http://www.zerohedge.com/fullrss2.xml/feed en US Treasury Cracks Down On Tax Inversions http://www.zerohedge.com/news/2014-09-22/us-treasury-cracks-down-tax-inversions <p>One of the key drivers of the recent spike in M&amp;A deals (and sellside advisory fees) has been the surge in tax inversion transactions, deals in which a U.S. company reincorporates for tax purposes in a tax-friendlier country such as the U.K. or Ireland, while maintaining its real headquarters in the U.S. Traditionally such deals have involved a merger between a U.S. firm and a smaller foreign firm. The reason for such deals is simple: to lower the corporate tax payments by avoiding the venue of the one country with the highest corporate tax rate in the world: USA, and leave more cash available for distribution to private shareholders. And since every such deal lowers the cumulative tax that the US collects from corporations, Obama, helpless to change the legislation that ushered in these deals in the first place, came out a few months ago, <a href="http://www.zerohedge.com/news/2014-07-24/president-obama-blasts-tax-inversions-are-wrong-demands-economic-patriotism-live-fee">with a heartfelt appeal to corporate patriotism</a>, calling inversions "wrong", and demanding "corporate patriotism." He failed. Which is why moments ago the Treasury released its new rules meant to "<a href="http://www.treasury.gov/press-center/press-releases/Pages/jl2647.aspx">Reduce Tax Benefits of Corporate Inversions</a>."</p> <p>Per the US Treasury: "<strong>Today, Treasury is taking action to reduce the tax benefits of — and when possible, stop — corporate tax inversions</strong>. This action will significantly diminish the ability of inverted companies to escape U.S. taxation.&nbsp; <strong>For some companies considering mergers, today’s action will mean that inversions no longer make economic sense.</strong>"</p> <p>As the <a href="http://online.wsj.com/articles/treasury-to-unveil-measures-to-combat-tax-inversions-1411421056">WSJ explains</a>, in a multipronged attack, the administration took action under five separate sections of the tax code to make so-called inversions harder to accomplish and less profitable.</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>Three of the moves are aimed at blocking inverted companies from using techniques—sometimes known as "hopscotching"—to get access to their offshore cash without paying U.S. tax on it. Those would apply to deals closed on or after Sept. 22.</p> <p>&nbsp;</p> <p>Another move makes it more difficult for U.S. firms to skirt current ownership standards in inverting. Still another move would make it harder for U.S. firms to spin off subsidiaries overseas.</p> <p>&nbsp;</p> <p>Taken together, the administration's moves are likely to remove at least some of the economic appeal of inversions, which have become more common in recent years, particularly in the pharmaceutical industry. Noticeably absent, however, was a much-discussed idea to limit inverted companies' ability to ship U.S. profits overseas tax free.</p> </blockquote> <p>Will it work? Hardly. After all it is the same corporations that have lobbied their favorite puppet politicians over the years that made inversions possible in the first place, and absent a change in the law it is difficult to see what authority the US Treasury has to make up rules on the fly. The WSJ agrees: "some experts have questioned how much authority the Treasury Department actually has in the area, and legal challenges to Monday's actions remain a possibility. The moves also seem unlikely to end inversions altogether, as even Treasury Secretary Jacob Lew has recently conceded, <strong>in part because the administration has little legal ability to block the most common type of inversion.</strong>" Just in case there was any doubt who really calls the shots in the America...</p> <p>Nonetheless, the inversion free for all is now likely over: "Monday's announcement was likely to chill many deals, at least for now. The Treasury Department also promised to continue looking for other regulatory steps to discourage inversions, and to review tax treaties."</p> <p>Yet to think: <strong>the US government would have spared itself so much jawboning effort and fake work if all the Treasury did was promise that the 10 largest shareholders of the "unpatriotic inversion offender" would get the "tea party" treatment by the IRS. </strong>Then watch as inversions end with a thud, never to be heard of again.</p> <p>And should the US government be taken to task for yet another despotic, "executive action" tactic, well, there are so many backupless hard disks in the US government that can <em><strong>and will </strong></em>fail at just the right time, that one is assured no trace of any decision process will ever exist.</p> <p>* * *</p> <p><em>Below is the <a href="http://www.treasury.gov/press-center/press-releases/Pages/jl2645.aspx">fact sheet on the specific actions </a>the Treasury will take starting today:</em></p> <p><strong>Today, Treasury is taking action to reduce the tax benefits of — and when possible, stop — corporate tax inversions. </strong>This action will significantly diminish the ability of inverted companies to escape U.S. taxation.&nbsp; <strong>For some companies considering mergers, today’s action will mean that inversions no longer make economic sense.</strong><br />&nbsp;<br />Specifically, the Notice eliminates certain techniques inverted companies currently use to access the overseas earnings of foreign subsidiaries of the U.S. company that inverts without paying U.S. tax.&nbsp; Today’s actions apply to deals closed today or after today.<br />&nbsp;<br />This notice is an important initial step in addressing inversions.&nbsp; Treasury will continue to examine ways to reduce the tax benefits of inversions, including through additional regulatory guidance as well as by reviewing our tax treaties and other international commitments. Today’s Notice requests comments on additional ways that Treasury can make inversion deals less economically appealing. <br />&nbsp;<br /><strong>Specifically, today’s Notice will:</strong><br />&nbsp;<br /><strong>Prevent inverted companies from accessing a foreign subsidiary’s earnings while deferring U.S. tax through the use of creative loans, which are known as “hopscotch” loans</strong>(Action under section 956(e) of the code)</p> <ul> <li>Under current law, U.S. multinationals owe U.S. tax on the profits of their controlled foreign corporations (CFCs) although they don’t usually have to pay this tax until those profits are repatriated (that is, paid to the U.S. parent firm as a dividend). Profits that have not yet been repatriated are known as deferred earnings.</li> <li>Under current law, if a CFC, tries to avoid this dividend tax by investing in certain U.S. property—such as by making a loan to, or investing in stock of its U.S. parent or one of its domestic affiliates—the U.S. parent is treated as if it received a taxable dividend from the CFC.</li> <li>However, some inverted companies get around this rule by having the CFC make the loan to the new foreign parent, instead of its U.S. parent. This “hopscotch” loan is not currently considered U.S. property and is therefore not taxed as a dividend.</li> <li>Today’s notice removes benefits of these “hopscotch” loans by providing that such loans are considered “U.S. property” for purposes of applying the anti-avoidance rule. The same dividend rules will now apply as if the CFC had made a loan to the U.S. parent prior to the inversion.</li> </ul> <p><strong>Prevent inverted companies from restructuring a foreign subsidiary in order to access the subsidiary’s earnings tax-free (</strong>Action under section 7701(l) of the tax code)</p> <ul> <li>After an inversion, some U.S. multinationals avoid ever paying U.S. tax on the deferred earnings of their CFC by having the new foreign parent buy enough stock to take control of the CFC away from the former U.S. parent. This “de-controlling” strategy is used to allow the new foreign parent to access the deferred earnings of the CFC without ever paying U.S. tax on them.</li> <li>Under today’s notice, the new foreign parent would be treated as owning stock in the former U.S. parent, rather than the CFC, to remove the benefits of the “de-controlling” strategy. The CFC would remain a CFC and would continue to be subject to U.S. tax on its profits and deferred earnings.</li> </ul> <p><strong>Close a loophole to prevent an inverted companies from transferring cash or property from a CFC to the new parent to completely avoid U.S. tax </strong>(Action under section 304(b)(5)(B) of the code)</p> <ul> <li>These transactions involve the new foreign parent selling its stock in the former U.S. parent to a CFC with deferred earnings in exchange for cash or property of the CFC, effectively resulting in a tax-free repatriation of cash or property bypassing the U.S. parent. Today’s action would eliminate the ability to use this strategy.</li> </ul> <p><strong>Make it more difficult for U.S. entities to invert by strengthening the requirement that the former owners of the U.S. entity own less than 80 percent of the new combined entity:</strong></p> <ul> <li>Limit the ability of companies to count passive assets that are not part of the entity’s daily business functions in order to inflate the new foreign parent’s size and therefore evade the 80 percent rule – known as using a “cash box. (Action under section 7874 of the code) Companies can successfully invert when the U.S. entity has, for example, a value of 79 percent, and the foreign “acquirer” has a value of 21 percent of the combined entity.