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For months, the US and Russia have been busy wrangling over possible terms for a ceasefire in Syria.

In addition to the fact that getting everyone to the table is well nigh impossible given the multifarious nature of the opposition and given how contentious the relationship between Tehran and Riyadh has become, there’s also the issue of Bashar al-Assad’s fate. Russia and Iran are not prepared to accept an outcome that doesn’t at least give the President a role in the country’s political future and Washington’s regional Sunni allies are bound and determined to finish what they started by usurping the government at all costs.

Throw in the fact that no one really knows who the legitimate “opposition” really is (i.e. who is a terrorist and who is a “revolutionary” fighting for a democratic transition in Damascus) and you have a nearly impossible task when it comes to negotiating some kind of truce that at least temporarily stops the bloodshed.

Nevertheless, Washington and Moscow managed to strike a deal that’s being billed as a “ceasefire” and will go into effect on Saturday at midnight. The deal will “be applied to all those parties to the Syrian conflict that have indicated their commitment to accept its terms,” a statement reads. “It will exclude Islamic State, Al Nusra Front and other terrorist organizations designated by the UN Security Council.”

“In a change to the previous aborted ceasefire, Russian and America have agreed to act as direct guarantors and monitors of the cessation of hostilities,” The Guardian writes on the way to delivering the following spot-on take on why this has absolutely no chance of holding:

Key to the agreement issued on Monday will be co-ordination between Washington and Moscow to set out territories that are subject to the ceasefire, and therefore must not be subject to aerial bombing by Russia, attacks by the Syrian army or the American backed opposition. In view of the intricate interweaving of the various factions, the shifting alliances and complexity of the front lines in Syria communication between Russia and the US on the precise territory subject to a ceasefire will have to be tightly co-ordinated. The likelihood that either artillery fire or aerial bombardment will deliberately or inadvertently land in territory party to the ceasefire is high. 

And therein lies the problem. There are ISIS and al-Nusra elements everywhere. Russia will always be able to claim that its warplanes are targeting parties not subject to the agreement because the situation on the ground is impossibly fluid. “This is a real chance to stop the bloodshed in Syria,” Vladimir Putin said in a televised statement. “A radical turn in the crisis is now possible,” he continued.

Putin spoke to Obama by phone today about the agreement. “That call was placed at President Putin’s request,” White House spokesman Josh Earnest said in his daily briefing. “We are going to to continue to try to capitalize on this moment of opportunity.”

“I am gratified to see the final arrangements concluded today for a cessation of hostilities in Syria and call on all parties to accept and fully comply with its terms,” John Kerry says. “If implemented and adhered to, this cessation will not only lead to a decline in violence, but also continue to expand the delivery of urgently needed humanitarian supplies to besieged areas and support a political transition to a government that is responsive to the desires of the Syrian people”.

Needless to say, the idea that Iran and Russia are going to stop firing now that they’re within weeks of retaking Aleppo proper is laughable. The war is very nearly won and besides, everyone involved claims to be bombing “the terrorists” and since “the terrorists” aren’t subject to the deal, it’s not at clear what exactly this will accomplish other than to perhaps to give whatever is left of the FSA and a few Saudi-backed militant groups a week or so of respite before Russia figures out an excuse to bomb them again.

Stay tuned to watch this unravel completely in a matter of days.

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

Submitted by Howard Kunstler via Kunstler.com,

How reassuring is it to Hillary, exactly, that she won what amounted to a straw poll totaling less than 11,000 votes among the various Nevada hotel employees unions? You could tell from her pained, artificial smile at the victory podium that there is something booby prize-ish about that narrow triumph. And what was with the metallic red outfit that had her looking like a previously-owned Christmas tree ornament? Maybe her handlers put her in Kevlar for the occasion.

She’ll need it as this fretful election campaign moves into the middle innings. That trademark unconvincing smile masks the embarrassing truth that the fix is in for Hillary inside the dark machine that is the Democratic Party hierarchy, hijacked by chairperson Debbie Wasserman-Schultz’s league of crones. The so-called “super-delegates” have all been rounded up and branded with a big smoking “H” on their hindquarters, leaving poor Bernie in the alkali basin of dashed hopes.

