Spain’s Economy Surges—Off the Books

Not that Europe is lacking for economic basket cases, but Spain
has been an especially fascinating train wreck to watch, with the
unemployment rate hitting
27 percent last year
. Official statistics are so dismal that
they could be expected to produce riots in the streets; that they
haven’t is evidence that, somehow, Spaniards are finding ways to
eat and pay the bills. If some sort of invisible economic activity
were not under way,
pointed out
Victor Mallet and Guy Dinmore in a 2011 article in
the Financial Times, “Spain would not be as peaceful as,
barring a few demonstrations, it has so far been.” Now comes
confirmation from the country’s government that the people of Spain
have, in fact, retained their ability to work and create jobs and
wealth—by staying as far under the state’s radar as possible.

A new
report
from Spain’s Finance Ministry reveals that the shadow
economy—underground activity that would be legal, if subject to the
usual tax and regulatory regime—has grown steadily every year from
2008 through 2012, the most recent year measured. In that time, the
shadow economy increased from 17.8 percent of official GDP to 24.6
percent.

Spain's shadow economy

Perhaps unsurprisingly for a country troubled by state meddling
with the economy, the shadow economy is smallest in Madrid, the
seat of government, at 17.3 percent, and sharply larger in every
other region, hitting 31.1 percent in Extremadura.

And Spain’s economy is somewhat hobbled by government
interference. On the 2014 Index of Economic Freedom, Spain ranks at
49
, and 22nd out of 43 countries in Europe. “Its score is 0.8
point lower than last year due to declines in the management of
government spending, business freedom, and labor freedom that
outweigh small improvements in trade freedom and freedom from
corruption.”

For Spaniards looking to climb out of the country’s economic
doldrums, not only are taxes high, but “Incorporating a business
takes 10 procedures and about three weeks, but completing licensing
requirements takes over seven months and costs more than the level
of average annual income. Labor regulations remain largely
inflexible hindering job growth in the private sector.”

The country has actually improved its overall economic freedom
ranking a bit over the past 20 years, but unevenly and with decline
in recent years, even as the Euro crisis made life difficult.

As they grapple with the growth of the shadow economy, Spanish
officials, like officials everywhere, will have to deal with the
fact that underground activity can develop its own inertia as
people get accustomed to living that way.

Writes
economist Friedrich Schneider
(PDF):

But even major tax reforms with major tax rate deductions will
not lead to a substantial decrease of the shadow economy. Such
reforms will only be able to stabilize the size of the shadow
economy and avoid a further increase. Social networks and personal
relationships, the high profit from irregular activities and
associated investments in real and human capital are strong ties
which prevent people from transferring to the official economy.

Having given people ample reason to hide their activities and
experience in doing just that, Spain’s government may have a tough
time getting those underground entrepreneurs back into the official
economy.

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Spain's Economy Surges—Off the Books

Not that Europe is lacking for economic basket cases, but Spain
has been an especially fascinating train wreck to watch, with the
unemployment rate hitting
27 percent last year
. Official statistics are so dismal that
they could be expected to produce riots in the streets; that they
haven’t is evidence that, somehow, Spaniards are finding ways to
eat and pay the bills. If some sort of invisible economic activity
were not under way,
pointed out
Victor Mallet and Guy Dinmore in a 2011 article in
the Financial Times, “Spain would not be as peaceful as,
barring a few demonstrations, it has so far been.” Now comes
confirmation from the country’s government that the people of Spain
have, in fact, retained their ability to work and create jobs and
wealth—by staying as far under the state’s radar as possible.

A new
report
from Spain’s Finance Ministry reveals that the shadow
economy—underground activity that would be legal, if subject to the
usual tax and regulatory regime—has grown steadily every year from
2008 through 2012, the most recent year measured. In that time, the
shadow economy increased from 17.8 percent of official GDP to 24.6
percent.

Spain's shadow economy

Perhaps unsurprisingly for a country troubled by state meddling
with the economy, the shadow economy is smallest in Madrid, the
seat of government, at 17.3 percent, and sharply larger in every
other region, hitting 31.1 percent in Extremadura.

And Spain’s economy is somewhat hobbled by government
interference. On the 2014 Index of Economic Freedom, Spain ranks at
49
, and 22nd out of 43 countries in Europe. “Its score is 0.8
point lower than last year due to declines in the management of
government spending, business freedom, and labor freedom that
outweigh small improvements in trade freedom and freedom from
corruption.”

For Spaniards looking to climb out of the country’s economic
doldrums, not only are taxes high, but “Incorporating a business
takes 10 procedures and about three weeks, but completing licensing
requirements takes over seven months and costs more than the level
of average annual income. Labor regulations remain largely
inflexible hindering job growth in the private sector.”

The country has actually improved its overall economic freedom
ranking a bit over the past 20 years, but unevenly and with decline
in recent years, even as the Euro crisis made life difficult.

As they grapple with the growth of the shadow economy, Spanish
officials, like officials everywhere, will have to deal with the
fact that underground activity can develop its own inertia as
people get accustomed to living that way.

Writes
economist Friedrich Schneider
(PDF):

But even major tax reforms with major tax rate deductions will
not lead to a substantial decrease of the shadow economy. Such
reforms will only be able to stabilize the size of the shadow
economy and avoid a further increase. Social networks and personal
relationships, the high profit from irregular activities and
associated investments in real and human capital are strong ties
which prevent people from transferring to the official economy.

