Month: October 2014

Submitted by Michael Snyder of The End of the American Dream blog,

When it comes to Ebola, the story that the government is telling us just keeps on changing.  At first, government officials were claiming that it was very difficult to spread the Ebola virus.  Some of them were even comparing it to HIV.  We were given the impression that we had to have “direct contact” with someone else’s body fluids in order to have any chance of catching the virus.  But of course that is not true at all.  Now authorities are admitting that Ebola is “aerostable”, that it can be “spread through droplets”, and that it can remain on surfaces for up to 50 days.  That is far different information than we have been getting up until this point.  So that means when they were so confidently declaring that they know exactly how Ebola spreads they were lying to us.

On October 24th, a 33 page document was released by the Defense Threat Reduction Agency, and in that document it is admitted that Ebola is “aerostable”.  WND was one of the first news outlets to report on this…

The information was contained in a 33-page report released Oct. 24 by the Defense Threat Reduction Agency, the Department of Defense’s Combat Support Agency for countering weapons of mass destruction.

 

The agency report states “preliminary studies indicate that Ebola is aerostable in an enclosed controlled system in the dark and can survive for long periods in different liquid media and can also be recovered from plastic and glass surfaces at low temperatures for over 3 weeks.”

 

The report says the government is seeking technologies for the “rapid disinfection” of Ebola, including an aerosol version of the virus.

 

“The technology must prove effective against viral contamination either deposited as an aerosol or heavy contaminated combined with body fluids,” reads the solicitation document.

You can view the document for yourself right here.

So is there any difference between “aerostable” and “airborne”?

That is a very good question.

Meanwhile, the CDC has finally come out and publicly admitted that Ebola “is spread through droplets”.

In other words, it can be spread by a cough or a sneeze.

On the CDC website, it now says the following…

“A person might also get infected by touching a surface or object that has germs on it and then touching their mouth or nose.”

Well, that certainly does not sound like “direct contact” to me.

And once someone has coughed or sneezed, the virus can live on a surface for a very long time.

In fact, authorities in the UK now tell us that Ebola can survive on a glass surface for up to 50 days…

The number of confirmed Ebola cases passed the 10,000 mark over the weekend, despite efforts to curb its spread.

 

And while the disease typically dies on surfaces within hours, research has discovered it can survive for more than seven weeks under certain conditions.

 

During tests, the UK’s Defence Science and Technology Laboratory (DSTL) found that the Zaire strain will live on samples stored on glass at low temperatures for as long as 50 days.

All of this directly contradicts what the CDC website has been telling us…

“To get Ebola, you have to directly get body fluids (like pee, poop, spit, sweat, vomit, semen, breast milk) from someone who has Ebola in your mouth, nose, eyes or through a break in your skin or through sexual contact.”

It turns out that is not even close to the truth.

And even as Obama boldly proclaims that there will not be an Ebola pandemic in the United States, the actions that his administration is currently taking suggest otherwise.

For example, we have just learned that the federal government has ordered 250,000 hazmat suits and is sending them to Dallas…

A manager with a major shipping company has exclusively revealed to Infowars that the U.S. government has ordered 250,000 Hazmat suits to be sent to Dallas, the location of the first Ebola outbreak in the United States.

 

The manager of the shipping company proved his credentials to Infowars by providing a photo ID and sending a verified email from the company account, but wishes to remain anonymous due to understandable fears that he could be fired for revealing the information.

 

“I just learned we have been asked to ship 250,000 HAZMAT suits to Dallas, TX. for the US Government. Again this is happening today, we are pulling these suits for the US Government to Dallas, TX,” states the individual, who manages the drivers who work for the shipping company.

Why in the world would the Obama administration buy so many hazmat suits if everything was under control?

It doesn’t make sense.

Is this Ebola outbreak much more of a potential threat than they are telling us?

Insurance companies sure seem to think so.  In fact, many of them are now specifically excluding Ebola from their policies…

Remember the promise of universal health care with Obamacare, with no refusal for ‘pre-existing conditions’? It looks like your insurance company may not have to cover you if you get Ebola. U.S. and British insurance companies have begun writing Ebola exclusions into standard policies to cover hospitals, event organizers, and other businesses vulnerable to local disruptions.