&nbsp; However in some inversion transactions, the foreign acquirer’s size is inflated by passive assets, also known as “cash boxes,” such as cash or marketable securities. These assets are not used by the entity for daily business functions. Today’s notice would disregard stock of the foreign parent that is attributable to passive assets in the context of this 80 percent requirement. This would apply if at least 50 percent of the foreign corporation’s assets are passive. Banks and other financial services companies would be exempted.</li> <li>Prevent U.S. companies from reducing their size pre-inversion by making extraordinary dividends. (Action under section 7874 of the code) In some instances, a U.S. entity may pay out large dividends pre-inversion to reduce its size and meet the 80 percent threshold, also known as “skinny-down” dividends. Today’s notice would disregard these pre-inversion extraordinary dividends for purposes of the ownership requirement, thereby raising the U.S. entity’s ownership, possibly above the 80 percent threshold.</li> <li>Prevent a U.S. entity from inverting a portion of its operations by transferring assets to a newly formed foreign corporation that it spins off to its shareholders, thereby avoiding the associated U.S. tax liabilities, a practice known as “spinversion.” (Action under section 7874 of the code)&nbsp; In some cases a U.S. entity may invert a portion of its operations by transferring a portion of its assets to a newly formed foreign corporation and then spinning-off that corporation to its public shareholders. This transaction takes advantage of a rule that was intended to permit purely internal restructurings by multinationals.&nbsp; Under today’s action, the spun-off foreign corporation would not benefit from these internal restructuring rules with the result that the spun off company would be treated as a domestic corporation, eliminating the use of this technique for these transactions.</li> </ul> <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="553" height="369" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/jack%20lew%20angry.jpg?1411429295" /> </div> </div> </div> http://www.zerohedge.com/news/2014-09-22/us-treasury-cracks-down-tax-inversions#comments B+ Fail Ireland Treasury Department Mon, 22 Sep 2014 23:44:51 +0000 Tyler Durden 494698 at http://www.zerohedge.com Five Important Lessons Learned From The Scottish Referendum http://www.zerohedge.com/news/2014-09-22/five-important-lessons-learned-scottish-referendum <p><em>Submitted by <a href="http://mises.org/daily/6888/Five-Lessons-Learned-from-the-Scottish-Referendum">Ryan McMaken via the Ludwig von Mises Institute</a>,</em></p> <p>Government authorities in the UK have declared that the &ldquo;Yes&rdquo; campaign for secession has failed by a margin of approximately 55 percent to 45 percent. Yet, even without a majority vote for secession, the campaign for separation from the United Kingdom has already provided numerous insights into the future of secession movements and those who defend the status quo.</p> <p><strong>Lesson 1: Global Elites Greatly Fear Secession and Decentralization </strong></p> <p>Global elite institutions and individuals including Goldman Sachs, Alan Greenspan, David Cameron and several major banks pulled out all the stops to sow fear about independence as much as possible. Global bankers vowed to punish Scotland, declaring they would move out of Scotland if independence were declared.</p> <p>According to <a href="http://www.marketwatch.com/story/good-riddance-scotland-we-dont-need-you-2014-09-16">one report</a>:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>A Deutsche Bank report compared it to the decision to return to the gold standard in the 1920s, and said it might spark a rerun of the Great Depression, at least north of the border.</p> </blockquote> <p>When it comes to predictions of economic doom, it doesn&rsquo;t get much more hysterical than that. Except that it does. David Cameron <a href="http://www.theguardian.com/lifeandstyle/2014/sep/17/mrs-camerons-diary-david-cameron-aberdeen">nearly burst into tears</a> <em>begging</em> the Scots not to vote for independence.</p> <p>The elite onslaught against secession employed at least two strategies. The first involved threats and &ldquo;for your own good&rdquo; lectures. Things will &ldquo;not work out well&rdquo; for Scotland in case of secession, intoned Robert Zoellick of the World Bank. John McCain <a href="http://www.dailymail.co.uk/news/article-2757510/Scottish-independence-expensive-mistake-says-economist-Alan-Greenspan.html">implied</a> that Scottish independence would be good for terrorists. The second strategy involved pleading and begging, which, of course, betrayed how truly fearful the West&rsquo;s ruling class is of secession.</p> <p>In addition to Cameron&rsquo;s histrionics based on nostalgia and maudlin appeals to not break &ldquo;this family apart,&rdquo; Cameron attempted (apparently successfully) to bribe the Scottish voters with numerous promises of more money, more autonomy, and more power within the UK.</p> <p>The threats that focused on the future of the Scottish monetary system are particularly telling. The very last thing that governments in London, Brussels, or Washington, DC want to see is an established Western country secede from a monetary system and join another in an orderly fashion. Political secession is bad enough, and is a thorn in the side of the EU which clearly hopes to establish itself someday as a perpetual union with no escape option. A successful withdrawal from a major global currency, even if to join the EMU later, would imply that countries have monetary options other than being absorbed wholesale (and permanently) by the EMU.</p> <p><strong>Lesson 2: Secession Movements Will Demand a Vote</strong></p> <p>While the UK elites were desperate to see the Scotland referendum fail, few argued that the Scots had no right to vote on the matter. Some argued that all of the UK should vote on it, but most observers appeared to simply accept that the Scots were entitled to vote by themselves on Scotland&rsquo;s status in the UK.</p> <p>This is bad news for many American and European regimes where traditions of democracy ostensibly run strong, but are manipulated to favor centralization. The United States government, for example, clings to the idea that no secession could possibly take place unless approved by the central government, and most Americans will dutifully denounce any attempt at a secessionist vote as treason. But in Europe, the mere existence of the Scotland referendum calls into question the legitimacy of efforts by central governments to ignore or prohibit local votes on independence. The Italian government has practically refused to even acknowledge the existence of the Venetian referendum, and the Spanish government in Madrid has already reiterated that it will ignore the results of the upcoming Catalonian vote.</p> <p>It will not go unnoticed that the people who ignore such democratic outcomes when they endanger the elite&rsquo;s status quo are the same people who extol the virtues of democracy when it suits their centralizing purposes, or when used to justify foreign wars.</p> <p>Those regimes that deny a vote or which refuse to recognize votes to secede will continue to appear more and more retrograde as time goes on, and much of this will be due to the nearly unchallenged Scottish prerogative to conduct local votes on secession.</p> <p>Some regimes may attempt to get around this by requiring nation-wide votes on secession. So, in the case of Venice, it is much easier to contemplate a situation in which the government in Rome allowed all of Italy to vote on whether or not Venice could secede. Such a vote would be safe from the central regime&rsquo;s perspective since it would be highly unlikely to succeed under such conditions. Southern Italians benefit from tax revenues extracted from the Veneto region. Catalan, as well, is one of the more productive regions in Spain, so a nationwide vote would almost certainly lean toward continuing to exploit Catalonia for the benefit of less productive Spaniards.</p> <p>Some observers have insisted that the relationship between such regions and the central governments in question are like &ldquo;marriages&rdquo; and that secession is like a &ldquo;divorce.&rdquo; A much better analogy, of course, is of a battered spouse seeking to flee the relationship for a safe house. Giving the full national electorate a vote is like giving an abusive spouse the power to veto any attempt at divorce.</p> <p>It&rsquo;s interesting to note, however, that Scotland is not in the same position as Veneto or Catalonia in that it is not a wealthy area of the United Kingdom. Indeed, from the point of view of budgets and tax revenues (ignoring the monetary dimension), England would not see much negative impact from Scotland&rsquo;s departure. Had things been different, we might not have seen the same accepting attitude toward a referendum. Nonetheless, the precedent has been set.</p> <p><strong>Lesson 3: American Ideas about Secession Are Unsophisticated and Parochial </strong></p> <p>For a great many Americans, the concept of secession is meaningless outside the context of the American Civil War. Since it is conveniently never mentioned that the American Revolution was the result of American secession from the British Empire, Americans know virtually nothing of any other secession movement in history in any other context except the Confederacy and slavery. Some Americans of a certain age associate secession with the Yugoslav Wars of the 1990s, wrongly thinking that war to be caused by secession and not by decades of centralizing communist rule.</p> <p>So, most Americans, when faced with a question of secession, have only two responses: (1) If you want secession you must want &ldquo;balkanization.&rdquo; By this, it is meant that secession equals ethnic cleansing and bloody civil war. (2) &ldquo;If you want secession, you must be racist.