The world’s geopolitics is changing. Gone are the fluffy days of Putin shaking hands with George Bush agreeing to keep the world supplied with oil, gone are the days of China helping US firms make profits using their cheap labour, gone are open-for-business days of Europe, gone is the Japanese military neutrality, gone are the Saudis as an unshakeable ally, gone is Israel also a steadfast ally, etc. What is happening is something deeply concerning. Globalisation is turning in on itself and it is each man for himself.
Saudi Arabia is the middle of two 'wars" - religious (from The Kingdom's perspective, Iran is a large Persian country sitting at the easternmost edge of the Middle East, from where it projects power across the Arab world by manipulating and exploiting the region's Shiite communities and other minorities); and geopolitical (it appears to reveal that the kingdom is willing to tolerate Brent prices between USD80-USD90/bbl for a period of 1-2 years in order to achieve two aims: to slow increases in US tight oil production and to pressure other OPEC members to contribute to supply discipline.)
The global economy is like a jetliner that needs all of its engines operational to take off and steer clear of clouds and storms. Unfortunately, as Nouriel Roubini tells The Guardian, only one of its four engines is functioning properly: the Anglosphere (the United States and its close cousin, the United Kingdom). As Roubini continues, the question is whether and for how long the global economy can remain aloft on a single engine. Weakness in the rest of the world implies a stronger dollar, which will invariably weaken US growth. The deeper the slowdown in other countries and the higher the dollar rises, the less the US will be able to decouple from the funk everywhere else, even if domestic demand seems robust. But it's not just the rest of the world that is decoupling from US growth... as the following uncomfortable chart shows, so is a crucial pillar of monetary policy transmission, consumer wealth perception, and economic stability - the US housing market itself.
If you require more evidence that the United States is a dysfunctional society, observe American elections. Election season is slander season. Each party’s attack teams focus on misrepresenting, defaming, and ridiculing the opposing party’s candidates. Attack ads have replaced debates and any discussion of what the issues are, or should be, and how candidates perceive the public’s interest. Each attack team tells lies designed to enrage various voters about the other team’s candidate. Whoever is elected is indebted not to voters but to the special interests that provided the campaign money.
In less than the time it takes for a chrysalis to release one of life’s remarkable transformations, many once called “capitalists” woke to find the world they once new changed into something only dreamed or told in folklore. In this new fairytale land there must certainly be a pot of gold at the end of every “rainbow.” However, one would be mistaken. For one must remember this is a “Keynesian Shangri-la” and gold here is useless. Today, at the end of these self propagated rainbows lies a Central Bank ready and willing to print as much money as one needs to see those vivid colors so plainly; only the term Technicolor® seems appropriate as a descriptor. “Markets right themselves with pain… That’s Capitalism. Back room manipulation to avoid pain only increases the severity of the pain to be felt down the road.”
It never fails: any time there is a dump in precious metals through their paper representation (GLD, SLV, or futures) typically as a hedge to a rally in the dollar (because last week Japan materially increasing its fiat monetary base was also somehow negative for gold and silver) or to meet margin demands from cross-asset liquidation, demand for physical PMs soars confirming yet again that any connection between paper prices and physical demand no longer exists. As reported on Friday, sales of American Eagle silver coins by the U.S. Mint jumped 40 percent in October to the highest in 21 months, defying a slump in New York futures to the lowest in more than four years.
Japan’s aging population needs rising prices like a hole in the head. The more “successful” Mr. Kuroda becomes in forcing prices up, the less money people will have to spend and invest. The economy will weaken, not strengthen, as a result. The advantages the export sector currently enjoys are paid for by the entire rest of the economy. moreover, even this advantage is fleeting. It only exists as long as domestic prices have not yet fully adjusted to the fall in the currency’s value. If one could indeed debase oneself to prosperity, it would long ago have been demonstrated by someone. While money supply growth in Japan has remained tame so far, the “something for nothing” trick implied by the BoJ’s massive debt monetization scheme is destined to end in a catastrophe unless it is stopped in time. Once confidence actually falters, it will be too late.
