Those who follow me know that I don’t agree with many of Goldman Sachs recommendations, primarily because I know that Goldman considers their clients to be “muppets” and use said muppets as profit springboards for trade setups. Of course, I can be wrong, but remember that we have ex-Goldman partners who support this thesis with personal experience, reference “Goldman Sachs Executive Director Corroborates Reggie Middleton’s Stance: Business Model Designed To Walk Over Clients“:

An executive director at Goldman Sachs has explicitly corroborated what I and many in the blogosphere have been crowing for some time now, and that is… 

 

The whole video can be seen here on the Max Keiser show, starting from about 19:00 minutes in where I discuss risk vs reward in GS and how they outperform eventhough risk outweighs reward. Those who like numbers and charts can see where I actually demonstrated in For Those Who Chose Not To Heed My Warning About Buying Products From Name Brand Wall Street Banks:

As in “When the Patina Fades… The Rise and Fall of Goldman Sachs???“, we can reminisce over the fact that Goldman BARELY earns its cost of capital on an economic basis, and that’s before considering the potential horrors which may (and probably do) lay on the balance sheet (for more on BS horror, reference Reggie Middleton vs Goldman Sachs, Round 2) .

And now we have supporting evidence from the inside… From the NYT:

“TODAY is my last day at Goldman Sachs. After almost 12 years at the firm — first as a summer intern while at Stanford, then in New York for 10 years, and now in London — I believe I have worked here long enough to understand the trajectory of its culture, its people and its identity. I can honestly say that the environment now is as toxic and destructive as I have ever seen it.”

“To put the problem in the simplest terms, the interests of the client continue to be sidelined in the way the firm operates and thinks about making money.”

“I knew it was time to leave when I realized I could no longer look students in the eye and tell them what a great place this was to work.”

” I have always taken a lot of pride in advising my clients to do what I believe is right for them, even if it means less money for the firm. This view is becoming increasingly unpopular at Goldman Sachs. Another sign that it was time to leave.”

 “How did we get here? The firm changed the way it thought about leadership. Leadership used to be about ideas, setting an example and doing the right thing. Today, if you make enough money for the firm (and are not currently an ax murderer) you will be promoted into a position of influence. What are three quick ways to become a leader? a) Execute on the firm’s “axes,” which is Goldman-speak for persuading your clients to invest in the stocks or other products that we are trying to get rid of because they are not seen as having a lot of potential profit. b) “Hunt Elephants.” In English: get your clients — some of whom are sophisticated, and some of whom aren’t — to trade whatever will bring the biggest profit to Goldman. Call me old-fashioned, but I don’t like selling my clients a product that is wrong for them. c) Find yourself sitting in a seat where your job is to trade any illiquid, opaque product with a three-letter acronym.”

“I attend derivatives sales meetings where not one single minute is spent asking questions about how we can help clients. It’s purely about how we can make the most possible money off of them. If you were an alien from Mars and sat in on one of these meetings, you would believe that a client’s success or progress was not part of the thought process at all.”

“It makes me ill how callously people talk about ripping their clients off. Over the last 12 months I have seen five different managing directors refer to their own clients as “muppets,” sometimes over internal e-mail. Even after the S.E.C., Fabulous Fab, Abacus, God’s work, Carl Levin, Vampire Squids? No humility? I mean, come on. Integrity? It is eroding. I don’t know of any illegal behavior, but will people push the envelope and pitch lucrative and complicated products to clients even if they are not the simplest investments or the ones most directly aligned with the client’s goals? Absolutely. Every day, in fact.

It astounds me how little senior management gets a basic truth: If clients don’t trust you they will eventually stop doing business with you. It doesn’t matter how smart you are.

These days, the most common question I get from junior analysts about derivatives is, “How much money did we make off the client?” It bothers me every time I hear it, because it is a clear reflection of what they are observing from their leaders about the way they should behave. Now project 10 years into the future: You don’t have to be a rocket scientist to figure out that the junior analyst sitting quietly in the corner of the room hearing about “muppets,” “ripping eyeballs out” and “getting paid” doesn’t exactly turn into a model citizen.”

