Monty Python’s John Cleese Condemns Political Correctness on Campuses

John CleeseBritish actor John Cleese—best known for his roles in the Monty Python films—joins the list of celebrity comedians perturbed by the utter rejection of so-called offensive humor on college campuses. In a recent video for Big Think, Cleese lamented that political correctness was depriving society of a sense of proportion. “Then, as far as I’m concerned, you’re living in 1984,” he said.

A transcript of his remarks:

I’ve been warned recently, don’t go to most university campuses because the political correctness has been taken from being a good idea—which is, let’s not be mean particularly to people who are not able to look after themselves very well, that’s a good idea—to the point where any kind of criticism of any individual or group can be labelled cruel. And the whole point about humor, the whole point about comedy—and believe you me, I’ve thought about it—is that all comedy is critical. Even if you make a very inclusive joke—like, How do you make God laugh? Tell him your plans—that’s about the human condition, it’s not excluding anyone, it’s saying we all have all these plans that probably won’t come and isn’t it funny that we still believe they’re going to happen. So that’s a very inclusive joke, but it’s still critical. All humor is critical. If we start saying, oh, we musn’t criticize or offend them, then humor is gone, and with humor goes a sense of proportion, and then, as far as I’m concerned, you’re living in 1984.

Cleese is no stranger to controversial comedy—Monty Python sketches frequently pilloried various political and religious traditions. If Life of Brian, for instance, were to be shown on a college campus today, it would not surprise me if it generated a protest.

from Hit & Run

Paul Craig Roberts: The West Is Being Reduced To Looting Itself

Authored by Paul Craig Roberts,

I, Michael Hudson, John Perkins, and a few others have reported the multi-pronged looting of peoples by Western economic institutions, principally the big New York Banks with the aid of the International Monetary Fund (IMF).

Third World countries were and are looted by being inticed into development plans for electrification or some such purpose. The gullible and trusting governments are told that they can make their countries rich by taking out foreign loans to implement a Western-presented development plan, with the result being sufficient tax revenues from economic development to service the foreign loan.

Seldom, if ever, does this happen. What happens is that the plan results in the country becoming indebted to the limit and beyond of its foreign currency earnings. When the country is unable to service the development loan, the creditors send the IMF to tell the indebted government that the IMF will protect the government’s credit rating by lending it the money to pay its bank creditors. However, the conditions are that the government take necessary austerity measures so that the government can repay the IMF. These measures are to curtail public services and the government sector, reduce public pensions, and sell national resources to foreigners. The money saved by reduced social benefits and raised by selling off the country’s assets to foreigners serves to repay the IMF.

This is the way the West has historically looted Third World countries. If a country’s president is reluctant to enter into such a deal, he is simply paid bribes, as the Greek governments were, to go along with the looting of the country the president pretends to represent.

When this method of looting became exhausted, the West bought up agricultural lands and pushed a policy on Third World countries of abandoning food self-sufficiency and producing one or two crops for export earnings. This policy makes Third World populations dependent on food imports from the West. Typically the export earnings are drained off by corrupt governments or by foreign purchasers who pay little while the foreigners selling food charge much. Thus, self-sufficiency is transformed into indebtedness.

With the entire Third World now exploited to the limits possible, the West has turned to looting its own. Ireland has been looted, and the looting of Greece and Portugal is so severe that it has forced large numbers of young women into prostitution. But this doesn’t bother the Western conscience.

Previously, when a sovereign country found itself with more debt than could be serviced, creditors had to write down the debt to an amount that the country could service. In the 21st century, as I relate in my book, The Failure of Laissez Faire Capitalism, this traditional rule was abandoned.

The new rule is that the people of a country, even a country whose top offiials accepted bribes in order to indebt the country to foreigners, must have their pensions, employment, and social services slashed and valuable national resources such as municipal water systems, ports, the national lottery, and protected national lands, such as the protected Greek islands, sold to foreigners, who have the freedom to raise water prices, deny the Greek government the revenues from the national lottery, and sell the protected national heritage of Greece to real estate developers.

What has happened to Greece and Portugal is underway in Spain and Italy. The peoples are powerless because their governments do not represent them. Not only are their governments receiving bribes, the members of the governments are brainwashed that their countries must be in the European Union. Otherwise, they are bypassed by history. The oppressed and suffering peoples themselves are brainwashed in the same way. For example, in Greece the government elected to prevent the looting of Greece was powerless, because the Greek people are brainwashed that no matter the cost to them, they must be in the EU.

The combination of propaganda, financial power, stupidity and bribes means that there is no hope for European peoples.

