en John Boehner To Stay On As Speaker After All, Fox Reports <p>As The GOP lurches from turmoil to chaos, <a href="">following speaker-in-waiting McCarthy&#39;s pulling out</a>, <a href="">Fox News&#39; Bret Baier reports</a> that<strong> Speaker John Boehner has agreed to stay on as Speaker</strong> - not just until the Caucus nominates someone - but, until that person can confirm 218 votes on the House floor (needed to take the Speaker&rsquo;s gavel).</p> <p>&nbsp;</p> <p><iframe width="480" height="360" src="" frameborder="0" allowfullscreen></iframe></p> <p>&nbsp;</p> <p><a href=""><em>As Fox News Bret Baier reports,</em></a></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong>Having Talked to several senior aides on Capitol Hill&nbsp; </strong>(along with Chris Stirewalt and his sources on the Hill tied to the leadership) here is the picture that is beginning to form.</p> <p>&nbsp;</p> <p><strong>Speaker John Boehner has agreed to stay on as Speaker--not just until the Caucus nominates someone --but, until that person can confirm 218 votes on the House floor (needed to take the Speaker&rsquo;s gavel).&nbsp;</strong> Short of that &ndash; Boehner will stay on for the rest of this Congress and steer legislation that is pending.</p> <p>&nbsp;</p> <p><strong>What does this mean?</strong>&nbsp;&nbsp; Moderates and leadership types are cheering and saying Boehner is the only one they will support.&nbsp;&nbsp; Conservatives will go ballistic since they know this signals that Boehner will make ALL kinds of deals to get big ticket legislation through the House even if it means using Democrats votes to do it.</p> <p>&nbsp;</p> <p>The news&hellip; short of another candidate that can get 218 votes (and that looks like a long shot with leadership and moderates lining up behind Boehner)</p> <p>&nbsp;</p> <p><strong>Looks like he may be here to stay to handle the very tough debt ceiling and next CR.</strong></p> </blockquote> <p>*&nbsp; *&nbsp; *</p> <p>Perhaps The Pope spoke to him again?</p> <p><a href=""><img height="511" src="" width="432" /></a></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="432" height="511" alt="" src="" /> </div> </div> </div> Debt Ceiling Fox News Thu, 08 Oct 2015 20:28:50 +0000 Tyler Durden 514595 at Do You See What Happens, Alcoa, When Your "Restructuring" Non-GAAP Addbacks Tumble <p>Moments ago, the company that traditionally kicks off earnings season did just that, and sent the ball into a throw in. The reason: just like all the other companies that have reported and pre-reported so far in the third quarter, its results were a huge miss: AA reported non-GAAP EPS of $0.07 missing expectations of $0.13, on revenues of $5.57 billion, a 10% drop Y/Y, also missing top-line estimates of $5.75. </p> <p>And while the company did have some justifications for the collapse, blaming what else but China...</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>In China, Alcoa lowered its estimate for 2015 automotive production growth to up 1 to 2 percent, from up 5 to 8 percent; reduced its projection for 2015 heavy duty truck and trailer production growth to down 22 to 24 percent, from down 14 to 16 percent; reduced its 2015 commercial building and construction sales growth to up 4 to 6 percent from up 6 to 8 percent; and kept its 2015 packaging estimate unchanged at up 8 to 12 percent.</p> </blockquote> <p>... the real culprit is none of that. Because, as <a href="">regular readers know very well</a>, with Alcoa it is all about the Non-GAAP addbacks.... and the problem here is that while in previous quarters Alcoa's "restructuring" charges were vast, usually eclipsing the actual GAAP earnings number, in Q3 they tumbled to "only" $66 million - the lowest since March 2013. </p> <p>They are shown as follows:</p> <p><a href=""><img src="" width="600" height="373" /></a></p> <p>&nbsp;</p> <p>Because that $0.07 EPS, that was non-GAAP. On a GAAP basis, Alcoa generated a paltry $44 million in Net Income, down 70% from a year ago, which translates into 2 cents per share.</p> <p>And just to show what Alcoa's true EPS picture looks like, now that its restructuring charge "addbacks" are finally grinding to a halt, in the past year, GAAP Net Income was just $538 million. What about non-GAAP net income: more than double that or $1.154 billion. And that's why, as Alcoa's Non-GAAP myth is about to collapse into the company's GAAP reality, its P/E is about to double... just as the company's topline is tumbling.</p> <p><a href=""><img src="" width="600" height="471" /></a></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="1041" height="817" alt="" src="" /> </div> </div> </div> China GAAP None Reality Thu, 08 Oct 2015 20:27:00 +0000 Tyler Durden 514594 at "Market-Watching" Fed Watches Market Surge After Fearing Market Purge <p><a href=""><u><strong>Having admitted that markets&#39; drop played a key role in their decision-making process</strong></u></a>, the reflexivity of Central Bankers be like...