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The Biggest Economic Story Going Into 2015 Is Not Oil
Submitted by Raul Ilargi Meijer via The Automatic Earth blog,
Isn’t it fun to just watch the market numbers roll by from time to time as you go about your day, see Europe markets up 3%+, Dubai 13%, US over 2% (biggest two-day rally since 2011!), and you just know oil must get hit again? Well, it did. WTI down another 3%+. I tells ya, no Plunge Protection is going save this sucker.
And oil is not even the biggest story today. It’s plenty big enough by itself to bring down large swaths of the economy, but in the background there’s an even bigger tale a-waiting. Not entirely unconnected, but by no means the exact same story either. It’s like them tsunami waves as they come rolling in. It’s exactly like that.
That is, in the wake of the oil tsunami, which is a long way away from having finished washing down our shores, there’s the demise of emerging markets. And I’m not talking Putin, he’ll be fine, as he showed again today in his big press-op. It’s the other, smaller, emerging countries that will blow up in spectacular fashion, and then spread their mayhem around. And make no mistake: to be a contender for bigger story than oil going into 2015, you have to be major league large. This one is.
The US dollar will keep rising more or less in and of itself, simply because the Fed has ‘tapered QE’, and much of what happened in global credit markets, especially in emerging markets, was based on cheap and easily available dollars. There’s now $85 billion less of that each month than before the taper took it away in $10 billion monthly increments. The core is simple.
This is not primarily government debt, it’s corporate debt. But it’s still huge, and it has not just kept emerging economies alive since 2008, it’s given them the aura of growth. Which was temporary, and illusionary, all along. Just like in the rest of the world, Japan, EU, US. And, since countries can’t – or won’t – let their major companies fail, down the line it becomes public debt.
One major difference from the last emerging markets blow-up, in the late 20th century, is size: emerging markets today are half the world economy. And they’re about to be blown to smithereens. Sure, oil will play a part. But mostly it will be the greenback. And you know, we can all imagine what happens when you blow up half the global economy …
Erico Matias Tavares at Sinclair has a first set of details:
There are some signs of trouble in emerging markets. And the money at risk now is bigger than ever. The yield spread between high grade emerging markets and US AAA-rated corporate debt has jumped, almost doubling in less than three weeks to the highest level since mid-2012.
MSCI Emerging Markets Index and Yield Spread between High Grade Emerging Markets and US AAA Corporates: 14 March 2003 – Today. Source: US Federal Reserve.
This means that the best credit names in emerging markets have to pay a bigger premium over their US counterparts to get funding. When this spread spikes up and continues above its 200-day moving average for a sustained period of time, it is typically a bad sign for equity valuations in emerging markets, as shown in the graph above. One swallow does not a summer make, but it is worthwhile keeping an eye on this indicator.
As yields go up the value of these emerging market bonds goes down, resulting in losses for the investors holding them. The surge of the US dollar in recent months could magnify these losses: if the bonds are denominated in local currency they will be worth a lot less to US investors; otherwise, the borrowers will now have to work a lot harder to repay those US dollar debts, increasing their credit risk. Any losses could end up being very significant this time around, as demand for emerging markets bonds has literally exploded in recent years.
Average Annual Gross Debt Issuance ($ billions, percent): 2000 – Today. Source: Dealogic, US Treasury. Note: Data include private placements and publicly-issued bonds. 2014 data are through August 2014 and annualized.
As the graph above shows, the issuance of emerging market corporate debt has risen sharply since the depths of the 2008-09 financial crisis.These volumes are very large indeed, and now account for non-trivial portions of investors’ and pension funds’ portfolios worldwide.
As a result, emerging markets corporations are now leveraged to the hilt, easily exceeding the 2008 highs by almost a multiple to EBITDA. And why not? With foreign investors desperate for yield as a result of all the stimulus and money printing by their central banks, they were only too happy to oblige. And they were not alone. Governments in these countries were also busy doing some borrowing of their own, as their domestic capital markets deepened.
[..] foreign investors have also piled into locally denominated bonds of emerging markets governments. Countries like Peru and Latvia now have over 50% foreign ownership of their bonds. [..] But there are big speculative reasons behind the recent money flows going into these countries – which could reverse very quickly should the tide turn. [..]
If investors end up rushing for the emerging markets exit for whatever reason, with this unprecedented level of exposure they might be bringing home much more than a bruised ego and an empty wallet. For one, European banks are hugely exposed to emerging markets. Any impairment to their books would likely make any new lending even more difficult, at a time when there is already a dearth of non-government credit in Europe.
And if emerging economies falter, where will the growth needed to repair Western government and private balance sheets come from? It used to be said that when the US economy sneezes the rest of the world catches a cold. Now it seems all we need is a hiccup in emerging markets.
That’s what you get when emerging markets are both half the global economy AND they’ve accomplished that level off of ultra-low US Fed interest rates and ultra-high US Fed credit ‘accommodation’. All you have to do when you’re the Fed is to take both away at the same time, and you’re the feudal overlord.
