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The New Cold War and the Death of the Discourse
The New Cold War and the Death of the Discourse
The truth is often ignored, at first, and when that becomes impossible, truth-tellers are often punished. As two incidents starkly reveal, this is certainly the case when it comes to the civil war in Ukraine and Washington’s unfolding cold war with Russia.
The first illustration of our truth-telling principle occurred after the “Maidan revolution” had already captured the imagination of the Western media, which was busy promulgating the official view as given expression by US government officials. According to this narrative, the “protesters” were heroes, the government of “Russian-backed’ Viktor Yanukovich was a coven of devils, and the catalyzing incident that led to Yanukovich’s ouster, the shooting of protesters in the Maidan, was the work of the Berkut, the Ukrainian government’s militarized police.
There’s just one problem with this story: it isn’t true. A leaked phone callbetween Estonian Foreign Minister Urmas Paet and European Union High Representative for Foreign Affairs Catherine Ashton, revealed that the protesters were shot by their own leaders – the radical nationalists who had military control of the Maiden. In the course of their discussion, Paet discusses one Dr. Olga Bogomolets, who was in line to become the new Health Minister, and at around eight minutes into the recording Paet drops this bombshell:
Paet: “All the evidence shows that the people who were killed by snipers from both sides, among police men and people in the street, that they were the same snipers killing people from both sides.”
Ashton: “Well that’s, yeah…”
Paet: “And [Bogomolets] also showed me some photos and she said that has medical doctor, she can say that it is the same handwriting…”
Ashton: “Yeah…”
…click on the above link to read the rest of the article…
The Last 30 Years of Global Economic History Are About to Go Out the Window
The Last 30 Years of Global Economic History Are About to Go Out the Window
Over the last 30 years, a near constant flow of cash has inundated China and other emerging markets. It has lifted those economies, pulled hundreds of millions of people out of poverty, and dictated corporate expansion plans worldwide.
That wave is now ebbing.
This year will see the first net outflow of capital from emerging markets in 27 years, according to the Institute of International Finance, a trade group representing international bankers. The group expects more than $500 billion worth of cash previously invested in things like Chinese factories, Brazilian government bonds, and Nigerian stocks to cascade out of such markets this year.
In a profound change of narrative for both the global economy and markets that are closely tied to it, the story of fast Chinese growth—a story that has soothed investors and corporate managers around the world since the 1980s—is looking increasingly tough to square with the evidence. And it’s even tougher to imagine anything else like China—a billion new consumers joining the global economy—emerging any time soon.
GDP growth in the People’s Republic fell to 7% per year in the second quarter, according to official numbers—some of the most most sluggish growth since the 2008 global financial crisis.
And most analysts say even those numbers should be taken with a handful of salt. For instance, economic forecasting firm Capital Economics estimates that GDP in the first half of 2015 grew not at 7% year-over-year, but at just above 4%.
Of course, the slowdown in China isn’t confined to China. Over the last 30 years, countries worldwide have built their economies to service the needs of the People’s Republic. Brazil would be a case in point.
Weak Chinese demand hurts China’s suppliers…
…click on the above link to read the rest of the article…
Bernanke’s Balderdash
Bernanke’s Balderdash
The US and world economies are drifting inexorably into the next recession owing to the deflationary collapse of commodities, capital spending and world trade. These are the inevitable “morning after” consequence of the 20-year global credit binge which has now reached its apogee.
The apparent global boom during that period was actually a central bank driven excursion into the false economics of household borrowing to inflate consumption in the DM economies; and frenzied, uneconomic investing to inflate GDP in China and the EM.
The common denominator was falsification of financial prices. By destroying honest price discovery in the financial markets, the world’s convoy of money-printing central banks led by the Fed elicited a huge excess of financialization relative to economic output.
The central manifestation of that was $185 trillion of debt growth during the past two decades——a stupendous explosion of credit which amounted to 3.7X the expansion of global GDP.
And even that ratio is an understatement. That’s because measured GDP has been artificially bloated by the monumental worldwide malinvestment and excess capacity arising from the credit bubble. That is, phony “growth” which under the laws of economics will be liquidated in due course.
But you wouldn’t have known that the global economy is about to hit the skids from Monday’s action. Bernanke kicked off the day in a Wall Street Journal op ed taking a bow for “saving the world”.
