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It can only get better from here… right?
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As we noted yesterday, the ECB cannot and will not be able to generate GDP growth or inflation.
The EU is simply too leveraged. You cannot have an entire region sporting a Debt to GDP of over 90%… with banks leveraged at 26 to 1 using sovereign debt as collateral on their derivatives trades, and “fix it” using NIRP or QE.
This is like trying to hold up a 400 lb. weight… and then having someone offer you a floor lamp as additional support. The effect, at best, is largely psychological.
Cue today…
The European Commission told the euro area’s largest economies to reduce debt and modernize labor markets as it again slashed its inflation forecast and warned of slower-than-predicted growth across the 19-nation bloc.
France, Spain and Italy, which have persistently failed to hit European Union budget targets, are still off track, the Brussels-based commission said on Tuesday. Gross domestic product in the currency area will increase by 1.6 percent this year and 1.8 percent in 2017 — both 0.1 percentage point lower than the commission forecast in February. Inflation will average 0.2 percent this year, below the European Central Bank’s target.
Source: Bloomberg.
So… even after expanding the pace of its QE purchases from €60 billion to €80 billion per month, the ECB expects inflation to be 0.2%.
Bear in mind, the ECB has been overestimating growth and inflation for four years straight. The notion that inflation will hit 0.2% might be misguided.
The fact of the matter is that nothing in the EU has been fixed. All that happened was the markets bought into Mario Draghi’s fib that he’d do “whatever it takes… and believe me it will be enough.”
This is perhaps the single greatest metaphor for everything post-2008: a Central Banker claiming the impossible and the entire world believing it. Meanwhile no structural issues have been addressed, no deleveraging has taken place, and trillions of Dollars have been misallocated based on Central Banks skewing the risk profile of the world by trying to corner the bond market.
How will this end? Terribly. Bonds are the bedrock of the entire financial system. Currently over $7 trillion in sovereign bonds are sporting NEGATIVE yields. It is absolute insanity.
Eventually this will trigger another 2008 type event. The derivatives market for interest rates is over $500 trillion in size. By way of comparison, the Credit Default Swap market, which nearly took down the system in 2008, was just $50-60 trillion in size.
The next Crisis is just around the corner. And it will make 2008 look like a joke.
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Update: *PAUL RYAN SAYS TRUMP WILL BE NOMINEE IF HE WINS INDIANA: CNBC
Today's primary in the Hoosier State could prove to be the last stand for Ted Cruz and John Kasich, as The Donald looks to deliver the final knockout blow to the two challengers. If Trump wins, it certainly would be an embarrassment for a GOP establishment that has literally done everything it can to stop Trump, most recently touting the Cruz/Kasich alliance that self-destructed just hours after it was announced.
On the Democrat side of things, Hillary looks to build on her lead and silence Bernie's recent calls for a contested convention.
Here is how the GOP race stands heading into today
Most of the polls show Trump firmly in command
And here is how the Democrats stand
With polls showing Hillary leading comfortably
Here are five things to watch for today, courtesy of The Hill
Do Cruz’s gambles work?
Cruz has already been mathematically eliminated from winning the nomination on the first ballot at July’s Republican National Convention in Cleveland. But he has been feverishly campaigning across Indiana and trying to shake up the race.
Last week, the Texas senator’s campaign announced he had forged an alliance with third-place contender John Kasich in the hope that the Ohio governor’s supporters would vote for Cruz in Indiana and keep Trump from winning as many delegates.
But the pact quickly unraveled as the candidates sent mixed messages. Kasich canceled events in the state but insisted he wouldn’t tell supporters to vote for his opponent; Cruz denied he’s working with Kasich at all.
A few days later, Cruz named Carly Fiorina as his vice presidential pick if he’s the nominee. The rare gamble of naming a running mate at this stage hasn’t happened since 1976. At an Indianapolis rally, Fiorina sought to convince voters that Trump and Clinton are two of a kind.
The Cruz-Fiorina duo received a tepid reception, however, and strategists said it underscores his desperation.
Cruz had been benefitting of late from anti-Trump sentiment, but his fortunes appear to have suffered as the billionaire gets closer to the 1,237 delegates needed to clinch the nomination.
Over the weekend, one poll showed him behind by as many as 17 points, and he now says California will be the decisive state. A win in Indiana, however, could renew the hopes by Republicans that he could be a viable alternative to Trump.
How much closer does Trump get to 1,237?
Following his clean sweep of five primaries in the Northeast last week, Trump declared himself the “presumptive nominee,” and a victory in the Hoosier State would bring him closer to the reality of avoiding a contested convention in Cleveland.
