Showing posts with label Adam. Show all posts
Showing posts with label Adam. Show all posts

Monday, December 4, 2017

America’s Puerile Preoccupation: Sex, Sex, Sex and more Sex!

Via The Daily Bell


As long as boys and girls exist, there will always be touching, ogling, improper comments, and even a little behind-the-scenes hanky-panky. There is nothing, absolutely nothing anyone can do about this short of neuter the population. It is quite normal for boys and girls to meet and inspect each other, regardless of age or proclivity. We must never forget that this has been occurring ever since Eve presented Adam with a full-disclosure bite from her apple. In fact, today like yesterday, sophisticated adults still generously use their sex appeal in one way or another to finalize a deal.


Sex is the fuel that makes the world go around. It is a need too basic to suppress, regardless of how unorthodox and self-destructive the act may seem or even be. Referencing it in its many variations has brightened many smart salons and board rooms with fresh, giddy spins since the beginning of civilization. To watch the sanctimonious right or left attack each other over indiscretions, however modest, horrifies me. You would think a touch, a witty innuendo or an unwanted kiss was grounds for capital punishment.


As long as no one is held captive to the act and can walk away from the incident intact, it should be regarded for what it is, a temporary annoyance or an exercise in bad taste, which, as shocking as it may seem, we have all been guilty of at one time or another.


When I hear of adults confessing and shedding painful tears over some harmless act that may have occurred years ago, I become suspicious. If they were so severely damaged psychologically or physically by some unwanted assault, why didn’t they create a trail of complaints before surprising everyone years later with their accusations?


Regardless, unwanted sexual activity is a serious problem when someone is raped, drugged, injured, or knocked up. And it becomes a deadly sin when the predator molests or kidnaps a child or an adult in order to gratify some evil or depraved need, either for profit or pleasure. But to accuse someone of violating them years later without supportive evidence is, in my opinion, a vicious attempt at character assassination.


As a society, we have abandoned decency by allowing horrendous sex acts to become the norm. To understand how this has gotten so out of hand, we need to step back a moment in time. Wasn’t the sixties and seventies the beginning of the sex revolution? Wasn’t that the period in history when sex in all its variations broke out of the closet and began to shake up America – with its music, its movies, and even its tasteless sex education classes in the schools?


For many who survived, it was an era of sad beginnings in which the young tuned in, dropped out, and flew high. Because of adults like Harvard University’s Psychologist Timothy O’Leary, many of his students under the influence of LSD (and probably other drugs as well) went on terrifying journeys of all kinds without a return ticket.


As a result, many teenagers (and adults) were prematurely robbed of their innocence and introduced to high-voltage fornication (and drugs) everywhere – in the streets, in the movies, and in the basement with the janitor. The sixties and seventies launched a new era, in which the entertainment industry accelerated the corruption of Americans with salacious and vulgar music, dance, and sexual gymnastics on film. In one way or another, the entire American population succumbed and became victims of a New Age, an in-your-face, get-it-on revolt against propriety. To have escaped unscathed, you would have had to have been locked up in a cloister with neutered monks or nuns numbing your mind with fire and brimstone sermons.


Let me emphasize: no one escaped the sexual revolution. In one way or another, we all became victims – and for some, unfortunately, we remained victims.


Nevertheless, I believe breaking free of our puritanical overdose, which once dulled our great nation, was a good move. But instead of allowing our children to grow up with grace and discretion, we threw them into a hot cauldron of excess, where many remained, trapped. What we are seeing today, over 40 years later, are the angry results. The lynch mobs are everywhere, and they are ready to destroy anyone guilty of any indiscretion. No one really seems to be interested in learning what’s behind this change. The spectators are having too much fun watching the mighty fall to concern themselves about what the purpose of it all is.


In my novel (and also in my published play) Teacher of the Year, I playfully satirize one of the major groups responsible for damaging our children, specifically, the educators. Although collectively educators are doing considerable mental damage to our children through the process of education, they don’t deserve full credit for what is happening today. For this, we need to give some of that credit to our mass communication system, which carefully nourishes sultry ideas that often lead to horrendous acts.



To bring a halt to this societal suicide, we need to provide our children with a responsible education and environment that will allow them to mature gracefully into mature adults with a healthy respect for their libido. And we must stop classifying as criminal what in some cases is innocent and normal behavior between the sexes.


___


Joe David is the author of numerous articles and six books; among them are two novels on education, Teacher of the Year andThe Fire Within. www.bfat.com

Wednesday, November 15, 2017

Dennis Kucinich Exposes "The Permanent Government" Behind US Foreign Intervention

Authored by Adam Dick via The Ron Paul Institute for Peace & Prosperity,


In a recent interview with host Wilmer Leon at the Inside the Issues show, former presidential candidate and United States House of Representatives Member Dennis Kucinich (D-OH) discussed how what Kucinich terms the “permanent government” has worked to ensure the United States continues pursuing destructive foreign interventions and to keep America “at the precipice of a much wider war” irrespective of who is president.


“There’s an unbroken line going back over the last 30 years where American presidents have continued to proceed with an interventionism that has been counterproductive,” states Kucinich.


 


This “continued commitment to a failed foreign policy of interventionism, of unilateralism, of first strike,” Kucinich continues, “imperils America,” “does not make us safer,” “separates us from the world community,” “has people looking to extract vengeance on Americans,” and “has made the world a more dangerous place.”



Saying we need to look beyond the personalities of the succession of US presidents from George W. Bush to Barack Obama to Donald Trump, Kucinich recommends we “look at the foreign policy establishment of the United States of America” that, he explains, includes people in the State Department who have a neoconservative ideology, in the Pentagon who are dedicated to the military-industrial complex, and in the Central Intelligence Agency (CIA) who can “conjure conflicts” and “try to justify the further involvement of the military and the State Department.”



This, Kucinich says, “is the permanent government, which we see reflected through Democrat and Republican administrations, no matter whether they are so-called conservative or liberal or populist; it’s all the same.”


While this “permanent government” push for US intervention overseas has produced many harmful consequences, some of which Kucinich discusses in the interview, it also, he argues, produces the additional danger that it “keeps us at the precipice of a much wider war.”


Listen to Kucinich’s complete interview here.










Saturday, October 28, 2017

Nobody"s Buying Hamptons Mega-Mansions Because "Small Is The New Big"

Any realtor worth their salt will tell you, when it comes to the home-buying habits of wealthy hedgies and bankers, gaudy McMansions and sprawling estates are so last season.


Or, as they say in Greenwich: “Small is the new big."



Owners of large homes in tony Hamptons neighborhoods hoping to cash in on a frothy housing market before the inevitable rise in mortgage rates will be disappointed to learn that the trend of buyers favoring lower-priced homes continued in the third quarter, according to the latest Douglas Elliman Real-Estate Report. This left the high end of the market in a double-bind as supplies of new homes hit the market while sales tapered off...


Purchasers agreed to pay more than the asking price in 10 percent of deals for properties under $3.3 million -- this quarter’s definition of “non-luxury” homes, making up the bottom 90 percent of the market, according to a report Thursday by appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate. It was the biggest share of transactions with bidding wars since the firms began tracking the data in the second quarter of 2016.