Well, anyway…. This piece was not intended to reveal the inner workings of Goldman Sach’s business model. It was intended to illustrate how our UltraCoin system can be used to monetize global macro trade ideas, even if they are from the vampire squid! According to Forbes:

Goldman’s first non-U.S. trade recommendation revolves around an expectation European stock markets rise in 2015 as the impact of ECB money-printing makes its way into the real economy. Goldman recommends investors go long a December 2015 Eurostoxx 50 call spread, buying a Dec. 2015 strike call at 3,150, and selling a Dec. 2015 strike call at 3,450. “The (nearly) at-the-money 3150 call costs 170.6, while selling the 3450 call costs 69.10 (both priced as of the close on November 19), giving this position a maximum potential 2-to-1 payout,” notes Goldman. The firm sees two reasons European stocks will move higher: regional growth simply accelerates, or disappointing inflation readings force the ECB into added action. Both scenarios, Goldman believes, augur well for European asset prices.

First, let’s put this in a form that can be traded via UltraCoin. To go long the Eurostoxx 50, we’ll receive exposure to the SPDR Eurostoxx 50 long ETF (speculating that the top 50 EZ equities will rise from currency wars & QE)  and we will pay exposure to the ProShares Ultra Short Euro ETF (EUO) seeking to provide twice the inverse exposure to the performance of euro versus the U.S. dollar on a daily basis (speculating the euro will fall relative to the US dollar as a result of currency wars & QE). It should also be noted that leveraged ETF products usually seek to match the return of the euro short against the dollar over a single day. Due to this and the compounding of daily returns, the returns of the product may deviate from long term return rates, suggesting that investors need to monitor their holdings closely if they are going to be in for a long time period. It should also be noted that this is a materially more advanced trade setup than that recommended by Goldman, for it captures potential euro downside movement relative to the dollar AND potential european equity market upside -which, according to the Goldman hypothesis, are tightly linked. One would think that Goldman should start recommending trading with UltraCoin, no? Here’s what the setup looks like as an UltraCoin contract if you were to take it all the way out to December 2015.

My take on this? Well, it’s obvious that the euro will see some pressure from central bank machinations, but its not so obvious… or maybe its too obvious that that is an automatic plus for the eurozone economies in general. Remember, what’s good for stocks short term is not necessarily what’s good for the economy medium term. The eurozone is a confederate of 27 (or so) countries with widely disparate economies, equity markets, macro situations, fundamentals and financial situations. This is far from a one size fits all situation. This should be obvious to all (and is how I called the Pan-European Sovereign Debt Crisis 5 years ago). In Lies, Damn Lies, and Sovereign Truths: Why the Euro is Destined to Collapse! I illustrated how inaccurate the many calls for European growth actually were, to wit:

Notice how dramatically off the market the IMF has been, skewered HEAVILY to the optimistic side. Now, notice how aggressively the IMF has downwardly revsied their forecasts to still end up widlly optimistic.

 

Ever since the beginning of this crisis, IMF estimates of government balance have been just as bad…

The EU/EC has proven to be no better, and if anything is arguably worse!

Revisions-R-US!

and the EU on goverment balance??? Way, way, way off.

It’s not just Greece either…

And what about Italy???

This is Italy’s presumption of economic growth used in their fiscal projections:

 

 

If the IMF was wrong, what in the world does that make the EC/EU?