Indiana is still a tight race, though, with two polls on Friday showing conflicting results: One found Cruz with a double-digit lead, while another survey showed Trump ahead by 9 points. And a survey released over the weekend found Trump with a 15-point lead.
Trump received a notable endorsement from former Indiana University basketball coach Bobby Knight, while Cruz embarrassed himself at a rally by calling a basketball hoop a basketball “ring.”
And while Gov. Mike Pence says he’ll be voting for Cruz on Tuesday, he also praised Trump, saying he “has given voice to the frustration of millions of working Americans with a lack of progress in Washington, D.C.”
Trump needs only 241 delegates to clinch the nomination and avoid a contested convention, according to The Associated Press delegate tracker.
Indiana holds a winner-take-most contest. The statewide winner will receive 30 delegates, and 27 more will be awarded through winner-take-all contests in each congressional district.
If he wins all 57 delegates, the real estate mogul would need as little as 41 percent of the remaining delegates.
If Cruz loses Indiana, will the anti-Trump movement fall apart?
The major Never Trump groups are going all-in for a Cruz victory in Indiana.
The Club for Growth Action poured in $1.7 million for ads attacking Trump, and Our Principles PAC has spent at least $1 million in the state.
These groups hope to stymie Trump’s momentum in Indiana, but Our Principles PAC chairwoman Katie Packer conceded that a Trump victory would make efforts to stop him in California’s June primary more difficult.
“We certainly see Indiana as crucial for Trump. If he doesn’t win Indiana, he can’t get to 1,237,” Packer told The Hill last week. “If he does win Indiana, then it all comes down to California. No question about it; it makes our job a lot harder.”
If Trump can’t be stopped in Indiana, the looming question will be whether the Never Trump movement thinks spending more money is worthwhile.
Can Clinton hold off Sanders?
Clinton is also running on significant momentum after winning four of the five primaries last week and New York’s the week before. Her victory speech last week made it clear she’s channeling much of her attention to the fall by repeatedly attacking Trump.
Sanders has been making a push in the Hoosier State, spending at least $1 million on TV ads, though the campaign will cut about $200,000 by laying off hundreds of campaign staffers.
There’s been minimal polling in the state, but a survey over the weekend found Clinton up 4 points, within the margin of error. A poll released Friday found her leading by 8 points.
But Indiana’s demographics don’t look favorable for Sanders. The northern part of the state is heavily African-American, a voter bloc that Clinton continues to win by overwhelming margins.
His one saving grace could be the state’s voter registration system, which allows voters to participate in either primary. That means he could attract independents, who tend to gravitate toward his campaign.
“It’s not the greatest state in the world for Bernie Sanders,” Democratic strategist Brad Bannon said. “The fact that it’s open is good because he does very well in open primaries. But he may be too liberal for Democrats down that way. It’s going to depend a lot on turnout among independents.”
Clinton is shy of the Democratic nomination by 218 delegates, including superdelegates, according to the AP’s tracker. Sanders would need to win every remaining pledged delegate and sway more superdelegates to his side to reach that threshold.
Indiana Democrats award 83 delegates proportionally.
Is Sanders in to win or to influence?
Sanders and his campaign maintain that the Vermont senator will stay in the race until the Democratic National Convention in July.
This differs from senior strategist Tad Devine’s remarks after Sanders lost in New York that the campaign will “assess where we are” after the Northeastern primaries. But after a bad night, Sanders still says he isn’t going anywhere.
The mixed messages and recent campaign layoffs leave some wondering whether Sanders still sees a path to victory or if he’s just angling for leverage at the convention and a chance to mold the party’s platform.
At a recent town hall, Sanders placed the responsibility on Clinton to woo his supporters and wouldn’t definitively say whether he’d back her as the nominee. Clinton fired back, chiding him for setting conditions for his support and calling for the party to unify.
He has since said he’ll do anything to prevent a Republican from winning the White House and admits that his path to the nomination is “narrow.”
Bannon said Sanders’s recent comments sound more like “a concession speech.”
“The way I read Bernie, it’s a guy who’s come to grips he’s not going to be the Democratic nominee for president,” Bannon said.
At a Sunday press conference, however, Sanders said he and Clinton were headed to a contested convention. Will Sanders and his surrogates come to a clear position after Tuesday, win or lose?
