse</strong></em></span><span style="text-decoration: underline; color: #3366ff;"><em><strong>&nbsp;</strong></em></span></a></p> <p>&nbsp;</p> <p>&nbsp;</p> <p>&nbsp;</p> <p><span style="color: #000000;">Check out these other articles by our contributors:</span></p> <p>&nbsp;</p> <div class="mp-post-header"> <div class="mp-post-header"><a href="">CPM Group’s Jeff Christian Responds “NEGATIVELY” To The SRSrocco Report On Silver Investment Demand - Steve St. Angelo</a></div> <div class="mp-post-header"></div> </div> <div class="mp-content std fix-me"><a href="">The Biggest Bubble Ever, In Three Charts - John Rubino</a></div> <div class="mp-content std fix-me"></div> <div class="mp-post-header"><a href="">Eric Sprott Forecasts Status Quo Now, But Big Rally in 2018 (Weekly Wrap-Up, December 8, 2017)</a> </div> </div> Currency Eric Sprott Finance Futures contract Futures markets Gold Gold Bugs Matter Precious Metals Precious metals Speculation United States dollar Tue, 12 Dec 2017 09:13:38 +0000 Sprott Money 608955 at Oil Producers Turning To Crypto To Solve Sanctions Problems <p><a href=""><em>Authored by Tom Luongo,</em></a></p> <p><strong><em>Last week, Venezuela announced it would develop a national cryptocurrency backed by its oil reserves, the Petro.&nbsp; Now there is a report that <a href="">Russia is considering the same thing</a>.&nbsp; Iran will likely follow suit.</em></strong></p> <p><strong><em><a href=""><img height="233" src="" width="600" /></a></em></strong></p> <p>As of right now this is just a rumor, but it makes some sense.&nbsp; So, let&rsquo;s treat this rumor as fact for the sake of argument and see where it leads us.</p> <p><strong>The U.S. continues to sanction and threaten all of these countries for daring to challenge the global status quo.&nbsp; There is no denying this.&nbsp;</strong> And so much of what we see in the geopolitical headlines are knock-on effects of this challenge.</p> <h2><span style="text-decoration: underline;">The Geopolitical &ldquo;Why&rdquo;</span></h2> <p>From the Middle East to North Korea, the Dutch changing their laws to block Nordstream 2 to the Saudis breaking off relations with Qatar<strong>, everything you read about in the news is a move on the geopolitical <a href="">&ldquo;Go&rdquo; board</a>.</strong></p> <p>Because<strong> at the heart of this is the petrodollar.</strong> Contrary to what many believe, the petrodollar is not the source of the U.S. dollar&rsquo;s power around the world, but rather <strong>the U.S.&rsquo;s main fulcrum by which to keep competition out of the markets.</strong></p> <p>It is a secondary effect of the dollar&rsquo;s dominance in global finance today. &nbsp;But it is not the main driver.&nbsp; Financial market are simply too big relative to the size any one commodity market for it to be the fulcrum on which everything hinges.</p> <p>It was that way in the past. But it is not now.&nbsp; That said, however, getting out from underneath the petrodollar gives a country independence to begin building financial architecture that can be levered up over time to threaten the institutional control it helped create.</p> <p><strong>U.S. foreign policy defends the petrodollar along with other systems in place &ndash; the IMF, the World Bank, SWIFT, LIBOR and the central banks themselves &ndash; to maintain its control.</strong></p> <p>The main oil producers, however, can escape this control simply by selling their oil in currencies other than the U.S. dollar.&nbsp; That&rsquo;s not enough to dethrone the dollar, but, like I just said, it is where the process has to start.</p> <p><strong>Therefore, any and all means must be employed to defend the dollar empire by keeping everyone inside that system.&nbsp;</strong></p> <p>So, it looks like the petrodollar is all-important, but only in the long-run.&nbsp; In the short run, monetary policy, diplomacy and political stability are far more powerful actors on the system.</p> <h2><u>Russia&rsquo;s Crypto-Upside</u></h2> <p><strong>However, the oil-backed cryptocurrency by Venezuela is very important.&nbsp;</strong> And it&rsquo;s why attaching a rumor to Russia makes sense.&nbsp;<u><em><strong> Who do you think put this idea in President Maduro&rsquo;s head, anyway?&nbsp; Martians?&nbsp; No, it was Putin.</strong></em></u></p> <p>Because it deepens Russia&rsquo;s tools to combat U.S. hybrid war tactics, which include financial sanctions.&nbsp; They&rsquo;ve already announced their <a href="">plans for a crypto-ruble</a>, as well as supporting cryptocurrency research, massive Bitcoin mining operations, and the possibility of a BRICS-Coin as well.</p> <p>And, most importantly, legal frameworks under which all of this will operate.&nbsp;<strong> In short, these things create certainty in the minds of companies doing business in Russia that the government will act in predictable ways.</strong></p> <p>Those ways may still not be profitable enough to lay off other risks and attract capital, but predictability first and fine-tuning second.</p> <p><em><strong>Adding in a cryptocurrency backed by their oil reserves which can trade on the open market then only makes sense.&nbsp; It allows smaller oil and gas companies to avoid the worst of U.S. banking sanctions.&nbsp; It will help create secondary markets for corporate debt and equity issuance, fast-international clearing without need of centralized systems like SWIFT, etc.</strong></em></p> <p>This can facilitate a shift in the oil supply chain economy away from banks sanctioned by the U.S. and spur development in that space across not only Russia, but the entire region served by the Eurasian Economic Union.</p> <p><strong>Especially if this potential &ldquo;Neft-coin&rdquo;(Neft is Russian for &lsquo;oil&rsquo;) is convertible into crypto-Rubles and, by extension, Rubles themselves.&nbsp;</strong> There will be no barrier for Russian businesses to use the &ldquo;Neft-coin&rdquo; to get around sanctions since it the crypto-Ruble was predictable tax consequences.</p> <p>Moreover, since the crypto-Ruble will only be taxed at 13%, the capital gains tax rate in Russia, this, in effect, could be a back-door way for companies to lower their corporate tax rate to 13% from the current 20% Russian corporate tax rate. &nbsp;&nbsp;I am just spitballing here.&nbsp; But, if I were Vladimir Putin I would consider this, highly to compete with the U.S. pushing their corporate tax rate down from 35%.</p> <h2><u>The Other Side of the Coin</u></h2> <p><em><strong>Those are the benefits, but what are the potential drawbacks?</strong></em></p> <p>The problem with backing any currency with physical reserves is the fluctuations in value of those reserves.&nbsp; It&rsquo;s not like oil is a low-beta commodity or anything. &nbsp;But, like everything else in the commodity space, price movements are supposed to be smoothed out by the futures markets helping to coordinate price with time.</p> <p>But the bigger problem is the estimation of those reserves the coin&rsquo;s value is based on. &nbsp;First, how do you accurately quantify them?&nbsp; Can holders of Petro or Neft-coin trust the Russian or Venezuelan governments to provide accurate assessments of their reserves?</p> <p>Second, there is the ability of the country to pull it out of the ground and sell it into the market at anything close to a fair price.