</p> <p><iframe allowfullscreen="" frameborder="0" height="315" src="" width="560"></iframe></p> <p>And to the outside world...</p> <p><iframe allowfullscreen="" frameborder="0" height="315" src="" width="560"></iframe></p> <p>&nbsp;</p> <p>This will help to explain the stock market...</p> <blockquote class="twitter-tweet" data-partner="tweetdeck"><p dir="ltr" lang="en">On Sept 17 a dovish Fed was bearish On October 8 the same dovish Fed is bullish</p> <p>&mdash; zerohedge (@zerohedge) <a href="">October 8, 2015</a></p></blockquote> <script async src="//" charset="utf-8"></script><p><u><strong>Welcome to The Farce... Dow +1050 Points off payrolls lows...</strong></u></p> <p><a href=""><img height="429" src="" width="600" /></a></p> <p>&nbsp;</p> <p><strong>Stocks are the most overbought since the epic Bullard ramp from October 2014...</strong></p> <p><a href=""><img height="315" src="" width="600" /></a></p> <p>&nbsp;</p> <p>As The S&amp;P pushes back to unchanged post-QE3...</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 280px;" /></a></p> <p>*&nbsp; *&nbsp; *</p> <p>This is what happened after the dovish FOMC Minutes...</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 324px;" /></a></p> <p>&nbsp;</p> <p>Futures were weak overnight as China opened notably below expectations...</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 385px;" /></a></p> <p>&nbsp;</p> <p>Leaving stocks all higher for the day (note early decoupling between Nasdaq and rest)...</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 343px;" /></a></p> <p>&nbsp;</p> <p>The epic ramp continues to extend off the payrolls lows... just look at Small Caps!!</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 387px;" /></a></p> <p>&nbsp;</p> <p>VIX fat-fingered in its usual &quot;Signalling&quot; way after FOMC Minutes...</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 724px;" /></a></p> <p>&nbsp;</p> <p>The S&amp;P broke above its 50-day moving average (and the figure 2000) as the post-FOMC Minutes buying frenmzy took hold... (and Dow tops 17k)</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 224px;" /></a></p> <p>&nbsp;</p> <p><u><strong>The S&amp;P 500 is now above Goldman, BofA year-end revised price targets of 2000.</strong> <em>Time to revise them higher again...</em></u></p> <p>Since The September FOMC Statement, bonds &amp; bullion remain the winners but stocks jerked up to near them today...</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 431px;" /></a></p> <p>&nbsp;</p> <p>Treasury yields surged once again today (after an initial rally/drop in yields after FOMC Minutes)...</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 314px;" /></a></p> <p>&nbsp;</p> <p>The USD slipped most of the day (led by AUD strength), then dumped and pumped on the FOMC Minutes...</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 312px;" /></a></p> <p>&nbsp;</p> <p>Commodities were very volatile today with crude and silver trading somewhat chaotically...</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 314px;" /></a></p> <p>&nbsp;</p> <p>Crude ramped back to yesterday&#39;s highs on OPEC comments about demand</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 556px;" /></a></p> <p>&nbsp;</p> <p>And silver was dumped and dumped and pumped and dumped...</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 362px;" /></a></p> <p>&nbsp;</p> <p><em>Charts: Bloomberg</em></p> <p><a href=""><strong>Bonus Chart: We now know what happened to the record short-interest...</strong></a></p> <p><a href=""><img height="413" src="" width="600" /></a></p> <p>&nbsp;</p> China Crude NASDAQ OPEC Reflexivity Thu, 08 Oct 2015 20:06:18 +0000 Tyler Durden 514593 at "I'm Not Here To Beg You To Open Your F##king Eyes" <p><a href=""><em>Submitted by Thad Beversdorf via,</em></a></p> <p>So <strong>I&rsquo;m often asked whether I really believe that government and policymakers intentionally create laws and policies that hurt the people and help themselves.</strong> &nbsp;My answer is typically that</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong><em>&ldquo;if you&rsquo;re asking me this question you know I do but&nbsp;you don&rsquo;t believe me; so either do your own research or continue to live in the world&nbsp;as you wish to perceive it. &nbsp;I&rsquo;m not here to beg you to open your fucking eyes&rdquo;.</em></strong></p> </blockquote> <p>I started this&nbsp;blog about 18 months ago and I have chosen to provide my research with no income attached to it. &nbsp;It means I have no axe but the truth. &nbsp;I spent 13 years in major international banks and have been on both sides of the double edged sword that makes the financial services sector a place to reap riches and also to be thrown to the wolves. &nbsp;<strong>That is, I am intimately familiar with the system. </strong>&nbsp;That said, what I&rsquo;ve discovered is that really very little effort is required to see the world for what it is.