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“A global flight-to-safety continues to dominate the landscape as lower oil prices drives the bid for core fixed income markets”

       – ED&F Man

Anyone who was hoping the market would rebound on last-minute news that the US government has gotten funding for another 9 months, will be disappointed this morning, when futures are finally starting to notice the relentless decline in crude, and with Brent down another 1% as of this writing following yet another cut in the forecast of Global oil demand by the IEA (the 4th in the last 5 months) and with Chinese
industrial production also missing estimates (recall that the Chinese slow-motion hard landing has been said by many to be the primary catalyst for the crude collapse) which however pushed Chinese stocks higher on hopes of even more stimulus, the S&P is trading lower by some 13 points, the 10 Year is in the red zone at 2.12%, and the USDJPY is close to session lows. In short: Kevin Henry’s “ETF” desk at the NY Fed will have its work cut out to generate one of the now traditional pre-weekend feel good, boost confidence stock market ramps.

Some more details

European equities trade lower (Eurostoxx50 -1.4%) following the late sell-off in the S&P 500 as oil broke USD 60 to print its lowest level since July 2009 which pushed the VIX (+8.4%) to its biggest 4 day gain since 2011. In Europe the Eurostoxx50 Volatility Index is up 10%, following its US counterpart, with the FTSE (-1.7%) underperforming due to lower commodity prices with energy the worst performing sector in Europe. The DAX (-1.3% also trades heavy as index heavyweights BASF (-2.75%) was downgraded at Morgan Stanley and Commerzbank (-1.55%) is looking to settle USD 1bln fine with US regulators.

As fixed income traders focus on the weekly LTRO update (not released at time of writing) weak equities have helped push Bunds (+45 ticks) to contract highs and German 10 year yields to record lows at 0.64%.

Overnight the US House of Representatives narrowly passed a USD 1.1trl spending package that will fund nearly all of the US government through September 2015. The Senate now has until midnight Saturday to take up the bill, thanks to a short-term resolution passed by the House to give it time. Senator Harry Reid said the chamber could take up the bill as early as Friday. (BBG)

Nikkei 225 (+0.7%) retraced recent losses amid expectations for PM Abe’s party to win an overwhelming majority in the lower house, with results due this weekend. Shanghai (+0.4%) and Hang Seng (-0.3%) traded mixed following Chinese IP Y/Y 7.2% vs. Exp. 7.5% (Prev. 7.7%) and Retail Sales Y/Y 11.7% vs. Exp. 11.5% (Prev. 11.5%). Downside was capped amid heightened expectations of further easing after China’s 2015 GDP growth targets were lowered at the Central Economic Work conference. JGBs traded higher up 7 ticks at 147.32 amid notable curve steepening after the BoJ offered to buy JPY 1.3trl of JGBs, all in the 1yr–10yr maturity range.

10Y Treasury futures traded 220k contracts overnight as European equities sell off; bund yield making record lows at 0.639%, “which in turn is underpinning Treasuries,” Tom di Galoma, head of credit and rates trading at ED&F Man writes in note. “A global flight-to-safety continues to dominate the landscape as lower oil prices drives the bid for core fixed income markets”: ED&F

The US economic calendar is a little lighter this afternoon featuring just the PPI and the preliminary UofM Consumer Sentiment for December. It will be interesting to see if lower energy prices will have an impact on the latter, we add sarcastically.

Market Wrap

European shares fall, though are off intraday lows, with the basic resources and oil & gas sectors underperforming and real estate, travel & leisure outperforming. European bond yields fall to all-time lows. IEA lowers forecast for global oil demand, WTI crude falls below $60 a barrel. Ruble falls to record, Norway’s krone falls to 11-year low. China November industrial production growth below estimates y/y. The U.K. and French markets are the worst-performing larger bourses, the Swedish the best. The euro is stronger against the dollar. German 10yr bond yields fall; French yields decline. Commodities decline, with WTI crude, Brent crude underperforming and natural gas outperforming. U.S. Michigan confidence, PPI due later.

• S&P 500 futures down 0.5% to 2013.1
• Stoxx 600 down 1.3% to 335
• US 10Yr yield down 3bps to 2.13%
• German 10Yr yield down 3bps to 0.64%
• MSCI Asia Pacific up 0.4% to 137.3
• Gold spot down 0.3% to $1224/oz

FX

FX markets have been relatively quiet as the USD (-0.19%) has traded in a small range following its recent bout of volatility. USD/JPY printed session lows after sources suggested the BoJ would reject added stimulus to ease the blow from to CPI from oil. The continued slide in oil prices pushed the RUB to all-time lows vs. USD once again, shrugging off the Russian rate cut yesterday. In the Asian session NZD fell for the first time in 4-days amid disappointing data including Manufacturing PMI (55.2 vs. Prev. 59.3) and as Fonterra in its global forecast said sees decreasing milk exports. AUD steadied despite yesterday’s attempts by RBA Governor Stevens to jaw bone the currency saying AUD/USD should be closer to 0.7500.

Bulletin Headline Summary from RanSquawk and Bloomberg

Bunds hits contract highs and German 10y hits record low yields as European equities trade lower and the Eurostoxx50 Volatility Index is up 10% with energy the worst performing sector in Europe.

Looking ahead will see the release of US PPI, Michigan and updates from S&P and Fitch on UK and France.

COMMODITIES
WTI and Brent crude futures continue their descent with the latest leg lower below USD 59 as the IEA cut their global oil
demand forecast for the fourth time in five months. This comes in addition to earlier this week when OPEC cut their global
demand forecasts. In terms of levels to the downside, USD 58.32bbl could be a key level, with this price being the low seen in July
2009. Precious metals have traded sideways.

* * *

DB’s Jim Reid Concludes the overnight recap

The ECB will likely start broad based asset purchases in Q1 (probably March) including corporate and government bonds. This will help European credit withstand some risks in the early months, not least from possible pivotal Greece elections. There will also likely be an early year drag from US credit due to the effects of the falling oil price on the US energy sector and periodic fears of a hawkish Fed. Although our spread forecasts are for tighter Euro/GBP spreads by the end of H1 and YE we think we could go wider in Q1 for a period of time. The days of blanket US QE and low volatility are over. Expect some challenging conditions en route to tighter spreads. As the year progresses we expect the Fed to be more dovish as still soft global growth and low inflation makes it harder for them to pull the trigger on rates in line with their own timing preferences. So credit (especially US) may have a better H2 than H1.