Having given people ample reason to hide their activities and
experience in doing just that, Spain’s government may have a tough
time getting those underground entrepreneurs back into the official
economy.

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BofA Technician Watching 1750 S&P Support: “Below Here Is Trouble”

"Where's the bounce," asks (rhetorically) Bank of America's Macneil Curry, warning that despite the repeated signals that investor anxiety is at unsustainable levels and that this is a late stage "risk off" environment, given the blow off top conditions in several EM currencies, particularly $/TRY, and extreme readings in SPX volatility, with the VXV/VIX ratio recently breaking below 1, the S&P500 can't maintain a bid. "Risk assets are vulnerable," he concludes…

 

Via BofAML's Macneil Curry,

S&P500 key support at risk.

Despite the repeated signals that investor anxiety is at unsustainable levels and that this is a late stage "risk off" environment, given the blow off top conditions in several EM currencies, particularly $/TRY, and extreme readings in SPX volatility, with the VXV/VIX ratio recently breaking below 1, the S&P500 can't maintain a bid. Key support is vulnerable.

A break of 14m trendline support, now 1750/52 and risk markets are in big(ger) trouble.

Stay bullish US Treasuries

As such, we stay bullish Treasuries. US10yr yields target 2.544%/2.459%, potentially below. Meanwhile, 5s continue to stair step lower to 1.473%. This should be strong resistance, but a break below opens 1.245%/1.2245 (see charts for key support in 10s and 5s).

For risk assets to regain a more stable footing, ESH4 needs to regain 1790.75, with a move above 1801.25/1805.75 to confirm a base and turn higher. 

Bullish the US $, but the Japanese ¥ is the fairest of all

With the risk off environment continuing the US $ and Japanese ¥ remain on strong footing. The €/$ setup remains bearish. Declines are impulsive and gains are corrective. We target the 200d (now 1.3377) ahead of 18m channel support at 1.3177. Watch the US $ Index. 7wk trendline resistance at 81.37 is fast approaching. Above here should provide further bullish momentum for the Greenback.

As much as we like the US $, we like the Japanese ¥ even more.

Indeed, $/¥ continues to roll over. Watch 14m trendline support at 102.00. Below here clears the way for the 200d (now 100.05) and eventually the summer/spring 2013 lows at 93.79/92.57.


    



via Zero Hedge http://ift.tt/1frT9H6 Tyler Durden

BofA Technician Watching 1750 S&P Support: "Below Here Is Trouble"

"Where's the bounce," asks (rhetorically) Bank of America's Macneil Curry, warning that despite the repeated signals that investor anxiety is at unsustainable levels and that this is a late stage "risk off" environment, given the blow off top conditions in several EM currencies, particularly $/TRY, and extreme readings in SPX volatility, with the VXV/VIX ratio recently breaking below 1, the S&P500 can't maintain a bid. "Risk assets are vulnerable," he concludes…

 

Via BofAML's Macneil Curry,

S&P500 key support at risk.

Despite the repeated signals that investor anxiety is at unsustainable levels and that this is a late stage "risk off" environment, given the blow off top conditions in several EM currencies, particularly $/TRY, and extreme readings in SPX volatility, with the VXV/VIX ratio recently breaking below 1, the S&P500 can't maintain a bid. Key support is vulnerable.

A break of 14m trendline support, now 1750/52 and risk markets are in big(ger) trouble.

Stay bullish US Treasuries

As such, we stay bullish Treasuries. US10yr yields target 2.544%/2.459%, potentially below. Meanwhile, 5s continue to stair step lower to 1.473%. This should be strong resistance, but a break below opens 1.245%/1.2245 (see charts for key support in 10s and 5s).

For risk assets to regain a more stable footing, ESH4 needs to regain 1790.75, with a move above 1801.25/1805.75 to confirm a base and turn higher. 

Bullish the US $, but the Japanese ¥ is the fairest of all

With the risk off environment continuing the US $ and Japanese ¥ remain on strong footing. The €/$ setup remains bearish. Declines are impulsive and gains are corrective. We target the 200d (now 1.3377) ahead of 18m channel support at 1.3177. Watch the US $ Index. 7wk trendline resistance at 81.37 is fast approaching. Above here should provide further bullish momentum for the Greenback.

As much as we like the US $, we like the Japanese ¥ even more.

Indeed, $/¥ continues to roll over. Watch 14m trendline support at 102.00. Below here clears the way for the 200d (now 100.05) and eventually the summer/spring 2013 lows at 93.79/92.57.


    



via Zero Hedge http://ift.tt/1frT9H6 Tyler Durden

Amazon Drops 10% – Triggers SEC Short Sale Rule

Despite the best efforts of CNBC to have every bull on Amazon explain how great it really is and how they could enable to magical profit machine any minute if they so choose, the hedge fund hotel stock du jour is now down 10% and Bloomberg headlines blare:

  • *SEC Short Sale Rule 201 is in Effect : AMZN (NASDAQ)

Last night’s algo-ramp to VWAP (on rising Prime prices?) is a long-distant memory now…

 


    



via Zero Hedge http://ift.tt/LxkoWe Tyler Durden

Obama, Who Evidently Has Not Read the Controlled Substances Act, Denies That He Has the Power to Reclassify Marijuana

In an
interview
with CNN’s Jake Tapper that aired last night,
President Obama tried to dodge responsibility for eliminating the
contradiction between his
recent comments
about marijuana and its classification as a
Schedule I drug under the Controlled Substances Act:

Tapper: You said that smoking pot was a bad
habit but you didn’t think it was any worse for a person than
drinking. Now that contradicts the official Obama administration
policy, both on the website of the Office of National Drug Control
Policy and also the fact that marijuana is considered a Schedule I
narcotic, along with heroin and Ecstasy. Now do you think you were
maybe talking just a little too casually about it with Remnick in
The New Yorker, or are you considering not making
marijuana a Schedule I narcotic?

