Month: December 2016

Angry Dems Play The Blame Game Over Hillary Loss As the Infighting Escalates

Angry democrats are lashing out at anyone and anything they think contributed to Hillary’s loss while vehemently igoring the simple fact that Hillary, and her many scandals, were the unilateral reason for their crushing defeat.  Be that as it may, it is far easier to blame some combination of Bernie Sanders, Putin, James Comey, “Fake News”, Julian Assange, White Supremacists, The Electoral College, Jill Stein…and the list goes on and on.

Of course, as we recently noted, Obama has decided to focus his blame on Fox News and other “fake news” outlets.

 

Jennifer Palmieri (Hillary’s Communications Director), on the other hand, has chosen to blame “white supremacists” for Hillary’s loss…yes, because the Midwest states of WI, MI, and PA that voted for Obama twice by huge margins (Obama won Michigan by 17 points in 2008!) suddenly became overrun with “white supremacists” who showed up in force on election day to hand the presidency to Trump.

“If providing a platform for white supremacists makes me a brilliant tactician, I am proud to have lost.  I would rather lose than win the way you guys did.”

 

Meanwhile, Peter Daou, the former chief executive of Shareblue, an online venture described by the New York Times as “Hillary Clinton’s outrage machine,” has decided to focus his anger on Bernie….which has resulted in yet another glorious tweet storm from a disaffected Hillary supporter.

 

But, The Hill was able to track down at least a couple level-headed democrats who admitted that the blame game is “bullshit” and that “the Clinton people have to stop blaming everybody else for their loss.”

The idea that Sanders bears any blame for Clinton’s loss is “bullshit,” according to progressive commentator Bill Press, who is also a columnist for The Hill.

 

“Democrats — particularly the Clinton people — have to stop blaming everybody else for their loss,” Press continued. “The idea that they are going to blame it on Bernie, or blame it on [FBI director James] Comey, or blame it on the Russians… The other two [excluding Sanders] were factors but it doesn’t take away from the big picture that they lost an election they never should have lost.”

 

Whether Sanders would have won where Clinton failed is a question that will give progressives sleepless nights for a long time. The Vermont senator’s wife, Jane Sanders, said in the days after the election that he would “absolutely” have had a better chance of vanquishing Trump. But, she added, “it doesn’t matter now.”

 

“Hillary Clinton deserves all the blame she gets for the candidate she was and the campaign she ran,” said one Democratic strategist who requested anonymity to speak candidly. “But it is incredibly disingenuous for Bernie Sanders and his team to suggest they would have done better. He couldn’t win the f–king primary!”

We wonder whether democrats will ever wake up to the fact that the cause of their loss is actually quite simple and can be summed up in a single picture:

Hillary

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Metals and Forex Galore (Video)

By EconMatters


We compare the year over year metrics for the Metals and Currency Markets in this video. Palladium and Copper outperformed Silver and Gold Markets. The Russian Ruble and Brazilian Real strengthened against the US Dollar in year over year comparisons. The British Pound, Mexican Peso and Chinese Yuan all weakened considerably against the US Dollar the past year.

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Meet The Competitors In Italy’s Referendum

Via Stratfor,

Italy is finally holding its referendum on constitutional reforms. Prime Minister Matteo Renzi's proposals would reduce the powers and size of the Senate, granting the Chamber of Deputies more authority and transferring prerogatives from regional administrations to the central government in Rome. The changes would, in theory, sever the link between political instability and financial fragility in Italy. Instead, because Renzi has promised to step down if the Italian people vote against the reforms, opposition parties such as the Five Star Movement and the Northern League — and even some members of Renzi's center-left Democratic Party — have cast the referendum as a chance to force the prime minister and his government to resign.

Even if voters reject the reforms and Renzi resigns, early elections for a new government are not a given. Italian President Sergio Mattarella could ask Parliament to form a new government and appoint a prime minister, probably with the goal of introducing political and economic reforms. The Five Star Movement has said it would not support a caretaker government, but the Democratic Party and its junior coalition partner still control enough seats in Parliament to appoint a new prime minister, provided that they stay united.

