What’s the true risk for the Global Economy?

What’s the true risk for the global economy? Its pronounced: /d??fl?SH(?)n/

We are not trying to be cryptic? We are falling in line with commentary and messages from central bankers, institutions, funds with respect to the economy.  Here is the FOMC minute’s inflation range going into the next few years.


GDP average ranges from 1.8% to 2.6% per annum.  Pay special close to the PCE inflation and Core PCE inflation ranges: 1.5% to 2.4%.  The target inflation is 2.0 %.  These figures are considering a composed or steady increase in economic activity and a return of capital expenditures by larger – big cap – companies into technology, human capital, infrastructure, etc. Remember, the multiple on private spending is several fold public spending.    

The figures are not that bad, so far. We have an initial indication that the EU region is at risk of a slowdown.  The US economy is not awash in economic happiness nor are we experiencing difficulty rubbing two nickels together.  The Chinese are comfortable with slower growth.  Not slow growth, just slower growth.  This is the difference between 7.6% and 7.4% on an annual basis.  The figure today was at 7.3%.  Being fair, most economies in the world would give up their central bankers for that kind of GDP.  Outside of China, the other high GDP is India.  But we won’t mention the inflation levels in India in this article (wink, wink).

In pure economic terms, deflation is defined as the reduction of the general level of prices in an economy.  Said simpler: If you know that a smartphone will be cheaper tomorrow than today by $5, would you wait till tomorrow or buy today?  The very thought of considering that option is the beginning of deflation.  

What’s the greater risk with deflation? The infectious contention that you can wait to get a “good deal” on a particular good or service.  Why is this dangerous?  This reduces the flow of money.  If you hold your capital for a better opportunity, you are restricting the flow of money to the rest of the global economy.  In economics 101, the groundwork for the sustainability of an economy is the movement of money.

We already began to witness in some ways in the EU.  When factories are beginning to adjust pricing in relation to demand, we may have new leading indicator.  The possible problem is that if we experience a precipitous decrease in economic conditions across the global.  Notice how very little mention of inflation has remained in the lexicon of the central bankers in the last few weeks.  We really are trying not to be conspiratorial.    

What to watch for in the coming weeks? Inflation indicators: CPI, PPI, PCE, housing prices, factory orders, manufacturing PMI’s. 

Continue to monitor how ECB central bankers react to the macroeconomic figures.  Buying assets, QE, is an approach to bring in a bid in certain securities.  

Remember, QE had a concentration on short to medium term securities.  Not only did this allow the “Bid” in Treasuries, this also removed duration risk out of the equation.  In turn allowing little fluctuation in the securities.  

Central Bankers want stability in the markets and the economies.  Any hint of removing the movement of capital sets the central bankers into motion.  When interest leaves from Treasuries, Asset Based Securities, banks behave different to their clients and lending standards change.  Augmentation to lending standards invites greater scrutiny.  The burden is then on the borrowers.  The flow of capital stops.  Capital expenditures stops.  Business begin to question the pricing of goods and services.  

Our suggestion to the central bankers is to create another macroeconomic indicator.  This will be different from the m1, m2, m3.  Different from CPI,PPI, etc.  This indicator will stem from the need to track the flow of money both intra and inter economies.  Call it FoM, Flow of Money. 

For now, we’re just standing on the street corner rubbing two nickels together waiting for the next smartphone deal.


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More Foreign Policy Incompetence – U.S. Humanitarian Aid is Going Directly to ISIS

Screen Shot 2014-10-21 at 1.40.40 PM“The convoys have to be approved by ISIS and you have to pay them: The bribes are disguised and itemized as transportation costs,” says an aid coordinator who spoke to The Daily Beast on the condition he not be identified in this article. The kickbacks are either paid by foreign or local nongovernmental organizations tasked with distributing the aid, or by the Turkish or Syrian transportation companies contracted to deliver it.

The State Department official said he, too, was conflicted about the programs… “Are we helping indirectly the militants to build their caliphate? I wrestle with this.”