</p> <p><span style="text-decoration: underline;"><strong>The closest analogy is probably best left to Orwell with&nbsp;Animal Farm. </strong></span>&nbsp;<em>Humans around the world have been molded to believe they are part of a system to enable them to get ahead. &nbsp;While some do manage to find a path that has substantial monetary rewards the vast majority (and growing) have, whether they realise it or not, succumb to a role of&nbsp;Boxer, the cart-horse.</em></p> <p>That is, our lives revolve around putting in 8 to 10 hours of labour each day for which we receive enough to feed ourselves and our families, have a warm place to sleep and some of us are able to obtain some credit from which we can enjoy things like new cars every few years (while rarely actually owning them). &nbsp;<strong>However, in terms of reaping rewards we sew, it is simply not reality.</strong> &nbsp;The current system has a clear economic hierarchy&nbsp;which began taking shape&nbsp;centuries ago in Europe. &nbsp;The problem which seems to exist is that people are willing to look at a calendar, see that it&rsquo;s Thursday but believe almost any (false) figure of authority who says it&rsquo;s Wednesday. &nbsp;<em><span style="text-decoration: underline;"><strong>Let me give you an example.</strong></span></em></p> <p><em>The official&rsquo;s unemployment figure is now down to 4.9%. &nbsp;However, the U3 unemployment calculation, which is the one touted in mainstream media, excludes anyone unemployed that has not looked for work in the last 4 weeks. &nbsp;That&rsquo;s right, so if you don&rsquo;t have a job but&nbsp;you looked for a job 3.5 weeks ago then you are considered unemployed. &nbsp;However, if you are unemployed and haven&rsquo;t looked for a job in 4.5 weeks you are no longer considered unemployed, you simply no longer exist according to the U3 figure. &nbsp;The result is that after 4 weeks of not looking you fall off the radar and the U3 figure goes down. &nbsp;Wonderful metric eh?</em></p> <p><strong>In order to see if people falling off the radar have found work or simply no longer exist we can look to labour force. &nbsp;</strong>When we do it becomes clear that while U3 is moving down so too is labour force.</p> <p><a href=""><img alt="Screen Shot 2015-10-08 at 10.05.21 AM" class="alignnone size-full wp-image-2304" src="" style="width: 601px; height: 330px;" /></a></p> <p><strong>This means people are not finding work they simply disappear out of the labour force and so no longer exist according to the unemployment figure we all follow.</strong></p> <p>Looking at the U3 chart we find another interesting pattern.</p> <p><a href=""><img alt="Screen Shot 2015-10-08 at 8.45.22 AM" class="alignnone size-full wp-image-2300" src="" style="width: 600px; height: 330px;" /></a></p> <p><strong>Notice that there does not appear to be a steady state of &lsquo;full employment&rsquo;. &nbsp;That is, unemployment declines until it explodes higher into a recession. </strong>&nbsp;So the argument that simply appealing to the U3 figure as a forward looking gauge is nonsense. &nbsp;Currently we are in the second longest pattern of decline (peak to trough) without entering a recession. &nbsp;This is concerning because all hard indicators are now showing recession. &nbsp;So in this sense the historical U3 figure too is signaling we are overdue for a recession.</p> <p><u><strong>But isn&rsquo;t it just easier to accept whatever meme of happiness is being disseminated by those in charge?</strong></u> &nbsp;<em>Well let me bring this back to Animal Farm. &nbsp;We are sold the American dream. &nbsp;We are told the market is at all time highs and are led to believe that means Americans are doing fine. &nbsp;We are told to continue to do our part to keep America strong and that means get out there and buy stuff and if it&rsquo;s debt you need to do so well then it&rsquo;s debt you shall have! &nbsp;As long as you have stuff you should be happy.</em></p> <p><strong>And this continuous message of &ldquo;you are doing just fine but&nbsp;if you&rsquo;re not, well everyone else is so it must just be you&rdquo; prevents most of us from even attempting to explore&nbsp;the truth. </strong>For what if it is just me that is failing?? &nbsp;I surely wouldn&rsquo;t&nbsp;want to expose myself as not keeping up. &nbsp;But the real message is there in the background.