Then the stock market completed a rally from Friday’s post-NFP low, which amounted to 84 points (4.5%) on the S&P 500 during a seven-hour span of trading. That was even less time to “mission accomplished” than last October’s three-day Bullard Rip.
So here we are again circling the 2000 mark on the S&P 500—a level first crossed 440 days ago. Undoubtedly, the casino is knee-jerking upward because Goldman has already made an unsecret audible call, instructing the Fed to substantially defer lift-off well into next year.
…click on the above link to read the rest of the article…
How The War Party Betrayed America’s Non-Interventionist Foreign Policy Tradition
How The War Party Betrayed America’s Non-Interventionist Foreign Policy Tradition
So Vladimir Putin in his U.N. address summarized his indictment of a U.S. foreign policy that has produced a series of disasters in the Middle East that we did not need the Russian leader to describe for us.
Fourteen years after we invaded Afghanistan, Afghan troops are once again fighting Taliban forces for control of Kunduz. Only 10,000 U.S. troops still in that ravaged country prevent the Taliban’s triumphal return to power.
A dozen years after George W. Bush invaded Iraq, ISIS occupies its second city, Mosul, controls its largest province, Anbar, and holds Anbar’s capital, Ramadi, as Baghdad turns away from us — to Tehran.
The cost to Iraqis of their “liberation”? A hundred thousand dead, half a million widows and fatherless children, millions gone from the country and, still, unending war.
How has Libya fared since we “liberated” that land? A failed state, it is torn apart by a civil war between an Islamist “Libya Dawn” in Tripoli and a Tobruk regime backed by Egypt’s dictator.
Then there is Yemen. Since March, when Houthi rebels chased a Saudi sock puppet from power, Riyadh, backed by U.S. ordinance and intel, has been bombing that poorest of nations in the Arab world.
Five thousand are dead and 25,000 wounded since March. And as the 25 million Yemeni depend on imports for food, which have been largely cut off, what is happening is described by one U.N. official as a “humanitarian catastrophe.”
“Yemen after five months looks like Syria after five years,” said the international head of the Red Cross on his return.
On Monday, the wedding party of a Houthi fighter was struck by air-launched missiles with 130 guests dead. Did we help to produce that?
What does Putin see as the ideological root of these disasters?
…click on the above link to read the rest of the article…
When The Advanced Keynesian Disease Afflicts A Nation—–Japan’s Abe Goes Full Fantasy-tard With 3 New ‘Arrows’
When The Advanced Keynesian Disease Afflicts A Nation—–Japan’s Abe Goes Full Fantasy-tard With 3 New ‘Arrows’
Having completed his militarist plans, Japanese Prime Minister Shinzo Abe appears to have gone full fantasy-tard with his latest “plans” for the demographically-dead and debt-destroyed nation. “Creating a strong economy will continue to be my top priority,” Abe said, a goal he has stunningly under-achieved as Japan heads for its 5th recession in 4 years, but, as Bloomberg reports, it is his new “arrows” of economic hope that has left analysts scratching their heads – 20% economic growth(when its gone nowhere for years), a higher birth rate (as theaging of the nation accelerates and interest in sex plunges), and allegedly a goose that lays golden eggs (well why not?). The collapse of Abe’s approval says it all about his ‘plan’.
As Japan heads for a Quintuple Dip recession…
Abe proposes three new policy pillars without tying them to his previous plan. As Bloomberg reports, it has left analysts scratching their heads…
Speaking Thursday after his reappointment as leader of Japan’s ruling party, Abe unveiled three new “arrows” of his so-called Abenomics plan — a strong economy, child-care support and social security. When he took office in 2012, he had championed another trio — monetary stimulus, flexible fiscal policy and structural reforms.
But with the new policies sounding more like objectives rather than measures to achieve them, the risk is this fresh framework muddies his communication battle to encourage Japanese households and companies to spend rather than save.
“Investors like details, but all he’s done is announce targets,” said Mari Iwashita, chief market economist at SMBC Friend Securities Co. in Tokyo. “The growth strategy, one of the original three arrows, has branched off into three new arrows.”