Obama: Well, first of all, what is and isn’t a
Schedule I narcotic is a job for Congress.

Tapper: I think it’s the DEA that decides
that.

Obama: It’s not something by ourselves that we
start changing. No, there are laws undergirding those
determinations.

Tapper: Would you support that move?

Instead of answering that question, Obama started talking about
a “public health” approach to marijuana (a subject I plan to
address in another post). But notice that Obama at first denied
that the executive branch has the power to reschedule drugs, saying
“what is and isn’t a Schedule I narcotic is a job for Congress.” As
Tapper pointed out, that’s not true. While Congress can amend the

Controlled Substances Act
 (CSA) to increase or reduce
restrictions on particular drugs, the statute also gives that power
to the attorney general, who has delegated it to the Drug
Enforcement Administration (a division of the Justice Department).
In fact, the DEA has repeatedly
rejected
petitions to reschedule marijuana, most recently in
2011. I forget: Who was president then?

Apparently Obama forgot too. Obama often speaks as if he is an
outside observer of his own administration—condemning
excessively long prison sentences while hardly ever using his
clemency power to shorten them, sounding
the alarm
 about his own abuses of executive power in the
name of fighting terrorism, worrying
about the threat to privacy posed by surveillance programs he
authorized. Now here he is, trying to distance himself from his own
administration’s refusal to reclassify marijuana.

When Tapper challenged that evasive maneuver, Obama tried
another one. “There are laws uindergirding those determinations,”
he said, implying that the language of the CSA somehow dictates
that marijuana remain on Schedule I. These are the statutory
criteria for drugs in that category:

(A) The drug or other substance has a high potential for
abuse.

(B) The drug or other substance has no currently accepted
medical use in treatment in the United States.

(C) There is a lack of accepted safety for use of the drug or
other substance under medical supervision.

The DEA argues that marijuana satisfies the first criterion
because people like to consume it for nonmedical purposes, which
according to the government qualifies as abuse. It’s illegal, after
all. According to that definition of abuse, prohibition justifies
itself, which hardly seems fair. A more reasonable view defines
abuse as harmful, excessive, or problematic use. Regardless of
which definition you prefer, it is hard to see in what meaningful
sense marijuana has a higher abuse potential than, say, the
barbiturates and benzodiazepines on Schedule III. According to the
DEA, even dronabinol has a lower abuse potential than marijuana.
What is dronabinol? A synthetic version of THC, the main
psychoactive ingredient in marijuana.

The DEA says marijuana meets the second criterion—no currently
accepted medical use—not because the drug is ineffective at
treating symptoms such as nausea, pain, and muscle spasms (in fact,
the Obama administration
concedes
the medical utility of cannabinoids) but because such
uses have not gained wide enough acceptance within the medical
community. Given the subjectivity of that judgment, it amounts to
saying that marijuana has no accepted medical use because the DEA
deems medical use of marijuana unaccceptable. The agency likewise
does not accept that marijuana can be used safely, although it
obviously can, as Obama
conceded
when he observed that alcohol is more dangerous.

The DEA clearly is
bending over backward
to keep marijuana on Schedule I, and
nothing in the CSA requires it to do that. It could easily apply
the CSA’s criteria in a way that would make marijuana less
restricted, and the decision not to do so is ultimately Obama’s. He
is the one who appointed the current DEA administrator, a hardline
holdover from the Bush administration who is so committed to
prohibitionist orthodoxy that she recoils in horror at the thought
of a hemp flag flying over the Capitol and could not restrain
herself from
openly criticizing
Obama, notionally her boss, for his
scientifically uncontroversial statement about the relative hazards
of marijuana and alcohol. He is the one who, despite his avowed
commitment to sound science and his own statements to the contrary,
allows the DEA to insist marijuana is so dangerous that it must be
more tightly restricted than cocaine, morphine, oxycodone, and
methamphetamine.

“It’s very unfortunate that President Obama appears to want to
pass the buck to Congress when it comes to marijuana laws,” says
Tom Angell, chairman of Marijuana Majority. “If the president truly
believes what he says about marijuana, he has a moral imperative to
make the law match up with his views and the views of the majority
of the American people without delay. He should initiate the long
overdue rescheduling of marijuana today.”

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The Powers-That-Be Are Secretly Terrified of the People’s Power … And Only PRETEND They’re Firmly In Control

Our Actions Are More Powerful Than We Realize

David Swanson writes:

Almost every [history of past activism] includes belated discoveries of the extent to which government officials were influenced by activist groups even while pretending to ignore popular pressure.

 

These revelations can be found in the memoirs of the government officials as well, such as in George W. Bush's recollection of how seriously the Republican Senate Majority Leader was taking public pressure against the war on Iraq in 2006.

 

Of course, activism that appears ineffectual at the time can succeed in a great many ways, including by influencing others, even young children, who go on to become effective activists — or by influencing firm opponents who begin to change their minds and eventually switch sides.

