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A hungover America slowly wakes up from a day of society-mandated consumption and purchasing excess to engage in even more Fed-mandated excess in the equity markets. The only difference is that while the “90%” was engaged in the former and depleting their equity, and savings, accounts in the process, far less than 10% will be doing the latter.

Overnight attention was drawn to the rapidly escalating territorial dispute between China and Japan, now in the air, Bitcoin’s brief surge above the price of an ounce of gold, and the ejection of the Holland from the AAA Eurozone club (where only Germany and Finland remain), following an S&P downgrade of the Netherlands from AAA to AA+, which however had been largely priced in long ago (and was coupled with an upgrade of Spain from negative to stable outlook, as well as an upgrade of Spain from CCC+ to B-). Europe surprised pleasantly on both the inflation (better than expected) and unemployment rate (dropped from an all time high of 12.2% to 12.1%), even if youth unemployment rose to fresh record highs.

A few quick remarks on “Black Friday” from Deutsche: welcome to Black Friday although this long standing tradition seems to be losing its relevance over time. Indeed major retailers such as Wal-Mart, Target, Best Buy, Kohl’s, JCPenney, Kmart and Toys R Us were all opened for business last night to kick-off the all-important holiday shopping season. Not to be outdone, Macy’s also ended a 155-year tradition to follow suit by opening their doors on Thanksgiving Day. ‘Grey Thursday’ is fast becoming the norm. For bargain hunters who prefer to let their fingers to do the walking, online shopping has also gained increasing popularity in recent years. Indeed the latest poll from AC Nielsen’s Holiday Spending Forecast study, which surveys over 22,000 households throughout the US, indicates that 85% of consumers plan on skipping the stores on Black Friday this year. This is up from 82% in 2012, 82% in 2011 and 80% in 2010 so a negative four-year trend is taking shape. Black Friday shopping seems to be merging with Cyber Monday as well with 51% of consumers say they will do their Black Friday shopping online this year. According to the National Retail Federation, the holiday season generally accounts for about 20% of the retail industry’s annual sales so all eyes will be on retail sales updates/snippets over the weekend.

The US event calendar is empty which means the low volume levitation can continue without fears that on this POMO-free day something may surprise the NY Fed “long only” trading desk.

 

Overnight bulletin summary from Bloomberg and RanSquawk

• Despite the risk-on sentiment, Bunds were supported by month-end flows and this morning’s CPI releases as market participants expected a higher number following yesterday’s inflation reading from Germany which buoyed expectations
• S&P cut Netherlands to AA+ from AAA; outlook stable, change Spain’s outlook to stable from negative, maintains BBB- rating and raise Cyprus sovereign rating to B- from CCC+, outlook stable.
• As was the case yesterday volumes are expected to be light as a result of the Thanksgiving Holiday
• Treasuries head for modest weekly loss in quiet holiday trading; 5/10 and 5/30 curve spreads holding near steepest levels since 2011 on expectations Fed aims to taper asset purchases while holding short rates low indefinitely.
• Sifma recommends 2pm close for U.S. fixed-income markets; stock markets close at 1pm
• Bank of England’s Mark Carney took steps yesterday to head off a potential housing bubble by diluting a credit-boosting program, two weeks after raising growth  forecasts and signaling interest rates might increase sooner than previously projected
• Euro-area inflation rose to 0.9% in Nov., more than foreacst, moving toward the ECB’s goal for the first time in four months
• The jobless rate in the EU fell to 12.1% in October from a record 12.2% the prior month
• S&P cut its rating on the Netherlands to AA+ from AAA, leaving Germany, Finland and Luxembourg as the only euro- area countries with a AAA rating at the three main ratings companies
• While the Obama administration has said the government’s troubled healthcare.gov website will function smoothly by the end of tomorrow, those paid to help enroll Americans in Obamacare remain doubtful
• Small businesses won’t be able to use the federal government’s health-insurance website until November 2014 in most U.S. states, the latest delay for Obamacare
• China sent planes over a new air defense zone off its  eastern coast for a second day, asserting Communist Party leaders’ determination to enforce control over the area after challenges from the U.S., Japan and South Korea
• Sovereign yields mixed; EU peripheral spreads narrow. Asian stocks mixed, European stocks, U.S. equity-index futures gain. WTI crude, copper and gold higher

 