* * *
As Philip Diehl notes, via The Hill, this is The Beginning of The End for Cruz…
Sen. Ted Cruz (Texas) has run a brilliant campaign, and if it were not for Donald Trump, he'd probably be on the verge of wrapping up the Republican nomination by now. The Texas firebrand knew long before others that the party's primary schedule and delegate allocation rules played to his advantage, not to an establishment candidate like former Florida Gov. Jeb Bush. From his arrival in the Senate, Cruz has bent the political space-time continuum around himself by demonstrating GOP leaders' inability to govern effectively or deliver on their promises to conservatives.
But he has made a fatal mistake. After excoriating the GOP establishment in the Senate and on the campaign trail, Cruz has now made common cause with the party in a desperate attempt to stop Trump. Wisconsin marked the turning point. Initially, he was coy about accepting the party's support. He did not court it, but Wisconsin was crucial to slowing Trump's momentum. And it worked. The Texan took 36 of the state's 42 delegates and appeared to have dealt a setback to the New York real estate mogul. But by cooperating with the party in Wisconsin, Cruz crucially altered the narrative of the campaign. The core of his electoral value proposition has been fierce opposition to the party's leaders. Once he tacitly accepted the party's embrace, he began to morph from a conservative stalwart to an opportunist.
The end of the beginning came in mid-March when establishmentarian Sen. Lindsey Graham(S.C.) endorsed Cruz. The beginning of the end came with Cruz's victory in Wisconsin on April 5, when the media portrayed it as a product of an unholy alliance between Cruz and the establishment. This narrative fed directly into discussions of scenarios in which Cruz would conduct raids on Trump's delegates. In turn, the party would make changes in the convention rules and use Trojan-horse delegates to hand the nomination to Cruz, or a white-knight candidate such as Speaker Paul Ryan (Wis.). Cruz appeared too-clever-by-half, or worse, a patsy being played by the establishment to, first, turn away Trump, then deny the nomination to Cruz.
A kiss by the GOP establishment in 2016 has been the kiss of death. This has been the most consistent pattern of the campaign. Yet, as strategic as Cruz has been in his run, he seems to have missed this cautionary lesson. Or perhaps he believed he was immune, or he felt the opportunity slipping away and acted in desperation.
According to the RealClearPolitics average of national polls, Cruz hit his peak of the 2016 campaign on April 6, the day following the Wisconsin primary. After being stuck at 20 percent for two months, the Texas senator's support jumped 14 percentage points in 30 days, and he closed the gap with Trump to 7 points. The trend reversed when Cruz's Faustian bargain became clear. He began to fade over the next 19 days and Trump's lead almost doubled.
The pattern is more evident in state polling. According to six polls conducted in New York between March 29 and April 7, Cruz's support stood at 19 percent around the time of the Wisconsin primary. By primary day, his share of the vote was less than 15 percent and he had lost by 46 points. In Maryland, an NBC/Marist College poll showed Cruz reaching his peak at 29 percent between April 5 and April 9 and closing the gap with Trump to 12 points. When the returns came in only 17 days later, Cruz had drawn less than 20 percent of the vote and lost by 36 points.
In Pennsylvania, two polls conducted between April 1 and April 7 showed Cruz with an average of 25 percent of the vote, 18 points down to Trump. When votes were counted, Cruz had won less than 22 percent of the vote and lost by 35 points. His support saw a similar dramatic collapse in Connecticut after the Wisconsin primary.
The pattern holds outside of the Northeastern states. A Field poll conducted in California between March 24 and April 4 showed Cruz's support at 32 percent, within 7 points of Trump. Three weeks later, a Fox News poll found the Texan's support had fallen to 22 percent and he was trailing Trump by 27 points.
All of these polls were conducted before Cruz and Ohio Gov. John Kasich reached their ill-fated agreement to avoid competing with each other in Indiana, Oregon and New Mexico. Not only did the agreement have a very short half-life, but it cemented impressions that Cruz would make any deal with the party establishment to remain viable. Now he has tapped former Hewlett-Packard CEO Carly Fiorina in an attempt to put California back in play, a curious move considering that Fiorina was trounced in her 2010 Senate race in the state, in a Republican year against an apparently vulnerable incumbent. The move has all the markings of desperation.
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Submitted by Constantin Gurdgiev via True Economics blog,
In a recent op-ed in FT, Wolfgang Mu?nchau raised a very valid point that globalisation, free trade and markets liberalisation do produce both winners and losers. Nothing new here. But the key point is that this realisation must be timed / juxtaposed against political and social realities on the ground…
Quoting from Mu?nchau (emphasis is mine):
“In the past two years, there has been a dramatic reversal of public opinion in Germany about the benefits of free global trade in general, and TTIP in particular. In 2014, almost 90 per cent of Germans were in favour of free trade, according to a YouGov poll. That has fallen to 56 per cent. The number of people who reject TTIP outright has risen from 25 per cent to 33 per cent over the same period of time. These numbers do not suggest that the EU should become protectionist. But… [EU leaders] should be more open-minded about the political costs of this agreement. …A no to TTIP would at least remove one factor behind the surge in anti-EU or anti-globalisation attitudes.