</p> <p><a href=""><img alt="Screen Shot 2015-10-08 at 9.23.09 AM" class="alignnone size-full wp-image-2301" src="" style="width: 601px; height: 451px;" /></a></p> <p><strong>While the&nbsp;Pigs whisper words of encouragement into your ear their real message sits ever so faintly&nbsp;behind the facts. </strong>&nbsp;The truth so very clearly is that&nbsp;we have become nothing more than Boxer, the cart-horse for whom the Pigs recognize&nbsp;must be kept warm with belly full but beyond that all equity from your labour and all profits from your debt will go to them. &nbsp; <strong>Remember true capitalism has a natural relationship between profit and labour, but our existing policies have nothing to do with capitalism. Our&nbsp;policies are designed by the&nbsp;Pigs for the Pigs. &nbsp;Why can we not see that?? </strong>&nbsp;It&rsquo;s right there, now in front of you, have a look. &nbsp;Stare at it for a moment and contemplate the implications if what I&rsquo;m saying is true.</p> <p><u><strong><em>So continue to accept that unemployment is 4.9%, continue to accept a Fed manipulated&nbsp;all time high market indicates American workers are strong, continue to accept that 30 years of debt inflated GDP defines economic prosperity, continue to ignore the furnished facts&nbsp;and continue to accept the lies&nbsp;from the Pigs and you will continue to forge the chains of&nbsp;which your grandchildren will wear.</em></strong></u> &nbsp;And while I recognize this all sounds very dramatic I expect&nbsp;you haven&rsquo;t seen nothing yet.</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="423" height="464" alt="" src="" /> </div> </div> </div> Reality Recession Unemployment Thu, 08 Oct 2015 19:50:00 +0000 Tyler Durden 514589 at "Trust Me..." <p>I got your back...</p> <p>&nbsp;</p> <p><a href=""><img src="" width="600" height="405" /></a><a href=""><br /></a></p> <p><a href=""><em>Source:</em></a></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="787" height="531" alt="" src="" /> </div> </div> </div> Thu, 08 Oct 2015 19:30:00 +0000 Tyler Durden 514587 at Hillary Clinton Reveals Her Plan To "Prevent The Next Crash" In Bloomberg Op-Ed <p>No commentary is needed for this Op-Ed just posted by Hillary Clinton in <a href="">Bloomberg</a>, which should be read in lieu of Thursday humor.</p> <p><em>First <a href="">published in Bloomberg View</a></em></p> <p><strong>My Plan to Prevent the Next Crash</strong><em><br /></em></p> <p>Seven years after the financial crash, despite important new rules signed into law by President Barack Obama, there are risks in our financial system that could still cause another crisis. Banks have paid billions of dollars in fines, <strong>but few executives have been held personally accountable. </strong>“Too big to fail” is still too big a problem. Regulators don’t have all the tools and support they need to protect our economy. To prevent irresponsible behavior on Wall Street from ever again devastating Main Street, <strong>we need more accountability, tougher rules and stronger enforcement</strong>. I have a plan to build on the progress we’ve made under President Obama and do just that.</p> <p>In the years before the crash, as financial firms piled risk upon risk, regulators in Washington either couldn’t or wouldn’t keep up. Top regulators under President George W. Bush posed for a picture literally taking a chain saw to banking rules. Before the crisis hit, as a senator from New York,<strong> I was alarmed by this gathering storm, and called for addressing the risks of derivatives, cracking down on abusive subprime mortgages and improving financial oversight</strong>. Unfortunately, the Bush administration and Republicans in Congress largely ignored calls for reform. The result cost 9 million Americans their jobs, drove 5 million families out of their homes and wiped out more than $13 trillion in household wealth.</p> <p><strong>Thanks to President Obama’s leadership and the determination and sacrifice of the American people, we’ve worked our way out of that ditch and put our economy on sounder footing</strong>. Now we have to keep going.</p> <p>First, it’s time for more accountability on Wall Street. Stories of misconduct in the financial industry are shocking -- like HSBC allowing drug cartels to launder money or five major banks pleading guilty to felony charges for conspiring to manipulate currency exchange rates. <strong>This is criminal behavior, yet the individuals responsible often get off with limited consequences -- or none at all. I want to change that.</strong></p> <p>People who commit serious financial crimes should face serious consequences, including big fines, disbarment from working in the industry <strong>and the prospect of imprisonment</strong>. As president, I will seek to extend the statute of limitations for major financial crimes, enhance whistle-blower rewards, <strong>and increase resources for the Department of Justice and the Securities and Exchange Commission to investigate and prosecute individuals</strong>. We should also hold financial executives accountable for egregious misconduct by their subordinates. <strong>They need to lose their bonuses </strong>and, in some cases, their jobs.