Our favorite friend-to-not-like Ambrose Evans-Pritchard does what he does well: provide numbers:
Fed Calls Time On $5.7 Trillion Of Emerging Market Dollar Debt
The US Federal Reserve has pulled the trigger. Emerging markets must now brace for their ordeal by fire. They have collectively borrowed $5.7 trillion in US dollars, a currency they cannot print and do not control. This hard-currency debt has tripled in a decade, split between $3.1 trillion in bank loans and $2.6 trillion in bonds. It is comparable in scale and ratio-terms to any of the biggest cross-border lending sprees of the past two centuries.
Much of the debt was taken out at real interest rates of 1% on the implicit assumption that the Fed would continue to flood the world with liquidity for years to come. The borrowers are “short dollars”, in trading parlance. They now face the margin call from Hell as the global monetary hegemon pivots. The Fed dashed all lingering hopes for leniency on Wednesday. The pledge to keep uber-stimulus for a “considerable time” has gone, and so has the market’s security blanket, or the Fed Put as it is called. Such tweaks of language have multiplied potency in a world of zero rates.
Officials from the BIS say privately that developing countries may be just as vulnerable to a dollar shock as they were in the Fed tightening cycle of the late 1990s, which culminated in Russia’s default and the East Asia Crisis. The difference this time is that emerging markets have grown to be half the world economy. Their aggregate debt levels have reached a record 175% of GDP, up 30 percentage points since 2009.
Most have already picked the low-hanging fruit of catch-up growth, and hit structural buffers. The second assumption was that China would continue to drive a commodity supercycle even after Premier Li Keqiang vowed to overthrow his country’s obsolete, 30-year model of industrial hyper-growth, and wean the economy off $26 trillion of credit leverage before it is too late. [..]
Stress is spreading beyond Russia, Nigeria, Venezuela and other petro-states to the rest of the emerging market nexus, as might be expected since this is a story of evaporating dollar liquidity as well as a US shale supply-glut.
[..[ the Turkish lira has fallen 12% since the end of November. The Borsa Istanbul 100 index is down 20% in dollar terms. Indonesia had to intervene on Wednesday to defend the rupiah. Brazil’s real has fallen to a 10-year low against the dollar, as has the index of emerging market currencies. Sao Paolo’s Bovespa index is down 23% in dollars in 3 weeks.
The slide can be self-feeding. Funds are forced to sell holdings if investors take fright and ask for their money back, shedding the good with the bad. Pimco’s Emerging Market Corporate Bond Fund bled $237m in November, and the pain is unlikely to stop as clients discover that 24% of its portfolio is in Russia.
One might rail against the injustice of indiscriminate selling. Such are the intertwined destinies of countries that have nothing in common. The Fed has already slashed its bond purchases to zero, withdrawing $85bn of net stimulus each month. It is clearly itching to raise rates for the first time in seven years. This is the reason why the dollar index has jumped 12% since May, smashing through its 30-year downtrend line, a “seismic change” in the words of HSBC. [..]
World finance is rotating on its axis, says Stephen Jen, from SLJ Macro Partners. The stronger the US boom, the worse it will be for those countries on the wrong side of the dollar.
“Emerging market currencies could melt down. There have been way too many cumulative capital flows into these markets in the past decade. Nothing they can do will stop potential outflows, as long as the US economy recovers.
Hold it there for a moment. I don’t think it’s the US economy (its recovery is fake), it’s the US dollar.
Will this trend lead to a 1997-1998-like crisis? I am starting to think that this is extremely probable for 2015,” he said.
This time the threat does not come from insolvent states. They have learned the lesson of the late 1990s. Few have dollar debts. But their companies and banks most certainly do, some 70% of GDP in Russia, for example. This amounts to much the same thing in macro-economic terms. Private debt morphs into state debt since governments cannot allow key pillars of their economies to collapse.
These countries have, of course, built $9 trillion of foreign reserves, often the side-effect of holding down their currencies to gain export share. This certainly provides a buffer. Yet the reserves cannot fruitfully be used in a recessionary crisis because sales of foreign bonds automatically entail monetary tightening. [..]
.. these reserves are a mirage. If you deploy them in such circumstances, you choke your own economy unless you can sterilize the effects. [..]
Investors are counting on the European Central Bank to keep the world supplied with largesse as the Fed pulls back. Yet the ECB could not pick up the baton even if it were to launch a blitz of quantitative easing, and there is no conceivable consensus for action on such a commensurate scale.
The world’s financial system is on a dollar standard, not a euro standard. Global loans are in dollars. The US Treasury bond is the benchmarks for global credit markets, not the German Bund. Contracts and derivatives are priced off dollar instruments. Bank of America says the combined monetary stimulus from Europe and Japan can offset only 30% of the lost stimulus from the US.
What more can I say? This is the lead story as we go into 2015 two weeks from today. Oil will help it along, and complicate as well as deepen the whole thing to a huge degree, but the essence is what it is: the punchbowl that has kept world economies in a zombie state of virtual health and growth has been taken away on the premise of US recovery as Janet Yellen has declared it.
It doesn’t even matter whether this is a preconceived plan or not, as some people allege, it still works the same way. The US gets to be in control, for a while, until it realizes, Wile E. shuffle style, that you shouldn’t do unto others what you don’t want to be done unto you. But by then it’ll be too late. Way too late.
As I wrote just a few days ago in We’re Not In Kansas Anymore, there’s a major reset underway. We’re watching, in real time, the end of the fake reality created by the central banks. And it’s not going to be nice or feel nice. It’s going to hurt, and the lower you are on the ladder, the more painful it will be. Be that globally, if you live in poorer countries, or domestically, if you belong to a poorer segment of the population where you are. In both senses, the poorest will be hit hardest.