Readers have noticed (and complained loudly) lo these many months that I couldn’t get on-board for Bernie. I’m glad that someone opposed Mz It’s-My-Turn, but the Vermonter-from-Brooklyn lacks the juice to drive the necessary wooden stake into her grifter’s heart. The Goldman Sachs speaking fees ($200-K-plus each) should have been enough to send her to the donkey’s graveyard but, like so many awful truths in our over-amped and under-brained world, it got sucked into the TMZ alternative universe of discarded realities.

The latest simpleton’s political theory floating around the ether says that Hillary is guaranteed to get the overwhelming support of black voters. Why is that exactly? And what does it mean? Is she going to re-run the civil rights era? Is she going take up the banner for “safe spaces” on campus? Is she going to join the Oscars boycott? And, honestly, what has Mr. Obama done for black America, besides provide a model for how you can get somewhere in this society by learning how to speak English intelligibly?

So, the simpleton’s theory goes: Hillary wins the black and Hispanic vote and a big majority of womens’ votes. What does that mean? That America is now split into an ethnic-and-womens’ party (Dems) against a white mens’ party (Repubs)? Isn’t that a nice recipe for a multi-dimensional civil war?

Actually, it would be the mere seasoning in a stew of civilizational crisis simmering on the margins of the stupidest election contest in American history that could literally blow the country to pieces. The news media is, for instance, perfectly oblivious to the awful instabilities blossoming on the financial scene. In fact, the banks and markets are behaving in a way that suggests shocking disruptions to everyday life before the general election is even held. How would the Hillary-versus-Trump match-up go in a September of bank bail-ins and empty supermarket shelves due to the inability of businesses to service one another?

Rumblings out of the banking system ought to inform us that trust in mutual obligations is dwindling to the same zero-peg (and under) as world-wide interest rates. Something’s got to give and something will give (perhaps starting with something that has the initials “DB”) and then a whole lot of other things will give — beating a path swiftly to disrupting the normal complex operations of daily life that put food in your microwave and gasoline in the convenience store pumps. At that point, of course, all bets are off. Without being too cute about it, we ought to have reason to worry that America will be too disorderly later this year to even hold the 2016 general election.

As for Mr. Trump, he remains what I said at the campaign’s outset: worse than Hitler, lacking the brains, charm, and savoir faire of the Ol’ Fuhrer, and with his darkness even more plainly visible. Even Adolf could manage to get his necktie on so that it didn’t dangle around his nutsack. I don’t mean to trivialize the difference between these two psychopaths, except to say that America will be very very sorry to follow the tune of the so-far leading Republican candidate’s pied-pipings.

Frankly, if Mr. Trump actually manages to technically snag the party’s nomination, I can imagine several consequences. One, that he will indeed succeed in destroying the party. The other leaders at the dark heart of its hierarchy will never stand for Trump. In that case, they will form a breakaway rump GOP and throw their support to Michael Bloomberg, if he decides to jump in — and he might be enough of a true patriot to do that. The less appetizing alternative consequences involve the apparatus of the runaway Deep State (NSA and the military) either bumping off Trump, or staging a coup d’état against him in the event that he manages to get elected. I’m not advocating for those outcomes, but you ought to be prepared for the possibilities.

Most of all, don’t underestimate the power of events to outrun personalities this year.

via Zero Hedge http://ift.tt/1RXr5A8 Tyler Durden

“The industrial environment is in a recession – I don’t care what anybody says,” Fastenal CFO Daniel Florness exclaimed in frustration back in October when William Blair analyst Ryan Merkel dared to suggest that the US economy wasn’t in fact in the doldrums on the company’s Q3 call.

No matter where you look there are signs that Marc Faber is correct to suggest that the US is already in a recession. Plunging oil prices have wreaked havoc on the country’s oil boom towns and America’s beleaguered manufacturing sector – which exists as but a shadow of its former self – is set to suffer mightily under the strong dollar. Just this morning we got a fresh warning about the the health of the manufacturing sector when US factories reported the worst business conditions in three years.

Last month we learned that in November, US freight volumes fell for the first time in three years and before that, the recession.

That’s consistent with what we’ve seen in the trucking industry, where Class 8 sales growth is in freefall, which just last week cost 1,250 people their jobs at Daimler in North Carolina. “Everybody around here’s been hurting, and it’s going to hurt even more,” one convenience store clerk told the local media in the wake of the layoffs.