&nbsp; This isn&rsquo;t a concern for Russia, the world&rsquo;s 2<sup>nd</sup> largest supplier of oil and very stable government but Venezuela is the opposite.&nbsp; And, its &ldquo;Petro&rdquo; would probably trade at quite a discount early on to the dollar price of oil.</p> <p><strong>It will open up all kinds of arbitrage opportunities.</strong></p> <p>Moreover, the blockchain that backs this &ldquo;Neft-coin&rdquo; is subject to hacking by hostile actors&hellip; I wonder who those will be?</p> <p><strong>A cryptocurrency is only as secure as its blockchain is.</strong>&nbsp; And, the size of the mempool backing that blockchain is the elephant in the room and it has to be big, deep and incorruptible.</p> <p><strong>Don&rsquo;t think for a second that various U.S. &lsquo;intelligence&rsquo; agencies are not developing ways to attack anything crypto-based that either of these countries put in place.&nbsp; </strong>And, as well, don&rsquo;t think that the Russians, masters themselves of cryptography, aren&rsquo;t thinking of ways to combat this at a fundamental level.</p> <h2><u>Bitcoin Solves Other Problems</u></h2> <p>Now, there are schemes emerging in the blockchain space that can mitigate this possibility very simply.&nbsp;<strong> And it all depends on the architecture of this &ldquo;Neft-coin&rdquo; or Venezuela&rsquo;s &ldquo;Petro.&rdquo;&nbsp;</strong> Tying either of these coins to a massive proof-of-work based blockchain like Ethereum or Bitcoin would be the right way to do this.</p> <p>Like I said at the outset, this is purely speculation on my part, but it&rsquo;s important to ask these questions now to see what shakes out.</p> <p><strong>I wouldn&rsquo;t be surprised to see this &ldquo;Neft-coin&rdquo; if it&rsquo;s happening, is employing some form of double-proofing that ties back into the plans for <a href="">Russian Miner Coin</a>, and the employment of not only the best new Bitcoin mining ASICs but the incredibly cheap Russian electrical grid.</strong></p> <p><a href="">I wrote about this when it was first announced back in August</a>, seeing it as a way to get around sanctions and create a potential crypto-reserve system for the Russian economy.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>Not only does Bitcoin get potentially elevated to the level of reserve asset to reside right next to Russia&rsquo;s enormous pile of gold that represents nearly 20% of M2 in Rubles at insanely depressed prices, but it also furthers the argument for Russia to be a destination for capital as the sovereign debt crisis unfolds.</p> <p>&nbsp;</p> <p>Capital is flowing into cryptos at an astounding pace.&nbsp; Governments are completely behind the curve in their adoption of this technology.&nbsp; Russia under Putin is moving quickly to remedy this and now fully groks how it can help him acheive his goals for Russia&rsquo;s financial independence from the U.S.</p> <p>&nbsp;</p> <p>Lastly, if this proves successful, Russia&rsquo;s new Bitfury chips that will power this system could see wide demand in the global mining market.</p> </blockquote> <p><strong>And now you know why Russia is interested in taking over 10% of the Bitcoin mining hashing power.&nbsp; </strong>In cryptocurrency mining, he who controls the hashing power controls the network, in essence.&nbsp; Russia wants in on this for the strategic purpose of leveraging it for a number of reasons.</p> <p><strong>Both a crypto-Ruble and this potential &ldquo;Neft-coin&rdquo; can be tied to the Bitcoin blockchain by proxy and insulate it from any number of attack types.&nbsp; </strong>For an example of how they could structure this read about <a href="">Komodo&rsquo;s delayed-Proof-of-Work system</a>.</p> <p>The drive to attract global capital away from the existing and (in my opinion) failing monetary and political system is what is driving the creation of these new types of digital assets.&nbsp; Contrary to the opinion of many America Firsters, the U.S. is not capable of militarily taking on the world.&nbsp; It does most of its fighting through the financial markets and political backrooms.</p> <p>Moves like this and assets like Bitcoin itself happen because of that very natural human desire to be free from external control which enriches the few at the expense of the many.&nbsp; <strong><em>Even if Russia isn&rsquo;t working on a &ldquo;Neft-coin&rdquo; because of its relationship with China and its developing a crypto-Ruble, it&rsquo;s obvious that there is a coordinated effort via the blockchain to secure Russia&rsquo;s future free from U.S. control.</em></strong></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="1003" height="389" alt="" src="" /> </div> </div> </div> Alternative currencies Bitcoin Bitcoin Blockchains Central Banks China Computing Cryptocurrencies Cryptography cryptography Decentralization Economy of Russia ETC Ethereum Eurasian Economic Union headlines International Monetary Fund Iran Legality of bitcoin by country or territory LIBOR M2 Middle East Middle East Monetary Policy Money North Korea Sovereign Debt SWIFT Vladimir Putin Vladimir Putin World Bank World Bank Tue, 12 Dec 2017 08:30:00 +0000 Tyler Durden 608967 at Warning From The World's Biggest Shipping Line On Outlook for World Trade <p><strong>The optimism on world trade didn&rsquo;t last very long.</strong></p> <p>It was only late September when the <a href="">WTO</a> issued a &ldquo;strong upward revision&rdquo; to their estimate for 2017 world trade. WTO economists raised their forecast to 3.6% from 2.4%, which was at the top end of the previous 1.8-3.6% range. This marked a sharp acceleration from the 1.3% growth in 2016. The IMF&rsquo;s forecast for 2017 world trade, also made in September, was even higher at 4.2%. Now the Copenhagen-based Maersk, the world&rsquo;s number one container shipping company, is sounding a warning about softer demand and downward pressure on freight rates. According to <a href="">Bloomberg</a>.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>The world&rsquo;s largest container shipping line says international freight rates are reversing after climbing for most of this year, raising questions about the sustainability of the global trade recovery. Decade-old oversupply issues swamped demand for containerized sea trade in the third quarter, a senior official at Maersk Line Ltd. said in an interview last week. Over 90 percent of trade is routed through ships, making the industry a bellwether for the worldwide economy.</p> </blockquote> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong>&quot;We have started to see some pockets of downward pressure,&quot; </strong>said Steve Felder, Mumbai-based managing director of Maersk&rsquo;s South Asian unit. The global trade order book at around 13.5 percent of capacity isn&rsquo;t high,<strong> &quot;however, given that freight rates are largely determined on the basis of supply-demand balance, they remain fragile,&quot;</strong> he said.</p> </blockquote> <p><a href=""><img alt="" src="" style="width: 500px; height: 281px;" /></a></p> <p>Last week, we <a href="">highlighted</a> the collapse in the share price of Samsung Heavy, the world&rsquo;s third largest shipbuilder, after unexpectedly forecasting losses for this year and 2018 and announcing a capital raise. The company stated that new order demand is falling which suggested that the revival seen across the industry in 2017 is already fading. Samsung Heavy said it didn&rsquo;t see a recovery until 2019.