Charles Hugh Smith On The Phony "Economic Recovery," Stress and "Losing It"

Everyday Stress Can Shut Down the Brain's Chief Command Center. Neural circuits responsible for conscious self-control are highly vulnerable to even mild stress. When they shut down, primal impulses go unchecked and mental paralysis sets in. (Scientific American; subscription required, hopefully your local library has a copy) This helps explain the natural "fight or flight" response we feel when suddenly confronted with danger or potential danger, but more importantly it illuminates how we lose the ability to analyze circumstances rationally when we are "stressed out." Once our rational analytic abilities are shut down, we are prone to making a series of ill-informed and rash decisions. This has the potential to set up a destructive positive feedback loop: the more stressed out we become, the lower the quality of our decision-making, which then generates poor results that then stress us out even more, further degrading our already-impaired rational processes. This feedback loop quickly leads to "losing it completely." Doesn't this describe our increasingly dysfunctional and disconnected-from-reality legislative process?

Following Greek Bond Humiliation, Europe's Biggest Equity Investor Is Slashing Its European Exposure

Remember this from September 2010? "Norway, which has amassed the world’s second-biggest sovereign wealth fund, says Greece won’t default on its debts. “The point is, do you expect these guys to default?” said Harvinder Sian, senior fixed-income strategist at Royal Bank of Scotland Group Plc, in an interview. “Norway has taken the view that they will not. The Greek holdings are particularly interesting because the consensus in the market is that they will at some point restructure or default.” Norway says its long-term perspective will protect it from losses. “One could say we are investing for infinity."... Uhm, Big Oops. Needless to say, this stupidity was roundly mocked by Zero Hedge at the time. Yet we can only applaud the fact that unlike other European investors (read primarily Italian banks) which are merely sinking ever deeper into the quicksand by dodecatupling down on pyramid scheme assets, the Norwegian SWF finally "plans to sharply reduce its European exposure while raising investments in emerging markets and Asia-Pacific, the finance ministry said on Friday." While we ridiculed their stupidity in 2010, we applaud Norway's prudence in this case, as unlike other insolvent European entities, the crude-rich country is not falling for the latest round of central planning bullshit, and is finally acting as a fiduciary agent. "We're reducing our European exposure because we see that economic development in the global economy is changing and this should also be reflected in our investment strategy," Johnsen said. "Most likely we'll have to sell some assets in Europe." Remember: in game theory he who defects first, defects best. We expect to see many more funds openly declaring they will commence dumping European assets, all of which are buoyed 100% artificially by the ECB, and US taxpayers, shortly.

Frontrunning: March 30

  • Greek PM does not rule out new bailout package (Reuters)
  • Euro zone agrees temporary boost to rescue capacity (Reuters)
  • Madrid Commits to Reforms Despite Strike (FT)
  • China PBOC: To Keep Reasonable Social Financing, Prudent Monetary Policy In 2012 (WSJ)
  • Germany Launches Strategy to Counter ECB Largesse (Telegraph)
  • Iran Sanctions Fuel 'Junk for Oil' Barter With China, India (Bloomberg)
  • BRICS Nations Threaten IMF Funding (FT)
  • Bernanke Optimistic on Long-Term Economic Growth (AP)
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Much of the fiscal and monetary insanity that has come out of the EU over the last two years can be summated by one of my central global theses: politics determine Europe's policies, not economics. And Europe now appears to be shifting towards a more leftist/ anti-austerity measure political environment. If this shift is cemented in the coming Greek, French, and Irish elections/ referendums, then things could get ugly in the Eurozone VERY quickly.


Austerity - Mais, Non. Spending - Nein. PSI - Tal Vez?

Austerity hasn’t worked for countries.  So far the austerity path has made situations worse, rather than better.  Without stimulus, economies have seen their problems compound.  So now virtually everyone is against the idea that austerity is helpful. That takes us back to spending.   Maybe it’s just me, but spending is what got us into this mess in the first place.  If spending worked so well and was so easy we wouldn’t have a sovereign debt crisis in the first place.  Virtually every country was spending, yet deficits grew and economies shrank.  Why is there any faith that spending now will work?  Are we so good at targeting specific things that will really, truly, work?  Not a chance.  Spending will ensure debt grows just as fast, make the problem even bigger in the end, but will make people slightly happier in the near term. So if austerity doesn’t work, and spending hasn’t worked, what will? PSI, or Default, or Restructuring.

Some Childish Humor Courtesy Of Moody's

Moody's may never downgrade the US or France for that matter, but when it comes to its stable assessment of Dong Energy, its rock solid analysis truly stands out.

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Because of its interventions and bond purchases, ¼ of the ECB’s balance sheet is now PIIGS debt AKA totally worthless junk. And the ECB claims it isn’t going to take any losses on these holdings either. No, instead it’s going to roll the losses back onto the shoulders of the individual national Central Banks. How is that going to work out? The ECB steps in to save the day and stop the bond market from imploding… but the minute it’s clear that losses are coming, it’s going to roll its holdings back onto the specific sovereigns’ balance sheets?

Guest Post: Welcome To The United States Of Orwell, Part 3: We Had To Destroy Democracy In Order To Save It

The dominant narrative of our so-called 'National Security State' seems to be: we were surprised by a treacherous, shadowy, sinister enemy and we have to set aside the niceties of democracy and civil liberties to combat this new and terrible foe. It's actually very simple: whatever the National Security State does anywhere on Earth is legal. Whatever action you take to protect your civil liberties is illegal. The State holds all the hammers, and you know what happens to raised nails.

Obama Promises Russia To Be More "Flexible" After Election

In today's open mic farce that has made the president a target of a fresh republican onslaught, we have Obama telling Russian presidential pawn Dmitry Medvedev that "this is his last presidential election", and that he will have "more flexibility after the election." One can only assume that Obama is referring to the aggressive NATO expansion which has angered Russia substantially as noted previously, and even led to Russia putting radar stations on combat alert. It could be this or it could be anything, including US posturing vis-a-vis Syria assuming the stance a huanitariam, if completely impotent, do-gooder globocop, or for that matter any other foreign policy fiasco in which Russia now have the upper hand by default. Naturally, one wonders why Obama would be pandering to Russia (well, aside for the country's premier export position when it comes to nat gas and crude of course) in the first place. Or more importantly, as the GOP has now figured out, why does the president need to be more flexible after the election to begin with, and to what other special interest will Obama be far more responsive than to his mere electorate. Either way, nothing but more theater as central planning continues on its merry way to terminal dislocation with reality.


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Taking Bernanke’s statement to indicate that QE is coming in April is wishful thinking at best. Bernanke’s actual words imply, if anything, that the Fed may have failed to fix the US economy. This is more of the Fed playing damage control because the reality is that Bernanke is well aware of this:  by the Fed’s own data we’re clearly in a structural Depression, NOT a cyclical recession.

Guest Post: How To Think Like A Mad Man, Find Your Edge & Risk Little For Lots

Eccentric People

The enigma that is eccentricity can be unravelled by grasping of this single statement; that which you perceive is both a matter of the object of your perception (in this case; the eccentric person) and your apparatus of perception. Eccentricity, then, is as much a quirk of the popular mind as it is of a particular person. So with the assumption that you seek creativeness and intrigue — here’s how to think eccentrically, find your edge and risk little for lots.