“Over the last 30 years, the bad times last longer and the good times are shorter,” Minnesota lawmaker Tom Anzelc, whose House district includes the city of Iron Junction, which has suffered in the face of China’s acute excess capacity problem and the slump in global growth said earlier this month. “This particular time is the worst I have ever seen.”

Against this backdrop, consider that four states are already officially in a downturn: Alaska, North Dakota, West Virginia and Wyoming.

“Job gains and losses are key factors that the National Bureau of Economic Research uses to chart U.S. expansions and recessions,” Bloomberg writes. “Even as U.S. employers added 2.7 million workers in 2015, job cuts last year totaled 18,800 in North Dakota, 11,800 in West Virginia and 6,400 in Wyoming, according to the U.S. Labor Department.”

Likewise, things aren’t going so well in Louisiana, New Mexico and Oklahoma which are all at risk according to Moody’s. And then there is of course Texas, which is also struggling to cope with the Saudi war of attrition on US oil producers.

“For every 25 percent drop in oil prices, employment could be expected to decline 0.6 percent in Texas and 0.8 percent in Louisiana, while Wyoming stands to lose 2.1 percent of its jobs and North Dakota and Oklahoma about 1 percent each,” Bloomberg goes on to note, citing research by Stephen Brown, an economist at the University of Nevada, Las Vegas, and Mine Yücel, director of research at the Dallas Fed.

Amusingly, we’re supposed to believe that the consumer is going to keep things afloat. “Whether the weak links break the entire U.S. economy will hinge largely on a group that’s benefited from the energy price collapse: American consumers,” Bloomberg concludes. Of course as we’ve said too many times to count, Americans simply aren’t spending their savings at the pump. If they were, you’d think GDP growth wouldn’t be bumping along at a paltry 0.69% clip. 

And about all of that net job creation, don’t forget this indelible chart: 

But as lower for longer continues to break the back of the US oil patch and as the soaring dollar further imperils the dying manufacturing sector, just remember, Janet Yellen doesn’t think the malaise will spread. “But with respect to employment, although there really are very severe losses [in energy], it’s a pretty small sector of the work force overall.”

Dan Oxley, a West Virginia homebuilder who spoke to Bloomberg doesn’t share Yellen’s assessment. “Everyone is going to have to tighten their belts. The next couple of years are going to be difficult.”

Stop “peddling fiction” sir.

via Zero Hedge http://ift.tt/1oDF2Ia Tyler Durden

For the first time since the first week of January VIX is back below 20. Despite VIX making new 2016 lows, S&P is unable to break the early February highs as it appears every effort is being made to jam VIX lower via the VIX ETF complex. For the 4th time since the August flash-crash, XIV (inverse VIX ETF) has decoupled from SPY (S&P ETF)… will it be different this time?

VIX back below 20… notice the extreme noise in VIX as the recent rally in stocks took off…

 

But it is the decoupling of the inverse VIX ETF that is most notable…(all the decay and roll technicals aside, it seems SPY keeps wanting to revert back to XIV’s relative lows)

 

Trade accordingly.

via Zero Hedge http://ift.tt/1RiRqq4 Tyler Durden

Submitted by Charles Kennedy via OilPrice.com,

During a sombre visit to Germany last week, Iraqi Prime Minister Haider al-Abadi urged the international community to help boost his country's crisis economy in the face of plummeting crude oil prices, underscoring a desperate situation in which Iraq has lost 85 percent of its oil revenues.

Iraqi oil revenues have fallen to just 15 percent of what they used to be, the embattled prime minister said, despite a boost in production ordered last year.

The surge in production has failed to compensate for the collapse of oil prices, and the situation is dire when oil revenues constitute around 43 percent of Iraq’s gross domestic product (GDP), 99 percent of its exports and 90 percent of all federal revenues.

All told for this year, the Iraqi government expects to export 3.6 million barrels of oil per day (bopd).

Only last October, Iraq’s oil revenues were holding at about $40 billion, excluding the cost of oil production.

This has prompted the Al Abadi government to announce strict austerity measures across institutions, including significant salary cuts for middle-class government employees. Protest rallies were held against delayed salaries, which later turned violent in some parts of Iraq, including the Kurdistan region.

