In 2015 Merkel & Gabriel crushed the Greek Spring together, while practising socialism for bankers. Are they surprised now with the results?
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Radical Appeal for More EU Stupidity
Radical Appeal for More EU Stupidity
The rise of far-right and far-left parties across Europe is directly related to calls for “more Europe”.
Yet, French president Emmanuel Macron makes a Radical Appeal for a More Powerful EU.
Bold Actions
Macron seeks “bold” actions. He wants an EU “military intervention force”, a common budget, carbon taxes, national conventions to discuss the future of Europe, trade prosecutors to enforce countries to stick with the rules, and a Franco-German cooperation treaty,
Mercy!
I cannot think of a more destabilizing thing than a common military force that will undoubtedly be used to wage wars. Ukraine comes to mind.
Macron proposes taxing US tech companies by value created, rather than profits. Now how the hell is that supposed to work? Who gets to decide “value created”.
Franco-German Cooperation Treaty
Really?! And not include the rest of the EU?
How inclusive!
Ultimate Irony
The ultimate irony in Macron’s “Radical Appeal” is that Brexit, the rise of AfD, Marine Le Pen, and the rise of Beppe Grillo all happened because nannycrats insist on “more Europe” against the direct wishes of a large and growing percentage of the population.
I exit with this Tweet:
I do not believe Yanis Varoufakis is referring to Greece per se. Rather, Varoufakis refers to the general policy of migration, more Europe, etc.
Germany does not give a damn about Greece.
…click on the above link to read the rest of the article…
Catalonia Police Reject Madrid Orders: Barring Invasion, the Vote Will Take Place
Catalonia Police Reject Madrid Orders: Barring Invasion, the Vote Will Take Place
Barring a mass invasion by Spanish government troops, it appears the vote in Catalonia will take place.
Given the importance of the story, Western media is amazingly silent. Stories are few and far between.
We have not even see Tweet 1 from President Trump. Let’s take a look at the latest news and Tweets that I can find.
US News reports Catalonia Refuses to Give Police Over to Spain
Catalonia’s top security official says the regional government is refusing to hand over control of a regional police force to Spanish central authorities who are trying to stop a referendum on independence.
The announcement by the Catalan interior chief Joaquim Forn followed a move by Spain’s Interior Ministry to take over coordinating all policing efforts to stop the Oct. 1 Catalan independence vote that the Spanish government considers illegal.
The measure would mean that Madrid would send direct orders to the regional Mossos d’Esquadra police, who have been criticized for not cracking down hard enough on preparations for the vote.
Forn said the chief of the Mossos d’Esquadra had expressed his opposition to the measure during a meeting Saturday with the top state prosecutor in Catalonia and chiefs of two other national police forces, the National Police and the Civil Guard.
Forn says “we denounce the attempt by the state to intervene in the police forces of Catalonia.”
Bloomberg reports Spain Rebuffed in Boosting Control Over Catalonia’s Police.
Police in Spain’s rebel region of Catalonia rejected giving more control to the central government in defiance of authorities in Madrid who are trying to suppress an independence referendum on Oct. 1.
…click on the above link to read the rest of the article…
Defiant Catalans Block Spain’s Military Boats From Landing; Spain Seizes “.CAT” Domain
Defiant Catalans Block Spain’s Military Boats From Landing; Spain Seizes “.CAT” Domain
Spain’s plan to send boatloads of military police to Catalonia to prevent its independence referendum have backfired with dockers in two ports staging a boycott and a third refusing access.
The Express writes Police boats Blocked by Catalan ports as unrest threatens to Rip Spain Apart.
More than 4,000 members of Spain’s Guardia Civil are being dispatched to the troubled region amid concerns over divided loyalties in the autonomous community’s own police force, the Mossos d’ Esquadra.
Spanish authorities wanted to house the Guardia Civil officers on four cruise ships – two in Barcelona, one in Tarragona and another in Palamos.
But as thousands took to the streets to protest against the detention of Catalan officials, local dock workers joined the backlash.