Moreover, opinion polls show that the Five Star Movement's popularity is close to that of the Democratic Party, giving it incentive to avoid early elections that could unseat it. In a potential runoff election between the Democratic Party and the Five Star Movement, all opposition parties could side with the protest party to propel it to victory. This prospect might impel the government to change the rules while it still can. Lorenzo Guerini, the deputy secretary of the Democratic Party, has said that in case of a defeat in the referendum, the party would try to modify the country's electoral laws so that new elections could be held in summer 2017.

Whether or not the referendum fails and subsequent early elections are held, the possibility that the Five Star Movement will eventually triumph at the national level cannot be discounted, because more and more Italians have grown weary of traditional political parties. Decades of mismanagement and corruption have led to voter mistrust in the establishment parties' ability to turn around Italy's tepid economic growth and persistently high unemployment. Still, a government led by the Five Star Movement would face many of the same constraints as its predecessors.

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Putin Says Trump Is “A Smart Man”, Will Adapt To Responsibilities As “Unipolar World Model Fails”

Following Trump’s phone call on Friday evening with the Taiwan president, which led to scathing response by the US press and diplomatic corps, both of which were shocked to see Trump threaten the “One China” status quo by taking foreign policy matters into his own hands (the same media and diplomats who were just as shocked to see Trump win the presidential election) , on Sunday morning Trump got some words of encouragement from none other than Vladimir Putin, who in an interview with Russian NTV TV, said that Trump is “a clever man” and will quickly adapt to his new responsibilities and new role as president.

“Trump was an entrepreneur and a businessman. He is already a statesman, he is the head of the United States of America, one of the world’s leading countries.”

“The fact that Trump managed to achieve success in business, suggests that he is a smart man,” Putin said in the NTV interview.  “And as he is smart, that means he will fully and quite quickly be aware of a different level of responsibility. We assume that he will be acting this way,” he added.

Putin has spoken previously of his hope that Trump will help restore U.S.-Russia relations, and analysts said he was unlikely to want to dial up anti-Western rhetoric before Trump’s inauguration in January.

“Because he achieved success in business, it suggests that he is a clever man. And if (he is) a clever man, then he will fully and quite quickly understand another level of responsibility. We assume that he will be acting from these positions,” Putin said.

Putin’s comments seemed to address criticism from Trump’s opponents who say his unconventional actions since the election – including railing at the cast of a Broadway show and early-morning invective on Twitter – show Trump is out of his depth.

Discussing Russia’s poor relations with the West, Putin touched upon the current geopolitical situation, saying that he could see it changing, as attempts to establish a unipolar world have failed.

“I believe that it is not a secret, everyone can see, that many of our partners prefer to refer to the principles of the international law, because the balance of power in the world is gradually being restored,” he said. “But this is inevitable!

Finally, Putin said when building relationships with other countries, Russia would respect their interests: “Attempts to create a unipolar world have not succeeded. We are living in a different dimension. Russia has always held this point of view – that, while protecting our national interests, we must respect the interests of other countries. So, this is the way we establish relations with other countries.”

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Something Strange Is Taking Place In The Mediterranean

Via GEFIRA,

NGOs are smuggling immigrants into Europe on an industrial scale

For two months, using marinetraffic.com, we have been monitoring the movements of ships owned by a couple of NGOs, and, using data from data.unhcr.org. We have kept track of the daily arrivals of African immigrants in Italy. It turned out we were witness of a big scam and an illegal human traffic operation.

NGOs, smugglers, the mafia in cahoots with the European Union have shipped thousands of illegals into Europe under the pretext of rescuing people, assisted by the Italian coast guard which coordinated their activities.

Human traffickers  contact the Italian coast guard in advance to receive support and to pick up their dubious cargo. NGO ships are directed to the “rescue spot” even as those to be rescued are still in Libya. The 15 ships that we observed are owned or leased by NGOs have regularly been seen to leave their Italian ports, head south, stop short of reaching the Libyan coast, pick up their human cargo, and take course back 260 miles to Italy even though the  port of Zarzis in Tunis is just 60 mile away from the rescue spot.