</p> <p><a href=""><img alt="" src="" style="width: 500px; height: 343px;" /></a></p> <p>Maersk&rsquo;s downbeat assessment of the outlook mirrors the view of a number of shipping consultants, banks, other container shipping companies and rating agencies, as Bloomberg notes.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>Maersk isn&rsquo;t alone. Drewry Shipping Consultants expects the container-shipping freight growth rate to drop to less than 10 percent in 2018 from around 15 percent in 2017 as a supply glut hits home. CMA CGM, the No. 3 container shipping company, recently signaled slightly lower rates for 2018 in early negotiations of Asia-Europe contracts, analysts at Credit Suisse Group AG wrote in a Nov. 29 note.</p> </blockquote> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong>&quot;It remains very early in the negotiation period, but this uncertainty is plainly unhelpful to investor confidence,&rdquo; they said.</strong></p> </blockquote> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>Fitch Ratings expects supply of shipping containers to grow more than 5.5 percent in 2018, outpacing an over 4.5 percent expansion in demand.</p> </blockquote> <p>The one positive note in the overall world trade outlook right now is air freight, where IATA&rsquo;s projected growth of 7.5% for 2017 is widely believed to have significant upside potential. However, air freight is a small part of the overall market. The world air freight sector accounts for about $100 billion compared with aggregate world trade of about $15.5 trillion &ndash; about 0.6%.&nbsp;</p> <p>Drewry Shipping Consultants latest data on spot freight routes points to significant weakness on several routes between Shanghai and developed economies. For example, rates for Shanghai-Rotterdam, Shanghai-Genoa, Shanghai-Los Angeles and shanghai-New York are all down more than 20% versus the first week in December 2016.</p> <p><a href=""><img alt="" src="" style="width: 500px; height: 285px;" /></a></p> <p>Currently, both the WTO and the IMF are expecting growth in world trade to remain buoyant in 2018. The former is projecting growth of 4.0% and the latter 3.6% with a range of 3.2-3.6%. 2017 will be the first year since 2014 when trade growth has exceeded global GDP growth. Based on the current IMF forecasts, the two will be approximately equal next year. However, the weakness flagged by Maersk, Drewry and others suggests that trade could, once again, act as a drag on global growth as we move into 2018.</p> <p><a href=""><img alt="" src="" style="width: 500px; height: 264px;" /></a><br />&nbsp;</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="338" height="227" alt="" src="" /> </div> </div> </div> Business Business China Shipping Container Lines CMA CGM Container ship Containerization Credit Suisse Economy Fitch Intermodal containers International Monetary Fund Maersk Rating Agencies ratings recovery Samsung Transport World Trade WTO Tue, 12 Dec 2017 07:45:00 +0000 Tyler Durden 608894 at Russia's Military Withdrawal Will Prompt President Assad To "Compromise" <p><a href=""><em>Authored by Andrew Korybko via Oriental Review,</em></a></p> <p><strong>Russia has every right to withdraw most of its Aerospace Forces from Syria following Daesh&rsquo;s defeat, with one of the most immediate consequences of this move being that it will prompt President Assad into a &ldquo;political compromise&rdquo; with the &ldquo;opposition&rdquo;. </strong></p> <p><a href=""><strong><img alt="" src="" style="width: 581px; height: 309px;" /></strong></a></p> <p>President Putin&rsquo;s <a href="" rel="noopener" target="_blank">surprise visit</a> to Syria saw the Russian leader announce the large-scale withdrawal of his country&rsquo;s Aerospace Forces from the Arab Republic, signifying that Moscow truly believes that Daesh is defeated and that its original mission in Syria has been accomplished. It needs to be reminded that Russia&rsquo;s 2015 anti-terrorist intervention was initiated by the need to destroy this international terrorist threat, although other more locally active terrorist organizations were also targeted for elimination in the course of events as well.</p> <p>Contrary to some of the expectations and misleading inferences shared across a few Alt-Media platforms since that time, <strong>Russia did not get involved in Syria in order to &ldquo;save Assad&rdquo;, but to protect the constitutional order of the state and prevent its Libyan-like fall to terrorists.</strong> To this end, Russian Foreign Minister Sergei Lavrov even once<a href="" rel="noopener" target="_blank"> remarked</a> that &ldquo;Assad is not our ally, by&nbsp;the way. Yes, we support him in&nbsp;the fight against&nbsp;terrorism and in&nbsp;preserving the Syrian state. But he is not an ally like&nbsp;Turkey is the ally of&nbsp;the United States&rdquo;, further driving home this point in an unforgettable way.</p> <p><strong>Now that Daesh is defeated, there&rsquo;s no &ldquo;official&rdquo; reason for Russia&rsquo;s military forces to remain actively deployed in Syria, although President Putin was clear that they&rsquo;ll still continue to remain hosted in the two bases that Moscow has in the country and won&rsquo;t hesitate to act if the terrorists suddenly return. </strong>It&rsquo;s at this point where it&rsquo;s important to clarify what Russia means by &ldquo;terrorists&rdquo;; unlike Damascus, Moscow&rsquo;s interpretation of this term doesn&rsquo;t extend to the armed &ldquo;moderate opposition rebels&rdquo; that are partaking in the parallel international peace processes of Astana and Geneva.</p> <p>This is a crucial difference in understanding because it determines the legitimate scope of Russia&rsquo;s anti-terrorist assistance to the Syrian Arab Army (SAA). Although Daesh is defeated, the whole northeast of the country beyond the Euphrates is under the control of the Kurdish-led &ldquo;Syrian Democratic Forces&rdquo; (SDF) who are stubbornly intent on &ldquo;federalizing&rdquo; the remaining two-thirds of the country with American support. Likewise, there are already four &ldquo;de-escalation zones&rdquo; (DEZ) active in the rest of Syria, which essentially function to separate the SAA from the armed &ldquo;opposition&rdquo; in these places.</p> <p><strong>President Assad once famously promised to liberate &ldquo;<a href="" rel="noopener" target="_blank">every inch</a>&rdquo; of Syria, but there&rsquo;s no way that he&rsquo;ll be able to free those parts of the country now unless he &ldquo;compromises&rdquo; with his opponents.</strong> In hindsight, this might be why President Putin <a href="" rel="noopener" target="_blank">said</a> during last month&rsquo;s <a href="" rel="noopener" target="_blank">Sochi Summit</a> with his Iranian and Turkish counterparts that &ldquo;<em>It is obvious that the process of reform will not be easy and will require compromises and concessions from all participants, including of course the government of&nbsp;Syria</em>.&rdquo; Russia won&rsquo;t ever target the &ldquo;moderate opposition rebels&rdquo; that it signed DEZ deals with and invited to Astana, so Damascus will be compelled to &ldquo;compromise&rdquo; with them if it wants to reassert its authority over the territory that they presently occupy.