It’s the new model along which the clowns we allow to run the show, do so. Unless ‘we the people’ take back control, it’s pretty easy to see how this will go down.
* * *
Still not convinced... Barclays notes this is already one of the worst sell-offs in EM credit since the crisis...
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The tags preceding the article exemplifies what you are saying Radical Marijuana. The 'big data' generated is effectively useless. Why not simply tag each and every article 'Business As Usual'?
Take a look at Cherry Picker's comment just above yours. It correctly identifies the inertia in the system and it's limited horizon. Unfortunately it doesn't perceive the "windshields towards a fly" collision course we are on after one expands the horizon. As the Zero Hedge banner says...
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THE "CORRECTIONS" OR "RESETS" TO THOSE SITUATIONS TOO BIG FOR US TO BE ABLE TO PERCEIVE WITH ANY ADEQUATE PERSPECTIVE!
The "resets" that we are headed towards will probably become short-circuits of the established systems which will become more fatal than we can currently comprehend.
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We have lived with the perspective of mutually assured destruction throughout time, and while it's true that today it means the numbers are in the billions, a new perspective/ level of comprehension has come into view. It is now being discussed on the world stage, all be it within a 'framework'. The glowing circuits of the artificial system are mirrored in the glowing circuits of the natural ecology and we have precious little time to come to grips with the fact that should either set of circuits start to blow, we will at some point realize that human systems blowing will do great damage but that will pale in comparison to the natural system blowing. Now you have not only billions of humans dead but also unknown millions of species giving trillions if not quadrillions of dead advanced organisms replaced by 'bazillions' of simple life forms.
p.s. Evo Moralis and The AMEG Bear were the most radical people I saw in Peru ; ) Al Gore may not qualify as a radical but at least he did raise the question about following the path of least morality... in a very public space...
got lost there.. uh uh uh ..
so,where is the Mary Jane?
And we will STILL fail because we'll have once again refused to question our underlying premise of perpetual growth on a finite planet. I do NOT believe that this is "solvable," as to "solve" implies a permanent solution, and given that nothing is really permanent it's really a pretty silly notion to try and contort things that are not contort-able just because one does not like the alternatives (the bottom line of which centers around population size [rather than making the tough choices we will instead allow the tough choices to be made for us (allow nature/"God" to handle it)].
Thanks for the reply Seer. I'm not sure that samcontrol was replying to me but admittedly my reply to RM was poorly worded. I had a more polished reply but my browser "unexpectedly quit" and I had to rely on my weary memory. GRRRRRR
I was drawing on the fact that artificial selection has replaced natural selection as RM discusses and that the circuits we see blowing in the financial stuff we read about every day here (debt insanities) is leading us on towards war (death insanities) because as Rad says, the fraud is built on the lies backed by war. My point is that although the debt and death numbers are now into the billions and trilions, they pale in comparison to the numbers involved when THE circuit blows. To relate to what I just said, one has to understand the concept of mass extinction and that is easier to understand by looking at something like "Canfield Oceans".
As for solutions, it appears we are on the verge of tipping points, arguably maybe passed them. Rather than looking for a solution (there is no quick fix) we should be trying to buy ourselves more time to work on the problem. Unfortunately we have squandered a lot of precious time. Cast yourself back to Sevren Suzuki speaking in Rio when the world population was closer to five billion. Too bad so sad, but the message coming out of Peru, at least from the three messengers I mentioned above, is that when the going gets tough the tough get going. For an analogy, I am laughed at by the old farmers for using the seatbelt when operating the tractor but what would my children say if I died in a rollover and was not using the seatbelt? "What was he thinking?!?"
I have yet to find the Evo Morales speech or press conference from COP20 in english but I caught his drift. The Arctic Methane Emergency Group, aside from sweating his nuts off outside the Paris Pavilion, was holding press conferences discussing the problem AND the link to how our system of economics is standing in the way of any significant progress, progress that is URGENTLY needed. I would bet my last dollar that these three people most certainly understand the concept of infinite growth on a finite planet! They are in FACT questioning that premise, on the world stage!
The point I was trying to make to RM is that while you won't hear anyone in the financial world talk about anything in terms other than debt crisis, currency crisis, bonds, markets, and all the other mumbo-jumbo as if it's going to be disruptive/inconvenient, and meanwhile we blog our faces off about WWIII, the "adequate reference" and our ability to "comprehend" the magnitude of these problems has only one proxy: The 6th Mass Extinction.
here are some links:
http://unfccc6.meta-fusion.com/cop20/events/2014-12-11-15-38-lima-climat...
scroll down to link Gore's speech.
http://unfccc6.meta-fusion.com/cop20/events/2014-12-09-18-00-abibimman-f...
I believe this is The Bear, unmasked ;)
http://unfccc6.meta-fusion.com/cop20/events/2014-12-09-14-00-bolivia
Bolivia's presser (not in English)
http://unfccc6.meta-fusion.com/cop20/events/2014-12-09-10-00-conference-...
Evo Morales speaks first (not in English) pdf here
I went back and looked again at Cherry Picker's comment and the replies to that.
