Germany

Germany is rapidly descending into chaos on the heels of a wave of attacks allegedly perpetrated by refugees in Cologne on New Year's Eve. A PEGIDA protest had to be broken up by water cannon-wielding riot police on Saturday and in an eerie twist of fate, the seven decade ban on publication of "Mein Kampf" expired this month.

In principle, the BRRD, or “bail-in directive” as it is also known, is quite a good idea. The fact that lending money to fractionally reserved banks or even merely depositing it with them, involves risks needed to be firmly reestablished. One simply cannot expect that banks and their creditors will be bailed out by taxpayers at every opportunity. Besides, the admission that there are risks in banking that have hitherto been glossed over or have even been lied about was long overdue. However, Europe’s governments are now likely to find out that the current monetary system with its fractionally reserved banks is actually incompatible with this admission, so to speak.

It was an ominous beginning to what is poised to be a most tumultuous year. Market participants are quickly coming to appreciate that China does in fact matter. Few understand why. Most – from billionaires to fund managers to retail investors – will “Do Nothing.” This has worked just fine in the past – repeatedly. Not understanding and not doing anything will be detriments going forward.

"I am not in the habit of replying to silly comments on Poland made by foreign politicians. Such words, said by a German politician, cause the worst of connotations among Poles. Also in me. I'm a grandson of a Polish officer, who during World War II fought in the underground National Army with 'German supervision.' I came to a sad conclusion that it is easier for you to talk about fictitious threats to media freedom in other countries than to condemn censorship in your homeland." - Polish justice minister Zibgniew Ziobro

Central Banks have employed virtually all of their ammunition including policies that would have been considered "nuclear" in 2008. And the debt bubble is $20 trillion larger than it was in 2008!

Once, there was a time when Hitler, Stalin, Mussolini and Tojo ruled almost all of Eurasia. And another time when a monolithic Sino-Soviet Communist bloc ruled from the Elbe to the Pacific. As those times are long gone, is it not time for an exhaustive review of the alliances we have entered into and the war guarantees we have issued, to fight for nations and interests other than our own?

Reports now suggest the string of sex assaults allegedly perpetrated by asylum seekers on New Year's Eve wasn't confined to Germany as women in Switzerland, Austria, and Finland say they experienced similar attacks to those which occurred in Cologne. Germany now says it's prepared to deport those responsible, while little by little, Angela Merkel's rheotric is shifting.

• U.S. jobs market seen fairly healthy despite slowing economy (Reuters)
• China State Funds Said to Buy More Shares After Market Rout (BBG)
• Global Stocks Gain Some Respite (WSJ)
• U.S. Jobs Data Take on Added Importance With Markets in Turmoil (BBG)
• GOP Health Plans Are Works in Progress (WSJ)
• For economy czar of crisis-hit Venezuela, inflation 'does not exist' (Reuters)

The half-life of the latest "market supporting" intervention by the Chinese government: just about 12 hours.

While previously there was some ambiguity with regard to who actually perpetrated the attacks which allegedly unfolded in Cologne on New Year's Eve, authorities are now sure that "most" of those involved were "freshly traveled asylum seekers." From Die Welt: "Primarily it was the most Arab perpetrators to sexual offenses or, to put it from their point of view to their sexual amusement. A group of men circling a female victim, closes it and takes on the woman."

Fico said Thursday his government sees what he calls a "clear link" between the waves of refugees and the Paris attacks and the sexual assaults and robberies during the New Year's Eve festivities in Germany. He says: "We don't want what happened in Germany to happen here."  Fico says "the idea of multicultural Europe has failed" and that "the migrants cannot be integrated, it's simply impossible."

One of the (many) fascinating things about this latest global financial crisis is that there’s no single catalyst. Unlike 2008 when the carnage could be traced back to US subprime housing, or 2000 when tech stocks crashed and pulled down everything else, this time around a whole bunch of seemingly-unrelated things are unraveling all at once.

Once China set the Yuan fixing some 0.5% lower, the biggest drop since the August devaluation, all hell broke loose and unleashed a global selling panic after China's stock market was promptly shut down less than 30 minutes into trading, then European shares dropped the most in more than 4 months as Asian equities plunges, as did US stock futures, the dollar weakened against the euro and the yen; crude plunged to fresh 12 year lows. Gold rose.

"These people that we welcomed just three months ago with teddy bears and water bottles ... started shooting at the cathedral dome and started shooting at police. Well seasoned police officers then confessed to me that they never saw something like this in their entire lives."