 

While it is estimated that expenditures to treat the original Dallas Ebola patient, Thomas Eric Duncan, were approximately $100,000 an hour (though he passed anyway), it looks like insurance companies won’t be footing the bill.

 

President Obama originally refused to set up travel restrictions in and out of West Africa, too, even though the governments latest scare tactics and the CDC’s ineptitude have resulted in insurance companies creating new policies which exclude Ebola care. Renewals will also become costlier for companies opting to insure business travel to West Africa or to cover the risk of losses from quarantine shutdowns at home.

The American people deserve the truth.

I can understand the desire to keep people calm, but giving the public a false sense of security isn’t going to do anyone any good, and it might end up making this crisis much, much worse.

It is important for people to know how easily this virus spreads so that they can take appropriate measures to protect themselves and their families.  Since June, approximately 400 health workers have caught this virus, and about 230 of them have died.  These workers take extreme precautions to avoid getting Ebola.  If this virus did not spread easily, this would not be happening.

 If our politicians and the mainstream media are not going to tell us the truth, then we are going to have to keep one another informed.

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When central bankers go wild…

 

h/t @NanexLLC

*  *  *

Perhaps a better analogy is as follows:

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Submitted by Charlie Hennemann via CFA Institute blog,

Of all the noteworthy moments from the 2014 CFA Institute Fixed-Income Management Conference, the bombshell may have been the default call from Martin S. Fridson, CFA.

Fridson, CIO at Lehmann Livian Fridson Advisors, has been a leading figure in the high-yield bond market since it was known as the “junk bond” market — and he sees as much as $1.6 trillion in high-yield defaults coming in a surge he expects to begin soon.

“And this is not based on an apocalyptic forecast,” he assured the audience.

High-yield bonds, typically issued with credit ratings at the bottom of the scale, tend to suffer default surges during troughs in the credit cycle. The first high-yield default surge occurred from 1989 to 1992, and encompassed the collapse of Drexel Burnham Lambert. The second surge ran from 1999 to 2003, following the bursting of the dot-com bubble, and the third happened in the midst of the global financial crisis, from 2008 to 2009.

Fridson suggests the next default surge will be larger than the last three combined. Each surge saw an average annual high-yield default rate above 7% (which, if extended over a multi-year period, can add up to real money).

Fridson currently projects that 1,155 issuers will default in the next wave. Over a four-year period that easily surpasses the 644 defaults in 1999–2003, the largest of the three prior default surges.

Fridson: Distressed managers will have "plenty to do" in next cycle; predicts a cumulative HY default rate of 33% in 2016-19. #CFAFI

— Charlie Henneman CFA (@CHenneman) October 16, 2014

 For context, Fridson points to the last default surge of 2008–2009 : It lasted only two years, and the market swung from a record number of defaults in 2008 to a below-average number in 2009, something Fridson “would have said was impossible.” The reason, of course, was that interventionist policies did as intended in the wake of the financial crisis, cutting the credit cycle short and giving new life to many issuers that were staring default in the face. In the absence of a strong cyclical recovery, this may only have delayed the inevitable.

Fridson noted that since 2010, the high-yield market has seen deterioration in the credit-ratings mix even as it has grown at a compound annual growth rate exceeding 10%, fueled in part by European issuers accessing the high-yield markets in lieu of bank credit, which has been harder to get thanks to more conservative bank capital requirements.

One key assumption behind Fridson’s forecast is that the Fed ends its program of quantitative easing (QE) and allows interest rates to rise. QE may have ended, but Fed guidance calls for interest rates to remain low for a “considerable time.” Fridson was asked about QE and the persistence of low rates during Q&A after his presentation, and the answer left the audience murmuring.

“If we’re in this Fed rescue mode [in 2016–2019], then I think we’re in a lot of trouble. Very serious trouble.”

The final presentation at the Fixed-Income Management Conference was from Paul Travers, a manager of bank loans and collateralized loan obligations (CLOs) at Onex Credit Partners. Travers was quick to offer his thoughts about Fridson’s forecast, which would have a profound impact on the bank loan market if it comes to pass.

“I hope he’s wrong,” Travers exclaimed, noting that high-yield issuers are often also issuers of syndicated loans. “I don’t know if I can live through another four-year default wave.”