Under these circumstances, one must question the legitimacy of the deal Baghdad has now offered to the Iraqi Kurds.

Earlier this week, Baghdad extended an offer to pay the salaries of the KRG’s public employees in return for a halting of unilateral oil exports by the Kurds. Both sides need this deal. The KRG is struggling to pay salaries, and protests are mounting—threatening the stability of what was not long ago the only peaceful and secure place in all of Iraq.

But most significantly, both Baghdad and the KRG need to ensure that the Kurdish Peshmerga fighting forces are being paid, because this is the key bulwark against further Islamic State (ISIS) advancements in the disputed territories of northern Iraq, around Mosul and oil-rich Kirkuk.

The Iraqi Kurds have accepted the deal, but they don’t really believe it will happen. Baghdad has consistently failed to make good on deals, and with its oil coffers depleted, it’s unclear how the central Iraqi government can afford this.

Al Abadi’s government inherited Iraq’s civil war-ravaged sluggish economy back in September 2014 and set out to try to consolidate the administration, which was bursting at the seams with a massive budget deficit, inherent bureaucratic corruption and the ongoing war burden with ISIS.

So with low oil prices depleting revenues, Baghdad finds itself in an uphill struggle to fund the war against ISIS, which continues to control over 10 percent of Iraq’s oil fields, including those in the Nineveh governorate. ISIS hasn’t gotten anywhere near the oil-rich area of Basra—where the serious exports are—but Basra has its own problems, which are being compounded under the multiple pressures.

All the talk of potential independence—founded on unilateral oil flows—for Iraqi Kurdistan has lent more impetus for calls for more control over oil wealth management and distribution in Basra. And Shi’ite tribal clashes are raging in Basra, far too close to the main oil installations, prompting Baghdad to divert security forces there—away from the ISIS battle.

The situation in Basra will likely intensify, too, with growing protests over the central government’s imposition of a higher customs tariff as of 18 January. Profit margins are threatened, and there will be a backlash in a province where autonomy sentiments are already running high.

The country has been losing up to 400,000 barrels of oil per day because of ISIS advances—even after recapturing a couple of oil refineries like Bajii in the Saladin Governorate, north of Baghdad, from ISIS in October last year.

All eyes are now on the giant Majnoon oil field in Basra, in the south, which is considered to be one the richest oil fields in the world, with an estimated 38 billion barrels of oil reserves. Majnoon has approximately 13 different oil and gas reservoirs, but this area, too, is now becoming a flashpoint of unrest and tribal clashes.

As such, the deal brought up earlier this week by Saudi Arabia, Russia, Venezuela and Qatar to freeze oil output to January levels will not likely see the light of day. It requires the same commitment by Iran—which is not keen—and Iraq, which is hesitant to join in.

In January, Iraqi production hit a record high, averaging 4.775 million barrels per day. January exports averaged 3.9 million bpd. But with oil prices averaging right now under or around $30 per barrel, these production figures won’t help. Iraqi oil is going for about $22 per barrel. That’s half of what it needs to be to meet budgetary requirements.

Nowhere are the stakes higher than in Iraq, and selling oil at half the price it would take to just break even could break this giant’s back. It certainly isn’t enough to stave off the unrest in Basra, not to mention the ISIS threat.

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

If China’s recent record surge in loan creation, and its revision of a key PBOC capital outflow “data” wasn’t sufficient proof that the world’s second largest economy is on the verge of panic, then the explicit propaganda directive issued to the the local press by China’s president Xi Jinping late on Friday should certainly seal it.

As SCMP reports, according to a commentary published by a leading mouthpiece online “having public opinions that are different from the official ones will shake the foundation of the rule of the Communist party and the country.“

Xiakedao, a social media account operated by the overseas edition of People’s Daily, said in a commentary on Friday’s high-profile tour by President Xi Jinping to the three largest state media outlets – People’s Daily, Xinhua and Central China Television — “that the party was alarmed by how different public opinion is from official media.“

Sure enough, it is time to remind “public opinion” influenced largely by the unofficial media who is boss.

There are two spheres for opinions — official and unofficial media. The latter refers to social media or means of communications not controlled by the party.

“Information dissemination is diversified and fragmented. A real army is no rival of the guerilla (opinions spreading on social media). It becomes a crisis of traditional media,” the commentary said. “Official and unofficial opinions are very different … and even contradictory,” it said.