Speaking to reporters Thursday, Abe avoided mentioning monetary or fiscal policy, as well as tricky regulatory reforms that many economists say are already too slow. Instead, he focused on his new three objectives:
…click on the above link to read the rest of the article…
This Bubble’s Days Are Numbered—–Market Tops Are Sprouting Up Everywhere
This Bubble’s Days Are Numbered—–Market Tops Are Sprouting Up Everywhere
I have an important update regarding how far we could see the market drop in the short days and weeks ahead…
I’ve been warning for months that it looks like this bubble may finally be peaking.
I’ve warned that it’s best to get out of stocks a little early rather than a bit late. That’s because, when bubbles finally break, they burst rapidly – as much as 40% in the first few months. It can make markets very volatile, up and down, hence harder to predict and adjust to. If this is indeed the end, we’ve only taken the first step down a long ladder.
In retrospect, the odds keep going up that we saw a major long-term top on May 19.
The first warning sign was that, as stocks made little progress from late December into May, we saw a series of major tops around the world. And that to me is no small matter.
Dow Transports peaked in late November and are down 20% since.
Dow Utilities peaked in late January and are down 18%.
The German DAX and British FTSE both peaked in April and are down 24% and 19%, respectively.
The Dow and S&P 500 appear to have peaked in late May. The Dow’s down 16% since then.
Then in June came China’s Shanghai Composite index – one of the leading dominoes to fall – and it’s crashed 42%. The Russell 2000 index also peaked in June and is down a little more than 12%.
And finally, our Nasdaq, which peaked in late July, is recently down 21%.
Four of those are undeniably in bear territory. The Shanghai, DAX, Nasdaq and Dow Transports have crossed that 20% threshold that literally defines a bear market. A drop like that only raises the chances that a bubble is finally over. But thus far technical indicators only show that the Shanghai and DAX have peaked for good.
And all of this is just the first warning sign…
…click on the above link to read the rest of the article…
Riding ZIRP Into The Doom Loop—–Monetary Central Planning’s Dead End
Riding ZIRP Into The Doom Loop—–Monetary Central Planning’s Dead End
What the Fed really decided Thursday was to ride the zero-bound right smack into the next recession. When that calamity happens not too many months from now, the 28-year experiment in monetary central planning inaugurated by a desperate Alan Greenspan after Black Monday in October 1987 will come to an abrupt and merciful halt.
Why? Because Keynesian money printing is in a doom loop. The Fed’s ZIRP policies guarantee another financial crash, which will trigger still another outbreak of panic in the C-suites of corporate America and a consequent liquidation of excess inventories and labor on main street. That’s the new channel of monetary policy transmission, and it eventually leads to recession.
This upcoming recession, in turn, will prove beyond a shadow of doubt that in today’s financialized global economy you can’t manage the GDP of a single country as if it were isolated in an economic bathtub surrounded by high walls; nor can you attain domestic macro-targets for employment and inflation through the blunderbuss instruments of pegged money market rates and wealth effects levitation of the stock market.
Instead, the Fed’s falsification of financial asset prices simply subsidizes gambling in secondary markets; enables daisy chains of collateral to be endlessly hypothecated and re-hypothecated; causes vast misallocations and malinvestments of corporate resources, especially stock buybacks and other financial engineering; and sends money managers scrambling for yield without regard to risk, such as in junk bonds and EM debt.
What it doesn’t do is get households all jiggy, causing them to boost their leverage and spend up a storm. That’s because they reached “peak debt” at the time of the financial crisis, and have been struggling to reduce debt ever since. In the most recent quarter, in fact, household debt posted at $13.6 trillion or 3% lower than in early 2008.
…click on the above link to read the rest of the article…
David Stockman Interview On Yahoo——The Fed Painted Itself Into A Corner, Confidence In The Casino Is Headed For A Fall
David Stockman Interview On Yahoo——The Fed Painted Itself Into A Corner, Confidence In The Casino Is Headed For A Fall
David Stockman is not a fan of the Fed. In fact he claims that the Fed is on a “jihad” against retirees and savers.
The former Reagan budget director and author of “The Great Deformation: The Corruption of Capitalism in America” visited Yahoo Finance ahead of the Fed announcement to discuss his predictions and the potential impact of today’s interest rate decision. “80 months of zero interest rates is downright crazy and it hasn’t helped the Main Street economy because we’re at peak debt,” he says.