</p> <p>Second, I will work with Congress and independent regulators to rein in the complexity and riskiness of major financial institutions. The Dodd-Frank Act that President Obama signed after the crisis has already made important reforms, but there’s more to do.</p> <p>One serious approach being advocated is to pass an updated Glass-Steagall Act, separating commercial and investment banking, to reduce the size of the banks and the risk of a taxpayer bailout. I certainly share the goal of never having to bail out the big banks again,<strong> but I prefer the path of tackling the most dangerous risks in a different way.</strong></p> <p>To start, I will propose a new fee on risk that would discourage the type of excessive leverage and short-term borrowing that could spark another crisis. We should also strengthen and enforce the Volcker Rule so banks can’t make risky and speculative trading bets with taxpayer-backed money<strong>. And if a bank suffers losses that threaten its overall financial health, senior managers should lose some or all of their bonus compensation</strong>. That will ensure that financial executives have skin in the game and a real incentive to avoid reckless risk-taking.</p> <p>My plan would also give regulators the authority they need to reorganize, downsize or even break apart any financial institution that is too large and risky to be managed effectively. It is a comprehensive and flexible approach. It allows regulators to adapt to changing markets and help ensure that large financial firms never pose a danger to our entire economy.</p> <p>We’ve learned the hard way that there’s no substitute for tough, empowered regulators with the resources and support to do their job. <strong>That’s why I’ve supported Wisconsin Senator Tammy Baldwin’s bill to restore trust in government and slow Wall Street’s revolving door</strong>. We need to find the best, most independent-minded people for these important regulatory jobs -- <strong>people who will put consumers and everyday investors ahead of the industries and institutions they’re supposed to oversee.</strong></p> <p>Third, we need a comprehensive strategy to reduce risk everywhere in the financial system. After all, many of the firms at the heart of the crash in 2008, like Lehman Brothers, Bear Stearns and AIG, were not traditional banks<strong>. I’ll push for stronger oversight of the “shadow banking” sector, which includes certain activities of hedge funds, investment banks and other nonbank finance companies.</strong></p> <p>Fourth, <strong>we need to ensure that everyday investors and consumers can trust that our financial markets work for them </strong>-- and not just for insiders with the most sophisticated, specialized and fastest connections. That is why <strong>we should impose a tax on the high-frequency trading that makes our markets less stable and less fair. </strong>And we should reform the rules that govern our stock markets to ensure equal access to markets and information, increase transparency, and minimize conflicts of interest.</p> <p>Finally, I will veto any legislation that would weaken Dodd-Frank. <strong>We can’t go back to the days when Wall Street could write its own rules</strong>. I believe we can defend Dodd-Frank while easing burdens on community banks so they are able to lend responsibly to the hardworking families and small businesses they know and trust. We also have to defeat Republican attempts to gut the Consumer Financial Protection Bureau -- an agency dedicated solely to protecting Americans from unfair and deceptive financial practices -- and to exploit the upcoming budget and debt-ceiling negotiations for rollbacks in financial reforms.</p> <p>The bottom line is that we can never allow what happened in 2008 to happen again. Just as important, we have to encourage Wall Street to live up to its proper role in our economy -- <strong>helping Main Street grow and prosper</strong>. With strong rules of the road and smart incentives, the financial industry can help more young families buy that first home, make it possible for entrepreneurs to create new small businesses and support hardworking Americans saving for retirement. My plan will help us unlock that potential. <strong>We’ll create good-paying jobs, raise incomes and help families afford a middle-class life, with less speculation and more growth -- growth that’s strong, fair and long-term. That’s what I’m fighting for in my campaign, and that’s what I’ll do as president.</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="620" height="413" alt="" src="" /> </div> </div> </div> AIG Barack Obama Bear Stearns Department of Justice Lehman Lehman Brothers Main Street None President Obama Securities and Exchange Commission Speculative Trading Subprime Mortgages Transparency Thu, 08 Oct 2015 19:22:07 +0000 Tyler Durden 514592 at The Dow Is Up 1000 Points From Post-Payrolls Lows <p>Because the worst jobs data in years is reason to BTFD at a record pace... <strong><em>what a farce...