Within Europe we think 2014’s sell-off in HY, especially single-Bs, makes it attractive against IG as technicals from the likely ECB buying spread to more ‘yieldy’ assets. Our excess return forecast for European HY is around 5% in 2015 while for EUR and GBP IG, excess return expectations range from 1.4%-4.9% across non-fins and fins with GBP outperforming EUR. Our US credit strategists expect the US HY default rate to rise to 3.5% in 2015 from September’s cycle lows of 1.7%. This is led by the energy sector. For Europe all of our forward indicators currently point to a 1.5-2% default rate over the course of the year – still incredibly low. The risk is if US energy defaults start to lead to a wider mini credit crunch in global HY. Please see the link in your inboxes that arrived within the last 90 mins.

To celebrate finishing the report I had a glass of mulled wine and some roasted chestnuts at Vienna’s fabulous main Xmas market last night. With the big day now only two weeks away I’m surprised I haven’t yet heard my favourite Xmas song namely “Fairytale of New York”. This normally marks the point that I turn from bah humbug to embrace the whole seasonal mood. I’m turning late this year and it probably doesn’t help that markets are still busy and full of intrigue.

Next week sees the important Fed meeting where Mrs Yellen will either be seen as ‚Scrooge or Santa? and we’ll also know whether Abe receives a ringing endorsement for Abenomics with the Japanese election due on Sunday – we should get the official results late on Sunday night in our timezone. The Greek presidential elections will also commence and with Greek equities down over 20% this week and with a huge inversion of the yield curve there’s plenty to play for.

For now the ongoing weakness in Oil continues to dominate the headlines. Indeed yesterday saw WTI and Brent fall by 1.6% and 0.9% with the former closing below $60/bbl for the first time since July 2009. The S&P 500 got off to a pretty strong start to the day having risen as much as 1.4% helped by a decent retail sales report. The market took a turn in the afternoon as the selloff in Oil gathered momentum although the index (+0.45%) still managed to post its first up day this week. The energy sector was unsurprisingly the laggard although having closed the day unchanged it was probably one of the better outcomes that one could have hoped for. Elsewhere the 10yr benchmark Treasury yield was little changed at 2.16% but the curve flattened further led by strength by long bonds. The 30yr fell by 2.5bp to close at around 2.81% a level which is currently lower than the pre-Taper tantrum lows that we saw in May last year. Demand for the 30yr auction yesterday was strong with a bid/cover ratio (2.76x) higher than the previous sale. Credit underperformed on a relative basis with the CDX IG about half a basis point wider and the CDX HY index around four-tenths of a point lower.

Staying on Credit we have the latest US HY fund flow stats and unfortunately we don’t have much good news to share. US HY mutual funds saw outflows of over $2.6bn (0.9% AUM) in the latest week ended 10 December. This marks the fourth straight week of outflows but notably it is the biggest weekly redemption for the asset class since the peak of outflows during the summer. The latest outflow also brings the 4-week moving average flows for US HY to – $1.1bn from around -$280m in the prior week. Energy is clearly the driver here. There is some good news though for European HY investors as outflows seem to have stabilized for now. The latest week saw around $160m (0.3% AUM) of inflows into the asset class, the first in 6 weeks. This gives us a little more confidence that European HY can out-perform the US, especially given its lack of exposure to Energy. Indeed many of the companies should be benefiting from lower Oil. As usual we have updated the weekly HY fund flow charts in the PDF for those interested.

In Europe the ongoing weakness in Greece was again one of the key market features yesterday. There was further pressure on the front end of the Greek curve with the 3yr and 5yr bond yields jumping 128bp and 98bp to close at 10.7% and 9.6% yesterday. The ASE was also down sharply closing more than 7% lower yesterday to put Greek equities as the worst performing equity markets year to date behind Russia. Indeed the ASE is poised to suffer from its worst weekly performance since 1987 and has lost around 29% this year. Our in house Greek expert George Saravelos had just returned from Athens and noted that the local opinion is firming that we are heading for an early election. What also looks to be becoming increasingly clear is that the government seems to be going down a strategy of polarization/highlighting the risks of an election while the opposition is trying to allay fears hence we are likely to get more headlines similar to Samaras’ over the course of the next few weeks. So plenty to look out for ahead of the first presidential vote (next Wednesday at 5pm London time).

Away from Greece the second round of the ECB’s TLTRO was reasonably subdued with just €130bn of funds allocated to banks – coming in at the lower end of expectations. Given the €1tn balance sheet expansion aim proposed by the central bank, the cumulative €212bn of issuance over the first two rounds lends further support to our call more broad-based QE sometime in Q1 next year, especially as upcoming legacy LTRO repayments over the next 2 and a half months are likely to exceed this amount.

Rounding out the market news, there were some contrasting moves from central banks in Europe yesterday. Starting in Norway, the Norges Bank surprised the market with a 25bp cut in rates to 1.25% with the decline in oil prices weighing on the country’s economy. On the other hand the Bank of Russia hiked 100bp yesterday to 10.5% – the fifth hike this year- although this did little to halt a further slide for the Rouble which closed 1.6% weaker versus the Dollar, extending the record low to 55.7/Dollar. Quickly updating the Asian session overnight, equity markets are mostly in the green as we type. The Nikkei, HSCEI and KOSPI are +1.1%, +0.5% and +0.4%, respectively. Onshore Chinese equities are little changed though the latest Chinese data just hit the screens as we are about to head to print. A mixed bag overall with Fixed Asset Investments (+15.8%) and Retail Sales (+11.7%) coming in line with consensus. Industrial Production (+7.2% v 7.5%) fell short of expectations though which is broadly consistent with the trends of late. More on China the PBOC yesterday said that it will maintain a prudent monetary policy with balance between loosening and tightening.

In terms of the day ahead, we have the wholesale price index from Germany but focus will probably be on the inflation data out of Spain and Italy. The US economic calendar is a little lighter this afternoon featuring just the PPI and the preliminary UofM Consumer Sentiment for December. It will be interesting to see if lower energy prices will have an impact on the latter.

Otherwise Oil and Greece should still be on top of people’s watch list ahead of next week’s FOMC meeting.

via Zero Hedge http://ift.tt/1BnPeF6 Tyler Durden

This was originally supposed to be a post about the household balance sheet, but after reading the following example of just how profoundly the Obama administration has crashed intellectually, morally and in every other aspect, we promptly changed our mind following one of the most profound Lewis Black moments yet.

As everyone knows by now, and especially in the aftermath of the Jonathan Gruber revelations which have made it clear that every single proponent of the Affordable Care Act is, well, an idiot, Obamacare has been not only a big disappointment – actually debacle may be a better word – with the administration’s lackeys recently testifying to Congress why they fabricated enrollment numbers, but worse, it has sent healthcare premiums for tens of millions of Americans soaring higher in the process crushing any “savings” America’s middle-class may have had courtesy of plunging gas prices (as explained yesterday).