John Anderson, an American tourist from San Clemente, California, was driving down a poorly-maintained highway when he saw flashing lights in his rearview mirror. After a brief exchange with the local police officer, Anderson was shocked when the cop started searching his vehicle. Anderson had $25,180 in US dollar cash in the car, which by the way was not a crime according to the local laws. When the cop saw it, he told Anderson that we would take it and threatened him with arrest if he protested. Ultimately Anderson gave in; the cop let him go and did not charge him with a crime, but took every last penny in the vehicle. And for the last two years, Anderson has been trying to unsuccessfully fight it in the country’s Kangaroo court system. Clearly we should all avoid going to such dangerously corrupt third world countries.
When work is punished and grift is not, is it any surprise that, as The Washington Times reports, nearly 60,000 triple dipping Veterans picked up $3.5 billion in benefits (collecting their military retirement pay; and disability benefits from both the Veterans Administration and Social Security too). The arrangement is legal, but since everyone else is abusing the system, from crony banks to deadbeat dads to squatting slummers, it was only a matter of time before even veterans decided to dip, then dip again and dip some more. Sen. Tom Coburn, noted it was "hard to understand," but perhaps the hardest thing to understand is why it took veterans so long to realize we live in a world without consequences.
BofA Banker Arrested In Hong Kong For Double Murder Of Two Prostitutes, One Victim Was Stuffed In A SuitcaseSubmitted by Tyler Durden on 11/02/2014 09:44 -0400
The excesses of 1980s New York investment banking as captured best (and with just a dose of hyperbole) by Bret Easton Ellis's American Psycho may be long gone in the US, but they certainly are alive and well in other banking meccas, such as the one place where every financier wants to work these days (thanks to the Chinese government making it rain credit): Hong Kong. It is here that yesterday a 29-year-old British banker, Rurik Jutting, a Cambridge University grad and current Bank of America Merrill Lynch, former Barclays employee, was arrested in connection with the grisly murder of two prostitutes. One of the two victims had been hidden in a suitcase on a balcony, while the other, a foreign woman of between 25 and 30, was found lying inside the apartment with wounds to her neck and buttocks, the police said in a statement.
The story of the destruction of the German mark during the hyper-inflation of Weimar Germany from 1919 to its horrific peak in November 1923 is usually dismissed as a bizarre anomaly in the economic history of the twentieth century. But no episode better illustrates the dire consequences of unsound money or makes a more devastating, real-life case against fiat-currency: where there is no restraint, monetary death will follow.
"Do we really need QE every time the market gets nervous? Right now the world is a very vulnerable place... we are in the midst of a big bubble that will - down the line - be referred to as 'The QE Bubble'"
During the month of October, three things happened that destroy any credibility that 'believers' had about the stock 'market' being an efficient discounter of fundamental earnings. Stocks began the month weak on geopolitical fears, concerns about the end of QE, and falling earnings; then Bullard unleashed his "but but but we might do QE4" words and stocks exploded higher. But a funny third thing happened as this malarkey occurred... analysts kept on slashing EPS estimates - in fact they slashed them by more than double the average EPS downgrade of any quarter in the last 10 years... So, if earnings are the mother's milk of the market, central bank promises are the Human Growth Hormone, EPO, Steroid cycle of all-time highs.
In a somewhat stunning announcement, Spain’s State Secretary for Security, Francisco Martinez, said in an address to the parliament, that extremists connected to the Islamic State (the terrorist organization formerly known as ISIS) have been considering using Ebola as a weapon against the West. As RT reports, Martinez notes a close eye is being kept on online chat rooms, where such attacks are reportedly discussed among jihadist groups where “The use of Ebola as a poisonous weapon against the United States” was the topic of conversation. So far US Homeland Security Secretary Jeh Johnson denied these allegations citing "no specific credible intelligence."