In a typical default situation, the holders of senior-secured bank debt would be expected to have much better recoveries than holders of the same issuer’s high-yield bonds, because bank loans have higher priority in the company’s capital structure. But investors in loans may not do as well in the next credit trough as they have in the past, as leverage multiples in the loan market have steadily climbed since 2011.

Unlike fixed-rate high-yield bonds, leveraged loans typically offer floating rates indexed off of Libor, usually resetting monthly, which provides some protection for investors against the prospect of a rising interest rate environment. Travers considers the current credit environment “relatively benign,” and said the current low-rate, low-growth environment is the “sweet spot” for the leveraged loan market — positive growth that isn’t rapid enough to threaten a rate increase. Under these conditions, the S&P/LSTA Leveraged Loan Index par amount outstanding increased to $768 billion in July of this year, adding $76 billion in the first half of 2014.

During his presentation, Travers noted that “Covenant Lite” loans now exceed 50% of the  S&P/LSTA Leveraged Loan Index. According to Travers, fewer loan covenants wouldn’t necessarily lead to a higher incidence of defaults, since loan holders in most instances would be inclined to waive covenants rather than force an issuer into default. But over time, the lack of tight covenants could allow cash to flow out of the company, resulting in lower loan recoveries for investors in the event of default.

Of more immediate concern to Travers was the impact of retail fund flows on the leveraged loan market, which had seen 14 consecutive weeks of negative flows at the time of the conference after a long period of inflows. A fairly recent phenomenon in the leveraged-credit market, these retail flows from large loan managers — forced to buy and sell large blocks of loans to put cash to work or meet fund redemptions — contribute to volatility.

In addition to the underlying loan market’s volatility, Travers suggested the CLO market was experiencing volatility itself as a result of just-announced risk retention provisions under section 941 of Dodd–Frank, which would require managers of CLOs to own at least 5% of the risk in their portfolios. Anticipation of this rule was a contributing factor in the rush of CLO issuance in 2014, which equaled 187 deals at the time of the conference.

While the risk-retention requirement isn’t expected to kick in immediately, Travers suggested that going forward, investors should determine whether CLO managers have the capital to comply with this new requirement as part of their due diligence process.

Fridson and Travers approached the leveraged credit market from different perspectives, but their talks suggested that the placid environment encouraged by low interest rates and accommodative credit won’t persist. The next credit cycle will pose some serious challenges for leveraged-credit investors, regardless of their place in the capital structure.

Under the circumstances, the retail component of leveraged credit investments — absent from prior default surges — is probably not a positive development.

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Amid record unemployment, even recorder youth unemployment, and politicians willingly breaking EU treaties (with apparently no consequences), it appears – just as in the US – police brutality in France was the straw that broke ‘Le Camel’s back. As RT reports, another anti-police brutality protest turned violent in the French city of Rennes, with masked youths and police engaging in running street battles. The unrest follows the death of a young environmental activist earlier this week. Overnight Thursday, protesters in the northwestern city lobbed flairs at police and flipped over cars, some of which they set ablaze. Police responded by firing tear gas. We hear guillotines are still cheap on ebay.

 

 

The French (youth) are revolting…

As RT reports,

A similar protest in Paris on Wednesday also descended into violence. Around 250 people gathered outside City Hall in Paris, with some throwing rocks at police and writing “Remi is dead, the state kills” on walls, The Local’s French edition reports. At least 33 people were taken into police custody following the unrest.

 

 

The protests are in response to the death of 21-year-old activist Remi Fraisse. He was killed early on Sunday by an explosion, which occurred during violent clashes with police at the site of a contested-dam project in southwestern France.

His death, the first in a mainland protest in France since 1986, has been blamed on a concussion grenade fired by police. France’s Interior Minister Bernard Cazeneuve, who came under serious pressure to resign following the incident, announced an immediate suspension of such grenades, which are intended to stun rather than kill.

 

The incident has put additional pressure on the already unpopular government of Francois Hollande, who has vowed that a thorough investigation will be conducted into the circumstances surrounding Fraisse’s death.

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Is this the start?

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Submitted by David Stockman via Contra Corner blog,

This is just plain sick. Hardly a day after the greatest central bank fraudster of all time, Maestro Greenspan, confessed that QE has not helped the main street economy and jobs, the lunatics at the BOJ flat-out jumped the monetary shark. Even then, the madman Kuroda pulled off his incendiary maneuver by a bare 5-4 vote. Apparently the dissenters – Messrs. Morimoto, Ishida, Sato and Kiuchi – are only semi-mad.