The organizations in question are: MOAS, Jugend Rettet, Stichting Bootvluchting, Médecins Sans Frontières, Save the Children, Proactiva Open Arms, Sea-Watch.org, Sea-Eye and Life Boat.

The real intention of the people behind the NGOs is not clear. Their motive can be money, we would not be surprised if it turned out to be so. They may also be politically driven; the activities of the Malta-based organisation, MOAS, by trafficking people to Italy is the best guarantee that migrants will not show up on the Maltese shore. MOAS is managed by an Maltese Marine officer well known in Malta for his maltreatment of refugees 1). It is also possible that these organisations are managed by naive “do-gooders” who do not understand that offering their services they are acting like a magnet to the people from Africa and thus they are willy-nilly causing more fatalities, not to mention that their actions are destabilizing Europe.

How high-minded the intentions of these organisations might be, their actions are criminal as most of these migrants are not eligible for being granted asylum and will end up on the streets of Rome or Paris and undermine Europe stability raising racially motivated social tensions.

Brussels has created particular legislature to protect people traffickers against prosecution. In a dedicated section of an EU resolution entitled On Search and Rescue, the text states that “private ship masters and non-governmental organisations who assist in sea rescues in the Mediterranean Sea should not risk punishment for providing such assistance.”2)

During the two months of our observation, we have monitored at least 39,000 Africans illegally smuggled into Italy, which was done with the full consent of the Italian and European authorities.

More information:

In October we discovered that four NGOs picked up people in the Libyan territorial waters. We have proof that these smugglers communicated their action in advance with the Italian authorities. Ten hours before the immigrants left Libya, the Italian coast guard directed the NGOs to the “rescue” spot:  Full account  “Caught in the act: NGOs deal in migrant smuggling”

The MOAS organisation has close links with the famous US military contractor “Blackwater”, the US army and the Maltese navy. Full account: “The Americans from MOAS ferry migrants to Europe”

There is a full account about the ships involved: “NGOs Armada operating off the coast of Libya”and how people are encourage to come to Europe: “Death road to Europe promoted on the web”

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The Eurodollar Market: It All Starts Here

By Chris at http://ift.tt/12YmHT5

This is the first part of a series of articles (I don’t know how many, I’m not done yet) designed to explain what is easily THE most important, albeit poorly understood (even by professionals) market on this ball of dirt.

Eurodollars: What Are They?

To best explain what Eurodollars are we start with the English language.

You see, while English belongs to the Brits it is at the same time the undisputed, undefeated heavyweight champion of the world’s languages. You can be in Marrakesh, Ulan Bator, or Shanghai, and buy yourself a cold beer, swear at a taxi driver, and discuss the weather with a lady called Mei at the train station – all without changing language once.

Sure, you may have to strain your ears to understand Singlish in Singapore, and Texans have their own version of most everything, so why not English?

Australians always sound like they’ve had too much to drink (which is entirely possible), and at the speed that Kiwis talk it’s no wonder they were exiled to live in a land with more cattle than humans. Hell, even in the birthplace of the English language you’d be found scrunching your face, straining your ears, and begging for sign language instead when conversing with a Geordie. And heaven forbid you find yourself in a pub full of drunken Glaswegians.

Still, English is the grease in the cogs of global communications and so it is with dollars in global finance.

Dollar deposits in their birthplace (US) are well, just dollars. Dollar deposits outside of the US are like Singlish or Ingrish and the dozens of variations across the globe. It’s the same language just in a different place. Just as dollar deposits outside of the US are still dollars.

So eurodollars are essentially all those dollar deposits outside of the US banking system. They are NOT nor have ANYTHING to do with that ridiculous monetary experiment called the euro which wasn’t yet a twinkle in the eye of European bureaucrats, let alone a bump in the womb of Europe, when eurodollars first came into existence.

