French Tourism Tumbles 10% On Average Following Terrorist Attacks

Submitted by Michael Shedlock via,

Want to know how much European tourism declined in the wake of terrorist attacks?

Today, a translated Le Monde (The World) headline readsAfter the Attacks, Foreign Tourists Leave France“.

In the first six months of the year, the number of overnight stays of foreign tourists in France fell by an average of 10%, due to concerns over the attacks, said Secretary of State for tourism promotion, Matthias Fekl, in an interview with the Sunday newspaper.

Decline in Numbers

  • In Paris, the hotel occupancy fell by 9.8 points to 78.1% in July compared to last year, according to figures from the Economic Observatory of Paris tourism.
  • Airline reservations for American tourists declined by 19.2% between 25 and 31 July, while they were up 14% between June 27 and July 3.
  • Airline reservations of the British fell 23% last week of July, under the combined effect of the attacks, the Brexit and the fall of the pound, according to Thomas Deschamps, economic and Observatory Paris tourism statistics.
  • The festival of Bayonne posted a decline in attendance of 20%.
  • The Loire castles, one of the most visited castles in France, experienced a general decline in attendance of 6%, but a fall of 20% for Japanese customers, according to its CEO Jean d’Haussonville, quoted in Le Parisien last week.
  • The firm Protourisme estimates convention cancellations and works council bookings related to business tourism will be down 5% to 10% in September compared to last year.

Overall French hotel occupancy has fallen between 5 and 10% YoY…


And French RevPar has now tumbled 10 straight months…


Les Miserables, indeed!

via Tyler Durden

Redneck Investin Part 1 – A look from the other side

While we often get caught up in discussions about QE and gold storage reports, it’s easy to forget the realities in life that most humans face on planet Earth.  Let’s face it – you need spare money to invest.  And not a few extra coins – you need real cash.  

We get questions all the time from common folk who don’t know about investing.  Not all are poor.  One great example is a older trust fund baby with $100 Million in a Bank of America Savings account “Ain’t nobody touchin’ MY MONEY!” he’d say.  

So, for all of you who are not qualfied investors – here’s your practical poor-man’s guide to investing.  And it’s short – only 1 page!  This is also a good read for those who want a different outlook, to understand a little about how ‘the other side’ lives.

Rule #1 – If you only have $1,000 to invest, the only reasonable investment is in CANNED FOOD which can be stored for up to 20 years.  Because Food inflation, depending on how you calculate it, is about 10% – 20% per year or more.  Certain food items can experience a permanent ‘adjustment’ of 50% – 100% for example due to weather factors or other circumstances.  Where else can you get 20% per year returns nearly guaranteed?  Plus, if the investment doesn’t work out or you get desperate, you can eat it.  It’s a win-win.  The best way to store this food is in large PVC pipes dug deep into the ground, the cans can be connected with duct tape and lowered into the pipes.  When you need some money – just pull up your in ground savings account!  It will be safe here from the IRS and from pesky hungry neighbors.  No capital gains tax here.

Redneck Arbitrage Strategies

Coin Hoarding 

A penny is worth more than a penny.  Not only in the United States – in Russia too!  Take this strategy international!  In the US, it’s illegal to melt pennies.  But that may not always be the case.  And if you think this strategy is only for Rednecks, think again. 

Kyle Bass is a Nickel Hoarder (but, he had to buy them from the Fed due to the large quantity):

At the time of the mega-purchase of 20 million circulated nickels in 2011, the coins contained 6.8 cents apiece in metallic value per planchet. Nickel and copper have dropped since that time, and the current melt price is just under face value according to the Coinflation web site. Since Bass paid face value for his nickel hoard, there was no downside risk.  Obtaining such a vast amount of 5-cent pieces obviously requires more than ordering the coins through normal channels such as armored car companies. This multi-ton request had to be filled by the Federal Reserve. When the Fed asked Bass why he wanted a cool million in Jeffersons, he calmly replied “I like nickels.”

Postage Stamp Arbitrage

This is illegal and information about this strategy is provided only to demonstrate how ridiculous the financial system is, in its current state and form.  FOR EDUCATIONAL PURPOSES ONLY – DO NOT CONSIDER ACTUALLY DOING THIS!!! “Forever” stamps sell at current single stamp value of $.47; they were $.41 in April 2oo7; about a 12% increase.  12% you’re thinking – it’s nuthin.  But it’s guaranteed!  And people always need stamps.  Checkout this site for historical stamp data:

April 10, 2016   $ 0.47
January 26, 2014:   $ 0.49
January 27, 2013:   $ 0.46
January 22, 2012:   $ 0.45
May 11, 2009:   $ 0.44
May 12, 2008:   $ 0.42
April 12, 2007:   $ 0.41

Although, investors here should note the value actually DROPPED in last 2 years.  But this has been a historical anomaly.

Rule #2 – Keep a savings account in heavy metal stored in remote locations.  Make regular ‘deposits’ to this account by spending an afternoon ‘scrapping’ – collecting unused metal garbage such as appliances, cars, metal frames, railroad tracks (abandoned, of course) and other metal objects.  Don’t go near electrical wires!  They are live and will shock you!