Now, for sure, there are some eurozone nations that will benefit mightily from the debasement boost, but those countries are not representative of the entire eurozone. The reason why debasement and QE are almost a forgone conclusion is that Japan has thrown the gauntlet down and the ECB feels it has little choice. You see, there is a stark difference between how the Japanese economy (despite 34 years of a lost decade) and the EZ economies are put together, and a currency war will bring those differences starkly to the forefront. I posted series of tweets on this topic a few days ago…

Of course, if one wanted to take the opposite side of Goldman’s views, simply click the switch button in the trade setup screen of UltraCoin to reverse the exposures.Download the UltraCoin client for free, and start trading for free without banks, brokers or exchanges.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/FZ8-nn6KjqA/story01.htm Reggie Middleton

via Zero Hedge http://ift.tt/1ytEzJg williambanzai7

Submitted by Mike Krieger via Liberty Blitzkrieg blog,

You probably haven’t heard of Mark Paffrath, the 28-year-old Navy veteran, and former employee of the Drury hotel chain, who was fired from his job and called a “terrorist” for taking pictures of Department of Homeland Security (DHS) vehicles and posting them to his personal Facebook page.

The story of his recent job termination is further proof of fascism’s relentless bull market within these United States. What happened to Mr. Paffrath could easily happen to any of us, and it’s imperative that we support him and reject the type of backwards fear-mongering being perpetrated by his control-freak employer.

Just two weeks ago, we saw a 90-year-old vet threatened with jail for feeding homeless people in Florida. Now this.

TechDirt reports that:

Mark says that on Thursday after work he snapped 2 photographs and a short video of several dozen Homeland Security vehicles in the parking garage. He then uploaded them to his Facebook page. In his post he writes “why are all the cop cars here…I wonder if it has anything to do with Ferguson”, he also included the hashtags #Ferguson #NoJusticeNoPeace.

 

On Friday, shortly after arriving to work at the Drury Plaza Hotel, Mark stated that he was called to the office of Jeff Baker, the General Manager. Upon arriving Mr. Baker advised Mark that he needed to remove the photos and video from Facebook. Mark immediately complied and removed the post. Mark then continued and finished his shift.

That should be the end of it, but of course it’s not…

Saturday, Mark stated after being at work no more than 30 minutes, he was again called to the General Manager’s office. Waiting for him was Jim Bohnert, Director of Security for Drury Hotels Company, LLC. Mark told ASN that Mr. Bohnert advised him that his Facebook posts almost cost the company a $150,000 contract with the Department of Homeland Security and because of this he was being terminated.

 

Jim Bohnert — formerly of the Secret Service and the St. Louis Police Department — had more to say on the matter. He called the former military member a “terrorist” and told him he had “dishonorably served his country” by posting pictures of vehicles parked in a garage where any guest or employee of the hotel could have seen them. In fact, any member of the public could have seen them simply by entering the garage, which is not secured. Argus Streaming News writers were able to see “over 100″ DHS vehicles in the garage while driving through it on their way to speak to the hotel’s manager.

 

Bohnert also threatened Paffrath with arrest if the photos were reposted (presumably by someone with more power than Director of Security for Drury Hotels, Bohnert’s current position).

Specifically, this is what Bohnert supposedly said:

Mark stated that Mr. Bohnert ended the conversation with “if you repost the photos and video you will have the federal government knocking on your door and you will be incarcerated”.

We must all support Mr. Paffrath, and let Drury Hotels know that it is their behavior that is unacceptable, not Mark Paffrath’s. It’s perfectly representative of the addled, insane society we live in that the hotel’s security director had the nerve to call a U.S. veteran a “terrorist” for posting pictures to Facebook. I think we all know who’s actually behaving like a terrorist in this case. The time for getting outraged has long since passed.

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

Of the 10 days on which the FBI has conducted the most background checks since December 1998, two are the last two Black Fridays.

 

As WaPo reports, it’s not just Best Buy and JCPenney that sees throngs of Americans herding hungirly in anticipation of a ‘deal’, many hope for a discounted firearm at stores like Cabela’s – and guns make popular gifts. However, the flood of demand on Black Friday is actually a problem for the oh-so-efficient government…

In 2013, 186,000 people were allowed to buy weapons without a
background check at all, according to the AP, after the FBI was unable
to process their applications within the legal window of three days. This year demand is even higher…

 

 

*  *  *

Nothing to see here, move along.