Never mind that the BOJ will now escalate its bond purchase rate to $750 billion per year – a figure so astonishingly large that it would amount to nearly $3 trillion per year if applied to a US scale GDP. And that comes on top of a central bank balance sheet which had previously exploded to nearly 50% of Japan’s national income or more than double the already mind-boggling US ratio of 25%.

In fact, this was just the beginning of a Ponzi scheme so vast that in a matter of seconds its ignited the Japanese stock averages by 5%. And here’s the reason: Japan Inc. is fixing to inject a massive bid into the stock market based on a monumental emission of central bank credit created out of thin air. So doing, it has generated the greatest front-running frenzy ever recorded.

The scheme is so insane that the surge of markets around the world in response to the BOJ’s announcement is proof positive that the mother of all central bank bubbles now envelopes the entire globe. Specifically, in order to go on a stock buying spree, Japan’s state pension fund (the GPIF) intends to dump massive amounts of Japanese government bonds (JCB’s). This will enable it to reduce its government bond holding – built up over decades – from about 60% to only 35% of its portfolio.

Needless to say, in an even quasi-honest capital market, the GPIF’s announced plan would unleash a relentless wave of selling and price decline. Yet, instead, the Japanese bond market soared on this dumping announcement because the JCBs are intended to tumble right into the maws of the BOJ’s endless bid. Charles Ponzi would have been truly envious!

Accordingly, the 10-year JGB is now trading at a microscopic 43 bps and the 5-year at a hardly recordable 11 bps. So, say again. The purpose of all this massive money printing is to drive the inflation rate to 2%. Nevertheless, Japanese government debt is heading deeper into the land of negative real returns because there are no rational buyers left in the market – just the BOJ and some robots trading for a few bps of spread on the carry.

Whether it attains its 2% inflation target or not, its is blindingly evident that the BOJ has destroyed every last vestige of honest price discovery in Japan’s vast bond market. Notwithstanding the massive hype of Abenomics, Japan’s real GDP is lower than it was in early 2013, while its trade accounts have continued to deteriorate and real wages have headed sharply south.

So there is no recovery whatsoever—-not even the faintest prospect that Japan can grow out if its massive debts. The latter now stands at a staggering 250% of GDP on the government account and upwards of 600% of GDP when the debts of business, households and the financial sectors are included. And on top of that there is Japan’s inexorable demographic bust—–a force which will shrink the labor force and squeeze even further its tepid growth of output as far as the eye can see.

Stated differently, Japan is an old age colony which is heading for bankruptcy. It has virtually no prospect for measurable economic growth and a virtual certainty that taxes will keep rising —since notwithstanding the much lamented but unavoidable consumption tax increase last spring it is still borrowing 40 cents on every dollar it spends.

So 5-year JGBs yielding just 11 bps are an insult to rationality everywhere, and a warning that Japan’s financial system is a disaster waiting to happen. But even that is not the end of it. Having slashed its historic holdings of JCBs, the GPIF will now double it allocation to equities, raising its investment in domestic and international stocks to 24% each.

Stated differently, 50% of GPIF’s $1.8 trillion portfolio will flow into world stock markets.  On top of that—the BOJ will pile on too—-tripling its annual purchase of ETFs and other equity securities. This is surely madness, but the point of the whole enterprise explains why the world economy is in such extreme danger. A Japanese market watcher caught the essence of it in his observation about the madman who runs the bank of Japan,

“Kuroda loves a surprise — Kuroda doesn’t care about common sense, all he cares about is meeting the price target,” said Naomi Muguruma, a Tokyo-based economist at Mitsubishi UFJ Morgan Stanley Securities Co., who correctly forecast more stimulus today.

That’s right. Its 2% on the CPI…..come hell or high water.  There is not a smidgeon of evidence that 2% inflation is any better for the real growth of enterprise, labor hours supplied and economic productivity than is 1% or 3%.  Its pure Keynesian mythology. Yet all the world’s central banks are beating a path toward the same mindless 2% inflation target that lies behind this morning’s outbreak of monetary madness in Japan.

Folks, look-out below.  As George W. Bush said in another context…..this sucker is going down!