The basic theory of evolution is punctuated equilibrium, where things stay mostly the same for a long time, as the environment stays the same ... but then, there can be abrupt punctuations to those conditions, which disrupt the previous equilibria, to relatively radical degrees, depending on the nature of those punctuation events.
A simple example is the sun shining on the tropic oceans, day after day the same, until the tipping points are reached (perhaps with a little extra push from a solar event) for that energy to become organized into a hurricane. Most of us are still sitting on the beach comfortably, but the kinds of satellite images and models presented on Zero Hedge are about the on-coming social storms, which look to develop to unprecedented levels of severe financial weather ... not that we could do anything to stop them anyway ...
I take the perspective that human beings' evolution was due to bad weather, and their own effect upon themselves, with the current situation appearing to be that we are going to drastically force our own evolution even more so by having created our own bad weather! Nobody knows what happens when the relatively nice weather we were used to in the 20th Century get its equilibria punctuated, yet it is quite possible that it could, and relatively faster than we can fully imagine, just like while sitting on the beach watching a hurricane on the horizon is not like being on that beach when the hurricane is finally blowing through!
Yeah, Rad, it's like James Burke said 25 years ago, the industrial revolution was when when we started doing things to the weather, not just the other way around, although I've read some interesting things about how even the small human populations of history were impacting at least the atmospheric chemistry.
I would say that nobody knows for certain what happens when the relatively nice weather of the 20th century (and back further to whenever the weather didn't wipe us out!) gets it's equalibria punked, but as does Zero Hedge present images of the coming financial storm, it necessarily can't come right out and say "It's hopeless, we're fucked, we're signing off" ie: commit suicide. Zero Hedge does a great job of reporting the crazy conditions.
You do a great job of explaining how it got to be so crazy and how the storms are bigger than Zero Hedge can see. You justifiably show that a political miracle is required, stat! Personally I think you should be taking your message to Paris, because it is important, but regardless your message is getting out for anyone on the cybersea to find...
My 'Ford 9N' comments attempt to show people here that although we can't be absolutely certain, wE knOw enough to understand that this equilibria punctuation has the potential to lead to mass extinction and that there most certainly is a link between our neolithic civilization and action to possibly avoid the knockout punch the climate may be winding up to deliver. That's what those links in my reply to Seer above show. Regardless of the fact that these are products (ARs, eloquent speeches at conferences) made WITHIN human systems (Nations / United Nations) of bullshit lies backed by violence, it is in Peru that they are willing to talk about how bad the storm really could be, as you talk here about how the Neolithic style is going to drive civilization over the cliff.
I'm not impressed with the USA-China "agreement" and I'm not surprised with the "outcomes" of COP20. As in politics and the world of finance, the ROW really is fighting it out with the USA, culminating in Paris 12 months from now. Paris WILL be the "extra push". It could leave us with a disunited nations which while some may see that as something to cheer, it is a vacuum that could be filled by death insanities.
As James Burke also said in After The Warming 25 years ago, nothing but endless reports and conferences happened until the USA was stopped in it's tracks by a third catastrophic drought. John Kerry's tough talk in Peru, although I thought it was quite a powerful speech, projects the incorrect notion that the USA is going to dictate the terms of the agreement.
The transition from the Neolithic begins in Paris or it likely never will, Mr Kerry. Find the moral courage.
All Roads lead to Paris.
Thanks for the reply Radical Marijuana!
p.s. I see the social storm clouds picked up a little more energy today in New York : (
Again I agree with you, MEAN BUSINESS.
It is nice to get feedback from a few who understand just as well, and have interesting perspectives to contribute to one's own.
I tend to agree with the sociological view that we must get up to at least 10% of the population understanding enough, before things could maybe begin to significantly change. By understanding "enough" I mean not merely being aware of the problems, but aware enough of the reasons for those problems so that 10% would not continue to be tricked by bullshit "solutions." While more and more people are being forced to recognize the problems, I find that very few become more realistic about the "solutions," rather than just spout idealized bullshit about what "we should do."
I would be very surprised if the Paris meeting did not continue in the vein of professional liars and immaculate hypocrites agreeing with each other's lies and hypocrisies. The basic issue Seer raises is that it is NOT possible to have endless exponential growth. By definition, what stops that are some forms of death controls. Those who want to believe that "nature" or "god" are going to do that for us, I regard as indulging in over-simplified wishful thinking. The greatest selection pressure upon human beings is other human beings. However, that developed through the history of warfare and economics to operate through the maximum possible deceits and frauds.
The runaway growth MUST stop, and will, and human beings shall surely have a large hand in that! The ruling classes are preparing for nothing else than their covert agenda to mass murder the majority of the human population. The only genuine alternatives must be better death controls, to back up better debt controls, that would steer human developments into better integrated systems of human, industrial and natural ecologies. Those are theoretically possible, there are lots of creative alternatives. However, the established systems of backing up lies with violence are entrenched, and that is especially the case due to the degree to which there is controlled opposition.