via Zero Hedge http://ift.tt/1tzq4gL Tyler Durden

Submitted by Dmitry Orlov via Club Orlov blog,

The final days of US empire are fast approaching. Perhaps its end will pass slowly and gradually, or perhaps the event will unfold rapidly and catastrophically. Maybe chaos will break loose, or maybe its demise will be organized well and proceed smoothly. This nobody knows, but the end of empire is coming as surely as day follows night and sun follows rain. Overexpansion, overreach and over-indebtedness will take their toll—as all past empires have discovered. Empires are like bacteria in a Petrie dish; unthinking, unseeing, unfeeling, they expand until they run out of food or contaminate their environment with their waste, and then they die. They are automatons, and they just can’t help it: they are programmed to expand or die, expand or die, and, in the end, expand and die.

What does the empire feed on? It feeds on money and fear; your money and your fear, both obtained with your cooperation. It is bigger now than when it faced an actual adversary in the Soviet Union. Russia is no adversary; all it wants is to be a normal country, at peace with the world. But the empire won’t let it, will it? It must create enemies. Who are our enemies? According to the authors of endless war they are North Korea, Iran, Syria, and Islamic terrorists. Are any of them actually capable of threatening the US? Well, yes, but they are all quite easy to deter. But the plan of the authors of endless war is not to deter them; it is to back them into a corner with political instability and sanctions, while whipping up the population on both sides into fear-filled frenzy.

We all know that the US military-industrial complex has become a self-perpetuating and uncontrollable organism, just like Dwight D. Eisenhower warned us in 1961. Everyone knows the phrase and Eisenhower's warning—it is part of our collective memory. At a trillion dollars a year and growing, with over 1000 bases ringing the planet, it has expanded far beyond what Eisenhower could have imagined in his worst nightmare. We can’t say we didn’t know: he warned us. After the National-Socialist episode in Germany, many good Germans voiced regrets at not speaking up, claiming that they didn’t know what was being done in their name. But we do not have that excuse: we all knew all along.

Nor was it the first time we were warned. General Smedley Butler told us before, in 1933, and his words are still with us, posted online. Why is it that everyone, generals included, suddenly gain wisdom immediately upon reaching retirement? Butler offered an explanation: his “mind was in suspended animation while serving as a soldier and following orders.” In 1933 Butler told us that he “was a racketeer, a gangster for capitalism.” He said:

“I helped make Mexico, especially Tampico, safe for American oil interests in 1914. I helped make Haiti and Cuba a decent place for the National City Bank boys to collect revenues in. I helped in the raping of half a dozen Central American republics for the benefits of Wall Street. The record of racketeering is long. I helped purify Nicaragua for the international banking house of Brown Brothers in 1909-1912…I brought light to the Dominican Republic for American sugar interests in 1916. In China I helped to see to it that Standard Oil went its way unmolested.”

This empire is nothing new, and we knew what it is and what it does all along. We can’t say we didn’t know. We have watched throughout our lives as the US put down every popular uprising against local autocrats and oligarchs, placed countries under US control, then helped organize and train the death squads that killed off the opposition. Think of Indonesia, Argentina, or Honduras. We watched as the empire crushed every democratic government that threatened US business interests under the false pretext of “anti-communism,” starting with Iran in 1953, Guatemala in 1954, and proceeding to Congo, Haiti (numerous times), and most notably and infamously Chile in 1973 (assassinating president Salvador Allende on September 11, 1973), Nicaragua in the 1980’s, and many, many others. (For details see William Blum’s Killing Hope.) And of course, many of us lived through the epic lies and genocide of millions in Vietnam, Laos and Cambodia during the so-called “Vietnam War.” We knew, we watched, and we paid taxes that paid for the bullets and the bombs.

More recently we’ve seen the barefaced lies of empire laid out for all to see in Iraq, Libya, Syria, Afghanistan, Somalia, Georgia, Pakistan, Yemen, Ukraine… they never end! But the trouble we stir up in other places never seems to come home and ring our doorbell, does it? Maybe that’s why it keeps on going. We think that we can just ignore it and go on with our lives—that it won’t affect us. Or does it?