– From Sunday’s Daily Beast article: U.S. Humanitarian Aid Going to ISIS

The Daily Beast has been at the forefront of exposing the bizarre emergence of the latest terror threat known as ISIS, which is being used to take away civil liberties at home, and fuel more chaos and destruction throughout the Middle East. It was their work in June that first highlighted the fact that ISIS was and is being funded and supported by U.S. allies in the Persian Gulf. I commented on the absurdity of the situation in my piece, America’s Disastrous Foreign Policy – My Thoughts on Iraq, in which I noted:

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Ebola 2014 Is Mutating As Fast As Seasonal Flu

Yesterday we reported that according to Peter Jahrling of the National Institute of Allergy and Infectious Disease – one of the top authorities in the world on Ebola – and who is on the front lines fighting Ebola disease in Liberia, there is something different about the current Ebola outbreak in that not only does it spread more easily than it did before, but the viral loads in Ebola patients are much higher than they are used to seeing. "I have a field team in Monrovia. They are running [tests]. They are telling me that viral loads are coming up very quickly and really high, higher than they are used to seeing…. It may be that the virus burns hotter and quicker."

That is one observation on how different the current Ebola outbreak may be from the traditional fare. Another one comes courtesy of Operon Labs, which as cited in detail below, notes that "the current Ebola 2014 virus is mutating at a similar rate to seasonal flu (Influenza A).  This means the current Ebola outbreak has a very high intrinsic rate of viral mutation.  The bottom line is that the Ebola virus is changing rapidly, and in the intermediate to long term (3 months to 24 months), Ebola has the potential to evolve."

The question is evolve into what?

Submitted by Operon Labs

Ebola 2014 is Mutating as Fast as Seasonal Flu


The current Ebola 2014 virus is mutating at a similar rate to seasonal flu (Influenza A).  This means the current Ebola outbreak has a very high intrinsic rate of viral mutation.  The bottom line is that the Ebola virus is changing rapidly, and in the intermediate to long term (3 months to 24 months), Ebola has the potential to evolve.  

We cannot predict exactly what the Ebola virus will look like in 24 months.  There is an inherent stochastic randomness to viral evolution which makes predictions on future viral strains difficult, if not impossible.  One basic tenet we can rely on is this: Viruses tend to maximize their infectivity (basic reproduction number) within their biological constraints (Nowak, 2006).  

These evolutionary constraints can be extremely complex, and can include trade-offs between virulence and infectivity, conditions of superinfection, host population dynamics, and even outbreak control measures.

One of the few statements we can make with confidence that the Ebola genome is changing at a specific rate, which is explained below.

Ebola Mutation Rate:

Analysis of the available research suggests that the Ebola 2014 virus is currently mutating at a rate 200% to 300% higher than historically observed (Gire, 2014).  

Ebola Genome Substitution Rates (Gire, 2014)

Furthermore, the Ebola-2014 virus's mutation rate of 2.0 x 10³ subs/site/year is nearly identical to Influenza A's mutation rate of 1.8 x 10³ subs/site/year (Jenkins, 2002).  This means Ebola 2014 is mutating as fast as seasonal flu.

Disclaimer: This paper contains no evidence (for or against) alternate modes of transmission for Ebola, nor is this paper postulating that genetic changes have impacted EVD clinical presentation (although evidence for this has started to emerge). This paper is simply demonstrating what appears to be a rapid rate of evolution in the Ebola 2014 Virus. Many recent Ebola viral mutations have been synonymous mutations, some have been in intergenic regions, while others are non-synonymous substitutions in protein-coding regions. All have unknown impact at the present time. Such questions should be the subject of future scientific research. This article simply points out that Ebola in 2014 is undergoing rapid mutation and adaptation.  The future implications of Ebola's rapid evolution are unclear.  

We chose to compare Ebola-2014 to Influenza A (Seasonal Flu) because Influenza is one of the fastest-mutating viruses (Jenkins, 2002).  Unlike chickenpox (VZV), which people usually only contract once per lifetime, Influenza can infect a single individual many times repeatedly over the years.  One of the reasons Influenza is able to re-infect humans each year is because the Influenza's high mutation rate allows the virus to generate 'escape mutants'.  Escape mutants are Influenza viruses which are no longer recognized by human immune systems.  Each winter presents us with a new mutated strain of the Influenza virus. Rapid mutation is beneficial to Influenza genetic fitness (in regards to antigenic regions), because it allows a 'new' Influenza virus to circulate year after year.

The benefit of a high mutation rate in Ebola 2014 is different — the genetic changes in Ebola-2014 allow for rapid exploration of the entire fitness landscape in a brand new host — humans. We need to be aware that the Ebola-2014 virus is undergoing rapid adaptation.