The same is true in the United States, Canada, Australia, and the UK. In the US tens of millions of US citizens have quietly accepted the absence of any interest income on their savings for seven years. Instead of raising questions and protesting, Americans have accepted without thought the propaganda that their existence depends upon the success of a handful of artificially created mega-banks that are “too big to fail.” Millions of Americans are convinced that it is better for them to draw down their savings than for a corrupt bank to fail.

To keep Western peoples confused about the real threat that they face, the people are told that there are terrorists behind every tree, every passport, under every bed, and that all will be killed unless the government’s overarching power is unquestioned. So far this has worked perfectly, with one false flag after another reinforcing the faked terror attacks that serve to prevent any awareness that this a hoax for accumulating all income and wealth in a few hands.

Not content with their supremacy over “democratic peoples,” the One Percent has come forward with the Trans-Atlanta and Trans-Pacific partnerships. Allegedly these are “free trade deals” that will benefit everyone. In truth, these are carefully hidden, secret, deals that give private businesses control over the laws of sovereign governments.

For example, it has come to light that under the Trans-Atlantic partnership the National Health Service in the UK could be ruled in the private tribunals set up under the partnership as an impediment to private medical insurance and sued for damages by private firms and even forced into abolishment.

The corrupt UK government under Washington’s vassal David Cameron has blocked access to legal documents that show the impact of the Trans-Atlantic partnership on Britain’s National Health Service

For any citizen of any Western country who is so stupid or brainwashed as not to have caught on, the entire thrust of “their” government’s policy is to turn every aspect of their lives over to grasping private interests.

In the UK the postal service was sold at a nominal price to politically connected private interests. In the US the Republicans, and perhaps the Democrats, intend to privatize Medicare and Social Security, just as they have privatized many aspects of the military and the prison system. Public functions are targets for private profit-making.

One of the reasons for the escalation in the cost of the US military budget is its privatization. The privatization of the US prison system has resulted in huge numbers of innocent people being sent to prison, where they are forced to work for Apple Computer, IT services, clothing companies that manufacture for the US military, and a large number of other private businesses. The prison laborers are paid as low as 69 cents per hour, below the Chinese wage.

This is America today. Corrupt police. Corrupt prosecutors. Corrupt judges. But maximum profits for US Capitalism from prison labor. Free market economists glorified private prisons, alleging that they would be more efficient. And indeed they are efficient in providing the profits of slave labor for capitalists.

Here is a news report on UK Prime Minister Cameron denying information about the effect of the Trans-Atlantic partnership on Britains’ National Health.

The UK Guardian, which often has to prostitute itself in order to maintain a bit of independence, describes the anger that the British people feel toward the government’s secrecy about an issue so fundamental to the well being of the British people. Yet, the British continue to vote for political parties that have betrayed the British people.

All over Europe, the corrupt Washington-contolled governments have distracted people from their sellout by “their” governments by focusing their attention on immigrants, whose presence is a consequence of the European governments representing Washington’s interests and not the interest of their own peoples.

Somthing dire has happened to the intelligence and awareness of Western peoples who seem no longer capable of comprehending the machinations of “their” governments.

Accountable government in the West is history. Nothing but failure and collapse awaits Western civilization.

via Zero Hedge Tyler Durden

Japanese Bond Yields Continue To Collapse As China Margin Suffers Longest Losing Streak On Record

Following Kuroda’s panic policy measures from Friday, JGB yields continue to collapse across the curve (though notably 30Y is selling off – is someone actually concerned about long-term survival risk?). 2Y Yields have collapsed all the way to BoJ’s -10bps rate, 5Y is plunging – now close to -9bps, and 10Y has dropped 20bps to just over 6bps… with BofA warning a negative 10Y rate looms. However, Japan is not having all the excitement as China’s margin debt (driver of all animal spirits) dropped again today – making this the longest losing streak in history as China’s stock market investors continue to leave the levered building screaming fire.

JGB yields are collapsing… not exactly the risk-on stock-buying euphoria Abe and Kuroda were hoping for

With 10Y JGB yields closing in on negative, the percentage of global debt below 0% will explode.

*  *  *

And then there is China… where margin debt has collapsed for the longest losing streak in history…

The outstanding balance of Shanghai margin debt dropped for 21st consecutive day on Friday, the longest streak since the exchange began compiling the data on April 1, 2010.