&rdquo; Because, of course, secession could serve no possible purpose other than the spread of slavery.</p> <p>The Scottish question has made it clear that in the rest of the world, most educated human beings understand that secession has been used in a wide variety of historical and political contexts. Obviously, slavery has nothing at all to do with the secession movements in Quebec, Scotland, Veneto, or Catalonia.</p> <p>Moreover, Americans in the typical fashion of authoritarians who justify any unjust state of affairs by dogmatically repeating the phrase &ldquo;it&rsquo;s the law&rdquo; act as if the matter of regional autonomy and independence was settled once and for all in 1865 by the Civil War. Presumably, for these people, the matter has been settled until the End of Time, because some other people &mdash; all of whom are now long-dead &mdash; fought a war about it. It requires truly awe-inspiring levels of philistinism to think that something political is forever settled because of something <a href="http://press-pubs.uchicago.edu/founders/documents/v1ch2s23.html">someone else did</a> a century and half ago. Among more rational and reasonable groups of humans, however, it is recognized that political conditions and allegiances change constantly.</p> <p>At the same time, the pro-secessionists in America who dogmatically invoke the United States constitution of 1787 as proof of secession&rsquo;s legality, will continue to fail to win converts. The constitution as envisioned by those who wrote it has been dead and buried for at least a century. The old interpretation is far too limiting in any case, and only applies to full US states, and not to portions of states.</p> <p><strong>Lesson 4: Secession is a good way to bargain </strong></p> <p>As we learned from the Scotland experience, centralizers fear secession to the point where they&rsquo;re willing to throw a lot of bones to the secessionists. Of course, in the case of Scotland, which is a net tax-receiver region, these promises involved a lot of government welfare. In the case of Veneto, for example, things would be different. In any case, threatening secession is a useful tactic in obtaining additional autonomy. Moreover, it is always helpful to force a central government to submit to a referendum on its legitimacy. This should not be done in a one-off election as the Scots have done, but as a regular feature of the political process.</p> <p>Ultimately, however, what <em>really</em> matters to the regime is that the ability to inflate the money supply and control the financial system. Politicians from the central government will be willing to part with many powers, but the power to inflate and control the banks will never be given up lightly.</p> <p><strong>Lesson 5: Centralization is Unnecessary for Economic Success </strong></p> <p>As predicted by Martin Van Creveld and a host of other observers of trends in state legitimacy, the state&rsquo;s status as <em>the central fact</em> in the political order of the world continues to decline with smaller national groups and economic regions breaking up the old order in favor of both local autonomy and international alliances. The Scottish secession effort is simply one of many recent examples. The short-term defeat of the referendum will do little to alter this trend.</p> <p>In addition, the economic realities of the modern world with constantly-moving capital and labor will continue to undermine the modern nation-state which has been largely built on the idea of economic nationalism and the myth that national economic self-sufficiency can be obtained.</p> <p>The proliferation of trade among nations with huge national markets, labor forces, and a willingness to trade internationally has broken down the old national claims that only the nation-state can provide the markets, coercive power, and international clout necessary for economic growth. In fact, the Scots, the Venetians, and the Catalonians see access to international markets as something that is quite attainable without the added baggage of the central state to which they are presently beholden. Does Venice need Rome to trade with China? It&rsquo;s unlikely.</p> <p>As Peter St. Onge <a href="http://mises.org/daily/6878/Is-Scotland-Big-Enough-To-Go-it-Alone">has pointed out</a>, small nations do quite well when it comes to economic performance, and smallness is hardly a liability. This assertion that bigger is better was always easily disprovable, but remained popular for centuries. The success of the Scottish secessionist claims that Scotland could indeed compete internationally has shown that the dominance of the old myth continues to break down.</p> <p><strong>Conclusion </strong></p> <p>Some British newspapers have declared that &ldquo;the dream is over&rdquo; for Scottish independence. That seems hardly likely, unless by &ldquo;over,&rdquo; the newspapers mean &ldquo;over for the next few years.&rdquo; <strong>Europe-wide, the drive for more regional independence and autonomy will only continue to grow as economies stagnate, and as elites from Brussels or Rome or Madrid continue to maintain that they know best.</strong> Eventually, the promises of the centralizers will fall on very deaf ears.</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="248" height="216" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20140922_scot.jpg?1411427357" /> </div> </div> </div> http://www.zerohedge.com/news/2014-09-22/five-important-lessons-learned-scottish-referendum#comments Alan Greenspan China Deutsche Bank Fail Goldman Sachs goldman sachs Great Depression Italy John McCain Ludwig von Mises Mises Institute Money Supply Nationalism United Kingdom World Bank Mon, 22 Sep 2014 23:30:45 +0000 Tyler Durden 494697 at http://www.zerohedge.com The Illustrated Guide To Keynesian Vs Austrian Economics http://www.zerohedge.com/news/2014-09-22/illustrated-guide-keynesian-vs-austrian-economics <p>There has been an <strong>unsettled debate among economists for a century now of whether government intervention is beneficial to an economy</strong>. The heart of this debate lies between Keynesian and Austrian economists (though there are other schools as well). In order to get a full understanding of the two schools of economic thought, the following infographic should help...</p> <p>&nbsp;</p> <p><strong>&nbsp;</strong></p> <p><strong><a href="http://theaustrianinsider.com/infographic-keynesian-vs-austrian-economics"><img src="http://theaustrianinsider.com/wp-content/uploads/2014/09/Economics-Infographic.jpg" alt="Keynesian vs Austrian Economics" width="600" border="0" /></a></strong></p> <p><a href="http://theaustrianinsider.com/infographic-keynesian-vs-austrian-economics/"><strong><br /></strong><em>Source: The Austrian Insider</em></a><strong><br /> </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="578" height="566" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20140922_econ.jpg?1411427125" /> </div> </div> </div> http://www.zerohedge.com/news/2014-09-22/illustrated-guide-keynesian-vs-austrian-economics#comments Mon, 22 Sep 2014 22:55:40 +0000 Tyler Durden 494696 at http://www.zerohedge.com The Geopolitical Situation In Europe http://www.zerohedge.com/news/2014-09-22/geopolitical-situation-europe <p><em>Authored by <a href="https://www.globalgold.ch/fileadmin/user_upload/Newletters/Global_Gold_Outlook_Report_Nr._7.pdf">Prof. Dr. Albert A. Stahel, Excerpted from Global Gold's Outlook</a>,</em></p> <p><span style="text-decoration: underline;"><strong>The geopolitical situation of Europe</strong></span></p> <p>After the end of the cold war, the United States dominated world affairs for nearly twenty years. <strong>However, the situation of a unipolar world has changed since the financial crisis of 2008 to a now multipolar world that includes China, Russia, India, Brazil and South Africa.</strong> These powers are influencing and manipulating the conflict zones we have today to their advantage. By analysing and dissecting the issues concerning the major conflict zones on our world map, as well as illustrating the parties involved, this article will <strong>explain what political and strategic interests are at play and how the development in major hotspots shape the big picture</strong>. This will identify the geopolitical forces that affect the European continent and what future concerns and worries await us.</p> <p>&nbsp;</p> <p><span style="text-decoration: underline;"><strong>Conflict zones in the world</strong></span></p> <p>There are now five conflict zones that affect the geopolitical situation&nbsp;of Europe:</p> <ul> <li>Gaza: the still on-going conflict between Israel and Hamas;</li> <li>Syria: the war between the al-Assad regime and different opposition groups;</li> <li>Iraq: the war between the regime in Baghdad and ISIS (the Islamic State);</li> <li>Afghanistan: the fight of the Taliban against Kabul and the foreign troops;</li> <li>East Ukraine: the Russian separatists versus the Ukraine government.</li> </ul> <p>Gaza, Syria, Iraq and Afghanistan all belong to a region, which the former security advisor Zbigniew Brzezinski had named the Eurasian Balkans, which included the Middle East and Central Asia. So in fact, our world incorporates two big conflict zones. One is the crumbling structure of different states in the Eurasian Balkans. The second one is Eastern Europe, in which we now have Russia struggling to be recognized as a world power.</p> <p>&nbsp;</p> <p><span style="text-decoration: underline;"><strong>The world’s conflict zones in detail</strong></span></p> <p>Let’s start with <strong>Gaza</strong>. The conflict between Israel and Hamas is a direct function of the creation of the Jewish state in 1948 and the stateless status of the Palestinians. Hamas fired rockets of different ranges, mostly coming from Iran, against Israel. By firing these rockets, Hamas demonstrated its willingness to inflict damage on Israel. By responding with air and ground attacks against Gaza, Israel was pursuing the following objectives:</p> <ol> <li>Destroying Hamas’ entire rocket-arsenal and tunnels;</li> <li>Inflict serious damage to the political leadership and military command of Hamas;</li> <li>Punish the population of Gaza for supporting Hamas.