ETC

Just when you thought it was safe to buy the 12% collapse (the biggest since Lehman) in Chinese stocks, they re-plunge another 3-4% with no dip-buyers evident. The drivers are twofold: first, China PMI beat expectations modestly (uh oh no more QDII, QE, PSL, etc.); and second - and much more critically - The PBOC Operations Office has called for stricter regulation of brokerage liquidity (implicitly clamping down on the seemingly infinite expansion of margin lending required to fuel the boom). CHINEXT has entered a bear market (down 21.5%) and the rest of the Chinese complex is down 3-5% today (down 15-20% from the highs).

There are effectively no tools left for governments and central banks to deal with another major crisis. Like Paris in 1940, they have no Plan B. They’re completely defenseless to support the financial system or the currency in the event of a major shock. We should all take a moment to appreciate this level of incompetence. This doesn’t happen overnight. It takes decades of “blunder and neglect” to engineer financial vulnerability on this scale. But they’ve somehow managed to pull it off.

Unnamed "officials" have proclaimed a new set of Greek proposals received by Brussels tonight as "a good base," according to AFP, and thusly the Euro is very modestly bid. However, both Socgen (without a 3rd bailout of €60-80 billion over the next 3 years, Greek uncertainty remains high and leaves Grexit risk merely semi-stable) and Goldman (a deal will come only after the introduction of capital controls, a technical default on the IMF and issuance of IOUs/and a further build-up of arreas... and the damage resulting from a breaking of the integrity of the Euro would not be fixed by monetary policy alone) leave us wondering just who is buying Euros and US stocks and selling Swiss Francs as D(efault) Day looms and the 'C' word (contagion) spreads.

How can it be implied that the markets are too fragile to deal with an unexpected raise of interest rates to (gasp) 1/4 of 1%, if all the “data” we were told (or sold) has been showing signs of all this “improvement?” The question still remains: How does any Ivory Tower prognosticator, or Wall Street talking head, square all these circles? Simple – they don’t. They just act as if it they didn’t or won’t happen. Or, just continue to act as if we’re too dumb to answer. This is complacency, idiocy, and more – all turned up to 11!

The 1960s visibly changed society in a few short years, and less visibly, the economy. Two books published in 1970, at the end of the tumultuous 1960s, attempted to weave a coherent narrative of what everyone was experiencing: Future Shock and The Greening of America. If Future Shock and Present Shock have any predictive value, then we must conclude the speeding up of change is eroding our ability to make sense of present-day trends, as the velocity of change is outrunning our ability to construct coherent narratives.

Today’s America* is an ugly fraud. Today’s America* has nothing in common with the nostalgic images and grand successes of the nation as it were in her glory days. In fact, we would argue not only does America* lack any authentic representation of times past but is the antithesis of America. We have come full circle, back to the very thing our ancestors fought, died and ultimately persevered to escape.

Any economic intervention, no matter how slight, causes unintended consequences. There are things that you cannot see, that the planner cannot anticipate. There are also easy ones...

Since the beginning of this year the markets have primarily treaded water. The primary support for the bulls has been continued acknowledgement by the Fed on an inability to remove accommodative policy by raising interest rates. (Which should make you question what happens the first time they do.) The bears have been feasting on weak economic data and deteriorating fundamentals.

• Greek PM optimistic on debt deal as banks bleed (Reuters)
• Greek central bank chief says banking system stable (Kathimerini)
• ECB Said to Confer on Emergency Greek Aid Amid Cash Flight (BBG)
• More tax "avoidance": Citigroup to shift European retail banking HQ to Dublin (Reuters)
• Florist's tip led police to Charleston shooting suspect (USAToday)
• Asian shares edge higher on Fed caution, China sell-off intensifies (Reuters)
• Toyota in damage control mode after American exec arrested (Reuters)
• Venezuela Oil Loans Go Awry for China (WSJ)

It’s over. Except for a short moment or a wild and self-exhausting governmental mandate (both of which are doubtful), there will never again be enough “good jobs” to go around. That model is gone and we need to root it out of our imaginations.

So a nation that had essentially 40 continuous years of production expansion suddenly goes into a tailspin upon changing up the monetary basis of trade suggesting that we can pinpoint the culprit. A 5 year old could pick up on this actuality. So how is it that these supposed omniscient academics at the ECB are simply incapable of seeing the blatantly obvious?

This is the REAL issue with interest rates, NOT the economy. 

The statists are coming for your kids, and the conditioning has already begun...

When and what will break the chains on gold by those seemingly omnipotent forces that so assuredly keep its price in check? In essence, the belief is (and I expect for most honest and impartial analysts this is true) that because there is potentially significant downside risk to a global monetary system built upon a currency to which gold represents the proverbial kryptonite (we’ll discuss why), there are checks in place within the system, to ensure that kryptonite doesn’t become too potent. The architects of the existing system would have been foolish not to implement checks on gold.

They call it "voting," and we're told it's our civic duty. But it's just an illusion. Just like in Caesar’s time, the election will go to the people who spend the most money. But we're not talking about the candidates. They're just puppets. Entertainers. We're talking about the people who bankroll them.