Ebola in Zoonotic Reservoir: Viral Genome adapted to Fruit Bats.  (Green)
Ebola in Human Hosts: Viral Genome adapted to Humans.      (Red)
Ebola Genotype will move Green -> Red during serial passage through Humans.

Until the Ebola outbreak is brought under control, the Ebola-2014 virus will continue to seed and adapt in its growing pool of West African human hosts.   We need to consider that as the weeks and months go on, the rapidly-changing Ebola-2014 virus will undergo repeated export from the West African region to countries around the world.

As new Ebola cases grow in West Africa and elsewhere, we are effectively conducting 'serial passage' experiments of Ebola-2014 through human hosts. The repeated passage of Ebola-2014 through humans is exerting selection pressure on the Ebola-2014 virus to adapt to our species (instead of fruit bats).  The introduction of Ebola-2014 into a large pool of West African human hosts (coupled with the complex dynamics of evolutionary selection pressure) may allow the Ebola-2014 virus to become more transmissible as the months go on, particularly in the absence of effective control interventions. 

The high mutation rate we see in Ebola-2014 reflects its ability to rapidly explore the fitness landscape. The ability of Ebola to undergo rapid genome substitutions and SNPs, coupled with genetic recombination, will allow 'survival of the fittest' in Ebola-2014 genetic variants (on both the intra-host and inter-host levels). New Ebola sub-clades are created with each passing month (there are already four sub-clades as of August 2014). New Ebola genetic variants are created with each new infection, though most are selected against. Rapid adaptation emerges from the high intrinsic Ebola-2014 mutation rate, coupled with the virus's ability to undergo RNA recombination during superinfection.

Molecular dating of the Ebola-2014 outbreak (Gire, 2014).
Probability distributions for both 2014 divergence events are overlaid above.

This phylogenetic tree is based on 99 Ebola viral genomes deep-sequenced from 78 distinct patients in Sierra Leone (Gire, 2014). We can see in the figure above that there are at least four Ebola genetic clusters (or sub-clades) based on phylogenetic analysis: These Ebola clusters are called GN, SL1, SL2, and SL3 by Gire et al. The key takeaway is that even prior to July 2014, the current Ebola outbreak had already accumulated significant genetic diversity.  Furthermore, the dominant circulating Ebola variants have changed over time. Up to four different Ebola-2014 viral sub-clades (groups of genetically related Ebola isolates) have circulated between humans since the onset of the 2014 Ebola outbreak.  

As the number of people affected by the 2014 Ebola outbreak has grown, so has the number of Ebola unique viral mutations and unique viral genetic lineages.  We can expect Ebola 2014 viral lineages to grow as some function f(i) proportional to the number of people infected with Ebola.

Ebola-2014: Acquisition of genetic variation over time (Gire, 2014).
Fifty mutational events (short dashes) and 29 new viral
lineages (long dashes) were observed.

The diagram above suggests that as the Ebola-infected host pool grows, so does the number of unique Ebola viral lineages (Gire, 2014).  This implies that Ebola acquires genetic diversity as it infects more people, particularly if the virus undergoes recombination during superinfection (Niman, 2007).  The growing number of new Ebola viral lineages will undergo natural selection for some 'optimum' balance of virulence, infectivity, tissue tropism, immune suppression, and other parameters which maximize the reproductive fitness of the Ebola virus in humans.  What that final virus might eventually look like 2 years from now is anyone's guess.  But the explosion of genetic variation suggests that the Ebola virus will become more difficult to contain as time goes on, which is why early action is important.

The idea that the Ebola-2014 Virus jumped species, but is now somehow 'static' or 'frozen in time' is a mistake. The Ebola-2014 virus is undergoing a period of rapid adaptation in human hosts, as evidenced by the Ebola RNA sequences deposited in Genbank, and the studies referenced with this article.  Hopefully, interventions (like contact tracing) will be able to stop Ebola-2014 before the virus optimizes its genotype.

These are two scenarios to outline what may happen in the future.  The critical variable determining the global outcome of Ebola is the response in West Africa, not the response in the United States.