And so, slowly but surely, Obamacare has transformed from the most admired law of the land to the most loathed and despised.

What is truly outrageous, or perhaps hilarious, is that this transformation has not been lost on the Obama administration itself. And now, engaged in unprecedented damage control, the former Health and Human Services Secretary, Kathleen Sebelius, on Wednesday suggested a simple fix to the “bad brand” of Obamacare: change the name.

As Politico reports, “I think we may need to call it something in the future different, but it is working,” Sebelius said at POLITICO’s “Lessons from Leaders” event.

Sebelius, who resigned in April following the botched roll out of President Barack Obama’s signature health law, said that current issues involving the Affordable Care Act have to do with its commonly used name.

“Obamacare, no question, has a very bad brand that has been driven intentionally by a lot of misinformation and a lot of paid advertising,” Sebelius said.

 

But she insisted the law is working.

 

“Not only are people getting coverage, [but also] the largest drop in uninsured rates in this country, the lowest healthcare cost growth in this country ever recorded,” Sebelius said. “So, it’s actually doing what it’s supposed to do and creating a competitive market for people who had no choice.”

Anyone surprised? Remember: these are the same people who bet on America’s stupidity to pass the law in the first place. How can there possibly be any surprise that all they are doing now is doubling down that Americans are truly the dumbest people in the world, and hoping that they can be fooled by something as idiotic as a name change?

And just what should “Obamacare” be changed to? For the answer, we open it up to our readers, who we are confident can come up with far better names than the administration ever could.

via Zero Hedge http://ift.tt/1sn71qA Tyler Durden

Submitted by Brandon Smith via Alt-Market blog,

Like many people, I grew up watching numerous television shows and mainstream movies depicting a world in which the common police officer stood as a sentinel of civilized society against a seething underbelly of violence and chaos just beneath the surface of the world around us. Through public schooling, we were indoctrinated to fear the drug culture as a breeding ground of gangland destruction and to worship law enforcement officials as the only barrier between us and a cocaine-frosted wasteland. We were led to believe that every day police were holding back a tide of crime and terrorism. The so-called “thin blue line” was an indispensable part of a safe and prosperous nation.

To criticize or present opposition to the institution of state and federally funded law enforcement is often considered tantamount to treason – or, at the very least, it is considered unpatriotic. After all, we have all been told every moment of our lives that a world without police would immediately turn into a frothing, frenzied orgy of mass insanity and that average human beings cannot be trusted to take responsibility for the day-to-day security of their neighborhoods and towns. Official doctrine today demands a designated warrior class, separate from the rest of us, to handle the protection and care of weakling citizens.

Now, it is important to note that there are in fact many good people working in the field of law enforcement. This is not under debate and not relevant to the point I am about to make. The problem is not necessarily with all the individuals who make up law enforcement; the problem is with the existence and mandate of the institution itself. I personally do not “hate” cops per se (though some of them deserve to be hated). But I do hate corrupt government structures, and law enforcement has become the grasping arm of the elitist machine.

The downfall of any policing system arises when individuals are separated from the responsibility for their own security and society is delegated into classes of protectors, or sheepdogs, and sheep.  As I have outlined in many articles, government itself has become an entity foreign to the interests of the American people. Through the false left/right paradigm, elitists have taken away the ability of the public to participate in civic duties and to preserve our principles rather than sacrifice them in the name of the “greater good.” City and state police are not subject to the tides of political elections, even if elections actually mattered. They are part of an unaccountable bureaucratic monstrosity that shifts only according to the whims of the establishment.

The existence of a separate government-controlled warrior class has caused crisis and catastrophe all throughout human history. Invariably, this warrior class ends up exalting itself as superior to the functions and values of the citizenry, rather than maintaining a sense of duty to the citizenry. The claim that the average American is not capable of proper self-security or community security is perhaps the most successful lie of the past century. This is not to say that warriors do not exist. Some people develop the proper mindset, while others do not. However, becoming a warrior is a personal psychological and spiritual pursuit meant to overcome the detriments of fear and has nothing whatsoever to do with government recognition. The fact that many law enforcement officials often refer to non-LEOs as “civilians” is a rather laughable example of the delusions of the government-paid bureaucratic warrior class in action, fantasizing as if they have been deployed to Afghanistan while writing speeding tickets in suburbia.

In the early days of America, the common citizenry through the formation of the militia WAS the warrior class. Every last able-bodied person was a sentinel and defender of the peace. The sheriff, the only elected and constitutional form of law enforcement, often had a posse, which was, again, made up of regular citizens. There was no exalted Praetorian Guard — only friends, family and neighbors.  There was no need for a government dominated law enforcement structure back then, nor is there a need for one now.

The militia system was slowly eroded over decades and replaced with centralized law enforcement under the direct influence of the political elite. Currently, using the Department of Homeland Security and the integration of “fusion centers,” the police are now an army under direct federal control, equipped with military-grade technology through the 1033 program. When Barack Obama called for the creation of a “civilian national security force” just as powerful and well-funded as the military back in 2008, this is clearly what he was referring to. The results of police militarization are thoroughly negative.

In my recent article 'The Ferguson conundrum solved by community security,' I discussed the complete lack of LEO protection against looting and arson during the Ferguson, Missouri, riots, which led the Oath Keepers to provide security for innocent business owners, filling the void left behind. Law enforcement officials were apparently too busy harassing peaceful protesters and journalists to deal with the threat of a burning city, or too busy guarding government building and revealing where their true loyalties rest.  I have heard arguments that the Ferguson police were not to blame for the failure because they were under orders from their superiors and under pressure from the federal government.  While I would note that each individual officer has the right and the duty to refuse immoral orders, regardless of whether or not LEO's refused to protect businesses out of personal choice, or out of fear of losing their jobs, the fact remains that the public is often left to face criminality without the aid of police.  And, because this is an undeniable reality, the public must take back responsibility for its security.

Whether one believes that the shooting of Michael Brown was justified or not, the police response after the fact only reinforced public expectations of corruption. Ferguson is only one example in a multitude of police abuses, and these abuses are not relegated to any one ethnicity. Leftists are not wrong when they point out the dangerous evolution of law enforcement into a government goon squad (the liberty movement was warning the world about it long before the left ever figured out what was going on). But in their half-sighted examinations, they make the mistake of believing police abuse is purely race-related. In reality, police abuse is universal — from Tamir Rice, the black 12-year-old in Cleveland shot dead by police less than two seconds after their arrival for having a toy gun in his pants, to the murder of Kelly Thomas, a white homeless man shot with a stun gun in the face and beaten for 10 minutes straight in the street until dead by California police for the crime of “not sitting still as ordered.”