</li> </ol> <p>After the retreat of the Israeli army from Gaza, Hamas reactivated its launching of rockets against Israel. Now there is a truce, but how long will it be observed?</p> <p>The war in <strong>Syria</strong> has two origins: the geopolitical rivalries between Iran, Turkey and Saudi Arabia, and the dictatorship of the religious minority of the Alawites under the leadership of the al-Assad family ruling a Sunni majority.</p> <p>The ayatollahs of Tehran want to extend the country’s sphere of influence. For this reason, they support the regime of the Alawites, an offshoot of the Seventh Shiite branch, in Syria. Turkey and Saudi Arabia feel threatened by such influence. They therefore seek to overthrow the Shiite regime in Syria and replace it with a Sunni one. This is also why Turkey is now supporting the opposition oriented towards the Muslim Brotherhood with weapons. Because of this situation, the Salafist jihadist Islamic State (of Iraq and the Levant), ISIS, could grow to the best-organized group in Syria.</p> <p>The situation in <strong>Iraq</strong> is similar: Under the leadership of their Caliph al-Baghdadi, ISIS has conquered the western part of Iraq! The Iraqi army now controls only the southern region of Iraq. The Peschmergas, the army of the Kurdish Republic, are fighting ISIS from their territory in the northeastern part of Iraq with the support of American airstrikes. The fighting between ISIS and the Iraqi army is mostly around Baghdad. ISIS’ main objective appears to be to destroy the Iraqi government and its army. Like in Syria, there is no longer an identity of a state of Iraq. With the creation of the Caliphate, ISIS has changed the whole structure of Iraq and Syria that was built by the British and the French after 1918 and the partitioning of the Ottoman Empire. This leads us to question what the future holds, whether other states like Turkey, Iran and Saudi Arabia could fall and new states could be created based on different religions and ethnicities.</p> <p>It is expected that the USA and its allies will mostly retreat from <strong>Afghanistan</strong> by the end of this year. This will create a vacuum in large parts of Afghanistan, which the Taliban who mostly belong to the ethnicity of the Pashtuns and the Tajiks of the former Northern Alliance could fill up with their combatants. The security forces of Afghanistan are still too weak to control the whole country. Obama had previously announced the Americans would definitely leave by the end of 2016. If the Taliban could occupy the South of Afghanistan, the North and the West would belong to the Tajiks. Such a development could also destabilize Pakistan. With these ambitions in mind, the Pashtuns of Afghanistan and Pakistan could erect a new country, Great Pashtunistan. The Tajiks of Afghanistan and Tajikistan could unite, creating a Great Tajikistan.</p> <p>Closer to home, the territory of today’s <strong>Ukraine</strong> had belonged to different larger countries. Until the middle of the 18<sup>th</sup>century, the Tatars, who were controlled by the Ottoman Empire, ruled the southern part. Western and northern Ukraine were part of the Confederation of Poland and Lithuania. Since Empress Catherine the Great, the East had belonged to Russia. With the definitive dissolution of the Confederation in 1795, the Hapsburgs could annex the western part and Russia the northern part. After the First World War, Poland annexed the West of Ukraine, which was a Hapsburg territory at the time. When Hitler and Stalin destroyed Poland in 1939, the West of Ukraine became attached to the Soviet Republic of Ukraine. Finally, Chruschtschow added the Krim. So in fact, today we have a country that is mostly divided between the West, which is Ukrainian and the East, which is Russian. The southern region belongs to Ukrainians, who in the past were greatly influenced by Russian culture. The struggle we see today could in fact end in the partition of Ukraine, which is certainly one of the strategic objectives of the Russian President Putin.</p> <p>&nbsp;</p> <p><span style="text-decoration: underline;"><strong>The role of regional powers</strong></span></p> <p>All these conflict zones are dominated by the rivalries and ambitions of different regional powers. In the Middle East the key players are Turkey, Iran and Saudi Arabia. In Gaza, Turkey and Iran are struggling to influence the military actions of Hamas. Iran is delivering long-range missiles to Hamas to target the southern part of Israel. Turkey and Qatar together have contact with the political wing of Hamas. Both countries are politically oriented towards the Muslim Brotherhood, which was crushed last year by the new regime in Egypt led by former Field Marshal al-Sisi. Meanwhile, al-Sisi’s regime found strong political and financial support by Saudi Arabia and other Gulf states.</p> <p>In Syria, the al-Assad regime receives Iranian support. While Iran is allegedly sending Hezbollah combatants from Lebanon (Hezbollah belongs to the same Shiite sect as the Iranians), Turkey is providing military support to the moderate opposition of the Syrian Free Army against the regime. It is said, yet unconfirmed, that until last year Saudi Arabia was helping the Salafist opposition. Whether this includes ISIS is questionable. The Saudis face a challenge in that they seek both an anti-Assad Syria and an anti-Shiite regime in Iraq, and at the same time want more moderate Sunni regimes gaining ground by fighting jihadist forces such as al-Qaeda, ISIS included. However, the situation in Syria has changed. The moderates are controlling only a small part of the country, the regime is surviving and the Salafists like ISIS are in a strong position. If ISIS can really consolidate the Caliphate with part of Iraq and Syria, then ISIS will pose a great threat to the kingdoms of Jordan and Saudi Arabia. Meanwhile, Iran extends its support to the regime and army in Iraq, who also belong to the same Shiite sect, as Turkey promotes the interests of the Kurds in Northern Iraq. By so doing, Turkey serves the interests of the Kurdish population within its own borders and secures the supply of crude oil from the fields of Northern Iraq.</p> <p>Afghanistan is the focus of the regional powers Iran and Pakistan. On one hand, Iran is influencing and helping the Tajiks of the former Northern Alliance. On the other hand, Pakistan is doing the same with the Taliban who, as we said earlier, mostly belong to the ethnicity of the Pashtuns. However, both have different futures when it comes to the possible partitioning of Afghanistan. While Iran stands to benefit, this is not the case for Pakistan. The identity of Pakistan could be threatened by the creation of a Great Pashtunistan by the Taliban. Therefore, the regime and existence of the Pakistani Republic is at stake.</p> <p>The case of Ukraine is more complicated. Here we have the global powers struggling for influence in Europe. Smaller states like Poland and Lithuania are mostly interested in Ukraine’s membership in the EU and NATO. The region’s history and the geopolitical situation are motivating these two countries to play a bigger role in the region’s political developments. On the other end we have Germany which still favours maintaining a good relationship with Russia.</p> <p>&nbsp;</p> <p><span style="text-decoration: underline;"><strong>The role of Russia and the USA in these conflict zones</strong></span></p> <p>In addition to the regional powers Iran and Turkey, Russia and the United States are in direct competition on having the farthest-extending and strongest political influence on the states of the Middle East, particularly since 2008, the year of the war in Georgia. If in the Middle East the USA is helping one side, Russia is supporting the other - it is a matter of balance of powers. At the same time, both have developed opposing blocs of regional powers.</p> <p>Syria is now the best example, which embodies the rivalries between the two superpowers in the Middle East. The USA is supporting Turkey and Saudi Arabia for their influence on the outcome of the war in Syria. Through its (indirect) support of the Syrian Free Army, the USA not only seeks to destroy the regime of Bashar al-Assad, but also to get Russia out of Syria altogether. By so doing, Russia will lose its foothold in the region. The most important difference between the politics and strategies of Russia and the USA are their geopolitical interests. Both seek to extend their own regional influence while diminishing that of the other. Iran is a pivotal issue. As Russia seeks to help Iran gain further regional power, the USA seeks to end this perspective.</p> <p>In Iraq we have a similar situation. Russia is sustaining Iran and the Shiite government in Baghdad. Because of Russia’s involvement in this conflict, the USA is still reluctant to send fighter aircrafts and weapons to the government of Iraq. Now we find them supporting the Peschmergas (and in this way also the army of Iraq) by launching airstrikes against ISIS. Realizing the increasing geopolitical importance of the Middle East, Russia has high ambitions for greater influence on the region. Therefore, the USA’s actions in the civil war in Iraq must come with great caution. Any wrong step could cause the loss of a critical Sunni partner, such as Saudi Arabia, to the Russian camp. Although it may be very unlikely to happen, the risk remains.