IF 10% of the people were to face enough of the facts about how the combined money/murder systems actually work, and then, did not continue to be tricked by bogus "solutions" for that situation based on the same old impossible ideals, then we might be able to evolve something better than what the ruling classes have been planning to do, namely, more false flag attacks, to get more genocidal wars going, while preparing to impose democidal martial law. At the present time, those are the most probable real resolutions to the problems of unsustainable growth. Namely, the ruling classes are going to mass murder the majority of the people that they rule over, while those that they rule over appear to be currently incapable of transforming that, since they tend to deliberately refuse to want to understand any of it, while the few that do continue to mostly be reactionary revolutionaries, promoting the same old magic words expressing bullshit "solutions."
Your own efforts with EDAs have shown that nowhere near 10% will understand enough before it's too late. I'm almost poster child material for "political idiot" and I'm above average! That's where gangsters that understand what you mean by "path of least morality" come in. Chavez tried. Morales (77+China) and Putin (EURASIA) will not take no for an answer. There's your 10% ...which is really more like well past 50%. The crash course is given to the respected (what's Evo's approval rating, why did he speak on behalf of the 77+China, why did he speak first at CMP10?!?) Reps who will in the fullness of time will be able to discuss it all with everyone else.
Paris, if we make it that far, may appear to start off as you describe, because of inertia ...but it won't finish that way, in part thanks to you. And that's the finest feather in Zero Hedge's hat as far as I'm concerned.
Thank you BOTH so much.
looks like I was wrong about the radicals club:
"PASSIONATE DEFENDER OF the environment for more than twenty years, Senator Al Gore is now convinced that the engines of human civilizations have brought us to the brink of catastrophe. In this brave and provocative book, Gore argues that only a radical rethinking of our relationship with nature..."
and you'll like this, the 1992 book was called: earth in the balance ECOLOGY AND THE HUMAN SPIRIT
AL Gore the radical talking about Spirit and (obviously) Energy? whocouldaknowd!
Hold on, are you sure you're not Al Gore?!?
Cheers!
Yeah, the historical facts about the Canadian Political Contribution Tax Credit realizing less than 0.2% of its potential during the 40 years from 1974 to 2014 have PROVEN, over and over again, those social facts THAT governments are arrogantly dishonest, while the vast majority of people have been conditioned to act like political idiots.
IF that were not so, then I would be too busy to bother to post comments on Zero Hedge. However, all of my political experiments, and court cases against the government, have only PROVEN, again and again, THAT IS SO!
P.S.
http://www.democracynow.org/2006/9/22/bolivian_president_evo_morales_on_...
"Morales spoke for the first time before the United Nations General Assembly in New York. He vowed to never yield to U.S. pressure to criminalize coca production. During his speech he held up a coca leaf even though it is banned in the United States."
I thought it was great when Morales held up a coca leaf at the UN:
http://www.alternet.org/story/149657/us_rejects_indigenous_rights_in_favor_of_failed_war_on_drugs_strongarms_other_countries_to_follow_suit
Bolivia was attempting to persuade UN to legalize coca leaves, while it was no surprise that the USA was very against that kind of change!
http://www.alternet.org/story/149489/what_are_the_u.s.'s_real_motives_for_launching_a_drug_war_in_mexico
"Drugs wars" obviously have real ulterior purposes, e.g.:
What are the real targets of these plans for the international coordination and militarization of the struggle against alleged terrorists and narcos? They are aimed at immigrants, original peoples, guerrilla resistance, political dissidents, and social movements against transnational corporations taking over natural resources, including water, and causing mining pollution. ...
Obviously, the drug wars were really wars against people. Obviously, "drug wars" were much more against the South! That is why it was nice to see anyone standing up against those insane drug wars!
HOWEVER, THE ORGANIZATIONS WITH THE MOST MONEY THAT CAMPAIGN TO END THE WAR ON DRUGS LOOK LIKE CONTROLLED OPPOSITION.
MOREOVER, THE ESTABLISHED SYSTEMS ARE ALREADY REPLACING THE WAR ON DRUGS WITH THE WAR ON TERROR, WHICH IS MANY ORDERS OF MAGNITUDE WORSE!
This conversation has turned into an episode of James Burke's Connections series for me!
In 2006 I was three years into struggling to survive "the war on family" with my five year old son and three year old (yep, she was three months old when SHTF) daughter in tow (miraculously!), so I wasn't paying any attention to anything else. (would like to discuss the bullshit family law is with you in the future)
I will spend tomorrow gathering my thoughts and pecking out a reply. I never knew that about Morales at the UN. WOW! Thanks!
Morales upholds the ideals of the UNFCCC, solidarity, cooperation, justice, and equity in his remarks at the opening of the 4th session in Peru on behalf of the G77 + China. That only took him about 90 seconds and then spends thirty minutes issuing a call to arms saying the people have to take control. I guess that's because, as you say, he can easily see Paris continuing the lies and hypocrisies as that is what he is basically saying the discussion over the last 30 years has produced. Finally he calls for an international tribunal.
It's difficult for me to gage how well he understands the money/murder system but he certainly is talking in terms of profits and war in his speech. He said capitalism developed science to obtain profits, even if it has to kill. One has to wonder if climate science falls into that category too...
I can't see that. I think the victors of WWII grew so arrogant that they let their guard down. The growing population created a growing research and technological prowess that fed back on itself and spun off to every extreme. Like the Pale Blue Dot off in an obscure corner of the galaxy, the theory of global warming caught the interest of someone and data started piling in. Once the data started giving crude indications of a potential problem eyebrows started being raised, but everyone was busy with the cold war, the moon landing, or the Canada Cup. Eventually "they" stepped in to exercise control because the data pointed to a problem with business-as-usual.
