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.
As the clock ticks down to tomorrow's Crimea referendum, where residents will vote to align with Russia or to stay in Ukraine, Russia Today looks at what the sunny Black Sea peninsula can offer economically and what ties it has with Moscow and Kiev. At first glance, Crimea has certain problems - a lack of energy, and more dangerously, freshwater resources. The republic's annual GDP is only $4.3 billion - 500 times smaller than the size of Russia’s $2 trillion economy. However, whatever the results of the referendum are, fixing the dilapidated state of infrastructure and transport could offer a real investment opportunity for both Russian companies and Crimean entrepreneurs.
With the Bank of England recently denying any collusion with dealers to manipulate FX rates and exclaiming "it was not our job to go hunting for the rigging of markets," the WSJ reports that none other than that bastion of trust The Federal Reserve examined key FX benchmarks months before global regulators sounded alarms over the manipulations... but took no action.
China is the reason so many companies tell you how great their prospects are.
Copper's China-credit-contraction-driven crash continues as the metal drops to fresh 5-year lows today (on par with Lehman and the US downgrade collapses). Japanese stocks are down over 1000 points from their post-Putin highs. Russian stocks are plunging, Germany's (and Swiss) bonds are surging (as is gold) and European equity and credit markets are in free-fall. But apart from that... Finally we saw the world's angst spill into Yen-carry trades (USDJPY was spanked today - almost biggest drop in 6 months). US equities plunged tick-for-tick with USDJPY (S&P's biggest drop in 6 weeks and red for 2014); Treasury yields were crushed 9-10bps from intraday highs (biggest drop in 2 months); credit spreads banged wider; gold jumped to six-month highs; and EUR weakness (post-Draghi) ramped the USD back near unchanged on the week. VIX was a one-way street higher all day (biggest low-to-high run in 6 weeks) to 6-week highs.
Merkel Warns Putin Of "Massive Damage", Russia Continues Piling Troops, Pro-Russia Oligarch Arrested, Gazprom SpeaksSubmitted by Tyler Durden on 03/13/2014 10:05 -0400
It's crunch time for Ukraine.
Simply ending the corporate lives of Fannie Mae and Freddie Mac as the Johnson-Crapo proposal envisions is not sufficient
The profane alliance between big banks, big corporations, and big government has created the Big Brother surveillance society we are living under today. And 95% of the populace is either willfully ignorant or perfectly happy with a boot stomping on their face forever. We have willingly become hopelessly enslaved while believing we are free. A population unable or unwilling to think critically doesn’t comprehend the extreme danger to our civil liberties from the unwarranted intrusion into our private lives by a surveillance police state bent on bribing, coercing and silencing dissent, truth and First Amendment rights.
"In the future, no matter how the situation is resolved in Crimea, we need a much stronger Ukraine," warned Pavlo Rizanenko, a member of the Ukrainian parliament, adding that "If you have nuclear weapons people don't invade you." It would seem tough for the West (and their START Treaty) to get behind a nation that, as USA Today reports, believes it may have to arm itself with nuclear weapons to enforce a security pact to reverse the Moscow-based takeover of Crimea. "We gave up nuclear weapons," (inherited from the Soviet Union) because of the 1991 agreement that The United States, Great Britain and Russia would "assure Ukraine's territorial integrity" but Rizanenko told his government today, "now there's a strong sentiment in Ukraine that we made a big mistake."