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Possible End Game: The United States Has Created a Climate That Could Easily Be Transformed Into a War

April 25, 2016

Possible End Game: The United States Has Created a Climate That Could Easily Be Transformed Into a War

grand-chessboard

Most readers have been watching, as the U.S. and Russia seem to be positioning themselves along Cold War lines. The posturing is not confined to maneuvering military assets; it also runs along economic lines, in which most warfare is at least based if not a major or the sole impetus. Each power has sought to cement its claims/presence in areas bordering the sphere of influence of, or the actual territory of the other power. Such posturing can be dangerous and lead to an incident that escalates into the uncontrollable.

Recently the news media has been abuzz with the Russian fighter aircraft buzzing the U.S. in the face: first the incident with the two fighters coming within 30 feet of an American naval vessel, and another separate incident involving aerial theatrics around a U.S. reconnaissance aircraft (a Boeing RC-135 intelligence-gathering spy plane). The U.S. responded in kind on April 20 by allowing a guided missile destroyer, the U.S.S. Cook to encroach upon Russian borders while conducting maneuvers near Poland. The U.S. claimed that Russian aircraft were doing fly-by’s to intimidate the destroyer.

Unlike the puissant response by John Kerry, feigning anger and doing nothing with the Russian aircraft incidences of the past two weeks, Russia is not playing with the destroyer incident. The Russian ambassador to NATO, Alexander Grushko is reported by Reuters to have made the following statement:

“This is about attempts to exercise military pressure on Russia. We will take all necessary measures, precautions, to compensate for these attempts to use military force.”

This statement by Grushko was not limited to the incident with the Cook. NATO Secretary General Jens Stoltenberg has affirmed in the past week the intention of NATO to deploy command and control centers in Bulgaria, Estonia, Latvia, Lithuania, Poland, and Romania.

…click on the above link to read the rest of the article…

While America Debates the $20 Bill, China Moves Closer to Gold

April 25, 2016

While America Debates the $20 Bill, China Moves Closer to Gold

On Wednesday, Jack Lew announced that the US Treasury was following Ben Bernanke’s advice and keeping Alexander Hamilton on the $10, instead deciding to bring Harriett Tubman to the $20. While Lew’s news left America distracted in debate over whose portrait should grace the Federal Reserve’s most popular bank note, Zerohedge was highlighting how China was taking important steps to distance themselves from the dollar.

Earlier this week, Reuters reported China taking the bold step of launching a yuan-denominated gold price. Reuters noted:

As the world’s top producer, importer and consumer of gold, China has baulked at having to depend on a dollar price in international transactions, and believes its market weight should entitle it to set the price of gold.

The new benchmark may not be an immediate threat to London, but industry players say over time China could set the price of the metal, especially if the yuan become fully convertible.

During an interview with Bloomberg TV Hao Hong, managing director and chief China strategist with Bocom International, one of China’s largest banks, put it more bluntly:

By trading physical gold in renminbi, China is slowly chipping away at the dominance of US dollars….The gold reserve on the China balance sheet has almost doubled since 2009. By holding gold, and moving away from a US-dollar centric system, we actually require less US dollars.

Of course the true measure of China’s gold holdings is still a closely guarded secret by the Chinese government. While the country has taken steps to increase transparency in its reserved reporting, which bolstered their successful campaign to have the yuan factored into the IMF’s Special Drawing Rights, James Rickards explains:

…click on the above link to read the rest of the article…

Why Are Bankrupt Oil Companies Still Pumping?

April 21, 2016

Why Are Bankrupt Oil Companies Still Pumping?

As oil prices have declined, the number of bankruptcies and distressed oil majors has quickly risen into the dozens. In fact, a recent Reuters analysis suggests little effect on production from when companies enter bankruptcy. Reuters cited Magnum Hunter as a primary example of this reality.