Best Case Scenario:

WHO immediately deploys contact-tracing teams on the ground in West Africa.  The US Military is deployed as well, and constructs hospitals sufficient to care for the sick. The hospitals are staffed by qualified (read: well trained) caregivers. Teams on the ground  track down and care for Ebola-infected patients across West Africa, distributing self-treatment kits, food, medicine, and expertise.  An effort is made to involve local authorities and community leaders.  These efforts cause measurable reductions in the basic reproduction number of the virus by the end of 2014. 

Within 3 months to 9 months, the outbreak in West Africa peaks, levels-off, and begins to fade.  The Ebola virus never has the opportunity to acquire any significant mutations, due to its limited host pool. Ebola is fully under control by early 2015.  Sporadic cases in other countries are dealt with by treatment and contact tracing.  By Q4 2015, multiple Ebola vaccines and drugs are in the pipeline limiting the overall threat Ebola poses.

Worst Case Scenario:

The international response is perpetually behind the curve. Every response action is 8 to 12 weeks too late.  Statistics from the WHO become volatile and are unreliable as the lack of deployed personnel make hard numbers impossible to pin down. By  2015 the number of infections is in the hundreds of thousands in West Africa. The West African region exports 'asymptomatic infectives' which go undetected by basic screening. These individuals  'seed' outbreaks in other countries.

As more people become infected, a significant mutation arises that allows for a longer asymptomatic but infectious period, increasing the R-0. Globally, cases continue to double every 16 days, contact tracing infrastructure outside the West becomes saturated, and hospitals are overrun. By early-to-mid 2015, the global pool of Ebola-infected patients are in the millions, mainly centered in West Africa and Southeast Asia with multiple strains of varying virulence. A sudden change in the outbreak epidemiology caused by a recombinant Ebola strain causes confusion about how to respond. Efforts at developing treatments/vaccines become logistically complex and ineffective.

The implication of the Ebola 2014 mutation rate is this:  A single Ebola mutation doesn't necessarily mean the virus will become 'airborne', or that the virus has altered tissue tropism, or that the virus spreads more easily.  But a high intrinsic rate of Ebola mutation means that such changes may become possible in the future.  If the number of people infected grows into the hundreds of thousands, or even low millions, then the probability of a significant 'constellation' of accumulated Ebola mutations with phenotypic impact becomes more likely.  The problem is that accumulated Ebola mutations will scale with the size of the population infected.  Conversely, in a small population, such Ebola mutations are not likely to have a significant impact.  It's a bit like the virus is buying lottery tickets… The more lottery tickets the Ebola virus 'buys', the more chances it has to 'win'.  

Next Steps:

The general consensus in the scientific and epidemiological community is immediate intervention in West Africa is necessary in order to avoid taking the risky outcomes possible in a 'worst case' scenario.  A suitable response would need to include airlifting self-treatment kits with thermometers, the distribution of life-saving drugs, the construction of Ebola treatment centers, hospital staffing, contact tracing teams, and so forth.  A robust international response must happen soon in order to ensure that the current situation with the Ebola outbreak remains a 'best case' outcome.


[1] Genomic surveillance elucidates Ebola virus origin and transmission during the 2014 outbreak. (Gire et al, 2014).
[2] Rates of Molecular Evolution in RNA Viruses: A Quantitative Phylogenetic Analysis. (Jenkins et al, 2002).
[3] Isolates of Zaire ebolavirus from wild apes reveal genetic lineage and recombinants. (Wittman et al, 2007).
[4] Ebola Recombination: Recombinomics Commentary. (Niman, 2007).
[5] Evolutionary Dynamics: Exploring the Equations of Life. (Nowak, 2006).

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113 Federal Reserve Staff Members Make $250,000 Annually

Submitted by Mike Krieger via Liberty Blitzkrieg blog,

Just in case you need another reason to dislike the thieving Federal Reserve. From Reuters:

(Reuters) – The top 113 earners among staff at the Federal Reserve’s Washington headquarters make an average of $246,506 per year, excluding bonuses and other benefits – more than Fed Chair Janet Yellen and nearly double the normal top government rate.

Don’t worry Janet, once you leave, you can earn $250k per speech like your hero Banana Ben Bernanke.

The details on Fed pay were provided to Reuters in response to a Freedom of Information Act request for data on all employees of the U.S. central bank’s board whose salaries outstrip $130,810, which is the top of the government’s pay scale in most areas.