Unofficial opinions are different because what the public experiences is different from what is described by official media.

Perhaps that is because the “unofficial opinions” tend to reflect reality, not the communist party’s communist ivory tower which over the past few months have been dangerously shaking.

And in the starkest warning to the uncontrolled media to toe the party lines, the Friday commentary warned that “if the gap lasts, it will erode the legitimacy of the rule, and distabilise the root of the party and the state,” it said.

In other words, China is worried that popular anger and negative sentiment is starting to stir especially after the recent economic troubles, and that those who dare to promote an objective version of reality will likely be promptly quieted.

As SCMP notes, “the commentary said making sure that public and official opinions did not deviate was important, especially when China is facing economic downturn.”

“As China’s economy slows, theories about the threat of China, the collapse of China and how China drags down the world’s economy are on the rise. How to prove they are false?”

It did not elaborate how to bridge the gap except to say that state media should be in touch with the public. But in what is seen as a political signal that the party would further tightened its grip on media, Xi said in a speech that all news outlets and “genres” should strictly toe the party line.

And just like Friday’s decision to eliminate a key FX outflow tracking data set, China is now openly declaring war on anyone who dares to even suggest that not all may be well in China.  A separate commentary by Xinhua yesterday said that controlling public opinion was essential for a a ruling party: “With one hand we grab the guns; with the other we grab the pens,” it said. “Mobilising public opinion is the great tradition of our party.”

And while such periodic clampdowns on the local media are endemic to the country which reminds everyone now and then that it is a communist bastion where insubordination will not be tolerated, the fact that it comes just days after Japan went “Full Goebbels” with a “Government Crack Down On Media Over Negative Economic Reporting” is sufficient proof that something very bad is afoot if the economic truth is now grounds for imprisonment Asia’s two largest economies.

* * *

Below are some excerpts from the Xinhua piece, indicative of what will happen in the US once the First Amendment is eliminated, and fringe websites are quieted. Don’t worry about the U.S. mainstream media though: it already reports only what its biggest advertisers and shareholders demand.

BEIJING, Feb. 19 (Xinhua) — Chinese President Xi Jinping on Friday ordered news media run by the Communist Party of China (CPC) and the Chinese government to strictly follow the Party’s leadership and focus on “positive reporting.”

Speaking in a symposium Friday afternoon after touring China’s three leading news providers, the People’s Daily, Xinhua News Agency and China Central Television, Xi, also General Secretary of the CPC Central Committee, called Party- and government-run news outlets the “publicity fronts” of the party and the government.

All news media run by the Party must work to speak for the Party’s will and its propositions and protect the Party’s authority and unity, Xi said.

They should enhance their awareness to align their ideology, political thinking and deeds to those of the CPC Central Committee and help fashion the Party’s theories and policies into conscious action by the general public while providing spiritual enrichment to the people, he said.

Marxist journalistic education must be promoted among journalists, Xi added, to make them “disseminators of the Party’s policies and propositions, recorders of the time, promoters of social advancement and watchers of equality and justice.”

According to Xi, the mission of the Party’s media work is to provide guidance for the public, serve the country’s overall interests, unite the general public, instill confidence and pool strength, tell right from wrong and connect China to the world.

 To do so, Xi continued, they should also stick to guiding public opinion on the correct path in every aspect and stage of their work.

* * *

And here is where Excel would #Ref! out:

“Truthfulness is the life of journalism, and the facts must be reported based on the truth,” Xi said. “While accurately reporting individual facts, journalists must also grasp and reflect the overall situation of an event from a broad view.”

Yes, this is from the same commentary in which the CPC demands the media only engage in “positive reporting.”

Finally, the piece de resistance:

According to Xi, the journalism industry should accelerate its progress in fostering workers with firm political beliefs, outstanding professional skills, moral excellence and whom the Party and people can trust.

 

“Officials should improve their ability to interact with the media and make good use of it to publicize their policies and ideas, understand grassroots opinions, uncover conflicts and problems, guide public feelings, mobilize the people and push forward work in real life,” Xi said.

Or, as Xinhua said just sentences prior, “report facts based on truth”… with a few exceptions.