The Assembly of Stevedores of the Port of Barcelona announced that workers would not provide any services to boats carrying security forces, a decision it said was taken “in defence of civil rights”.
Colleagues in Tarragona quickly followed suit and the Catalan government then denied permission to dock in Palamos – which, unlike Barcelona and Tarragona, falls under regional rather than national control.
More than 40,000 people have gathered in Barcelona to protest over the arrests and the intervention of the Spanish government in the Catalan independence vote.
Many of the angry protesters have been waving Catalonia’s red and yellow flag while chanting “We will vote” and “Hello Democracy!”
In a television address, Catalan’s President Carles Puigdemont said: “The Spanish state has by all rights intervened in Catalonia’s government and has established emergency rule.
“We condemn and reject the anti-democratic and totalitarian actions of the Spanish state.”
…click on the above link to read the rest of the article…
Stock Market “Crash” Unlikely: It’s the Debt, Stupid
Stock Market “Crash” Unlikely: It’s the Debt, Stupid
Many people have been predicting another stock market “crash”. I have not been in that camp for reasons I will explain below.
Yet, I believe the stock market is at least 50% overvalued, and a 40% to 60% “net” decline is coming.
My view is the decline will be slow and miserably painful for all involved, but there will not be a “crash” defined as a 35% plunge or greater in a single year.
To understand my view, we first need to discuss corporate debt.
It’s the Debt Stupid!
Yesterday, Bloomberg author Sho Chandra wrote Corporate America Has Amassed a Record Amount of Cash.
Corporate America’s cash reached a record of almost $2.3 trillion in Q2, up nearly 60% since mid-2009: Fed data https://www.bloomberg.com/news/articles/2017-09-21/corporate-america-has-amassed-a-record-amount-of-cash …
Corporate America Has Amassed a Record Amount of Cash
Corporate America has never been in better shape to put its cash hoard to use on everything from investment to acquisitions, share buybacks and dividends. Or just hold on to it.
bloomberg.com
The idea that “Corporate America has never been in better shape to put its cash hoard to use on everything from investment to acquisitions, share buybacks and dividends. Or just hold on to it,” is preposterous.
I “politely” replied to Lisa Abramowicz …
Pure bullshit
How much debt is behind that alleged cash? https://twitter.com/lisaabramowicz1/status/910964395743866881 …
I do not know if I inspired her or not, but today she accurately Tweeted …
$2.3 trillion in cash but still deeply in debt https://www.bloomberg.com/gadfly/articles/2017-09-22/corporate-cash-isn-t-doing-much-but-hiding-debt … This one’s for you, @DougKass
The Great Corporate Shell Game
Stockpiles of liquid assets aren’t a safety net.
bloomberg.com
…click on the above link to read the rest of the article…
Stupidity Well Anchored: Absurdity of Inflation Expectations in Graphic Form
Stupidity Well Anchored: Absurdity of Inflation Expectations in Graphic Form
The amount of sheer nonsense written about inflation expectations is staggering.
Let’s take a look at some recent articles before making a mockery of them with a single picture.
Expectations Problem
On July 17, 2017, Rich Miller writing for Bloomberg proclaimed The Fed Has an Inflation Expectations Problem.
Expectations matter because they shape how households and companies act and thus can go a long way in determining where inflation actually ends up. Consumers accustomed to meager inflation will resist paying up for goods and services.
“Lower inflation expectations make it all the more difficult for the central bank to achieve its inflation objective,” Charles Evans, president of the Chicago Fed, said in remarks posted on the bank’s website on July 14.
Key Element
The Business Insider says The Fed is missing a key sign of economic weakness coming from American consumers.
Andrew Levin, a career Fed economist who was a special adviser to Fed Chairman Ben Bernanke, told Business Insider he was worried by a noticeable decline in inflation expectations, both as reflected in consumer surveys and bond-market rates.
“The reality is that the longer-term inflation expectations of consumers and investors have shifted downward by about a half percentage point. Thus, even with the economy moving towards full employment, it’s not surprising that core PCE inflation remains about a half percentage point below the Fed’s inflation target,” he said, referring to a closely watched reading indicator that excludes food and energy costs.