In nearly all of these cases of overt police force, even when video evidence clearly indicates wrongdoing, LEOs are acquitted by the system. The reason for this should be obvious: The establishment must keep the warrior class happy, content, and untouchable; otherwise, the they loses power. No corrupt system is going to punish its own unless utterly necessary to its survival, because if it did, it would then have to admit that it is not entirely trustworthy, causing the people to question whether its existence is more dangerous than the villains it is supposed to protect us from. Government generally only cares about perpetuating its own existence; it does not care about the safety of the populace.  In this way, police become a kind of Mafia or cult with their own set of rules outside of the purview of the rest of society and immune to any form of justice.

What is truly disturbing are the lengths to which some Americans (and other law enforcement) will go to rationalize any and all actions taken by police, even if they result in the death of an innocent. The Stockholm Syndrome certainly seems to be at work as portions of the public continue to worship LEOs as saviors who can do no wrong.  Mention the idea of getting rid of state police, and the LEO fan club cries out in terror like children separated from their parents at a crowded shopping mall.  In the end, though, all children must eventually grow up and start taking care of themselves.

At bottom, police are not protectors of the public good, not even in a technical or legal sense. Law enforcement organizations have even argued in the Supreme Court that their job is NOT to prevent crime but to enforce the law after the fact, and they have won using this assertion. That is to say, a police officer is NOT legally required to protect a person from harm, only to institute state policy once a crime is committed.

What government law enforcement is admitting to in its argument is that it does not provide security, which is what we in the liberty movement have known all along. The only service police provide is to clean up the mess left over when the carnage of a crime has subsided. If law enforcement has any purpose at all, it is to keep the public in check and in line – to promote the farce that without government protection, chaos will rule.

The communist Cheka, a security organization founded by Vladimir Lenin at the beginning of the Bolshevik takeover of Russia, was notorious for random arrests and killings of civilians in the name of peace and security. Many communist Russians, true believers in the Bolshevist cause, refused to accept that the Cheka were capable of criminal abuse. They assumed that those killed must have been enemies of the state, just as the government proclaimed. And when they themselves were arrested for no apparent reason, they wrote letters from the gulags to Stalin, naively believing that he would save them from what must have been a bureaucratic error.

In fact, the Cheka had been given orders directly from the state to fill a quota of arrests in order to justify the constant propaganda the state produced warning of agents of “capitalist evil” around every corner. The Cheka, the secret police, were given warrior-class status and free reign to assert their authority over anyone, at any time, for any reason. America is only a short step away from a similar nightmare, and many in our nation suffer from the same naive faith in statism as the Russians did years ago.

The only way to avoid such a horror is to remove state-sanctioned law enforcement from the picture entirely.  Is this "throwing the baby out with the bathwater"?  No.  Rather, it is saving the baby from a swirling virulent cesspool.

As we saw in grand scale in Ferguson, LEOs are essentially useless to the public. In response, members of the Ferguson community welcomed the Oath Keepers and their Community Preparedness Team strategy. In time, Oath Keepers CPT will train locals to provide their own protection without need for any outside aid. When locals provide their own security, when every citizen is a member of the warrior class, abuse is far less likely because the watchmen have no motivation to abuse themselves.

Arguments that this will lead to a culture of "warlords" invariably pop up when discussing the concept of community based security.  Of course, when every member of a community is trained to defend themselves, abusive warlord do not last long, but then again, neither do abusive governments, which I suppose is the true reason why decentralized community security is treated with such disdain.  This is yet another contrived attempt to insinuate that the American people cannot be trusted with their own defense, but the government can.  It is built around the illusion that state police are somehow "impartial observers" and actors.  This has simply never been so.  State controlled police have every motivation to protect state interests, and as long as they are given free license to do whatever they please without consequence, most of them will continue to do so.  Impartiality is non-existent in the world of law enforcement.

Police misconduct has a cumulative effect on a culture. We do not forget all of the oversteps of the past; we merely file them away until we finally reach a breaking point. It is important for LEOs to understand that while they may have a relative immunity to legal reparations, they are not immune to the rage of the populace and will likely find their fragile warrior personas rather inadequate when that day arrives. For the true constitutional police out there, it is time to take sides, either with good American people or with the corrupt establishment. It is impossible to serve both. The illusion of the “thin blue line” is quickly fading. The only question now is: What is going to replace it? The establishment would have you believe there are only two options: total chaos or martial law. But there has always been a third alternative they seek to suppress: the return of community defense, the resurgence of localized responsibility and the victory of personal liberty over false security.

via Zero Hedge http://ift.tt/1zWDf0d Tyler Durden

via Zero Hedge http://ift.tt/12TNfMs williambanzai7

And with just over 2 hours left until the funding deadline, and amid high straght to C-SPAN drama, the Crominus bill hass passed thus funding the government until September 2015.

 

And with that, Wall Street wins again because with the swap pushout rule, a few hundred trillion in derivatives will get taxpayer backing.

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

Despite a 100bps rate hike this morning, Russia’s Ruble has slipped lower and now trades 55.8 to the USD – a new record low. The initial surge in the Ruble was quickly sold back as the hike, while in line with surveyed expectations, was below FRA-market-implied levels of 200bps. Goldman believes this will not slow the decline and calls for ‘other tools’ like unsterlized intervention. Russian default risk continues to rise (though still low) back to the highest since April 2009.

 

From FX interventions to rate hikes, nothing appears to be slowing the collapse…

 

But today’s rate hike gains very rapidly diminished…

 

As Goldman explains, this may not be enough…

The CBR raised its main policy rate by 100bp, below market expectations for as much as a 200bp rate hike, but above our forecast for 50bp. In our view, the decision was guided by inflation and inflation expectations dynamics, which have worsened markedly in recent months. The CBR noted that it expects inflation to rise to 10% by year-end and to stay close to this level into Q1-2015, before beginning to decline in Q2 and into H2-2015 – a forecast that is very similar to ours. It indicated that it will maintain a tightening bias in case inflation dynamics worsen further, but will begin easing policy once inflation stabilizes and is on a downward trend. We maintain our view that the CBR will keep rates on hold in Q1-2015, before entering into a rate-cutting cycle in Q2 as inflation begins declining.

In our view, the CBR will continue to adjust policy rates in response to developments in inflation and inflation expectations, while potentially using other tools in order to stabilize the Ruble. These other tools include FX interventions that may be unsterilized and, thus, tighten liquidity, with the CBR limiting the quantities offered at its main lending facilities.

