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Since about 2001, several sectors of the economy have become increasingly inefficient, in the sense that it takes more resources to produce a given output, such as 1000 barrels of oil. This growing inefficiency explains both slowing world economic growth and the sharp recent drop in prices of many commodities, including oil. The mechanism at work is what I would call the crowding out effect. As more resources are required for the increasingly inefficient sectors of the economy, fewer resources are available to the rest of the economy. As a result, wages stagnate or decline. Central banks find it necessary lower interest rates, to keep the economy going. What we seem to be seeing recently is a drop in price to what consumers can afford for some of these increasingly unaffordable sectors. Unless this situation can be turned around quickly, the whole system risks collapse.

As noted earlier, following the failed vote Greek banks are cratering, with many entering a bear market as of the last price update, such as Eurobank Ergasias -23%, Piraeus Bank -21%, National Bank of Greece down  18%, Alpha Bank 17% lower. While in the past this would have been enough to send European shares limit down and peripheral bonds bidless, algos have forgotten their programmed kneejerk reaction since Greece has been off the front page for so long. As a result, Europe is down but not nearly where it would have been had today's vote taken place a couple of years ago. Then again, with the USDJPY far more important than what Greece may or may not do, all that will take for the Santa rally to resume, if only in the US, is for "someone" to buy a few yards of Dollar-Yen, push the pair to 121, and all shall be well once more.

In what police called "a random act of 'I want something that person has and I am going to take it from them," a black teenager was shot and killed after attempting to rob a man of his $200 Air Jordans. After being unable to purchase the 'limited edition' shoes, 16-year-old Jawad "JJ" Jabar and 2 other Middletown, Ohio schoolmates, brandished a firearm at a man (of unknown color) who had just bought a pair. The man, who had a valid concealed carry permit, shot once and killed Jawad. Since the dead black teenager was not killed by a white policeman, we doubt there will be any protests, Al Sharpton commentary, or mainstream media blitz.

"I’ve seen enough of the world in my 68 years to know that wishing is not enough. We need to be doing. It’s not possible to solve all of the world’s problems right away. For most people, putting an end to world hunger, poverty, disease and the police state may seem too insurmountable a task to even tackle. But, there are practical steps each of us can take to hopefully get things moving in the right direction..."

Back in July it was all everyone could talk about: who shot down Malaysian Airlines flight MH-17 flying over east Ukraine? A hurriedly-prepared official report (by Western authorites) quickly put the blame on Russia, ignoring any suggestion the downing may have been the result of a Ukraine fighter jet, and said the catastrophe was the result of a Russian-made missile shot by Russian separatists. Then the story promptly disappeared. Russia, however, continued digging, and overnight, Russia’s Investigative Committee says it has uncovered evidence Ukraine was involved in the crash citing a military defector from the Ukraine.

The story of Ukraine's corzined gold just got far better, and far, far more bizarre and surreal. As Bloomberg reports, Ukraine opened a criminal probe after several gold bars at the central bank’s storage in the southern city of Odessa turned to be painted lead.  The latest gold fraud involved a central bank employee passing lead bars covered with golden paint to the storage unit, registering them as gold, the Vesti newspaper reported today, citing an unidentified person with knowledge of the matter in Odessa’s police department.  In other words, the central bank was actually conned into buying the gold-plated lead.

Just a week ago we detailed how China was preparing to bailout Russia's liquidity crisis via the 150 billion yuan swap line the two nations agreed in October. Today, as Bloomberg reports, we got confirmation as two Chinese ministers offered support for Russia. China will provide help if needed and is confident Russia can overcome its economic difficulties, Foreign Minister Wang Yi was cited as saying; and Commerce Minister Gao Hucheng said expanding a currency swap between the two nations and making increased use of yuan for bilateral trade would have the greatest impact in aiding Russia. The Global Times (mouthpiece for the Comunist Party) wrote in an editorial this weekend, "Russia is an irreplaceable strategic partner on the international stage." Isolated?

Despite the authorities' best efforts to keep everything orderly, we know how this global Game of Geopolitical Tetris ends: "Players lose a typical game of Tetris when they can no longer keep up with the increasing speed, and the Tetriminos stack up to the top of the playing field. This is commonly referred to as topping out."