</em></strong></p> <p>&nbsp;</p> <p><a href=""><img src="" width="600" height="429" /></a></p> <p>&nbsp;</p> <p><em>Charts: Bloomberg</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="1081" height="773" alt="" src="" /> </div> </div> </div> Thu, 08 Oct 2015 19:13:02 +0000 Tyler Durden 514590 at Venezuela Is Now The Most Expensive Country In The World <p><em><a href="">Submitted by Simon Black via,</a></em></p> <p><em>Forget Norway. Japan. Iceland. Switzerland. Or any of the other places around the world that are notorious for being painful on the wallet.</em></p> <p><u><strong>Venezuela is now the most expensive country in the world, hands down.</strong></u></p> <p><strong>To give you an idea, the cost of a 15-minute taxi ride to the beach yesterday afternoon totaled an eye-popping $158.</strong></p> <p><em>(I paid less than that to rent a helicopter in Colombia last week.)</em></p> <p>With all of its vast mineral resources, Venezuela should be the most prosperous country in Latin America by far. And it once was.</p> <p><strong>But years of corruption, incompetence, and central planning have taken their toll.</strong></p> <p>Normally, when huge companies like Exxon Mobil extract oil out of the ground, they reinvest a portion of their profits back into improving their operations.</p> <p>They spend money on more infrastructure, technology, and exploration. In short, they invest in the future.</p> <p><strong>But in Venezuela, guys like Hugo Chavez and his successor Nicolas Maduro spent years funneling oil revenues into idiotic social programs designed to keep themselves in power.</strong></p> <p>Venezuela did not invest in the future. Now its oil infrastructure is rotting. Production is in serial decline. And the oil price has collapsed to boot.</p> <p>This is bad news for a government that generates a huge proportion of its revenue from oil exports.</p> <p><strong>And just like how the United States and most of the West can&rsquo;t balance their budgets without going even further into debt, Venezuela&rsquo;s government also spends far more than it generates in revenue.</strong></p> <p>Especially now. With the government&rsquo;s budget deficit at 14% of GDP, they&rsquo;re barely able to make their debt payments this month without defaulting.</p> <p>In fact, Venezuela is so screwed up that the government doesn&rsquo;t have a hope of balancing its budget unless the oil price is between $100 and $120 per barrel.</p> <p><u><em><strong>Thus,&nbsp;they&rsquo;ve had to resort to even more destructive ways of making ends meet.</strong></em></u></p> <p><u><em><strong>Like most governments, that means printing money.</strong></em></u></p> <p>The problem&nbsp;is:&nbsp;the Venezuelan&nbsp;bolivar&nbsp;isn&rsquo;t used as a reserve currency around the world like the US dollar or euro.</p> <p>That&nbsp;is what has enabled&nbsp;the&nbsp;US&nbsp;to get&nbsp;away with its relentless printing so far, as&nbsp;much of the resulting&nbsp;inflation is simply exported abroad.</p> <p><u><strong>Instead,&nbsp;here when they print&nbsp;bolivars, Venezuelans are stuck with all of it. Zimbabwe style.</strong></u></p> <p>Inflation in Venezuela has been among the highest in the world, with some private estimates as high as 800%.</p> <p>Once that became a problem, their solution was to introduce price controls, which failed miserably. Venezuela infamously tried fixing prices in the grocery stores and ended up with crippling shortages of everything from beef to toilet paper.</p> <p>Then they decided to try capital controls by forcing a completely absurd &lsquo;official&rsquo; exchange rate to the local currency.</p> <p>And that&rsquo;s what makes this country so expensive.</p> <p><u><strong>The official rate of the&nbsp;bolivar&nbsp;is 6.3 per US dollar. But the black market rate is over 60x higher.</strong></u></p> <p><em>Last night I met up with a local guy who had sacks of cash hidden all around his house, and I changed $50 for 20,000&nbsp;bolivares. That&rsquo;s a rate of 400 per US dollar.</em></p> <p>It&rsquo;s an unbelievable difference. 6.3 under the official rate. 400 in the black market.</p> <p><strong>My taxi ride yesterday really cost me 1,000&nbsp;bolivares. Using the black market rate, that&rsquo;s a pittance at just $2.50. But using the official rate, it&rsquo;s $158.</strong></p> <p>So depending on which exchange rate you use, Venezuela can either be one of the cheapest countries in the world, or the most expensive.</p> <p>But as you can imagine, exchanging currency in the black market carries SEVERE penalties.</p> <p>And that&rsquo;s&nbsp;not all they&rsquo;re doing&nbsp;to prevent&nbsp;people from&nbsp;protecting themselves against a rapidly depreciating&nbsp;bolivar.