</p> <p>The same situation applies for the PYD-YPG Kurds, too. The 2000 US troops in northeastern Syria and 10 American bases there make it impossible for the SAA to militarily reintegrate this region, thus necessitating some sort of &ldquo;decentralization&rdquo; deal likely modelled off of the one that&rsquo;s included in the <a href="" rel="noopener" target="_blank">Russian-written &ldquo;draft constitution&rdquo;</a> and possibly seeing DEZs (which the Kurdish-controlled third of the country might eventually be designated) <a href="" rel="noopener" target="_blank">transformed</a> into &ldquo;decentralization&rdquo; units. The SAA&rsquo;s Iranian Revolutionary Guard Corps (IRGC) and Hezbollah allies won&rsquo;t be of much help in any forthcoming liberation operation that Damascus might secretly be planning in these regions because they lack the pivotal airpower of Russia&rsquo;s Aerospace Forces, which was responsible for turning the tide of war in the first place in late 2015.</p> <p>They&rsquo;d also be violating the DEZs that Moscow worked so hard to establish, likely earning each of them a sharp rebuke from Russia behind closed doors or even in public if the situation was serious enough to &ldquo;warrant&rdquo; it. President Putin is adamant that the War on Syria begins transitioning from the military theater to the political one, using his proposed &ldquo;<a href="" rel="noopener" target="_blank">Syrian National Dialogue Congress</a>&rdquo; as the template for proceeding to the next step, and he will do whatever is reasonably possible within his and his country&rsquo;s power to ensure that this happens.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>The refusal of Russia to get militarily involved in what it officially views as the &ldquo;civil war&rdquo; dimension of the conflict between Damascus and the armed &ldquo;moderate opposition rebels&rdquo; following its victory in the international one between the SAA and Daesh suggests that Moscow will now intensify all of its diplomatic efforts towards reaching a &ldquo;political solution&rdquo;. There are a few reasons behind all of this, but they can broadly be categorized by domestic and international imperatives that share a common pragmatism.</p> </blockquote> <p><strong>On the home front, President Putin is delivering on the promise that he made to his countrymen to win their War on Terror, </strong>having done so in only a third of his term (~2 years) and without dragging it on indefinitely like the US has done for over 8 times as long. Neither he nor his voters want to see Russia embroiled in what they always fear could become an Afghan-like quagmire by continuing military operations during what they believe to now be a solely &ldquo;civil war&rdquo; context. In addition, downscaling Russia&rsquo;s involvement in Syria could allow the federal government to redirect hundreds of millions of dollars to domestic projects during President Putin&rsquo;s expected fourth term, which boosts his populist credentials during this election season.</p> <p>The other reason behind why Russia will probably focus mostly on diplomatic initiatives at this time is because of the role that this intricate process can play in promoting Moscow&rsquo;s 21st-century &ldquo;<a href="" rel="noopener" target="_blank">balancing</a>&rdquo; act in becoming the supreme stabilizing force in the Eurasian supercontinent. By withdrawing most of Russia&rsquo;s Aerospace Forces from Syria and thereby creating the conditions whereby President Assad is prompted into making &ldquo;political compromises&rdquo; as a result, Russia expects to enhance its strategic relations with Turkey, the <a href="" rel="noopener" target="_blank">Kurds</a>, <a href="" rel="noopener" target="_blank">Israel</a>, and <a href="" rel="noopener" target="_blank">Saudi Arabia</a>, all with an eye on furthering the prospects of the emerging <a href="" rel="noopener" target="_blank">Multipolar World Order</a> in this pivotal location at the tri-continental crossroads of Afro-Eurasia.</p> <p><strong>Furthermore, by withdrawing right after <a href="" rel="noopener" target="_blank">accusing</a> the US of provocative in-air maneuvers over Syria, Russia is extending an &ldquo;olive branch&rdquo; of &ldquo;goodwill&rdquo; to its Great Power rival and signaling that it&rsquo;s eager as always to normalize relations if Washington is ready to reciprocate. </strong>The much-sought-after and so-called &ldquo;New Détente&rdquo; could finally make progress if Russia and the US reach a &ldquo;gentlemen&rsquo;s agreement&rdquo; with one another over the fate of the Syrian Kurdish &ldquo;federalists&rdquo;, as appears to already somewhat be the case with both of them encouraging their on-the-ground partners of the SAA and SDF respectively to refrain from crossing the Euphrates River border between them.</p> <p>Bearing all of the above in mind, the implications of Russia&rsquo;s announced military withdrawal from Syria are much larger than simply signifying Daesh&rsquo;s defeat, but point to a thought-out and far-reaching plan to prompt President Assad into making &ldquo;political concessions&rdquo; to the &ldquo;opposition&rdquo; as a means of enhancing Russia&rsquo;s overall &ldquo;balancing&rdquo; role in the Mideast, all for the &ldquo;greater good&rdquo; of multipolarity. <strong>While there&rsquo;s hope that this process could also yield a breakthrough in relations with the US, such expectations should understandably be tempered by the reality of the &ldquo;deep state&rsquo;s&rdquo; War on Trump</strong>, though the prospects of &ldquo;constructive&rdquo; US-Russian interaction via the Syrian Kurds &ndash; particularly in the event that they succeed in &ldquo;institutionalizing&rdquo; their self-declared &ldquo;federation&rdquo; in northeastern Syria &ndash; shouldn&rsquo;t be overlooked.</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="581" height="309" alt="" src="" /> </div> </div> </div> Assad family Bashar al-Assad Congress federal government Foreign involvement in the Syrian Civil War Foreign relations of Syria Hizballah International relations Israel northeastern Syria Politics Reality Russian involvement in the Syrian Civil War SAA’s Iranian Revolutionary Guard Corps Saudi Arabia Syrian Arab Army Syrian Civil War Turkey Turkish involvement in the Syrian Civil War Vladimir Putin War Tue, 12 Dec 2017 07:00:00 +0000 Tyler Durden 608966 at Yes, The FBI Is America's Secret Police <p><em><a href="">Authored by James Bovard via,</a></em></p> <p><strong>Politifact <a href="" rel="noopener noreferrer" target="_blank">delivered a &ldquo;pants on fire&rdquo; slam </a>to Fox News on Friday because one of its commentators asserted that the Federal Bureau of Investigation &ldquo;has become America&#39;s secret police.&rdquo; </strong></p> <p><a href=""><img alt="" src="" /></a></p> <p><strong>The FBI has legions of new champions nowadays among liberals and Democrats who hope that its probes will end <a href="">Donald Trump</a>&rsquo;s presidency. </strong></p> <p>This is a stunning reversal that may have J. Edgar Hoover spinning in his grave.</p> <p><u><em><strong>In order to boost the credibility of the FBI&rsquo;s investigations of the Trump team, much of the media is whitewashing the bureau&rsquo;s entire history. But the FBI has been out of control almost since its birth.