The Annotated History Of Global Volatility

While Janet Yellen is bust ignoring “noisy” inflation and dismissing low volatility as indicative of any complacency, Goldman is a little more concerned. The decline in economic and asset market volatility this year from already low levels in 2013 has been striking, which as Markus Brunnermeier states, means “the whole system is more prone to a financial crisis when measured volatility is low, which tends to lead to a build-up of risk in the background – the so-called ‘volatility paradox’.”

“In general, extremely low risk premiums right now are somewhat concerning… If there is a smooth adjustment towards more normal levels of risk premium, I believe the financial system can handle it. But if risk premiums suddenly move back to high levels… the question is how the financial system will react.”

Allison Nathan: Does low market volatility breed complacency and excessive risk taking?

Markus Brunnermeier: Yes. I have coined this dynamic the “volatility paradox.” When measured market volatility is low, people feel empowered to take on more leverage and more liquidity mismatch, which leaves the whole system more prone to sharp movements. This dynamic occurred during the “Great Moderation.” During that period, fundamental and asset volatility was generally low and market participants took on much more leverage.


Source: Goldman Sachs

via Zero Hedge Tyler Durden

You Want to Know the Truth About the World? Ask a Child…

By: Brad Thomas and Chris Tell at:

Why is she so fat Daddy?” …looking at an obese woman struggling to get out of her car at the supermarket.

“I like your funny hair.” …said to a surfer with dreadlocks.

“How do you know that?” …asked of a religious, end-of-the-world crusader holding up a placard and yelling that “We’re all going to die and only God can save us!”

These are some of the random comments I’ve heard from pre-teen children over just the last few weeks. Parents of young children know all to well how uncomfortable children’s questions can sometimes be. We should relish the beautiful and at times brutal honesty they display without hesitation, though that is sometimes easier said than done.

Rarely is there any sacred ground. Honesty and a genuine unquenchable curiosity are two of the most wonderful traits of children; ironically, they’re also the two traits all to often lacking in adults.

Paul Rosenberg, the author of A Lodging of Wayfaring Men, penned a great article a while ago discussing a related topic on his website here.

The crux of the article is the argument that children are inherently free, having not yet been corrupted with dangerous ideas. Ideas placed in their fragile minds by Government-run institutions humorously referred to as “public education establishments.”

We have much of our current political woes to blame on a populace too easily led with corrupt and corrupting ideas. The indoctrination begins at an early age via “schooling”, then media, and subsequently socially.

Paul suggested asking pre-teen children the following question:

Should you be allowed to do anything you want, as long as you don’t hurt anyone?

Now, if you think about it the above question delves directly into the role of the state in our personal lives. Worth thinking about.

If you have children, grandchildren or you need to kidnap a neighbors for a few minutes, I’d encourage you to run this test yourself and share the results with us here.

I thought about this question myself, and why the answers differ between children and adults. Paul’s question denotes a bigger problem, though… education is broken.

I have written about this many times before, including a post where I described why I would rather see my kids throwing up from dysentry in an Indian hostel than nursing a self-induced hangover in a university dorm room.

The notion that our children, via government-run schools, are being “educated” as opposed to “indoctrinated” is an absurdity for anyone paying close attention. Once we reach adulthood the common perception is that we cease to believe in fantasy. Out with the Easter Bunny, out with Santa and in with reality, right?


Most adults believe in the pure fantasy that the government can, do and should educate their children. They also believe that the government can, do and should provide pensions, free healthcare and the myriad other “services”. All this from a morally bankrupt group of parasites who daily show their true colours to a near comatose, naive citizenry. At the rate that we’re headed, the biological makeup of humanity will have evolved purely to supply the head and hands with sufficient oxygen and blood, to enable the head to rest at suitable TV height, with the hands primed for updating social network status and voting on American idol.

Perhaps young kids who’ve not been brainwashed with garbage ideas yet will provide us with some insights?

It was with this thought that I took Paul’s question to my own two young children, both of whom are under 10 years of age. Now admittedly, my children don’t likely represent a “typical” mindset. Their upbringing has been anything but “typical” and amongst many other things has included home-schooling, time in a Thai Buddhist school (no, I’m not Buddhist, but I believe that only by integrating with different cultures and religions can one gain a fuller, more balanced understanding of the world) and an exposure to the world many think crazy.

I’m a firm believer that education is not to be found inside the four walls of a classroom, but in our wide and wonderful world. My wife and I try to educate our children from this paradigm. It is why I bought my son a second hand piece of furniture, and why I want my children to go cold and hungry. Yeah, I’m THAT kind of father.

So here are the answers my children provided to Paul’s question:

My son: “Not if you irritate them.”

Me: “OK, irritating might not be hurting someone. Other than that?”