Market Re-Cap from RanSquawk

European equities are mixed across the board over the course of the European session this morning with French banks benefiting in early trade after a broker recommendation by UBS and thus providing some gains for the financial sector across Europe. Despite the risk-on sentiment, Bunds were supported by month-end flows and this morning’s CPI releases as market participants expected a higher reading following yesterday’s inflation reading from Germany which buoyed expectations. In turn, EUR/USD failed to benefit from the upward trending EUR/GBP which itself was driven by the regular month-end demand out of EU sovereign names. At the same time, a combination of profit taking related flows, together with optionality plays continues to weigh on JPY, with both USD/JPY and EUR/JPY now trading in negative territory. Looking ahead for the session, there is the release of Canadian GDP, but other than that, it is set to remain a quiet one, following yesterday’s US Thanksgiving Holiday.

Asian Headlines

China is likely to maintain 2014 economic growth at 7.5% or higher according to China’s National Development and Reform Commission macroeconomic research institute deputy director Wang Yiming.

BoJ governor Kuroda said they need to keep watching impact of BoJ’s JGBs buying on debt market and that JGBs may fluctuate sharply if confidence in Japan’s finances erode, which would inflict severe damage to the economy.

Japanese National CPI (Oct) Y/Y 1.1% vs. Exp. 1.1% (Prev. 1.1%).

– National CPI Ex Food and Energy (Oct) Y/Y 0.3% vs. Exp. 0.2% (Prev. 0.0%)

EU & UK Headlines

S&P cut Netherlands to AA+ from AAA; outlook stable.
S&P changed Spain’s outlook to stable from negative, maintains BBB- rating.
S&P raised Cyprus sovereign rating to B- from CCC+, outlook stable.

ECB’s Coeure said that quantitative easing like that in Japan and the U.S. is not right for the Euro area and that current inflation is low but clearly positive and we don’t see deflation threats at the moment UK Mortgage Approvals (Oct) M/M 67.7k vs Exp. 68.5k (Prev. 66.7k, Rev. 66.9k) – Highest since Feb 2008 UK October gross mortgage lending GBP 15.7bln – Highest since October 2008

Euro-Zone CPI Estimate (Nov) M/M 0.9% vs Exp. 0.8% (Prev. 0.7%)
Euro-Zone CPI Core (Nov A) M/M 1.0% vs Exp. 0.9% (Prev. 0.8%)
Euro-Zone Unemployment Rate (Oct) 12.1% vs Exp. 12.2% (Prev. 12.2%)

Barclays month-end extensions: Euro Aggr (+0.04y)
Barclays month-end extensions: Sterling Aggr (+0.06y)

US Headlines

Newsflow in the US continues to be light amid yesterday’s Thanksgiving holiday.

Barclays month-end extensions: Treasuries (+0.11y) Of note, although the avg. is around 0.06y, larger than avg. increase had been expected given the 3y, 10y and 30y refunding auctions last week.

< p>Equities

Stocks in Europe have recovered from a lower open and are now seen mixed across the board, with financials as the best performing sector after positive broker recommendations by UBS on French banking names. In terms of specific indices, the Ibex is leading the way after being supported by Santander who are up around 0.5%. In terms of other news Rio Tinto are trading with gains as the Co. have approved expansion of its annual iron ore output capacity to 360mln tons by 2017 and said that they will deliver the expansion at an estimated capital cost of more than USD 3bln below previous expectations.

FX

Despite the upward move seen in EUR/GPB, EUR/USD has failed to benefit despite today’s inflation figure from the Eurozon which did see a higher than expected reading, although some market participants were expecting an even higher reading as a result of yesterday’s CPI reading from Germany. JPY is being weighed on by optionality plays which can be observed in USD/JPY and EUR/JPY.

Commodities

Heading into the North American open, WTI and Brent crude futures trade in positive territory with volumes still remaining light following yesterday’s US Thanksgiving holiday. The WTI-Brent spread has been narrowing throughout the session this morning despite a recent widening of the spread with levels not seen since February amid an increase in supply from the US and supply continuing to be constricted from OPEC nations such as Libya following domestic disturbances.

Japan crude imports have fallen 2.9% in October with Iran specific imports falling 18.9% in October as the nation struggled to adhere to the US sanctions targeting Tehran.

Rio Tinto to suspend production at Gove Alumina refinery. Co. says refinery no longer viable due to low alumina prices and high exchange rate.