</strong></em></u></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>A <strong>1924 </strong>American Civil Liberties Union report warned that the FBI had become <a href="" rel="noopener noreferrer" target="_blank">&ldquo;a secret police system of a political character</a>.&rdquo;</p> <p>&nbsp;</p> <p>In the <strong>1930s</strong>, the Chief Justice of the Supreme Court feared that the FBI had bugged the conference room where justices privately wrangled over landmark cases, as Tim Weiner noted in his &ldquo;<a href="" rel="noopener noreferrer" target="_blank">Enemies: A History of the FBI</a>.&rdquo;</p> <p>&nbsp;</p> <p>In <strong>1945</strong>, President Harry Truman noted that &ldquo;<a href=";documentid=hst-psf_naid735219-01&amp;pagenumber=1" rel="noopener noreferrer" target="_blank">We want no Gestapo or Secret Police. FBI is tending in that direction.</a>&rdquo;</p> <p>&nbsp;</p> <p>And FBI chief J. Edgar Hoover compiled a list of 20,000 &ldquo;potentially or actually dangerous&rdquo; Americans who could be rounded up and <a href=";pg=PA161&amp;lpg=PA161&amp;dq=tim+weiner+Congress+secretly+financed+the+creation+of+six+of+these+camps+in+the+1950s&amp;source=bl&amp;ots=W__fqsI0n3&amp;sig=8HbjmQ13lL0nBc-zqh3Ckhkx_-g&amp;hl=en&amp;sa=X&amp;ved=0ahUKEwiqk4Dks-XTAhVKNiYKHd1UAZ8#v=onepage&amp;q=tim%20weiner%20Congress%20secretly%20financed%20the%20creation%20of%20six%20of%20these%20camps%20in%20the%201950s&amp;f=false" rel="noopener noreferrer" target="_blank">locked away in one of the six detention camps the federal government secretly built in the <strong>1950s</strong></a>.</p> <p>&nbsp;</p> <p><strong>From 1956 through 1971</strong>, the <a href="" rel="noopener noreferrer" target="_blank">FBI&rsquo;s COINTELPRO program</a> conducted thousands of covert operations to incite street warfare between violent groups, to get people fired, to smear innocent people by portraying them as government informants, to sic the IRS on people, and to cripple or destroy left-wing, communist, white racist, antiwar, and black organizations (including <a href="" rel="noopener noreferrer" target="_blank">Martin Luther King Jr.). </a>These operations involved vast numbers of warrantless wiretaps and illicit break-ins and resulted in the murder of some black militants. A Senate Committee chaired by liberal Sen. Frank Church (D-Idaho) issued a<a href="" rel="noopener noreferrer" target="_blank"> damning report on FBI abuses of power </a>that should be mandatory reading for anyone who believes the bureau deserves deference today.</p> </blockquote> <p><strong>According to Politifact, the FBI is<a href="" rel="noopener noreferrer" target="_blank"> not a &ldquo;secret police agency&rdquo; because &ldquo;the FBI is run by laws, not by whim.&rdquo; </a></strong>But we learned five years ago that the FBI explicitly teaches its agents that &ldquo;<a href="" rel="noopener noreferrer" target="_blank">the FBI has the ability to bend or suspend the law to impinge on the freedom of others</a>.&rdquo; No FBI official was fired or punished when that factoid leaked out because this has been the Bureau&rsquo;s tacit code for eons. Similarly, an FBI academy ethics course taught new agents that subjects of FBI investigations have &quot;<a href="" rel="noopener noreferrer" target="_blank">forfeited their right to the truth</a>.&quot; Are liberals so anxious to get Trump that they have swept under the rug the 2015 Washington Post bombshell about<a href="" rel="noopener noreferrer" target="_blank"> false FBI trial testimony that may have sentenced 32 innocent people to death</a>?</p> <p><strong>Politifact absolved the bureau because <a href="" rel="noopener noreferrer" target="_blank">&ldquo;The FBI doesn&rsquo;t torture or carry out extrajudicial executions.&rdquo;</a> </strong>Tell that to the Branch Davidians &mdash; <a href="" rel="noopener noreferrer" target="_blank">80 of whom</a> died after the FBI assaulted their ramshackle home with tanks and <a href="" rel="noopener noreferrer" target="_blank">pyrotechnic devices </a>and <a href="" rel="noopener noreferrer" target="_blank">collapsed much of the building on their heads </a>even before fires burst out.</p> <p>Politifact quotes a professor who asserts that &ldquo;<a href="" rel="noopener noreferrer" target="_blank">any use of unnecessary violence (by the FBI) would be met with the full force of the criminal law.&quot;</a> Is that why an internal FBI report claimed that <a href="" rel="noopener noreferrer" target="_blank">every one of the 150 shootings by FBI agents</a> between 1993 and 2011 was faultless?</p> <p><strong>FBI sniper Lon Horiuchi <a href="" rel="noopener noreferrer" target="_blank">gunned down Vicki Weaver in 1992 </a>as she stood in her Idaho cabin doorway holding her baby.</strong> After I <a href="" rel="noopener noreferrer" target="_blank">accused the FBI of a coverup in a Wall Street Journal oped</a>, <a href="" rel="noopener noreferrer" target="_blank">FBI chief Louis Freeh denounced me </a>for twisting the truth. But after a confidential Justice Department report leaked out revealing the FBI&rsquo;s deceits and unconstitutional rules of engagement, the <a href="" rel="noopener noreferrer" target="_blank">feds paid a $3 million wrongful death settlement</a> to the Weaver family. When an Idaho County sought to prosecute the FBI sniper, the Justice Department <a href="" rel="noopener noreferrer" target="_blank">invoked the Supremacy Clause </a>of the Constitution to torpedo the case.</p> <p>Politifact asserts that <a href="" rel="noopener noreferrer" target="_blank">&ldquo;just because the FBI sometimes operates in secret does not mean that it&rsquo;s a &lsquo;secret police.&rsquo;&quot;</a> But the FBI&rsquo;s secrecy is profoundly skewing American politics. More than a year after the 2016 election, Americans still have no idea the true extent of the FBI&#39;s manipulation of the presidential campaign. Did the FBI wrongfully absolve <a href="">Hillary Clinton</a> on the email server issue? What role did the FBI have in financing or <a href="" rel="noopener noreferrer" target="_blank">exploiting the Steele dossier</a>? Will we ever learn the full truth?</p> <p><u><strong>The so-called fact checkers insists that any comparison of the FBI and KGB is &ldquo;ridiculous&rdquo; because the FBI is &ldquo;<a href="" rel="noopener noreferrer" target="_blank">subject to the rule of law and is democratically accountable.&rdquo; </a></strong></u>But there is little or no accountability when few members of Congress have the courage to openly criticize or vigorously cross-examine FBI officials. House Majority Leader Hale Boggs admitted in 1971 that<a href=";pg=PA167&amp;lpg=PA167&amp;dq=HALE+BOGGS+1971+society+cannot+survive+a+planned+and+progr" rel="noopener noreferrer" target="_blank"> Congress was afraid of the FBI</a>: &ldquo;Our very fear of speaking out (against the FBI) ... has watered the roots and hastened the growth of a vine of tyranny ... which is ensnaring that Constitution and Bill of Rights which we are each sworn to uphold.&rdquo; The FBI is currently scorning almost every congressional attempt at oversight. Thus far, members of Congress have responded with nothing except press releases and talk show bluster.