Key numbers

Key rate (7-day auction-based repo): 10.5%, up from 9.5% previously (GS: 10.0%; consensus: 10.5%)

Main points

The Bank of Russia raised its main policy rates by 100bp, above our forecast for a 50bp hike but below market expectations for a larger rate hike, with FRA contracts implying expectations for short-rates to rise by 200bp. The immediate market reaction – a 1% weakening of the Ruble and a 15-50bp decline in yields at different tenors of the bond curve and a sharply lower move in front-end swaps – confirms that the decision was a disappointment to market expectations for a larger hike. Nonetheless, the rate hike was in line with the Bloomberg survey median expectation for a 100bp rate hike.

As usual, the press statement placed most of its emphasis on inflation dynamics, which it cited as the main reason for the rate hike. It noted that inflation was running at 9.4% as of December 8, with Rosstat’s measure of core inflation running at 8.9% in November. It indicated that the CBR’s forecast is for inflation to rise to around 10% at end-year and then possibly to exceed 10% in Q1-2015, before declining later in the year as pass-through from the weaker Ruble fades, with downward pressure from subdued aggregate demand (due to an output gap), and with base effects from this year’s food import bans. The statement also referred to a “surge” in inflation expectations among households and firms.

The press statement reiterates the CBR’s view that the current monetary stance is intended to reduce inflation to the target level of 4% in the medium term. However, there was no reference to the 2015/16 inflation targets, which had been dropped explicitly in the CBR’s recently-published monetary policy guidelines for 2015-17.

The statement indicated that the CBR expects growth to be close to zero in 2015-16, before recovering in 2017. However, the CBR does not see much spare capacity on the supply side and sees investment contracting next year and consumption remaining weak.

The CBR indicated that it will maintain a tightening bias in case inflation risks worsen. However, it also stated that in the presence of a “stable downward trend” in inflation and inflation expectations, it will start easing monetary policy.

Our forecast for inflation is very much in line with the CBR’s. We forecast that it will rise further to 9.7% at year-end and will stand close to 10% in Q1-2015, before beginning to decline in Q2 and into H2-2015. Assuming this inflation forecast, we maintain our view that the CBR will keep rates on hold into Q1-2015 and will begin cutting rates in Q2 as inflation begins falling.

We think that the CBR will continue to adjust policy rates in response to developments in inflation and inflation expectations, while potentially using other tools in order to stabilize the recent Ruble volatility. These other tools include interventions that may be unsterilized and, thus, tighten liquidity, with the CBR limiting the quantities offered at the CBR’s main lending facilities.

*  *  *

Russia default risk – although still relatively low –  has spiked recently to its highest since April 2009…

 

And the knock-on effect is huge. Here is Gazprombank’s Swiss Franc-based 2024 5.125% coupon bonds… trading at a 11.5% yield…

h/t @Russian_Market

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

Submitted by Jim Quinn via The Burning Platform blog,

Sometimes I wish I could just passively accept what my government monarchs and their mainstream media mouthpieces feed me on a daily basis. Why do I have to question everything I’m told? Life would be much simpler and I could concentrate on more important things like the size of Kim Kardashian’s ass, why the Honey Boo Boo show was canceled, the Victoria Secret Fashion Show, whether I’ll get a better deal on Chinese slave labor produced crap on Black Thanksgiving, Black Friday, or Cyber Monday, fantasy football league standings, the latest NFL player to knockout their woman and get reinstated, Obama’s latest racial healing plan, which Clinton or Bush will be our next figurehead president, or the latest fake rape story from Rolling Stone. The willfully ignorant masses, dumbed down by government education, lured into obesity by corporate toxic packaged sludge disguised as food products, manipulated, controlled and molded by an unseen governing class of rich men, and kept docile through never ending corporate media propaganda, are nothing but pawns to the arrogant sociopathic pricks pulling the wires in this corporate fascist empire of debt.

I’m sure my blood pressure would be lower and my mood better if I just accepted everything I was told by my wise, sagacious, Ivy League educated, obscenely wealthy rulers as the unequivocal truth. Why should I doubt these noble, well intentioned, champions of the common folk? They’ve never misled us before. They would never attempt to use two highly publicized deaths as a lever to keep black people and white people fighting each other and not realizing all races are now living in a militarized police surveillance state supported by the one Party. They would never use their complete control over the financial, political, judicial, and media organisms to convince the masses that voting for one of their hand selected red or blue options will ever actually change anything. They would never engineer the overthrow of a democratically elected government, cover up the shooting down of an airliner, and attempt to blame their crimes on the leader of a nuclear power in their efforts to retain a teetering global empire. They would never overthrow or wage economic warfare on countries that don’t toe the line regarding the continued dominance of the petrodollar in global commerce.

Sadly, I’m cursed with a mind that questions everything and trusts no one in authority or associated with the status quo. It’s the reason I don’t read newspapers or watch mainstream media television entertainment propaganda, disguised as news. It’s the reason I will never vote in a national election again. The lesser of two evils is still evil. I’m skeptical of every piece of data fed to the sheep by the government apparatchiks working for the state. The faux journalists being paid millions by one of the six corporations controlling the media and dependent upon the government, Wall Street bankers, and mega-corporations for their advertising revenues regurgitate whatever they are told by those pulling the purse strings. The mainstream media are nothing but propaganda peddlers for the Deep State and truth telling is prohibited in their world of deception, debt, and denial. Their job is to sustain, enhance, and further enrich the status quo by engineering consent through what they report and what they do not report. The true ruling powers who operate in the shadows behind the scenes are men of power, wealth, status and education who truly believe they are better equipped to consciously manage and manipulate the public mind to achieve their ends. They are disciples of the Edward Bernays School of deception, manipulation and propaganda.

“If we understand the mechanism and motives of the group mind, is it not possible to control and regiment the masses according to our will without their knowing about it? The recent practice of propaganda has proved that it is possible, at least up to a certain point and within certain limits.” – Edward Bernays

The Nazis were pikers compared to the technologically savvy Madison Avenue maggots and Silicon Valley snakes who mold the opinions, tastes, and beliefs of the iGadget addicted, vapid, unintelligent, unquestioning, zombie-like masses who beseech to be led, told what to do and what to believe. A vast swath of the population don’t read books or even know how to read above a grade school level. They couldn’t write a coherent paragraph if their life depended upon it. But they can twitter, text, Instagram, and facebook at the speed of light. Try walking down any street in an American city without some iGadget distracted oblivious moron bumping into you. The addicting nature of today’s technology is being used by the ruling elite to monitor, control, and make you respond the way they choose.

Facebook, corporate media organizations, quasi-government organizations, and the NSA are creating a corporate totalitarian state where the slaves willingly sacrifice their privacy, liberty and freedom for mindless entertainment and distractions. The 21st Century totalitarian state captures your political beliefs, daily activities, habits, interests, spending behaviors, organizational associations, love life, pictures, psychological makeup, and fears from your own postings on the internet. With the right algorithms they can uncannily predict how you will react to different situations and messaging. They can also uncover threats to the status quo. Under the guise of keeping you safe from terrorists they are actually ferreting out subversives and radicals who refuse to conform to their idea of a good citizen slave. We will all be subject to our own Room 101.