“If the FOMC continues to ignore the downward drift in inflation expectations and simply proceeds with its intended path of policy tightening, actual inflation is likely to keep falling short of the Fed’s target and might well decline even further,” he said.
…click on the above link to read the rest of the article…
Rate Hike Cycles, Gold, and the “Rule of Total Morons”
Rate Hike Cycles, Gold, and the “Rule of Total Morons”
In response to Janet Yellen’s everything is OK speech following today’s balance sheet reduction notice by the FOMC committee, I received an interesting set of comments from Pater Tenebrarum at the Acting Man Blog regarding rate hike cycles, gold, and stock market peaks.
“Rule of Total Morons”
A new bull market in gold started in late 2015 concurrently with the Fed’s first rate hike. That is no coincidence. The gold market is highly sensitive to future changes in liquidity. The more tightening moves the Fed undertakes (which it does in the face of collapsing money supply growth, because its decisions are based on lagging economic indicators), the more gold bullish and the more stock market bearish the fundamental backdrop becomes. Anyone long stocks should actually ask himself how it is possible that gold is up nearly 30% from its low, despite an ostensibly “gold bearish” rate hike cycle.
But they never do ask the right questions, which is why stocks peak with a big lag, particularly in major bubbles. Economic historians found out that the economy was technically very likely already in recession when the stock market peaked in 1929. In the 2007 to 2009 bust, NBER backdated the beginning of the recession to December 2007, but in May of 2008 Bernanke was still talking about how well the economy was doing and how the high oil price was “creating inflation” (thereafter he began to shut up about all that, but not before demonstrating for everyone to see how utterly clueless he was). And of course, stocks peaked in October of 2007, practically two seconds before the economy fell into recession.
In bubble regimes, the final stage is always characterized by the “rule of total morons”. That’s just how it is.
Missing Inflation
Central banks cannot see inflation because they are totally clueless how to measure it: Central Banks Puzzled as Global Inflation Hits Lowest Level Since 2009: Solving the Puzzle
…click on the above link to read the rest of the article…
Long-Term Mortgage Delinquencies Seriously Under-Reported
Long-Term Mortgage Delinquencies Seriously Under-Reported
Keith Jurow, a real estate analyst and author of the Capital Preservation Real Estate Report, pinged me a few days ago with his analysis that suggests long-term mortgage delinquencies are seriously under-reported.
Hi Mish,
I thought you might be interested in the important clarification I just received from my contact at the NY State Dept. of Financial Services.
A few weeks ago, I sent you the latest update (attached again) of pre-foreclosure notices sent to delinquent homeowners in NYC and LI. I had noticed that 80% were listed as delinquent for less than 60 days. I asked my contact why that percentage was so high when he had been telling me for several years that over 40% of these notices were repeat notices – sent to long-term delinquents.
His response was that for repeat notices, the mortgage servicers often provided the same information as on the original notice. For example, if a repeat notice was sent two years after the initial one, the length of delinquency was not changed from that first one. That was why a second notice where the borrower might be three years delinquent could show a delinquency of 60 days.
This clarification confirmed my belief that many – if not most – of the borrowers were now delinquent for several years.
Keith Jurow
New York Loan Delinquencies
Out of 65,523 loans, a whopping 52,218 supposedly fall into the 60-days or less delinquent bucket.
90-Day Pre-foreclosure Notices Filed with the NY Department of Financial Services
100% of those 65,523 delinquencies generated a 90-day pre-foreclosure notice.
Case closed.
Spanish Government Threatens to Seize Catalan Finances to Stop Referendum: Juncker in Hot Water
Spanish Government Threatens to Seize Catalan Finances to Stop Referendum: Juncker in Hot Water
In its latest move to stop an October 1 independence referendum, the Spanish Government is Poised to Seize Catalan Finances.
Finance Minister Cristóbal Montoro said a mechanism had been approved for the state to take control of the autonomous region’s finances. Madrid is seeking to stop the Catalan government spending public money on its planned independence referendum.
