Tag: news

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

The full breakdown is shown in the table below:

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

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

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

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

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

 

1 oz of Gold = $1241.98 (Bloomberg)

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

 

 

 

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

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

The Chinese just stepped up the rhetoric notably,

Via Yonhap,

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

The Japanese are not backing down…

Via Kyodo News,

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

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

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

The Chinese just stepped up the rhetoric notably,

Via Yonhap,

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

The Japanese are not backing down…

Via Kyodo News,

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

www.rcwhalen.com

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

When the US government said the sequester would cripple its ability to single-handedly rule over the world, it wasn’t kidding. Either that, or Joe Biden’s Joint Strategic Plan to “curb” copyright infringement was just a case of very confused humor by the vice president gone badly wrong, and he meant to “encourage.” Whatever the reason, the fact that the Obama administration was just busted with a $50 million case of software piracy involving none other than the US Army, is indicative that while the Bureau of Labor Statistics was adopting all the best features of the Chinese Department of Truth, the US government was busy copycatting China’s respectful approach toward intellectual property. Yet what is even worse, is that the software that was pirated managed the US army’s troop and supply movements: in other words, the US government relied on pirated software to prepare for and engage in eventual war.

Specifically, the army “used Apptricity’s integrated transportation logistics and asset management software across the Middle East and other theaters of operation. The Army has also used the software to coordinate emergency management initiatives, including efforts following the January 2010 earthquake in Haiti.”

Here’s what happened, as reported by RT: in 2004, Apptricity agreed with the US Army to license the troop-movement software, allowing the government to use it on five servers and 150 standalone devices. What happened instead is that the Army proceeded to use the softward around the world.  “The improper installation of thousands of unlicensed copies of software was discovered incidentally, when the US Army Program Director said during Strategic Capabilities Planning 2009 that thousands of devices had Apptricity software.”

Ultimately, 93 servers and over 9,000 standalone devices of the Army had the unlicensed software. Apptricity figured it was owed US$224 million based on usual fees of US$1.35 million per server and US$5,000 per device.

Upon discovering just how vast the US government piracy stretched Apptricity sued the government, accusing the US military of willful copyright infringement. It won, and the government went on to admit the illegal use and entered into lengthy negotiations with Apptricity to settle. The cost to the Obama administration from being caught in the act: $50 million in damages.

RT does a great summary of yet another instance of remarkable hypocrisy by the “most transparent administration ever.”

While the Obama administration’s has launched efforts against intellectual property theft – including the Joint Strategic Plan run by Vice President Joe Biden that aims to curb copyright infringement – the US Army was concurrently using pirated Apptricity enterprise software that manages troop and supply movements.

 The Administration has yet to comment on the settlement. But Biden’s words upon announcing the federal anti-copyright-infringement plan ring clear.

“Piracy is theft, clean and simple.”

Even when it was your subordinates that engaged in theft? Surely someone’s hand will be slapped, right? But one can be absolutely certain: neither Biden nor Obama “had any idea”…

What was not mentioned anywhere, however, is just how the US government spent the hundreds of millions in appropriated funds, because it is guaranteed that the Army was allotted the full mandated amount by Congress to purchase every single piece of Apptricity software it would ever need. And still somehow $200 million disappeared. Of course in any non-banana republic, a legal system might inquire in whose pockets this excess cash ended up. Which of course means that in the US nobody will even consider this eventuality, especially since Ben Bernanke prints that amount in roughly 5 minutes every day.

Finally, one wonders: what would happen if in the middle of a Syrian (or any other) war suddenly the US army was halted dead in its tracks when HQ got a flashing red “Your 30 Day trial period has expired. Please insert activation code now” notification. We can only hope US drone command didn’t get its copy of “Blow Up Innocent Women And Children From 10,000 Miles Away Ver 1.0” on the Moscow black market.

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