Businesses in the U.S. are $12 trillion in debt. That’s $2 trillion more than before the crisis, but “all of it has gone into financial engineering—stock buybacks, mergers and acquisitions and so forth,” according to Stockman. “The jig is up; [the Fed] needs to get on with the business of allowing interest rates to find some normalized level.”
While Stockman believes that the Fed should absolutely raise rates today, he isn’t so sure that they will. But even if they do, he says they’ll muddle the effect by saying “‘one and done’ or ‘we’re going to sit back and watch this thing unfold for the next two or three months.’”
This all fuels an inflationary bubble on Wall Street, according to Stockman. “This massive money printing we’ve had has never gotten out of the canyons of Wall Street. It’s sitting there as excess reserves.”
According to Stockman, the weakness of the U.S. economy has been due to a lack of investment over the past 15 years and inflated labor costs in America that can’t compete on a global scale. “Simply printing more money and keeping interest rates at zero do not help that problem.”
…click on the above link to read the rest of the article…
Goldman Sachs——-Perpetuator Of The Fed’s Jihad Against Savers
Goldman Sachs——-Perpetuator Of The Fed’s Jihad Against Savers
You can’t blame Janet Yellen entirely for the growing prospect that the Fed will take a powder on Wednesday and opt for the 81st straight month of ZIRP. After all, she’s basically a fuddy duddy school marm caught in a 1970s labor economics time warp—–a branch of the “home economics” taught by John Maynard Keynes after he turned protectionist in 1930.
Accordingly, she does apparently believe that the US economy resembles a giant bathtub, and that it is the Fed’s job to see that employment and output rise full to the brim. Nor does that mission take much special doing——-at least according to the primitive macroeconomic plumbing theories of Keynes’ disciples like her PhD supervisor, Professor James Tobin of Yale. Just crank the interest rate valve lower until the economic ether thereby released called aggregate demand works its magic.
Indeed, the good professor did help ignite a rip-roaring inflationary boom in one country during the Kennedy-Johnson years. Back then the world economy was still segmented and unmonetized enough to at last partially encompass a closed economy model of state managed pump-priming. That was especially possible because more than a billion potential workers were trapped in the economic Gulag of Mao’s China and the post-Stalinist Soviet bloc.
Never mind that today the US GDP bathtub leaks like a sieve and that massive trade, capital and financial flows transmit economic and financial impulses from around the globe. Accordingly, the marginal price of labor is set in the rice paddies of China, the call centers of Bangalore, the temp agency body shops of America and on the “bid for gigs” sites of the worldwide web.
The Bureau of Labor Statistics, which is apparently the Keynesian chapel where Yellen worships, captures none of this; it ought to be put in the Francis Perkins memorial museum along with souvenirs from the WPA and FDR’s Fair Labor Standards Act of 1938.
After The Great Deformation——The Next Challenge
After The Great Deformation——The Next Challenge
David Stockman has written the finest piece of financial journalism of our generation: The Great Deformation: The Corruption of American Capitalism. It shows how we got into the mess we are in.
Blame the government. Then blame us. It is our government. We must not parrot Flip Wilson’s Geraldine: “The devil made me do it!”
Stockman has followed up his book with a website: David Stockman’s Contra Corner. He posts daily articles, not on how we slouching toward Gomorrah, but how we are being dragged toward Armageddon. He has identified the culprits: the “dirty dozen” who compose the Federal Reserve System’s Federal Open Market Committee (FOMC).
Stockman is now trapped by his own enterprise. He is going to have to write a 300-page book, along with a multi-episode YouTube documentary:Up from Armageddon. It should be released in year three of the coming recession. Trust me: it’s coming. Trust Stockman: it’s going to last at least three years.
The book/documentary should have three sections: (1) how deep in the hole we really are; (2) how we got into this hole; (3) how we can get out.
Section 3 will be this: “Rebuilding from the Ground Up.” Here, he must offer a grand design: the way things ought to be after the rebuilding. But he must also offer a practical, step-by-step strategy. As Karl Marx often wrote, but never actually delivered: “from theory to practice.”