And yes, everyone got the warning: Friday’s symposium was attended by about 180 central media officials, Beijing municipal officials and representatives of central media groups.

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

Authored by Mark St.Cyr,

There are times you try to connect the dots. There are others where those connections warrant adorning your trusted tin-foiled cap of choice; for you just can’t get there unless you do. This I believe is one of those times. And if correct? What at first might appear apocryphal, may in fact, be down right apocalyptic. And besides, what good is a tin-foil capped conspiracy theory anyhow if it doesn’t have the potential for doom, correct?

So, with that in mind, let’s venture down some roads full of conjecture where if it’s found to have more of a footing in fact as opposed to fiction? The implications for everything we now take for granted such as: money, enterprise, global commerce, and a whole lot more may be far closer to a “Minsky moment” than any of us dared to imagine.

Today, one can’t begin without scrutinizing the latest example of monetary flip-flop. e.g., The Bank of Japan’s (BOJ) surprise announcement of implementing negative interest rates.

Although “surprise” is the correct word, it is also an understatement. For it was only days prior current Governor Haruhiko Kuroda made statements to the contrary implying that he was not even thinking about adopting such a policy as of now. Then; he did precisely that. And the fallout is still being registered and assessed via the shock-waves continuing to resonate throughout the global markets, let alone, Japan’s own Nikkei™ and currency.

For those that watch the markets daily, you know what happened next. For those who don’t, I can best explain it this way: It had the exact opposite reaction that many (especially the so-called “smart crowd) believed would happen. I.e., More easing invokes a reflexive stocks up, and weakens the host currency simultaneously. Instead: stocks fell rather dramatically, as their currency (the ¥en) spiked higher. Again, the complete antithesis of what was thought “should” take place. And I’ll reiterate, the resulting aftershocks, in my opinion, are far from over.

If you look at this monetary flip-flop as an isolated event, it’s fair to assume there’s not too much more to see here than what we witness from any political flip-flop that happens on a daily basis across the globe. i.e., A President, Premier, or other elected official says X one day only to do Y the next. It’s far from anything new. However, that’s politics. “Monetary policy” is quite another. i.e., We are told it’s far more stable and less prone to the daily political swings inherent in elected politics. After all, isn’t that what “independent body” run by “appointed members” is supposed to represent in the first place? i.e., Less susceptible to the politics of the day.

With all that said, the more I toiled with the idea of the resulting calamity the BOJ now has to contend with following this obvious reputation of more intervention, along with, just what made them feel compelled to do it in the manner which they did. My mind kept coming back to a previous article I wrote on this topic a few weeks back. To wit:

“Did the BOJ’s out-of-the-blue reversal on its monetary stance which was refuted just weeks prior by Mr. Kuroda himself take place because after listening to the arguments, suggestions, as well as concerns, from the participants at Davos he concluded much like what the movie “Margin Call” depicted: It was all about to unravel? And if so: is this him deciding to be “first” and considered it his only choice?

 

And if so, what does his actions pose for the credibility of his brethren bankers? Do they now act from a place of “Who can they trust?” And what does that mean for the rest of us? The implications are staggering when you begin to open those doors for they have the potential of making Pandora’s box seem harmless in comparison.”

In actuality it was more of the second line or paragraph that kept nagging on me. And, in particular, the “Who can they trust?” Why you may ask? Fair enough, but be forewarned we’re now venturing down what some might call “conspiracy alley.” So, in the spirit of safety: the proper helmet is now required.

Let’s remember when it was the BOJ Governor changed his mind (or had his mind made right?) It was right after returning from the annual meeting where all the other like-minded, dependent upon, and similarly employed brethren gathered: at Davos.

Why this is important to the speculation is this: Were his (meaning Kuroda) actions based on some self assessed need to “panic first” from distilled information he gathered, processed and concluded was his only option? Or, was it something far more nefarious, as in: the information he garnered was intentionally supplied, boogeyman’d and actually spurious? Expressed solely by a select few for the sole purpose to make him conclude his only choice was – to “panic first?”

If it were the latter? The implications are very far-reaching indeed.

It’s one thing to assess and make the wrong conclusions on your own. It’s quite another if your conclusions were made or based on deliberately signaled false pretenses.