Free Money Claims

Cash in, on a class – action.  Anyone is eligible to get a check.  Did you smoke Marlboro cigarettes in the late 90’s while living in east Massachusetts?  You may be eligible for a big reward.  Did you purchase Tom’s Toothpaste in the last few years?  Sites such as Free Money Claims list class actions that are open for joining.

Civil War Treasure Hunting

If you’ve got a lot of time, and if you’re poor or on the dole probably you do, and you like the outdoors, nuthin better than a good ol’ treasure hunt!  Spend some time doing some research, get the gear – and go hunt!  You’ve got nothing to lose.  In the worst case, you spend a day or two hiking through the woods and get some good excercise.  It’s out there:

..there are reports that there is a cache of Civil War-era valuables worth upwards of $350,000 buried deep in the woods of Fairfax County, Virginia.

If you think Redneck investin’ is a dead end- you haven’t been following CNBC.  There’s billions in this budding domestic ’emerging market.’

The south will rise again!

If you want a quick Forex education, checkout Splitting Pennies – the pocket guide designed to instantly make you a Forex genius!

If you want to get started looking at investing, checkout Fortress Capital Forex

For financial institutions, checkout Liquid Claims Securities Settlement Serivces.

via globalintelhub

“It’s One Gigantic Lawless Crime Scene” – Exposing The Dirty Business of U.S. ‘Think Tanks’

Submitted by Mike Krieger via Liberty Blitzkrieg blog,

Many of you have already read this past Sunday’s excellent and deeply disturbing article published by the New York Times regarding the shady and inappropriate activities regularly conducted by U.S. “think tanks.” If you haven’t read it yet, I highly suggest you take the time to do so.

It’s important to acknowledge that the U.S. economy has morphed into one gigantic lawless crime scene. An environment in which crony insiders who add zero value to society parasitically feast on the country’s treasure. In the case of so-called “think tanks,” we have organizations receiving copious taxpayer subsidies for the privilege of screwing over the American public.

To understand the topic further, I present you with some excerpts from the article titled, Researchers or Corporate Allies? Think Tanks Blur the Line:

Think tanks, which position themselves as “universities without students,” have power in government policy debates because they are seen as researchers independent of moneyed interests. But in the chase for funds, think tanks are pushing agendas important to corporate donors, at times blurring the line between researchers and lobbyists. And they are doing so while reaping the benefits of their tax-exempt status, sometimes without disclosing their connections to corporate interests.


Thousands of pages of internal memos and confidential correspondence between Brookings and other donors — like JPMorgan Chase, the nation’s largest bank; K.K.R., the global investment firm; Microsoft, the software giant; and Hitachi, the Japanese conglomerate — show that financial support often came with assurances from Brookings that it would provide “donation benefits,” including setting up events featuring corporate executives with government officials, according to documents obtained by The New York Times and the New England Center for Investigative Reporting.


“This is about giant corporations who figured out that by spending, hey, a few tens of millions of dollars, if they can influence outcomes here in Washington, they can make billions of dollars,” said Senator Elizabeth Warren, Democrat of Massachusetts, a frequent critic of undisclosed Wall Street donations to think tanks.


Washington has seen a proliferation of think tanks, particularly small institutions with narrow interests tied to specific industries. At the same time, the brand names of the field have experienced explosive growth. Brookings’s annual budget has doubled in the last decade, to $100 million. The American Enterprise Institute is spending at least $80 million on a new headquarters in Washington, not far from where the Center for Strategic and International Studies built a $100 million office tower.

The U.S. economy would be infinitely better if everyone in Washington D.C. blasted off to space in a rocket ship.

The likely conclusions of some think tank reports, documents show, are discussed with donors — or even potential ones — before the research is complete. Drafts of the studies have been shared with donors whose opinions have then helped shape final reports.


Donors have outlined how the resulting scholarship will be used as part of broader lobbying efforts. The think tanks also help donors promote their corporate brands, as Brookings does with JPMorgan Chase, whose $15.5 million contribution is the largest by a private corporation in the institution’s history.


Despite these benefits, corporations can write off the donations as charitable contributions. Some tax experts say these arrangements may amount to improper subsidies by taxpayers if think tanks are providing specific services.


“People think of think tanks as do-gooders, uncompromised and not bought like others in the political class,” said Bill Goodfellow, the executive director of the Center for International Policy, a Washington-based think tank. “But it’s absurd to suggest that donors don’t have influence. The danger is we in the think tank world are being corrupted in the same way as the political world. And all of us should be worried about it.”

Indeed, “think tanks” represent a key, overlooked player in the never-ending information war being waged against the American public. A war specifically designed to shape public perception in favor of policies that go against our best interests while making a handful of people extremely wealthy.

“We strongly believe in our model of seeking solutions to some of our country’s most difficult problems,” John J. Hamre, the chief executive at C.S.I.S., said in a written reply to questions. “We gather stakeholders, vet ideas, find areas of agreement and highlight areas of disagreement.” 

Emphasis on “stakeholders,” i.e. corporate sponsors. If these think tanks are actually working in the best interests of the country, why is inequality soaring and why has the middle class been destroyed so efficiently?