 

The beautiful thing about nonviolent activism is that, while risking no harm, it has the potential to do good in ways small and large that ripple out from it in directions we cannot track or measure.

 

Wittner participated in his first political demonstration in 1961. The USSR was withdrawing from a moratorium on nuclear testing. A protest at the White House urged President Kennedy not to follow suit:

"Picking up what I considered a very clever sign ('Kennedy, Don't Mimic the Russians!'), I joined the others (supplemented by a second busload of students from a Quaker college in the Midwest) circling around a couple of trees outside the White House. Mike and I — as new and zealous recruits — circled all day without taking a lunch or a dinner break.

 

"For decades I looked back on this venture as a trifle ridiculous. After all, we and other small bands of protesters couldn't have had any impact on U.S. policy, could we? Then in the mid-1990s, while doing research at the Kennedy Library on the history of the world nuclear disarmament movement, I stumbled onto an oral history interview with Adrian Fisher, deputy director of the U.S. Arms Control and Disarmament Agency. He was explaining why Kennedy delayed resuming atmospheric nuclear tests until April 1962. Kennedy personally wanted to resume such tests, Fisher recalled, 'but he also recognized that there were a lot of people that were going to be deeply offended by the United States resuming atmospheric testing. We had people picketing the White House, and there was a lot of excitement about it — just because the Russians do it, why do we have to do it?'"

Yes, Kennedy delayed a horrible action. He didn't, at that time, block it permanently. But if the picketers in 1961 had had the slightest notion that Kennedy was being influenced by them, their numbers would have multiplied 10-fold, as would the delay have correspondingly lengthened.

 

Yes, our government was more responsive to public opinion in the 1960s than now, but part of the reason is that more people were active then. And another reason is that government officials are doing a better job now of hiding any responsiveness to public sentiment, which helps convince the public it has no impact, which reduces activism further. We also focus far too much on the most difficult individuals to move, such as presidents.

 

In 1973-1974, Wittner visited GI coffee houses in Japan including in Yokusaka, where the Midway aircraft carrier was in port. The Japanese were protesting the ship's carrying of nuclear weapons, which was illegal in Japan, and which the U.S. military, of course, lied about. But U.S. soldiers with whom Wittner and other activists had talked, brought them onto the ship and showed them the nukes. The following summer, when Wittner read in a newspaper that,

"a substantial number of American GIs had refused to board the Midway for a mission to South Korea, then swept by popular protest against the U.S.-backed dictatorship, it occurred to me that I might have played some small role in inspiring their mutiny."

Soldiers can still be reached much more easily than presidents, more easily in many cases in fact than the average citizen. War lies are harder to sell to the people who have been fighting the wars.

 

In the late 1990s, Wittner was researching the anti-nuclear movement of decades past. He interviewed Robert "Bud" McFarlane, President Ronald Reagan's former national security advisor:

"Other administration officials had claimed that they had barely noticed the nuclear freeze movement. But when I asked McFarlane about it, he lit up and began outlining a massive administration campaign to counter and discredit the freeze — one that he had directed. . . . A month later, I interviewed Edwin Meese, a top White House staffer and U.S. attorney general during the Reagan administration. When I asked him about the administration's response to the freeze campaign, he followed the usual line by saying that there was little official notice taken of it. In response, I recounted what McFarlane had revealed. A sheepish grin now spread across this former government official's face, and I knew that I had caught him. 'If Bud says that,' he remarked tactfully, 'it must be true.'"

When someone tells you to stop imagining that you're having an impact, ask them to please redirect their energy into getting 10 friends to join you in doing what needs to be done. If it has no impact, you'll have gone down trying. If it has an impact, nobody will tell you for many years.

Mr. Swanson is right. I noted in 2009:

As MSNBC news correspondent Jonathan Capehart tells Dylan Ratigan, the main problem is that people aren’t making enough noise. Capehart says that the people not only have to “burn up the phone lines to Congress”, but also to hit the streets and protest in D.C.

 

Even though most politicians are totally corrupt, if many millions of Americans poured into the streets of D.C., a critical mass would be reached, and the politicians would start changing things in a hurry.

 

As [liberal] PhD economist Dean Baker points out:

The elites hate to acknowledge it, but when large numbers of ordinary people are moved to action, it changes the narrow political world where the elites call the shots. Inside accounts reveal the extent to which Johnson and Nixon’s conduct of the Vietnam War was constrained by the huge anti-war movement. It was the civil rights movement, not compelling arguments, that convinced members of Congress to end legal racial discrimination. More recently, the townhall meetings, dominated by people opposed to health care reform, have been a serious roadblock for those pushing reform….

 

A big turnout … can make a real difference.

Baker is right about Vietnam.

 

Specifically – according to Daniel Ellsberg and many others – Richard Nixon actually planned on dropping a nuclear bomb on Vietnam. Nixon also said he didn’t care what the American people thought. He said that — no matter what the public did or said — he was going to escalate the war in Vietnam.

 

However, a well-known biographer says that Nixon backed off when hundreds of thousands of people turned out in Washington, D.C. to protest an escalation of the war.

And Pulitzer prize winning reporter Chris Hedges pointed out recently:

I was in Leipzig on November 9, 1989 with leaders of East German opposition and they told me that – perhaps within a year – there would be free passes back and forth across the Berlin wall.

 

Within a few hours, the Berlin Wall, at least as far as an impediment to human traffic, did not exist.