 


In their zeal for lower-end deals, buyers snapped up condos as well. Those units -- with a median sale price of $567,500 -- were available for just 97 days on average before going under contract, the fastest clip in six years of record-keeping. On the high-end, buyers showed less interest in acquiring luxury homes than sellers did in listing them. Inventory in that top 10 percent of the market jumped 22 percent, the biggest pile-up in two years.


 


“The market is looking towards those smaller, more manageable homes,” said Carl Benincasa, a regional vice president at Douglas Elliman who oversees sales in the Hamptons. “That’s certainly been a trend we’ve been observing.”



Bloomberg, which obtained an advance copy of the report, noted that the Hamptons housing market often parallels performance in the financial industry, seeing as many buyers of luxury homes out east are wealthy finance types.



With markets at record highs, the Hamptons housing market is doing reasonably well - but buyers’ unwillingness to snap up the most expensive homes in a way mirrors the trepidation surrounding stretched stock valuations and record low volatility.


With stocks at record highs, people are in a buying mood in the Hamptons. The beachside towns on Eastern Long Island, whose fortunes are closely linked to the performance of the financial industry, had 517 total sales in the three months through September -- or 12 percent more than the 10-year quarterly average, Miller Samuel and Douglas Elliman said. Even with all that buying, inventory declined only in the non-luxury category, with listings dropping 10 percent from a year earlier to 1,143.


 


Deals for less than $500,000 fell 12 percent to 57 -- because there weren’t many such properties available, Town & Country Real Estate said in its report on Hamptons. But sales of homes priced between $500,000 and $999,000 jumped 22 percent to 131, and those between $1 million and $1.99 million climbed 12 percent to 76, the brokerage said.



One realtor noted that inventory is thinnest in the under-$1 million category, which has forced some buyers to the next rung of the market.


“When you look at the inventory under a million, that’s the largest shortage, so buyers stepped up to the next level of the market,” said Ernest Cervi, a senior vice president at Corcoran Group, which released its own report Thursday.



One couple recounted their struggle finding a new home in the Hamptons for under $1 million after selling their old home for $1.4 million.


For Brian DeSesa, it was much easier to sell his under-$2 million home than it was to buy one in that price tier. Sensing the market demand for lower-cost properties, he and his wife listed their three-bedroom Sag Harbor Village house in June at $1.45 million. It went into contract in July, to a buyer offering $1.35 million but willing to pay all cash and close within 14 days, said Jessica von Hagn, the Brown Harris Stevens broker who marketed the property.


 


Then came the hard part: finding a new house in the area for less than $1 million. The couple bid on at least three such properties, offering the asking price each time and getting outbid within hours, said DeSesa, 36, a land-use attorney with the Adam Miller Group in


 


Bridgehampton. On the next try, they offered the $795,000 asking price on a ranch-style home -- and then, in a second round of bidding, offered $860,000, which won them the deal.


 


“It’s pure competition,” von Hagn said. “At the $1 million mark, you’re competing with year-rounders trying to live out there, you’re competing with builders who are going to tear it down, and you’re competing with flippers.”



To be sure, there were still some ultra-luxury deals in the quarter, including two for more than $20 million, the same as a year earlier, Bloomberg reported. Purchases between $5 million and $9.99 million plummeted 56 percent to just 11. Sales were up 30 percent in Bridgehampton, with six deals over $10 million, but plunged 29 percent in the Sag Harbor area, where none of the 17 transactions were for more than $5 million.


Of course, as we noted last quarter, “smaller” in the Hamptons is purely relative, because apparently there’s nothing more modest among today’s Hamptons set than trading a 13,000 square-foot home for an 8,000 square-foot home.
 









Monday, August 21, 2017

US Policy Paradox: How To Lose Friends And Influence Nothing

Authored by Adam Garrie via The Asia Times,


When Paul Robeson belted out the lyric “I’m tired of living, and scared of dying,” he stumbled on to a paradox of emotional dissonance that could easily define the geo-strategic cognitive dissonance that the US exhibits when dealing with its fellow superpowers Russia and China.



Time and again the United States has shown that it does not want war with either of those countries, and these feelings are of course mutual. However, the US has a strange penchant for conducting provocative measures that inexorably harm relations with both Russia and China in mind-blowingly close proximity in time to moves suggesting rapprochement or, at minimum, de-escalation of tensions.



The most recent example is the Pentagon signing an agreement to open lines of direct communication with the commanders of the People’s Liberation Army to avoid “miscalculations” in areas ranging from the Korean Peninsula to the South and East China Seas.



In a rational environment, this would be seen as a US climb-down over actions China finds unacceptable in Korea and in its maritime waters. But in the current environment, while the US has signed an agreement that would ideally reduce tensions between the Chinese and US armed forces, the US president has also authorized his government to open an investigation into Chinese trade practices. While the proximate issue is US intellectual-property rights in China, the phrase “anti-Chinese sanctions” is on the tip of everyone’s lips.


Far from being out of character, the dichotomy of cooperating with China and engaging in a would-be pre-emptive trade war that the Chinese Ministry of Commerce has warned could be deeply dangerous is actually par for the course under the Trump administration.


On July 7, Donald Trump and Vladimir Putin met for the first time. The most meaningful outcome of the meeting was the agreement jointly to police a ceasefire and accompanying de-escalation zone in southwestern Syria, along with Jordan.


Less than a month later, Trump signed a sanctions bill against Russia that Moscow remains furious about. Détente 2.0 officially lasted from July 7 to August 3, 2017.


In respect of Iran, the Trump administration has quietly but officially stated that Tehran has not violated a single clause of the 2015 nuclear deal, but US officials continue to sanction Iran and continue to speak of Iran as though it has violated every agreement ever signed in history.


This has the aggregate effect of making the United States appear tired of warring but scared of cooperating.


In reality, neither Russia, China nor Iran wants war with the United States. One could also add North Korea, Mexico, Syria, Venezuela, Zimbabwe or just about every other country on the planet to that list.


Therefore, while moves to de-escalate military tensions are positive developments no matter where they happen, the mixed signals the US is sending will only serve as a demonstration that the US is not serious about proper de-escalation and cooperation and therefore it is only natural for the wider world to assume the worst about the United States, which far too often translates into “the tense status quo hasn’t changed”.


What’s more is that while pundits argue over whether this is part of a larger American geo-strategic plan to sow confusion or is simply an inexperienced Trump administration that cannot decide if it is coming or going, the wider world is more concerned with the effect than the cause.  


In this sense, the US is less like the longing voice of “Old Man River” than it is like the author of a future worst-seller, “How to Lose Friends and Influence Nothing”.

Thursday, August 17, 2017

Korean War Part II: Why It's Probably Going To Happen

Authored by Brandon Smith via Alt-Market.com,


Though a lot of people in my line of work (alternative economic and geopolitical analysis) tend to be accused of "doom mongering," I have to say personally I am not a big believer in "doom." At least, not in the way that the accusation insinuates. I don"t believe in apocalypse, Armageddon or the end of the world, nor do I even believe, according to the evidence, that a global nuclear conflict is upon us. In fact, it annoys me that so many people seem desperate to imagine those conclusions whenever a crisis event takes shape.