China’s official media pointedly said that Japan is the “prime target” of Beijing’s newly declared air control zone over the East China Sea, warning that China is willing to engage in “a protracted confrontation with Japan.” (Yonhap). In other reports, an official from Japan’s Liberal Democratic party is considering asking lawmakers to consider a ruling that would demand immediate withdrawal of China’s air defense zone.

DB’s Jim Reid concludes the overnight summary

Welcome to Black Friday although this long standing tradition seems to be losing its relevance over time. Indeed major retailers such as Wal-Mart, Target, Best Buy, Kohl’s, JCPenney, Kmart and Toys R Us were all opened for business last night to kick-off the all-important holiday shopping season. Not to be outdone, Macy’s also ended a 155-year tradition to follow suit by opening their doors on Thanksgiving Day. ‘Grey Thursday’ is fast becoming the norm. For bargain hunters who prefer to let their fingers to do the walking, online shopping has also gained increasing popularity in recent years. Indeed the latest poll from AC Nielsen’s Holiday Spending Forecast study, which surveys over 22,000 households throughout the US, indicates that 85% of consumers plan on skipping the stores on Black Friday this year. This is up from 82% in 2012, 82% in 2011 and 80% in 2010 so a negative four-year trend is taking shape. Black Friday shopping seems to be merging with Cyber Monday as well with 51% of consumers say they will do their Black Friday shopping online this year. According to the National Retail Federation, the holiday season generally accounts for about 20% of the retail industry’s annual sales so all eyes will be on retail sales updates/snippets over the weekend.

Back in the world of financial markets, European investors were also in a bit of a shopping mood yesterday as major bourses closed moderately higher across the region. Gains were paced by the FTSE MIB (+0.92%), the IBEX (+0.52%), and the DAX (+0.39%). Italian markets were said to be supported by Berlusconi’s removal from the Senate and a slightly stronger than expected business confidence reading (98.1 v 97.5 expected). In reality it was a relatively uneventful day for the market with the US out on holiday. Elsewhere in the region, the Eurozone economic confidence index (98.5 v 98.0 expected) also printed somewhat better than expected.

Moving on to the overnight session, Asian equities are a mixed bag and there isn’t really a clear theme to drive the market. Most are expecting another quiet session ahead as it will be a half-day session for US equities and bond markets today. The Hang Seng (+0.1%) and the Nifty (+1.3%) advanced overnight whilst the Nikkei (-1.0%) gave back some of yesterday’s gains after having reached a 6-year high. The S&P 500 futures are up +0.2% as we type. On the data front, Korea’s Industrial Production rose 1.8% mom/+3.0%yoy in October, much stronger than the 0.8%mom/0.9%mom expected by the market. Japan’s industrial production in October fell short of consensus thought, which came at +0.5% mom v +2.0%mom expected. But at least Japan’s inflation data offered some hope that Abenomics seems to be gaining an upper hand in the battle against deflation with its core CPI (ex energy and food) up 0.3% yoy, its highest reading since 1998.

Staying in the region, both Japan and South Korea have both flown planes unannounced through China’s newly declared air defence zone according to BBC News. Japanese officials did not specify when the flights happened but confirmed the surveillance activity, and expressed no intention to change such activities. South Korea and China apparently held talks on this issue yesterday but failed to reach any agreement. South Korea’s foreign minister had previously said that the air zone issue had made already tricky regional situations even more difficult to deal with. The market reaction to these developments has been fairly muted so far.

In terms today, European data will be the focus as we get retail sales data from Germany, consumer spending data and PPI from France, and unemployment rate from Italy. All in all we should be in for a relatively quiet day again ahead of the year’s final non-farm payrolls in the US next week.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/jK0J78P52hw/story01.htm Tyler Durden

If October’s stunning(ly low) inflation print of 0.7% is what conventional wisdom believes is the reason for the surprising ECB rate cut (it isn’t – the culprit was the record low increase in private loan creation), then the just released modest increase in Eurozone November CPI, which was expected to print at 0.8%, instead rising just above that, or 0.9%, will likely mean less surprises out of the ECB in the future. Core CPI (excluding food, energy, alcohol and tobacco) rose 1.0%, following a 0.8% increase in October and 0.9% expected, while the biggest headline bounce was in energy prices which rose from -1.7% to -1.1%, if still rather negative. Looking at the main components of euro area inflation, food, alcohol & tobacco is expected to have the highest annual rate in November (1.6%, compared with 1.9% in October), followed by services (1.5%, compared with 1.2% in October), non-energy industrial goods (0.3%, stable compared with October) and energy (-1.1%, compared with -1.7% in October).

