In the 16 months since Japanese Prime Minister Shinzo Abe launched his bold plan to reflate Japan’s shrinking economy the yen has depreciated by 22% against the dollar, 28% against the euro and 24% against the renminbi. The hope was to stimulate trade and push the current account decisively into the black. Yet the reverse has occurred. Japan’s external position has worsened due to anemic export growth and a spiraling energy import bill: in January it recorded a record monthly trade deficit of ¥2.8trn ($27.4bn). Having eked out a 0.7% current account surplus in 2013, Japan may this year swing into deficit for the first time since 1980. So why is the medicine not working?
While Europe is furiously scrambling to find alternative sources of energy should Gazprom pull the plug on natgas exports to Germany and Europe (the imminent surge in Ukraine gas prices by 40% is probably the best indication of what the outcome would be), Russia is preparing the announcement of the "Holy Grail" energy deal with none other than China, a move which would send geopolitical shockwaves around the world and bind the two nations in a commodity-backed axis. One which, as some especially on these pages, have suggested would lay the groundwork for a new joint, commodity-backed reserve currency that bypasses the dollar, something which Russia implied moments ago when its finance minister Siluanov said that Russia may refrain from foreign borrowing this year. Translated: bypass western purchases of Russian debt, funded by Chinese purchases of US Treasurys, and go straight to the source.
Sanctions against billionaires - that's one (very much meaningless) thing. But halting sales of Russian vodka, now that could really cripple someone, just not clear who. And in an attempt to answer that question, the premier of Canada's Saskatchewan province, Brad Wall, says he is considering banning Russian booze in government-run liquor stores because of Russia’s actions in Ukraine. Wall says it’s a small measure, but sends a strong statement.
Why hide inflation? Well for one thing, understating inflation allows you to overstate GDP growth.
Back in 2013 it was Syria where the world was gearing for imminent military action after a relentless series of false flag provocations by the United States (intent on securing a Qatar gas pipeline to Europe) which in the last minute was deftly diffused by Vladimir Putin. In 2014, it was the Ukraine's turn, and after a prolonged campaign orchestrated by Victoria Nuland and the US State Department (again) which succeeded in the now traditional violent coup (see Egypt and Libya), once again saw Putin victorious, after yesterday's annexation of the all important Crimean peninsula, achieved without the firing of one shot. So now that Putin has succeeded in trouncing the US twice in a row, it is time to poke some old, well-known geopolitical wounds, such as Iran. And who better to do it than Israel, where as Haaretz reports, "Prime Minister Benjamin Netanyahu and Defense Minister Moshe Ya’alon have ordered the army to continue preparing for a possible military strike on Iran’s nuclear facilities at a cost of at least 10 billion shekels ($2.89 billion) this year, despite the talks between Iran and the West, according to recent statements by senior military officers."
Well over a week after the disappearance of flight MH370 - which now is the longest official disappearance of a modern jet in aviation history - with no official trace of the missing plane yet revealed, the investigation, which as we reported over the weekend has focused on the pilots and specifically on Captain Zaharie Ahmad Shah, earlier today revealed that on his home-made flight simulator had been loaded five Indian Ocean practice runways, among which those of Male in the Maldives, that of the US owned base at Sergio Garcia, as well as other runways in India and Sri Lanka - all notable runways as all are possible landing spots based on the flight's potential trajectories. The Malay Mail Online reported, "The simulation programmes are based on runways at the Male International Airport in Maldives, an airport owned by the United States (Diego Garcia), and three other runways in India and Sri Lanka, all have runway lengths of 1,000 metres."
Ordinarily Grant Williams would bet the ranch on this spat being defused diplomatically and everybody leaving the negotiating table a little disgruntled (which would mean the outcome was just about perfect); but he suspects that markets have become dangerously conditioned — by one perfectly executed landing after another in recent years — to expect (and position for) the best. The trouble is we've been here before and pulled back from the brink every time, but this time that outcome is expected again by most, and that is extremely dangerous; as markets are most assuredly NOT ready for reality. Add to that the fact that every new Fed chief gets a serious test - perhaps it is Yellen's turn?