The marginal economic benefits of the agreement are outweighed by the political consequences of its adoption.
What advocates of global market liberalisation should recognise is that both globalisation and European integration have produced losers. Both were supposed to produce a situation in which nobody should be worse off, while some might be better off.”
Perhaps it is this dynamic – of the excess supply of losers and the over-concentration of winners – that is behind the dire state of global trade growth:
Wolfgang Mu?nchau's article came in days ahead of the leaks that revealed the duplicit nature of EU and U.S. negotiating positions on TTIP (see Leaked TTIP documents cast doubt on EU-US trade deal), well before we knew that (again, emphasis is mine)
"These leaked documents give us an unparalleled look at the scope of US demands to lower or circumvent EU protections for environment and public health as part of TTIP. The EU position is very bad, and the US position is terrible. …The way is being cleared for a race to the bottom in environmental, consumer protection and public health standards."
In simple terms, TTIP is risking to further magnify the chasm between the winners in the Agreement (larger corporates on both sides of the Atlantic, plus Governments) and the losers (consumers, small firms and entrepreneurs).
The documents reveal that under the TTIP, "American firms could influence the content of EU laws at several points along the regulatory line, including through a plethora of proposed technical working groups and committees." If so, the TTIP will only increase bureaucratic costs and amplify impact of large corporates lobbying power at the expense of smaller firms and start ups.
As bad as the U.S. position, is, EU's position is even worse. Despite making lots of political noise about protecting European consumers, environmental and health standards etc, the EU negotiators have clearly adopted a two-faced-Janus position vis-a-vis different stakeholders. For example, on many points of more controversial U.S. proposals, "the EU has not yet accepted the US demands, but they are uncontested in the negotiators’ note, and no counter-proposals have been made in these areas." In other words, the EU leadership is saying one thing to the European audiences (advancing a virtuous position of a defender of consumer rights and environment) while positing no explicit objection to the U.S. proposals. In simple terms, the EU leadership appears to be outright lying and manipulating public opinion.
How do we know this?
"In January, the EU trade commissioner Cecilia Malmström said the precautionary principle, obliging regulatory caution where there is scientific doubt, was a core and non-negotiable EU principle. She said: “We will defend the precautionary approach to regulation in Europe, in TTIP and in all our other agreements.” But the principle is not mentioned in the 248 pages of TTIP negotiating texts." In plain English, Malmström is lying.
Another example: "The public document offers a robust defence of the EU’s right to regulate and create a court-like system for disputes, unlike the internal note, which does not mention them." Again, what is said for public consumption is at odds to what the EU is saying at the negotiating table.
Wolfgang Mu?nchau pointed that "The marginal economic benefits of the agreement are outweighed by the political consequences of its adoption".
But you can also add to his equation negative social consequences of the TTIP and adverse consequences to SMEs and entrepreneurs. By the time you do the sums, it is clear that TTIP is not an agreement about free trade, but an agreement about corporatist system takeover of transcontinental trade and investment flows. As such, its marginal benefits are negative to begin with.
via http://ift.tt/1rjqQoD Tyler Durden
When it comes to dealing with the mass media and its impact on public confidence, China has a long and illustrious history of not beating around the bush. Last summer around the time its stock market bubble started to crack, Beijing banned the use of such terms as “equity disaster” and “rescue the market.” Then earlier this year, China’s president Xi Jingping visited the country’s three big state news organizations, Xinhua, the People’s Daily and China Central Television, to lecture them on the need to toe the party line, “tell China’s stories well” and enhance the nation’s influence in the world.
After all, hinting that not all is as it appears in official propaganda soundbites would merely instill further lack of confidence in the economy and accelerate the stealthy capital outflows from the country (while making the Vancouver real estate market even more entertaining).
Now, according to the WSJ, Chinese authorities have set their sights on a new set of targets: “economists, analysts and business reporters with gloomy views on China’s economy.”