The full breakdown is shown in the table below:

The market response to the better than expected print was subduded with the EUR going nowhere fast. Perhaps this is due to the complete impotence of the ECB to talk down the currency and the fact that it is now at a higher level than where it was when it announce the November 7 rate cut. Furthermore, with strong German inflation prints yesterday, the market may have been expecting an even larger number out of Eurostat.

Finally, what drives the ECB next will once again not be the rigged inflation print but other considerations. Deutsche Bank had a good summary of just these earlier today:

• ECB may choose to announce measures to alleviate concerns about year-end liquidity, Deutsche Bank strategists led by Francis Yared, write in a note.
• Liquidity measures may help accommodate the turn of the year and any cash hoarding from banks ahead of Asset Quality Review
• The fact ECB didn’t manage to fully sterilize SMP this week suggests some liquidity relief may be supported
• ECB could reduce reserve requirements further by 0.5%, generating ~EU50b additional liquidity
• Sterilization of SMP could be suspended which would temporarily add EU180b of liquidity
• Expect ECB to remain dovish but refrain from any material new easing decision

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/8ieOmXA977Q/story01.htm Tyler Durden

It seems the growing tensions in Asia (Japan-China sabre-rattling and Indian capital controls) have prompted more great rotation out of fiat and into digital currency as China/India markets open. For the first time ever, the price of one unit of Bitcoin exceeds the price of an ounce of gold…

 

1 oz of Gold = $1241.98 (Bloomberg)

1 unit of Bitcoin = $1242.00 (Bitcoinwisdom.com)

 

 

 

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/0lUih9twhFM/story01.htm Tyler Durden

Following the to-ing and fro-ing of the last 2 days with US and Japan “testing” China’s new Air Defense Zone (ADIZ), China has not only escalated (as we noted earlier) but as the day begins in Asia is stepping up the rhetoric significantly. Official media said that Japan is the “prime target” and it is an “urgent task for China to further train its air force to make full preparation for potential conflicts.” Japanese lawmakers, meanwhile, are pushing for a bill “demanding an immediate withdrawal of China’s ADIZ.” While the Western world goes on its merry way buying S&P futures, China’s concluding message rings its most defint so far, “We are willing to engage in a protracted confrontation with Japan. Our ultimate goal is to beat its willpower and ambition to instigate strategic confrontation against China.”

The Chinese just stepped up the rhetoric notably,

Via Yonhap,

China’s official media pointedly said Friday that Japan is the “prime target” of Beijing’s newly declared air control zone over the East China Sea, warning that China is willing to engage in “a protracted confrontation with Japan.”

 

China’s declaration of its Air Defense Identification Zone (ADIZ), announced last week, has sparked strong resistance from Japan, the United States, South Korea and other neighboring Asian nations. The new zone partly overlaps those of South Korea and Japan.

 

The U.S. flew two B-52 bombers through the Chinese zone without informing China this week. South Korea and Japan followed suit. In response, China sent several fighter jets and an early warning aircraft on patrol Thursday into the disputed air space.

 

In an editorial titled “Japan prime target of ADIZ tussle,” the official Global Times newspaper said, “We should carry out timely countermeasures without hesitation against Japan when it challenges China’s newly declared ADIZ.”

 

“If Tokyo flies its aircraft over the zone, we will be bound to send our planes to its ADIZ,” the editorial said.

 

“If the trend continues, there will likely be friction and confrontations and even tension in the air like in the Cold War era between the U.S. and the Soviet Union,” it said.

 

“It is therefore an urgent task for China to further train its air force to make full preparation for potential conflicts,” the editorial said.

 

“We are willing to engage in a protracted confrontation with Japan. Our ultimate goal is to beat its willpower and ambition to instigate strategic confrontation against China,” it said.

 

Analysts said the Chinese declaration of air control zone is mainly aimed at bolstering its claims to a group of islets in the East China Sea at the center of a bitter territorial dispute with Japan, which are known as Diaoyu in China and Senkaku in Japan.