Eurodollars got their name originally from US dollar deposits in European banks, and in fact their origins date back to the communist days when the Ruskies and Chinese kept dollar deposits abroad (non-US banks) for fear of seizure. Today, however, they are dollar deposits in any bank outside of the US. So dollar deposits in Tokyo, Moscow, and London are all part of the eurodollar system. They are actually even more than simple dollar deposits, which I’ll come to in a bit, but I don’t want to confuse you with what is an incredibly complex market, so let’s do this one step at a time.

What’s It Got to Do With Europe and the Euro Currency?

The term “euro” in eurodollar has as much to do with the euro currency, or the European Union, as peanut butter has to do with the solar system – nothing. You can, for example, have euroeuros or euroyen and these would be euro deposits outside of the EU and euroyen would similarly be yen deposits outside of Japan. Got it?

What’s important to understand is that the eurodollar system is THE biggest source of global funding, bar none. Nobody knows for sure how large it is as it’s basically a large unregulated financing system with thousands of participants globally. But we do know that the eurodollar futures market on the CME is larger than S&P futures, larger than oil futures, larger, in fact, than the 10-year bond futures. It’s estimated over 90% of international trade is financed through the eurodollar market. As Trump would say: it’s yuuuge!

In fact, when cash settled eurodollar futures contracts were introduced to the CME in 1981 it was immediately the largest trading pit ever.

Courtesy CME

Courtesy CME

That so few investors know about this enormous market, its importance, and relevance is frankly pretty shocking. 

Understanding the eurodollar market goes a long way to understanding why, despite the greatest monetary intervention we’ve ever seen by central banks, we’ve remained in a contractionary environment. I, for one, learned precious little about eurodollars at university, and I know it’s only lightly covered in MBA programs and the CFA which is simply mind boggling to me. But then I don’t make up the syllabus and I’ve always said college is a waste of valuable time. 

Our Global Financing System: Hidden in Plain Sight

The eurodollar system is a global financing system regulated by no one, influenced by many, and directly or indirectly affecting every asset price globally. Think of it as a deposit and loan market for offshore dollars. It affects asset prices because it is the wholesale financing system most used in the world. To be clear: there exist wholesale financing in other currencies (the eurocurrency market) but the dollar accounts for an estimated 75% of the eurocurrency market. It is the big Daddy.

It is a critical component to how banks fund and manage their liability structures. It’s also worth pointing out that the eurodollar market is almost entirely a cashless market. It is for simplicity sake, banks’ balance sheets.

The advent of technology in finance has allowed for real time matching of assets and liabilities across financial institutions and the balancing of what are essentially banks’ balance sheets enacted with eurodollars. It is to a certain extent as close to a virtual currency as a real virtual currency like Bitcoin. Very efficient, close to instantaneous, and, in the case of eurodollars, allows for the tapping of huge pools of capital, which can be freed up for financing.

Why Should I Care?

Good question, always worth asking. Otherwise you risk landing up being an intellectual – great at cocktail parties, full of smart things to say, but broke. After all, what good is information you can’t or don’t execute on?

Eurodollars provide us with what is THE best insight into global capital flows and credit demand. Problems in the eurodollar market are problems in the market. Heck, this IS the market.

The eurodollar financing market took a massive blow to the skull back in 2007, which makes sense given that so much collateral was wiped from the system (the topic of my next article on this).

What is both fascinating and scary at the same time is that despite all of the central bank QE programs collateral has failed to come back into the system. It’s as if the eurodollar market is suffering from concussion. We know this by looking at the eurodollar market which has never regained levels seen back in 2007.

What this tells us is that the offshore money market world is failing to produce collateral and this failure to produce collateral is reflected in the eurodollar funding markets. QE doesn’t address this problem as it is interest rate driven stimulus and this isn’t a cost of capital problem but a collateral problem. But more on this in part II.