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Over the last 2 days, more than two dozen Russian military aircraft, in four groups, were tracked and intercepted conducting aerial maneuvers around Europe, according to NATO. As The Wall Street Journal reports, this activity is on a scale seldom seen since the end of the Cold War, prompting NATO jets to scramble in another sign of how raw East-West relations have grown. "There is a troubling trend… of sabre rattling" warned The White House, noting that NATO has intercepted over 100 incursions by Russia year-to-date to which the US Army chief of staff ominously warned, this is "Russian aggression," and "we have to reassure our allies."

 

A photo released Wednesday by the Norwegian Air Force shows what it said was a Norwegian F-16AM Fighting Falcon, left, accompanying a Russian Tupolev Tu-95MS at an undisclosed location

 

As The Wall Street Journal reports,

Russian military aircraft conducted aerial maneuvers around Europe this week on a scale seldom seen since the end of the Cold War, prompting NATO jets to scramble in another sign of how raw East-West relations have grown.

 

The North Atlantic Treaty Organization said that more than two dozen Russian aircraft in four groups were intercepted and tracked on Tuesday and Wednesday, an unusually high level of activity that the alliance said could have endangered passing civilian flights.

 

Military jets from eight nations were scrambled to meet the Russian aircraft, which a NATO spokesman said remained in international airspace and didn’t violate NATO territory.

 

However, NATO officials said such flights heighten the risks of military miscalculations. They also come at a time when U.S. officials have been voicing concern about Moscow’s actions in the wake of the Ukraine crisis, where thousands have been killed in months of fighting between the government and Russia-backed separatists.

 

“There is a troubling trend of out-of-area events being increasingly used by Russia along its periphery for political saber-rattling, with probing incursions by air and sea by the Russian military becoming more commonplace and flagrant,” a senior Obama administration official said. “The United States has repeatedly called upon Russia to respect international law and the sovereign territory of its neighbors.”

 

There was no immediate comment from Moscow, which has denied in the past that such flights were provocations.

 

NATO said it has conducted over 100 intercepts of Russian aircraft so far this year, about three times as many as were conducted in 2013.

 

…

 

“We have been keeping track of incidents and have noticed an increase in Russian flights close to NATO airspace since the start of the Ukraine crisis,” said Lt. Col. Vanessa Hillman, a Pentagon spokeswoman. “We don’t think those flights help de-escalate the current situation at all.”

 

Gen. Ray Odierno, the U.S. Army’s Chief of Staff, called the flights “Russian aggression” in an interview on CNN. “I think they are trying to reassert themselves,” he said. “I think we have to watch it very carefully. We have to reassure our allies.”

 

Read more here…

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In an interview with The Wall Street Journal on Tuesday, Jens Stoltenberg, NATO’s new secretary-general, said more “transparency and predictability” was needed between NATO and Russia “to avoid that the crisis spirals into something worse [and] that misunderstandings create even bigger conflicts.”

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Submitted by Ben Hunt of Salient Partners' Epsilon Theory blog,

Oliver Sacks is both a gifted neurologist and a gifted writer. I want to begin this note with a passage from his book “An Anthropologist on Mars”. It’s a long selection, but worth the effort.

Here’s the other thing, the darker side of a world where we all bear the “TRUST NO ONE” tattoo … it’s all well and good when mass-mediated representations of financial advice and ersatz authenticity generate characters like “Jim Cramer”, who I believe is relatively harmless in a larger political or social sense. But this is how characters like “Senator Joe McCarthy” are created, too, and they are anything but harmless. The flip side of a world where no one is trusted and nothing is believed is that anyone can be trusted and everything can be believed. I’ve recently experienced this modern-day McCarthyism and fear-mongering first hand. It makes me angry, of course (one day I’ll write an “Angry Ben” note on this topic), but even more than that it makes me sad. I’m sad because I see more and more intelligent, engaged, well-meaning people withdrawing from anything with a public face or function, asking themselves “why would I subject myself to this particular form of social torture”, and ceding the field to the McCarthy’s and their media stooges.