While in the US and the rest of the free world, anyone who holds a less than bullish view of things is simply marginalized as a conspiracy theorist, ridiculed by establishment economists and pundits, is the recipient of mainstream media hit pieces, or denigrated by the president as “peddling fiction”, China has decided to take a more blunt approach: “securities regulators, media censors and other government officials have issued verbal warnings to commentators whose public remarks on the economy are out of step with the government’s upbeat statements.”
Take the example of Lin Caiyi, chief economist at Guotai Junan Securities who has been outspoken about rising corporate debt and a glut of housing and the weakening Chinese currency. According to the WSJ, she received a warning in recent weeks, her second, from her state-owned firm’s compliance department, which instructed her to avoid making “overly bearish” remarks about the economy, particularly the currency.
For now it is just verbal warnings although if past is prologue we expect China will soon incarcerate at least a few of its “rogue” bearish economists to send a very clear signal that any lack of upbeat commentary will not be tolerated.
Meanwhile, China’s economy is doing so well, that as a result of “pressure” by financial regulators bent on stabilizing the market, stock analysts at brokerage firms are becoming wary of issuing critical reports on listed companies. At least one Chinese think tank was told by propaganda officials not to cast doubt on a planned government program to help state companies reduce debt.
What China really wants is to make sure that every financial and economic expert is on the same page and reinforcing the same message as that uttered by the country’s political leaders.
The WSJ caveats that while evidence of the clampdown is anecdotal, it appears widespread. Government departments didn’t respond to requests for comment or declined to. Commentary about the economy and reporting on business, unlike on politics or many social policies, have been relatively unfettered in China in a tacit acknowledgment by officials that a freer flow of information serves economic vitality.
As noted above, Beijing openly moved to reassert control of the country’s economic story line after stumbles over the stock markets and exchange-rate policies last year fed doubts among investors about the government’s competence in navigating a hard-to-arrest slowdown in growth. During the past two months, the Communist Party leadership has taken to talking up the economy to try to reassure global markets, seemingly not realizing that such “full tilt” propaganda merely confirms everyone’s worries about the just how bad the underlying economy truly is.
“Vigorous debate among economists and public confidence in this conversation is critical if China is to successfully navigate the choppy economic waters,” said Scott Kennedy, a deputy director at the Center for Strategic and International Studies, a Washington think tank. “If the party and government only want to hear good news, then they’d be better off hearing nothing because the value of the words would be less than zero.”
None of this, however, trickles down to the politburo, which just cares about one thing: stopping the naysayers.
Some lower-level government officials describe a siege mentality taking hold among Chinese leaders and senior officials as international financiers like George Soros expressed gloom about the economic outlook early this year. At high-level meetings the past few months in the walled Zhongnanhai compound where the leaders work, some senior officials called for quashing any criticism that might encourage foreigners to “short China”—or bet against the prospects for growth—officials with knowledge of the discussions say.
“You can see they’re not happy when you tried to tell them foreign speculators are not your biggest problem,” said one of the officials who attended the meetings.
You can also see it during overnight CNH trading sessions when in its eagerness to destroy Yuan shorts, the PBOC unleashes the artillery to push the currency higher, even if it ultimately means more pain for China’s economy.
Meanwhile, “journalism” in China is now back to levels seen during the peak of the communist regime: non-existent.
“As a Chinese reporter, you can do anything but journalism these days,” said a senior editor at a state-owned media outlet. One colleague, the editor said, was forced by the outlet to take a leave of absence over what senior editors considered the reporter’s aggressive investigation into the causes of last summer’s stock market crash.
It was unclear if a major party mouthpiece had unleashed a hitpiece against the reporter first.
Still, the one aspect of the economy China is most worried about is its currency. In February, as reported here before, the central bank abruptly stopped releasing data on foreign-exchange purchases by commercial banks—long viewed by market analysts as a key snapshot of China’s capital flows—amid growing worries over more money leaving its shores. In a statement days later, the central bank said it took the step because the data were “no longer a true reflection of China’s capital flows.”
Ms. Lin, the economist at Guotai Junan, said she started getting guidance last fall to tone down her public remarks about the Chinese currency, the yuan or renminbi—something she acknowledged at an economic forum held at Shanghai’s Fudan University in October.
“I was told by regulators not to recommend shorting the renminbi,” Ms. Lin told the gathering, “so I’m just going to recommend buying the dollar.” Neither Ms. Lin nor her firm responded to inquiries for comment, nor did the regulator.