While Magnum Hunter filed for bankruptcy in December 2014, the firm has scrambled even in Chapter 11 to keep its oil flowing, resulting in O&G production rising by roughly one-third between mid-2014 and late 2015. The firm has used the protection bankruptcy courts to help stave off creditors while keeping the pumps flowing full tilt. Nearly all of Magnum Hunter’s 3000 wells are still producing crude, and that makes sense for several reasons.

First, daily costs for operating wells remain well below current spot prices. While drilling new wells is not economical, it is perfectly logical to keep exploiting existing wells. Fracked wells usually start to see a significant decline in production after about two years of operations. So eventually Magnum Hunter and other companies will see their production fall, but two years can be a very long time to pump.

Second, creditors want to extract maximum value from the company and the best way to do that in the current environment is to keep the oil flowing.

…click on the above link to read the rest of the article…

“Nuit Debout” – Have Protests in France Turned Into a Larger Movement?

April 14, 2016

“Nuit Debout” – Have Protests in France Turned Into a Larger Movement?

The French people have been protesting new labor laws for a couple of weeks, but what I find particular interesting is the potential for these gatherings to turn into a full fledged political movement.

We all know by now that the status quo doesn’t care if the peasants get out in the streets for a few days to blow off some steam after being raped and pillaged by politicians. What really worries them; however, is when people get together, start talking to each other and then form cohesive movements. With “Nuit Debout,” or “Up All Night,” this may be happening in France.

Reuters reported the following yesterday:

The “Nuit Debout” or “Up all Night” movement began on March 31 when a group of activists decided not to go home after a march against labor reform, said 35-year-old Simon, a theater worker and one of the volunteers who greets newcomers.

Crowds ranging from several hundred to a few thousand have gathered every evening since then for a spontaneous happening that is a mixture of street theater, party and ritual initiation for a new generation of activists.

“Nuit Debout is a problem for Hollande because it’s largely his 2012 voters who are taking to the street and saying ‘We were fooled. Never again’,” Socialist lawmaker Malek Boutih told Le Monde daily.

Sound familiar?

Hollande made a big play for the youth vote in his 2012 election campaign and is now considering whether to run again in 2017 despite record low approval ratings.

The all-night sit-ins spread to some 60 towns around the provinces at the weekend, worrying the government sufficiently for it to announce about 500 million euros in extra subsidies for young job seekers on Monday.

Protesters say the latest handouts to students and apprentices miss the point.

…click on the above link to read the rest of the article…

Deutsche Bank Admits It Also Rigged Gold Prices, Agrees To Expose Other Manipulators

April 14, 2016

Deutsche Bank Admits It Also Rigged Gold Prices, Agrees To Expose Other Manipulators

Well, that didn’t take long.

Earlier today when we reported the stunning news that DB has decided to “turn” against the precious metals manipulation cartel by first settling a long-running silver price fixing lawsuit which in addition to “valuable monetary consideration” said it would expose the other banks’ rigging having also “agreed to provide cooperation to plaintiffs, including the production of instant messages, and other electronic communications, as part of the settlement” we said “since this is just one of many lawsuits filed over the past two years in Manhattan federal court in which investors accused banks of conspiring to rig rates or prices in financial and commodities markets, we expect that now that DB has “turned” that much more curious information about precious metals rigging will emerge, and will confirm what the “bugs” had said all along: that the precious metals market has been rigged all along.”

This was confirmed moments ago when Reuters reported that Deutsche Bank has also reached a settlement in US litigation alleging the bank conspired to fix gold prices. In other words, hours after admitting it was rigging the silver market, it did the same for gold.