My son: “Yes, I think so (looking quizzically at me). I wouldn’t be doing anything wrong. I think it would be hard to be doing something wrong if I’m not hurting anyone, right?”


My daughter: “My friend was nasty to me and she shouldn’t do that.”

Me: “Did she hurt you?”

My daughter: “No.”

Me: “But it hurt you emotionally, did it? So you’re still upset at her?”

My daughter: “Yes”

Me: “Is it OK to do that, then?”

My daughter: “I don’t think so.”
Me: “What about other things?”

My daughter: “If I don’t hurt people like that, then I should be able to do anything, unless I break your rules,

Me: “Right!”

Paul mentioned in his article that he wished to run this as an experiment, and since I was interested in the idea I thought that getting the word out would provide us with a better data-set.

Specifically Paul said:

I’d like to propose we actually run such an experiment. I’ll be pleased to coordinate and publish the data.

In order to ensure that the results are meaningful, I recommend the following:

  • Make sure you have a neutral setting. Don’t talk to the child about liberty, obedience, or anything along those lines before asking the question. Make sure that you are feeling neutral too. You should want to know the child’s opinion, sincerely.
  • Since children have notoriously short attention spans, ask the question only after you have calmed them and centered their attention. I suggest something like this:

Can I ask you a question? I want to know what you think about this.

  • If the child answers more than a simple ‘Yes’ or ‘No,’ write down precisely what they say. Then, if necessary, write down your interpretation of what the child said and why you interpreted their meaning that way.
  • After you write down the answer, feel free to continue the discussion with the child if fitting, but not if there are other study participants in the area. Keep them neutral.

As I say, I’ll be pleased to tabulate and publish the results if one or more of our readers want to run the experiment.

I think the results might be very interesting… and quite possibly very useful.

We would love to be able to publish the results from as large a data-set as possible. Let us know what your results are. I eagerly await the replies and will, along with Paul publish them once they’re tabulated.

Will the minds of children provide us with any reprieve from the intellectually dishonest “rules” that blanket society today?

Let’s find out, shall we?

– Chris

P.S.: Paul will be amongst a host of incredible speakers and friends, who will be joining us for an intimate gathering in Aspen, Colorado this August. We have a couple spots let before we close bookings. You can get more details about the event here.


“In the United States today, there is a pervasive tendency to treat children as adults, and adults as children. The options of children are thus steadily expanded, while those of adults are progressively constricted. The result is unruly children and childish adults.” – Thomas Szasz

via Zero Hedge Capitalist Exploits

Germany’s “End The Fed” Protest Organizer Gets Car Fire-Bombed

Anyone saying “the Fedeal Reserve Act is bad” in Germany is, according to Lars Maehrholz, looked upon by the mainstream as being a Nazi. The organizer of the widespread “End The Fed” rallies that we discussed previously, explained that he is not only under attack by the main stream media and political system in Germany but also physical threats that resulted in a car he was in getting fire bombed by an anonymous perp.

As WeAreChange reports,

Lars received threats that this would happen online and now his friends car that he was in, was set on fire.


The police say that the car caught on fire by itself and are not investigating the case. Luckily Lars and his friend were not in the car when it was set on fire.

In this video Luke Rudkowski talks to Lars Maehrholz a skydiver that became the main organizer of the massive Monday peace vigils in Berlin.

The Monday peace vigil is an autonomous fully independent movement that gained massive popularity in Berlin that is against the U.S Federal Reserve.

via Zero Hedge Tyler Durden

This Has Never Happened Without The US Falling Into Recession

With all eyes firmly focused on yesterday’s disastrous GDP report (and ultimately dismissing it as ‘weather’ and one-off exogenous factors), we thought Bloomberg Brief’s Rich Yamarone’s analysis of a lesser-known (yet just as key) indicator of the state of US economic health was intriguing. As he notes, according to the latest data from the Bureau of Economic analysis, there has never been a time in history that year-over-year gross domestic income has been at its current pace (2.6 percent) without the U.S. economy ultimately falling into recession. That’s more than 50 years of history, which is about as good as one could ever hope for in an economic indicator.



Source: Bloomberg Briefs

via Zero Hedge Tyler Durden

Guest Post: Proof That Government Economic Numbers Are Being Manipulated

Submitted by Michael Snyder of The Economic Collapse blog,

How in the world does the government expect us to trust the economic numbers that they give us anymore?  For a long time, many have suspected that they were being manipulated, and as you will see below we now have stone cold proof that this is indeed the case.  But first, let's talk about the revised GDP number for the first quarter of 2014 that was just released.  Initially, they told us that the U.S. economy only shrank by 0.1 percent in Q1.  Then that was revised down to a 1.0 percent contraction, and now we are being informed that the economy actually contracted by a whopping 2.9 percent during the first quarter.  So what are we actually supposed to believe?  Sometimes I almost get the feeling that government bureaucrats are just throwing darts at a dartboard in order to get these numbers.  Of course that is not actually true, but how do we know that we can actually trust the numbers that they give to us?