Or take the example of another ludicrous plan recently proposed by China: the intention to convert trillions of bad loans into equity, something we dubbed an “unprecedented nationalization of insolvent companies.” Here too Beijing wants to make it clear that no domestic opposition to this “plan” will be accepted:
In the financial hub of Shanghai, the city’s propaganda department recently instructed a local think tank to stop researching a planned debt-for-equity swap program aimed at helping big state companies reduce debt, according to economists familiar with the matter. The reason, these economists said, is that officials don’t want the research to turn up unfavorable evidence after Premier Li Keqiang and others have endorsed the swaps. The information office of the Shanghai government didn’t respond to requests for comment.
Many analysts have said the plan, which would allow banks to exchange bad loans for equity in companies they lend to, could risk keeping companies afloat when they should sink while leaving banks more strapped for capital. Given the climate, some are changing their tone.
Then, in mid-April, a well-known Chinese economist gave investors in Hong Kong a grim assessment of the economy. It was not meant to last.
Despite recent signs of a rebound, Gao Shanwen, chief economist at brokerage Essence Securities Co., told investors that “a lot of the official data aren’t reliable” and the economy still faces “big problems,” according to people who attended the closed-door event.
Words of those remarks crackled across social media. Two days later, Mr. Gao issued a clarification on his public account in the popular Chinese messaging app, WeChat, saying those remarks were “made up.” He then released a report on the economy shorn of critical commentary. Mr. Gao and representatives at his firm didn’t return requests for comment.
And just like that not only is all Chinese “economic data” rubbish and a completely goalseeked fabrication, but henceforth any domestic commentary on said “data” will be just as credible.
Meanwhile, while in the US while the government is not directly threatening anyone who dares to criticize the economy – yet – there are more tacit ways of pressuring critics and contrarians, the most simple of which of course is to simply pay much more to those who do comply with the tacit propaganda line. This, sooner or later, is sufficient to get even the most bearish naysayers to change their tune. After all they have to eat too.
Incidentally, when that fails and when bullish US propaganda has to be as leakproof as that of China, we are confident that any naysayers will get comparable treatment.
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A massive brawl broke out between the ruling Justice and Development Party (AKP) and the Peoples' Democratic Party (HDP) during a Turkish parliament meeting recently. According to Russia Today, the fight started as the two sides debated a constitutional amendment that would strip lawmakers of their legal immunity.
Tensions were already high as Turkish president Erdogan has been accusing HDP of ties to the outlawed Kurdistan Workers' Party (PKK), and the constitutional amendment that was being debated was allegedly worrying members of the HDP that they'd potentially be open to prosecution for any opposition of the ruling party.
Here is the footage of the chaos…
After all of the mayhem, the parliament did end up actually approving the bill, according to Reuters.
This is presumably not going on the best practices list in any civics textbooks.
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Submitted by Yves Mamou via The Gatestone Institute,
"There are today, we know, a hundred neighborhoods in France that present potential similarities with what's happened in Molenbeek." — Patrick Kanner, Minister for Urban Areas.
The Salafists, in fact, do not want to "take the power in these neighborhoods." In many, they already have it.
"The farther I walked between the buildings, the more I was stunned. A courtyard of Islamist miracles; an enclave that wants to live like during the times of Muhammad. Bakery, hairdresser… It's a mini Islamic Republic. During the sermons, they denounce, they criminalize. A woman who smokes? A degenerate. A woman who does not veil herself? A tease. A man that does not eat halal? He has an express ticket to hell." — Paris Match.
Remadna received a death threat over the phone: "We know where your kids go to school," and "your daughter is very pretty." The next day, a delegation of completely veiled Salafist "true Muslim mothers" came and told her, "We want mosques, not schools."
Patrick Kanner, France's Minister for Urban Areas, was undoubtedly not planning to tell the truth on March 27.
He was on the set of Europe 1 TV to emphasize the left's credo: Islamist terrorism is rooted in poverty and unemployment. But they asked one question again and again: "How many Molenbeeks are in France?" Finally, he said: "There are today, we know, a hundred neighborhoods in France that present potential similarities with what has happened in Molenbeek."
Molenbeek, as the entire world knows today, is the neighborhood of Brussels that has become the epicenter of jihad in Europe. It is a neighborhood under Salafist control that sent three of its residents to assassinate hundreds of people in Paris on November 13, 2015. These are the residents of the same neighborhood that bombed the Brussels airport and the Maalbeek Metro station.
The Molenbeek neighborhood of Brussels has become the epicenter of jihad in Europe. Abdelhamid Abaaoud (right), mastermind of the November 2015 attacks in Paris, lived in Molenbeek. Amedy Coulibaly (left), who in January 2015 murdered a policewoman and four Jews in Paris, spent time in Molenbeek. |
The reactions to Kanner's statement have not been slow. The first secretary of the Socialist Party, Jean-Christophe Cambadélis, accused Kanner of "dissolving national harmony." Julien Dray, another leading figure of the Socialist Party, also criticized Kanner, telling him: "I do not like it when we stigmatize [people]."