 

The Japanese are not backing down…

Via Kyodo News,

An official of Japan’s ruling Liberal Democratic Party is considering asking lawmakers to adopt a bill demanding an immediate withdrawal of China’s air defense zone in East China Sea

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/7W9yuDHvR8E/story01.htm Tyler Durden

Following the to-ing and fro-ing of the last 2 days with US and Japan “testing” China’s new Air Defense Zone (ADIZ), China has not only escalated (as we noted earlier) but as the day begins in Asia is stepping up the rhetoric significantly. Official media said that Japan is the “prime target” and it is an “urgent task for China to further train its air force to make full preparation for potential conflicts.” Japanese lawmakers, meanwhile, are pushing for a bill “demanding an immediate withdrawal of China’s ADIZ.” While the Western world goes on its merry way buying S&P futures, China’s concluding message rings its most defint so far, “We are willing to engage in a protracted confrontation with Japan. Our ultimate goal is to beat its willpower and ambition to instigate strategic confrontation against China.”

The Chinese just stepped up the rhetoric notably,

Via Yonhap,

China’s official media pointedly said Friday that Japan is the “prime target” of Beijing’s newly declared air control zone over the East China Sea, warning that China is willing to engage in “a protracted confrontation with Japan.”

 

China’s declaration of its Air Defense Identification Zone (ADIZ), announced last week, has sparked strong resistance from Japan, the United States, South Korea and other neighboring Asian nations. The new zone partly overlaps those of South Korea and Japan.

 

The U.S. flew two B-52 bombers through the Chinese zone without informing China this week. South Korea and Japan followed suit. In response, China sent several fighter jets and an early warning aircraft on patrol Thursday into the disputed air space.

 

In an editorial titled “Japan prime target of ADIZ tussle,” the official Global Times newspaper said, “We should carry out timely countermeasures without hesitation against Japan when it challenges China’s newly declared ADIZ.”

 

“If Tokyo flies its aircraft over the zone, we will be bound to send our planes to its ADIZ,” the editorial said.

 

“If the trend continues, there will likely be friction and confrontations and even tension in the air like in the Cold War era between the U.S. and the Soviet Union,” it said.

 

“It is therefore an urgent task for China to further train its air force to make full preparation for potential conflicts,” the editorial said.

 

“We are willing to engage in a protracted confrontation with Japan. Our ultimate goal is to beat its willpower and ambition to instigate strategic confrontation against China,” it said.

 

Analysts said the Chinese declaration of air control zone is mainly aimed at bolstering its claims to a group of islets in the East China Sea at the center of a bitter territorial dispute with Japan, which are known as Diaoyu in China and Senkaku in Japan.

 

The Japanese are not backing down…

Via Kyodo News,

An official of Japan’s ruling Liberal Democratic Party is considering asking lawmakers to adopt a bill demanding an immediate withdrawal of China’s air defense zone in East China Sea

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/7W9yuDHvR8E/story01.htm Tyler Durden

Back in March 2011, author Carmen
Reinhart wrote a comment in Bloomberg describing the terms “financial
repression.”  He wrote:

“As they have before in the
aftermath of financial crises or wars, governments and central banks are
increasingly resorting to a form of “taxation” that helps liquidate the huge
overhang of public and private debt and eases the burden of servicing that
debt.

Such policies, known as financial
repression, usually involve a strong connection between the government, the
central bank and the financial sector. In the U.S., as in Europe, at present,
this means consistent negative real interest rates (yielding less than the rate
of inflation) that are equivalent to a tax on bondholders and, more generally,
savers.”

http://www.bloomberg.com/news/2012-03-11/financial-repression-has-come-back-to-stay-carmen-m-reinhart.html

In
the FDIC data released this week, the financial repression imposed by Ben
Bernanke, Janet Yellen and the rest of the Federal Open Market Committee over
the past five years is very apparent.  Chief
among the data points to be noted is that net interest expense, which is the
money paid to depositors at banks, continues to fall.  While all banks earned about $118 billion in
interest income last quarter, they paid just $13 billion to depositors, a
graphic example of the “financial repression” used by the Fed to subsidize the
US banking industry.

http://www2.fdic.gov/qbp/qbpSelect.asp?menuItem=QBP

Notice
that while the Fed has maintained the net interest income to banks, the
earnings of depositors have fallen more than 90% since 2008.  Via QE, the Fed is subsidizing all banks to
the tune of over $100 billion per quarter in artificially depressed interest
cost and income to depositors of all stripes. By robbing consumers and all
savers of income, the FOMC is in fact feeding deflation and hurting growth and
employment.  The chart below using data
from the FDIC shows the interest earnings, expenses and net interest income through
the end of September 2013 for all US banks.