Dan Kaplan in his recent article about Facebook as a tool for totalitarianism lays out the extreme threat to our future:

Today’s totalitarian demands a more subtle way to influence cultural and political sentiment. But if you got your hands on an algorithmically filtered newsfeed? One that could control the stories people see every day and influence their emotions across geographic, political and economic lines? You’d be in business.

But then there was the mood-influence study that scandalized us for a couple of weeks this year. Facebook changed the tone of content showing up in people’s feeds to test the impact it could have on their moods. The results, not too surprisingly, suggested that Facebook has the power to manipulate sentiment at scale.

Given how easy it is to scare people about the scary-seeming-but-actually-low-risk Ebola, and how dumb we all get when we are afraid, it is not crazy to think that under the wrong circumstances — like one or two more mass-scale terrorist attacks on major cities — modern democracy gives way to something akin to 1984.

If Big Brother were to seize the reins of power, sure, he’d use the cable news the way it’s being used today. But Facebook’s data maw, targeting power and sentiment-manipulation capabilities would be far more insidious. Whether this is what we become or not comes down to the future we choose to build.

The saddest part of this episode of mass delusion, mass confusion, and mass media collusion is that even though we are moving towards Orwell’s totalitarian vision of society, thus far, technology, triviality and an unending array of distractions have lured the masses into passive preoccupation with egotistical pleasures. We’ve been persuaded to love our servitude while drowning in a sea of irrelevance, diversions, and trifles. We continue to amuse ourselves to death while forging our own chains of debt and yielding to the direction of an all-powerful welfare warfare surveillance state that promises to protect us from phantom threats while actually abolishing our rights, freedoms, and liberties. No coercion necessary. We have been trained to love our servitude.

“A really efficient totalitarian state would be one in which the all-powerful executive of political bosses and their army of managers control a population of slaves who do not have to be coerced, because they love their servitude.” – Aldous Huxley – Brave New World

Arrogance, Desperation, Lies & Truth

 “Facts do not cease to exist because they are ignored.” – Aldous Huxley

The level of data massaging by the government and their co-conspirators on Wall Street and in the corporate media is a futile attempt at a happy ending that will never come to fruition. The intensity and relentlessness with which the state and its quasi-state minions attempt to paint a false picture of economic recovery is equal parts arrogance and desperation. The arrogance is a function of successfully pulling off the greatest heist in world history from 2003 through 2008 with no adverse consequences, no criminal charges, no penalties for their crimes, and more power and wealth than they had prior to 2003. The only way to stop sociopaths is to throw them in jail or kill them. In our dystopian paradise of greed, they were rewarded with trillions in rescue packages by their cohorts in crime at the Federal Reserve and in Congress. They’ve paid themselves billions in bonuses for gorging at the Federal Reserve trough of QE and ZIRP. The desperation is borne from the fact that after $7.5 trillion of debt added by the Federal government and $3.5 trillion of debt created by the Federal Reserve since 2009, the Greater Depression for average Americans deepens by the day.

The men pulling the strings behind the scenes are drunk with power and their hubris allows them to believe their own infallibility and blinds them to the dire consequences for our country when their debt Ponzi scheme fails. But, as we grow ever closer to the day of reckoning, they will use every means at their disposal to paint a positive picture, regardless of the facts and reality for the average person. The examples of twisting, distorting and outright lying about the economic reality of our times are endless. These are some of the major false storylines peddled by our benevolent corporate fascist leaders:

The BLS reported 321,000 jobs added in November and the unemployment rate at 5.8%. Jobs are plentiful, based upon these statistics.

A skeptical critical thinking individual might ask a few questions or point out a few inconvenient facts the government purveyors of propaganda might not want us to ponder:

• The non-manipulated, non-seasonally adjusted number of jobs in November FELL by 270,000. The BLS added 600,000 jobs as an adjustment to achieve the headline grabbing result.
• If the jobs market is so good, why is the labor participation rate at a 30 year low of 62.8%?
• Since 2007 the number of working age Americans has risen by 17 million, while the number of employed has risen by less than 1 million, but the unemployment rate is about the same.
• Why would almost 14 million working age Americans leave the labor force since 2007 if the economy is booming and jobs plentiful, with 1.2 million leaving in the last 12 months?
• Why would payroll tax receipts be flat with last year if millions of new jobs have been created?
• If the country has really added 8 million jobs since 2010, how could real median household income FALL by 2.3%?

According to the government reported figures, the economy hasn’t been this strong since 2007. GDP has supposedly grown at greater than 4% over the last two quarters.

Anyone who is sentient knows consumer spending accounts for 68% of GDP. Capital investments that lead to long term prosperity continue to decline as a percentage of GDP from 20% in 2000 to 16% today. We’ve chosen consumption and financialization over savings and investment. This fact leads to some observations:

• If GDP has actually grown by 20% since 2008 how does this correlate with a 6.9% decline in real median household income?
• GDP has been goosed by a $69 billion increase in government spending, with the majority going to the military industrial complex. ISIS has been a godsend for our GDP and arms dealer profits.
• GDP was increased retroactively by $500 billion last year based on a new way the government accounts for intangibles.
• The surge in consumer expenditures over the last two quarters has been in the purchase of services. The higher costs for Obamacare are a boon for GDP. Are they a boon for your bank account?
• The trade deficit has fallen as exports of petroleum products have temporarily provided a boost to GDP. The collapse in oil prices will reverse that trend rapidly.

According to the quasi-governmental mouthpieces at the Conference Board, consumer confidence is near a 5 year high, reflecting what should be robust spending.

So we are told by the representatives of corporatism that we are confident about the economy and the future. How does that measure up to the facts on the ground:

• Black Friday weekend sales collapsed by 11% versus the previous year. As the pundits tried to blame it on on-line sales (10% of total retail sales), Cyber Monday also proved to be a dud.
• If the average person is confident about the future and happy with their economic circumstances, why did they just vote to throw out the bums in November?
• If consumers are confident, why have real retail sales, excluding subprime debt goosed auto sales, been flat for the last three months and up only 1% in the last year?
• If consumers are so confident, why are credit card balances still $138 billion BELOW where they were in 2008? If all these new jobs are being created why is credit card debt lower than it was in mid-2010? Maybe consumers are so desperate they are using credit cards to pay utility and tax bills and not using them for frivolous Chinese crap at big box retailers.
• The increased spending at grocery stores and restaurants is driven by food inflation, not foot traffic. Discretionary spending at furniture, electronics, and sporting goods stores is flat.
• Department store sales continue to fall. Sears and JC Penney teeter on the verge of bankruptcy. Delia’s is liquidating and Radio Shack isn’t far behind. The major chains have completely stopped building new stores. The great bricks and mortar unwind relentlessly plods forward. In addition, online growth is stalling as states implement sales taxes.