Nonetheless, Kanner will not let himself be intimidated. In a March 28 interview in Le Parisien, he recalled,
"Amedy Coulibaly [the killer in the Hyper Cacher attack], who was from the Grande-Borne à Grigny, Mehdi Nemmouche [the Brussels Jewish Museum killer], who passed through the Bourgogne neighborhood in Tourcoing. and Mohamed Merah, who was from the Mirail neighborhood in Toulouse."
Malek Boutih, Socialist Deputy, came to Kanner's aid. He declared,
"It is the first time that a minister of the suburbs says even a little bit of the truth, namely that the ghettos have transformed, little by little, into zones that we cannot control very well… Neighborhoods that are incubators for terrorists."
Samia Ghali, a Senator from Bouches du Rhones (Socialist Party), echoed the statements of the Minister for Urban Areas: "There are training camps in the neighborhoods of Marseille where people are learning to shoot." She adds, "I've gotten to the point of asking if we should build walls to protect schoolyards from Kalashnikov bullets or from rifles finding their way into the school yard."
Gilles Kepel, professor at the Paris Institute of Political Studies, and one of the best experts on Islamism in France, explained in early April that three ingredients are necessary for making a Molenbeek:
"1) A strong system of crime organized around kif [a type of marijuana];
2) Hideouts for terrorists and sites where they can stock weapons;
3) Local politicians who accept that the Salafists have opened countless uncontrollable mosques."
These three ingredients would be uniformly present in all 100 French Molenbeeks, added Kepel. But the goal of the Salafists, he adds, is actually to seize neighborhoods in order to wage a "enclave war."
Patrick Kanner, the Minister for Urban Areas confirmed this view: "The Salafists want to take the power in these neighborhoods." The gravity of the situation was recently underscored by Prime Minister Manual Valls: a fundamentalist "minority," he said, is about to win "the ideological and cultural battle" over Islam.
The Salafists, in fact, do not want to "take the power in these neighborhoods." In many, they already have it.
On January 27, the magazine Paris-Match dedicated several pages to the neighborhood Reine-Jeanne in Avignon, a large city in the south of France, where the Salafists have systematically exploited half a million Muslims.
"The farther I walked between the buildings, the more I was stunned. A courtyard of Islamist miracles, a Salafist pocket, an enclave that wants to live like during the times of Muhammad. Bakery, hairdresser, building managers, teenagers. All (or almost) overcome with the Koran. Well, their Koran. It's a mini Islamic Republic.
"During the sermons, they denounce, they criminalize. A woman who smokes? A degenerate. A woman who does not veil herself? A tease. A man that does not eat halal? He has an express ticket to hell. That female neighbor, the one who is divorced, with three kids, and works with men? She will end up losing her virtue. She should just give up. In order to not pass for an 'easy woman,' the unlucky choose the hard life, welfare benefits!"
In Sevran, a suburb of Paris, the Salafist mosque was sealed off several weeks ago because it had been recruiting a dozen young Muslims for the Islamic State. Six may have already been killed in Syria. Nadia Remadna, a Muslim social worker, lives in Sevran. She started the local "Mothers' Brigade" to help women keep control over their children, against the Islamists. In 2014, she wrote the provocative book, How I Saved My Children, with the sub-title "Before, we feared our children would fall in with delinquents. Now, we fear they will become terrorists."
On March 14, Remadna received a death threat over the phone: "We know where your kids go to school," and "your daughter is very pretty."
The next day, a delegation of completely veiled Salafist "true Muslim mothers" came and told her, "We want mosques, not schools."
On March 29, the philosopher Yves Michaud spoke to the magazine Paris Match about his students:
"My ex-students who teach today in the suburbs… tell me that among their students they have some who could become terrorists overnight. They take on the weight of Islam, of adolescence, of the ghettoization that makes them question their identity, of cultural disorientation. It is an ideal breeding-ground for the jihadist calling."
How many Salafists are there in France? 15,000 to 20,000, according to Bernard Godard, former head of the Bureau of Religion for the Ministry of the Interior. According to the politician Antoine Sfeir, there are 20,000 to 30,000 Salafists. According to police sources, out of 2,500 listed Islamic places of worship in metropolitan France, at least 90 are Salafist. The number doubles every three years. They are located in the suburbs of Paris, in the Lyon region and in Marseille.