I think the concept of "apocalypse" is rather lazy - unless we are talking about a fantastical movie scenario, like a meteor the size of Kentucky or Michelle Obama"s Adam"s apple hurtling towards the Earth. Human civilization is more likely to change in the face of crisis rather than end completely.


I do believe in massive sea-changes in societies and political dynamics. I believe in the fall of nations and empires. I believe in this because I have seen it perpetually through history. What I see constant evidence of is that many of these sea changes are engineered by establishment elitists in government and finance. What I see is evidence of organized psychopathy and an agenda for total centralization of power. When I stumble upon the potential for economic disaster or war, I always ask myself "what is the narrative being sold to the public, what truth is it distracting us from and who REALLY benefits from the calamity."


The saying "all wars are banker wars" is not an unfair generalization — it is a safe bet.



First, let"s clear up some misconceptions about public attitudes towards the North Korean situation.


According to "polls" (I"ll remind readers my ample distrust of polls), a majority of Americans now actually support U.S. troop deployment to North Korea, but only on the condition that North Korea attacks first.


I want you to remember that exception - North Korea must attack first. It will be important for later in this analysis.


Despite a wide assumption that the mainstream media is beating the war drums on this issue, I find it is in most cases doing the opposite. The mainstream media has instead been going out of its way to downplay any chance that the current inflamed rhetoric on both sides of the Pacific is anything other than bluster that will end with a whimper rather than bomb blasts. This is one of the reasons why I think war is imminent; the media is a notorious contrarian indicator. Whatever they predict is usually the opposite of what comes true (just look at Brexit and the election of Donald Trump, for starters).  Another generalization that is a sure bet is that the mainstream media usually lies, or at the very least, they are mostly wrong.


That said, if we are to believe the latest polls, unfortunately, one thing is clear: The American people, on both sides of the political spectrum, are becoming more galvanized around supporting a potential conflict with North Korea. For the establishment, war is a winning sell, at least for now.


Of course, I am aware that we have heard all this before. Back in 2013 tensions were relatively high with North Korea just like they are today. North Korea threatened a preemptive nuclear strike on the U.S. back then, too, and in the end it was all hot air. However, besides wider public support than ever before in terms of troop deployment to North Korea, something else is very different from 2013. Primarily, China"s stance on the issue of regime change.


In the past, China has been consistent in supporting UN sanctions against North Korea"s nuclear program while remaining immovable on war and regime change in the region. In 2013, it was clear that China was hostile to the notion of a U.S. invasion.


In 2017, though, something has changed. China"s deep ties to the global banking establishment, their open statements on their affection for the IMF, and their recent induction as the flagship nation for the IMF"s Special Drawing Rights system make it clear that they are working for the globalist agenda, not against it. This is not necessarily a new thing behind the curtain; China has done the bidding of globalist institutions for decades. Today though, the relationship is displayed far more publicly.


In 2015, it was China, not the U.S., that sounded the alarm over North Korea"s nuclear program, indicating that Pyongyang might have technology well beyond American estimates. It was this warning that triggered the slow buildup to today"s fear over a fully capable intercontinental ballistic missile package in the hands of North Korea. It seems obvious to me that China plays the role of North Korea"s friend as long as it serves the interests of the globalist agenda, and then China turns on North Korea when the narrative calls for a shift in the script. It is China that opens and closes the door to war with North Korea; a China that is very cooperative with the IMF and the push towards total globalization.


In 2013, China presented the narrative of stalwart opposition to U.S. invasion. In 2017, China has left the door wide open.


Both alternative and mainstream media outlets latched onto recent statements made by Beijing proclaiming that China "would not allow regime change in North Korea." What many of them forgot to mention or buried in their own articles, though, was that this was NOT China"s entire statement. China also asserted that they would REMAIN NEUTRAL if North Korea attacked first. I cannot find any previous instance in the past when China has made such a statement; a statement that amounts to a note of permission.


Both the American public and the Chinese government have given support for regime change in North Korea given the stipulation that there is an attack on the U.S. or U.S. interests and allies. So, I ask you, what is most likely to happen here?


Much of the world and most importantly the U.S. is on the verge of a new phase of severe economic decline according to all fundamental data trends. The U.S. is set to enter into yet another debate on the debt ceiling issue with many on the conservative side demanding that Trump and Republicans not roll over this time. And, as I discussed in my article "Geopolitical Tensions Are Designed To Distract The Public From Economic Decline", a North Korean conflict stands as the best possible distraction.


How does the establishment rationalize a contested debt ceiling increase while also diverting blame away from themselves on the continued decline in U.S. and global fiscal data? War! Not necessarily a "world war" as so many are quick to imagine, but a regional war; a quagmire war that will put the final nail in the U.S. debt coffin and act as the perfect scapegoat for the inevitable implosion of the current stock market bubble. The international banks have much to gain and little to lose in a war scenario with North Korea.


I predict that there will be an attack blamed on North Korea. Either North Korea will be prodded into a violent reaction, or, a false flag event will be engineered and tied to Pyongyang. Remember, for the first time ever, China has essentially backed off of its opposition to invasion of North Korea as long as North Korea "attacks preemptively." Why? Why didn"t they make this exception back in 2013? Because now the international banks want a distraction and China is giving them the opening they require.


Will this war culminate in global nuclear conflagration? No. The establishment has spent decades and untold trillions building it"s biometric control grids and staging the new global monetary framework under the SDR system. They are not going to vaporize all of this in an instant through a nuclear exchange. What they will do, though, is launch regional wars and also economic wars. Those people expecting apocalypse in the Hollywood sense are going to find something different, but in my opinion much worse — a steady but slower decline into economic ruin and global centralization.


Eventually, China and the U.S. will enter hostilities, but these hostilities will lean more towards the financial than the kinetic. The establishment cabal works in stages, not in absolute events. Another Korean war would be a disaster for America, just not in the way many people think.


Will there be a nuclear event? Yes. If war takes place in North Korea then it is likely they will use a nuclear device somewhere in retaliation. We may even see a nuclear event as a false flag catalyst for starting the war in the first place. This will not be a global threat, but a mushroom cloud over any American city or outpost is enough to scare the hell out of most people. It is all that will be needed.


Does this mean "doom" for the American people? It depends on how we react. Will we continue to hold the banking establishment responsible for all of their sabotage previous to a high profile war in the pacific? Or, will we get caught up in the tides of war fever? Will we question the source of future attacks on the U.S., or will we immediately point fingers at whoever the media or government tells us is the enemy? Our response really is the greatest determining factor in whether or not the American ideal of liberty stands or falls. This time, I do not see bluster, but a dark fog very common in the moments preceding conflict. This time, I believe we are indeed facing war, but war is always a means to an end. War is an establishment tool for social engineering on a massive scale.

Thursday, August 10, 2017

The Secret History Of The Banking Crisis

Authored by Adam Tooze via ProspectMagazine.co.uk,


Accounts of the financial crisis leave out the story of the secretive deals between banks that kept the show on the road. How long can the system be propped up for?