Yet researchers at think tanks are seeing corporate influence firsthand. Rachel Stohl, a senior associate at the Stimson Center in Washington, said she had been quizzed by potential donors as she tried to raise money for research on the military’s use of armed drones.

“‘Are you going to say drones are bad?’” she recalled one potential financial backer asking. “‘We are not interested in funding something that says drones are bad.’”


The confidential Brookings spreadsheet had an unassuming title: Corporate Overviews Tracking. It listed nearly 90 corporations, from Alcoa to Wells Fargo, providing a glimpse of the vast electronic file that Brookings maintained on donors and prospects, and the benefits it might offer.


The database, along with thousands of pages of emails, solicitations for money and memos on meetings with corporate officials, highlighted Brookings’s practice of assuring that donors would see results from their contributions.

So why exactly are taxpayers subsidizing this behavior?

K.K.R., after starting special funds around 2010 to invest in real estate and other infrastructure projects, donated $450,000 to Brookings, some of it as the institution agreed to set up meetings for a top K.K.R. executive with community leaders in Philadelphia and Detroit, where the company was considering real estate projects. Brookings separately produced a report, published on K.K.R.’s website, promoting one of the company’s infrastructure projects in New Jersey, after the company executive suggested such a piece.


Lennar joined Brookings’s Metropolitan Leadership Council, established for the program’s top donors, in July 2010. That month, the company won approval to redevelop Hunters Point in San Francisco, turning the area into a more than 700-acre mix of housing, education and commercial development.


Brookings would later name the project one of the three most “transformative investments in the United States.”


The San Francisco project generated controversy from the beginning, with critics concerned about toxic waste left by the former Navy shipyard.


Follow-up memos were more explicit: Brookings, as it sought an additional $50,000 from Lennar in 2014, said it was prepared to “use our convening power, research expertise, network connections and knowledge of innovative practices to help further drive the ultimate impact and success” of Lennar’s project and to “provide public validation of San Francisco’s efforts through national and local media coverage.”


The think tank soon delivered.

Screen Shot 2016-08-09 at 10.50.56 AM

All this corporate marketing paid for with taxpayer subsidies. Good gig if you can get it.

Hitachi has been another large donor to the metropolitan program, giving a total of $1.8 million to Brookings over the last decade, according to Brookings documents. The think tank reviewed the company’s corporate marketing and sales strategy targeting the United States, an internal memo shows. Brookings also organized public events that featured top Obama administration officials and allowed Hitachi executives to promote their products.


When JPMorgan offered a major donation to the metropolitan program in 2011, Brookings created the Global Cities Initiative, complete with a new logo that called it a “joint project of Brookings and JPMorgan Chase.”


The project was premised on a common interest between the bank and the think tank. Brookings wanted to promote economic growth in cities by encouraging international trade, and JPMorgan wanted to gain new business by offering loans to companies in the same markets.


Mr. Indyk and executives from JPMorgan said the company and the think tank simply agreed on a worthy agenda.


“This was about growing the economy, and we are incredibly proud of the results of this initiative,” said Peter Scher, the head of the corporate responsibility program at JPMorgan. “We believe it’s had a huge impact in more than 30 cities that are involved.”


At the same time, hundreds of pages of memos — status reports to JPMorgan, internal reports by Brookings staff to prepare for meetings with top bank executives, and formal documents soliciting more money — make clear that Brookings saw the Global Cities Initiative as a branding effort that could help JPMorgan bolster its standing in cities.


“Bottom line: Growing metro economies is good for the nation and for JPMC; also, many U.S. cities are JPMC clients — motivation to support them and their clients,” said one Brookings document dated July 2011, as officials from the think tank met with top bank executives to discuss a planned donation that eventually totaled $15 million.


The Global Cities Initiative, another document written by a Brookings senior fellow explained, “must mean a marriage between JPMC corporate interests” and “Brookings continued thought leadership.”


JPMorgan, in a document dated a month before the agreement was signed, said the pending donation to Brookings “deepens/extends relationships with important client base among business and civic leaders both in the U.S. and abroad.”


At times, Brookings officials seemed worried they were not doing enough for the bank.


This is all so gross…

Screen Shot 2016-08-09 at 11.04.19 AM


Donations from the corporations to Brookings are tax exempt based on the premise that the think tank’s work benefits the public good, not a company’s bottom line.


But two lawyers who specialize in nonprofit law — Miranda Perry Fleischer, a professor at the University of San Diego School of Law, and Clifford Perlman, a partner at a New York-based firm — said Brookings’s agreements raised questions.


“Tax deductions are subsidies that are paid for by all taxpayers,” Ms. Fleischer said. “And the reason the subsidy is provided is that the charitable organization is supposed to be doing something for the public good, not that specifically benefits the private individual or corporation in the form of providing them goods or services.”

Apparently “the public good” now equals helping big cities and big banks. You know, those suffering the most from American neo-feudalism.

While all the above is disgusting and unacceptable, what follows is even worse. It shows how the corruption and cronyism of think tanks can directly lead to the exportation of war and death abroad.