But I think they arrived too late. The meme had spread too far too fast and data was coming in from too large a network. Plan B was to subvert all efforts using the usual methods and hence the 30 years of lies and hypocrisy. Sadly it appears that there is a price to pay for that behavior. Moreover, they are losing control, rapidly, creating a very very dangerous situation for the human population in the short term, due to the supreme ideology of militarism and the existence of atomic weapons, simultaneously creating a deadly situation for an untold number of other species. While Morales speaks of the injustice to developing countries I think he is encapsulating the injustice to those other species when he uses the phrase "Mother Earth".
Now it would appear we have an existential crisis on our hands as the data seems overwhelming while at the same time we have every reason to believe that nothing is believable anymore. Insanity seems to have taken over. Morales urges the people to take matters into their own hands but the people are political idiots. As you keep saying RM, anyway one looks at it this is a disaster in the making bazillions of times worse than anyone wants to believe. Massive, if not total.
The connection of Morales in 2006 at the UN calling bullshit on the war on drugs with the Bolivian presidential plane being forced down on it's way back from Russia during the Snowden hunt, then with Putin in the Syria crisis that September followed by the Ukraine crisis and now Morales "headlining" the CMP10, all confirms to me that the biggest bullies are on the road to be called out. That is an extremely tricky situation orders of magnitude worse than even the war on terror because in exposing the lie that the war on drugs was, Morales (with perhaps some help from Snowden&friends?) is going to need to prove that the war on terror is a lie as well if there is any chance of kick starting the war on The 6th Mass Extinction.
I continue to see your input as extremely valuable to those at the center of that storm. Thank You Radical Marijuana.
I continue to see Paris as a pivotal moment in human history. I hope the entire Arctic ice cap melts next summer so those folks arrive in Paris shitting bricks!
Soon,
MEAN BUSINESS
p.s. I think YOU need a little vacation. I hear Bolivia is nice this time of year, and while you're there maybe swing round for a chat with Evo ok? Be sure to send a post card, and come back soon!
Smoke weed everyday.
-Dr. Dre
Raul Meijer or Tylers,
We need to stop using the term "greenback" to mean the same thing as
"Federal Reserve Notes." Greenbacks were treasury money, FRNs are credit mony issued by a Private Banking Cartel.
Greenbacks are fundamentally different than FRN. Greenbacks were issued during Lincolns adminstration so he could pay he soldiers rather than pay usurious amounts to Wall Street Banks in the form of banker money credits. FRN type money is the antithesis of Greenbacks.
Greenbacks were a long lasting type of floating money (not credit) which survived despite repeated efforts to recall them They lasted from 1862-1996, when Treasury burned their last stock.
They STILL appear on the Treasury’s debt report (251m). They appear on the report as instruments specifically NOT allowed to be used against the national debt, like silver certificates.
They are debt-free money then, no matter what they were for the first year or two of their introduction (when they were supposedly redeemable in gold; that never happened either).
The private bankers don't want Greenbacks to cycle in and out of their debt instruments, thus driving debts down to zero. Bankers prefer their Credit as money in the supply. If you are the master of the universe, why would you allow a large component of floating money in the money supply? Your objective to have a mortgage or debt instrument on everything, and thus you gain usury for mere keyboard entries and accounting.
This is not trivial - please use the right words as words have meaning, and the type of money we have goes to the core of economics.
http://www.opednews.com/articles/Debt-No-More-How-Obama-ca-by-Scott-Baker-Banks_Constitution-In-Crisis_Constitution-The_Constitutional-Amendments-131018-391.html
IF Vlad is really threatened by these low oil prices, and the smelly Sauds refusing to do anything about it... don't you think he would consider attacking the various pipelines... he does, after all, have some pretty competent Special Forces... and he is not the Pansy FUBAR that our Queen Odumbo is... seems like that would be eminently "DO-able".
Just so we don't have to have this conversation over the weekend.
https://bitcoinwisdom.com/markets/btce/btcusd
Bitchez/
Take your mining bitchits, and chew on them.
blah blah blah, just go long uvxy the next trading day after xmas and hold all year long in 2015
and if the market does not crash , lose70% in that year.
Weekly close analysis
http://investfts.blogspot.co.uk/2014/12/weekly-closings-stocks-oil-gold....
'15... The great unwind/
Possibly circuit boards and technolgy will come back home? I'm sick of Chink Junk/
ok. you could have summed this up in two words:
Stronger Dollar.
'nuff said.
man you're long winded.
Let me fix that for you.
PEAK CRONY CAPITALISM
thanks
Are you suggesting that Capitalism peaked some time ago and that its worthless understudy, Crony Captialism, is peaking now?
http://www.advisorperspectives.com/dshort/commentaries/Federal-Governmen...
Slavery is alive and well.
Misfire.
Further epidodes of the world of la-la.
The vision becomes more clear every day. From the haze of wickedness and corruption, come the righteous up-right among you. Walkers of the Way, doing the right thing. The GAOTU has given the Decree of MA AT. Take the evil killer toys away from the koo-koo-kids. End the world killing corruption. End the crimes beyond most sane peoples belief. Save your eternal Souls by your own words, deeds, and actions.