Some more headlines from Reuters:

Reaches settlement in U.S. litigation alleging it conspired to fix gold prices.
Plaintiffs’ lawyers, in filing, say Deutsche Bank has signed a settlement term sheet
Plaintiffs’ lawyers say are negotiating formal settlement agreement that would be presented for judge’s approval later
Plaintiffs’ lawyers say settlement contemplates a monetary payment by Deutsche Bank
Gold settlement follows similar accord involving alleged silver price-fixing that was disclosed on Wednesday

Most importantly, as the actual settlement reveals, Deutsche has agreed that in addition to once again providing “valuable monetary consideration” which will be paid into a settlement fund, that like in the silver settlement it will provide “cooperation in pursuing claims against the remaining Defendants.“

…click on the above link to read the rest of the article…

Deutsche Bank Confirms Silver Market Manipulation In Legal Settlement, Agrees To Expose Other Banks

April 14, 2016

Deutsche Bank Confirms Silver Market Manipulation In Legal Settlement, Agrees To Expose Other Banks

Back in July of 2014, we reported that in an attempt to obtain if not compensation, then at least confirmation of bank manipulation in the precious metals industry, a group of silver bullion banks including Deutsche Bank, Bank of Nova Scotia and HSBC (later UBS was also added to the defendants) were accused of manipulating prices in the multi-billion dollar market.

The lawsuit, which was originally filed in a New York district court by veteran litigator J. Scott Nicholson, a resident of Washington DC, alleged that the banks, which oversee the century-old silver fix manipulated the physical and COMEX futures market since January 2007. The lawsuit subsequently received class-action status. It was the first case to target the silver fix.

Many expected that this case would never go anywhere and that the defendant banks would stonewall indefinitely: after all their legal budgets were far greater than the plaintiffs.

Which is why we were surprised to read overnight that not only has this lawsuit against precious metals manipulation not been swept away, but that the lead defendant, troulbed German bank Deutsche Bank agreed to settle the litigation over allegations it illegally conspired with Bank of Nova Scotia and HSBC Holdings Plc to fix silver prices at the expense of investors, Reuters reported citing a court filing by law firm Lowey.

Terms were not disclosed, but the accord will include a monetary payment by the German bank.

It goes without saying, that there would have been neither a settlement nor a payment if the banks had done nothing wrong.

…click on the above link to read the rest of the article…

Stunning Photos Of Huge Oil Supertanker Lines Forming “World’s Biggest Traffic Jam”

April 13, 2016

Stunning Photos Of Huge Oil Supertanker Lines Forming “World’s Biggest Traffic Jam”

“It may be the world’s biggest traffic jam.”
– Reuters

Last week we revealed what we thought was a “shocking photo” of nearly 30 oil tankers caught in a traffic jam off the Iraqi coast, an indication of just how much excess oil is currently parked offshore.

To be sure, the record offshore storage is a problem because with the front-end contango collapsing, DB warned just several weeks ago when comparing the current level of floating storage (157.3 million barrels) versus that in early February (126.6 million barrels), that there may be an additional 31 million barrels of inventory to be drawn down between now and the next inventory trough over the next several months. It calculated that “depending on the duration of drawdown (three months or six months) this could mean anywhere from 165-330 kb/d of incremental supply.”

But the photo above, meant to do DB’s thesis justice, was nothing in comparisons to what Reuters would reveal today.

Because as ports struggle to cope with a global oil glut, huge queues of supertankers have formed in some of the world’s busiest sea lanes, where some 200 million barrels of crude lies waiting to be loaded or delivered, Reuters reports today.

The vessels, filled with oil worth around $7.5 billion at current market prices, would stretch for almost 40 km (25 miles) if formed up in one straight line.

Something not quite so theoretical, and yet almost identical taking place right now, is shown in the photo below, which shows VLCC supertankers traveling between India and Southeast Asia, courtesy of Reuters.

…click on the above link to read the rest of the article…

Federal Regulators Accuse Banks Of Not Having Credible Crisis Plans, Would Need Another Bailout

April 13, 2016

Federal Regulators Accuse Banks Of Not Having Credible Crisis Plans, Would Need Another Bailout

Perhaps the biggest farce to result from the Dodd-Frank legislation designed to “rein in” banks was the ridiculous notion of “living wills” – a concept that makes zero sense in an environment where the failure of even one bank assures a systemic crisis and could – as the Lehman financial crisis showed – lead to the collapse of all other interlinked financial institutions.