Each chapter of Up from Armageddon should have a link back to his site: proof. No footnotes needed. (Note: the links should be shortened links:http://bit.ly.)
Will the government/Federal Reserve do any of this? Of course not. But we need a field manual on what can and should be done. When the FED responds to the crisis by doing everything wrong — count on this — he can write a follow-up, I-told-you-so book: Another Fine Mess.
…click on the above link to read the rest of the article…
Why The Keynesian Chorus Is Cackling Like Chicken Little
Why The Keynesian Chorus Is Cackling Like Chicken Little
This is getting way too stupid. The Keynesian Chorus has launched a full blast trilling campaign, emitting a shrill cackle of warnings against a Fed rate hike. Yes, 80 months of pumping free money into the canyons of Wall Street is not enough.
Why?
Well, this is hard to type with a straight face, but according to the cackling gaggle of Keynesian Chicken Littles, the Fed has already tightened too much!
Paul Kasriel, the former chief economist at Northern Trust who now writes “The Econtrarian” blog, argues that “in recent months Fed monetary policy has become downright restrictive.”
Would that Kasriel could be dismissed as merely a Wall Street shill, but its seems that he’s taking his cues directly from John Maynard Keynes’ very vicar on earth. That would be Larry Summers, who yesterday blogged an identical bit of tommyrot:
I believe the case against a rate increase has become somewhat more compelling even than it looked two weeks ago…..First, markets have already done the work of tightening. The U.S. stock market is worth $700 billion less than it was 2 weeks ago and credit spreads have widened noticeably. Financial conditions as measured by Goldman Sachs or the Chicago Fed index have tightened in the last 2 weeks by the impact equivalent of more than a 25 BP tightening. So even if resisting inflation required a 25 BP tightening as of two weeks ago, this is no longer the case.
You can’t make this stuff up! And you don’t have to mince any words, either. This whole mantra that free money is actually tight money is the product of a tiny circle of academic scribblers and Wall Street hirelings who have invented what amounts to an alternate vocabulary of economic newspeak.
…click on the above link to read the rest of the article…
The Endless Emergency—–Why It’s Always ZIRP Time In The Casino
The Endless Emergency—–Why It’s Always ZIRP Time In The Casino
Based on the headline from the latest Jobs Friday report you wouldn’t know that we are still mired in an economic emergency—–one apparently so extreme that it might entail moving to the 81st straight month of zero interest rates at next week’s FOMC meeting. After all, the unemployment rate came in smack-dab on the Fed’s full-employment target at 5.1%.
But that’s not the half of it. The August unemployment rate was also in the lowest quintile of modern history.
That’s right. There have been 535 monthly jobs reports since 1970, yet in only 98 months or 18% of the time did the unemployment rate post at 5.1% or lower.
In a word, the official unemployment rate is now in what has been the macroeconomic end zone for the past 45 years. Might this suggest that the emergency is over and done?
Not at all. The talking heads have been out in force insisting on yet another deferral of “lift-off” on the grounds that the economy is allegedly still fragile and that the establishment survey number at 173,000 jobs came in on the light side. Even the so-called centrists on the Fed—–Stanley Fischer and John Williams—–have gone to full-bore, open-mouth, two-armed economist mode, jabbering incoherently while they await more “in-coming” economic data.
Self-evidently, the only “incoming” information that can matter between now and next Wednesday is the stock market averages. To wit, if last October’s Bullard Rip low on the S&P 500 holds at 1867, the FOMC will declare “one and done”, at least for the year; and if the market succumbs to another spot of vertigo, the Fed will concoct yet another lame excuse for delay.
Indeed, the Fed’s true Humphrey-Hawkins target is transparent. Namely, avoidance of a “risk-off” hissy fit at all hazards.
…click on the above link to read the rest of the article…
4 Charts Show Why This Rally Will Become a Rout!
4 Charts Show Why This Rally Will Become a Rout!
There’s a reason why I warn you to get out of a bubble a little early rather than a little late. It’s because the first wave down tends to happen in a matter of a few weeks or months, sometimes days. It’s fast and furious.
I know this because I’ve studied every major bubble in modern history – all the way back to the infamous tulip bubble in 1637, when a single tulip cost more than most people made in a single year! And what I’ve seen in each case, without exception, is that bubbles do not correct in nice stair steps when they’re coming off their highs. They burst, crash, collapse, clatter, clang – however you want to say it!