It is a decade since the first tremors of what would become the Great Financial Crisis began to convulse global markets. Across the world from China and South Korea, to Ukraine, Greece, Brexit Britain and Trump’s America it has shaken our economy, our society and latterly our politics. Indeed, it has thrown into question who “we” are. It has triggered both a remarkable wave of nationalism and a deep questioning of social and economic inequalities. Politicians promise their voters that they will “take back control.” But the basic framework of globalisation remains intact, so far at least. And to keep the show on the road, networks of financial and monetary co-operation have been pulled tighter than ever before.


In Britain the beginning of the crisis was straight out of economic history’s cabinet of horrors. Early in the morning of Monday 14th September 2007, queues of panicked savers gathered outside branches of the mortgage lender Northern Rock on high streets across Britain. It was—or at least so it seemed—a classic bank run. Within the year the crisis had circled the world. Wall Street was shaking, as was the City of London. The banks of South Korea, Russia, Germany, France, Belgium, the Netherlands, Ireland and Iceland were all in trouble. We had seen nothing like it since 1929. Soon enough Ben Bernanke, then chairman of the US Federal Reserve and an expert on the Great Depression, said that this time it was worse.


But the fact that the tumult assumed such spectacular, globe-straddling dimensions had initially taken Bernanke by surprise. In May 2007 he reassured the public that he didn’t think American subprime mortgages could bring down the house. Clearly he underestimated the crisis. But was he actually wrong? For it certainly wasn’t subprime that brought down Northern Rock. The British bank didn’t have any exposure in the United States. So what was going on?


The familiar associations evoked by the Northern Rock crisis were deceptive. It wasn’t panicking pensioners all scrambling to withdraw their savings at once that killed the bank. It wasn’t even the Rock’s giant portfolio of mortgages. The narrative of Michael Lewis’s The Big Short, of securitisation, pooling and tranching, the lugubrious details of trashy mortgage dealing, the alphabet soup of securitised loans and associated derivatives (MBS, CDO, CDS, CDO-squared) tell only one part of the story. What really did for banks like Northern Rock and for all the others that would follow—Bear Stearns, Merrill Lynch, Lehman, Hypo Real State, Dexia and many more—and what made this downturn different— so sharp, so sudden and so systemic, not just a recession but the Great Recession—was the implosion of a new system not just of bank lending, but of bank funding.






It is only when we examine both sides of the balance sheet—the liabilities as well as the assets—that we can appreciate how the crisis was propagated, and then how it was ultimately contained at a global level. It is a story that the crisis-fighters have chosen not to celebrate or publicise. Ten years on, the story is worth revisiting, not only to get the history right, but because the global fix that began to be put in place in the autumn of 2007 is in many ways the most significant legacy of the crisis. It is still with us today and remains largely out of sight. The hidden rewiring of the global monetary system provides reassurance to those in the know, but it has no public or political standing, no resources with which to fight back if attacked. And this matters because it is increasingly out of kilter with the nationalist turn of politics.


In the wake of the crash and its austere aftermath, voters in many countries have pointed the finger at globalisation. The monetary authorities, however, have quietly entwined themselves more closely than ever before—and they have done so in order to provide life support to that bank funding model which caused such trouble a decade ago. Ten years on, the question of whether this fix is sustainable, or indeed wise, is a question of more than historical interest.





“To keep the show on the road, networks of financial and monetary co-operation have been pulled tighter than ever before”



In 2007 economists were expecting a crisis. Not, however, the crisis they got. The standard crisis scenario through to autumn that year involved a sudden loss of confidence in American government debt and the dollar. In the Bush era, the Republicans had cut taxes and spent heavily on the War on Terror, borrowing from China. So what would happen, it was asked anxiously, if the Chinese pulled the plug? The great fear was that the dollar would plunge, interest rates would soar and both the US economy and the Chinese export sector would crash land. It was what Larry Summers termed a balance of financial terror. America’s currency seemed so doomed that in autumn 2007, the US-based supermodel Gisele Bündchen asked to be paid in euros for a Pantene campaign, and Jay-Z dissed the dollar on MTV.










But somewhat surprisingly, like the nuclear stand-off in the Cold War, the financial balance of terror has become the basis for a precarious stability. Crucially, both Beijing and Washington understand the risks involved, or at least they seemed to until the advent of President Donald Trump. Certainly during the most worrying moments in 2008 Hank Paulson, Bush’s last Treasury Secretary, made sure that Beijing understood that its interests would be protected. Beijing reciprocated by increasing its commitment to dollar assets.


In 2007, it was not the American state that lost credibility: it was the American housing market. What unfolded was a fiasco of the American dream: 8.7m homes were lost to foreclosure. But the real estate bust wasn’t limited to the US. Ireland, Spain, the UK and the Netherlands all had huge credit booms and suffered shattering busts. As homeowners defaulted some lenders went under. This is what happened early on to predatory lenders such as New Century and Countrywide. Bankruptcy also came to the Anglo Irish Bank and Spain’s notorious regional mortgage lenders, the cajas. In the fullness of time, it was—perhaps, though not necessarily—the fate that might well have befallen Northern Rock too. But before it could suffer death by a thousand foreclosures, Northern Rock was felled by a more fast-acting kind of crisis, a crisis of “maturity mismatch.”


Banks borrow money short-term at low interest and lend long at marginally higher rates. It may sound precarious, but it is how they earn their living. In the conventional model, however, the short-term funding comes from deposits, from ordinary savers. Ordinarily, in a well-run bank, their withdrawals and deposits tend to cancel each other out. Fits of uncertainty and mass withdrawals are always possible, and perhaps even inevitable once in a while. So to prevent them turning into bank runs, governments offer guarantees up to a reasonable amount. Most of the Northern Rock depositors had little to fear. Their deposits were, like all other ordinary savers, guaranteed by then Chancellor Alistair Darling. The investors who weren’t covered by government backing were those who had provided Northern Rock with funding through a new and different channel—the wholesale money market. They had tens of billions at stake, and every reason to panic. It was the sudden withdrawal of this funding that actually killed Northern Rock.


As well as taking in money from savers, banks can also borrow from other banks and other institutional investors. The money markets offer funds overnight, or for a matter of weeks or months. It is a fiercely competitive market with financial professionals on both sides of every trade. Margins are slim, but if the volumes are large there are profits to be made. For generations this was the preserve of investment bankers—the ultimate insiders of the financial community. They didn’t bother with savers’ deposits. They borrowed in the money markets. From the 1990s commercial banks and mortgage lenders began to operate on a similar model. It was this new form of “market-based” banking combined with the famous securitisation of mortgages that enabled the huge expansion of European and US banking that began to crash in 2007.


Run for the hills: Northern Rock depositors rush to start taking out their money. 



By the summer of 2007 only 23 per cent of Northern Rock’s funding came from regular deposits. More than three quarters of its operation was sustained by borrowing in capital and money markets.




For these funds there were no guarantees. For a run to develop in the money market, the mortgages did not need to default. All that needed to happen was for the probability of some of them defaulting to increase. That was enough for interbank lending and money market funding to come abruptly to a halt. The European money markets seized up on 9th August. Within a matter of days Northern Rock was in trouble, struggling to repay short-term loans with no new source of funding in prospect. And it was through the same funding channel that the crisis went global.