</p> <p>Politifact repeatedly scoffs at the notion that the FBI is &ldquo;<a href="" rel="noopener noreferrer" target="_blank">a secret police agency such as the old KGB</a>.&rdquo; And since the FBI is not as bad as the KGB, let&rsquo;s mosey along and pretend no good citizen has a right to complain. A similar standard could exonerate any American president who was not as bad as Stalin.</p> <p>In the 1960s, some conservatives adorned their cars with &ldquo;Support Your Local Sheriff&rdquo; bumper stickers.<u><em><strong> How long until we see Priuses with &ldquo;Support Your Secretive All-Powerful Federal Agents&rdquo; bumper stickers? </strong></em></u>But those who forget or deny past oppression help forge new shackles for the American people.</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="617" height="267" alt="" src="" /> </div> </div> </div> American Civil Liberties Union American people of German descent COINTELPRO Congress Counter-intelligence Department of Justice Donald Trump Espionage FBI FBI agents Federal Bureau of Investigation Federal Bureau of Investigation federal government Fox News Gestapo Internal Revenue Service J. Edgar Hoover KGB Law Law enforcement in the United States Politics Robert Hanssen Secret police Sen. Frank Church Senate committee Supreme Court Testimony United States United States Department of Justice United States intelligence agencies Wall Street Journal War Tue, 12 Dec 2017 05:15:00 +0000 Tyler Durden 608965 at "It's In The Mania Phase": Securities Regulator Warns That "Mortgages Are Being Taken Out To Buy Bitcoin" <p>As the investing world continues to argue back and forth over whether Bitcoin is an acceptable store of value or nothing more than a massive bubble that has only been rivaled by the Dutch tulip mania of the 1600&#39;s, new information revealed by the President of the North American Securities Administrators Association would tend to lend some credence to the latter.</p> <p>Appearing on <a href="">Power Lunch today</a>, Joseph Borg, also director of the Alabama Securities Commission, argued that <strong>Bitcoin has clearly entered its &quot;mania phase&quot; with people now taking out home equity loans and cash advances on credit cards to purchase the digital currency in the hopes of getting rich quick.</strong></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong>&quot;We&#39;ve seen mortgages being taken out to buy bitcoin. &hellip; People do credit cards, equity lines,&quot;</strong> said Borg, president of the North American Securities Administrators Association, a voluntary organization devoted to investor protection. Borg is also director of the Alabama Securities Commission.</p> <p>&nbsp;</p> <p><strong>&quot;This is not something a guy who&#39;s making $100,000 a year, who&#39;s got a mortgage and two kids in college ought to be invested in.&quot;</strong></p> <p>&nbsp;</p> <p><strong>&quot;You&#39;re on this mania curve.</strong> At some point in time there&#39;s got to be a leveling off. Cryptocurrency is here to stay. Blockchain is here to stay. Whether it is bitcoin or not, I don&#39;t know,&quot; Borg said in an interview with &quot;Power Lunch.&quot;</p> </blockquote> <p><iframe height="337" src=";byGuid=3000677948&amp;size=600_337" width="600"></iframe></p> <p>Of course, as we noted a few months ago, <a href="">JP Morgan&#39;s Jamie Dimon has has been among the most vocal critics of Bitcoin</a> and has frequently expressed his skepticism that international governments will allow it to survive in any meaningful capacity after someone inevitably <strong>&quot;gets killed...&quot;</strong></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>Speaking to CNBC later in the day, Dimon said he&rsquo;s skeptical governments will allow a currency to exist without state oversight: <strong>&ldquo;Someone&rsquo;s going to get killed and then the government&rsquo;s going to come down,&rdquo;</strong> he said. <strong>&ldquo;You just saw in China, governments like to control their money supply.&rdquo;</strong></p> <p>&nbsp;</p> <p>&ldquo;You&rsquo;re wasting your time with Bitcoin! Virtual currency, where it&rsquo;s called a bitcoin vs. a U.S. dollar, that&rsquo;s going to be stopped,&rdquo; said Dimon. <strong>&ldquo;No government will ever support a virtual currency that goes around borders and doesn&rsquo;t have the same controls. It&rsquo;s not going to happen.&rdquo;</strong></p> <p>&nbsp;</p> <p>&ldquo;Blockchain is like any other technology. If it is cheaper, effective, works, and secure, then we are going to use it. The technology will be used, and it could be used to transport currency, but it will be dollars, not bitcoins.&rdquo;</p> </blockquote> <p>...perhaps the Americans now levering up their largest asset in the midst of yet another housing bubble, only to turn around and purchase what could very well end up being an even bigger bubble, are the people to whom Dimon was referring???</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="743" height="470" alt="" src="" /> </div> </div> </div> Alabama Securities Commission Alternative currencies Bitcoin Bitcoin Blockchain China Cryptocurrencies Currency Decentralization Digital currency E-commerce Economics of bitcoin Finance Home Equity Housing Bubble Jamie Dimon Money Money Supply North American Securities Administrators Association Virtual currency Tue, 12 Dec 2017 04:55:00 +0000 Tyler Durden 608954 at America's Decline And The Neglect Of Luther's Principles Of Liberty <p><a href=""><em>Authored by S.T.Karnick via,</em></a><em>&nbsp;</em></p> <p class="drop-caps"><strong><em>Freedom requires a sense of personal responsibility if it is to survive.</em></strong></p> <p class="drop-caps"><a href=""><img alt="" src="" style="width: 599px; height: 282px;" /></a></p> <p class="drop-caps">With the nation&rsquo;s news dominated by reports of political corruption (most recently, the Clintons&rsquo; apparent use of &ldquo;pay to play&rdquo; schemes during Hillary Clinton&rsquo;s tenure as U.S. secretary of state), sexual harassment scandals pandemic among the nation&rsquo;s elites, extreme vulgarization of political speech and the common culture, riots against freedom of speech on the nation&rsquo;s college campuses, paralyzing partisanship in Congress, death threats and open assassination attempts against government leaders and police officers, and the rest of the dismaying parade of moral shortcomings on display among the nation&rsquo;s leaders in all walks of life, <u><em><strong>it appears that we are in the midst of a war not just between political and cultural factions, but over the very definition of our civilization.</strong></em></u></p> <div class="print-only"> <p>The primacy of individual liberty versus rule by elites is at the heart of this conflict, but with a twist: <em><strong>The undermining of personal responsibility is creating a backlash against liberty as people rampantly abuse their freedoms.</strong></em> A half-millennium ago, the German monk and theologian Martin Luther set the foundations for the modern world by redefining the relationship between people and their institutions, shattering the legal structures that insulated elites from the consequences of their misdeeds.