Which is why we were not surprised to read this morning that federal regulators announced that five out of eight of the biggest U.S. banks do not have credible plans for winding down operations during a crisis without the help of public money.

Which is precisely the point: now that the precedent has been set and banks know they can rely on the generosity of taxpayers (with the blessing of legislators) why should they even bother planning; they know very well that if just one bank fails, all would face collapse, and the only recourse would be trillions more in taxpayer aid.

As Reuters writes, the “living wills” that the Federal Reserve and Federal Deposit Insurance Corporation jointly agreed were not credible came from Bank of America, Bank of New York Mellon, J.P. Morgan Chase, State Street, Wells Fargo. What is more impressive is that the Fed and FDIC found any living will to be credible.

Also amusing: it was only the FDIC which alone determined that the plan submitted by Goldman Sachs was not credible while the Goldman-dominated Fed gave its blessing; alternatively, the Federal Reserve Board on its own found that the plan of Morgan Stanley – Goldman’s arch rival in investment banking – not credible. Citigroup’s living will did pass, but the regulators noted it had “shortcomings.”

…click on the above link to read the rest of the article…

Schauble Throws Up All Over Mario Draghi: “The ECB Is Causing Extraordinary Problems”

April 12, 2016

Schauble Throws Up All Over Mario Draghi: “The ECB Is Causing Extraordinary Problems”

Following this weekend’s snafu in which Spiegel said that Germany is considering suing the ECB if it launched QE, Mario Draghi reportedly made attempts to “mollify” Germany with promises that this won’t happen (it will) and that it was willing to meet – literally – with the German finance minister to appease any concerns he may have. Moments ago, Reuters reports that the meeting appears to have gone… badly.

SCHAEUBLE SAYS ECB CAUSING ‘EXTRAORDINARY PROBLEMS’: REUTERS

Oops.He added that he doesn’t see the ECB seriously discussing helicopter money (it is) adding that ECB policy does not help trust in Europe integration, and conluded with the following condemnation of everything that has been tried, and failed, so far:

SCHAEUBLE: FISCAL, MONETARY POLICY LARGELY EXHAUSTED GLOBALLY

Meanwhile, the IMF says that only more monetary and fiscal policy can save the world from fiscal stagnation.

While it is unclear what happens next, it is very much clear that never during the New Normal has there been so much confusion on how to proceed and what the next steps should be.

Dutch Referendum May Have Unleashed European “Continental Crisis”

April 6, 2016

Dutch Referendum May Have Unleashed European “Continental Crisis”

In early January, European Commission President Jean-Claude Juncker warned that a Dutch advisory referendum, which took place today, on the bloc’s association agreement with Ukraine could lead to a “continental crisis” if voters reject the treaty.

In an interview in January for Dutch daily NRC Handelsblad, Juncker said Russia would “pluck the fruits” of a vote in the Netherlands against deepened ties between the European Union and Ukraine. “I want the Dutch to understand that the importance of this question goes beyond the Netherlands,” NRC quoted Juncker as saying. “I don’t believe the Dutch will say no, because it would open the door to a big continental crisis.”

The reason why Jean-Claude “when it gets serious, you have to lie” Juncker was so nervous, is that the vote, launched by anti-EU forces, is seen as test of the strength of Eurosceptics on the continent just three months before Britain votes on whether to stay in the European Union.

Fast forward to today when the vote just took place, and based on initial exit polls, Juncker was dead wrong. According to Reuters, in a rebuke for the government, which campaigned in favor of the EU-Ukraine association agreement, roughly 64 percent voted “No” and 36 percent said “Yes”.

As a reminder, the political, trade and defense treaty is already provisionally in place but has to be ratified by all 28 European Union member states for every part of it to have full legal force. The Netherlands is the only country that has not done so.

And, it appears, that in a big hit for those who had plotted the Ukraine ascension, the Dutch may have just frozen Ukraine dead in its tracks.

Eurosceptics had presented the referendum as a rare opportunity for their countrymen to cast a vote against the EU and the way it is run – including its open immigration policies.