General Atomics, the California-based manufacturer of Predator drones, had a clear problem. Prospects for sales were falling as the wars in Afghanistan and Iraq wound down. The company wanted the Obama administration to change its policy to allow for sales to other countries, a lucrative proposition.


“When the budgets are going down in the U.S., you would like to be able to export more,” Frank Pace, the president of the company’s aircraft systems group, told a Reuters reporter in late 2013 at an air show in Dubai.

How this man lives with himself, I’ll never know.

At about that time, the industry turned to the Center for Strategic and International Studies for help, providing money that the think tank used to conduct a study on drone policy, including exports.


C.S.I.S. set up confidential meetings at its headquarters with company representatives, inviting top officials from the Navy, the Air Force, the Marine Corps, the Coast Guard, the State Department and the office of the defense secretary, according to emails and other documents obtained by The Times through open records requests.


As a think tank, the Center for Strategic and International Studies did not file a lobbying report, but the goals of the effort were clear.

In this economy, everything is a loophole, everything is a swindle.

“Political obstacles to export,” read the agenda of one closed-door “working group” meeting organized by Mr. Brannen that included Tom Rice, a lobbyist in General Atomics’s Washington office, on the invitation lists, the emails show.


Boeing and Lockheed Martin, drone makers that were major C.S.I.S. contributors, were also invited to attend the sessions, the emails show. The meetings and research culminated with a report released in February 2014 that reflected the industry’s priorities.

But the effort did not stop there.


Mr. Brannen initiated meetings with Defense Department officials and congressional staff to push for the recommendations, which also included setting up a new Pentagon office to give more focus to acquisition and deployment of drones. The center also stressed the need to ease export limits at a conference it hosted at its headquarters featuring top officials from the Navy, the Air Force and the Marine Corps.


Mr. Brannen, who has since left C.S.I.S., declined to comment. The think tank insisted that its efforts to influence administration policy were not lobbying.

What a heaping pile of bullshit.

One thing is clear: The result was a victory for General Atomics.


In February 2015, almost one year after the C.S.I.S. report was issued, the State Department announced a clarification of its rules, easing final approval that month for General Atomics’s long-planned sale of unarmed Predator drones to the United Arab Emirates, the first such sale to a non-NATO nation. The think tank report was just one of many voices pushing for the change.


A State Department spokesman said that while the government officials involved in the review had received opinions from think tanks and industry officials, “at the end of the day, this is a considered U.S. government policy.”

There you have it folks. Just another tale from the putrid and hopelessly corrupt U.S. economy.

Naturally, we shouldn’t be the least bit surprised that one of the most destructive human beings in modern American history is a Distinguished Fellow in Residence at the Brookings Institution. Yes, you know who I’m talking about…

Screen Shot 2016-08-09 at 11.19.23 AM

Thanks for playin’ America.

Screen Shot 2016-08-09 at 11.22.00 AM

via Tyler Durden

Some Olympic Athletes Are Chasing Huge Gold Medal Bonuses

If you’re a world-class British athlete, it may well be time to consider emigration to Singapore… judging by the colossal variance in gold medal bonuses on offer by various nations at The Olympics.

The glory of winning a gold medal is a massive incentive for athletes competing in Rio but, as Statista’s Niall McCarthy reports, the impressive bonuses on offer add another more lucrative dimension to the games.

The size of the bonus on offer varies hugely by country. For example, British athletes do not receive bonus for winning a gold medal whereas American competitors get $25,000 for every gold they take home. 

Successful athletes from Singapore are awarded a prize of $1 million Singapore dollars, not a bad day at the office at all.

Singapore has never won a gold medal…

Though all eyes will be on Singapore’s great medal hope Joseph Schooling who made an impressive start to Rio 2016 with a powerful swim in the 100m freestyle heats on Tuesday.

Indonesia offers its successful Olympians around $380,000, according to Fox Sports Australia. The following infographic provides an overview of the biggest estimated cash rewards for gold medal winners in Rio (the values were converted from Australian to U.S. dollars).

This chart shows the estimated bonus per gold medal at the Olympic Games in Rio…

Infographic: Some Athletes Are Chasing Huge Gold Medal Bonuses | Statista
You will find more statistics at Statista

So we have four years to move to Singapore, gain citizenship somehow, overdose on PEDs, become a world-class ______[BLANK]______, and ride off into the sunset with our $750,000! Doesn’t seem so hard.

via Tyler Durden

Here’s How A US-China War Could Play Out

Authored by Peter Apps, originally posted at,

For all the focus on terrorism, one of the most striking features of the last decade is that the risk of war between the world’s major countries has returned. For the first time since the fall of the Berlin wall, military thinkers in the United States, Europe and Asia are putting serious thought into what such a conflict might look like.

For a world with no shortage of nuclear weapons, that’s alarming. As I wrote last month, there is now not just a credible – if still limited – risk of conflict between Russia and NATO states, but also a real risk any such war would go nuclear.

Last week, U.S.-based think tank RAND Corporation – which also studied the prospects of war in the NATO member Baltic states – unveiled its latest thinking on what a potential clash between the United States and China would look like. The report is not direct U.S. government policy – although RAND has long been regarded as a major generator of thought for the U.S. military – but it does push the envelope further than much that has gone before.