Over at, John Williams publishes alternative economic statistics that he believes are much more realistic than the government numbers.  According to his figures, the U.S. economy has actually been continually contracting since 2005.  That would mean that we have been in a recession for the last nine years.

Could it be possible that he is right and the bureaucrats in Washington D.C. are wrong?

Before you answer that question, read the rest of this article.

It just might change your thinking a bit.

Another number that many have accused of being highly manipulated is the inflation rate.

But we don't have to sit around and wonder if that figure is being manipulated.  The truth is that even those that work inside the Federal Reserve admit that it is being manipulated.

As Robert Wenzel recently pointed out, Mike Bryan, a vice president and senior economist in the Atlanta Fed's research department, has been very open about the fact that the way inflation is calculated has been changed almost every month at times…

The Economist retells a conversation with Stephen Roach, who in the 1970s worked for the Federal Reserve under Chairman Arthur Burns. Roach remembers that when oil prices surged around 1973, Burns asked Federal Reserve Board economists to strip those prices out of the CPI "to get a less distorted measure. When food prices then rose sharply, they stripped those out too—followed by used cars, children's toys, jewellery, housing and so on, until around half of the CPI basket was excluded because it was supposedly 'distorted'" by forces outside the control of the central bank. The story goes on to say that, at least in part because of these actions, the Fed failed to spot the breadth of the inflationary threat of the 1970s.


I have a similar story. I remember a morning in 1991 at a meeting of the Federal Reserve Bank of Cleveland's board of directors. I was welcomed to the lectern with, "Now it's time to see what Mike is going to throw out of the CPI this month." It was an uncomfortable moment for me that had a lasting influence. It was my motivation for constructing the Cleveland Fed's median CPI.


I am a reasonably skilled reader of a monthly CPI release. And since I approached each monthly report with a pretty clear idea of what the actual rate of inflation was, it was always pretty easy for me to look across the items in the CPI market basket and identify any offending—or "distorted"—price change. Stripping these items from the price statistic revealed the truth—and confirmed that I was right all along about the actual rate of inflation.

Right now, the Federal Reserve tells us that the inflation rate is sitting at about 2 percent.

But according to John Williams, if the inflation rate was calculated the same way that it was in 1990 it would be nearly 6 percent.

And if the inflation rate was calculated the same way that it was in 1980 it would be nearly 10 percent.

So which number are we supposed to believe?

The one that makes us feel the best?

And without a doubt, "2 percent inflation" sounds a whole lot better than "10 percent inflation" does.

But anyone that does any grocery shopping knows that we are definitely not in a low inflation environment.  For much more on this, please see my previous article entitled "Inflation? Only If You Look At Food, Water, Gas, Electricity And Everything Else".

Of course the unemployment rate is being manipulated as well.  Just consider the following excerpt from a recent New York Post article

In case you are just joining this ongoing drama, the Labor Department pays Census to conduct the monthly Household Survey that produces the national unemployment rate, which despite numerous failings is — inexplicably — still very important to the Federal Reserve and others.


One of the problems with the report is that Census field representatives — the folks who knock on doors to conduct the surveys — and their supervisors have, according to my sources, been shortcutting the interview process.


Rather than collect fresh data each month as they are supposed to do, Census workers have been filling in the blanks with past months’ data. This helps them meet the strict quota of successful interviews set by Labor.


That’s just one of the ways the surveys are falsified.

The Federal Reserve would have us believe that the unemployment rate in the U.S. has fallen from a peak of 10.0 percent during the recession all the way down to 6.3 percent now.

But according to, the broadest measure of unemployment is well over 20 percent and has kept rising since the end of the last recession.

And according to the Federal Reserve's own numbers, the percentage of working age Americans with a job has barely increased over the past four years…

Employment Population Ratio 2014

The chart above looks like a long-term employment decline to me.

But that is not the story that the government bureaucrats are selling to us.

So where does the truth lie?

What numbers are we actually supposed to believe?

via Zero Hedge Tyler Durden

Dick Cheney Fearmongers “A Terrorist Attack Bigger Than 9/11 Will Happen Before End Of Decade”

Hot on the heels of Eric Holder’s domestic terrorism task force creation, Lindsay Graham’s recent diatribe of the “inevitability” of another terror attack (on the US) by Syria or Iraq, adding that “according to our own Director of National Intelligence, FBI Director, the next 9/11 is coming from here,” it seems the ultimate scaremonger has decided it is his turn to stir the pot. Appearing on Hugh Hewitt’s radio show, Dick Cheney explained that he “doubted” whether the US would “get through this decade” without another “massive attack on the homeland.” But it’s what he said after that makes Obama’s NYC nukes concerns pale in comparison…

I think there will be another attack. And the next time, I think it’s going to be far deadlier than the last one.