But apart from that – everything is stable.

via Zero Hedge Tyler Durden

So It Begins: Bloomberg Op-Ed Calls For An End Of Cash

In a moment of curious serendipity, a little over 90 minutes after we showed what a dystopian, centrally-planned, cashless society unleashed in a negative interest rate world would look like (“by forcing people and companies to convert their paper money into bank deposits, the hope is that they can be persuaded (coerced?) to spend that money rather than save it because those deposits will carry considerable costs”), and briefly after we laid out the countless recent warnings from “very serious people” that cash is evil and should be banned:

… while warning to await a full-on coopted media assault about the dangers of cash “which is an anacrhonysm from a bygone era, and that the world will be so much better if only everyone dutifully exchanges the physical currency in their pocket for digital, traceable, and deletable 1s and 0s”, none other than Bloomberg issued an editorial Op-Ed in which it had one simple message: Bring On the Cashless Future.”

For those who were amused by our warning that a cashless world may be coming, here is precisely why the warning was issued, in Bloomberg’s digital ink:

Bring On the Cashless Future


Cash had a pretty good run for 4,000 years or so. These days, though, notes and coins increasingly seem declasse: They’re dirty and dangerous, unwieldy and expensive, antiquated and so very analog.


Sensing this dissatisfaction, entrepreneurs have introduced hundreds of digital currencies in the past few years, of which bitcoin is only the most famous. Now governments want in: The People’s Bank of China says it intends to issue a digital currency of its own. Central banks in Ecuador, the Philippines, the U.K. and Canada are mulling similar ideas. At least one company has sprung up to help them along.


Much depends on the details, of course. But this is a welcome trend. In theory, digital legal tender could combine the inventiveness of private virtual currencies with the stability of a government mint.


Most obviously, such a system would make moving money easier. Properly designed, a digital fiat currency could move seamlessly across otherwise incompatible payment networks, making transactions faster and cheaper. It would be of particular use to the poor, who could pay bills or accept payments online without need of a bank account, or make remittances without getting gouged.


For governments and their taxpayers, potential advantages abound. Issuing digital currency would be cheaper than printing bills and minting coins. It could improve statistical indicators, such as inflation and gross domestic product. Traceable transactions could help inhibit terrorist financing, money laundering, fraud, tax evasion and corruption.


The most far-reaching effect might be on monetary policy. For much of the past decade, central banks in the rich world have been hampered by what economists call the zero lower bound, or the inability to impose significantly negative interest rates. Persistent low demand and high unemployment may sometimes require interest rates to be pushed below zero — but why keep money in a deposit whose value keeps shrinking when you can hold cash instead? With rates near zero, that conundrum has led policy makers to novel and unpredictable methods of stimulating the economy, such as large-scale bond-buying.


A digital legal tender could resolve this problem. Suppose the central bank charged the banks that deal with it a fee for accepting paper currency. In that way, it could set an exchange rate between electronic and paper money — and by raising the fee, it would cause paper money to depreciate against the electronic standard. This would eliminate the incentive to hold cash rather than digital money, allowing the central bank to push the interest rate below zero and thereby boost consumption and investment. It would be a big step toward doing without cash altogether.


Digital legal tender isn’t without risk. A policy that drives down the value of paper money would meet political resistance and — to put it mildly — would require some explaining. It could hold back private innovation in digital currencies. Security will be an abiding concern. Non-cash payments also tend to exacerbate the human propensity to overspend. And you don’t have to be paranoid to worry about Big Brother tracking your financial life.


Governments must be alert to these problems — because the key to getting people to adopt such a system is trust. A rule that a person’s transaction history could be accessed only with a court order, for instance, might alleviate privacy concerns.


Harmonizing international regulations could encourage companies to keep experimenting. And an effective campaign to explain the new tender would be indispensable.


If policy makers are wise and attend to all that, they just might convince the public of a surprising truth about cash: They’re better off without it.


To contact the senior editor responsible for Bloomberg View’s editorials: David Shipley at

And so it begins. It will most certainly not end there.

via Zero Hedge Tyler Durden

“This Is Much Larger Than Subprime” – Here Are The Legendary Hedge Funds Fighting The Chinese Central Bank

One month ago, we first revealed that for one prominent winner from the subprime crisis, Hayman Capital’s Kyle Bass, “the greatest investment opportunity right now” is to short the Chinese Yuan: as he explained “given our views on credit contraction in Asia, and in China in particular, let’s say they are going to go through a banking loss cycle like we went through during the Great Financial Crisis, there’s one thing that is going to happen: China is going to have to dramatically devalue its currency.” He even went so far as to give a timeframe: “we think it’s going to be in the next 12-18 months.”