</p> <p>Writing in&nbsp;the<em> Wall Street Journal</em>&nbsp;on the eve of the 500th anniversary of the beginning of the Protestant Reformation, King&rsquo;s College history professor Joseph Loconte insightfully<strong> traces the sources of&nbsp;<a href="">Martin Luther&rsquo;s ideas about freedom of the individual will</a>&nbsp;and the world-changing effect those thoughts would have over the subsequent half-millennium.</strong></p> <p>Although Luther was committed to the spiritual authority of the Catholic Church, his religious views about spiritual elitism would eventually affect political attitudes throughout the West, introducing &ldquo;a radical egalitarianism that helped lay the foundation for modern democracy and human rights.&rdquo; Loconte writes,</p> <div class="code-block code-block-4 ai-viewport-1 ai-viewport-2" style="float: right; margin: 8px 8px 8px 8px;">&nbsp;</div> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong>Luther came to despise every form of spiritual elitism. He sought to replace rigid church hierarchies with &ldquo;the priesthood of all believers,&rdquo; </strong>the proposition that there are no qualitative differences between clergy and laity. &ldquo;Just because we are all priests of equal standing,&rdquo; he wrote in &ldquo;An Open Letter to the Christian Nobility&rdquo; (1520), &ldquo;no one must push himself forward and, without the consent and choice of the rest, presume to do that which we all have equal authority.&rdquo;</p> </blockquote> <p><strong>Luther&rsquo;s &ldquo;message of freedom&rdquo; has not lost its power after five centuries, Loconte notes, providing a useful example for those who today oppose the many leaders of modern U.S. institutions who abuse their offices for personal gain:</strong></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>Luther took an ax to the legal culture that shielded priests and bishops from criminal prosecution simply because they held church offices. &ldquo;It is intolerable that in canon law, the freedom, person, and goods of the clergy should be given this exemption, as if the laymen were not exactly as spiritual, and as good Christians, as they, or did not equally belong to the church.&rdquo;</p> </blockquote> <p>Loconte observes that Luther&rsquo;s concept of liberty included a deep awareness of the responsibilities that accompany freedom:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&ldquo;A Christian has no need of any work or law in order to be saved,&rdquo; [Luther] insisted, &ldquo;since through faith he is free from every law and does everything out of pure liberty and freely.&rdquo; Christian liberty of this kind provided no excuse for libertinism. Just the opposite: &ldquo;I will therefore give myself as a Christ to my neighbor, just as Christ offered himself to me.&rdquo;</p> </blockquote> <p>Our nation&rsquo;s founders&nbsp;<a href="">universally acknowledged this view</a>, evident in observations such as this from Benjamin Franklin:&nbsp;<strong>&ldquo;Only a virtuous people are capable of freedom. As nations become more corrupt and vicious, they have more need of masters.&rdquo;</strong></p> <p><strong>Similarly, the rise and proliferation of such masters undermines virtue, both by making choice impossible (one cannot earn moral credit for actions done under compulsion) and by creating&nbsp;<a href="">moral hazard</a>, artificial reduction of the risks associated with making choices.</strong></p> <p>Thus, the enormous growth of government in the United States over the past 125 years both reflects and generates the loss of the idea of liberty, which has made national greatness possible.</p> <p><strong>We are seeing the results in economic stagnation, the takeover of the nation&rsquo;s institutions by thieves and tyrants, the decline of U.S. power in the world, and the dizzying array of stories of personal corruption among the nation&rsquo;s leaders in all walks of life.</strong></p> <p><em><u><strong>The fall of today&rsquo;s political and cultural icons cannot arrive too soon.</strong></u></em></p> </div> <p>&nbsp;</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="625" height="294" alt="" src="" /> </div> </div> </div> Apocalypticists Catholic Church Christian mystics Christianity Congress Corruption Democracy Egalitarianism King’s College Liberty Lutheran theology Martin Luther Moral Hazard Politics Politics Protestant theology Protestantism Religion Universal priesthood Wall Street Journal Tue, 12 Dec 2017 04:35:00 +0000 Tyler Durden 608962 at Chinese Banks Push Back On Shadow Banking Regulations - Expose "Catch-22" For Financial System <p>In November, we discussed how <strong>the post-Party Congress measures to deleverage and crackdown on the worst abuses in China&rsquo;s credit bubble took an important step forward with the announcement of a new era of regulation for China&rsquo;s $15 trillion shadow banking and asset management industry.</strong> See <a href="">&quot;A New Era In Chinese Regulation Means Turmoil For $15 Trillion In China&#39;s Shadows&quot;</a>. In particular, the authorities turned their sights on wealth management products (WMPs).</p> <p><a href=""><img alt="" src="" style="width: 500px; height: 279px;" /></a></p> <p>On the way out are &ldquo;guaranteed returns&rdquo; and &ldquo;capital pools&rdquo; which had turned the $4 trillion sector into a leveraged Ponzi scheme. <strong>We joked that in a &ldquo;radical and shocking&rdquo; departure from the norm, financial institutions would have to offer yields based on the risk and returns of the underlying assets</strong>. Paying out guaranteed returns with new funds from depositors would no longer be allowed.</p> <p><a href=""><img alt="" src="" style="width: 500px; height: 306px;" /></a></p> <p>Commentators at the time described it as &ldquo;a new era of regulation&rdquo; which would lead to tighter risk control and slower but higher quality growth in the Chinese economy, blah, blah. However, our interest was piqued by the implementation date for the new rules. This is slated for the end of June 2019, providing Chinese banks and the entire shadow banking system a grade period to get their house in order. As we suggested.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>We can only guess the delay reflects the enormity of the problems discovered by China&rsquo;s regulators when they finally looked under the hood.</p> </blockquote> <p><strong>We didn&rsquo;t have to wait long for confirmation that our cynicism was justified.</strong> It turns out that there was a &ldquo;closed-door meeting&rdquo; last week during which Chinese banks laid out the systemic risk if the regulators pursue their reform plan. According to <a href="">Reuters</a>.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>Ten Chinese banks have raised strong objections to the central bank&rsquo;s recent move to tighten rules on the asset management sector, saying it may cause a rush of redemptions among other risks, three sources with knowledge of the matter told Reuters.</p> </blockquote> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>Senior executives from the joint-stock banks said during a closed-door meeting in Shanghai last week that the rules would have a big impact on financial markets and could even &ldquo;trigger systemic financial risks&rdquo;, according to the sources, who declined to be identified due to the sensitivity of the matter. The executives also said the new rules on removing implicit guarantees for wealth management products (WMPs) could spark liquidity risks and increase market volatility, the sources said late on Thursday.