If the deadline is not met, the central government will take over the funding of most essential public services in the region, Mr. Montoro said.
Catalan President Carles Puigdemont launched his campaign for a “Yes” vote on Thursday night in the town of Tarragona, telling a rally at a former bullring: “Vote, and in so doing bring light to darkness that has lasted for too many years.” The crowd shouted back, “Independence”, “We will vote” and “We’re not afraid”, AFP news agency reports.
Public finances are a particularly sore point for Catalans who for years have contributed more to the state budget than they get back in spending on public services.
More than 700 Catalan mayors who have agreed to help stage the referendum now face criminal investigation and police have been ordered by Spanish prosecutors to seize ballot boxes, election flyers and any other item that could be used in the referendum.
The separatists have promised to declare independence within days if, as expected, the Yes vote prevails at the referendum.
Spanish Government Rejects Dialog Request
The Telegraph reports Spain threatens to cut funding for Catalonia over the independence referendum.
The Spanish government on Friday dismissed a letter from Catalan leaders offering talks over their looming independence referendum as “a trap”, and announced it would intervene in Catalonia’s finances to ensure that “not one euro” of public money was used to fund the “illegal” vote.
…click on the above link to read the rest of the article…
“Bad Options” Regarding 2% Inflation Targets (And Other Silly Notions)
“Bad Options” Regarding 2% Inflation Targets (And Other Silly Notions)
The Wall Street Journal and Bloomberg both posted ridiculous articles regarding today regarding inflation.
The former was on “bad options” the latter on “inflation expectations”.
Let’s take a look at both articles because both represent widely believed nonsense.
In Bad Options for Addressing Too-Low Inflation, Wall Street Journal writer Greg Ip says the Fed’s choice is to overheat the economy or give up its 2% target.
Unemployment and inflation are near their lowest levels in decades. Who wouldn’t love that?
Janet Yellen, for starters.
What looks like a dream economy could be a nightmare for the Federal Reserve chairwoman. Ms. Yellen’s worldview assumes that when unemployment is this low—4.4% in August—inflation should move up to the Fed’s target of 2%. Instead, it may have stabilized around 1.5%. That presents the Fed with some unpalatable options: deliberately overheat the economy for years to get inflation back up, then potentially induce a recession to stop it from overshooting; or give up on the 2% target, which could hobble its ability to combat future recessions.
This isn’t scaremongering: It’s the logical consequence of how central banks believe inflation operates. At the center of their model is the Phillips curve, according to which inflation edges lower when unemployment is above its natural, equilibrium level and putting downward pressure on prices and wages. Below that natural rate, also known as full employment, inflation crawls higher.
Until recently, Fed officials scoffed at the possibility [Trend inflation has fallen]. They noted surveys that suggest the public still expects inflation to return to 2% and credit their oft-repeated promise to hit their 2% target. But are they fooling themselves? Expectations of inflation are determined in great part by what inflation actually has been, and after every recession since 1982, core inflation has averaged less than in the previous business cycle: 4.1% in the 1980s, 2.1% in the 1990s, 1.9% in the 2000s, and 1.5% since 2009.
…click on the above link to read the rest of the article…
Three Massive Bubbles in 17 Years: When Will This One Bust? A 60% Decline Coming?
Three Massive Bubbles in 17 Years: When Will This One Bust? A 60% Decline Coming?
John Hussman’s presents a message no one wants to hear because nearly everyone is too busy believing for the third time in 17 years that “It’s different this time”.
Last week Hussman wrote about Valuations, Sufficient Statistics, and Breathtaking Risks. This week it’s more of the same with his post Behind the Potemkin Village.
The markets are so overvalued now that Hussman expects a 60% decline from here.
There’s an apocryphal story that in 1787, during the journey of Empress Catherine II to Crimea, Prince Grigory Potemkin, the governor of the region, erected fabricated villages along the Dnieper River, which would be disassembled after she passed by, and rebuilt again downstream overnight.