 

Week after week, month after month, these clergy in Leipzig held these candlelit vigils. And it was slow at first … people forget. Just like the Egyptian revolution has been percolating for many many months, and even years.

 

And suddenly, it began to grow.

 

And Honecker – who had been in ruling East Germany since the time of the dinosaurs – sent down a paratroop division to Leipzig .. . and they won’t attack the demonstrators.

Part of the reason that our actions are more powerful than we think is that courage is contagious. So is the ability to think.

As we've previously noted:

[Studies show ] that even one dissenting voice can give people permission to think for themselves. Specifically:

Solomon Asch, with experiments originally carried out in the 1950s and well-replicated since, highlighted a phenomenon now known as “conformity”. In the classic experiment, a subject sees a puzzle like the one in the nearby diagram: Which of the lines A, B, and C is the same size as the line X? Take a moment to determine your own answer…The gotcha is that the subject is seated alongside a number of other people looking at the diagram – seemingly other subjects, actually confederates of the experimenter. The other “subjects” in the experiment, one after the other, say that line C seems to be the same size as X. The real subject is seated next-to-last. How many people, placed in this situation, would say “C” – giving an obviously incorrect answer that agrees with the unanimous answer of the other subjects? What do you think the percentage would be?

 

Three-quarters of the subjects in Asch’s experiment gave a “conforming” answer at least once. A third of the subjects conformed more than half the time.

Get it so far? People tend to defer to what the herd thinks.

 

But here’s the good news:

Adding a single dissenter – just one other person who gives the correct answer, or even an incorrect answer that’s different from the group’s incorrect answer – reduces conformity very sharply, down to 5-10%.

Why is this important? Well, it means that one person who publicly speaks the truth can sway a group of people away from group-think.

 

If a group of people is leaning towards believing the government’s version of events, a single person who speaks the truth can help snap the group out of its trance.

 

There is an important point here regarding the web, as well. The above-cited article states that:

When subjects can respond in a way that will not be seen by the group, conformity also drops.What does that mean? Well, on the web, many people post anonymously. The anonymity gives people permission to “respond in a way that will not be seen by the group”. But most Americans still don’t get their news from the web, or only go to mainstream corporate news sites.

 

Away from the keyboard, we are not very anonymous. So that is where the conformity dynamic — and the need for courageous dissent — is vital. It is doubly important that we apply the same hard-hitting truthtelling we do on the Internet in our face-to-face interactions; because it is there that dissent is urgently needed.

 

Bottom line: Each person‘s voice has the power to snap entire groups out of their coma of irrational group-think. So go forth and be a light of rationality and truth among the sleeping masses.

And a recent study shows that when only 10% of a population have strongly-held beliefs, their belief will often be adopted by the majority of the society.

True, governments worldwide are cracking down on liberty with the iron fist of repression.

But some argue that this is actually a sign that we are winning.

As Truthout’s Matt Renner writes:

Recently I sat down with two of the young adults who organized and led the Egyptian resistance movement that overthrew Hosni Mubarak. The media narrative said it took 18 days, when in fact, they had been organizing for over five years.

 

According to these young men, the moment they knew they had won was the day Mubarak’s government shut off the Internet and blocked cellphone communications. When people could no longer get updates about what was happening in Tahrir Square, they had to come out of their homes and see for themselves, tripling the size of the protests in one fell swoop.

 

The global plutocracy is terrified of dissent. In some places, the war on dissent is being fought with bullets. In others, the war on dissent targets social media and mobile communications, while repressing and deceiving communities of struggle. It’s already happening.

Indeed, the use of heavy-handed tactics – taking the velvet glove off of the iron fist – could backfire, as it will show the “emperor’s ruthlessness” for all to see.

The powers-that-be are terrified of political awakening and dissent. For example, Zbigniew Brzezinski – National Security Adviser to President Carter, creator of America’s strategy to lure Russia into Afghanistan, creator of America’s plans for Eurasia in general, and Obama’s former foreign affairs adviser – said:

For the first time in human history almost all of humanity is politically activated, politically conscious and politically interactive. There are only a few pockets of humanity left in the remotest corners of the world that are not politically alert and engaged with the political turmoil and stirrings that are so widespread today around the world.

 

***

America needs to face squarely a centrally important new global reality: that the world’s population is experiencing a political awakening unprecedented in scope and intensity, with the result that the politics of populism are transforming the politics of power.

 

***

[T]he central challenge of our time is posed not by global terrorism, but rather by the intensifying turbulence caused by the phenomenon of global political awakening. That awakening is socially massive and politically radicalizing.

It is no overstatement to assert that now in the 21st century the population of much of the developing world is politically stirring and in many places seething with unrest. It is a population acutely conscious of social injustice to an unprecedented degree, and often resentful of its perceived lack of political dignity.

 

***

 

These energies transcend sovereign borders and pose a challenge both to existing states as well as to the existing global hierarchy, on top of which America still perches.

***

 

The misdiagnosis [of foreign policy] pertains to a relatively vague, excessively abstract, highly emotional, semi-theological definition of the chief menace that we face today in the world, and the consequent slighting of what I view as the unprecedented global challenge arising out of the unique phenomenon of a truly massive global political awakening of mankind. We live in an age in which mankind writ large is becoming politically conscious and politically activated to an unprecedented degree, and it is this condition which is producing a great deal of international turmoil.

 

That turmoil is the product of the political awakening, the fact that today vast masses of the world are not politically neutered, as they have been throughout history. They have political consciousness.