Then, during the Davos boondoggle, none other than the man who broke the Bank of England, George Soros, noted that he too is shorting the Yuan, which in turn prompted China’s communist party mouthpiece, the People’s Daily to officially warn Soros to back off adding in a petulant, schoolyard bully-ish voice “You Cannot Possibly Succeed, Ha, Ha.” Yes, China really said that.

Then, just last week, in a sad letter in which Bill Ackman blamed everyone and everything for his pathetic performance in 2015, most notably hedge fund herding and hotels, which he was so eager to exploit on the way up with presentation-filled idea dinners, and so eager to blame for dumping his names on the way down, we found out that Ackman had also decided to put on a Yuan devaluation trade just days before the Yuan devaluation announcement (perhaps he read our post from August 8, which said that a devaluation is imminent 3 days before it was revealed):

“Last summer, we built large notional short positions in the Chinese yuan through the purchase of puts and put spreads in order to protect the portfolio in the event of unanticipated weakness in the Chinese economy…Two days after we began to build our position in the Chinese yuan, China did a 2% surprise devaluation which substantially increased the cost of the options we had intended to continue purchasing. We continued to build the position thereafter by buying slightly more out of the money puts and selling further out of the money puts so as to keep the cost and risk/reward ratio of the position attractive.”

Sadly, Ackman has still to make money on this trade.

But Bass, Soros and Ackman are not alone.

In fact, as the WSJ writes today, the who’s who of hedge funds appears to agree with our post from December 11, in which we said that “anyone who thought that the Yuan devaluation is over, now that the currency is at the lowest level relative to the dollar since 2011, the reality is that the devaluation relative to everyone else is only just starting.

And, with the PBOC’s warning that the “RMB is relatively a strong currency among the major international currencies” the real devaluation is, just as we warned four months ago, about to be unleashed. Expect at least a 15% reduction in Trade-Weighted terms in the coming weeks and months, especially if the Fed hikes

Sure enough, just a few weeks later we were proven correct again when the PBOC unleashed a second, far more violent devaluation round, one which has cost the PBOC hundreds of billions in FX intervention costs and a desperate attempt to plug capital control holes as the domestic population desperately wants out sensing that its currency is losing its value by the minute.

So who are the brave souls who have decided to very openly fight the People’s Bank of China?

Here is a sample: Soros, Bass, Ackman, Druckenmiller, Tepper, Schreiber, Einhorn, Scogging, and Carlyle, Nexus and many more.

Some more details on just how massive these bets are:

Kyle Bass’s Hayman Capital Management has sold off the bulk of its investments in stocks, commodities and bonds so it can focus on shorting Asian currencies, including the yuan and the Hong Kong dollar.


It is the biggest concentrated wager that the Dallas-based firm has made since its profitable bet years ago against the U.S. housing market. About 85% of Hayman Capital’s portfolio is now invested in trades that are expected to pay off if the yuan and Hong Kong dollar depreciate over the next three years—a bet with billions of dollars on the line, including borrowed money.

Why is Kyle Bass practically all in? Simple: for him “‘this is much larger than the subprime crisis, said Mr. Bass, who believes the yuan could fall as much as 40% in that period.”

Then there are the legends: Billionaire trader Stanley Druckenmiller and hedge-fund manager David Tepper have staked out positions of their own against the currency, also known as the renminbi, according to people familiar with the matter.  David Einhorn’s Greenlight Capital Inc. holds options on the yuan depreciating.


Mr. Druckenmiller, who now invests his own wealth, and one of his former protégés, Zach Schreiber, who runs the roughly $10 billion hedge-fund firm PointState Capital LP, also have had sizable shorts against the renminbi since last year, people familiar with the matter said.


The funds’ bets come at a time of enormous sensitivity for China’s leaders. The government is struggling on multiple fronts to manage a soft landing for the economy, deal with a heavily indebted banking system and navigate the transition to consumer-led growth.


Other firms that have profited from shorting China’s currency include the $2 billion Scoggin Capital Management and Carlyle Group LP’s Emerging Sovereign Group, according to people familiar with the matter.


* * *


The situation grew more tense after billionaire investor George Soros predicted at the World Economic Forum gathering in Davos, Switzerland, recently that “a hard landing is practically unavoidable” for China’s economy. He said he is betting against commodity-producing countries and Asian currencies as a result.


Days later, a commentary appeared in China’s state-run Xinhua News Agency warning that “radical speculators” trying to short sell, or bet against, the Chinese currency would “suffer huge losses” as the Chinese monetary authority takes “effective measures to stabilize the value of the yuan.”