</p> <p><strong>They&rsquo;ve even tried blocking access to Bitcoin-exchange websites to prevent people from purchasing crypto-currency.</strong></p> <p><em>(Though these efforts are easily defeated by using a VPN.)</em></p> <p>Desperate to make ends meet in an environment where they see their savings and standards of living deteriorate by the day, <strong>many people have been driven to crime.</strong></p> <p>Caracas used to be a paradise; now it&rsquo;s one of the most dangerous cities in the world.</p> <p>It&rsquo;s a damn shame too, because this is a really wonderful country. <em><strong>And were it not for the crime, Venezuela would be a top retirement destination, attracting many an expat looking to live like royalty on $1,000 per month.</strong></em></p> <p>But that&rsquo;s not the case. Instead, Venezuela is sinking to rock bottom, and people here are suffering immeasurably.</p> <p><u><strong>All of this was brought on by yet another experiment in &lsquo;central planning for the greater good&rsquo; gone dreadfully wrong.</strong></u></p> <p>Too much spending created too much debt and too much money printing, which in turn created too much inflation.</p> <p>Inflation then led to price controls. Capital controls. Media controls. Destroying people&rsquo;s standards of living. Appalling levels of violent crime.</p> <p>They say the road to hell is paved with good intentions. Venezuela is a case in point, and shows&nbsp;just how short that&nbsp;road can actually be.</p> <p><strong>Westerners always think that these sorts of consequences can&rsquo;t happen where they live, as if the laws of the financial universe only apply south of the border.</strong></p> <p>It&rsquo;s not to say that the West will become Venezuela.</p> <p><em><strong>But if your government is already making its way down this path, taking&nbsp;on $60+ trillion in debt and printing limitless quantities of money, it&rsquo;s seriously foolish to assume that that it will not end up somewhere similar.</strong></em></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="489" height="304" alt="" src="" /> </div> </div> </div> Budget Deficit Corruption Exxon Iceland Japan Norway Reserve Currency Switzerland Thu, 08 Oct 2015 19:10:00 +0000 Tyler Durden 514586 at US Claims Malfunctioning Russian Cruise Missiles Hit Iran; Moscow, Tehran Both Deny <p>The past seven days have brought a wave of competing propaganda from both Washington and Moscow as both East and West scramble to shape the narrative on Syria where Russia’s “intervention” has apparently turned the tide in favor of Damascus, completely destroying the anti-Assad strategy of the Pentagon’s regional allies.&nbsp;</p> <p>It’s absolutely imperative for everyone to do their best to maintain the public’s trust here. This is how we put it on Wednesday:<em style="font-size: 1em; line-height: 1.3em;">&nbsp;</em></p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><em style="font-size: 1em; line-height: 1.3em;">The West cannot afford to stand by and watch Russia do in a matter of weeks what the US has failed to accomplish in 13 months. Put simply: if Moscow declares victory over ISIS within the next month or two (and that appears as likely as not), Washington will be left to explain to a bewildered public what just happened. To the uninitiated, it will appear as though Russia’s military is far superior to the US Army when it comes to fighting terror and on top of that, Iran’s now well publicized role will not only cast further doubt on the nuclear deal, but will also raise questions about the contention that Tehran is committed to financing and exporting terror.&nbsp;</em></p> <p>&nbsp;</p> <p><em style="font-size: 1em; line-height: 1.3em;">For Russia, the powerplay in Syria represents nothing short of a return to the world stage after decades of flying below the radar as a second rate superpower. Putin has now proven that Moscow can project its influence with virtual impunity and as Monday’s “accidental” violation of Turkish airspace suggests, The Kremlin is getting more brave by the day in the face of what certainly looks like a de facto surrender by the West.&nbsp;</em></p> </blockquote> <p>Well, it now looks as though, lacking anything in the way of options, the US is set to try and sow discord between Russia and Iran by highlighting the following “story”:</p> <ul> <li><span style="font-size: 1em; line-height: 1.3em;">MISSILES MEANT FOR SYRIA LANDED IN RURAL IRAN: DEFENSE OFFICIAL</span></li> <li><strong><span style="font-size: 1em; line-height: 1.3em;">FOUR RUSSIAN CRUISE MISSILES LANDED IN IRAN, U.S. OFFICIAL SAYS</span></strong></li> <li><span style="font-size: 1em; line-height: 1.3em;">U.S BELIEVES FOUR RUSSIAN CRUISE MISSILES FIRED AT SYRIA FROM RUSSIAN SHIP CRASHED IN IRAN -U.S. OFFICIALS</span></li> <li><span style="font-size: 1em; line-height: 1.3em;">MISSILES MEANT FOR SYRIA LANDED IN RURAL IRAN: DEFENSE OFFICIAL</span></li> </ul> <p>And here’s <a href="">CNN</a>:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong><em>A number of cruise missiles launched from a Russian ship and aimed at targets in Syria have crashed in Iran, two U.S. officials told CNN Thursday.