According to the government, the deficit was ONLY $483 billion in 2014.

This is a real doozy. Obama has been touting how he has cut the deficit through his wise management of the budget. This is where government accounting is used by apparatchiks to mislead the public and obscure the truth. A few pertinent facts are always left out by the politicians touting deficit reduction:

• Because of the budget impasse in 2013, the Federal government stopped updating the national debt on a daily basis, but we know from when they started counting again, the debt went up by $2.3 billion per day. Therefore, the national debt on October 1, 2013 was approximately $17.038 trillion. On October 1, 2014 the national debt was $17.875. Therefore, the national debt went up by $837 billion in 2014. Just a smidge higher than the reported deficit of $483 billion.
• Interest is not paid on reported deficits. It’s paid on the national debt, so the massaged, manipulated and made over deficit is meaningless. The national debt was always slightly higher than reported deficits, but in the last few years the deviation has grown to a Grand Canyon size.
• The deficit number has been artificially lowered by nothing other than accounting entry hocus pocus. The Federal Reserve increasing its balance sheet to $4 trillion out of thin air creates approximately $80 billion of phantom interest profits that are paid to the Treasury. Why don’t they increase their balance sheet to $40 trillion and eliminate deficits all together?
• The biggest accounting scam is Fannie and Freddie. Just as the Wall Street banks have created fake profits through accounting entries regarding future losses, Fannie and Freddie have gone the extra mile in helping fake deficit reduction. These bloated insolvent government run pigs required a $187 billion taxpayer bailout in 2009. Amazingly, when you allow criminals to value their assets at whatever they choose, phantom profits flow like honey.
• These two horribly run institutions of fraud “generated profits” of $129 billion in 2014 which were “paid back” to the Treasury. That is four times more than Apple or Exxon’s profits during a non-existent housing recovery. Why are their stocks trading at just over $2 per share if they are generating vastly more profits than they were in 2007 when their stocks were north of $70 per share? It’s because the profits are fake. Everyone knows it, but the Federal Deficit is reported $129 billion lower because these insolvent entities pretended to pay the taxpayer back. Accounting entries do not reduce deficits. Spending less than you generate in revenues reduces deficits.

According to the government, we’ve experienced a strong housing recovery since 2010.

The supposed housing recovery storyline continues to be beaten like a dead horse by the Wall Street media (CNBC) and the shills at the NAR. Anyone with a functioning brain (eliminates CNBC bimbos, hacks, and Ivy League economists) can see there has been no real housing recovery:

• The 24% rise in home prices (Case Shiller Index) since the 2012 low has been nothing more than a Wall Street hedge fund/Federal Reserve scheme to elevate prices and make Wall Street bank balance sheets less insolvent. Wall Street banks withholding foreclosures from the market while Wall Street hedge funds (Blackstone) use free money from the Fed to buy up housing and rent it out to former homeowners has enriched the .1% while destroying the dream of home ownership for millions.
• The percent of first time home buyers remains near record lows, while speculators, flippers, hedge fund managers, and rich Chinese businessmen make up a record number of purchasers. The fact this is a fake housing recovery is proven by mortgage applications to purchase a home sitting at 1995 levels and 30% below 2009 recession lows. Maybe the fact real median household income is also at 1995 levels, real wages keep declining, and labor force participation is at 1978 levels has something to do with real people not being able to purchase a home.

• Even with the artificial hedge fund demand, existing home sales are lower than 2013 and languishing at 1999 levels. They are still 25% below 2005 levels, despite the lowest mortgage rates in history. New home sales are a disaster, with no appreciable increase in two years. Apartment construction has far outpaced single family housing construction. After a five year housing recovery, new home sales languish at levels seen at the bottom of our last six recessions. New home sales are 65% below the 2005 peak and at levels seen in the early 1960’s when there were 130 million less people living in the country.

According to the corporate media, the auto market is hitting on all cylinders with annual sales of 16.4 million, the highest since 2006.

Pretending to sell automobiles to people without the means to pay you for the automobile is always a good business idea. Of course, when you have Ally Financial and the rest of the Wall Street banking cabal doling out 7 year 0% loans and subprime auto loans like candy, it’s easy to move inventory. The temporary boost to GDP by issuing more bad debt always works out in the long run. Right?

• If the auto business is booming why have GM profits fallen from $9.2 billion in 2011 to $5.4 billion in 2013, and on course to fall to $4 billion in 2014? Record levels of channel stuffing produces sales gains, but no profits. Why is their stock 25% below its 52 week high and lower than it was in 2010 when it was IPO’d after being rescued by Obama?
• If the auto business is booming why are Ford’s profits falling by 35% versus last year and lower than they were in 2010? Why is their stock price 16% below its 52 week high and still 20% below its 2010 price?
• Auto loan debt is at an all-time high of $950 billion, up 33% since 2010 when the Fed, Wall Street, and the political class in the fetid D.C. swamp decided they needed new debt bubbles in auto loans and student loans to jump start our moribund economy.
• There are 65 million auto loans outstanding, and the average debt now stands at $17,352. Over 30% of auto “sales” are actually leases. The rest are financed over an average of 65 months. Virtually all new car sales are nothing more than 3 to 7 year rentals. It’s amazing what easy money from the Fed can produce.
• Over 31% of all new auto loans this year were to subprime borrowers. They now account for 36.5% of all outstanding auto loans. You become a subprime borrower by defaulting on previous debt obligations. In a shocking development, auto loan delinquencies surged by 13% in the last quarter, with subprime loan delinquencies skyrocketing by 18%. When has issuing billions of debt to subprime borrowers ever caused problems before?
• Only a University of Phoenix African Studies major is more of a subprime risk than the millions of ecstatic Escalade drivers cruising around our urban ghetto paradises. The average student loan debt is now $33,000. Until the Obama administration went Keynesian, student loan debt was primarily in the private sector. When Obama entered the White House total student loan debt was $620 billion and delinquencies totaled $50 billion. There are now $1.3 trillion of student loans outstanding, with the Federal government accounting for $830 billion and guaranteeing a large portion of the rest. Delinquencies have skyrocketed to $125 billion, as another taxpayer bailout beckons.

According to the corporate mainstream media pundits, the plunge in oil prices from $100 per barrel to $61 per barrel is unequivocally good for the economy. The shale oil boom has worked its magic and happy times are here again.