What’s to be done? I really don’t know. McCarthy was undone when an institution of overwhelming authenticity and popular trust – the US Army – challenged him directly and got the newspapers to print the story. I just don’t know if any modern institution, including the Army, still commands that sort of trust, and I’m certain that there’s no modern institution that has the broadly dispersed and widely available reservoir of authenticity necessary to combat the pandemic of mistrust that has swept through modern markets. Everyone’s an expert today, and we think nothing of dismissing the advice we receive from our traditional bastions of professional advice – doctors, lawyers, financial advisors – in favor of our own views, almost always channeled from some charming disembodied voice we hear on TV or read on the Internet. We’re all our own doctor and lawyer and financial advisor today, precisely because we mistrust so thoroughly, and as a result we leave ourselves open to false notions of trust. We need new pockets of authenticity, a disaggregated source of authenticity to combat the disaggregated McCarthyism that is bursting spore-like all across the country. In my more optimistic moments I look at the Internet’s ability to eliminate media intermediaries and gatekeepers, and I think that there must be hope in the vast array of blogs and comment communities and Twitter-verses out there today. But then I actually spend some time in these virtual communities and I start to despair.

I shouldn’t, though … despair, I mean. It’s amazing how messy community building and small-l liberalism can be, and the whole idea here is to let 1,000,000 flowers bloom, no matter how inane or misguided some of those communities may seem to me. Cream rises. Leaders emerge. It won’t be pretty, and it won’t be fast, but it will happen. In the meantime, I’ll continue to try to build my own community around Epsilon Theory. I’ve got a pretty good microphone now, and I won’t deny the emotional gratification of speaking to more and more people. But it’s time to deepen the personal relationships here rather than just broaden the readership, as it’s the strength of individual connections with outstanding people that builds trust and a lasting community. As Kant wrote, “number not voices, but weigh them.” That’s how I’d like people to evaluate me. That’s how I’d like people to evaluate Salient. And it’s how I’m going to evaluate the success of Epsilon Theory.  

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An offshoot of 'Occupy Wall Street' is taking the $1.2 trillion student loan bubble, debt servitude dilemma of America's youth into its own hands… bit by tiny bit. As The BBC reports, activist group 'Rolling Jubilee' wants to "liberate debtors" by buying student-debt-bundled ABS on the secondary market (where they trade at significant discounts) and writing off the underlying loans. As Rolling Jubilee notes, "your debts are on sale… just not on sale to you," until now.

Rolling Jubilee says the problem lies deep within the structure of the education system and the way that selling education as a commodity reinforces inequality.

"It is documented that they end up worse off and have no better chance of getting work than if they simply finished high school," she says.

This week, the Federal Reserve chief Janet Yellen warned the quadrupling of the student loan debt since 2004 represented a barrier to social mobility.

John Aspray, national field director at the United States Student Association (USSA), said recent changes in law mean people in medical or gambling debt can declare themselves bankrupt – but to do so for student debt means satisfying an '"undue hardship" criteria, which is very difficult to prove.

 

"Opportunities for renegotiating are very well hidden," he says.

 

He says Rolling Jubilee's work was "important and symbolic" as a lot of people "don't even consider" getting rid of their debt.

 

As 85% of student loans are guaranteed by the national government the USSA is putting pressure on the department to "cut contracts with the worse corporations", says Mr Aspray.

 

"Political reforms are needed," he says. "We are going to see people continuing to rebel against this."

As The BBC reports,

An activist group in the United States has been carrying out deeds that some might think the stuff of dreams – buying and cancelling other people's student debts.

 

Rolling Jubilee has purchased and abolished $3.8m (£2.35m) of debt owed by 2,700 students, paying just over $100,000 (£62,000), or as it says, "pennies on the dollar".

 

The campaign group, which wants to "liberate debtors", says it takes its name from the tradition in many religions of marking a "jubilee" celebration by freeing people from debt.

 

…

 

Debts can be bought and sold in the financial marketplace. But student debt, which has spiralled to an estimated $1.2 trillion (£619bn), is not usually as available to buy as other debts, such as unpaid medical bills.

 

In this speculative secondary market, third parties buy debt for a fraction of its original cost and try to collect the full amount from debtors.

 

But these debt campaigners are buying debts and then writing them off.

Laura Hanna at Rolling Jubilee says the student debt situation amounts to a "bubble".

The group pulled off the deal to illustrate how cheaply the money owed can be sold on the secondary debt market, she says.

 

"We wanted to question the morality around repayment," she says.

 

"Your debts are on sale. They are just not on sale to you."

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