Republicans in the U.S. House of Representatives have sponsored a bill that would require the Fed to divulge that information publicly.


“It certainly bolsters the case for more oversight,” said Maggie Seidel, a spokeswoman for New Jersey Republican Scott Garrett, a co-sponsor of the bill.


As of July 31, the Fed’s inspector general led the list with an annual salary of $312,000, followed by the central bank’s four division directors, its general counsel and its chief operating officer, who each earn a base of $265,000.

Not a bad gig. All you have to do is be complicit in the destruction of the American middle class.

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Russia Deploys Troops, Robots Along Entire “2nd Middle East” Arctic Belt

On the heels of Sweden's military deployment (following the discovery of a damaged Russian sub), it appears Russia is taking no chances with its access to Arctic resources.As Reuters reports, the Russian defense minister announced today that Russian military units will be deployed along the entire Arctic border from Murmansk to Chukotka in 2014.




Interfax adds that combat robots are also being deployed to protect Russian oil and gas infrastructure in the harsh environment of the Arctic. This should be no surprise as The Guardian notes, the Arctic’s hydrocarbon resources nevertheless exert a powerful pull. It has been compared to "a second Middle East", with oil and gas reserves thought to represent 17% and 30%, respectively, of the global total.



This of course, is nothing new…

On 11 October, in an attempt to forestall such criticism, the Russian defence ministry announced plans to build “a regional environmental centre […] to prevent pollution in areas where Russian forces are deployed”. Russian troops systematically receive “training and briefings on environmental safety and compliance with legislation”, deputy minister Dmitry Bulgakov added. But it will take more than this to reassure the western powers.

But is a major escalation along such a massive border…


*  *  *

And finally, Interfax reports, Combat robots to protect Russian oil and gas infrastructure in Arctic

Undersea combat robots will be protecting Russian oilrigs and transportation networks in the Arctic region at some point, Deputy General Director of the Russian Foundation for Advanced Research Projects, Chairman of the Foundation's Scientific and Technological Board Vitaly Davydov told Interfax-AVN.


"The Foundation is not designing robotic sharks but it is working on undersea robots and autonomous gadgets capable of protecting infrastructure, controlling the waters and detecting, tracking and, if necessary, destroying a potential enemy. The prospective machinery may be deployed on the sea bottom and specialized submersibles," he said.


So far, the Foundation is focused not so much on defense issues as on mineral development projects, Davydov said.


"The rivalry in this region will be centered on its natural resources. A key task to be solved in the Arctic is access to mineral resources, first and foremost, hydrocarbons. This goal can be achieved through the completion of numerous tasks in the discovery, production and transportation of resources, sub-glacial operations and infrastructural security. This is the target of the Foundation's research programs," he said.

*  *  *

As The Guardian concludes, The Arctic, which is governed by international maritime law, is also the focus of other disputes. Canada regularly carries out military exercises in its Arctic territory. Relations between Ottawa and Moscow have cooled significantly since the start of the Ukraine crisis.

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Subprime Bubble Pop 2.0? Department Of Financial Services Slams America’s Largest Subprime Servicer

Once upon a time, in the distant 2005 and 2006, the world just couldn’t get enough of such subprime mortgage superstars as New Century Financial. In fact, some may have forgotten, but none other than David Einhorn was a director of New Century until March 2007, when suddenly everything fell apart and a few weeks later the company was bankrupt. The subprime collapse that followed, which contrary to Ben Bernanke’s promises was “not contained”, is what according to most catalyzed the plunge of the US economy into the greatest depression since 1929, led to the default of Lehman Brothers and nearly ended the financial system. 

Fast forward to 2014, when the US has a new subprime servicing superstar, which just like in 2006, also happens to be a hedge fund darling. The company: Ocwen Financial (a name which originated when some drunk banker or executive spelled Newco in reverse) which currently is responsible for servicing over $106 billion in subprime mortgages. A darling so prominent among the hedge fund community, it was one of the most beloved hedge fund hotel stocks in late 2012 and 2013, and judging by its current list of holders, still has a plethora of who-is-who hedge and mutual fund holders.

Well, in what may be a resounding echo of March 2006, moments ago the New York Superintendent of Financial Services said that Ocwen had engaged in abuses that could potentially harm hundreds of thousands of borrowers. As AP reports, the state regulator issued a letter Tuesday to Ocwen Financial Corp., documenting the same kinds of suspicious actions that worsened the housing crisis and the Great Recession.