Let’s leave aside the destruction of democracy that always accompanies a militarized, fascist police state that the US has gradually turned into. And let’s ignore the violence that pervades US society, or the vast gulag of incarceration that disposes of our useless eaters. Consider that the only military attack on US soil that actually scored a palpable hit since Pearl Harbor was 9/11. Pearl Harbor was on the periphery, way out in the Pacific, “A Day that will live in Infamy,” the more so since FDR knew it was coming and did all he could to provoke it by cutting Japan off from oil supplies, directly provoking it into launching the attack. But Hawaii is the periphery while 9/11 struck at the heart of the empire, the financial center in New York that drives the imperial wealth pump, and the Pentagon, which is charged with the mission of US world domination.

Whether you believe that 19 Arabs armed with box cutters who couldn’t fly propeller planes took down 3 World Trade buildings that plummeted straight down at the speed of freefall in what looked like controlled demolition (yes there were 3, look up “Building 7”), and destroyed a section of the Pentagon, or whether you believe it was an inside job, doesn’t matter. The point is, in that act of destruction, the wars of the empire finally came home.

What was the result? Did these events cause us to reconsider what we are doing? Of course not! Instead, we went all-in for war. Remember, the empire is an automaton, a self-perpetuating organism, living on money and fear. What better way to whip up fear than to stage, or to allow, or to simply fail to prevent, an attack on the “homeland”—which is, by the way, a Nazi propaganda term. The purpose of war is simply to cause more war, since it is so profitable for the badly misnamed “defense industry.” Butler told us in 1933 that “war is a racket,” and documented massive war profiteering during WWI. Do you know how much money Lockheed, Northrop-Grumman, Boeing, General Dynamics, Raytheon et al. are making from the “War on Terror”? The sums are astronomical.

As you read these words, the empire is busy doing its work in Ukraine. Here is how that works. First, it overthrows the elected government in a US-backed coup. Next, it directs its local puppet regime to unleash a military attack and organize death squads to deal with the population in the east that won't go along with the US-backed coup, in this case using actual Nazi-branded death squads, complete with Nazi SS Insignias. (Anyone can verify these facts with the most cursory internet search.) And for the final, consummate imperialist touch, it votes in the UN (together with Canada) against a resolution condemning the Ukrainian Nazis and other racist murderers, while the Europeans shamefacedly abstain. This sort of plan used to work really well, and so the empire keeps repeating it over and over again, even though the results are worse every time.

Vast numbers of Americans support the empire’s wars of conquest because they help maintain their lavish lifestyles. They bother some of us more than others. Many of us are adamantly against them, but only a few find it emotionally unbearable to countenance the destruction of millions of lives in our names and with our money. What makes them different? Who knows, you would have to ask a psychologist.

The question for those who oppose endless war is, What have we done about it? A mass movement in the 1960’s that added up to an uprising by a vast segment of society perhaps had something to do with ending the conflict in Vietnam. In spite of these protests, the empire was able to extend the war by an extra five years all the way to 1973, when it agreed to end it on the same terms that had been offered in 1968 to Nobel “peace laureate” Henry Kissinger. There has been no significant anti-war protest since then, and certainly none that succeeded in preventing or ending war. Why?

First, the draft was ended. This put an end to the involvement of average US families in the wars of empire, and therefore ending the requirement for consent of the governed. The strategists realized that the draft was a disaster for the empire. The new, much better and cheaper way to procure cannon fodder for the endless war is to enlist the children of the underclass, by using economic oppression in order to deprive them of any other means of advancement except military service.

 

Second, the military has been outsourced and privatized, requiring even less involvement by US families in the military, and less need for their consent. “You’re all volunteers, so shut up” is the attitude.

 

Third, the vastly increased scope of domestic spying by the NSA and other government agencies has helped keep everyone under control and stifle dissent.

 

Fourth is the tight government/corporate control of the US media, which has become consummately successful in brainwashing and propagandizing the population.