Case in point: What if he was somehow either told, or was insinuated via some type of pretense of surety that some other bank (or China?) was going to do _________ (fill in the blank) leaving the BOJ far behind any curve they could overcome if they didn’t act first? Only then to realize after the move, what he was assured would happen by some other bank – did not happen. Leaving him along with the Japanese economy any currency in the monetary equivalent of – up the creek with no paddle.

Furthermore, as of this writing, if a Chinese Yuan severe devaluation was said to be imminent, today shows proof positive, that to be false. For it has yet to happen. And, so far; no signs to show to the contrary concluding the BOJ did in fact have time to signal the move first, rather than “stun” the markets.

Not only is all that within itself problematic. If true? (as in being goaded) It would also imply just how desperate, as well as frightened, central banks currently are. And, more importantly, the depths they’ll now go as to save whatever it is they believe is now unraveling.

The implications as I iterated would be dire if so. For, it would signal – they really don’t have anything left. Or worse: haven’t a clue as what to do next and are panicked by it. After all, one only needs to look at the latest market gyrations and market data points to realize the Fed. itself is coming to the conclusion (just listen to any Fed. speakers public testimony of late for confirmation) the rate hike of December was a policy error. Just how much of an error is what’s to be seen.

Back to Japan: Why or how could I come to such a conclusion you ask? Fair enough. Let me take you back just one year ago to another “shocking” and “stunning” monetary policy move that nearly mirrors this one: The un-pegging of the Swiss Franc.

It was January of 2015 just prior to the annual Davos gathering when the Swiss National Bank (SNB) decided to unpeg the Franc (CHF) from the €uro. The resulting consequences within the forex markets was akin to the destruction of Alderaan “Where millions suddenly cried out in terror.”

Some will deduce because it happened before, (only a week thereabouts) rather than during, that it sets the SNB decision apart from the same influences possibly inferred by the BOJ. After all, as thinking will go, they (the SNB) subsequently weren’t privy to the information at the meeting since this happened beforehand.

Au contraire I would argue. For if one understands exactly how, or what takes place before meetings such as these. (i.e., agenda setting, other speakers, or panelists insights and more.) One would know that there is a lot of “what’s to be said or announced, and by whom, prior to the actual meeting. I know this because, I myself, partake in similar types of  conferences or venues where both speakers and panel members are involved having participated as both a featured speaker and panel member at the same event.

It’s done so everyone has some idea of what is entailed, and by whom, so you’re not completely blind going in as to what may, will, or be expected to be said or take place. There are also acquaintances and/or confidants you know and have discussions with prior, on your own volition, so as to have an even more informed concept going in. Any prudent speaker does it.

So with that in mind; remember what was being contemplated (or at least rumored) at that time? Hint: How much (or how effective) would the much-anticipated (as well as begged for) ECB’s QE initiative be? And more importantly: especially now that the Fed. had ended its QE program just months prior leaving the ECB effectively – on its own.

From an article I penned asking a very uncomfortable question, “Franc-ly Speaking: What If It Were All A Set Up?” To wit:

“So let’s move back into today with the SNB decision and the “set up” hypothesis. What would this move do that would reward the party responsible for the “set up”?

 

It may very well solve an issue that scared the implementer far more than the SNB. And that issue just might be where the “Full Monty” monetary bazooka that was about to be revealed, was in fact, going to be witnessed for all to see  – a pee-shooter. In other words, possibly far more restrained in nature by what the German (imposed) side of the argument would allow. And nothing brings the fear of losing one’s “omnipotence” more than needing to actually show it and there’s no there – there. Again.

 

Maybe the monetary threat of words this time were directed at the only place where words still might matter (for that’s all he has left) i.e., Directly at the Swiss as to make them cower into monetary panic.

 

The ECB would clearly know what would happen to the SNB if it were to release monetary mayhem with a its own version of QE with the Swiss Franc peg. Yet, how could one resolve the dilemma of efficacy if that so-called bazooka wasn’t as grand as its been suggested?

 

What if you could convince another monetary body (the SNB) into an outright panic; relieving your own condition? Regardless if the assistance it allows one (the ECB) for more time is temporary or not. For the key is – additional time. Any amount of time is better than none. For the implications of “no more time” are far too consequential for the ECB as a whole.”

Since that time it’s been well-recognized the initially implied round of “what ever it takes” was seen as highly inadequate when it became public as to back up the “bazooka” underpinnings jawboned incessantly by Mr. Draghi prior.

