Middle East

Despite the fact that myself and everyone else acting like they know what lays ahead are proven wrong time and time again, we continue to make predictions about the future. It makes us feel like we have some control, when we don’t. The world is too complex, too big, too corrupt, too lost in theories and delusions, and too dependent upon too many leaders with too few brains to be able to predict what will happen next. This is the time of year when all the “experts” will be making their 2013 predictions - but few will address where they were wrong in previous predictions. I’m more interested in why I was wrong. It seems I always underestimate the ability of sociopathic central bankers and their willingness to destroy the lives of hundreds of millions to benefit their oligarch masters. I always underestimate the rampant corruption that permeates Washington DC and the executive suites in mega-corporations across the land. And I always overestimate the intelligence, civic mindedness, and ability to understand math of the ignorant masses that pass for citizens in this country. It seems that issuing trillions of new debt to pay off trillions of bad debt, government sanctioned accounting fraud, mainstream media propaganda, government data manipulation and a populace blinded by mass delusion can stave off the inevitable consequences of an unsustainable economic system. Will 2013 be the year it all collapses in a flaming heap of rubble? I don’t know. Maybe you should ask an “expert”.

Two interesting infographics were published recently that make it so easy to see the decline of the West, even a caveman can do it. Both of these infographics point to the same conclusion: the west is living far beyond its means and is struggling with pitifully anemic growth. This is a long-term trend, and one that is only going to accelerate. Yet as obvious as the indicators may be, few people will actually do anything about it.

It’s Not a Tax or Spending Problem … It’s a Devolution Into Lawlessness

How does one of the best strategists view the world as we close the page on 2012, and look toward 2013? Find out with the help of these 35 charts.

Was the shooting of 20 students in Newtown, Connecticut the Neo-Liberal version of 9/11?  The question merits considerable thought, but let me explain further what I mean.  In the aftermath of the 9/11 World Trade Center attacks, a sense of shock and awe sunk into the minds of the American populace like nothing seen in decades.   This overwhelming fear, this logic crippling terror, infected the public to more destructive ends than any deadly virus in existence.  Conservatives were especially vulnerable to the infectious symptoms of the event, abandoning all reason and even their small government values to support the fascist inklings of the Bush Administration. More than a decade later, the Neo-Liberal (fake liberal) Obama Administration and its minions continue the Bush legacy by exploiting our latest tragedy at Sandy Hook Elementary as a means to an end; a political opportunity to assert federal authority as more valuable than constitutional freedom. If you can’t convince people through rational debate that your position is the correct one, and, if you have to threaten them, lie to them, or brainwash them before they will adopt your ideas, then there is something wrong with your ideas.

Worldwide, more than eight-in-ten people identify with a religious group. A comprehensive demographic study of more than 230 countries and territories conducted by the Pew Research Center’s Forum on Religion & Public Life estimates that there are 5.8 billion religiously affiliated adults and children around the globe, representing 84% of the 2010 world population of 6.9 billion. These five charts sum up the age, size, geography, and power of the world's major religions.

Following on the heels of Byron Wien, Morgan Stanley's Surprises, and Saxo's Outrageous Predictions, Deutsche Bank's FX strategy team has created a who's who of 13 outliers for 2013. Quite frankly, given the extreme nature of monetary (and now fiscal) policy, asset allocation decisions, and bankers' and politicians' willingness to go into the media and lie directly to our faces, the comprehension of the possible (no matter how improbable) is far more important for risk management than the faith in the centrally-planned unreality our markets (and therefore ourselves) currently find themselves in. As they note, all too often, the tendency to not stray too far from a self-anchoring recent-history-extrapolated consensus (while apparently highly profitable for some for a microcosm of time) leads to unrecoverable drawdowns exactly when career-risk was the limiting factor. From Malaysian elections and EM bubbles bursting to Fed monetizing equities and South China Sea escalation, these outliers seem all to 'normal' in our brave new world.