 

***

The other major change in international affairs is that for the first time, in all of human history, mankind has been politically awakened. That is a total new reality – total new reality. It has not been so for most of human history until the last one hundred years. And in the course of the last one hundred years, the whole world has become politically awakened. And no matter where you go, politics is a matter of social engagement, and most people know what is generally going on –generally going on – in the world, and are consciously aware of global inequities, inequalities, lack of respect, exploitation. Mankind is now politically awakened and stirring.

And a reader notes:

We do not understand our own power. Look around you. Almost everything you see was not only made, but created by people like yourselves. Most of the horrors existing on earth were engendered by the elites, WITH OUR CO-OPERATION. Without our consent, most of the terrifying situations existing in our world will cease to exist. Resist. It certainly may be difficult initially, but it grows easier moment by moment.

Some historical quotes may be helpful in illustrating the importance of struggling to make things better …

It is from numberless diverse acts of courage and belief that human history is shaped. Each time a man stands up for an ideal, or acts to improve the lot of others, or strikes out against injustice, he sends forth a tiny ripple of hope, and crossing each other from a million different centers of energy and daring, those ripples build a current that can sweep down the mightiest walls of oppression and resistance.
– Robert F . Kennedy

We must never despair; our situation has been compromising before; and it changed for the better; so I trust it will again. If difficulties arise; we must put forth new exertion and proportion our efforts to the exigencies of the times.
– George Washington

We must remember that one determined person can make a significant difference, and that a small group of determined people can change the course of history.
-Sonia Johnson

Never doubt that a small, group of thoughtful, committed citizens can change the world. Indeed, it is the only thing that ever has.
– Margaret Mead

Hope has never trickled down. It has always sprung up.
– Studs Terkel

At certain points in history, the energy level of people, the indignation level of people rises. And at that point it becomes possible for people to organize and to agitate and to educate one another, and to create an atmosphere in which the government must do something.
– Howard Zinn, historian

There is no act too small, no act too bold. The history of social change is the history of millions of actions, small and large, coming together at points in history and creating a power that governments cannot suppress.
– Howard Zinn

Cynicism Is Not Realistic

Millions of Americans think that hope is for the foolish, and that the smart people are cynics.

But if all of the people who think of themselves as cynics or skeptics made noise, things would instantly change for the better. In other words, the millions of cynics/skeptics/self-described “realists” aren’t raising a ruckus against the fraud being committed by the giant banks, the corruption of our political system, or the lawlessness and imperial arrogance of our intelligence-military-industrial complex because they think things can’t change.

But by staying silent, they are actually creating the conditions in which nothing can change. As Edmund Burke points out:

All tyranny needs to gain a foothold is for people of good conscience to remain silent.

If the millions of cynics woke up to the fact that they are a huge group – especially when combined with the people who are already actively working for the restoration of a liberty, justice and the rule of law – they would suddenly realize that collectively we can change things in a heart beat.

Don't Want to Go First?

Most people don't want to go first …

Most people want to see others succeeding before they give it a shot.

But the truth – as pointed out by Zbigniew Brzezinski above – is that people are waking up worldwide … and things are changing quickly.

A few short years ago, Americans wouldn't have believed that the White House would lie us into a major war, that our government would choose Wall Street over the little guy, or that the NSA spied on every American citizen.  Now, this is all common knowledge.

A few years ago, most Americans trusted government and corporate leaders.  Now, polls show that trust has collapsed, as people realize that our core institutions are rotten with corruption.

You will not be taking the first step.  More people than you realize are already working to challenge the corrupt people in positions of power.

When you act to make things better, you're actually joining a large group of people doing the same thing.

And as Hellen Keller pointed out:

Avoiding danger is no safer in the long run than outright exposure. Life is either a daring adventure, or nothing.

Postscript: Failing to speak out now can actually isolate us, leaving us more vulnerable later on.


    



via Zero Hedge http://ift.tt/1hYpuW9 George Washington

Guest Post: What Is Happening In The Ukraine?

Submitted by Pater Tenebrarum of Acting-Man blog,

Beware of Revolutionaries – Better Yet, Beware of Everyone

The current unrest in the Ukraine is very reminiscent of the failed 'Orange Revolution' that pushed current pro-Russian president Viktor Yanukovich (then prime minister under president Leonid Kuchma) from power when the opposition candidate approved by the West, Viktor Yushchenko, won the 2004 election. Prior to the 2004 election, Yushchenko's handlers launched a propaganda story about how their man was allegedly poisoned with dioxin. It later came to light that the story was very likely made up, but it sure helped his election victory along. 

'Our' man was finally in power – and soon turned out to be an even worse leader than his predecessor. The economy tanked and his political supporters split into different factions. Yushchenko's prime minister Julia Tymoschenko, another darling of the West, apparently got involved in shady deals – at least that is what the Ukrainian court that sent her to jail in 2011 claims (it involved a gas deal with Russia – politicians robbing the country blind once they are in power is a well-worn tradition in the Ukraine and if memory serves, her protestations of innocence were not very convincing). In fact, both the Kuchma and Yushchenko governments have been referred to as 'kleptocracies' in US diplomatic cables published by Wikileaks.

Yushchenko, the former hero of the revolution, received only 5% of the vote in the 2010 election, which makes it all the more likely that his power-grab was largely orchestrated (although it is undoubtedly true that people were fed up with Kuchma and there was probably some hope that things might change for the better at the time of Yushchenko's election). The main opponent of Yanukovich in the 2010 election was in fact Ms. Tymoschenko, and he in turn probably mainly won because many people regarded him as the lesser evil at that point.