There were many subsequent articles from what is known as the “mainstream” financial press (e.g., WSJ™, FT™, and others) that the SNB probably did over react and could have endured the resulting fluctuations made manifest via the ECB at a far less cost than what resulted with their own highly charged flip-flop of their peg. For remember; just like the BOJ – the SNB had also just days prior refuted such a proposal. Then – they went ahead and did it just that. And from what I’ve been able to garner – that worked out just fine for the ECB. Not so much for the SNB. Are you starting to see the similarities (or pattern) here?

What if (again it is all conjecture) some, or possibly many, of the participants at Davos selectively dropped spurious hints or specious hypotheticals to the BOJ Govenor in order to scare the daylights out of him (China! China!! CHINA!!!) and have him react in a way he near assuredly would. Let’s not forget: the ¥en is a Wall Street trader’s darling.

Yes, the $Dollar is used as for carry trades while simultaneously the “flight to safety” choice currency. However, the ¥en is the currency of choice for “the carry trade.” Effect (favorably) the dynamics and carry costs associated within these trades, and poof! You single-handedly eviscerated many of negative effects associated with the incurred incremental cost of trades carried in a rising $Dollar. i.e., Partially negating, or cancelling out the cost effect of the 25 basis point increase via the Fed. rate hike. After all, who cares how or where anything is done as long as the effect is the same. Don’t let that point be lost on you. It really is a distinction with a difference.

Could the BOJ have been goaded to make such an about-face in policy by a meaningfully led concerted effort of participants who would both benefit politically (i.e., if it all went right it might give the Fed, ECB, and others some breathing time and/or room) and from others who would profit monetarily (i.e., all the Wall Street’ers) whose current portfolios are melting away almost as fast as an ice wall does around a reactor meltdown? I think you’re starting to understand if you’ve read this far. Intriguing, no?

And if you believe monetary policy isn’t the place for intrigue or things that make you go hmmmm bordering on some high-end Hollywood big screen release. May I remind you of anther “tin-foil” laden, made for gawking, spectacle that happened not that long before the whole SNB debacle? It too has three initials: DSK. Remember those? They represent the name of one Dominique Strauss-Kahn. Former head of the IMF (International Monetary Fund.)

Back in early 2011 then head of the International Monetary Fund (IMF) Dominique Strauss-Kahn (DSK) suddenly was charged with rape, sexual abuse, and unlawful imprisonment. DSK at the time was considered the rising star in the world of European monetary policy and politics. So much so that he was also considered a credible challenge to Nicolas Sarkozy for the French presidency. In a blink of an eye all that was wiped from the ledgers. And none seemed more surprised than DSK himself. In retrospect – all with good reason.

With little fanfare (for it doesn’t make as delectable a story for the main stream media as the original accusation) DSK was cleared. The case against him? Dropped. His name, career, political aspirations? Gone. As we now know he was replaced with a far more “banker” friendly head Christine Lagarde. Conspiracy? Who knows. However, if you read the article I referred to earlier you’ll see one thing seemed obvious – he was sticking his nose around places one might infer others did not like. And some still think banking is so much safer and cleaner than the loading docks of any major port. Sure they are.

As troubling as it may be that the above actually transpired paving the way for “tin-foiled” inspired scenarios to even be contemplated. What may be worse is the fact what the BOJ did, no matter how they came to the conclusion: had exactly the opposite effect than what anyone (especially I’ll wager central bankers themselves) reasonably expected would happen. And with it – has now caused an absolute quagmire of evermore serious increasing problems.

We’ve only seen what many would compare to “a storm surge.” The full brunt of the storm is yet to make landfall. And when it does, it may intensify as it comes ashore rather than dissipate. And we won’t know just how intense it may be till it actually bares down and shows its teeth. Which is one of the more frightful ways to experience any storm in my opinion.

Then again, this all might be a fanciful thought experiment laced with a bit of conspiracy and/or controversy to make it interesting as food for thought over the weekend. And if that’s so, then we can get to the news of the day that is more straight forward, to the point, and matter of fact where conspiracy theories could never take hold. Such as the death of Supreme Court Justice Antonin Scalia. After all, everything’s pretty straight forward there, right?

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