The attraction of money market funding was that it freed you from the cumbersome bricks-and-mortar branch network traditionally used to attract deposits. Using the markets, banks could source funding all over the world. South Korean banks borrowed dollars on the cheap to lend in Won. American banks operating out of London borrowed Yen in depressed Japan, flipped them into dollars and then lent them to booming Brazil. The biggest business of all was the “round tripping” of dollars between America and Europe. Funds were raised in America, which for reasons of history and the nation’s sheer scale, is the richest money market in the world. Those dollars were exported to institutions and banks in Europe, who then reinvested them in the US, very often in American mortgages. The largest inflow of funds to the US came not from the reinvestment of China’s trade surplus, but through this recycling of dollars by way of Europe’s banks. Barclays didn’t need a branch in Kansas any more than Lehman did. Both simply borrowed money in the New York money markets. From the 1990s onwards, Europe’s banks, both great and small, British, Dutch, Belgian, French, Swiss and German, made themselves into a gigantic trans-Atlantic annex of the American banking system.






All was well so long as the economy was buoyant, house and other asset prices continued to go up, money markets remained confident and the dollar moved predictably in the direction that everyone expected, that is gently downwards. If you were borrowing dollars to fund a lending business the three things that you did not want to have happen were: for your own loans to go bad; money markets to lose confidence; or for dollars to suddenly become scarce, or, what amounts to the same thing, unexpectedly expensive. While the headlines were about sub-prime, the true catastrophe of the late summer of 2007 was that all three of these assumptions were collapsing, all at once, all around the world.





“The Fed effectively established itself as a lender of last resort to the entire global financial system”



The real estate market turned down. Large losses were in the pipeline, over years to come. But as soon as Bear Stearns and Banque Nationale de Paris (BNP) shut their first real estate funds, the money markets shut down too. Given the global nature of bank funding this produced an acute shortage of dollar funding across the European and Asian banking system. It was the opposite of what the best and brightest in macroeconomics had expected: strong currencies are, after all, meant to be built on thrift and industry, not shopping splurges and speculative debts. But rather than the world being glutted with dollars, quite suddenly banks both in Europe and Asia began to suffer periodic and panic-inducing dollar shortages.


The paradigmatic case of this counterintuitive crisis would eventually be South Korea. How could South Korea, a champion exporter with huge exchange reserves be short of dollars? The answer is that in the years of the recovery from the 1997 East Asian crisis, while Korean companies Hyundai and Samsung had conquered the world, Korea’s banks had been borrowing dollars at relatively low interest rates to lend out back home in Won to the booming home economy. Not only was there an attractive interest rate margin, but thanks to South Korea’s bouyant exports, the Won was steadily appreciating. Loans taken out in dollars were easier to repay in Won. As such these loans cushioned the losses suffered by South Korean firms on their dollar export-earnings.






By the late summer of 2008 the South Korean banks operating this system owed $130bn in short-term loans. Normally this was no problem, you rolled over the loan, taking out a new short-term dollar credit to pay off the last one. But when the inter-bank market ground to a halt the South Koreans were painfully exposed. Barring emergency help, all they could do was to throw Won at the exchange markets to buy the dollars they needed, which had the effect of spectacularly devaluing their own currency and making their dollar obligations even more unpayable. South Korea, a country with a huge trade surplus and a large official dollar reserve, faced a plunging currency and a collapsing banking system.


In Europe the likes of RBS, Barclays, UBS and Deutsche had even larger dollar liabilities than their South Korean counterparts. The BIS, the central bankers’ bank, estimated that Europe’s mega-banks needed to roll over $1-1.2 trillion dollars in short-term funding. The margin that desperate European banks were willing to pay to borrow in sterling and euro and to swap into dollars surged. Huge losses threatened—and both the Bank of England and the European Central Bank (ECB) could not do much to help. Unlike their East Asian counterparts, they had totally inadequate reserves.






The one advantage that the Europeans did have over the Koreans, was that the dollars they had borrowed had largely been invested in the US, the so-called “round-tripping” again. The huge portfolios of American assets they had accumulated were of uncertain value, but they amounted to trillions of dollars and somewhere between 20 and 25 per cent of the total volume of asset- and mortgage-backed securities. In extremis the Europeans could have auctioned them off. This would have closed the dollar-funding gap, but in the resulting fire sales the European banks would have been forced to take huge write downs. And most significantly, the efforts by the Fed and the US Treasury to stabilise the American mortgage market would have been fatally undercut.





“In the 60s, swaps were about stabilising exchange rates. Now they’re all about stabilising oversized banks”



This was the catastrophic causal chain that began to emerge in August 2007.


How could the central banks address it? The answer they found was three-pronged. The most public face of crisis-fighting was the effort to boost the faltering value of the mortgage bonds on the banks’ books (typically securitised versions of other banks’ mortgage loans, which were becoming less reliable in the downturn), and to provide the banks with enough capital to absorb those losses that they would inevitably suffer. This was the saga of America’s Troubled Asset Relief Programme, which played out on Capitol Hill. In the case of Northern Rock this prong involved outright nationalisation. Others took government stakes of varying sizes. Warren Buffett made a lucrative investment in Goldman Sachs. Barclays has now been charged by the Serious Fraud Office with fraudulently organising its own bailout, by—allegedly—lending money to Qatar, which that state is then said to have reinvested in Barclays. Without the bailout, you ended up with Lehman: bewildered bankers standing on the pavements of the City and Wall Street carrying boxes of their belongings. The masters of the universe plunged to earth. It half-satisfied the public’s desire for revenge. But it did nothing for business confidence.










With enough capital a bank could absorb losses and stay afloat. But to actually operate, to make loans and thus to sustain demand and avert a downward spiral of prices and more bankruptcies, the banks needed liquidity. So, secondly, the central banks stepped in, taking over the function, which the money market had only relatively recently assumed but was now suddenly stepping back from, of being the short-term lenders. The ECB started as early as August 2007. The Bank of England came in late, but on a large scale. The Fed became the greatest liquidity pump, with all of Europe’s banks benefiting from its largesse. The New York branches of Barclays, Deutsche, BNP, UBS and Credit Suisse were all provided with short-term dollar funding on the same basis as Citi, Bank of America, JP Morgan and the rest.



But it was not enough. The Europeans needed even more dollars. So the Fed’s third, final and most radical innovation of the crisis was to devise a system to allow a select group of central banks to funnel dollars to their banks. To do so the Fed reanimated an almost-forgotten tool called the “swap lines,” agreements between central banks to trade their currencies in a given quantity for a given period of time. They had been used regularly in the 1960s, but had since gone out of use. Back then, the aim was stabilising exchange rates. This time, the aim was different: to stabilise a swollen banking system that was faltering, and yet abjectly too big to fail. At a moment when dollars were hard to come by, the new swap lines enabled the ECB to deposit euros with the Fed in exchange for the dollars that the eurozone banks were craving. The Bank of England benefited from the same privilege.