Imagine what would happen if somebody could smuggle a nuclear device, put it in a shipping container, and drive it down the beltway outside Washington, D.C.


As Kimberly Paxton at The Daily Sheeple concluded,

Thanks, Dick.  You really couldn’t make it any more obvious that a major false flag event is in the works.


Whatever is coming, it’s going to be huge. A lot of people are going to die in horrific ways. Ghastly pictures will be plastered all over the news to reinforce the awful event and make certain it is foremost in the minds of America.  The Ministry of Propaganda mainstream media will diligently traumatize people like it’s their job. (Because, you know, it is.) Someone will be painted as the boogeyman and we’ll have a new enemy to hate.


And while everyone is afraid, wars of vengeance  (that are actually to line the pockets of those who are already wealthy) will be declared, legislation will be written and hastily passed, and rights are going to be lost.  What’s coming will make the unPatriot Act look like a wholehearted endorsement of our unalienable rights in comparison.


It’s coming… and we have to look at every event with skepticism if we wish to know the real culprit. The real terrorists are probably spending about half of their time in our nation’s capital. It doesn’t get more “homegrown” than that.

via Zero Hedge Tyler Durden

The Great American Economic Growth Myth

Submitted by Lance Roberts of STA Wealth Management,


via Zero Hedge Tyler Durden

Former Governor Warsh Slams Fed’s “Reverse Robin Hood” Policies

Isn’t it odd that when ‘officials’ are no longer part of the status-quo-sustainers, how the truthiness flows… As former Fed Governor Kevin Warsh explained this morning, “on the fairness point – if you have access to credit, if you’ve got a big balance sheet, the Fed has made you richer,” concluding rather too honestly for some people’s liking, “I would say [Fed policy] has been in some sense Reverse Robin Hood.” The bottom line, he chides, “this is a way to make the well to do more well to do because that’s all the Federal Reserve can do.”


via Zero Hedge Tyler Durden

DuPont Cuts Outlook, Blames Weather

Presented without commentary:

Today DuPont announced that the company is revising its outlook for operating earnings per share for the second quarter and full year 2014, due primarily to lower than expected quarterly performance of its Agriculture and, to a lesser extent, Performance Chemicals segments. The company expects operating earnings in the second quarter to be moderately below the $1.28 per share recorded in the same period last year [EST. $1.46].  As a result, the company is lowering its full-year outlook for operating earnings to $4.00 to $4.10 per share [EST.$4.29].


The revised outlook in Agriculture reflects lower than expected corn seed sales and higher than expected seed inventory write-downs. Given favorable soybean economics, soybean sales volumes in North America are higher than expected. However, the higher soybean volume will not fully offset the decline in corn volume, especially given the transition under way in the company’s soybean lineup to newer, higher performing products.  The company believes this is a short-term negative trend, and there will be strong demand for its next generation soybean products. The revised outlook also reflects lower than expected crop protection herbicide sales, largely due to weather.

via Zero Hedge Tyler Durden

Stocks End Unchanged As World Cup Loss Trumps Bullard Hawkishness & Dismal Data

The typically more dovish Jim Bullard unleashed a torrent of "markets are wrong" this morning and along with dismal macro data sent stock reeling out of the gate – catching down to Treasury yields divergence since the Fed last week. Stocks stabilized as the hevay volume dump dried up and staggered sideways after POMO and Europe's close. Then USA went 1-0 down against Germany and VIX was dumped and stocks pumped and then double-pumped again to almost back to unchanged in the last hour. During all this excitment, bond yields slid lower (to 3-week lows); gold and silver pushed higher (though gold ended modestly lower on the day after China gold loans news); and credit entirely ignored the exuberant bounce…VIX closed unch along with stocks as indices were rescued from a notable red day via an epic AUDJPY lift and VIX slam on negligible volume.

Early on we wondered…


But then this happened –  totally normal and human…


VIX was in charge…


Fun-durr-mentals… as luckily stocks had AUDJPY to save the day…


And in S&P Futures all the volume is on the down moves…(lower pane)


Treasuries remain notably divergent since the Fed…


And today was insane… (exactly the same deja vu all over again as yesterday- and that recoupled this morning)


Credit markets did not buy the dip as exuberantly as stocks…


Silver gained but gold dropped modestly…



Charts: Bloomberg

Bonus Chart: 1987 Deja vu – Melt-up before the crash?

via Zero Hedge Tyler Durden