When one examines the collapses of the tech bubble and the housing bubble, it’s evident that one of the central elements of those collapses was the gradual recognition by investors that the overvalued pieces of paper they were holding were actually little Potemkin Villages; temporarily glorious and impressive on the surface, but backed by much less than investors had imagined was there. What sort of “catalyst” is needed for a Potemkin Village or a Ponzi scheme to disappoint? Only the gradual or sudden discovery of the reality behind it: the recognition that there is no “there” there.
Market returns don’t just emerge from nowhere. They are driven by the sum of three factors: growth in fundamentals, income from cash distributions, and changes in valuations (the ratio of prices to fundamentals). For example, the 10% annual total return of the S&P 500 since 1960 also derives from growth in S&P 500 revenues averaging 5.7% annually since the 2000 peak, dividend income averaging about 3.0% annually, and a much steeper increase in the S&P 500 price/revenue ratio contributing 1.3% annually (taking the current price/revenue multiple to the same level observed at the 2000 market peak).
…click on the above link to read the rest of the article…
“10-Year Treasury Yields Headed to Zero Percent” Saxo Bank CIO
“10-Year Treasury Yields Headed to Zero Percent” Saxo Bank CIO
In his latest Email article, Steen Jakobsen, Saxo Bank Chief economist and CIO has a bold prediction about interest rates.
With nearly everyone, even Janet Yellen at the Fed, predicting wage-induced inflation, Jakobsen makes a bold call in the opposite direction.
This is a guest post by Steen Jakobsen
Steen’s Chronicle: All Great Things are Simple, Except Right Now
“All the great things are simple, and many can be expressed in a single word: freedom, justice, honour, duty, mercy, hope” — Winston Churchill
Let’s start with what is currently simple, and what has been simple all year.
- The US dollar has peaked and started a multi-year cycle lower as both US and world growth can’t work without a weaker dollar (a stronger dollar kills growth through debt service, emerging markets, and commodities).
- Everything is deflationary: demographics, technology, energy, and the debt mountain.
- The credit impulse peaked in late 2016/early 2017 leaving global growth vulnerable in the fourth quarter of 2016 and into Q1’17.
- US interest rates are headed to 0% in 10-year government yields by the end of 2018, early 2019.
I am enclosing the word “simple” between a generously-sized pair of quotation marks because nothing is truly simple. But the themes outlined above have served us well throughout 2017 with the market having now given up on the Federal Reserve hiking rates beyond December. This is because inflation in the US (and Europe) is more likely to hit 1% than 2%, and because growth – despite certain green shoots – remains considerably below historically normal recovery levels.
Meanwhile, most central banks – most prominently the Fed – continue to believe in the old-school Phillips curve model, and through this mistake, they misguide markets on both inflation and growth – a classically dogmatic, bureaucratic way of thinking whose limits in a world of ever-changing technology are obvious.
…click on the above link to read the rest of the article…
Panic Buying of Gasoline in Florida, 40% of Miami Stations Out of Gas: Blame Anti-Gouging Laws for Shortages
Panic Buying of Gasoline in Florida, 40% of Miami Stations Out of Gas: Blame Anti-Gouging Laws for Shortages
As Hurricane Irma nears Florida, everyone is in a rush to fill up their tanks. About 40% of the gasoline stations in the Miami-Fort Lauderdale region are now without fuel. Floridians have turned to the Crowd-Sourced ‘Gas Buddy’ App to determine which stations still have gas.
The above image from the web version of Gas Buddy Tracker. Zoom into the area you’re looking for gas to see the red and green symbols indicating fuel shortages. Gas Buddy says the mobile app is more accurate.
Patrick DeHaan, the senior petroleum analyst at Gas Buddy, said their newest feature – the Gas Availability Tracker – has now been rolled out to those who could be affected by Hurricane Irma in Florida, Georgia and the Carolinas.
“The tool seeks to help motorists in need to find gasoline, and certainly in some cases. will also help motorists find stations that have power,” DeHaan said.
The app was developed during Hurricane Harvey in Texas. People can log in to view gas stations in their area. A red fuel pump icon indicates the station currently has gas. A red lightning bolt icon indicates the station has power, especially helpful for those in areas affected by power outages.