This is deeply disturbing, and the actions taken by central banks have actually sucked high quality collateral from the system. And it is this collateral which has traditionally underpinned the wholesale funding markets, the largest of which is the eurodollar market.

Remember in 2008 when the Fed, in a blind panic, opened dollar swap lines, which they deployed in an unlimited fashion and which actually got to about $600 billion that year?

Well, what was happening was that even though the Fed had taken a chainsaw to the Fed funds rate and opened the credit spigot to full throttle, the international money markets never responded. LIBOR, which I’ll get to in a jiffy, remained elevated, which means the offshore dollar financing market was still bricking itself.

I’ll cover the reasons for WHY this was and still is the case in next week’s article, but for now now simply remember that, despite unlimited swap lines between the Fed and global central banks, the dollar shortage wasn’t ever resolved.

Dollar Shortage

The other thing this tells us is that there is a chronic dollar shortage in financial markets, and existing dollar financing is only going to continue to be constrained as the dollar moves higher.

Remember, dollar denominated debts become increasingly unmanageable as hedging costs rise.

This creates a feedback loop whereby, in order to decrease risk, market participants either hedge dollar risk (where their collateral is in other currencies but they have USD costs somewhere in their cost structure – think European manufacturers using US technology for example). These guys hedge this exposure by buying dollars and this pushes the dollar higher.

Or market participants reduce leverage by unwinding debt positions, and, in order to do so, they have to buy back dollars as they unwind what are short dollar positions. Once again, this pushes the dollar higher.

Protectionism: Gasoline to the Fire Dollar Shortage Fire

Ok, so Trump’s promised to bring jobs back to America. It’s protectionism writ large. He’s promised to lower tax rates to incentivise those jobs to return to the US.

Whether he manages to do this or not we’ll have to wait and see. To be clear I’m unconcerned with whether this is a good or bad thing or whether Trump is an angel or a demon. I’m only concerned with what takes place and how I can profit from outcomes.

That said, understand that there’s an estimated $3 trillion in corporate US profits sitting offshore. What happens if Trump manages to pull this off?

I’ll tell you what happens. Those dollars move OUT of the eurodollar market, a market already starved of dollars, back into US banks. Uh oh! And this brings me to eurodollar futures.

Bonds, Not Currency

Where the rubber meets the road is where this is tradable. Otherwise all we’re doing is engaging in intellectual masturbation which while it’s fun doesn’t change our income statement or balance sheet and that’s the objective here after all.

Ok, so we’ve just run through an admittedly extremely abbreviated discussion of the eurodollar financing market but one which hopefully provides you with some grasp of how it functions and it’s importance. As complex as the eurodollar financing market is, understand that the eurodollar futures market is a market which ultimately prices risk, and it is, I believe, the best pricing of risk we can look at in the global market.

Eurodollar futures are NOT currency futures.

Let me explain. Take Aussie dollar currency futures. These are plain vanilla currency futures. Ditto any other currency.

Eurodollar futures, on the other hand, are nothing like this as they are in fact cash settled futures contracts whose price moves in response to the interest rate offered on those dollar time deposits held in offshore (non-US) banks.

They are therefore interest rate products not currency futures and this is why I just said that this market is the best market in the world to understand global risk.

These loans or time deposits between banks are reflected in an average rate of interest charged. This is the London Interbank Offered Rate (LIBOR).

LIBOR

The rate at which banks are borrowing from and lending to each other is therefore a derivative of the eurodollar market.

The essence of the eurodollar market is that it provides us a window into where the crowd thinks LIBOR will be at a point in the future. So eurodollars are all about expectations of the future.

LIBOR Rates – 30 Year Historical Chart

Libor rates chart

Will the Fed Hike in December?

LIBOR, which indicates the pricing of risk in the eurodollar market, IS the market. Take a look at the chart above. Right now it’s telling us we’ll get a rate hike in December. Don’t believe me? Why don’t we wait and see, shall we?

Summary

The eurodollar market is the world’s largest and most important funding market.