To be sure, the show of force has scared off some fund managers from adding to their wagers. Some traders have scaled back or even exited from their short bets, saying they have little appetite to go up against the Chinese government. However, since it is merely a matter of time and having a large enough balance sheet to withstand the whipsaws by the PBOC, many will simply double down, and perhaps not so much on the Yuan but on parallel currencies who central banks aren’t as paranoid: “some say they are looking with new interest at shorting the currencies of other Asian countries that they expect would fall if the yuan keeps depreciating.”

Finally, there is a saying “don’t fight the Fed,” Well, ironically, by devaluing the Yuan, China is doing precisely that: it is fighting the Fed’s aggressive attempts to push the USD ever higher with its obstinate push to hike rates even as the entire world slides into a global USD-denominated recession, by devaluing at appropriate intervals and shocking the global financial system. Perhaps all these “brave hedge fund warriors” are not so much fighting the PBOC as they are siding alongside the Fed, if only for the time being. However at this rate of credibility loss, between the US, China and most recently Japan, not to mention the ECB’s December debacle, pretty sure it won’t be fighting this or that central bank, but all of them at the same time.

As of this moment, however, all these hedge funds who have taken on the PBOC are winning, because after another massive intervention round on Friday, one which cost the PBOC more billions of dollars from its rapidly dwindling FX reserve pile, the CNH is already weaker tonight: will the PBOC burn through another $10 billion just to teach these hedge funds a lesson even as the market is implying far more pain for the PBOC? 

Worst of all, since they are not physically located in China, the local authorities will find it just a little more difficult to physically arrest these “evil shorts” and “disappear” them for good.

via Zero Hedge Tyler Durden

This Question Should Not Be A Difficult One To Answer

Submitted by Jeffrey Snider via Alhambra Investment Partners,

At what point do we accede back to logic and rational thought? The Bank of Japan is “forced”, not my word, to unleash negative nominal interest rates and that is taken as a positive for everyone everywhere. Such a move is, without question, an open admission that QQE failed and failed spectacularly (since it was even expanded not really that long ago). That is cause for celebration and optimism?

Bloomberg tells us that a grim January gets to now end on a high note (that was the article’s title, after all) without ever pausing to consume the fact that January was so grim to begin with because nothing central banks do actually matter beyond the very short run.

U.S. stocks joined an advance in global equities, while bonds rallied as the Bank of Japan’s unexpected monetary stimulus boosted confidence that central banks remain vigilant of slowing economic growth. The yen tumbled, while oil gained.

The story performs the usual magic trick of semantics in favor of a positive reinforcement on the central bank activity; “central banks remain vigilant”, as if vigilance is all that is required or offered. It is neither. In the Bank of Japan’s case, what was delivered was supposed to be an enormous monetary wave of such fury and power as to leave no doubt as to how this was going to end. In April 2013, BoJ officials were so confident that they even provided a timetable for its expected completion – sustainable 2% inflation by the middle of 2015 (the end of 2015 if “unforeseen” problems developed).

Because inflation is taken as a signal of a healthy economy, that was all that was thought necessary. It obviously wasn’t, since not only was there a striking and deep recession in the middle of 2014 for Japan (which was and is blamed, wrongly, on the tax alteration) the BoJ actually scaled up QQE later that year.

ABOOK Jan 2016 Japan Again QE's

The initial conditions for QQE in April 2013 were questionable, but central bankers remained undeterred; going so far as to vow to keep doing QE in its last format until it worked.

Former investment-bank economists Takahide Kiuchi and Takehiro Sato, who joined the board last year, opposed today’s statement that inflation is likely to reach 2 percent in the latter half of the three-year BOJ forecast horizon, Kuroda told reporters at a press briefing today. He said he personally thinks the goal will be achieved in the 2015 fiscal year.


Kuroda said that no board member judged that additional easing was needed now, and that policy adjustments would be made if necessary. The bank will keep its stimulus until stable 2 percent gains in consumer prices are realized, he said.

Even under the expanded version of QE10 (or 11, depending on how you define and count them) it isn’t enough. If the BoJ “has” to now add negative interest rates the only way to judge all the QE’s dating back to 2001 is as total failures. But that isn’t the full weight of reckoning, either, as it is plain that the Japanese people, households, have paid a very heavy price for all of the continuous balance sheet expansion and yen debasement.

The idea of monetary intervention in this fashion is redistribution; that some economic agents will benefit at the expense of others. While that “expense” is acknowledged by the monetary central planners, they feel it necessary in order to achieve economic pump priming again. Thus, those who lose out in the initial stages of QE are expected to be eventually rewarded by the full recovery (omelets need broken eggs). Ben Bernanke was (in)famous in that respect, often talking about the woes of those savers depending upon fixed income who will be richly rewarded for their pain when his theory is proven correct.