</em></strong></p> <p>&nbsp;</p> <p><em>Monitoring by U.S. military and intelligence assets has concluded that at least four missiles crashed as they flew over Iran. One official said there may be casualties, but another official said this is not yet known.</em></p> <p>&nbsp;</p> <p><em>It's unclear where in Iran the missiles landed. The Russian ships have been positioned in the south Caspian Sea, meaning the likely flight path for missiles into Syria would cross over both Iran and Iraq.</em></p> <p>&nbsp;</p> <p><strong><em>The Russians have been firing a relatively new cruise missile called "Kaliber," using it for the first time in combat.</em></strong></p> </blockquote> <p>Note that we are not denying the possibility that some Russian cruise missles might have accidentally landed in Iran. That very well could be the case. But if it is, here's why: Moscow just fired up a military juggernaut that's been parked in the garage for nearly three decades and so yeah, it's entirely possibly that there will be a few hiccups and tragically, those hiccups will probably result in the loss of innocent lives. There's no sugar coating that.</p> <p>But if this is an effort on the part of the Pentagon to create tension between Moscow and Tehran it won't work. </p> <p>Understand that this would be like attempting to sow conflict between the US and Canada by drawing attention to US missles that accidentally hit Alberta on the way to targets in Alaska where militants were attempting to invade North America. In other words: Tehran isn't going to care about this and the sooner Washington, Doha, and Riyadh decide to get serious about developing a real strategy here, the better off they'll look in the history books because suggesting that Russian jets are about to bomb Ankara and/or that Russia shouldn't fire cruise missiles at militants because one or two might malfunction on the flight over Iran hardly counts as a credible "plan" and indeed, this isn't exactly the best time for the US to be pointing fingers <a href="">when it comes to collateral damage.</a></p> <p>Oh, and by the way, both Russia and Iran say these reports are entirely bogus. Via <a href="">Sputnik</a>:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><em>Iranian defense ministry believes reports on "fallen Russian cruise missiles" are part of the intensified western propaganda war, according to a source.</em></p> <p>&nbsp;</p> <p><em>Tehran denies US reports that four of Russia's cruise missiles targeting ISIL actually fell to the ground in Iran, with the country's defense ministry calling the accusations "psychological war." &nbsp;</em></p> <p>&nbsp;</p> <p><em>Russia's Defense Ministry denies US media reports of an alleged incident involving cruise missiles which were fired at ISIL positions in Syria on October 7, stating that all missiles hit their designated targets. &nbsp; &nbsp;&nbsp;</em></p> <p>&nbsp;</p> <p><strong><em>"No matter how unpleasant and unexpected for our colleagues in the Pentagon and Langley was yesterday's high-precision strike on Islamic State infrastructure in Syria, the fact remains that all missiles launched from our ships have found their targets," ministry's spokesman Maj. Gen. Igor Konashenkov said. &nbsp;</em></strong></p> </blockquote> <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="534" height="278" alt="" src="" /> </div> </div> </div> Caspian Sea Iran Iraq Thu, 08 Oct 2015 18:52:35 +0000 Tyler Durden 514588 at Rate-Hike Odds Tumble Post-Minutes; Stocks Soar <p>UPDATE: Well that didn't last long...</p> <p><a href=""><img src="" width="600" height="335" /></a></p> <p>&nbsp;</p> <p>Stocks are now soaring after we noted the initial reaction...</p> <p>A decidedly dovish FOMC Minutes, warning that the economy is not ready for rate-hikes, has <strong>driven rate-hike odds to their lows once again</strong>. December and January odds are now below 50% and markets are reacting with <strong>bond, crude, and bullion buying, dollar selling </strong>and stocks uncertainty.</p> <p>&nbsp;</p> <p>Rate hike odds drop...</p> <p><a href=""><img src="" width="600" height="309" /></a></p> <p>&nbsp;</p> <p>With bonds &amp; bullion outperforming...</p> <p><a href=""><img src="" width="600" height="529" /></a></p> <p>&nbsp;</p> <p>And WTI crude tops $50...</p> <p><a href=""><img src="" width="600" height="489" /></a></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="1293" height="721" alt="" src="" /> </div> </div> </div> Bond Crude Thu, 08 Oct 2015 18:24:14 +0000 Tyler Durden 514585 at