Sometimes you have to wonder whether the highly educated spokesmodels on the corporate mainstream media are really as vacuous and clueless as they appear or whether they are just paid to look pretty and mouth the corporate line. They seem incapable of comprehending the unintended consequences of various events. The collapse in oil prices is one of those events.

• There is no doubt that lower oil prices will lower the price of gas for the average American. Estimates say they will save $368 per year, which can be spent elsewhere. The highly paid shill economists who declare this will boost spending seem to be math challenged. Retail sales figures include gas stations. What isn’t spent there will be spent in another category, most likely healthcare or groceries as prices in both areas continue to escalate. It’s a zero sum game. No new spending will occur.
• The worldwide supply of oil has only increased marginally over the last few years. The U.S. shale boom has been offset by declines elsewhere (Libya, Iran, Mexico). The reason for the collapse is the same reason for the 2009 collapse – worldwide demand is contracting. Europe is in a depression. Japan is in a depression. Russia’s economy is contracting. China is decelerating rapidly. The U.S. demand is flat. The implications of another global recession after five years of central banks printing trillions of fiat currency are alarming to say the least.
• The cost to extract shale oil and transport it to a refinery capable of processing it is high. Honest analysts will tell you that a price of $70 to $80 is required to breakeven. Most companies don’t build breakeven into their plans. Bakken shale oil sells at a discount of about $14 per barrel due to the difficulty of extraction, transport, and processing. It is now selling for $47 per barrel. The number of permits for new rigs fell by 40% in November when oil was still selling for $75 per barrel. Do you think permits for new wells will fall at a price of $61 per barrel? Capital spending by the energy industry accounted for 33% of all capital spending in the last few years. I’m sure some other industry will pick up the slack. Right?
• It seems the shale oil boom has resulted in a few jobs being created since the 2010 recession trough. In fact the states where fracking is prevalent have accounted for all the job growth in the nation. I wonder if a shale oil bust will have any employment implications. There are 9.3 million jobs related to the energy industry across the country. The plunge in oil prices created by Saudi Arabia in the 1980s created a depression in Texas which contributed to the S&L crisis. This plunge will reveal who has been swimming naked in the high yield bond market and derivatives market.

 

These are just a few examples among a multitude of lies. Others include: stocks aren’t overvalued, gold isn’t money, inflation is good for you, and ISIS terrorists are an imminent threat to your way of life. Every feel good story fed to the masses by the oligarchs running this shitshow we call America is no different than the propaganda doled out by other infamous totalitarian regimes throughout history. We believe things because we’ve been conditioned to believe them. The crony capitalist oligarchs are intelligent enough to invent theories to explain how the world should work, but not intelligent enough to interpret their models correctly. When they act on their theories (Keynesianism), their actions appear to be those of a lunatic. Despite all evidence refuting their theories, their arrogance and hubris lead them to destruction. The collective insanity of this world is almost too much for a rational thinking person to grasp. The extremely wealthy men operating in the shadows will use every means at their disposal to retain power, enhance their wealth, and crush dissent.

“Being a card carrying member of the privileged class means never having to say I’m sorry, much less ‘not guilty.’  Power is doing what you want when you want, and consequences are for everyone else. Or perhaps these titans of modern industry and the halls of power are at heart just good natured bumblers, who in a genuine belief destroy lives and crash economies, while pursuing insane ideological assumption put forward by vested interests, all the while stuffing their pockets, and crushing all dissent with the political skills of a Machiavelli and the ruthlessness of Al Capone.” – Jesse

The two party system is nothing but a ruse designed to keep the people believing they have a say in how things are run in this country. Both parties support the military industrial complex. Both parties support the militarization of police forces around the country. Both parties support the mass surveillance of its citizens. Both parties do the bidding of their rich corporate and special interest benefactors. Both parties favor deficit spending for eternity. Both parties believe the government should expand its role in our everyday lives. Both parties do the bidding for and protect the Wall Street interests who really run this country. No more proof is needed than what has occurred over the last five years, as criminal Wall Street bankers were rewarded for their malfeasance with trillions of dollars from taxpayers and their puppets at the Federal Reserve. While we were allowing ourselves to be distracted, amused, entertained, and indebted, the oligarchs were busy conducting a silent coup.

“Let’s be clear about this, the oligarchs are flush with victory, and feel that they are firmly in control, able to subvert and direct any popular movement to the support of their own fascist ends and unslakable will to power.

This is the contempt in which they hold the majority of American people and the political process: the common people are easily led fools, and everyone else who is smart enough to know better has their price. And they would beggar every middle class voter in the US before they will voluntarily give up one dime of their ill-gotten gains.

But my model says that the oligarchs will continue to press their advantages, being flushed with victory, until they provoke a strong reaction that frightens everyone, like a wake-up call, and the tide then turns to genuine reform.” – Simon Johnson

The oligarchs have had a good run. The system cannot be reformed from within. The corruption runs too deep. The system is broken and can’t be fixed. There is no doubt in my mind that a collapse approaches which will make 2008/2009 look like a walk in the park. The anger, blame and retribution will sweep away the existing social order and replace it with something new. It will be up to the people to decide what happens next. We were warned two centuries ago by a wise man. Hopefully, we’ll get a 2^nd chance.

“However political parties may now and then answer popular ends, they are likely in the course of time and things, to become potent engines, by which cunning, ambitious, and unprincipled men will be enabled to subvert the power of the people and to usurp for themselves the reins of government, destroying afterwards the very engines which have lifted them to unjust dominion.” – George Washington

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

With just over 3 hours left until a completely unexpected government shutdown, what was supposed to be a token vote (as we called it), ended up being yet another debacle for House republicans under Boehner, when it turned out – literally in the last second – that the republicans do not have the required votes.

So here is what happens next:

NEWS: HOUSE REPUBLICANS WILL ROLL THE DICE, VOTE ON THE CROMNIBUS. MOVE TO THREE-MONTH STOP-GAP BILL IF IT FAILS.

— Jake Sherman (@JakeSherman) December 12, 2014

HOUSE Rs are REALLY rolling the dice by voting on the omnibus, but they do have the 3-month CR ready

— Jake Sherman (@JakeSherman) December 12, 2014

As for the vote, it will take place momentarily:

HOUSE VOTES AT 8:55

— Seung Min Kim (@seungminkim) December 12, 2014

HERE WE GO: House to reconvene momentarily to resume consideration of the $1.01 trillion spending bill.

— Ed O’Keefe (@edatpost) December 12, 2014

And yet…

Finally: House GOP leaders plan a vote around 9:05p on the cromnibus. Decent chance it fails. No official Plan B yet.

— Sahil Kapur (@sahilkapur) December 12, 2014

We will provide a link to the webcast once it goes live.

via Zero Hedge http://ift.tt/12Tyx8i Tyler Durden