Blaming the weather for the sullen state of corporate or economic affairs has become a daily occurrence by analysts, pundits and corporate chieftains. However, Bloomberg's Rich Yamarone notes that while there has undoubtedly been a larger-than-normal impact this year, some sub-components of headline indicators suggest underlying weakness without the influence of snowstorms. Sinking economic activity cannot be blamed solely on poor weather, he adds, noting one client's comment that, "If we adjusted for weather, Napoleon would have taken Russia in 1812."
For five long years, we have pursued the fantasy that we could return to "growth" without having to fix or change anything. The core policy of the fantasy is the consensus of "serious economists," i.e. those accepted into the priesthood of PhD economists protected by academic tenure or state positions: what we suffered in 2009 was not the collapse of leveraged crony-state financialization but a temporary decline of "aggregate demand" and productive capacity. The five-year fantasy that free money would fix all the distortions and systemic problems is drawing to a close. Why can't the fantasy run forever? The two-word answer: diminishing returns. Handing out subprime auto loans works at first because it pulls demand forward: anyone who wants or needs a new car buys one now, rather than put the purchase off a year or two. Eventually the marginal buyers default and demand falls off, and the distortions cause an even greater collapse in demand and auto loan quality.
PBOC Denies It Will Bail Out Collapsed Real Estate Developer While Chinese Property Developer Market CrashesSubmitted by Tyler Durden on 03/18/2014 10:15 -0400
The PBOC is reported to be scrambling to bail out China's second corporate default in one month, real estate company Zhejiang Xingrun, even as the Chinese property developer market is crashing and rapidly shutting down. So why did the PBOC personally just go to Weibo to deny such speculation. And what happens next?
One upon a time everyone got a hearty chuckle when Obama declared, on the very first day of his ascension to the throne, that his administration would be the "most transparent in history." And if they didn't then, they certainly will now following news that it none other than Obama's own administration - made infamous for spying on everyone who uses electronic communication courtesy of one whistleblower - that it has refused a record number of Freedom of Information (don't laugh) requests on the basis of, drumroll, national security. So between the NSA, whose job is to ensure national security, and all those pesky meddlesome investigators, whose only curiosity is to peek behind the secrecy of the Obama administration, there should be precisely zero acts of terrorism on US soil. Like last year's Boston bombing for example. Oh wait...
It has not been a good month for Boeing: first one of its 777s disappears in the now infamous Malaysian Airlines MH370 heist, which is increasingly looking as a hijacking commited by the pilots, and yesterday, a Delta Airlines Boeing 757, Flight 2412 from Orlandon to Atlanta, saw an entire panel tear off from its wing forcing the plane to make an emergency landing. At least this time the plane was tracked for the duration of the flight, perhaps because there was nothing that would be considered extraordinary in its cargo manifest, speaking of which, perhaps it is time for Malaysia Airlines to reveal just what was held in flight MH370's cargo hold. The detached panel did not impact the aircraft's ability to fly or land, Delta spokesman Anthony Black said of Flight 2412. "The crew, knowing that, followed procedure by declaring an emergency to air traffic control as they were landing, which gave them priority clearance to land and alerted ground crews." The airline is inspecting the plane to determine why the panel came off.
If one listens to the endless rhetoric of hollow threats and escalating war of words between Russia and DC, one thing should be clear by now: with the passage of the Crimean referendum, accepted (not to mention planned) as perfectly normal by Moscow and blasted as illegal by the West (since it is the former whose troops are in the Crimea, not the latter) then Putin has certainly crossed the Rubicon this time especially since as it was reported earlier, Crimea will formally apply to join Russia tomorrow. Surely, if nothing else, than at least the, drumroll, sanctions must be coming - after all if there is no forceful response now when Putin has called the Western bluff, the West may as well not bother. Well they very well may be... in about a week. The reason: Congress is now in vacation until March 24, so there will be at least one week before any response to the formal Russian annexation can be debated, let alone enacted into law.
My investigation into gold trading irregularities, including the time around the London fixes, initially began after reading the work of the late Adrian Douglas, along with Dmitri Speck.