How it functions, how it used to function pre-GFC, and how it has largely broken down since the 2008 crisis is key to understanding global capital flows in the financial markets. Everything from equities to fixed income, and indeed currencies, is affected. It is indeed pivotal to the Insider alert you’ve just received if you’re a member of our Insider circle so you’ll know what I’m talking about and if we’re correct there exists extraordinary asymmetry in being on the right side of what’s happening here.

I’ll follow up with part II where I will go into why the eurodollar market isn’t functioning properly, who’s to blame, and what this means to us as investors so be sure to watch your inbox if you’re on the free subscriber list.

I’ll leave you with a question:

What would happen to global communications if we took English out of the picture?

Yeah, I thought so.

More soon…

Have an excellent weekend. I’m going to run up a mountain. Wish me luck.

– Chris

“I find your lack of faith disturbing.” — Mario Draghi Darth Vader

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In Sunday’s “Day Of Reckoning”, Austria Braces For Historic Presidential Election Result

Six months after a hotly contested presidential election was voided following after evidence was found confirming “widespread” voting fraud, Austrians returned to the polls on Sunday in a bitterly fought election re-run which could see the European Union’s first far-right president and boost the anti-establishment tide sweeping many countries.

Austrian presidential candidates Van der Bellen (left) and Norbert Hofer (right)

Norbert Hofer of the anti-immigrant Freedom Party (FPOe) said he felt “calm and optimistic” as he cast his ballot in his hometown of Pinkafeld, 100 kilometres south of Vienna. Hofer, 45, hopes to emerge victorious after he narrowly lost to Greens-backed independent candidate Alexander Van der Bellen in a first run-off in May, which was annulled over ballot count breaches.

Opinion polls indicate the candidates are neck-and-neck in a tense race described as “day of reckoning” by Austrian media.

As AFP reports, boosted by Brexit and Donald Trump’s shock US election win, smooth-tongued gun enthusiast Hofer has vowed to “get rid of the dusty establishment”, seek closer ties with Russia and fight against “Brussels centralising power”. “This vote will be a sign of the mood in Europe,” Viennese voter Gerhard told AFP, bracing icy temperatures to cast his ballot.

Needless to say, should Norbert be elected, the mood in Brussels, if not so much Europe, will be quite dour.  Although Austria’s presidency is largely ceremonial, EU leaders fear a win for Hofer would trigger a domino effect with key elections next year in France, Germany and The Netherlands. Populist groups across Europe, on the right and the left, have benefited from a growing sense of unease about globalisation, multiculturalism, rising inequality, and austerity cuts.

“Much success today, Norbert,” tweeted the FPOe’s Dutch ally Geert Wilders, whose anti-Islam party is leading opinion polls ahead of a general election in March.

As reported before, the Austrian vote will be announced just hours ahead the conclusion of a high-stakes referendum in Italy, which could bring about the resignation of its prime minister and renew chaos in a bloc already weakened by Britain’s shock vote in June to quit the EU.

Terrified of the ongoing overhaul against the status quo, the Financial Times wrote recently that “nationwide votes in Austria and Italy on December 4 are causing palpable anxiety in Europe that… this will be the day when the sky starts falling.”  Incidentally, here is a list of the FT’s predictions for 2016 from December 31, 2015:

* * *

6.4 million Austrians are eligible to vote, and exit polls are expected shortly after voting ends at 1600 GMT, in less than an hour. If the race is too close to call, the winner will not be known until Monday when the postal vote count is tallied.

One can hope that unlike May, this time there won’t be postal vote fraud: back in May, this is what swung the ballot in favour of ex-Greens party chief Van der Bellen, 72, who beat his rival by just 31,000 votes. LHofer’s lawyers showed irregularities in the way some of the roughly 4.5 million ballots were counted, leading to today’s vote re-run.

Today’s repeat vote ends an ugly 11-month campaign which saw Hofer posters being defaced with Hitler moustaches and Van der Bellen’s with dog excrement. “The new president has to unify the country, this long election has polarised society,” voter Katharina Gayer told AFP in Vienna.