The report stresses that while premeditated war between Washington and Beijing ”is very unlikely,” the mishandling of disputes like the multiple territorial confrontations between China and U.S. allies such as Japan and the Philippines are a “danger” that “cannot be ignored.”

RAND examined two different scenarios, one for an inadvertent conflict taking place in the present day and one in 10 years from now, assuming Beijing’s military and economic buildup continues at roughly its current rate. China will substantially close its military gap with the United States over the next decade, it predicts – but the fundamental dynamics of how things will play out might not be hugely different.

Even now, the People’s Liberation Army is seen as having the ability to give a bloodied nose to U.S. forces in the region. Washington could expect to lose an aircraft carrier and multiple other surface warships in the opening stages, RAND warns, citing Chinese advances in ballistic and guided missiles as well as submarines.

The report does not estimate the number of human casualties, but they could be substantial. The loss of an aircraft carrier or several major surface warships could easily cost thousands of lives in an instant.

At the same time, it’s also generally assumed that both Beijing and Washington would have considerable success with cyber attacks.

As another recent report points out, China’s effectiveness would difficult to gauge – not least because it has not participated in a major conflict since invading Vietnam in 1979.

The real decision for Washington would be how much military force to commit to the Asia Pacific theater. Other threats and responsibilities would not have gone away – the Middle East would almost certainly still be a mess and the risk of Russian action in Europe might actually be heightened. Still, the United States would have considerable reserves of aircraft and ships in reserve.

Whether a conflict only endured days or weeks or dragged on for a year or more, Washington would almost certainly retain the ability to strike widely at Chinese targets across the battle space – including, in at least a limited way, into mainland China. Over time, Beijing could face the destruction of most, if not all, of its major surface naval forces. Its relatively primitive submarines would also likely be fairly easy picking, RAND predicts, although that will probably be less true by 2025.

The real battle of attrition, however, would be economic – as it almost always is when great powers confront each other. On that front, the consequences for China could be devastating.

Washington and Beijing are each other’s most significant trading partners. The report estimates that 90 percent of that bilateral trade would cease if the two were in direct military confrontation for a year. That would hurt both sides, but the United States could likely continue trade with much of the rest of the world while almost all imports and exports to China would have to pass by sea through a war zone.

Perhaps most importantly, China might find itself cut off from vital external energy sources while Washington’s energy supply chain would be far less affected.

While RAND estimates a year-long Asian war would take 5-10 percent off U.S. gross domestic product, it believes China’s economy could shrink by up to 25 percent.

These are good reasons why war should never happen. Even if miscalculations pushed both countries to the brink, it’s all but impossible to make a logical argument for either side to push things over the edge. The danger, therefore, would seem to be primarily ill-conceived actions that might cause a World War One-style escalation.

In the case of the United States and China, RAND’s analysts say they believe nuclear escalation would likely be avoided even if both sides fought prolonged naval and air battles. That’s a major departure in Western military thinking from the days of the Cold War, when nuclear escalation was seen an almost inevitable consequence of any direct conventional clash.

Whether that’s certain is a different question. Wars tend to develop their own horrific internal logic and momentum, and the temptation to move to more powerful weapons is ever present.

For now, there’s no evidence that Beijing has adopted Moscow’s thinking on “de-escalatory nuclear strikes,” using a single nuclear warhead in an attempt to shock a Western adversary into standing down and ending the conflict. But it’s possible to imagine that happening.

It’s becoming increasingly important to consider scenarios like these. It we don’t, the unthinkable might quietly – or worse still– suddenly and brutally become reality.

via Tyler Durden

As California Water Wells Run Dry, Kelly Slater Builds 65 Million Gallon “Perfect Wave” Tank

Back in December 2015, international surfing phenom Kelly Slater set the internet abuzz when he released video footage of himself surfing what he called the “perfect” man made wave. Slater made headlines again in May 2016 when he announced the sale of a majority stake in his Kelly Slater Wave Company to the World Surf League, an organization that hosts surfing competitions around the globe (terms of the sale were not disclosed). We have to admit, it’s pretty awesome, dude. 

A surfer riding a wave at the Kelly Slater Wave Company site in Lemoore, Calif.


Turns out that the perfect man made wave happens to be located in the middle of California’s Central Valley, over 100 miles from the coast.  For those of you not familiar with the Central Valley, it’s an agricultural oasis in the middle of California that produces a large percentage of the fruits and vegetables consumed in this country (see our post entitled “California Is Turning Back Into A Desert And There Are No Contingency Plans“). The problem, as we’ve pointed out multiple times on this site, is that California’s historic drought has forced farmers in the Central Valley to fallow over 500,000 acres in recent years due to a lack of water.  In fact, as can be seen in the charts below, state and federal water allocations to farmers in recent years have been all but non-existent.  That said, farmers aren’t the only ones making sacrifices, water wells are running dry for rural homeowners in the Central Valley and Jerry Brown imposed the State’s first ever mandatory water restrictions on residential consumers back in 2015.