Not that they were welcome at first. When the Fed first mooted the idea in the autumn of 2007, the ECB resisted. It did not want to be associated with a crisis that was still seen largely as American. If Gisele didn’t want to be paid her modelling fees in US dollars, why on earth should the ECB be interested? But as the European bank balance sheets unravelled, it would soon become obvious that Frankfurt needed all the dollars it could get. Initiated in December 2007, the swap lines would rapidly expand. By September all the major European central banks were included. In October 2008 the network was expanded to include Brazil, Australia, South Korea, Mexico, New Zealand and Singapore. For the inner European core, plus Japan, they were made unrestricted in volume. The sums of liquidity were huge. All told, the Fed would make swap line loans of a total of $10 trillion to the ECB, the Bank of England the National Bank of Switzerland and other major banking centres. The maximum balance outstanding was $583bn in December 2008, when they accounted for one quarter of the Fed’s balance sheet.


It was a remarkable moment: the Fed had effectively established itself as a lender of last resort to the entire global financial system. But it had done so in a decentralised fashion, issuing dollars on demand both in New York and by means of a global network of central banks. Not everyone was included. Russia wasn’t, which was hardly surprising given that it had come to blows with the west over Georgia’s Nato membership application only weeks earlier. Nor did the Fed help China or India.


And though it helped the ECB, it did not provide support to the “new Europe” in the east. The Fed probably imagined that the ECB itself would wish to help Poland, the Baltics and Hungary. But the ECB’s president Jean-Claude Trichet was not so generous. Instead, eastern Europe ended up having to rely on the International Monetary Fund (IMF).


Swapsies? As a scholar of the Great Depression, the Fed’s Ben Bernanke knew the importance of swap lines. Photo: MARK WILSON/GETTY IMAGES



The swap lines were central bank to central bank. But who did they really help? The reality, as all those involved understood, was that the Fed was providing preferential access to liquidity not to the “euro area” or “the Swiss economy” as a whole, but to Deutsche Bank and Credit Suisse. Of course, the justification was “systemic risk.” The mantra in Washington was: you have to help Wall Street to help Main Street. But the immediate beneficiaries were the banks, their staff, especially their highly-remunerated senior staff and their shareholders.






Though what the Fed was doing was stabilising the global banking system, it never acknowledged as much in so many words, certainly not on the record, where it said as little as it decently could about the swap line operation. The Fed’s actions have global effects. But it remains an American institution, answerable to Congress. Its mandate is to maintain employment and price stability in the US economy. The justification for the swap lines, therefore, was not global stability, but the need to prevent blowback from Europe’s de facto Americanised banks—to avoid a ruinous, multi-trillion dollar fire sale of American assets. Once the worst of the crisis had passed, Bernanke would assist the European banks in liquidating their American assets by way of the Fed’s three rounds of asset purchases, known as Quantitative Easing (QE).


The swaps were meticulously accounted for. Every cent was repaid. No losses were incurred—the Fed even earned a modest profit. They were not exactly covert. But given the extraordinary extension of its global influence that the swaps implied, they were never given publicity, nor even properly discussed. Bernanke’s name will be forever associated with QE, not swap lines. In his lengthy memoirs, The Courage to Act, the swaps merit no more than a few cursory pages, though Bernanke as a scholar of the 1930s knows very well just how crucial these instruments were. Is this an accident? Surely not. In the case of the swap lines, the courage to act was supplemented by an ample measure of discretion.






The Fed did everything it could to avoid disclosing the full extent and range of beneficiaries of its liquidity support operations. They did not want to name and shame the most vulnerable banks, for fear of worsening the panic. But there are politics involved too. Given the rise of the Bernanke-hating Tea Party in 2009, the likely response in Congress to news headlining the scale of the Fed’s global activity was unpredictable to say the least. When asked why no one on Capitol Hill had chosen to make an issue of the swap lines, one central banker remarked to me that it felt as though “the Fed had an angel watching over it.”


One other reason for the tight lips is that the story of the swap lines is not yet over. The network was rolled out in 2007 and 2008 as an emergency measure, but since then it has become the under-girding of a new system of global financial crisis management. In October 2013, as the Fed prepared finally to begin the process of normalisation by “tapering” its QE bond purchases, it made another decision which made plain that the new normal would not be like the old. It turned the global dollar swap line system into a standing facility: that is to say, it made its emergency treatment for the crisis into a permanent feature of the global monetary system. On demand, any of the core group of central banks can now activate a swap line with any other member of the group. Most recently the swap line system was readied for activation in the summer of 2016 in case of fallout from the Brexit referendum.


As the original crisis unfolded in 2008, radical voices like Joseph Stiglitz in the west, and central bankers in the big emerging economies called for a new Bretton Woods Conference—the meeting in 1944, which had decided on the post-war currency system and the creation of the IMF and the World Bank. The Great Financial Crisis had demonstrated that the dollar’s exorbitant privilege was a recipe for macroeconomic imbalances. The centre of gravity in the world economy was inexorably shifting. It was time for a new grand bargain.





“Central banks has staged Bretton Woods 2.0. But they had not invited the public or explained their reasons”



What these visionary suggestions failed to register was that foundation of the world’s de facto currency system were not public institutions like the IMF, but the private, dollar-based global banking system. The introduction of the swap lines gave that system unprecedented state support. The Fed had ensured that the crisis in global banking did not become a crisis of the dollar. It had signalled that global banks could rely on access to dollar liquidity in virtually unlimited amounts, even in the most extreme circumstances. The central banks had, in other words, staged their Bretton Woods 2.0. But they had omitted to invite the cameras or the public, or indeed to explain what they were doing.


The new central bank network created since 2008 is of a piece with the new networks for stress testing and regulating the world’s systemically important banks. The international economy they regulate is not one made up of a jigsaw puzzle of national economies, each with its gross national product and national trade flows. Instead they oversee, regulate and act on the interlocking, transnational matrix of bank balance sheets.






This system was put in place without fanfare. It was essential to containing the crisis, and so far it has operated effectively. But to make this technical financial network into the foundation for a new global order is a gamble.


It worked on the well-established trans-Atlantic axis. But will it work as effectively if it is asked to contain the fallout from an East Asian financial crisis? Can it continue to operate below the political radar, and is it acceptable for it to do so? With the Fed in the lead it places the resources, expertise and authority of the world’s central banks behind a market-based system of banking that has shown its capacity for over-expansion and catastrophic collapse. For all the talk of “macroprudential” regulation, Basel III and Basel IV, rather than disarming, down-sizing and constraining the global banking system, we have—through the swap lines—embarked on, if you like, a regulatory race to the top, where the authorities intervene heavily to allow the big banks in some countries to continue what they were doing before the unsustainable ceased to be sustained. And without even the political legitimacy conferred by G20 approval. Not everyone in the G20 is part of the swap line system.




The Fed’s safety net for global banking was born at the fag-end of the “great moderation,” the era when economies behaved nicely and predictably, and when a “permissive consensus” enabled globalisation. Though a child of crisis, it bore the technocratic, “evidence-based” hall marks of that earlier era. It bears them still.


Can it survive in an age when the United States is being convulsed by a new wave of economic nationalism? Is there still a guardian angel watching over the Fed on Capitol Hill? And with Trump in the White House, how loudly should we even ask the question?

















































Monday, July 24, 2017

Five Weird Conspiracy Theories From CIA Director Mike Pompeo

Authored by Adam Garrie via The Duran,


Mike Pompeo sounds increasingly unhinged when talking about Russia, Wikileaks and the media.