The current 'revolution' started after Yanukovich refused to sign a deal with the EU (which involved more than just trade – he would have had to make various unrelated concessions) and took what appeared to be a far better deal offered by Putin ($15 billion better at a minimum). We certainly cannot blame him for not wanting to have anything to do with the socialistic Moloch in Brussels. It is by the way pretty astonishing that EU politicians feel called upon to make imperious demands of Yanukovich because he is confronted with street protests. If EU governments were to immediately resign upon facing massive street protests, neither Rajoy nor Samaras would be in power today.

 


 

yush and tymo
Former president Viktor Yushchenko and former prime minister Julia Tymoschenko: Orange Revolution disappointment

(Photo via snb.nu / Author unknown)

 


 

Corrupt to the Core?

However, it is a very good bet that Yanukovitch is also upholding the above mentioned political tradition of robbing his country blind. We can't prove it of course, but plenty of rumors to this effect certainly exist. If so, then he cannot afford to loosen his grip on power, otherwise he will run the risk of suffering the same fate as Tymoschenko down the road. Still, he could presumably lose the next election when Vitaly Klitschko – the ex-boxer who has become the new revolutionary leader – stands against him and wins. Provided of course that there is no election fraud – allegations of election fraud tend to surface in every election as it were.  

As an aside, as a teenager, Yanukovich was once sentenced for participating in a robbery and three years later he was again sentenced for assault ('mistakes of youth' according to him). He also holds academic titles that he seems to have obtained under what appear to be rather dubious circumstances; his publications are listed by the national library, but cannot be found. His military rank of major is belied by the non-existence of any military service on his part (all this is independent of the fact that he could have easily joined the cast of 'Goodfellas' on his looks alone).

 


 

yanu
Viktor Yanukovich, who looks like he would make a good bouncer

(Photo credit: Reuters)

 


 

Not surprisingly,  the Ukraine is listed as one of the most corrupt countries in the world, tied with Bangladesh, Cameroon, the Central African Republic and Syria. On the surface, the conflict in the Ukraine is between the Russian-speaking half of the country (where Yanukovich's main support base is) and the more pro-Western Ukrainian-speaking half.

It appears to an outside observer rather as though various criminal gangs are vying for control of the State so that they can steal without fear of retribution.

A friend pointed the following example of a wealth-grab by Ukrainian politicians out to us. Apparently two businessmen and members of parliament have shaken down BNP Paribas for $100 million, with the connivance of the Ukrainian courts. Here is an open letter written by the board of the Ukrainian subsidiary of BNP Paribas to the president:

“Dear Mr. President,

 

BNP Paribas international financial group represented by UkrSibbank PJSC expresses its deep respect and is forced to appeal to you for protecting its rights as a reliable strategic investor of banking system that promotes the development of Ukrainian economy with credit resources. The European Bank for Reconstruction and Development, the largest financial investor in Ukraine, owns a 15% stake in UkrSibbank PJSC.

 

Taken the importance you traditionally pay to the investment climate in the country, we hope that you will not leave without attention an egregious situation that has been developed in business relations between UkrSibbank PJSC as a lender and the actual owners of AIS corporation Dmitriy Svyatash and Vasiliy Polyakov as unscrupulous borrowers who have been evading repayment of debt totaling USD 100 mln for nearly 5 years.

 

Such loans were granted by our bank in 2007-2009 under personal guarantees of Messrs Svyatash and Polyakov being the actual owners of AIS corporation, managing its current activities and now serving as the People’s Deputies of Ukraine. However, instead of complying with the terms and conditions of loan agreements, during all this time the borrowers have been committing acts qualified by the lawyers as persistent refusal to meet their obligations. They have commenced bankruptcy proceedings of companies-borrowers and many assets pledged to our Bank have been illegally transferred through offshore structures to new companies. Messrs Svyatash and Polyakov are currently continuing their business under `AIS` corporate brand based on newly incorporated companies that formally bear no indebtedness to UkrSibbank PJSC and report an annual turnover amounting to USD 800 million. Messrs Dmitriy Svyatash and Vasiliy Polyakov continue making attempts to evade repaying their debts therefore discrediting the government system of Ukraine they actually represent in the parliament.

 

Numerous shifting of dates of court and other proceedings without warning the bank’s lawyers, groundless rejection of their petitions, other procedural irregularities, and finally the cynical appointment of a court hearing on the national weekend and a holy holiday for all Orthodox Christians, the Christmas eve, on the 6th of January – this is an incomplete list of facts evidencing that court decisions are biased and passed in favor of unscrupulous borrowers.

 

The utmost injustice with regard to UkrSibbank PJSC was the decision of the Court of Appeal of Kyiv adopted at the hearing on January the 6th when the judge Anna Kryzhanovskaya has de facto sanctioned the fraudulent schemes and allowed Messrs Svyatash and Polyakov not to repay USD 100 mln to the Bank. Unfortunately, according to the trend of making judicial verdicts, we fear that our appeal against this decision will not be treated on a fair basis.

 

That is why, Mr. President, we are writing to you as the guarantor of observance of legality in the country to intervene in the situation and help restore the justice.