Ocwen inappropriately backdated foreclosure warnings and letters that denied mortgage loan modifications, making it nearly impossible for borrowers to appeal the company’s decision, according to the letter from Benjamin Lawsky, New York’s Superintendent of Financial Services.


The letter refrains from saying whether the backdating was intentional or the result of poor oversight by Ocwen. The company managed $106 billion worth of subprime mortgages at the start of 2014, according to Inside Mortgage Finance.

Here is the full letter:


Moments ago Ocwen replied. Its explantion – nothing is criminal here, it was a glitch, see?


See: “software errors”, i.e., glitches. So you must acquit

The full laughable statement:

Ocwen Financial Corporation (NYSE:OCN), the nation’s largest independent mortgage servicer, today made the following statement in response to a letter it received from the New York Department of Financial Services (“DFS”) related to erroneously dated borrower correspondence, and subsequent media coverage of the DFS’s letter.


Ocwen regrets that, due to software errors in our correspondence systems, we inadvertently sent improperly dated letters to some borrowers. As always, our goal is to avoid foreclosure. In the case of the 283 borrowers in New York who received letters with incorrect dates, 281 are currently borrowers with us. We are continuing to review the rest of the cases. We believe that we have resolved the letter dating issues that have been identified to date, and we continue our investigation as to whether there are additional letter dating issues that need to be resolved. We are working with and fully cooperating with DFS and the Monitor to address their concerns.”

So will the US Superintendent of Financial Services, Benjamin Lawski, let this too be swept under the rug or will he inevitably fold, and pretend that nothing has happened, instead chosing to believe the company that it has now “fixed the glitch.”

For now OCN’s investors are not too happy and OCN was down some 15% after being unhalted. Down, that is, at least until the BTFD crew – completely oblivious of the fundamental reality – comes in, and bids the stock back into the green again. Because in the New Normal, the fraud is not in just one stock: it is the entire market.

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In Uncharted Waters

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

What I see as extremes that must necessarily end badly, others see as mere extensions of recently successful policies and trends.

A long-time reader recently chastised me for using too many maybe's in my forecasts. The criticism is valid, as "on the other hand" slips all too easily from qualifying a position to rinsing it of meaning.

That said, given that we're in uncharted waters, maybe's become prudent and certainty becomes extremely dangerous. I have long held that the financial policy extremes that are now considered normal are unprecedented in the modern era: extremes in debt, leverage, risk, complexity and willful obfuscation of these extremes.
Consider the extent to which sky-high asset valuations and present-day "prosperity" depend on extremes of leverage: autos purchased with no money down, homes purchased with 3.5% down payments and FHA loans, stocks bought on margin, stock buybacks funded by loans, student loans issued with zero collateral, and so on–an inverted pyramid of "prosperity" resting precariously on a tiny base of actual collateral.
Since we have no guide to the future other than the past, we extrapolate past trends. Human nature hasn't changed over the short time-frames of civilizations (i.e. the past few thousand years), so in terms of human drives, emotions and responses, the past is an excellent guide to the range of human responses to crisis, euphoria, greed, fear, etc.
But extending trends is a shifting foundation for forecasts, as trends end and reverse, generally without telegraphing the end of an era. Few in 1639 China foresaw the collapse of the status quo Ming Dynasty a mere five years hence.
With the hindsight of history, we can discern the cracks in the Ming Dynasty before its collapse, but once we shift to our own era, things become less certain.
In my view, we're drifting in uncharted seas.
I have covered the dangers of certainty before: Certainty, Complex Systems, and Unintended Consequences (February 14, 2014)
What I see as extremes that must necessarily end badly, others see as mere extensions of recently successful policies and trends. Let's review a few of the many extremes that we now accept as ordinary and harmless.
Consider how much new debt is now required to lift GDP ("growth") off the flat line:
The slightest pause in the expansion of credit nearly collapsed the entire global economy:
Extraordinary central state and bank policies have boosted the wealth of those closest to the Federal Reserve's money spigot and left everyone else poorer:
It's not just real income that's declined–so has household wealth.
Incentives to borrow money to obtain a college degree are declining while student loan debt hits astounding extremes:
Feel free to extend this line of Federally funded student debt: where does it end?
The Federal Reserve has pushed astonishingly extreme policies for six years. Now that the Fed owns significant chunks of the Treasury bond and mortgage bond markets, it's being forced to limit these easing programs:
All the Fed money-printing and bond buying has sent money velocity in the real economy into a tailspin: this is good, right? No, actually it's a calamity. Money has slipped into a coma.