Tells all right now, good men and women. Weza can take this ship of fools and cast off the disharmonious puppet crew without a shot fired, or a gathering of good souls to do it. In four directions the instructed by JM went, just before the unholy date.
Herein are the greatest of all clockwork gears justa all workin in unison to keep the evil beast system going. All men and women know what the heart is screaming at you now. It is the imperial conditioning that keeps you from throwing this filthy barge scum over board and wishing them a happy day. See ahead full the faces of your children, not the digits and dollars of gold crime. See a future you want, and not of the topical slime. See your heart on fire, as your country bleeds. See the world, and not some place in leeds?
There are those that would be king, where among you gathered ye here, all are Kings and Queens. There is no number one in the Circle of harmony. It is all One Love.
Get back to the basics, for these ancient ways will save you. Pound down some merry merry, and get on your knees to emotionally pray. There comes a darkness in your face, smiling on TV and it is not St. Nick. This one is evil, and plans on giving EVERYBODY the dick-ing around, if not in only in the pure bull biscuits they gorgingly spew. Let your heart lead you, and not the wicked mind.
No...and yes. It could be the puppet master puppet cheney that is the anti-Christ among you...but then...there are so many now that can play the evil part well.
As the times of awakening to moar and moar craziness happens, seeing plans behind plans of even those who make the evil plans comes to the light, loose not Eye-sight of what else is going on in the what's it going to be in the wonderful universe next?
Speaking entirely as a human being, birth did not come with the fear of a repressive, nosy, criminally corrupted for the profits and gains of a few, puppet evil govt that seeks to kill merely for speakings ones truth. Or any puppet masters of the god, money.
Rather, birth came with the right to live in prosperity, to flourish in the sacred light of a Creator that meant for all the children to grow up and play together as one family. One Tribe. And, to be free of all fears. Those who propagate fear and mayhem for controlling purposes and the god-money, will perish in fear. The worst of it awaits on the other side. The god-money is going down the shat tubes of history soon.
Refuse, is now the word of the day. Refuse to play the games and stop supporting and financing evil. Refuse to support the corruption, murder, and out right insanity in all the deviations from the truth, logic, reason, and the Rule of Law. Stop duck walking to hell!
The great Supreme Light of the All That Is, in all dimensional levels of the mind, is admonishing every soul on board with eyes to see, and ears to read, to straighten up and fly right. This ain't no party, and Creation is not fooling around. The Man, is coming to town!
https://www.youtube.com/watch?v=FtK-QCiD-FE
Sheesh....time to go to the river to sing and cry....grace comes from there...and makes one sigh. Will they ever learn? Or, will we all die?
To Jah only:
https://www.youtube.com/watch?v=YwNRE_PFaN0
I'm gonna go out on a limb here and say emerging market collapses are ... Bullish !
Russia is the place to watch folks
Swedish IKEA To Temporarily Halt Sales In Russia Due To Huge Demand
Options Traders Turn Bullish on Russia ETFs
Russia’s First Business Jet To Deliver Passengers To VIP India Client
Australia’s Tigers Realm Receives Coal Mining License For Russian Project
Ruble Decline A Boom For Russia’s Mining and Metals Market – Deutsche Bank
Dubai’s Gold & Commodities Xchange DGCX To Start Russian Ruble-Futures, Gold and Oil Contracts
Sweden’s Nordea Bank Sees Profit of €40 Million From Russian Investments…..Russian Lending Rose 8.2%
E.U. Eases Sanctions On Russia’s Top Banks, Oil Companies
Oxford Study Confirms Europe’s Significant Dependence On Russian Energy
Western Venture Capital Continue Investment in Russia
zh your right the big story going forward is em what you don't get and never seem to understand is the other part of the same story ms piggy's inability to kill the dollar
This author seems prejudiced by religious type thinking that 'because of sins someone is going to hell, and never coming back'. There is little sense that economic patterns are cyclical, and that business and govt leaders make some efforts for positive change that often work. Meredith Whitney made this mistake in chicken littling on the death of muni's.
Author says EM corps are going to choke on new cost of credit? Even with spike to 2 in yield spread 2 + 3.37% (LQD rate) = 5.37% on new financing....all debt is not coming due now or in 2015...so what is crisis?
EM corps did load up on debt at low rates. lately..same as US corps...this improves their balance sheets so they can weather 2015 with ease if these are only factors
There may be some damage from countries with big currency falls who have to pay in dollars..many corps and sovs are hedged at least with part dollar debt, part local currency debt... author doesn't detail this.
"One swallow does not a summer make" But it does make my evening better.
fellow ZHers.. what say you we start trading HOPE?
Shit's sure to go for some coin.
Awesome piece. Many thanks. Very insightful.
I know it is fashionable for ZH'er commenters to blow off every piece of analysis that comes along, but maybe they should really go back to remedial school - these punters are a long way from making it to their ZhD.
In short it is pretty trivial to fact check this - if you hand Google Finance either "Emerging Markets Debt" or leave the "s" off "Markets" - basically the charts show that the Herd has *pivoted* and is racing out of Dodge all at once in December - BEFORE Yellen started "Yellin" (OK so maybe she more or less whispers in her lovely Brooklyn accent - but no one can argue that her Big Stick isn't scary).