Prior to the 2007 financial
crisis, total interest expense for all US banks was over $100 billion every
three months and interest income was almost $200 billion.  In order to maintain the net interest margin
for banks at +/- $100 billion per quarter, the Fed is confiscating income of US
savers, including companies, investors and the elderly, of almost the same
amount each quarter in badly needed income. 
This data graphically illustrates the deflationary nature of current Fed
interest rate policies and why Janet Yellen and the Federal Open Market
Committee need to raise interest rates soon.

In a paper published this month
by Carmen Reinhart and Ken Rogoff, the authors argue that financial repression
is a necessary part of the adjustment process for heavily indebted nations,
even the advanced nations.  The Guardian
reports: “They say that if history is any guide countries will not be able to
return to more sustainable levels of public debt through a combination of
austerity and growth. They cite Europe, where the assumption is that normality
can be restored by a combination of belt-tightening, forbearance and rising
output, as an example of Panglossian thinking.”

http://www.theguardian.com/business/economics-blog/2013/nov/20/reinhart-rogoff-latest-paper-harvard-financial-repression

Say Reinhart and Rogoff:   “The
claim is that advanced countries do not need to apply the standard toolkit used
by emerging markets, including debt restructurings, higher inflation, capital
controls and significant financial repression. Advanced countries do not resort
to such gimmicks, policy makers say.”

The Guardian:  “Historically, this is poppycock according to
Reinhart and Rogoff. Rich countries, when faced with high levels of debt in the
past have been more than happy to default, inflate away their debts or indulge
in financial repression (capping interest rates or putting pressure on savers
to lend to the government).”

The current policy mix in the US
certainly shows this tendency to resort to financial repression, but the real
question is whether current Fed policy has not resulted in a deflationary trap,
with falling income driving consumption, jobs and economic activity lower.  Taking $100 billion in income away from
savers each quarter does not seem to be a recipe for economic growth. 

But as Reinhart and Rogoff
document well, there is no easy solution available for the US, EU, Japan and
other heavily indebted developed nations. 
Once interest rates start to rise, the necessity of debt restructuring
in Europe, Japan and even the US will become more apparent.  There is no free lunch.  Either we kill growth via financial
repression of savers or we embrace the painful process of debt restructuring
for the major industrial nations.

www.rcwhalen.com

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/BPhAOa4tWOo/story01.htm rcwhalen

Submitted by James E Miller of The Ludwig von Mises Institute of Canada,

This past weekend I caught The Hunger Games: Catching Fire at my local theater. The movie is based on the second part of a dystopian trilogy written by Suzanne Collins. In Collins’s fictional world known as Panem, a despotic government rules over all with a violent iron fist. There is a strict separation between the political class and the rest of the populace, with the latter working in slave-like conditions to support the former. The story focuses on protagonist Katniss Everdeen and her struggle to protect her loved ones while surviving the tyranny of her brutal overlords.

Throughout Catching Fire, the subject of revolution is paramount. Since the first instalment of the series when Katniss bested her oppressive dictators in the highly-publicized, annual fight-to-the-death tournament, she has become a symbol of agitation to the people. They look to her as a chink in the government’s armor – a sign that tyranny is not immortal but can be damaged. The plebs and their desire for freedom results in riots in the streets with vicious crackdowns from Orwellian-named “peacekeepers” who maintain tranquility with the bloodied end of truncheons. At one point during Katniss’s victory tour, an older gentleman raises his hand in defiance of the regime and whistles the popularized tune of revolution. He is summarily executed on the spot while the crowd that attempts to protect him is beaten handily.

The act of violence drew a startled and winced response from the movie audience. It was a demonstration of the horribly destructive nature of tyranny. There was no question as to the evilness of Panem’s dictatorial government. The line between enemy and hero was straight and untainted.

Stories such as the Hunger Games are wonderful things because they spark what conservative statesman Edmund Burke called the “moral imagination.” In his famed Reflections on the Revolution in France, Burke chided the Jacobin revolutionaries for endeavoring to paint “the decent drapery of life” and the “moral imagination” as “ridiculous, absurd, and antiquated.” Russell Kirk expanded on this phrase and defined it as the “power of ethical perception which strides beyond the barriers of private experience and momentary events.”