…click on the above link to read the rest of the article…

A Quarter Century Of Monetary Voodoo

April 4, 2016

A Quarter Century Of Monetary Voodoo

A Witless Tool of the Deep State?

Finance or politics? We don’t know which is jollier. The Republican presidential primary and Fed monetary policies seem to compete for headlines. Which can be most absurd? Which can be most outrageous? Which can get more page views?

Politics, led by Donald J. Trump, was clearly in the lead… until Wednesday. Then, the money world, with Janet L. Yellen wearing the yellow jersey, spurted ahead in the Hilarity Run.

“Cautious Yellen drives global stocks near 2016 peak,” reported a Reuters headline. The story itself was a remarkable tribute to the whole jackass money system.

At first glance, “cautious Yellen” would seem incongruous with stocks rising to “near 2016 peak.” Caution normally means playing it cool, not encouraging speculation.

But it wasn’t so much what Ms. Yellen said that sent stocks racing ahead. It was what she hasn’t done. And she hasn’t done exactly what we thought she wouldn’t do. That is, so far this year, she has not taken a single step in the direction of a “normal” monetary policy; our guess is that she never will.

Why not? Is it because she is a witless tool of Deep State cronies? Is it because her economic theory is silly, superficial, and simpleminded? Or is it because she and her predecessor, Ben Bernanke, have done so much damage to the normal world that there is nothing to go back to?

A coo-coo for the stock market…

“Cautious Yellen drives global stocks near 2016 peak,” reported a Reuters headline. The story itself was a remarkable tribute to the whole jackass money system.

At first glance, “cautious Yellen” would seem incongruous with stocks rising to “near 2016 peak.” Caution normally means playing it cool, not encouraging speculation.

…click on the above link to read the rest of the article…

“Production Freeze” Narrative Collapses In Two Days: Russian Oil Output Hits New Post-Soviet Record

April 2, 2016

“Production Freeze” Narrative Collapses In Two Days: Russian Oil Output Hits New Post-Soviet Record

How quickly the oil production freeze narrative has fallen apart.

Source: stockboardasset

Indeed, it’s been a tough two days for oil bulls holding on to hope that excess oil production will normalize in the near term and that the world’s oil suppliers would somehow manage to curb oil production in the aftermath of the OPEC’s November 2014 cartel collapse.

First it was yesterday’s Bloomberg story which cited the Saudi Deputy Crown Prince Mohammed bin Salman as saying that the Saudis would not participate in an oil production freeze unless everyone including Iran which has made it joined “If all countries including Iran, Russia, Venezuela, OPEC countries and all main producers decide to freeze production, we will be among them.”

The second one came overnight.

Recall that one month ago, just as Russia and Saudi Arabia were finalizing their “agreement” to freeze oil production which was the major catalyst for the oil surge from its 13 year lows hit in early February, we got the surprising news that far from throttling production, Russian crude and condensate production just set new post-Soviet daily record of 10.92 million barrels.

Well, overnight we got the latest update of Russian oil output, and according to Bloomberg it just set a new post-Soviet high in March “as the success of a proposed crude production freeze between OPEC members and other major producers appeared to be in doubt.”

Bloomberg reports that Russian production of crude and a light oil called condensate climbed 2.1 percent in March from a year earlier to 10.912 million barrels a day, according to the Energy Ministry’s CDU-TEK unit. That narrowly beat the previous high of 10.910 million barrels in January.

…click on the above link to read the rest of the article…

The Trade Wars Begin: China Retaliates To Steel Tariffs With Global Anti-Dumping Duties

April 1, 2016

The Trade Wars Begin: China Retaliates To Steel Tariffs With Global Anti-Dumping Duties

When looking back in history, December 23, 2015 may be the date the global trade wars officially began. On that day, as we reported at the time, the U.S. imposed a 256% tariff on Chinese steel imports.