</p> </blockquote> <p><strong>Unlike the Big Four state-owned banks, the smaller banks have limited scope to increase lending in the absence of WMP funding...and that&#39;s ignoring the &quot;black holes&quot; hidden beneath the surface.</strong></p> <p><a href=""><img alt="" src="" style="width: 500px; height: 319px;" /></a></p> <p><u><strong>In short, the entire Chinese financial system, from depositors to banks to asset management companies, has become addicted to the WPM model.</strong></u> Reforming it will only advance the crystallization of losses and bankruptcies, never mind largescale protests from investors who have always assumed that, somehow, the banks would make good on their promises. On a small scale, the clearest example of the near-impossibility of reforming WMPs without threatening China&rsquo;s financial system, was the example of Foresea Life Insurance in May this year. This report from <a href="">Fortune</a> captured Ponzi nature and risk of civil unrest.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>A Chinese insurer has warned the country&rsquo;s regulators of defaults in the billions and possible unrest unless it is allowed to launch new products again. Foresea Life Insurance asked the China Insurance Regulatory Commission (CIRC) in a letter dated Apr. 28 to lift its ban, &ldquo;in order to avoid inciting mass incidents by clients and localized and systemic risks, producing greater damage to the industry,&rdquo; reports the Financial Times. It further warned that, with an expected redemption of $8.7 billion this year, the insurer might not be able to meet payouts without selling new products.</p> </blockquote> <p><a href=""><img alt="" src="" style="width: 500px; height: 333px;" /></a></p> <p>The Bloomberg article portrays the feedback they gave to regulators on the new regime as &ldquo;a rare protest by Chinese bankers as pressure mounts amid a government campaign to de-leverage and de-risk the country&rsquo;s massive and increasingly complex financial system&rdquo;. However, it&rsquo;s much more than that, it&rsquo;s essentially a plea for the survival on the part of smaller banks. Without large pools of deposits, smaller banks have relied on WMP and other shadow banking conduits for funding. In the absence of guaranteed returns, leverage and fraud, that might not have been a problem.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>The new rules will pose a direct challenge to a business model that small- and mid-tier banks have been relying on to drive asset expansion and profit growth, bankers told Reuters earlier. &ldquo;Every time when the regulators announce tighter regulations it would almost always benefit the large state banks and hurt the smaller ones, because they (the latter) are taking much bigger risks,&rdquo; said a senior executive at one of the country&rsquo;s big four state-controlled lenders.</p> </blockquote> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>The joint-stock banks, which are unable to compete against large state banks for public deposits, have depended on selling WMPs with implicit guarantee of fixed returns to attract retail funds. In turn, they invest the money they manage into stocks, bonds and non-standard debt assets to generate profit. Bank executives said at the meeting the 28.38 trillion yuan of banks&rsquo; WMPs, part of the so-called shadow banking sector, have allowed them to bypass regulatory restrictions on credit expansion and capital constraints.</p> </blockquote> <p><strong>The problem for Xi Jinping and his cronies is that they left the situation to fester for way too long before attempting to intervene.</strong> In an effort to dissuade the authorities, here is Reuters on more <strong>warnings from the threatened banks.</strong></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>If the current draft of the rules takes effect, banks will be forced to offload assets beforehand, including selling bonds, stocks and other liquid assets at a discount and asking clients to repay loans before time, the sources said. &ldquo;No matter which solution we choose, it will hit financial markets,&rdquo; they added.</p> </blockquote> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>The banks also said rules on strictly limiting bank WMP investments in non-standard debt assets and private equities would reduce their support for the real economy and increase financing costs for companies, the sources said. They also suggested the central bank remove certain rules and extend the transition period for the new rules - currently up to June 2019 - to three years to smooth the impact, the sources said.</p> </blockquote> <p><strong>&hellip;which basically amounts to a &ldquo;Catch-22&rdquo; situation for China&rsquo;s financial system</strong>.</p> <p>Meanwhile, it&rsquo;s worth highlighting a (very) recent example of fraud in the Chinese banking system which encompassed the WMP sector. Last Friday, the <a href="">South China Morning Post</a> (SCMP) reported on the 722 million yuan ($109 million) fine &ndash; the industry&rsquo;s biggest penalty - served on Guangfa Bank, the largest bank in Guangzhou city. The bank covered up the default of two bonds issued by phone maker, Cosun Group, which had ben sold on an Ant Financial Holdings&rsquo; WMP platform. As the SCMP explains.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>Ant Financial and 10 other banks sought compensation for investors from Zheshang Property and Casualty Insurance, which had provided insurance coverage on the debt, only to discover that the insurer had been issued fake letters of guarantee by Guangfa&rsquo;s branch in Huizhou city. The fraudulent documents were created using counterfeit corporate seals made by branch staff. The case involved as much as 12 billion yuan, as the bank tried to channel money to cover its mounting bad loans and operational losses.</p> </blockquote> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&ldquo;Guangfa did everything that regulators hate the most,&rdquo; said Chen Shujin, chief financial analyst at Huatai Securities. &ldquo;They gave an under-the-table guarantee, and made illegal interbank investments to cover up a non-performing loan.&rdquo;</p> </blockquote> <p><em><strong>The epidemic of fraud across China&rsquo;s financial system has been obvious for years. The Catch-22 situation faced by the Chinese authorities boils down to a timing preference. With Xi&rsquo;s position cemented for the next five years, the authorities can bring on the <strike>&ldquo;Minsky moment&rdquo;</strike> adjustment, knowing that the economy can recover by 2022. Or they can postpone it, leading to a truly catastrophic collapse down the road.</strong></em><br />&nbsp;</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="920" height="520" alt="" src="" /> </div> </div> </div> Bank Banking Business China China Insurance Regulatory Commission Chinese financial system Congress crystallization default Economic systems Economy Finance Financial crises Financial crisis of 2007–2008 fixed Money Reuters Shadow Banking Shadow banking system South China Systemic risk Too big to fail Volatility Yuan Tue, 12 Dec 2017 04:15:00 +0000 Tyler Durden 608931 at