Amid growing voter fatigue, Van der Bellen has urged people to choose “reason, not extremes” while Hofer vowed to keep Austria “safe”. The far-right hopeful has largely avoided inflammatory rhetoric, instead tapping into public anxieties about record immigration and rising unemployment.

His polished style saw him triumph in a first round in April, sensationally knocking out candidates from the two main centrist parties that have dominated Austrian politics since 1945. Disillusioned voters are “flocking to populist movements and the easy answers they offer,” political analyst Thomas Hofer (no relation) told AFP.

“We want to be part of the EU but not to lose our identity,” voter Helwig Leibinger told AFP at Hofer’s final rally in Vienna on Friday. “We want a commander-in-chief of the armed forces who can give the right orders.”

* * *

As Bloomberg adds, whether or not Hofer manages to defeat Alexander Van der Bellen of the Green Party in Austria, the country is heading for its first president in seven decades who isn’t from either the Social Democrats or the People’s Party.

Both candidates have promised to wield the power of the presidency more aggressively. Hofer, 45, has promised to dismiss governments he deems incapable of passing legislation. Van der Bellen, 72, has pledged to block anti-EU forces from governing. Hofer also wants to trigger new national elections. “The incentive for Hofer to dissolve the National Council if he wins the Presidential election is clear,” JP Morgan economist David Mackie said in a note. “The Freedom Party looks likely to do much better if an election were to be held now, as it is currently polling well ahead of the other two parties.”

Still, what a Hofer victory might mean is not exactly unclear. He wants more Swiss-style direct democracy, including a referendum on Austria’s EU membership if Turkey joins or the bloc becomes more centralised. Hitherto unused presidential powers could, in theory, allow Hofer to fire the coalition government.

More realistically his victory might prompt the main parties to pull the plug on their unhappy union and call fresh elections, benefiting the poll-leading FPOe. In 2000, over 150,000 people marched in Vienna against the FPOe after it entered a coalition with the conservative People’s Party. But observers say the far-right’s rise may not trigger the same backlash now that populists are gaining ground across the continent.

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Turkey Proposes Trade With China, Russia And Iran In Local Currencies

Forget the “impossible trinity” – Turkey is facing a just as impossible dilemma where it is trying to juggle two things at the same time: attempts to lower interest rates while supporting its currency, and predictably it is failing.

On Friday, the Turkish Lira crashed to record lows, plunging as much as 3.60 against the dollar when Turkish president Erdogan urged banks to lower interest rates because in order to stimulate investment in the economy “there is no other remedy”.

He referred to the United States, Japan and Europe as examples of where rates are low and questioned why Turkey still had such high rates. The Lira, which has soundly ignored the recent rate hike by the Turkish Central bank, plunged on the news, which in turn prompted Erdogan to tell his countrymen to convert their dollars into Lira and gold.

“For those who have foreign currencies under the pillow, come change this to gold, come change this to Turkish lira. Let the lira win greater value. Let gold win greater value,” he said during a televised speech in Ankara.

Then overnight, Turkey continued its crusade against high rates, so critical to keep the currency from foundering, when it announced it would prevent companies from borrowing at high rates. The measure will be part of a broader package of economic steps due to be announced Thursday, according to state-run Anadolu Agency which cited Deputy PM Veysi Kaynak as saying in an interview on CNNTurk.

“The rise in the dollar is certainly important, but the rise in interest is affecting our companies very quickly.” He added that the “prime minister will explain a package of measures that will touch the daily lives of our people,” and “relieve our companies financially,” including our banks.”

It was not exactly clear how government pressure to lower rates would help the plunging currency, however, in a surprising twist, one which likely seeks to isolate the Turkish Lira from its dependency on the US dollar, Erdogan said on Sunday that Turkey is taking steps to allow commerce with China, Russia and Iran to be conducted in local currencies, in what Reuters dubbed “the government’s latest effort to shore up the tumbling lira.”