The data is largely crowdsourced by users who submit information through the app.
Florida Gov. Rick Scott announced in Miami that he’s asked the governors of Alabama and Georgia to waive trucking regulations so tankers can get fuel into the city, which is experiencing one of the largest shortages statewide as residents prepare for the hurricane’s landfall.
He told residents of the Florida Keys that “we’re doing everything to get fuel to you as quickly as possible.” Tourists are under a mandatory evacuation order, which began Wednesday morning.
…click on the above link to read the rest of the article…
Showdown in Spain: I Wholeheartedly Endorse the Catalonia Independence Vote
Showdown in Spain: I Wholeheartedly Endorse the Catalonia Independence Vote
In a move many people thought would never happen, the Catalan parliament approved a referendum that would allow a vote on the region’s independence from Spain. The central government seeks intervention from the Constitutional Court. But short of invasion who is going to stop the vote?
The Spanish government has accused the Catalan Parliament of committing a “constitutional and democratic atrocity” by approving legislation to allow next month’s bitterly disputed independence referendum to go ahead.
On Wednesday night, the region’s ruling, pro-sovereignty coalition – which has a majority in the Catalan Parliament – managed to get the referendum law passed despite angry objections from opposition MPs, who complained that usual parliamentary procedures had been disregarded.
The legislation passed by 72 votes after 52 opposition MPs walked out of the chamber in Barcelona in protest at the end of an ill-tempered, 11-hour session.
The move was denounced by the Spanish government, which once again said it would do everything in its legal and political power to stop the vote from going ahead on 1 October.
The Spanish prime minister, Mariano Rajoy, ordered government lawyers to file a complaint with the country’s constitutional court so that the vote could be annulled.
The public prosecutor’s office also said it was preparing a case against Catalan parliamentary officials – including the speaker, Carme Forcadell – for disobeying previous court orders forbidding legislative steps towards independence.
Catalan separatists insist the wealthy north-eastern region has a political, economic and cultural right to self-determination.
But Madrid is opposed to independence, arguing that it is a violation of the constitution, and has refused to offer a Scottish-style referendum on the matter.
Three months ago, Puigdemont announced that the referendum would be held on 1 October and that voters would be asked: “Do you want Catalonia to be an independent country in the form of a republic?”
…click on the above link to read the rest of the article…
Moral Outrage Over Low Wages: Canada Joins Trump With Threats of Walking Out on NAFTA
Moral Outrage Over Low Wages: Canada Joins Trump With Threats of Walking Out on NAFTA
The threat of total abandonment of NAFTA took on a second front today as Canada’s biggest private-sector union said NAFTA should be scrapped if Mexico cannot agree to better labor standards.
Please consider Sharp Differences Over Labor Surface at NAFTA Talks in Mexico.
Tensions over sharp differences in pay between Mexican workers and their Canadian and U.S. counterparts surfaced on Sunday as negotiators discussed labor market rules in talks to overhaul the North American Free Trade Agreement.
Canada’s biggest private-sector union said NAFTA should be scrapped if Mexico cannot agree to better labor standards, clashing with Mexican business leaders who argued that workers rights were a matter for each country to resolve internally.
Mexican political and corporate leaders firmly resist demands to bring wages into line with U.S. and Canadian levels, arguing the big cost advantage the country enjoys over richer peers should decrease as economic development advances.
Labor union leaders in the two wealthier nations say laxer labor standards and lower pay in Mexico have swelled corporate profits at the expense of Canadian and U.S. workers, making resolution of the issue a major battleground of the NAFTA talks.
Jerry Dias, national president of Canadian union Unifor, said NAFTA had been a “lousy trade agreement for working-class people” and that the union was pushing his government to walk away from the talks if it could not secure them a better deal.
“If labor standards aren’t a part of a trade deal, then there shouldn’t be a trade deal,” Dias told reporters in Mexico City on the sidelines of a second round of negotiations to update the 1994 trade agreement among the three countries.
…click on the above link to read the rest of the article…