It did so perhaps with good reason: with its local end markets mothballed, China was desperate to dump as much excess capacity as possible offshore with shipments of steel, oil products and aluminum all reaching new highs according to trade data from the General Administration of Customs, and the result was a dramatic drop in US prices.

On the other hand, with Chinese mills, smelters and refiners all producing far more than can be purchased domestically amid slowing domestic demand, as well as the government’s anti-pollution crackdown, China’s decision to ship the excess overseas was also understandable.

As Bloomberg wrote at the time, “the flood of Chinese supplies is roiling manufacturers around the world and exacerbating trade frictions. The steel market is being overwhelmed with metal from China’s government-owned and state-supported producers, a collection of industry associations have said. The nine groups, including Eurofer and the American Iron and Steel Institute, said there is almost 700 million tons of excess capacity around the world, with the Asian nation contributing as much as 425 million tons.”

2016 was expected to get even worse: Colin Hamilton, head of commodities research, said the the price of hot-rolled coil, used in everything from fridges to freight containers, may decline about 13 percent next year. China’s steel exports, which have ballooned to more than 100 million metric tons this year, may stay at those levels for the rest of the decade as infrastructure and construction demand continues to falter.

…click on the above link to read the rest of the article…

Dozens Arrested, Tear Gas Deployed As French Labor Reform Protests Turn Violent

March 31, 2016

Dozens Arrested, Tear Gas Deployed As French Labor Reform Protests Turn Violent

In a stark reminder of the entrenched problems facing the French economy, today police used tear gas to disperse thousands of angry activists across the nation, who are protesting new labor reforms. French rail and air traffic suffered serious disruption on Thursday after transport staff stopped work and took to the streets along with high-school students to challenge plans for a pro-business loosening of the country’s protective labor laws.

In Paris the protest started in Place de la Nation, the same place where previous anti-labor rallies took place. The demonstrators threw bottles with flammable liquid and stones at police officers. Video footage relayed on social media showed some hooded youths jumping on cars and taunting police. CGT chief Martinez played down reports of a dozen arrests, saying there was often a bit of trouble caused by “some people who have nothing to do with the issue”.

“Everyone hates the police,” the protesters were
shouting. At least two protesters have been beaten by police officers in
the city of Lille, according to photo reporter Julien Pitinome, who tweeted a picture of the incident.

In the city of Nantes demonstrators tried to storm the town hall and smash windows.

…click on the above link to read the rest of the article…

Diversify Into Gold As An “Insurance Policy” Against Geopolitical Risk

March 26, 2016

Diversify Into Gold As An “Insurance Policy” Against Geopolitical Risk

“Investors could be forgiven for heading for the hills given the tumultuous start to 2016,” so writes Andrew Oxlade in The Telegraph today who advises investors to diversify into gold as an “insurance policy”:

We have long been advocates of exposure to gold as an insurance policy. This was demonstrated once again in the recent sell-off when the price of bullion surged from $1,061 (£762) an ounce on New Year’s Day to $1,246 (£895) by early February. In times of fear, gold is in demand. The price also rises when inflation becomes a danger.

Deflation remains the bigger threat for now, which is partly why gold has been a poor investment in recent years, but the money printing excesses of central banks could yet unleash inflation. In the meantime, the gold price offers some protection during repeat episodes of buckling confidence.

Gold in GBP – 5 Years

The Telegraph, like GoldCore, had warned of such turbulence at the start of the year. John Ficenec, editor of the Questor column, warned of the real risk of volatility and falls in stock markets.

We believe that the tragic events in Brussels show the continued very high degree of geopolitical risk and the need for an insurance policy.

Further attacks are quite possible, including in the U.S., and this should support gold.

Geopolitical risk is frequently underestimated and it would be unwise to discount the risk of a September 11 style attack in the coming months. Intelligence agencies and ISIS themselves are warning of such attacks and investors need to be diversified to hedge this growing risk.

It gives us no pleasure to be the bearer of this bad news but it is important that the reality of the real risks of today are considered in order to protect and grow wealth in these uncertain times.

…click on the above link to read the rest of the article…

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