When I was chairman, more than one legislator accused me and my colleagues on the Fed’s policy-setting Federal Open Market Committee of “throwing seniors under the bus” (to use the words of one senator) by keeping interest rates low. The legislators were concerned about retirees living off their savings and able to obtain only very low rates of return on those savings…


In recent years, several major central banks have prematurely raised interest rates, only to be forced by a worsening economy to backpedal and retract the increases. Ultimately, the best way to improve the returns attainable by savers was to do what the Fed actually did: keep rates low (closer to the low equilibrium rate), so that the economy could recover and more quickly reach the point of producing healthier investment returns.

That last paragraph is tragic in all the ways that are evident right now and suggested for the upcoming intermediate term. Savers and households (true state of the labor market) not just in Japan have been bearing this burden of redistribution for more than a decade (and almost a decade in the US and Europe) and still they are forced to ask where is the recovery to reward their dictated drain? It’s all the more distressing given that question still unresolved just as concerns turn increasingly toward the “next” downturn. Why is the economy always in the initial stages of recovery so that, years upon years later, it still cannot withstand the slightest alteration of monetary genius? It stops being redistribution and takes on the proportions of unnecessary and even criminal torture. The banks must always win so that the people might in a generation or two down the road?

This is madness, pure and simple. And it takes on just those characteristics in light of the ECB’s totally deficient experience with negative rates and QE. Consider: the BoJ is now supplementing QQE with negative rates just as the ECB has been supplementing negative rates with QE. What planet is this?

The end of QE as a monetary appeal should be heralded as a huge victory for the forces of common sense, but instead it only demands the further death of money. Not merely content to squeeze “store of value” down to its last remaining elements, central banks apparently will take the next step and make it actually painful as if it wasn’t before. There are no “high notes” to this kind of affair, only lower lows.

This is why economics is not in any way like a science, let alone an actual scientific discipline. It is the Aristotelian method of divining essence and then expecting the world to unfold according to that internal epistemology; and when it inevitably doesn’t, there is no mechanism for correction. The economist will declare in no uncertain terms that monetary policy works, and that a lot of it will undoubtedly work well. No matter how long that position remains in the negative, nothing causes feedback that dislodges the initial premise. Instead, as if to prove the anti-scientific nature of orthodox economics and especially econometrics, the economist will search high and low in everything but monetary policy for the potential answer (such is the holy grail of monetary neutrality).

In March 2015, Kuroda had already essentially dismantled QE anyway by exposing that myth.

First, the initial rounds of QE weren’t potent enough. “In order to escape from deflationary equilibrium, tremendous velocity is needed, just like when a spacecraft moves away from Earth’s strong gravitation,” Kuroda recently explained. “It requires greater power than that of a satellite that moves in a stable orbit.”

This is hysteresis, an unnecessarily complicated word that essentially means an economy cannot move without external strength of monetary policy; you have to unleash enough force to get even small rock to roll down an incline. The bigger the rock, the more force necessary to get it rolling. That was the point of the “Q” in QE. The term itself was meant to convey the supposedly objective mathematics at work, harnessed by experts displaying immense technical knowledge. That economists working in central banks could precisely measure and determine the size of the rock and the degree of the slope so that they could exactly, quantitatively calculate the exact force necessary to start the forward rolling progress. Stock prices cheered when they made the claim, and now they cheer when it is disproven?

Actually, the entire idea was disproven by time some time ago, instead stocks are nearly euphoric (even for just a day) that such was actually acknowledged by those central bankers moving on to another kind of “Q’ (and hoping you don’t notice). I wrote just last Friday:

So in broad and general terms, we find that central banks all around the world have turned to increasingly absurd ways with which to make monetary policy find their intended depth; and still they never do. The things that have happened in the past few years would have in 2006 been judged utterly insane. We may have become far too desensitized by now, but if you told Bernanke that the Bank of Japan would be buying corporate debt at negative yields, as it did just this week, and that it wasn’t so outlandish to assume that the Fed might follow, he and everyone else would have dismissed you outright as insane. It no longer is.


If this year turns out the way it is already shaping up, can you really not imagine Janet Yellen (or her successor, assuming she doesn’t survive the growing debacle) doing the same as the Bank of Japan? There has already been a steady growth of stories and rumors, all emanating carefully from that policy corridor, of intellectual flirtations with negative interest rates. Not only that, the FOMC in June 2003, just as Greenspan was achieving his “ultra-low”, ridiculed the Bank of Japan for its first two (of ten or eleven, depending on how you count) QE’s – only to follow them almost exactly just five years later.