 

Finally, there is the war on whistleblowers and journalists who expose the truth, from Tom Drake to William Binney, Sibel Simons, Jesselyn Radack, Bradley Manning and Julian Assange. If necessary, the police, who are vastly more militarized than in the past, together with national guard troops, can squash any dissent like a bug. All these measures ensure that efforts at reform pursued through legal, nonviolent means such as voting, protest, civil disobedience, civil resistance, etc. will have absolutely no effect. The only action that can possibly stop the empire in its tracks is cutting off its food supply—the tax money on which it lives. We have to starve the beast through divestment, capital expatriation, tax resistance, tax refusal and tax revolt. Former Secretary of State Alexander Haig told us this flat out in the 1980’s when, being confronted with huge protests over US Central American policy, he said: “Let them protest all they want as long as they pay their taxes.” Truer words were never uttered by a US official. Is there any evidence to contradict his statement? Has any other measure had any impact on the war machine? The honest answer is no. Millions of people around the world protested before the 2003 invasion of Iraq. These protests were ignored. No amount of protest or other efforts can stop it, because it doesn’t cut off the empire’s food supply of money and fear. Only by cutting off its funds by not paying taxes can we stop the empire.

Many have said that the US doesn’t need tax money as it survives on endless debt. Yes, the empire lives on debt, but the ability to sell debt is based on the bond rating of US treasury bonds. Most recently in June, 2014 S&P gave the US a AA+ rating with “stable outlook.”

If there is any doubt about the US credit rating, the ability to sell debt to continue financing the empire comes into question. The ability to collect taxes is what maintains the US bond rating. Any reduction of the US bond rating, and interest rates have to go up in order to continue attracting more investment. Then the interest on the debt balloons out of control and becomes unrepayable—never mind the principal, which they have no intention of ever paying back. By the way, the Tea Party’s efforts to shut down government by refusing to raise the debt ceiling was helping this effort for a time, although for different reasons. They thought that the welfare system is bankrupting the country. This is a laughable claim, because welfare spending looks negligible when compared to military spending. Still, they did manage to lower the bond rating for a time. Shutting down the federal government is a step in the right direction, and since in recent years only the Tea Party has managed to do it, lets give them some credit

If the US became unable to reliably collect taxes, then its ability to finance the empire with debt would be diminished, and the US would have to turn to increasing taxes—another politically unpalatable choice, especially in the age of the Tea Party, when the empire’s main constituency is dead-set against more taxes. So it is absolutely clear that the only thing that could stop the empire is a tax revolt. It wouldn’t even have to be that big; the slightest question about the ability of the federal government to collect taxes could reduce the bond rating. Even a minor reduction could raise interest rates enough to make the US debt unrepayable.

Let's get down to brass tacks: How do you avoid paying taxes, when the IRS withholds our salaries, and the tables are rigged to withhold about 15% more than necessary on average, so 80% of people get a refund? Did you think that this is a coincidence? No, this is a one-year interest-free loan to the empire from taxpayers. But it’s actually quite simple not to pay taxes. Get a W-4 form, write EXEMPT in the space provided, and turn it in to your friendly HR office. Your employer is not allowed to change it unless directed by the IRS. Normally they have no reason to question it.

Here’s what happened last time it was tried on a big scale. In 2007, Code Pink joined the War Resisters League to organize a national project for war tax refusal, to “Stop Bush’s Wars.” This was not a true tax revolt, just more or less a referendum on how many people would potentially support withholding a portion of their taxes owed, even a token amount. The online petition asked people if they would be willing to commit to withhold some of their taxes, even $1, if 100,000 other people would agree to do the same. Out of the US population of 316 million, how many people do you think signed it? About 2,000. So you see, there is not much evidence that people will do the only thing that could stop the empire: a true Tea Party tax revolt.

What this implies is that the empire will continue to churn along, and debt will continue to build up, because any other approach to paying for it is not feasible, and therefore collapse is inevitable. The aftermath of collapse is unpredictable; maybe there will be a soft landing, maybe not. But unless you are willing to engage in some form of tax revolt, collapse is inevitable. You will get to live with the results: stage a tax revolt now, or face collapse later.