</p> <p>In Afghanistan, however, the two superpowers see eye to eye on what is at stake. The Russians fear the takeover of the Taliban in the future. Therefore, they were willing to sell combat helicopters to the USA for the army of Afghanistan to fight the Taliban. Similarly, a year ago, Russia was supporting the Americans with the use of Russian territory for American logistics in Afghanistan. However, this phase of collaboration is now over.</p> <p>Ukraine set the scene of direct confrontation between Russia and the USA. While Russia supports the separatist movements with weapons and fighters, American Special Forces are advising the Ukrainian army in their engagement against the separatists. The USA has an interest in the membership of Ukraine in NATO and the EU, but Russia cannot accept such a possibility and is therefore destabilizing the country. With the war in Ukraine President Putin probably has the following strategic objectives:</p> <ol> <li>to halt the move of the government in Kiev for a membership in NATO and in the EU;</li> <li>to annex the eastern and southern part of Ukraine which will serve Russia’s geostrategic situation in the Black Sea and in the Mediterranean;</li> <li>to undermine the political influence of the EU in Europe.</li> </ol> <p><span style="text-decoration: underline;"><strong>The role of the EU</strong></span></p> <p>Today, the EU is still only a political and economic union as it lacks a military instrument. Because of this situation, NATO is the military protection to the EU. Without NATO, the EU has no military power. In this sense, the foreign policy of the EU is not credible without NATO. That credibility is based on the military capacity to respond to an act of aggression against Europe. Because of the disarmament of different states in Europe like Germany after the end of the cold war, this capacity no longer exists. In the last 6 years Russia has expanded and modernized the conventional forces by increasing its defence budget. Therefore, what we have in Europe is a rather unique situation as NATO’s deterrence capacity in relation to Russia diminished over time. NATO can no longer protect the small states in the Baltic region. For this reason the foreign policy of the EU has lost credibility.</p> <p>&nbsp;</p> <p><span style="text-decoration: underline;"><strong>Social unrest</strong></span></p> <p>On another level, the sanctions of the EU and the USA on Russia could lead to a recession of the economies in Europe. Such a recession will drive up unemployment rates in the EU, which will mainly affect the population under 25. In turn, the result could be social unrest, a danger that the mainstream media fails to address. At the same time, the sanctions of the EU still have very little influence on the strategy and politics of Russia.</p> <p>&nbsp;</p> <p><span style="text-decoration: underline;"><strong>The breakdown of the limes and the jihadists</strong></span></p> <p>In retrospect of the potential crisis in Europe, many of the Arab states in Northern Africa and the Middle East, which the British and the French created after 1918, are now breaking down. These states were the limes, which gave the European states the possibility to control and to influence the migration process from Africa and Asia to Europe for many years. Now the limes have broken down. In the next ten to twenty years the social, economic and demographic structure of Germany, France, Britain and other European countries will be affected by the influx of migrating Africans and Asians and therefore could completely change the social structure of Europe. The fact that the majority of this migrant population is coming from Muslim countries suggests there is a great probability that the next twenty years will witness the emergence of a Muslim majority in many European countries. The past decades of constant war and struggles in the Middle East region along with the accelerating religious war between the Sunni and the Shiite has and will lead to further radicalization of the masses. Europeans are becoming increasingly fearful of Muslims because of the negative and bad image of Muslims presented in the mainstream media. Moreover, the economic environment, which has already led to a staggering 30-60% youth unemployment rate in European nations, is further deteriorating. Negativity can only bring out more negativity and this will lead to additional tension in the Eurozone. While some are concerned that at some point many jihadists of European origins will come back from the battlefields in Syria and Iraq and be ready for action in Europe, one should never forget the factors that created this situation in the first place.</p> <p><strong>The future of Europe will be determined by the ongoing conflicts in the Middle East and in Ukraine, by the migration of millions of people and by the threat of force by European jihadists. Because of all these factors, there is a possibility that the conflict in Ukraine and the future migration process could destabilize Europe. In fact, I believe that the Caucasian race, which has dominated the world since the 17th century, could disappear in Europe. In twenty years, there could be a new Europe with a strong relationship with Africa and Asia. The tradition of Europe, which was built up by Emperor Charlemagne, will no longer exist.</strong></p> <p>*&nbsp; *&nbsp; *</p> <p><em>This is an excerpt from the latest Global Gold Outlook Report (</em><a href="https://www.globalgold.ch/fileadmin/user_upload/Newletters/Global_Gold_Outlook_Report_Nr._7.pdf"><em>full paper</em></a><em>). Take a free subscription to receive similar updates in the future via e-mail: </em><a href="http://www.globalgold.ch/"><em>www.globalgold.ch</em></a><em>.</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="600" height="364" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20140921_geo.png?1411421593" /> </div> </div> </div> http://www.zerohedge.com/news/2014-09-22/geopolitical-situation-europe#comments Afghanistan Brazil China Crude Crude Oil Eastern Europe Eurozone France Germany India Iran Iraq Israel Lithuania Middle East Poland Recession Saudi Arabia Turkey Ukraine Unemployment Mon, 22 Sep 2014 22:23:17 +0000 Tyler Durden 494695 at http://www.zerohedge.com "Smart Money" BTFATH At Most Furious Pace In Over A Year, 2Y Short-Squeeze Possible http://www.zerohedge.com/news/2014-09-22/smart-money-btfath-most-furious-pace-over-year-2y-short-squeeze-possible <p>Positioning among "smart money" participants in the markets continues to show major divergences. While <strong>large speculators bought S&amp;P 500 contracts at their strongest weekely pace in more than a year</strong> - shifting to a net long position - they also increased the <strong>net short Russell 2000 position to its 'most short' in five years</strong>. Large speculators also bought crude oil after eleven consecutive weeks of selling. In the rates complex, hedge funds maintained their 10Y Treasury long exposure while <strong>large speculators sold 2-Y Treasuries at the fastest weekely pace in more than three years to the biggest net short position in five years</strong>. - leaving, as BofA warns, 2Y susceptible to a squeeze pull-back. This potential squeeze extends all the way to 5Y as repo rates indicate a massive shortage into month-end.</p> <p>&nbsp;</p> <p>"Smart Money" is buying the S&amp;P, selling Russell, and neutral Nasdaq...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/09-overflow/20140922_pos2.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/09-overflow/20140922_pos2_0.jpg" width="600" height="1016" /></a></p> <p>&nbsp;</p> <p>As BofA's proprietary positioning indicates, Russell is as short as it has been in a year and S&amp;P and Dow longest...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/09-overflow/20140922_pos3.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/09-overflow/20140922_pos3_0.jpg" width="600" height="336" /></a></p> <p>&nbsp;</p> <p>&nbsp;</p> <p><strong>2Y shorts are the biggest since 2007...</strong></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/09-overflow/20140922_pos1.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/09-overflow/20140922_pos1_0.jpg" width="600" height="314" /></a></p> <p>&nbsp;</p> <p>And the squeeze potential extends to 5Y maturities - just look at the <strong>extreme shortages implied by these repo-rates</strong> (via SMRA)</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/09-overflow/5%20Year%20Repo%20Sept%2022.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/09-overflow/5%20Year%20Repo%20Sept%2022.jpg" width="592" height="136" /></a></p> <p><em>Source: BofA (most recent data)</em></p> <p>*&nbsp; *&nbsp; *</p> <p>This won't end well...</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="962" height="504" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20140922_pos1.jpg?1411421512" /> </div> </div> </div> http://www.zerohedge.com/news/2014-09-22/smart-money-btfath-most-furious-pace-over-year-2y-short-squeeze-possible#comments BTFATH Crude Crude Oil NASDAQ Russell 2000 Smart Money Mon, 22 Sep 2014 22:03:01 +0000 Tyler Durden 494694 at http://www.zerohedge.com The Federal Reserve Explains How Its Crystal Ball Works http://www.zerohedge.com/news/2014-09-22/federal-reserve-explains-how-its-crystal-ball-works <p><a href="http://libertystreeteconomics.newyorkfed.org/2014/09/forecasting-with-the-frbny-dsge-model.html#.VCA_pPldWaq"><em>Via The NY Fed&#39;s Liberty Street Economics blog</em></a>,</p> <h3 class="ts-article-title"><u>Forecasting with the FRBNY DSGE Model</u></h3> <p><img alt="" height="1" src="http://www.typepad.com/t/stats?blog_id=86843359508010764&amp;user_id=&amp;page=http%3A//libertystreeteconomics.newyorkfed.org/2014/09/forecasting-with-the-frbny-dsge-model.html%23.VCA_pPldWaq&amp;referrer=&amp;i=212495731" style="position: absolute; top: 0; left: 0;" width="1" /> <em><span class="ts-blog-article-author">Marco Del Negro, Bianca De Paoli, Stefano Eusepi, Marc Giannoni, Argia Sbordone, and Andrea Tambalotti</span></em></p> <div class="ts-special-announcement"><em><strong>First in a five-part series</strong></em></div> <p><strong><span class="ts-special-post-b">This series examines the Federal Reserve Bank of New&nbsp;York&rsquo;s dynamic stochastic general equilibrium (FRBNY DSGE) model&mdash;a structural model used by Bank researchers to understand the workings of the U.S. economy and provide economic forecasts. </span></strong> The Federal Reserve Bank of New&nbsp;York (FRBNY) has built a DSGE model as part of its efforts to forecast the U.S. economy. On <em>Liberty Street Economics</em>, we are publishing a weeklong series to provide some background on the model and its use for policy analysis and forecasting, as well as its forecasting performance. In this post,<strong> we briefly discuss what DSGE models are, explain their usefulness as a forecasting tool, and preview the forthcoming pieces in this series.