Speaking at the opening ceremony of a shopping mall in Istanbul, Erdo?an said that he had proposed Russian President Vladimir Putin to conduct trade between the two countries with local currencies. 

Turkish President Recep Tayyip Erdo?an speaks during an opening ceremony in Istanbul on Dec 3. / AA Photo

“I proposed Putin the following: Let’s do our trade in local currencies. Whatever I buy [from you] I shall pay you in Russian ruble, and whatever you buy from me make the payment in Turkish Liras,” said Erdogan on December 3, quoted by Hurriyet. 

He added that he had made the same offer to China and Iran and his offer was found reasonable.  “We have given the necessary instructions to our central banks and we will try to conduct such [trade] relationships between us through this way,” Erdogan said.

Erdogan again reiterated his call to Turkish citizens to convert their foreign exchange into gold or the Turkish Lira. “Those who keep foreign currency under their mattress should come and turn them into lira or gold,” he said. 

Stating that one should convert their foreign currencies to liras or gold against the ones who want to “destroy us,” Erdogan also answered the question of ‘what if we lose money,’ with this currency conversion. 

“Look, this is national, there is fruitfulness in this, you will not make a loss from this, do not worry,” said Erdogan, adding that it was actually the “other,” a reference to foreign currencies, that would make the Turkish people lose because “the other is a representative of the imperial logic.” “You look after your money that is local and national; the money will stay here,” he said.

We expect another sharp move lower in the TRY following these overtures by what increasingly sounds like a desperate regime, one in which Erdogan is likely set to soon take over the central bank next,in his quest to both lower rates and boost the currency.

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Why Trump’s War on the Media Matters: New at Reason

I must break you.Presidents tend to treat the news media warily, sometimes even with outright hostility. But there’s something different about the way President-elect Donald Trump deals with the press. As Trevor Thrall explains in a new column for Reason, “the deeper danger is that Trump’s war will undermine the media as an effective forum for debate and deliberation.”

Thrall adds:

By avoiding engagement with journalists and by stifling media critics through public shaming and other strong-arm tactics, Trump will weaken the ability of the press to play the role of watchdog and critic envisioned by the Founders and embodied in the First Amendment. By attacking the media’s objectivity and credibility, the Trump administration will weaken what’s left of public confidence in the public sphere and, by extension, in the entire project of democratic self-governance.

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In Tweetstorm, Trump Threatens “Retribution” For Companies That Leave The US

President-elect Donald Trump fired off Sunday morning with a Tweetstorm (after again complaining about the “totally biased, not funny ” Saturday Night Live), and in a series of six tweets threatened heavy taxes as “retribution” for U.S. companies that move their business operations overseas, fire US workers and still try to sell their product to Americans. Trump vowed he would slap a 35% tax on products sold inside the U.S. by any business that fired American workers and built a new factory or plant in another country.

The president-elect tweeted that his administration will “substantially reduce taxes and regulations on businesses. But any business that leaves our country for another country,” he added, “fires its employees, builds a new factory or plant in the other country, and then thinks it will sell its product back into the U.S. ……without retribution or consequence, is WRONG!”

Trump said there will be a 35 percent tax on the country’s “soon to be strong border” for companies that leave and then want to sell their products back to U.S. consumers. “This tax will make leaving financially difficult, but…..these companies are able to move between all 50 states, with no tax or tariff being charged,” the president-elect tweeted. 

“Please be forewarned prior to making a very expensive mistake! THE UNITED STATES IS OPEN FOR BUSINESS.”

Trump last week reached a deal with Carrier to keep about 1,000 factory jobs in Indiana that were slated to move to Mexico. On Friday night, we hinted that Rexnord, which is planning to move 300 jobs from Indiana to Mexico, is in his sights next.

The tweetstorm also suggests that far from moderating his stance on protectionism, Trump is only getting started; however it also means that companies will simply have to get more creative with finding tax loopholes that do not lead to escalating “retribution” although if Trump is indeed serious on punishing anyone who fires US workers in a quest for lower wages, may have their work cut out for them. 

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