Are you sure you want to take your chances on collapse? The results of a personal tax revolt are predictable: retribution with penalties and interest from the IRS; living in fear of having your salary, your property, even your house seized, or worse, your door broken down by federal agents (although these extreme measures don’t happen too often, they happen often enough to instill fear). Perhaps there would be loss of income, or even your job. Losing one’s job often leads to depression, divorce, drug or alcohol abuse, etc. So you may prefer collapse after all: loss of your savings, no heat, electricity or trash removal, shops looted or closed, armed gangs roaming the streets… Your choice!

On the other hand, collapse might go well! Hope springs eternal in the optimistic American heart. We are (or used to be) the “can-do” people. Maybe we can-do collapse better than anyone else? Doubtful though if you read Dmitry Orlov’s Collapse Gap presentation.

The results of collapse later are likely to be worse then the effects of tax revolt now. Especially, since the IRS takes years to catch up to exempt W-4 forms, and it would be even harder to crack down if it were being was done en masse. But it’s perfectly understandable if you opt to do nothing now and suffer no consequences, while engaging in ineffective protest to assuage your conscience. You probably have a family to support, an expensive hobby, or some other excuse. So you decide to take your chances with collapse later. After all, collapse might turn out OK for you! This psychology is quite understandable. I truly hope that collapse will be as painless as you wish it will be, but somehow I doubt it. Good luck though! Whatever happens, you will have to live with your decision for the rest of your life—be it long or short.

via Zero Hedge http://ift.tt/1y1LxFn Tyler Durden

Yesterday it was the French, with record high unemployment and record low bond yields. Today, it is the turn of the Italians as the unemployment rate rose to 13.2% – the highest since records began – as bond yields continue to plumb new "lower rates will spur lending which will spur economic growth which will create jobs" lows…

As Bloomberg reports,

Renzi said today’s increase in the unemployment rate is partly due to more people starting to look actively for a job. The so-called “discouraged” workers who are not looking for work are not counted in the Istat jobless data.

 

“Unemployment data are worrying,” said Renzi, whose comments on the sidelines of an event in Catania were broadcast by SkyTG24. “We cannot deny the problems out there, still we shouldn’t see the glass half empty either.”

Is this worrying?

 

As we asked – entirely rhetorically – before – just what is it that ECB sovereign QE supposed to achieve?

*  *  *

As Reuters reports, deflation looms…

Italy is stuck in a rut of diminishing expectations. Numbed by years of wage freezes, and skeptical the government can improve their economic fortunes, Italians are hoarding what money they have and cutting back on basic purchases, from detergent to windows.

 

…

 

"I see an enormous danger that we will still be in this situation in six months' time, and the longer it lasts the harder it is to get out," says Gustavo Piga, an economics professor at Rome's Tor Vergata University.

 

…

 

"I always tell myself that if we can get through this period we will come out very strong, but I'm honestly not optimistic about the future."

But it is considerably more worrisome than that…

Fully 70% of new jobs in Italy in the third quarter of this year were filled by temporary contracts, according to labour ministry statistics released Friday that highlighted the precariousness of the employment picture.

*  *  *

All Europe needs is bond-buying-backed lower rates and it will reach escape velocity… right?

via Zero Hedge http://ift.tt/1HM7EE1 Tyler Durden

Submitted by Simon Black via Sovereign Man blog,

Walking down the streets of Constantinople in the early Middle Ages, you would have immediately felt the energy and prosperity.

Constantinople was one of the wealthiest, most advanced cities in the world, and some historians estimate its population could have been as high as 500,000 people.

Byzantine architecture in Constantinople was world famous, and local artists were producing mosaics that are still regarded as some of the finest ever made.

At this point in history, wealth and power in the world was clearly concentrated in the East.

Europe was nothing more than a plague-infested backwater. Constantinople flourished. And even further to the east, China was sporting some of the most advanced technology in the world.

But times changed.