Several days ago, various media outlets misinterpreted a statement out of Russia, in which it was said that Assad may be defeated by the local Al Qaeda-funded and US-supported rebels, and which many took as an indication that the geopolitics in the Middle East may be shifting as Russian support of Syria was ending. Turns out nothing could be further from the truth, and moments ago the AP reports that a "Russian navy squadron has set off for the Mediterranean" with destination Syria. The official point of the exercise: evacuation. The unofficial: anything but. "The Defense Ministry said Tuesday that the ships will rotate with those that have been in the area since November. Russian diplomats said last week that Moscow is preparing plans to evacuate thousands of Russians from Syria if necessary. The ministry did not say whether the navy ships are intended for an evacuation." Remember that "evacuation" was the pretext when Russia also sent the Grand Missile Cruiser Moskva off the Gaza coast last month at the height of the latest escalation of the Israel-Gaza conflict. The pretext then? "Evacuation" too. Why anyone would send their Black Sea Navy flag ship to 'evacuate' a few hundred citizens, all of whom are perfectly proficient with instructions on how to board a plane, is of course, anyone guess.

After the success of the 'scariest charts for equity bulls', the following 12 charts are the most important, in CitiFX's view, to establish a 'starting point' for views on markets as we head into 2013. From employment trends echoing the 1970s, one-last-low in Treasury yields and '90s analogs, to EURUSD and its mid-'80s mirror, and the ongoing trend higher in gold; there is something here to scare equity and bond bulls and bears alike.

With gold and silver down this morning - following a mysterious vertical plunge last night (once again) - we thought ConvergEx's Nick Colas' timely discussion of gold was worthwhile. As he notes, Gold is the ultimate personality test for investors.  Some hate it, excoriating its adherents for their lack of faith in human ingenuity – gold has been valuable since before humans could write. And some swear by the yellow metal, in the belief that it is the last vestige of rationality in a world of financial assets manipulated by central banks and opaque trading venues.  What gets lost in the wash is that gold is a commodity and can be analyzed as such. On that basis, here is the 'Top 10' list of real-world fundamentals for gold.

Turkey’s trade balance may turn on whether President Barack Obama vetoes more stringent sanctions against Iran after the U.S. Senate passed a measure targeting loopholes in gold exports to the Islamic Republic. Turkey’s gold trade with neighbouring Iran has helped shrink its trade deficit over the past year according to Bloomberg. Incredibly, precious metals accounted for about half of the almost $21 billion decline. That’s calmed investor concern over its current-account gap, and helped persuade Fitch Ratings to give Turkey its first investment-grade rating since 1994.  The U.S. Senate voted 94-0 on Nov. 30 to approve new sanctions against Iran, closing gaps from previous measures, including trade in precious metals. Obama, who opposes the move on the grounds it may undercut existing efforts to rein in the nation’s nuclear ambitions, signed an executive order in July restricting gold payments to Iranian state institutions. Turkey exported $11.9 billion of gold in the first 10 months of the year, according to the Ankara-based statistics agency’s website. A very large 85% of the shipments went to Iran and the United Arab Emirates. Iran is buying the gold with payments Turkey makes for natural gas it purchases in liras, Turkish Deputy Prime Minister Ali Babacan told a parliamentary committee in Ankara on Nov. 23.

• Here come the low margin products: Apple Tests Designs for TV (WSJ)
• Obama and Republicans Trade Offers to Avert Fiscal Crisis (BBG)
• Carney broaches dumping inflation target (FT)
• Bernanke Critics Can’t Fight Bonds Showing No Inflation (BBG)
• Corporate Taxes on Table in Cliff Talks (WSJ)
• US business chiefs back tax rise (FT)
• Greece Confident Bond Buyback Needed for Aid Succeeded (BBG)
• New Faith in Europe's Banks (WSJ)
• European Bank Sees Little Room for Rate Cuts (WSJ)
• North Korea Claims Success in Rocket Launch (WSJ)

Own Physical Gold Now - While You Still Can!

“Farther from care than danger…”

The title above is a quote from Sir Thomas More’s classic, Utopia, describing a people’s overconfidence in their capacity for navigation given the compass for the first time.

"what you realize is that the lessons of ’08 will actually result in a much quicker process, a process that I would describe as a “black hole” if and when there is the next financial crisis.... Nobody in America has actually seen, or most people probably can’t even contemplate, what an actual loss of confidence may look like. What I’m trying to struggle with as a money manager, who really seriously doesn’t like to lose money, is how to protect our capital and how to think about the next crisis."

Your comprehensive yet concise, one-stop summary of all the bullish and bearish events of the past week.