In a tirade against Russia based news outlets RT and Sputnik, Donald Trump’s CIA Director Mike Pompeo blasted Russia for interfering not only in the 2016 US Presidential election but “the one before that and the one before that”. This would imply that Russia helped install Barack Obama in the White House even after his severely anti-Russian foreign policy became well known.


These statements are blasted by Russia’s Foreign Minister Sergey Lavrov in the following way:





If (Pompeo’s) statements mean that we interfered in the elections in 2008 and 2012 that means that President Obama owes us his victories. I’ll refrain from comment. In my opinion, this crosses the lines of what is reasonable.



Pompeo’s assertion came after a tirade in which he said that Russia’s current Chief of the General Staff Valery Gerasimov helped develop a ‘propaganda’ strategy which underlies RT and Sputnik’s alleged purpose. Pompeo further asserted that Gerasimov did this in the early 1970s. According to Pompeo:





His (Gerasimov’s) idea was that you can win wars without firing a single shot, with firing a very few shots in ways that are decidedly not militaristic. And that’s what happened


What changes is the cost to effectuate change through cyber and through RT and Sputnik, the news outlets and through other soft means has just really been lowered. It used to be expensive to run an ad on a television station. Now you simply go online and propagate your message, so they have found an effective tool, an easy way to go reach into our systems and into our culture to achieve the outcome they are looking for.



The ludicrousness of this claim can be easily debunked when one learns that General Gerasimov was born in 1955. If one can conservatively say that 1973 was the ‘early 1970s’, this means that Gerasimov developed a communications strategy that relied on the internet being up to 2017 standards when he was 18 years of age. There is simply no logic in Pompeo’s assertions.


This is the same Mike Pompeo who has told some rather strange tall-tales about Wikileak’s founder Julian Assange while simultaneously calming that RT is part of Wikileaks.


In April of 2017, Pompeo stated:





It is time to call out WikiLeaks for what it really is – a non-state hostile intelligence service often abetted by state actors like Russia. In January of this year, our Intelligence Community determined that Russian military intelligence—the GRU—had used WikiLeaks to release data of US victims that the GRU had obtained through cyber operations against the Democratic National Committee. And the report also found that Russia’s primary propaganda outlet, RT, has actively collaborated with WikiLeaks.



He then stated:





No, I am quite confident that had Assange been around in the 1930s and 40s and 50s, he would have found himself on the wrong side of history.



So to recap, the following are Mike Pompeo’s most ludicrous conspiracy theories:





1. Russia’s current Chief of the General Staff invented the concept of RT and Sputnik, one which relies on the power of the internet in 2017, in the early 1970s when he was in his late teens and still in the equivalent of high school.



2. Russia interfered in the US elections in 2008, 2012 and 2016, meaning that Russia supported Barack Obama who was the most anti-Russian US President in modern memory, but no one noticed this Russian interference at the time.



3. RT collaborates with Wikileaks which is a hostile intelligence agency rather than an on-line publisher.



4. Julian Assange, a self-styled free speech advocate and anti-war activist would have supported Hitler in the 1930s and 1940s.



5. RT and Sputnik are supported by Russia because they are cheaper than going to war. This is ostensibly a bad thing in Pompeo’s view.



Mike Pompeo seems like less of an intelligence chief than a simplistic conspiracy theories.

Saturday, June 17, 2017

Netflix Now Has More Subscribers Than Cable

Despite going all-in on Adam Sandler content – a bizarre choice - Netflix has managed to continue growing its subscriber base, recently reaching a new milestone: It now has more paying customers than Comcast Corp., Charter Communications and all other US cable companies combined.


As Forbes reports, Netflix now has 50.85 million subscribers, surpassing cable"s 48.61 million. There is one caveat, though: Cable’s total doesn’t include minor cable networks, which could amount to 5% of total customers.



Over the past five years, Netflix has managed to more than double its subscriber base from 23.4 million in the first quarter of 2012. But growth has slowed recently due to intensifying competition from a host of rival streaming services, causing Netflix to miss both its domestic and foreign subscriber targets for the first quarter.


Here’s a summary of Netflix"s Q1 results:





1Q revenue $2.64b vs est. $2.65b


1Q GAAP EPS 40c vs 37c


1Q domestic streaming net adds 1.42 million, vs consensus est. 1.59MM vs company forecast 1.5MM


1Q international streaming net adds 3.53MM consensus est. 3.90m vs company forecast 3.7MM


2Q GAAP EPS forecast 15c vs est. 23c


2Q revenue forecast 2.755BN  vs est. $2.76BN



Luckily for American cable companies, the battle for subscribers isn’t a zero-sum game. Here"s Forbes:





While cable subs are down by 4 million in the same five years that Netflix has seen huge growth, that"s not a massive drop off. It"s also worth bearing in mind that cable TV makes up only 50% of total TV viewership in pay TV. That said, Q1 2017 shows a net loss in subscriptions while Q1 2016 saw cable grow a little.



Satellite TV is doing okay, with around 38 million subscribers. Dish Network added 318,000 customers in Q1 with Direct TV stalling with gains that didn"t outpace customer loses. Satellite is still growing faster than cable though.



Faster still though are the internet-delivered services like Sling TV and Direct TV now which have added 350,000 in Q1. These services now have 1.7 million customers between them, and it"s likely that this segment will continue to see growth as customers move away from cable TV.



Cable, satellite and internet streaming services in the US have a combined 93.3 million subscribers. Even as Netflix expands into more foreign markets, it likely won’t match that total any time.


To be sure, the Netflix to cable comparison isn’t really fair to the cable companies: While the exact cost depends on the specific package, monthly fees associated with cable are typically many times more expensive than Netflix"s $10 fee.


Which brings us to our next, and final topic: Slowing subscriber growth isn’t the only metric that makes Netflix"s critics uncomfortable. The company’s unprecedented cash burn is another major red flag. In Q1, the company burned $422 million, which while less than the record $640 million burned in Q4 (over $1 billion in the last 6 months) was $160 million than its cash burn from a year ago. The company still expects to burn a total of $2 billion for the full year.


Here’s how the company explains it:





Free cash flow in Q1’17 was -$423 million vs. -$261 million in the year ago quarter and an improvement from -$639 million in Q4’16. The growth in our original content means we continue to plan to have around $2B in negative FCF this year.



We have a large market opportunity ahead of us and we’re optimizing long-term FCF by growing our original content aggressively. Negative near-term FCF is the result of the big increases in our original content, combined with small but growing operating margins. Since we want our operating margins to grow slowly so we can spend enough to quickly grow revenue and original content, we anticipate negative FCF to accompany our rapid growth for many years.



Our operating margins are our key indicator of improving global profitability; they are already growing and we plan to keep them growing for many years ahead. Eventually, at a much larger revenue base, original content and revenue growth will be slower, and we anticipate substantial positive FCF, like our media peers.



It remains to be seen if the transition from massive cash burn to cash flow positive is as simple as the company expects it to be.

Saturday, May 13, 2017

Déjà Vu In The USD Bull Market?

By Chris at www.CapitalistExploits.at


What in God"s name is happening?


It"s not a high.


It"s a record high.


Sweet mother of Mary...