Extend the trendlines in these charts, and then ask yourself: where do they end? What will they trigger as they push ever deeper into uncharted waters?

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WTF Chart Du Jour: The Broken Market Fallacy

UPDATE: And then this happened…


As every good Keynesian ‘knows’, broken-windows are good for the economy; so that must mean that ‘broken markets’ are good for the… markets?


Having started to fade after the opening ramp, since the NYSE broke, stocks have levitated linearly…


…driven by a surge in XIV (the inverse VIX ETF, which was among the 150 symbols that ‘broke’ today)…


As Stocks decouple from any fun-durr-mental carry driver…



As well as Bonds and credit markets’ perspective on ‘recovery’ and ECB rumors…


and equity volume is well below average… (again)


*  *  *

Why anyone would trust this shambles of a US equity “market” anymore…?

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Land of the Free – 1 in 3 Americans Are on File with the FBI in the U.S. Police State

Screen Shot 2014-10-21 at 11.36.30 AMThe sickening transformation of these United States into a authoritarian police state with an incarceration rate that would make Joseph Stalin blush, has been a key theme of my writing since well before the launch of Liberty Blitzkrieg. One of the posts that shocked and disturbed readers the most was published a little over a year ago, and titled: American Police Make an Arrest Every 2 Seconds in 2012. In the event you never read it, I suggest taking a look before tackling the rest of this piece.

Fast forward to fall 2014, and the Wall Street Journal has a powerful article about how children in schools systems across the U.S. are being arrested or turned over to police custody for doing things that children have always done since the beginning of time. Things such as wearing too much perfume, sharing a classmates’ chicken nuggets, throwing an eraser or chewing gum.

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How Can You Have a Recovery Without Jobs Creators?

One of the items overlooked by the MSM regarding the dismal economic “recovery” of the last five years is the complete decimation of the self-employed.


There are currently 10 million people classified as self-employed in US. That’s 5% of the total workforce. Incidentally this is also a record low.



It is not coincidental the massive increase in reliance on Government handouts (46 million on food stamps, 47% of US households on some kind of Government assistance) has coincided with a significant drop in self-employment and independence.


It is also not coincidental that many entrepreneurs and self-employed individuals have decided to close up shop. A weak economy generally means weaker sales. Combine this with massive increases in healthcare costs, taxes and the like, and it’s a lot harder to be self-employed today than it was 10 or 20 years ago.


All the talk of “helping small business” and “creating jobs” is just that: talk. Those who actually show initiative to create business shouldn’t be overburdened with tax loads and bureaucratic red tap.


If the political class really wanted to create jobs, they should focus on growing the number of self-employed. If we were to increase the percentage of self-employed Americans in the workforce to just 10% where it was in ‘90s, we’d need to add 4 million self-employed people to the workforce.


Obviously some of these entrepreneurs would fail, but a significant percentage of them would find some degree of success, creating who knows how many jobs.


But let’s go back even further. If we returned to the same level of self-employment as that which existed during the 1960s (18%) we’d create 15 million self-employed and who knows how many jobs.


With the total number of Americans in the workforce around 146 million, this would mean increasing the workforce by over 10%. That would be a truly incredible increase in job growth… even greater than that which the US economy created going back to 2003!


We missed a great opportunity to change the US for the better in 2008. What could have been a wake up call for fiscal discipline instead became the biggest crony capitalist boondoggle of all time as politically connected institutions were bailed out using tax-payer money.


The repercussions of this are still being felt with the system now even more leveraged (meaning more debt) than it was in 2008). This in turn has paved the way for the REAL crisis, which is coming… and this time around, it will be entire countries that go bust, not just a handful of banks.


If you’ve yet to take action to prepare for the second round of the financial crisis, we offer a FREE investment report Financial Crisis "Round Two" Survival Guide that outlines easy, simple to follow strategies you can use to not only protect your portfolio from a market downturn, but actually produce profits.


You can pick up a FREE copy at:




Best Regards


Phoenix Capital Research





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