For those reasons and so many more, we were a little surprised to discover that Kelly Slater’s “perfect wave” found its home in the Central Valley of California.  We just have to question the logic of state/county officials who approved a 65 million gallon (give or take a few million) man-made wave pool in the middle of farmland fallowed due a lack of water.  Are we missing something here?  So farmers can’t get water deliveries due to environmental restrictions imposed to save an invasive fish species (see “California Drought Worsens – El Nino ‘Gains’ Flushed Into The Pacific As Water Storage Runs Dry“) but a surfer can build a giant “perfect wave” for private use by himself and couple of buddies? 

But hey, at least the water situation is getting better.



Oh well, just enjoy the video and forget we said anything.

via Tyler Durden

China Food Inflation Looms As Ag Output Set To Plunge Most In 50 Years Amid Historic ‘La Nina’

Via Investing In Chinese Stocks blog,

The 2016 La Nina is set to be bigger than 1998 and that was one of the strongest ever. It was a bad hurricane season in the Southeast United States, and the effects of La Nina lasted for more than 2 years, eventually draining natural gas inventories due to colder than normal winters, sending prices to $10 / MMBtu.

China is also concerned due to flooding and the effect on food prices.

At the beginning of this summer, Anhui, Guangxi, Guizhou, Hubei and other areas have suffered large floods, local residents and property caused substantial losses. China's major cities weather data from the World Agricultural Outlook Board released data show that average precipitation of various cities in recent signs of deviation from normal is obvious central elevation.


Logically speaking, choose to take the data itself is a deviation from the normal value, if the normal value is an average value within a sufficiently long period of time, then the data in the long run should be at a zero value fluctuate. Location but in fact, the average annual precipitation of various cities has deviated from the normal 20 mm / month or more shock for nearly a year, sometimes even reaching 55 mm / month as much.


Large amount of precipitation and frequent storms across the board so that the Yangtze River above the warning level, superimposed on the arrival of the main flood season influence the formation of summer flooding a large area. Up to now, the country has 26 provinces suffered floods, which affected counties have more than a thousand. Why this year the weather is so abnormal it? This is the El Niño phenomenon has a direct correlation. El Nino from the tropical Pacific SST anomalies warming, thereby causing global climate (especially in the Pacific Rim region) exception, in accordance with its laws of history, El emergence period is probably about seven years, but not appear every time El Niño will huge disasters, because even if this phenomenon leads to abnormal weather, there is stress.


Measure an important indicator of the El Nino phenomenon is the SST anomalies (published in the National Oceanic and Atmospheric Administration), the data show that in 2015 – 2016 SST anomalies have reached a high of 2.82, higher than the 1982–1983 years 2.79 and 1997– 2.69 in 1998. The data show that this year's El Nino phenomenon is worse than in 1998, even NASA (National Aeronautics and Space Administration) expectations: the strongest El Niño may debut in 2016.


…Once the abnormal weather caused crop failures, then the prices of agricultural products there will move up the role, which led to changes in the domestic CPI.

The last two strong La Ninas caused drops in agricultural output:

First, once the abnormal weather led to rising prices of agricultural products, it will cut production of agricultural products through this link.


In the past 50 years of food production, the lowest growth rate appeared in those two years. Once in 1985 and once in 2000, grain output fell 7% in the former, while the latter's food production fell 9%. These two serious cuts to food occurred in the third year after the El Nino phenomenon, and therefore, a conclusion can basically get is: are these two food production caused by the El Nino weather anomaly caused.

Chinese grain output went negative in 1999 and didn't recover until 2004:

Second, 1997–1998 years that floods seem bigger impact on the agricultural harvest. Since 1998, China's grain harvest plunged from 510 million tons to 430 million tons in 2003, a decline of more than 15%, and since 1999, China began to grain from average annual growth rate of around 3% fall into negative growth, until 2004, only to return to positive growth in food production. For 1982–1983 Nian that weather impact, its effect on agricultural crops is relatively eased off a little. When El Nino event starts on agricultural products affected by the formation of agricultural products is still increasing production status, affect only agricultural production growth. After 1985, agricultural harvest brief negative growth in agricultural production in 1986 and will soon return to normal.

Food inflation went from negative during the Asian Crisis up to 33 percent:

Third, no doubt are: food production will bring upward pressure on food prices, if we are focusing in 1997 – 1998 and that the impact of the El Niño phenomenon on agricultural products of the case (that of 1982 due to a lack of market-oriented price mechanism the lack of reference value), you can see the 1999 CPI began to appear a rising cycle, when it rose to 2004 round ended. The terms of the CPI was rising phase of the sample can be easily found in many varieties in the CPI, food prices rose the most fierce breed when food prices year on year growth from 33.9% -13.8%, climbed all the way, you can guess, in the case of high probability, when food prices because of supply problems pushed faster.


From these three events we can infer the following: First, food production caused by the El Nino phenomenon, is expected to last for two years, until 2018, food production will have to repair; the second is the labor shortage even at the current trend of urbanization, we must be alert to the magnitude of agricultural production may be more severe than that of 2000; the third is food price inflation is likely to become the focus of attention late.

via Tyler Durden

Bank Of England Suffers Stunning Failure On Second Day Of QE: “Goodness Knows What Happens Next Week”

It all started off well enough.