Ten years ago, all this would have been written off as the stuff of an insane mind or conspiracist. Now, it is just normal and economists would have you think it the only option. This is inflation; true inflation. The standards of actual conduct have been so eroded and degraded as to be totally meaningless; there is nothing left for honest trade except the further death of money. What we are finding is that it is not a “clean death”, however, but a tortured journey on a winding road of further and further madness. It only ends when someone finally gets to question why an economy needs monetary policy in the first place. Can an economy really not grow without it, or central banks? If there is only increasingly absurd monetarism in our future, the answer to that most fundamental question is not all that difficult.

via Zero Hedge Tyler Durden

“Stable” China’s Economic Bounce Is Over: PMIs Plunge In January

After an almost unprecedented surge in credit (total social financing) and over-invoicing enabled a bounce in China’s PMI data in December, both Manufacturing and Services data tumbled in January, confirming South Korean trade data. While manufacturing continues its contraction (dropping to 49.4, the weakest since Aug 2012), it is non-manufacturing’s plunge from a one-year high “transition is happening, see” narrative to practically the weakest print since 2008. But apart from that all that, China is “stabilizing” according to officials.

China’s economy is improving under medium-to high-speed growth, according to a People’s Daily commentary written by Zhong Sheng, who wasn’t identified.


There is consensus in the international community that long- term basic element in the Chinese economy is still strong: commentary


NOTE: Zhong Sheng is a homonym in Chinese for “voice of China” and commonly used in commentaries by the People’s Daily, which is published by the Chinese Communist Party

Does this look like stabilization to you?


Of course – if we just wait around long enough (like 45 minutes) Caixin’s PMI will print and explain all this ‘craziness’ away.

Time for some more devaluation – which is exactly what China’s CDS is implying.

via Zero Hedge Tyler Durden

America’s #1 Import: Deflation

Submitted by Erico Matias Tavares of Sinclair & Co.,

It seems that everyone these days is exporting deflation to the US.

The drop in commodity prices and the US dollar rally versus a broad basket of currencies in recent years had a big impact of course, but the magnitude of the decline of US import prices has been very significant indeed. And this matters for many reasons.

Competition for the all-important US consumer remains fierce, as exporting countries devalue their currency and/or further reduce their costs to maintain market share. While imports represent a relatively small percentage of US GDP (typically <17%), the technocrats at the Federal Reserve will now have to work harder to fan the flames of inflation across the economy (hint: not by continuing to raise interest rates…). Moreover, these price patterns suggest that all is certainly not well in the global economy.

The graph above shows the evolution of selected US import price indices by country of origin since January 2009 (=100), when the world was in the throes of the great recession, as provided by the US Bureau of Labor Statistics.

The dotted line shows total import prices excluding oil, to isolate the direct impact of the recent collapse in crude oil prices. After staging a post-crisis rally, prices of overall imports pretty much remained in a range between mid-2011 and mid-2014. But then something happened: the US dollar started to rally hard and that price index quickly went the other way.

How the major industrial exporters have responded is where things get really interesting.

The price index of the three majors peaked at different times: Chinese import prices peaked in early 2012, the Japanese later that year and the Europeans kept raising their US dollar prices until mid-2014. While the composition of the imports varies from country to country, it were the diverging policy responses that largely dictated what followed.

The graph above shows the 12-month change (in %) of each of those indices, providing a better sense of the magnitude of the price change. As a result of Abenomics and the crushing of the Yen, Japanese exporters have been the most aggressive in reducing their US dollar prices since 2013. The Chinese had started that process a few months earlier, but that has been more subdued until now. And the Europeans eventually jumped in the bandwagon, substantially cutting their prices throughout 2015.

With Japan joining the negative interest rate club last week, any subsequent Yen weakness will further tighten the screws on its competitors. And as the US dollar price of a Lexus becomes cheaper compared to a Mercedes, probably the Europeans will have to follow suit.

While the Chinese may not compete directly in the same high-end segments, with these dynamics it looks likely that they will have to further reduce their US dollar prices at some point. And if they do so in a meaningful way the impact on their competitors – from all over the world – could be quite dramatic.

Meanwhile American companies will have a much harder time competing domestically and abroad, certainly if the US dollar remains elevated.

The graph above shows the 12-month change (in %) for the EU import price index only, this time extended to the start of the data series in September 1993. When it goes negative it is usually associated with a major financial crisis, a global recession or both. So the recent price move suggests that there is trouble out there indeed.