</strong></p> <p><strong>The term DSGE, which stands for dynamic stochastic general equilibrium, encompasses a very broad class of macro models</strong>, from the standard real business cycle <a href="http://www.minneapolisfed.org/research/prescott/papers/timetobuild.pdf" target="“_blank”">(RBC) model</a> of <a href="http://www.nobelprize.org/nobel_prizes/economic-sciences/laureates/2004/advanced-economicsciences2004.pdf" target="“_blank”">Nobel prizewinners Kydland and Prescott</a> to New&nbsp;Keynesian monetary models like the one of <a href="http://benoitmojon.com/pdf/Christiano%20%20Eichenbaum%20Evans%202005%20JPE.pdf" target="“_blank”">Christiano, Eichenbaum, and Evans</a>. What distinguishes these models is that rules describing how economic agents behave are obtained by solving intertemporal optimization problems, given assumptions about the underlying environment, including the prevailing fiscal and monetary policy regime. <strong><u>One of the benefits of DSGE models is that they can deliver a lens for understanding the economy&rsquo;s behavior. </u></strong>The third post in this series will show an example of this role with a discussion of the forces behind the Great Recession and the following slow recovery.</p> <p><strong>DSGE models are also quite abstract representations of reality, however, which in the past severely limited their empirical appeal and forecasting performance.</strong> This started to change with work by <a href="http://www.jstor.org/stable/2678564" target="“_blank”">Schorfheide</a> and <a href="https://www.aeaweb.org/articles.php?doi=10.1257/aer.97.3.586" target="“_blank”">Smets and Wouters</a>. First, they popularized estimation (especially <a href="http://books.google.com/books?id=da0mve_vB5IC&amp;printsec=frontcover&amp;dq=Handbook+of+Bayesian+econometrics&amp;hl=en&amp;sa=X&amp;ei=7qHBU7-ACMOvyAS814Eg&amp;ved=0CB4Q6AEwAA" target="“_blank”">Bayesian estimation</a>) of these models, with parameters chosen in a way that increased the ability of these models to describe the time series behavior of economic variables. Second, these models were enriched with both endogenous and exogenous propagation mechanisms that allowed them to better capture patterns in the data. For this reason, estimated DSGE models are increasingly used within the Federal Reserve System (the <a href="http://www.federalreserve.gov/econresdata/edo/edo-models-about.htm" target="“_blank”">Board of Governors</a> and the Reserve Banks of <a href="http://www.chicagofed.org/webpages/publications/working_papers/2012/wp_02.cfm" target="“_blank”">Chicago</a> and <a href="http://www.philadelphiafed.org/research-and-data/real-time-center/PRISM/" target="“_blank”">Philadelphia</a> have versions) and by central banks around the world (including the <a href="https://www.ecb.europa.eu/home/html/researcher_awm.en.html" target="“_blank”">New&nbsp;Area-Wide Model</a> developed at the European Central Bank, and models at the <a href="http://www.norges-bank.no/Upload/66495/EN/NEMO.pdf" target="“_blank”">Norges Bank</a> and the <a href="http://www.riksbank.se/en/Press-and-published/Published-from-the-Riksbank/Other-reports/Occasional-Paper-Series/2013/Occasional-Paper-Series-No-12-Ramses-II--Model-Description/" target="“_blank”">Sveriges Riksbank</a>). The FRBNY DSGE model is a medium-scale model in the tradition of <a href="http://benoitmojon.com/pdf/Christiano%20%20Eichenbaum%20Evans%202005%20JPE.pdf" target="“_blank”">Christiano, Eichenbaum, and Evans</a> and <a href="https://www.aeaweb.org/articles.php?doi=10.1257/aer.97.3.586" target="“_blank”">Smets and Wouters</a> that also includes credit frictions as in the financial accelerator model developed by <a href="http://faculty.wcas.northwestern.edu/%7Elchrist/course/Czech/BGG%201999%20Handbook%20chapter.pdf" target="“_blank”">Bernanke, Gertler, and Gilchrist</a> and further investigated by <a href="http://www.aeaweb.org/articles.php?doi=10.1257/aer.104.1.27" target="“_blank”">Christiano, Motto, and Rostagno</a>. The second post in this series elaborates on what DSGE models are and discusses the features of the FRBNY model.</p> <p>Perhaps some progress was made in the past twenty years toward empirical fit, but is it enough to give forecasts from DSGE models any credence? Aren&rsquo;t there many critics out there (here is <a href="http://macroadvisers.blogspot.com/2010/06/emperor-has-no-clothes-ma-on-state-of.html" target="“_blank”">one</a>) telling us these models are a failure? <strong>As it happens, not many people seem to have actually checked the extent to which these model forecasts are off the mark. </strong><a href="https://www.google.com/url?sa=t&amp;rct=j&amp;q=&amp;esrc=s&amp;source=web&amp;cd=1&amp;cad=rja&amp;uact=8&amp;ved=0CB0QFjAA&amp;url=http%3A%2F%2Feconomics.sas.upenn.edu%2F%7Eschorf%2Fpapers%2Fhb_forecasting.pdf&amp;ei=POXBU_y8FsydyASugYKACA&amp;usg=AFQjCNFJRaEiNYHGh65f-8AbcQ-EtHDyzQ&amp;sig2=QsCTFSGiKLJ24CqIFywoDw" target="“_blank”">Del Negro and Schorfheide</a> do undertake such an exercise in a chapter of the recent <a href="http://books.google.com/books?id=-_dSuakNHWYC&amp;printsec=frontcover&amp;dq=Handbook+of+Economic+Forecasting&amp;hl=en&amp;sa=X&amp;ei=zuXBU-KtH9i1yASl9oDADA&amp;ved=0CC4Q6AEwAA" target="“_blank”">Handbook of Economic Forecasting</a>. Their analysis compares the real-time forecast accuracy of DSGE models that were available prior to the Great Recession (such as the Smets and Wouters model) to that of the Blue Chip consensus forecasts, using a period that includes the Great Recession. They find that, for nowcasting (forecasting current quarter variables) and short-run forecasting, DSGE models are at a disadvantage compared with professional forecasts. <strong>Over the medium- and long-run terms, however, DSGE model forecasts for both output and inflation become competitive with&mdash;if not superior to&mdash;professional forecasts. </strong>They also find that including timely information from financial markets such as credit spreads can <a href="http://libertystreeteconomics.newyorkfed.org/2012/04/forecasting-the-great-recession-dsge-vs-blue-chip.html#.U8KglI1dWbY" target="“_blank”">dramatically improve the models&rsquo; forecasts</a>, especially in the Great Recession period.</p> <p>These results are based on what forecasters call &ldquo;pseudo-out-of-sample&rdquo; forecasts. <strong>These are not truly &ldquo;real time&rdquo; forecasts, because they were not produced at the time. </strong>(To our knowledge, there is little record of truly real time DSGE forecasts for the United&nbsp;States, partly because these models were only developed in the mid-2000s.) For this reason, in the fourth post of this series, we report forecasts produced in real time using the FRBNY DSGE model since 2010. These forecasts have been included in internal New&nbsp;York Fed documents, but were not previously made public. Although the sample is admittedly short, these forecasts show that while consensus forecasts were predicting a relatively rapid recovery from the Great Recession, the DSGE model was correctly forecasting a more sluggish recovery.</p> <p><strong>The last post in the series shows the current FRBNY DSGE forecasts for output growth and inflation and discusses the main economic forces driving the predictions.</strong> Bear in mind that these forecasts are not the official New&nbsp;York Fed staff forecasts; the DSGE model is only one of many tools employed for prediction and policy analysis at the Bank.</p> <p><strong>DSGE models in general and the FRBNY model in particular have huge margins for improvement.</strong> The list of flaws is long, ranging from the lack of heterogeneity (the models assume a representative household) to the crude representation of financial markets (the models have no term premia). Nevertheless, we are sticking our necks out and showing our forecasts, not because we think we have a &ldquo;good&rdquo; model of the economy, but because we want to have a public record of the model&rsquo;s successes and failures. In doing so, we can learn from both our past performance and readers&rsquo; criticism. The model is a work in progress. <strong>Hopefully, it can be improved over time, guided by current economic and policy questions and benefiting from developments in economic theory and econometric tools.</strong></p> <p>*&nbsp; *&nbsp; *</p> <p><a href="http://www.zerohedge.com/news/2014-04-23/feds-farcical-forecast-fiasco"><u><strong>And for some inisght into just how well the Fed has done...