Portugal

The divergence theme is likely to strengthen in the week ahead.  

Neoliberal economics is blind to reality and serves to justify the destruction of the economic prospects of the Western World. It remains to be seen if Russia and China can develop a different economics or whether these rising superpowers will fall victim to the “junk economics” that has destroyed the West. With so many Chinese and Russian economists educated in the US tradition, the prospects of Russia and China might not be any better than ours. The entire world could go down the tubes together.

For those unaware, a fifth of Spain's GDP is voting on whether to secede from the country on Sunday. Here is everything you need to know about the Catalan black swan.

As far as we can tell, not only has democracy departed the Western world, but also compassion, empathy for others, morality, integrity, respect for truth, justice, faithfulness, and self-respect. Western civilization has become a hollow shell. There is nothing left but greed and coercion and the threat of coercion.In the Western World the aristocracy of wealth is being re-established.

Newly-upgraded Portugal unleashed a budget bombsell on Wednesday when it revised its 2014 deficit higher by some 60% after a failure to liquidate the predecessor to bailed out Banco Espirito Santo left taxpayers holding a €5 billion bag. 

"We’re not Bolivia for God’s sake"...

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Non-bombasitc overview of the investment climate.  No, the sky is not falling.  This is not the end of days.  

Ffor whatever reason starting in the last hour of trading and continuing until the close, the Shanghai Composite - after trading largely unchanged - went from red on the day to up 4.9% after hitting 5.9% minutes before the close - the biggest one day surge since March 2009 - and nearly erasing the 6.1% drop from the past two days in just about 60 minutes of trading, providing a solid hour of laughter to bystanders and observers in the process.

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Almost two weeks after we explained why any hope for a QQE boost by the BOJ is a myth, and that any increase in monetization will simply lead to a faster tapering and ultimately halt of Kuroda's bond purchases the market finally grasped this, when overnight the BOJ not only did not easy further as some - certainly the USDJPY - had expected, but kept its QE at the JPY80 trillion level and failed to offer any hints of further easing that many had hoped for, pushing the Nikkei down from up almost 400 point intraday to virtually unchanged and sending the USDJPY back under 120. JGBs also traded lower on concerns there may not be much more QE to frontrun.

The lack of leadership to tackle this clear and present danger to Europe's future is truly concerning. Both the migrants and the Europeans might be worse off as a result.

Moments ago, US equity futures tumbled to their lowest level in the overnight session, down 22 points or 1.1% to 1924, following both Europe (Eurostoxx 600 -1.8%, giving up more than half of yesterday's gains, led by the banking sector) and Japan (Nikkei -2.2%), and pretty much across the board as DM bonds are bid, EM assets are all weaker, oil and commodities are lower in what is shaping up to be another EM driven "risk off" day. Only this time one can't blame the usual scapegoat China whose market is shut for the long weekend.

• Markets on edge as policymakers flex muscles (Reuters)
• European shares recover from rough ride (Reuters)
• For Stock Markets, the Moment When Humans Matter (WSJ)
• Puerto Rico's PREPA, bondholders have framework for deal (Reuters)
• Hundreds of migrants protest at Budapest station, want to go to Germany (Reuters)
• New Whale Seen Moving Tokyo Markets (BBG)

It’s been noticed more than a few times that there aren’t many substantive differences between the Republicans and Democrats. What they have in common - at least the mainstream varieties - is a desire to use the state to shape society in whatever way they see fit. As Andrew Napolitano put it, "We have migrated from a two-party system into a one-party system, the big-government party. There’s a democratic wing that likes taxes and wealth transfers and assaults on commercial liberties and there’s a republican wing that likes war and deficits and assaults uncivil liberties." And both parties love prohibition, just of different things.