By the 13th century, the Byzantine Empire was in clear decline. Its borders were shrinking and the empire was at the center of almost constant warfare.

And more importantly, they had begun to debase their currency. Again.

For centuries, the Byzantine gold solidus had acted as sort of de-facto international reserve currency. It contained roughly 4.5 grams of pure gold and was used in trade and commerce around the world for nearly seven centuries.

(Modern archaeologists have unearthed medieval gold solidus coins as far east as Inner Mongolia!)

Problem is– war is terribly expensive. And they paid for it by debasing by their currency. By the 11th century, the gold content in the solidus had been debased to the point that it was no longer worth anything.

So they gave it another try. Fool me once. Shame on you.

The successor to the solidus was called the hyperon; it was initially struck at 20.5 carats of gold (roughly 85% purity). But this was quickly reduced to 18 carats, then 15, then 12.

Fool me twice. Shame on me.

Enough was enough, and the rising powers in Europe demanded an alternative.

It was the Italians (the most advanced power in Europe at the time) who solved the problem.

Florence, Genoa, and Venice were all minting their own gold coins by the 13th century, and the 3.5g Florentine florin soon became the new international reserve standard used across Europe.

In many ways, this marks the beginning of the West’s rise to dominance: it all started with declaring their monetary independence from a declining power and a currency they could no longer trust.

Fast forward several centuries and we can see that the tables have clearly turned.

The West has been the dominant superpower for centuries. Yet like the Byzantines before, the West is in obvious decline.

At this point insurmountable debts and deficits plague nearly all Western governments. And they make up the difference by debasing their currencies.

This has created massive distrust, especially in the world’s most dominant reserve currency today, the US dollar.

Like the Venetians and Florentines before them, rising powers in Asia are starting to take matters into their own hands.

The Chinese renminbi (though surely not a one-way bet) is rising in international prominence. And China is at the center of a new emerging global financial system being set up in partnership with Russia, India, Brazil, etc.

Western dominance was born from a distrust in the dominant reserve currency at the time. Its decline will be because they followed the same route.

And the canary in the coal mine is what’s happening in Switzerland this weekend.

On Sunday, the people of Switzerland are going to the polls to vote on a return to the gold standard.

It was only 14 years ago that the Swiss franc, traditionally seen as a safe haven currency due to Switzerland’s reputation for stability, was still on a gold standard.

In fact, of all the major currencies, the Swiss franc was the last to abandon prudent monetary standards.

Ever since then, the Swiss National Bank’s balance sheet has absolutely exploded.

Now there’s a national election to return to a gold standard and conservative monetary policy.

Right now the polls suggest that the Swiss are leaning towards ‘NO’, i.e. they want to continue to abandon prudent practices and hand over total control of the money supply to unelected central bankers.

And if the country that has the world’s strongest traditions for financial stability chooses to turn its back on sound money, what hope is there for the rest of the West?

If the Swiss vote NO this weekend, I view that as a major watershed moment in signaling the beginning of the end of Western monetary dominance.

We can already see the signs everywhere.

Across Europe, government bond yields are NEGATIVE, i.e. you have to PAY these bankrupt governments for the privilege of loaning them money.

And as IMF director Christine Lagarde said last week that a diet of high debt, low growth and high unemployment may yet become “the new normal in Europe”.

Each of these data points signals an obvious long-term trend. We can see where this is going.

But here’s the good news: none of this need affect you. The power is in your hands.

Even if the Swiss divorce themselves from prudent policy, and even if your government refuses to maintain sound money, you still have options.

You can choose to maintain a portion of your savings at a well-capitalized bank abroad in stronger currencies.

You can choose to hold some physical precious metals (or even cryptocurrency) overseas at a secure location where it can’t be confiscated by a bankrupt government.

You can choose to own productive assets abroad or collectibles that cannot be conjured out of thin air by central bankers.

All of these tools and resources already exist today. And for now, they’re available for anyone to take advantage of.

via Zero Hedge http://ift.tt/1vWX4Xy Tyler Durden

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Source: Cagle

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