OK setting up the story for 2015. It is likely comes down to which countries and firms can do the "Oil Can Limbo" longest. Hedgies who loaded up on cheap CDS insurance on the death of oil debt are likely going to really win this game as they are the "shortest" players heh heh. (at least the metaphor still works!). The Big Players who set up carry trades to buy oil debt are likely surprised by how sticky this game is - who is going to buy when the herd is selling?? (there is that PEMIX chart again, yuck).
OK enuf prognosticating ; it is a diet heavy in commodity debt in 2014 is leading to major debt indigestion (with possible blockage, yuck) in 2015.
The theme song for 2015 : Merle Hazard's " The Great Unwind " https://www.youtube.com/watch?v=hj86YsaoCtw
Are you sure that they will get paid on that CDS? The CDS are still outside the Central Clearing facilities.
Doesn't matter what "he" owes you, only what "he" can pay.
excellent!
u bash ZH community and come forward with Google? .....if you hand Google Finance either......
u must be drunken more, than a danish sailor.
Fuck those clowns that run the show. It's like they are on acid.
Agree on the part of EM Asia paper evisceration. They have sucked in lots of US$ debts. They have not reformed from structural deficiencies - mainly still dreaming in maintaining their export models and maliinvesments in real estate with leverages. Atop of these is the abundance of crony capitalists.
Falling tax revenues prompts governments worldwide to take the easy way out and borrow more rather than cut expenditures and improve efficiency. The governments in the emerging markets, taking advantage of easy liquidity and low interest rates, borrowed in USD and spent the proceeds unproductively in their local economies. The strengthening USD is likely to create a payment crisis for the emerging markets as their liabilities increase at a rapid pace and a majority of their tax revenues end up as payment for their loans.
http://www.marketoracle.co.uk/Article40231.html
Anyway you look at it I have a problem lending my hard earned money out for a long period of time based on predictions of future government deficits. These forecast are often formed and made on assumptions based on rosy scenarios or politically skewed to benefit those in power. Like many investors I think the bond market is a bubble ready to pop and won't touch bonds with a ten foot pole. Knowing what we know about the effect that interest rates have on the value of bonds one might deduce that the 30 year bull run on bonds will have to come to an end the moment rates are expected to go up.
To give you a sense of what this may mean to U.S. Treasury Bond investors a 10 year treasury bond issued at a 2.82% interest rate could see a 42% loss in value from a mere 3% rise in interest rates. This means if you’d held $100,000 in these bonds prior to the rise in rates, you would only be able to sell those bonds for $58,000 in the secondary market after the 3% rise. Not only would bond holders be stripped of wealth if rates rise or even worse soar, but it would magnify the nations debt service and rapidly impact our deficit in a negative way. The article below delves into just how big a problem it could cause.
http://brucewilds.blogspot.com/2014/12/bond-market-bubble-has-ugly.html
The great sucking sound of 2015 as the rewind button is pushed.
“Suppose the Russian government says, ‘Well, since the attack on the ruble is political and you guys are attacking the ruble and causing us so much trouble, we are just not going to pay off the next traunch of our debt that comes due early in 2015.'
Well, the European banking system would collapse because those banks are terribly undercapitalized. Some of them have loans to Russia that almost absorb the entire capital base. So the Russians don’t even have to default. They can just say, ‘We’re not going to pay this year. We will do it later. We’ll do it when the ruble stabilizes.’
http://kingworldnews.com/paul-craig-roberts-russia-unleash-ultimate-blac...
A different perspective on what's really happening with oil...
http://www.globaldeflationnews.com/whats-really-happening-with-oilthe-la...
Why are "working Joe's" assumed to be morally superior? Being poor has nothing to do with moral superiority.
Err.. No.. actually the biggest story will be this one!
I like PCR- he is a neighbor after all. But I don't think Russia will starve Europe of energy. It is not in their interest and further, it would be inhumane. Whether Putin actually runs Russia or is another bankster puppet is in my mind, still an unanswered question.
However, if Putin really wanted to bust Obama's balls, he'd sell his UST's for Rubles. He'd just as well push the Nazi's back to Kiev and declare a new border along the Dneiper, while he's at it.
Obviously the West doesn't give a fuck about his concerns, why should he give a flying fuck what they say about him?
That is, unless he too, is merely a bankster puppet.
The Big Story, you'll never see in the MSM, is the biggest counterdfeiter in history that no one seems to know about or if they do, care. As iflation continues to expand the average Joe will figure it out as they did in Weimar Germany after awhile.
I've kinda become fascinated with the possibilities for USD going ever higher... into the sky in fact...
Then Russia and China coming together (yet again) to pool their resources with that rather large vacuum cleaner they mutually own called the "Benjamin Franklin upright" that they will employ to mop up those increasingly worthless rubles with -when the time and place suits them!...
Sounds real good to me Lord... Sounds real good to me!...
This time the threat does not come from insolvent states. They have learned the lesson of the late 1990s. Few have dollar debts. But their companies and banks most certainly do, some 70% of GDP in Russia, for example. This amounts to much the same thing in macro-economic terms. Private debt morphs into state debt since governments cannot allow key pillars of their economies to collapse.
Please explain to us why said governments cannot first let those companies default on their dollar debts, then rescue/nationalize the local parts?