</strong></u></a></p> <p>The chart below, which summarizes 5 years of Fed &quot;forward guidance&quot; on that most critical of variables - the Fed Funds rate - proves two things:</p> <p>i) there is nothing worse in this world than being a Fed Funds, or Eurodollar, trader, considering 5 years of forecasts have been systematically destroyed by a Fed which has failed time <em>and time <strong>and time again </strong></em>to stimulate the economy enough to push it away from ZIRP (and why any hope for the first rate hike in mid-2015 are idiotic), and</p> <p>ii) when it comes to central planning, the economists that now openly control the bond and stock market and increasingly more of global capital flows, have absolutely no idea what tomorrow brings perversely, since it is their actions that have made the required outcome - a self-sustaining, economic recovery - impossible.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2014/04/forward%20guidance.JPG"><img height="337" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2014/04/forward%20guidance_0.JPG" width="600" /></a></p> <p>&nbsp;</p> <p>*&nbsp; 8&nbsp; *</p> <p>No wonder they need a new crystal ball.</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="304" height="289" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20140922_NYFED.jpg?1411407239" /> </div> </div> </div> http://www.zerohedge.com/news/2014-09-22/federal-reserve-explains-how-its-crystal-ball-works#comments Bank of New York Bond Central Banks Crude EuroDollar European Central Bank Federal Reserve Federal Reserve Bank Federal Reserve Bank of New York Monetary Policy New York Fed Norges Bank Reality Recession recovery Mon, 22 Sep 2014 21:30:57 +0000 Tyler Durden 494693 at http://www.zerohedge.com #OccupyAndOrFloodWallStreetForClimateChange Takes On NYSE TV Studio - Live Feed http://www.zerohedge.com/news/2014-09-22/occupyandorfloodwallstreetforclimatechange-takes-nyse-tv-studio-live-feed <p><strong>It has been several years since the disjointed, confused, and extremely disorganized Occupy Wall Street movement made any headlines.</strong> Alas, in the interim, the career prospects of those who comprise its up prime age demographic have gone nowhere but down while inversely impacting the nominal free time of said cohort, which is why we were somewhat surprised it took as long as it did for the same individuals, best known for camping out in Zucotti Park (until it started snowing of course), to stage a daring comeback. Which they did today, following a weekend in which <a href="http://nypost.com/2014/09/22/climate-change-skeptics-call-out-marchers-hypocrisies/">New York City was overrun with "The People's Climate March", protesting against climate change by... leaving behind them tons of non-biodegradable garbage</a>. </p> <p><strong>It is this same group that has once again made its way all the way down into the Financial district, and specifically in front of the TV studio formerly known as the NYSE.</strong></p> <p>But <strong>while we understand the frustration of America's youth</strong> (although by the looks of thing the prevailing protesters have a median age well in the 30s) with life in America as a Millennial (or Gen Yer, or Gen Xer) as nothing continues to change in the country, we are a little confused: after all by now everyone should know that the "New York" Stock Exchange is located in Mahwah, New Jersey, and that all the servers that host HFT algos - the key market player in the New Normal - are EnergyStar compliant.</p> <p>Which is why we hope that the young men and women in the live webcast below can explain to us: <span style="text-decoration: underline;"><strong>just what is it they are protesting?</strong></span></p> <p>Live Feed:</p> <p><iframe src="http://cdn.livestream.com/embed/activistworldnewsnow?layout=4&amp;height=340&amp;width=560&amp;autoplay=false" width="560" height="340" frameborder="0" scrolling="no"></iframe></p> <div style="font-size: 11px; padding-top: 10px; text-align: center; width: 560px;">Watch <a href="http://www.livestream.com/?utm_source=lsplayer&amp;utm_medium=embed&amp;utm_campaign=footerlinks" title="live streaming video">live streaming video</a> from <a href="http://www.livestream.com/activistworldnewsnow?utm_source=lsplayer&amp;utm_medium=embed&amp;utm_campaign=footerlinks" title="Watch activistworldnewsnow at livestream.com">activistworldnewsnow</a> at livestream.com</div> <p>&nbsp;</p> <p>&nbsp;</p> <p>Some examples...</p> <p><iframe src="//www.youtube.com/embed/pvmCfGidLD4" width="560" height="315" frameborder="0"></iframe></p> <p>&nbsp;</p> <p><iframe src="http://new.livestream.com/accounts/45219/events/3418167/videos/62874656/player?width=560&amp;height=315&amp;autoPlay=false&amp;mute=false" width="560" height="315" frameborder="0" scrolling="no"></iframe></p> <p>&nbsp;</p> <p><iframe src="http://new.livestream.com/accounts/45219/events/3418167/videos/62861305/player?width=560&amp;height=315&amp;autoPlay=false&amp;mute=false" width="560" height="315" frameborder="0" scrolling="no"></iframe></p> <p>&nbsp;</p> <p>Blue powder exuberance... (not tear gas)</p> <p>&nbsp;</p> <blockquote class="twitter-tweet" lang="en"><p>BREAKING! Dear world: This is how it looks today on <a href="https://twitter.com/hashtag/WallStreet?src=hash">#WallStreet</a>! We <a href="https://twitter.com/hashtag/FloodWallStreet?src=hash">#FloodWallStreet</a> <a href="https://twitter.com/hashtag/ClimateChange?src=hash">#ClimateChange</a> <a href="https://twitter.com/hashtag/PeoplesCIimate?src=hash">#PeoplesCIimate</a> <a href="http://t.co/BbuMXaEGN4">pic.twitter.com/BbuMXaEGN4</a></p> <p>— Libor Von Schönau (@LiborVS) <a href="https://twitter.com/LiborVS/status/514156161395068930">September 22, 2014</a></p></blockquote> <script src="//platform.twitter.com/widgets.js"></script><p>&nbsp;</p> <p>Arrests</p> <p>&nbsp;</p> <blockquote class="twitter-tweet" lang="en"><p>Arrests and outrage at <a href="https://twitter.com/hashtag/FloodWallStreet?src=hash">#FloodWallStreet</a> protests in NYC's financial district today. <a href="http://t.co/Arb7TmuhpF">http://t.co/Arb7TmuhpF</a> <a href="http://t.co/EQbEbF0oqg">pic.twitter.com/EQbEbF0oqg</a></p> <p>— Boing Boing (@BoingBoing) <a href="https://twitter.com/BoingBoing/status/514151078662000641">September 22, 2014</a></p></blockquote> <script src="//platform.twitter.com/widgets.js"></script><p>&nbsp;</p> <p>And this sums it all up...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/09-overflow/20140922_occupy1.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/09-overflow/20140922_occupy1.jpg" width="488" height="542" /></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="539" height="389" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20140922_occupy2.jpg?1411420041" /> </div> </div> </div> http://www.zerohedge.com/news/2014-09-22/occupyandorfloodwallstreetforclimatechange-takes-nyse-tv-studio-live-feed#comments headlines HFT LIBOR Mahwah New Normal New York City New York Stock Exchange Twitter Twitter Mon, 22 Sep 2014 21:05:40 +0000 Tyler Durden 494692 at http://www.zerohedge.com On The Breakdown Of Nations http://www.zerohedge.com/news/2014-09-22/breakdown-nations <p><em>Submitted by <a href="http://www.sovereignman.com/trends/on-the-breakdown-of-nations-15042/">Tim Price via Sovereign Man blog</a>,</em></p> <p><strong>Several years ago we highlighted the work of Leopold Kohr.</strong> Kohr was an Austrian Jew who only narrowly escaped the Holocaust.</p> <p>The village in which he was born, Oberndorf in central Austria, with a population of just 2,000 or so, would come to exert a disproportionate influence on Kohr’s thinking.</p> <p>Kohr went on to study at the LSE with the likes of fellow Austrian thinker Friedrich von Hayek. In 1938 he left Europe for America, a place he would make his home for the next 25 years.</p> <p>In September 1941, just as the mass murder of the Jewish inhabitants of Vilnius was beginning, <strong>Kohr wrote the first part of what would become his masterwork, ‘The Breakdown of Nations’.</strong></p> <p>In it <strong>he argued that Europe should be “cantonized” back into the sort of small, political regions that had existed in the past and that still persisted in democratic hold-outs like Switzerland.</strong></p> <p>It all comes down to scale. As Kirkpatrick Sale puts it in his foreword to ‘The Breakdown of Nations’,</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>“What matters in the affairs of a nation, just as in the affairs of a building, say, is the size of the unit.</p> <p>&nbsp;</p> <p>“A building is too big when it can no longer provide its dwellers with the services they expect – running water, waste disposal, heat, electricity, elevators and the like – without these taking up so much room that there is not enough left over for living space, a phenomenon that actually begins to happen in a building over about ninety or a hundred floors.</p> <p>&nbsp;</p> <p><strong>“A nation becomes too big when it can no longer provide its citizens with the services they expect – defence, roads, post, health, coins, courts and the like – without amassing such complex institutions and bureaucracies that they actually end up preventing the very ends they are intending to achieve, a phenomenon that is now commonplace in the modern industrialized world.</strong></p> <p>&nbsp;</p> <p>“It is not the character of the building or the nation that matters, nor is it the virtue of the agents or leaders that matters, but rather the size of the unit: even saints asked to administer a building of 400 floors or a nation of 200 million people would find the job impossible.”</p> </blockquote> <p>Kohr showed that there are unavoidable limits to the growth of societies:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong>“..social problems have the unfortunate tendency to grow at a geometric ratio with the growth of an organism of which they are a part, while the ability of man to cope with them, if it can be extended at all, grows only at an arithmetic ratio.”</strong></p> </blockquote> <p>In the real world, there are finite limits beyond which it does not make sense to grow.