As we can see from the above chart courtesy of the FT, emerging markets sold a record amount of government debt in the first quarter of this year.


More from the FT here:





"Data from Dealogic, a research firm, show that sovereign bond sales from emerging markets rose to $69.6bn in the first three months of the year, an increase of 48 per cent from a year ago and a record amount for a single quarter. Corporate bond sales by companies in developing countries also surged, rising 135 per cent year on year in the first quarter to $105bn, according to Bloomberg data."



This reminds me of Donny Hathaway"s song Giving Up:


Giving up


 Is hard to do


 When you really


 Love someone


 Giving up


 So hard to do


When you still depend upon


Her warm and tender touch


Her kiss and her caress


Ooh, they used to


Mean so much


And bring you happiness


Giving up


So hard to do
I"ve tried


But it just ain"t no use


Giving up


So hard to do
I said I"ve tried


But it just ain"t no use


It"s understandable. Investors have been richly rewarded for so so long by investing in bankrupt countries. Giving up is so very hard to do.


According to Bank of America Merrill Lynch, emerging-market debt funds have collected new money for 10 straight weeks. And while that"s been taking place, U.S. stock funds had $14.5 billion of outflows in just one week - the most in well over a year.


Out of equities and into bonds, which really proves just how screwed up the markets have become.


Context is ... Everything






The past half-century has seen debt-enabled growth of a magnitude that, if it were steroids, would have a stone dead horse stand straight up and gallop into the sunset. The last decade being the most supercharged of all.




Debt is, I will remind you, simply borrowed growth from the future.



Where this matters is that much of this debt (estimates at 90%) is dollar denominated. Yes siree, the good ol" borrow-one-currency-and-invest-into-higher-yielding-assets play is back in force.


It Matters



Why this matters is due to the contracting of global liquidity which my friend Daniel Want talks about.


If you"ve not read my report on the Eurodollar market (inspired in part by conversations with Daniel), this helps explain it. Go now and read it HERE. It"ll make you an even more beautiful and intelligent list of subscribers than you already are.


The skinny version is that as global liquidity contracts the world is starved of dollars and as long as we have this environment the dollar is forced higher as dollar demand exceeds dollar supply.









"A bull market in the US Dollar is underway and its magnitude and duration are likely to catch everyone by surprise. I believe it isn’t out of the question for the USD Index to advance by at least 50% within the next 5 years. If this forecast proves correct, there will be profound ramifications for the global economy and many financial markets, particularly emerging markets."




Lucky, I guess.


The fact is this wasn"t guess work.


Global dollar liquidity was contracting sharply, and human nature being what it is investors were extrapolating linear outcomes in a non-linear world.


In market speak implied volatility was the lowest since Adam bit into the apple. Wonderful stuff.


The reason for pointing this out is because all that dollar debt sitting outside of the land of apple pie quite quickly becomes a serious liability when the dollar begins to move against you and your investments are in something other than dollars.


The good old carry trade works spectacularly when the borrowed currency stays flat or indeed depreciates and not so spectacularly when it doesn"t.


Let"s return for a minute to the rapid accumulation of emerging markets debt, currently growing exponentially. It"s worth pointing out that this is all taking place while dollar liquidity is contracting and the charts are looking increasingly bullish for the Dollar Index.


I"m not sure what lands up setting of the next leg in the dollar bull market but emerging markets bond holders stand to get torched as they"re sitting on a fault line which when it shakes measures 9.4 on the Richter scale.


Clearly, you know where I stand on this issue but I"m curious what my readers think.


Question


EM InvestorsCast your vote here and also see what others think is going on


- Chris


"Every bubble consists of a trend that can be observed in the real world and a misconception relating to that trend." — George Soros


--------------------------------------


Liked this article? Don"t miss our future missives and podcasts, and


get access to free subscriber-only content here.


--------------------------------------

Sunday, March 12, 2017

Angry Turks Protest Near Rotterdam Consulate As Dutch Embassy In Turkey Closed Off

Update 3: The Mayor of Rotterdam has issued an order to vacate the city"s center, where the Turkish protesters are situated



* * *


Update 2: Dutch authorities have arrested Turkey"s family minister and are deporting her to#Germany according to RTL. The escalation may lead to a spike by Turks in the Netherlands, with some speculating that a curfew is imminent:



Update: As expected, Gert Wilders has just chimed in, responding to the Turkish Family Minister who earlier in the day was barred by Dutch police from entering the Turkish consulate:



* * *


Hundreds of demonstrators waving Turkish flags gathered outside the Turkish consulate in the Dutch city of Rotterdam on Saturday night, demanding to see the Turkish minister for family affairs as a diplomatic scandal between the two countries escalated.





Earlier in the day, Turkish Foreign Minister, Mevlut Cavusoglu was barred from flying into Rotterdam to participate in pro-Erdogan rallies, to which the Turkish president responded by calling the Dutch "fascists" and his NATO partner a Nazi remnant" as the scandal over Ankara campaigning among emigre Turkish voters, which has recently swept Germany, Switzerland and Austria, intensified.



The Dutch quickly responded:



In any case, as a protest built up by the Turkish consilate, the Police erected metal barriers and patrolled on horseback to keep the demonstrators away from the consulate as the crowd grew with more pro-Turkish protesters arriving from Germany, according to Reuters. A video released by a Turkish camera operator shows him being attacked by a police dog after he refused to leave the area in front of the consulate.




Turkish Family Minister Fatma Betul Sayan Kaya traveled by road to the Netherlands from neighboring Germany after the Dutch government revoked the landing rights for the plane carrying the foreign minister earlier on Saturday. Dutch TV footage showed police stopping the minister"s convoy near the Turkish consulate in Rotterdam and preventing her from entering the building.




The Dutch government said it did not want Turkish politicians campaigning among Turkish emigres in the Netherlands, leading President Tayyip Erdogan to brand the fellow NATO member a "Nazi remnant". The government also said it does not object to meetings in the Netherlands to give information about the Turkish referendum, "but these meetings should not add to tensions in our society and everybody who wants to organize a meeting must adhere to instructions from authorities so that public order and security can be guaranteed." It said the Turkish government "does not want to respect the rules in this matter."


Meanwhile, over in Turkey, the Dutch embassy and consulate in Turkey were closed off "for security reasons" on Saturday following the latest diplomatic scandal. The residences of the Dutch ambassador, charge d"affaires and consul general were also closed off, according to Reuters.


The Turkish Foreign Ministry said earlier in a statement that Ankara did not want “the Dutch ambassador, currently on leave, to return to his post for some time.”


“It has been explained to our counterparts that this grave decision taken against Turkey and the Dutch Turkish community will cause serious problems diplomatically, politically, economically and in other areas," the statement said, as cited by Reuters.


Turkey"s president Erdogan is expected to make a statement to the nation momentarily in response to the Dutch "provocation."


The unexpected escalation in tensions between the Netherlands and Turkey comes just three days ahead of the critical Dutch general election on March 15, in which the anti-immigration, anti-EU, Freedom Party of Geert Wilders is expected to emerge as the largest party. Today"s tensions may boost support for his platform which has seen a modest drop in public approval in recent days. A full preview of the Dutch General Election can be found here.