 

We hope for your support and assistance in practical confirmation of commitment of the Ukrainian State to the rule of law. We believe that the willingness of the President of Ukraine, the Government, and the higher judicial institutions to advocate for the rights of banking institutions will have a positive impact on the international image of Ukraine and its system of state power. In addition, this will serve to strengthen the confidence in the judicial and law enforcement system of the country, which demonstrate its impartiality, the ability to make fair decisions regardless of political affiliation of the parties.

 

 Jean-Paul Sabet

Chairman of UkrSibbank Supervisory Board”

It remains to be seen whether Yanukovich will intervene on behalf of BNP, but this is quite a story. Shaking down a big powerful Western bank for $100m. in broad daylight takes some chutzpa, and the way in which it was done certainly seems to confirm the validity of the Ukraine's corruption ranking.

Naturally, it seems quite likely that there is genuine frustration in the population over the state of political affairs in the country. In other words, the protests likely are rooted in genuine grievances, even though Western powers may have had a hand in their timing. Here is a BBC update on the latest developments. One reader sagely commented:

It seems astonishing that protesters are risking their lives to join the EU whilst southern Europeans are bankrupt, unemployed and taxed to the hilt at the hands of Brussels.”

It is not merely 'astonishing', it really strains credulity. In other words, we don't believe for a second that people have been standing in the cold for weeks and engaging in battles with the police because they love Brussels and Herman 'damp rag' Rompuy so much, in spite of his undeniable haiku-writing talent. It seems far more likely that they are simply hoping that finally a perhaps somewhat less corrupt political group will take over. That seems quite a tall order considering the disappointments of the Yushchenko/Tymoschenko era.


    



via Zero Hedge http://ift.tt/1gxXNqD Tyler Durden

How To Trade The Emerging Market Meltdown

Over the past week we took our fair share of jabs at SocGen EM FX analyst Benoit Anne (the one who said “Governor Basci, You Have Avoided A Domino Crisis In EM“… er, oops?) . They were all in good humor – after all when it comes to sheer contrarian cluelessness nobody, and we mean nobody in the known world, can even reach Tom Stolper’s toe nail, whose fades have resulted in over +12,000 pips on these pages alone over the past 5 years. Which is why we follow up the comedy with something more serious: now that the honeymoon is over, Anne has put together a solid compendium on how to trade the EM meltdown, with an emphasis on defensive strategies. Considering the tapering will continue for a long time, and as GaveKal explained yesterday, someone will have to lose (big) before EM normalcy returns, we urge anyone with EM exposure to read this.

From SocGen’s Benoit Anne:

How to trade the GEM meltdown

In the face of stress escalating in global emerging markets (GEM), we are currently focusing on implementing defensive strategies. In EM FX, we sell high-beta EM FX outright or favour defensive relative value crosses. In EM rates, we are looking at front-end rates payer strategies, combined with bear flatteners, especially in markets that are subject to policy pressure contagion of the kind that has been observed in Turkey and South Africa. Finally, in EM Credit, we favour low-beta countries with strong balance sheets (low external debt and high FX reserves) as well as Central European countries; we also favour short-dated papers as sovereign curves are likely to steepen further.

GEM stress escalating

We have witnessed a severe escalation of stress in recent days in global emerging markets (GEM). The stress has travelled across all regions and spread to all asset classes. In a few markets, the volatility has reached levels that had not been seen since the fall of Lehman Brothers. We are clearly in the middle of a severe Doom phase, with no signs for now that this will turn around. There is no denying that we had not anticipated that magnitude of the correction. In many ways, what we are witnessing is a proper market meltdown.

Ramping up defensive strategies

Against this backdrop, it makes sense to go fully defensive in all asset classes. On the FX side, the strategy should be centered on either selling EM FX outright or at least favouring defensive relative value FX. In Central Europe, we have just entered a long EUR/HUF position, with a target of 329. So far, Central Europe has been relatively resilient, but we believe that this resilience is only going to be temporary. We have already seen EURPLN coming under mounting pressure. Given its higher-beta status in the region, the PLN looks vulnerable, in our view. In relative value, we continue to like short PLN/RON which has now moved to about 1.06. In the dollar bloc, we believe that the ZAR and the TRY are to be played on the short side, but await better entry levels.

 

In EM rates, we are observing a radical shift as regards the curve move momentum. While the defensive positions would typically be curve steepeners recently, we now believe that the momentum has gone to curve flatteners simply because an increasing number of EM central banks are victim to policy pressure contagion. The hedge fund community has taken on some central banks, primarily the CBRT and the SARB, whose credibility has been badly shaken.

 

We believe that this market pressure will spread to other candidates, with the National Bank of Hungary, and perhaps even the Central Bank of Russia now in the potential line of fire. On this basis, we are now looking at rates payer strategies, together with curve flatteners. In Mexico, we just entered a 1y TIIE payer, simply because we believe that investors may try to push Banxico. It does not mean that we think Banxico will actually hike, but any move in policy pricing expectations will help the rates payer performance. One of the few markets where we would actually be comfortable with a steepener is Brazil.

 

Finally in EM credit, we continue to like Romania $2023 vs. Hungary $2023. We believe the credit profile of Romania has substantially improved is well poised to show better resilience than other EMEA countries, in particular Hungary which continue to trade rich in view of fundamentals, in our view. Generally speaking, and at this stage of the crisis, we favour lowbeta names with strong balance sheet (low external debt combined with high FX reserves).

 


    



via Zero Hedge http://ift.tt/1gxRZNG Tyler Durden