According to the Ministry of the Interior, 41 Islamic places of worship have been the target of "infiltration," meaning that "traditional" imams are being forcibly evicted and replaced by Salafist imams.
The real question is:
If the state is aware of the situation — and it is — why has it not banned Salafism, and why does it not expel the Salafist imams who are prospering not only in these neighborhoods, but also on YouTube, Facebook, and Twitter?
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David Siegel is worried, very worried as a matter of fact. The co-founder of Two Sigma, the $35 billion hedge fund said at the Milken Institute Global Conference that he's "very worried" that machines could soon replace a large amount of the workforce.
"Most people in the bulk of the job market are not involved in super-high-value jobs. They are doing routine work and tasks and it's precisely these tasks that computers are going to be better at doing" Siegel said.
A perfect example of this is on display in many Mcdonald's restaurants now as a result of some states raising the minimum wage. You now will find touch screens to place your order and pay instead of dealing with a person.
Of course, Mr. Siegel knows a bit about how powerful a role computers could play in the economy, as his New York based firm is regarded as one of the most sophisticated firms that use technology in order help it make money (i.e. high frequency trading).
A few other people chimed in on the matter as well. Steve Cohen, of SAC fame, agreed that artificial intelligence is "coming but not here yet", and it will be "a while" before technology displaces humans. David Harding, founder of $30 billion London based Winton Capital commented that artificial intelligence "won't completely change the whole field. It won't replace distressed-credit arbitrage or something like that."
While AI may not replace distressed credit arbitrage right away, one look at the floor of the NYSE during trading hours indicates that it may not be far off.
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Commercial Hedgers just hit their most extreme net short position ever in sliver futures.
Just 5 weeks ago, on March 28, we noted that the so-called “smart money” commercial hedgers had reached their largest net short position in silver futures in more than a decade. Well, for us to dedicate another post to this situation within such a short time frame, there had to be either a massive reversal in that positioning, or a further expansion in shorts to an all-time record. As the title suggests, the latter is the inspiration for this post.
Specifically, as of Tuesday, April 26, commercial hedgers held a net short position of 91,302 silver futures contracts. Since the CFTC began reporting the Commitment Of Traders’ data in 1986, that is their largest net short position on record. Of course, on the other side of that position, we find the non-commercial speculators holding a record net long position of 78,773 contracts.
What is the significance of this situation? As we have explained before, the non-commercial speculators category mainly consists of commodity funds who are making directional bets in the futures markets. These funds are primarily trend followers and, thus, will build up a position in the direction of the trend. On the other side of those trades are commercial hedgers whose main function in the futures market, as their name implies, is to hedge. By definition, therefore, they typically build up positions contrary to the prevailing trend.
As a result, at key turning points in a contract, these groups’ net positioning is often at an extreme, with hedgers correctly positioned for the turn and speculators incorrectly positioned. It is for that reason that the hedgers are often referred to as the “smart money” and the speculators, the “dumb money”.
These tags represent a bit of a misnomer, however, as neither group has a monopoly on right or wrong positions. Indeed, during long trends, the “dumb money” speculators may be correctly positioned for a considerable length of time. It is at the turns that the group will most often be off-sides, and vice-versa for the “smart money” hedgers.
Of course, identifying the turning points in the underlying contract and delineating when the groups’ positioning is extreme enough to matter are the challenges. An apparent extreme can continue to become even more extreme before any consequences are felt. Premature record commercial short positions in crude and the U.S. Dollar in recent years come to mind as examples.
Thus, the positives that silver bulls have going for them are
A) the trend is on their side,
B) the metal has continued to be firm in the face of the bearish COT positioning, and
C) a market that does not do what it’s “supposed to” is likely telling us that its current trend is strong enough to overwhelm these ancillary factors for the moment.
However, with the COT positioning at its most extreme ever, the potential headwind for silver upon a turn lower could be considerable should the speculators race to unwind their record long position.
Assuming silver does run into a setback, it will interesting, and telling, to see what form such a setback takes. If the metal is able to consolidate its gains of the past few months by more or less going sideways while the COT extremes are worked off, it may argue for another eventual leg higher in the metal. On the other hand, should the full potential of the unwind of COT extremes come to pass, it could conceivably undermine the 2016 reflation scenario, at least as far as silver is concerned.
But that is getting a bit ahead of ourselves. For the moment, silver’s intermediate-term bull market remains in force, albeit with a record level of bearishness on the part of the “smart money”.
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More from Dana Lyons, JLFMI and My401kPro.
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