"I’m tired of being outraged!"

Blind faith in policymakers remains a bad trade that’s still widely held. Pressure builds everywhere we look. Not as a consequence of the Fed’s ineptitude (which is a constant in the equation, not a variable), but through the blind faith markets continuing to place bets on the very low probability outcome – that everything will turn out well this time around. And so the pressure keeps rising. Managers are under pressure to perform and missing more targets, levering up on hope. Without further delay we present our slightly unconventional annual list. Instead of the usual what you should do, we prefer the more helpful (for us at least) what we probably wouldn’t do. Five fresh new contenders for what could become some very bad trades in the coming year.

• Citigroup is pleased: Obama signs $1.1 trillion government spending bill (Reuters)
• Oil holds below $60 as OPEC, Russia keep pumping (Reuters)
• 5 Things to watch at the December Fed Meeting (WSJ)
• Russia Tries Emergency Steps for 2nd Day to Stem Ruble Rout (BBG)
• Ruble crisis could shake Putin's grip on power (Reuters)
• Apple Curbs Russia Sales as McDonald’s Lifts Prices (BBG)
• Traders Betting Russia’s Next Move Will Be to Sell Gold (BBG)
• China Warms to a More Flexible Yuan (WSJ)

The rank economic cheerleading in the guise of “news” printed by the Wall Street Journal, Reuters and the rest of the financial press never ceases to amaze. But on the heels of Congress’ pathetic capitulation to Wall Street over the weekend you have to wonder if even the robo-writers who compose the headlines are on the take. How could anyone in the right mind label this weekend’s CRomnibus abomination “A Rare Bipartisan Success for Congress”? Apparently, that unaccountable plaudit was bestowed upon Washington by the WSJ solely because it avoided another government shutdown.

People are bombarded with sensation and that substitutes for thinking

• Oil slide hits European stocks, safe-haven assets sought (Reuters)
• IEA Cuts Global Oil Demand Forecast for 4th Time in Five Months (BBG)
• Cue constant pro-Abe propaganda out of Japan: Japan’s Secrecy Law Takes Effect as Abe Seeks Fair Vote Coverage (BBG)
• As if it has a choice: Japan’s GPIF Bets on Abenomics-Driven Recovery (WSJ)
• Heather Capital: How a $600 Million Hedge Fund Disappeared (WSJ)
• Senate Panel Votes to Authorize U.S. War on Islamic State (BBG)
• Japan’s 28 IPOs in 11 Days Give Abe a Lift as Startups Boom (BBG)
• U.S. authorities face new fallout from insider trading ruling (Reuters)
• Greek Stock Rout Means ASE Is 2014 Worst After Russia (BBG)

• Shale operaters Goodrich, Oasis Petroleum cut spending for 2015 as oil slides (Reuters)
• Greece to hold elections in January if president vote fails (Reuters)
• Norway’s Shock Rate Cut Drives Krone to Lowest Since 2009 (BBG)
• ‘Severe Downturn’ Threatening Norway, Central Bank Governor Says (BBG)
• Russia’s Fifth Rate Increase Fails to Halt Ruble Slide to Record (BBG)
• SNB Says Deflation Risks Increased as Franc Cap Maintained (BBG)
• China eases bank lending restrictions, PBOC targets 10 trillion yuan in loans for 2014 (Reuters)
• Mobius Says China’s Bull Market Is Just Getting Started (BBG)
• How Wal-Mart Made Its Crumbling China Business Look So Good for So Long (BBG)

• New Normal headlines: Global stocks up on hopes of China policy easing (Reuters)
• China inflation eases to five-year low (BBC)
• U.S. Lawmakers Agree on $1.1 Trillion Spending Bill (WSJ)
• U.S. Braced for Blowback as CIA Report Lays Bare Abuses (BBG)
• CIA tortured, misled, U.S. report finds, drawing calls for action (Reuters)
• CIA Made False Claims Torture Prevented Heathrow Attacks (BBG)
• Oil Resumes Drop as Iran Sees $40 If There’s OPEC Discord (BBG)
• OPEC Says 2015 Demand for Its Crude Will Be Weakest in 12 Years (BBG)
• Greek yield curve inverted as politics raise default fears (Reuters)