On the first day of the Bank of England’s resumption of Gilt QE after the central bank had put its monetization of bonds on hiatus in 2012, bondholders were perfectly happy to offload to Mark Carney bonds that matured in 3 to 7 years. In fact, in the first “POMO” in four years, there were 3.63 offers for every bid of the £1.17 billion in bonds the BOE wanted to buy.

However, earlier today, when the BOE tried to purchase another £1.17 billion in bonds, this time with a maturity monger than 15 years, something stunning happened: it suffered an unexpected failure which has rarely if ever happened in central bank history: only £1.118 billion worth of sellers showed up, meaning that the BOE’s second open market operation was uncovered by a ratio of 0.96.  Simply stated, the Bank of England encountered an offerless market.


What makes this particular failure especially notable – and troubling – is that while technically uncovered sales of government securities happen frequently, and Germany is quite prominent in that regard as numerous Bunds auctions have failed to find enough demand in the open market in recent years forcing the “retention” of the offered surplus, when it comes to a central bank’s buying of securities, there should be, at least in practice, full coverage of the operation as the central bank is willing and able to pay any price to sellers to satisfy its quota.

For example, in today’s operation, the scarcity led to the BOE accepting all submissions, even as some investors offered prices above the prevailing market. The highest accepted price for the 4 percent bond due in 2060, for example, was 194.00, compared with a weighted average of 192.152, which means that the happy seller obtained a yield well in excess of that implied by the market.

And yet, despite having a completely price indiscriminate buyer, some £52 million worth of bond sellers simply refused to sell to the BOE at any price!

The QE failure quickly raised alarm signals among the bond buying community. In a Bloomberg TV interview, Luke Hickmore, an Edinburgh-based senior investment manager at Aberdeen Asset Management said that “lots of people are bidding us for bonds — Mark Carney is now bidding me for bonds and he still can’t have them. The problem is he was trying to buy 15-year plus bonds today in the gilt market. That’s a really difficult area.”

Needless to say, immediately after the news that not even the BOE can buy all the bonds it needs to buy at any price, yields on 10 and 30-year gilts quickly dropped to new record lows. “Yesterday we saw a 3.63 cover in the short APF so this is a sharp difference that has really caught the market off guard,” said Daniela Russell of Legal & General Group in London, cited by Bloomberg.

We were surprised they didn’t slide even lower. After all, if even the central bank is met with an offerless market, there is simply no price that is high enough, as ludicrous as that may sound, for longer-maturity gilts because the last marginal seller can demand any price from the BOE and they will get it.

As Bloomberg notes, the BOE’s failure to reach its target on Tuesday is an early warning of the challenges it may face in expanding its QE plan. A big part of the problem for the central bank is that it already scooped up about a third of the U.K. government bond market as part of a program that started in March 2009. And, with yields already at all time lows, it has just run into the same problem that we warned back in 2014 will haunt the BOJ: a lack of willing sellers. Ironically, even as the BOJ has stumbled from one monetary policy embarrassment to another, it never had a failed POMO. It was up to the Bank of England to demonstrate what a bond shortage really means.

But why the lack of sellers? Well, since the BOE paused purchases in 2012, global bond yields have tumbled, meaning investors may be less willing to part with longer-term bonds that tend to offer higher yields than their shorter-dated equivalents. Long-dated U.K. bonds are in particular demand from pension companies that hold the securities to match their liabilities.

“You’d understand why investors might not be keen to offload longer bonds – if you are looking for yields that’s the only place on the curve to be,” said Jason Simpson, a London-based fixed-income strategist at Societe Generale SA.

Longer-dated bonds are “an area where people are hunting down what yield is left – you have to extend out into that area to get anything really,” Aberdeen’s Hickmore said. Carney “is going to say ‘it’s very early days, this is day one of the long-end purchasing.’”

Whatever the reason, and however the BOE will try to justify this striking failure, Mark Carney has a major problem on his hands: according to last week’s announcement, the BOE hopes to increase its holdings of government securities by 60 billion pounds ($78 billion) to 435 billion pounds over the next six months. However, if today is any indication, it will fail.

Tomorrow the market’s attention will be fixated on the BOE’s Asset Purchase Facility website (link) then another open market operation, this time in the seven- to fifteen-year sector, is scheduled to take place. Another uncovered failure like today, and alarm bells will be going off everywhere, not to mention that Gilt yields will implode.

Just as importantly, the BOE has said that “the Bank will announce its response to the shortfall in today’s uncovered operation at 9am tomorrow.”

We can’t wait, and neither can SocGen’s Jason Simpson: “It is a bit of a surprise that this went uncovered in the first week of the operation, goodness knows what happens next week.”

via Tyler Durden

The Class Struggle Is Real

Submitted by Matthew McCaffrey via The Mises Institute,

Libertarians are often skeptical about the idea of class struggle. This is no surprise, given how closely associated it is with Karl Marx. However, Marx did not originate the theory of class conflict, which was actually developed by the French liberals in the 19th century. In fact, it was classical liberal intellectuals in France, England, and the United States who spearheaded the early development of class theory.