</p> <p>Kohr argued that only small states can have true democracies, because only in small states can the citizen have some direct influence over the governing authorities.</p> <p>When asked what had most influenced his political and social ideas, Kohr replied: “Mostly that I was born in a small village.”</p> <p><strong>The euro zone in particular is an object lesson in an unwieldy, oversized, dysfunctional political construct haphazardly cobbled together among irreconcilable cultural entities.</strong></p> <p>Wherever something is wrong, wrote Kohr, something is too big. The answer is not to grow, embracing even more disparate states within a failing currency union with make-it-up-as- you-go-along rules. The answer is to stop growing.</p> <p><strong>The answer to the ‘too big’ problem lies not in ever greater union, but in division.</strong></p> <p>And if the larger states in Europe ultimately decide that the political union is more than their electorates can bear, and that what they really want is to slaughter each other, they should not expect the United Kingdom, once again, to wade into the abattoir and sacrifice its own in the process.</p> <p><span style="text-decoration: underline;"><strong>“We have ridiculed the many little states,” wrote Kohr, sadly; “Now we are terrorized by their few successors.”</strong></span></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="600" height="313" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20140922_small.jpg?1411404481" /> </div> </div> </div> http://www.zerohedge.com/news/2014-09-22/breakdown-nations#comments Switzerland United Kingdom Mon, 22 Sep 2014 20:55:08 +0000 Tyler Durden 494691 at http://www.zerohedge.com Ukraine Introduces Capital Controls http://www.zerohedge.com/news/2014-09-22/ukraine-introduces-capital-controls <p>A <a href="http://www.zerohedge.com/news/2014-09-18/more-just-gas-natural-resource-reason-ukraine-civil-war">few days ago </a>we showed how when Obama said there would be <em><strong>"costs" </strong></em>for Moscow in the Ukraine-Russian conflict, he got the recipient country of said costs woefully wrong, as confirmed by the economic data released by Ukraine which showed its Industrial Production crater at a pace on par with the Lehman collapse, confirming the Ukraine economy was on the verge of a spectacular implosion just in time for the harsh, Gazprom-free winter to finish off what little economic activity is left. </p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/09/20140918_ukr3.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/09/20140918_ukr3_0.jpg" style="width: 600px; height: 315px;" /></a></p> <p>The resulting selloff in the Hryvnia and Ukraine bonds, was therefore, hardly surprising. </p> <p>Which probably means the news reported by Bloomberg moments ago, which cites Ukraine's Unian news service, <strong><em>that the Ukraine central bank just instituted restrictions on Hryvnia use, i.e., capital controls, </em></strong>should also not come as a surprise, yet for all those expecting Russia to crater first under the weight of western sanctions, to see said cratering take place in western-backed (and IMF guaranteed) Ukraine is probably just a little unpleasant. </p> <p>The details: </p> <p>Central Bank forbids companies completing FX payments on import contracts if they don’t actually bring goods into Ukraine, Unian reports, citing Central Bank decree that comes into effect tomorrow.</p> <ul> <li>FX payments on imports also prohibited if customs registration of goods takes more than 180 days</li> <li>Foreign investors forbidden to receive investment return from selling Ukraine securities beyond stock exchange, except govt bonds</li> <li>Foreign investors forbidden to receive dividend return on Ukrainian shares not traded in stock exchanges</li> <li>Central bank also forbids FX transactions using individual FX licenses, except placing money by cos. on accounts in foreign banks</li> </ul> <p>In other words, the money concentration into a select few government-approved (and controlled) asset classes has begun. For those who are unsure what happens next, please google "<em>Cyprus and March 2013.</em>"</p> <p><em>Source: <a href="http://economics.unian.ua/finance/987897-natsbank-obmejiv-valyutni-rozrahunki-v-importnih-operatsiyah.html">Unian</a></em></p> http://www.zerohedge.com/news/2014-09-22/ukraine-introduces-capital-controls#comments Google Lehman Ukraine Mon, 22 Sep 2014 20:25:22 +0000 Tyler Durden 494690 at http://www.zerohedge.com Death-Crossed Russell Suffers Biggest 2-Day Plunge In 5 Months http://www.zerohedge.com/news/2014-09-22/death-crossed-russell-suffers-biggest-2-day-plunge-5-months <p>Death crosses; Hindenburg Omens; PBOC, BOJ, and ECB hinted at removing the punchbowl; crappy US housing data; and a Chinese IPO takeout hangover weighed on stocks with <strong>Russell 2000 the biggest loser (suffering its biggest high-to-low drop from Friday in over 5 months)</strong>. The Dow is the only index holding post-FOMC gains (Russell down over 2%). <strong>Homebuilders are now down 4% from last week&#39;s FOMC statement, post-FOMC high-flyer financials have tumbled red</strong> (catching down to credit), and only safe-haven healthcare is holding any gains post-FOMC (Biotech -3%). <strong>Treasury yields fell</strong> led by the short-end (3Y -3.5bps, 10Y -2bps) back under FOMC levels. The USD recovered European session losses to end almost unchanged as <strong>considerable AUD and CAD weakness</strong> outweighed GBP strength. Despite being clubbed like a baby seal in Asia, Silver rebounded through the day to end -0.3%, gold unch, oil down, and copper -1.6% as China stimulus hopes faded. <strong>S&amp;P 500 lost 2,000; Russell is down 2.6% year-to-date (-6.8% from July highs); VIX jumped most in 2 months to ~14.</strong> BABA pinned at $90, HLF smashed -10%.</p> <p>&nbsp;</p> <p>Stocks remain notably rich to the Fed Balance Sheet - as its growth slows to a trickle</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/09-overflow/20140922_EOD12.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/09-overflow/20140922_EOD12_0.jpg" style="width: 600px; height: 315px;" /></a></p> <p>&nbsp;</p> <p>Russell&#39;s biggest 2-day swing lower in 5 months... as the death cross hits...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/09-overflow/20140922_EOD3.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/09-overflow/20140922_EOD3_0.jpg" style="width: 600px; height: 399px;" /></a></p> <p>&nbsp;</p> <p>An ugly day for stocks...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/09-overflow/20140922_EOD10.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/09-overflow/20140922_EOD10_0.jpg" style="width: 600px; height: 360px;" /></a></p> <p>&nbsp;</p> <p>But since FOMC, even uglier...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/09-overflow/20140922_EOD9.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/09-overflow/20140922_EOD9_0.jpg" style="width: 600px; height: 422px;" /></a></p> <p>&nbsp;</p> <p>Who could have seen financial stocks getting ahead of themselves?</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/09-overflow/20140922_EOD1.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/09-overflow/20140922_EOD1_0.jpg" style="width: 600px; height: 315px;" /></a></p> <p>&nbsp;</p> <p>As only healthcare is holdings its post-FOMC gains...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/09-overflow/20140922_EOD11.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/09-overflow/20140922_EOD11_0.jpg" style="width: 600px; height: 360px;" /></a></p> <p>&nbsp;</p> <p>The USD ended the day modestly lower - recovering most of the overnight session losses - with CAD/AUD weakness outweighed by GBP and EUR strength</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/09-overflow/20140922_EOD5.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/09-overflow/20140922_EOD5_0.jpg" style="width: 600px; height: 312px;" /></a></p> <p>&nbsp;</p> <p>Treasury yields fell on the day, back below FOMC levels... sliding into the close...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/09-overflow/20140922_EOD7.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/09-overflow/20140922_EOD7_0.jpg" style="width: 600px; height: 316px;" /></a></p> <p>&nbsp;</p> <p>Silver was dumped and pumped, Copper dropped and gold ended unch...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/09-overflow/20140922_EOD2.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/09-overflow/20140922_EOD2_0.jpg" style="width: 600px; height: 327px;" /></a></p> <p>&nbsp;</p> <p>A close-up on the silver liquidations and bounce back...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/09-overflow/20140922_EOD4.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/09-overflow/20140922_EOD4_0.jpg" style="width: 600px; height: 466px;" /></a></p> <p>&nbsp;</p> <p><em>Charts: Bloomberg</em></p> <p><strong>Bonus Chart: BABA pinned at $90...</strong></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/09-overflow/20140922_EOD6.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/09-overflow/20140922_EOD6_0.jpg" style="width: 600px; height: 372px;" /></a></p> <p>&nbsp;</p> <p><strong>Bonus Bonus Chart: HLF -10% on heavy volume, no news...</strong> where&#39;s Icahn?</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/09-overflow/20140922_EOD8.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/09-overflow/20140922_EOD8_0.jpg" style="width: 600px; height: 406px;" /></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="959" height="503" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20140922_EOD1.jpg?1411415158" /> </div> </div> </div> http://www.zerohedge.com/news/2014-09-22/death-crossed-russell-suffers-biggest-2-day-plunge-5-months#comments China Copper Russell 2000 Mon, 22 Sep 2014 20:06:12 +0000 Tyler Durden 494689 at http://www.zerohedge.com