When the bubble deflates, it typically crashes 50% minimum to as high as 90%. But it’s that first wave down that can wipe out 20% to 50% right off the bat!
Below I have four charts that make the argument for me.
They show the 1929 bubble burst… the 1987 crash… the 2000 “Tech Wreck”… and the latest of 2015 from the Red Dragon itself – China’s Tsunami.
In each case, the fact that these bubbles were destined to burst were only obvious to the few that weren’t in denial. Most give into the bubble logic that new highs are the new norms. They think: “This time is different.” It’s not! It never is.
It’s always hard to predict exactly when bubbles will peak and crash. It’s like dropping grains of sand on the floor. A mound will build up – becoming like a Hershey’s kiss that grows more narrow at the top. At some point, one grain of sand will cause the avalanche. Who knows which grain of sand that one will be!
Here are those charts. Like I said, they speak for themselves!
What does that tell you!? EVERY bubble bursts. Bam, pow – no exceptions! So hopefully you understand why I keep harping on about this.
…click on the above link to read the rest of the article…
The Central Bankers’ Malodorous War On Savers
The Central Bankers’ Malodorous War On Savers
Well, that didn’t take long!
After just three days of market turmoil the monetary politburo swung into action. This time they sent out B-Dud to promise still another monetary sweetener. Said the head of the New York Fed,
“From my perspective, at this moment, the decision to begin the normalization process at the September FOMC meeting seems less compelling to me than it was a few weeks ago.”.
Needless to say, “B-Dud” is a moniker implying extreme disrespect, and Bill Dudley deserves every bit of it. He is a crony capitalist fool and one of the Fed ring-leaders prosecuting a relentless, savage war on savers. Its only purpose is to keep carry trade speculators gorged with free funding in the money markets and to bloat the profits of Wall Street strip-mining operations, like that of his former employer, Goldman Sachs.
The fact is, any one who doesn’t imbibe in the Keynesian Kool-Aid dispensed by the central banking cartel can see in an instant that 80 months of ZIRP has done exactly nothing for the main street economy. Notwithtanding the Fed’s gussied-up theories about monetary “accommodation” and closing the “output gap” the litmus test is real simple.
To wit, artificial suppression of free market interest rates by the central bank is designed to cause households to borrow more money than they otherwise would in order to spend more than they earn, pure and simple. Its nothing more than a modernized version of the original, crude Keynesian pump-priming theory—–except it dispenses with the inconvenience of getting politicians to approve spending increases and tax cuts in favor of the writ of a small posse of unelected monetary mandarins who run the FOMC and peg money market interest rates at will.
…click on the above link to read the rest of the article…
Bubbles Don’t Correct, They BURST!
Bubbles Don’t Correct, They BURST!
I’m practically drowning in interviews. I had half a dozen yesterday and even more today. But it’s time to put the word out that the second greatest bull march in history is finally coming to an end. It’s done.
Wall Street thinks this is a correction – a 10% drop, maybe 20% at worst, followed by more gains. They think we’re just six years into a 10 if not 20 year bull market. This is just a healthy breather.
Of course they think that! It’s the same “bubble-head” logic you find at the top of any extreme market in history!
Every single time – without exception – we delude ourselves into believing there is no bubble. We think: “Life’s good, why should we argue with it?”
And every time, we’re shocked when it’s over. Only in retrospect do we realize, yes, that was clearly a bubble, and oh, how stupid we were for not seeing it.
Bubbles don’t correct. They burst. They always do. And if anyone is still doubting whether this is a bubble, they need to get with the program – now!
Like I said on Fox yesterday, I wasn’t always a bear. I was one of the most bullish forecasters since the late ‘80s because I discovered how you can predict the spending of consumers through demographics.
With one simple indicator I predicted the Japan crash in the ‘90s when everyone was saying they’d overcome the U.S.
I predicted the greatest boom in U.S. history thanks to the spending of the Baby Boomer generation. All from demographic research, driven by my top cycle, the Spending Wave.
And from that, we knew the Boomers would peak in 2007 followed by a slowing economy.
…click on the above link to read the rest of the article…