Whether viewers know it or not, the basic plot of the Hunger Games series is an appeal to the moral imagination that men should be free from working as servants to others. It’s not exactly a new theme when compared to other modern movies. There are a multitude of storylines where a strong-willed protagonist finds the courage within themselves to fight off an authoritarian power, not alone, but with the help of others. The narrative follows a familiar pattern: while outgunned and outmanned, good ultimately triumphs over evil not so much because of one person but rather the hope for a better life embodied within a symbol.

The engrossing message of liberty over tyranny in the Hunger Games is thought to be why the franchise is so popular. In some ways, that is correct. People tend to have the urge of rooting for the underdog. When the abuser receives his just deserts, it’s seen as a representation of justice fulfilled.

But as great as the moral imagination is, it ultimately means nothing if it does not translate into real-life behavior modification. It’s one thing to cheer on a character on screen who is risking their life for a freer world. It’s another to embody that risk yourself in a reality that is slipping towards despotism.

Anyone who claims the post-apocalyptic setting in Hunger Games bears an uncanny resemblance to state control in our time is liable to be marked as a black helicopter-type. The ridicule is the same that was aimed, and still is aimed, at Friedrich Hayek after his great work The Road to Serfdom was released. “No,” the critics say, “the existence of the large welfare-warfare state has not translated itself to one world authoritarianism.” That is certainly true for now. Still, the general public finds it fun to mock the government as an over-bearing and inefficient behemoth while relying on the beast for a bi-weekly allotment of tax subsidies.

We may not be living hand-to-mouth while being forced to labor for thuggish overlords but the modern trend is clear: the political class is consuming more and more wealth-generating capital for themselves. It can be seen in highly-unionized European countries and within the bubble of richness known as the District of Columbia. The police state is ratcheting up its already untamed authority. Economic regulation is becoming more varied and intrusive. In the West, the state as an institution has been growing by leaps and bounds for over a century. Only an imbecile would deny this mass centralization in government power.

Yet most viewers of the Hunger Games will not let that message sink into their consciousness. They will not make the connection between a story and their own lives. It’s far too discomforting. At the same time, they will revere characters in a tale who come off as heroes. These fictional thought constructs are viewed as perfectly noble persons who sacrifice for the greater good. One would think the same reverence would be shown to those individuals who engage in the same art of defiance against what is generally deemed an unjust situation. If characters in fiction can be seen as courageous, why not real-life persons who display the same type of behavior?

Edward Snowden, the now-infamous whistleblower of the National Security Agency, is still seen as a dirty, rotten traitor by much of the public. It’s a strange cognitive dissonance that while a majority are irate over their government’s spying, they see the man who clued them in as some type of mendacious plotter who hates Uncle Sam. It’s equally as strange that the same folks who hardly bat an eye when calling Snowden a scumbag will just as quickly latch on to the fighter of injustice in a movie.

Stories provide valuable insight into the limits of mankind and what constitutes good. But they are not reality in the end. There is little risk in admiring a character in fiction who stands up for the right thing. Doing so in real-life is apt to bring ridicule, and thus has a social stigma attached to it.

It takes no spine to be a warrior on paper. It also requires little brain power to bend your will with that of an author’s. The science of critical thinking demands a logical and coherent approach to viewing issues. Criticizing someone for doing the very same action that you praise in make-believe land is inconsistent and a sign of poor judgment. The borderline between the real and the imagination does not render ethics and morality capricious. A proper way to live is to be transcendent of observable examination alone.

Hunger Games contains a pertinent message to those living under big government. The heroes and villains of the story should not be unfamiliar to current events. Edward Snowden is a real life Katniss Everdeen. He defied the powers-that-be in order to do what he believed was right. But instead of receiving praise, he got condemnation from voices normal
ly wary of statism. The irony remains that the same men and women who call Snowden a traitor should be cheering for the tyrannical government of Panem to squash the rebellion and restore its oppressive hold on society. Of course, that suggestion sounds crazy, but then so does the person who pays lip-service to freedom while cheering for the death of someone who risks their life for greater liberty. Their moral imagination is in great need of fine-tuning.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/0hreCSvJ_UM/story01.htm Tyler Durden