American consumers will be delighted with everyone sending cheaper goods their way. However, what this may do to their income and employment prospects is a whole different matter.


via Zero Hedge Tyler Durden

Global Trade Collapsed In January: Bellwether South Korea Exports Crash “Most Since Lehman”

As the first major exporting nation to report each month, all eyes and hopeful speculative capital was glued to tonight’s South Korean trade data. After a brief respite in November, December’s drop was worrisome, but January’s just reported 18.5% crash – the most since the financial crisis – has only been seen during a US economic recession. Worse still, South Korean imports plunged over 20% in January as it appears crashing crude and cliff-diving freight indices are less about supply and more about demand (there is none) after all.

Annother red flag in the US recession looming camp…


Furthermore, with China accounting for around one quarter of South Korean exports – and following a 16.5% YoY plunge in December – tonight’s headline data suggests January was a total disaster for the Chinese economy also… though later we will get the PMI data to explain everything.

via Zero Hedge Tyler Durden

Is Germany Paying African Nations To Take Back Rejected Refugees?

As Der Freitag reports (via Google Translate), if the German authorities do not get rid of a refugee, you can just change his nationality. African embassies are paid for their help…

Joseph Koroma does not understand to this day why he was deported to Nigeria – a country in which he had never before set foot. When he fled to Germany in 2006, he applied for asylum and told his escape story: He had been persecuted in Sierra Leone, by supporters of the Poro secret society that controls whole regions in West Africa. They killed his father and threatened also to murder, unless he would join the Confederation him.


But the Federal Office for Migration and Refugees rejected the application for asylum. Among other things, questioned the officials, whether Koroma really come from Sierra Leone. He made ??a subsequent application and put new documents in front of his persecution, including a recent newspaper article, who took up his case. However, the application was subsequently rejected, Koroma sued – and lost. According to the competent ended court one could easily launch newspaper articles in Sierra Leone.


Now he was obliged to leave, but without a passport. So his stay by the German authorities was tolerated for many years – would be to his identity definitively clarified. In 2012, members of the Embassy of Nigeria changed his birthplace in the Nigerian state of Ogun – initially without Koroma's knowledge. A year later knocked policemen at his bedroom door. He should quickly grab a few things, the officials said, they would take him. His plane to Nigeria fly in a few hours. Koroma was stunned.

As SputnikNews confirms, the procedure is claimed to take place in the framework of the so called "Readmission Agreements" and mainly applies to African countries.

According to these agreements, the countries have to readmit their own citizens who were rejected an asylum status by Germany. But despite that, they are encouraged to accept rejected asylum seekers from other countries, who travelled through these transit countries to get to Europe.


As reported by refugee rights organization Pro Asyl, African embassies are paid for their assistance. German immigration authorities have allegedly invited officials from African States to participate in special meetings where they "decide on refugees' nationality."

This is by no means a small issue. As Der Freitag continues, based on the most recent figures from the year 2014…

At that time, found, according to the Federal Police 50 mass hearings with representatives of African countries instead of 18. A total of 720 refugees were questioned, or an average of more than ten per appointment. In addition, an unknown number of hearings, organize the federal states. The "success rates" vary: In hearings by Nigerian delegations about half of the presented was declared citizens, at the Embassy of Benin there are three of the four escapees.


But the method is not only error-prone. There are also conflicts of interest. The embassy staff get namely money if they allow deportation. For Germany, this is cheaper than the month-long tolerance of refugees.


Cooperation with the Nigerian Embassy designed a long time difficult to staff a reimbursement for the hearings have been promised: 250 Euros per summons, another 250 euros for identification, including issuing the travel document. Benin employees will each receive 300 euros. The different levels will be officially on the grounds that it concerns charges of the respective embassy and Germany it had no effect.


Officially, the federal police does not comment on this case.

Away from the dubious method of establishing identity, the question arises whether it is reasonable to make precisely Nigeria one of the main deportation destinations in Africa. In 2012, a memorandum of understanding between Germany and Nigeria was signed, which determines the course of the hearings, and reaffirms the common will to work together. Even Frontex praises the close cooperation with Nigeria, there is a contract against "illegal migration".

The situation in the African country is unstable.

Since late 2010, the Islamist militia Boko Haram perpetrated regularly attacks on the population. Even the state security forces are accused of serious human rights violations such as killings, brutal mistreatment and torture. The Embassy of the Republic of Nigeria wants to express no opinion on repeated request.

via Zero Hedge Tyler Durden