Marx, Engels, and even Lenin were well aware of the origins of class doctrine, and openly acknowledged their bourgeois influences. However, the Marxists developed their own version of the theory that was distinctly inferior to that advanced by the French.

Both sides agreed that society contained exploited and exploiting classes. However, for the liberals, society was not divided between the bourgeoisie and the proletariat, but between the productive class and the political class. The liberals recognized that there are two ways to organize human productive effort: through peaceful cooperation and trade, or through violence. Each method—peace and power—creates groups of people with distinct, conflicting interests. The former organizes individuals within the division of labor, in which each person contributes willingly to the welfare of others. The second organizes individuals into political groups that claim monopolies over coercion.

Importantly, in this view, class membership isn’t based on economic roles like laborer or entrepreneur, but on sources of income. Some members of society earn wealth through production and trade, while others acquire it through redistribution. The modern state not only institutionalizes redistribution, but creates a network of privileges for the individuals and groups it wants to support. These groups include businesses seeking to protect themselves from market competition, but also the intellectual classes, which the state relies on for support in the court of public opinion.

It is difficult to perfectly define the membership of each class. A good place to start though is by distinguishing between those who earn their net income through production and those who earn it through predation. Government redistributes wealth through several means, but its most systematic tool is taxation. Productive members of society are net tax-payers, while members of the political class survive parasitically as net tax-consumers. Taxation institutionalizes the divide between the state and its privileged groups on the one hand, and the productive classes on the other.

Sadly, Marx and Engels only partly understood the liberal view, though the theory does occasionally appear in their work. For example, Engels described American politics as follows:

Nowhere do “politicians” form a more separate and powerful section of the nation than precisely in North America (i.e. the United States). There, each of the two major parties which alternately succeed each other in power is itself in turn controlled by people who make a business of politics… It is in America that we see best how there takes place this process of the state power making itself independent in relation to society… we find two great gangs of political speculators, who alternately take possession of the state power and exploit it by the most corrupt means and for the most corrupt ends—the nation is powerless against these two great cartels of politicians who are ostensibly its servants, but in reality dominate and plunder it. (emphasis added)

Engels might as well be writing about current electoral politics. Unfortunately, Marx and his followers strayed from the liberal theory in order to develop their own approach, which remains dominant in the public mind to this day.

This discussion only scratches the surface of the classical liberal approach to class theory, which still holds tremendous research potential for young scholars in the liberal tradition. For those who want to know more, Ralph Raico has written two outstanding essays on the subject (here and here; audio here). David Hart has also done an enormous amount of research on the French liberals and their theory of class, much of which you can find on his website (here). More recently, people like Murray Rothbard and Roderick Long have refined and expanded the liberal theory.

Class analysis is just as relevant today as it was two centuries ago, if not more so. In fact, spreading it might be every bit as important for the progress of liberty as spreading the Marxist theory was for the progress of socialism.

Tragically, the message of liberalism is simple, yet so difficult to communicate: violent exploitation through politics creates destructive class conflict; peaceful cooperation through the market doesn’t.

via Tyler Durden

Chinese Bond Yields Tumble To 2009 Lows As Spooked Investors Rush Out Of Potential Defaults

The biggest (unspoken of) bubble in the world, just got bubblier. Following the lowest 10Y China government bond auction yield since records began in 2004, a surge of foreign inflows (seeking yield) combined with domestic flight-to-safety from the increasingly default-ridden corporate bond sector has sent China's government bond yields to 2009 lows.

10Y Chinese government bonds offer a 120-140bps yield enhancement over Treasuries (and far more over JGBs or Bunds), which has sparked a surge of demand, sending the yield to near record lows in 2009…


And foreigners reach for yield has driven demand for Chinese government debt(as Bloomberg notes)

The increased demand for sovereign debt was reflected at the government’s latest issuance of 10-year securities last week, which fetched a coupon of 2.74 percent, the lowest since at least 2004.



Overseas investors increased their holdings of onshore bonds in June by 47.7 billion yuan ($7.2 billion) to 764 billion yuan, latest available data from the People’s Bank of China show.

But there is another driver that is crushing government bond yields lower…

Chinese sovereign bonds have benefited from overseas inflows, which surged the most in two years in June, after the nation eased access to domestic markets.



Demand for the relative safety of government debt has been driven also by a rising number of company defaults, with a Chinese shipbuilder becoming the latest to renege this week. While recent data including that on factory deflation suggest the economy is stabilizing, gross domestic product is projected to expand at the slowest pace in more than two decades this year.



“Investors are more interested in government bonds as the slowing economy has reduced risk appetite and as default risks were exposed in the corporate debt market," said Liu Dongliang, a senior analyst at China Merchants Bank Co. in Shenzhen.

And what has all this flight-to-safety and reach-for-yield created? The biggest – least spoken of – bubble in the world…


Of course local analysts see no problem…

"The bull market will continue for the rest of the year, as supporting factors will continue to exist and as the market may still expect the central bank to ease monetary policy to support growth.”

Thanks once again to the central planners saving the world, no matter what.

via Tyler Durden