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Once again all eyes are on the carry-trade driving Yen, whose avalance into oblivion is picking up speed, and where the formerly unimaginable USDJPY level of 120 as presented here in September, is now looking like this week’s business, with the only question how long until Albert Edwards’ next target of 145 is hit leading to nuclear currency warfare between Japan, Korea, China and ultimately, the US and Europe. Unfortunately, for Japan, at this point the terminal currency collapse will do nothing to incrementally boost exports or its economy, and the former Japan finmin was on the tape warning again that the Japanese recession will persist as USDJPY over 115 is now hurting Japan, something which should by now have been clear to most.

Then again with a money-printing Keynesian lunatic in charge, for whom there is now no turning back, Japan really has no options. The good news, at least for the US which is now openly pulling the strings behind Japan’s monetary policy, is that the soaring Yen will continue to drag correlation algos higher, and send the S&P500 to fresh all time highs even as the Japanese economy is devastated.

In other news, the much hyped Stock Connect between China and Hong Kong is a dud with volumes plunging and CLSA calling it a ghost traing. According to Bloomberg, about 2.6 billion yuan, or 20%, of the 13 billion yuan northbound daily quota was taken on day 3 of the link vs 100% and 37% on the 2 opening days. Of the Shanghai connect stocks, 242 were up, and 249 down; of the Hong Kong connect stocks only 81 were up, while 159 down.

Worse, the commodity rout continues, with the slide in iron ore prices has been a particular focus in the commodity complex with Dalian iron futures hitting a second consecutive record low as data in China continues to fail to impress. Nonetheless, precious metal prices have continued to see support with spot gold managing to break out of its tight overnight range to touch the USD 1,200/oz level

European equities enter the North American crossover mostly in the green after picking up off their worst levels which were seen earlier in the session following overnight weakness in Asian equities and pulling back some of yesterday’s gains. In terms of the rebound, nothing fundamental has been attributed the move higher, although it does coincide with the Gilt-led softness seen in fixed income products following the less dovish than expected BoE minutes release, which also saw short-sterling reverse its earlier flattening pattern. Despite the upside for European stocks, the FTSE 100 trades in the red as the continuing decline in iron prices has placed weight on the mining-heavy FTSE index, with names such as Rio Tinto and Antofagasta seeing a bout of underperformance.

Bulletin Headlines Summary

• GBP/USD pulls off session lows following a less dovish than anticipated BoE minutes release, which has also placed pressure on fixed income products.
• European equities trade mostly in the green with no sustained direction, although the FTSE 100 underperforms as Iron ore miners continue to feel the squeeze of the slide in iron ore prices.
• Looking ahead, attention turns towards the release of US housing starts, building permits, DoE crude oil inventories and of course the FOMC minutes release.
• Treasuries decline with core euro zone sovereigns amid heavy corporate issuance calendar and as investors awaits release of minutes from Fed’s October meeting.
• Bank of England policy makers voted 7-2 to keep the key interest rate at a record low this month as some of the majority began to raise concerns about potential inflation pressures
• Obama plans to issue a reprieve for undocumented immigrants whose children were born in the U.S., part of an order that would shield between 4m and 5m from deportation, according to people familiar with the proposal
• Prime Minister Shinzo Abe invoked the American Revolution in calling a snap election and shelving a further increase in a tax that sank Japan into recession
• BOJ’s Kuroda secured a wider majority today and warned inflation could fall below 1% after the world’s third- largest economy slid into recession
• Keystone XL pipeline backers came up one vote short in the Senate and vowed to try again in January, when they expect to have enough support to send a bill to Obama
• Sovereign yields mostly higher. Asian stocks mostly lower. European stocks gain, U.S. equity-index futures lower. Brent crude and gold higher, copper falls

US Event Calendar

• 7:00am: MBA Mortgage Applications, Nov. 14 (prior -0.9%)
• 8:30am: Housing Starts, Oct., est. 1.025m (prior 1.017m)
• Housing Starts m/m, Oct., est. 0.8% (prior 6.3%)
• Building Permits, Oct., est. 1.040m (prior 1.018m, revised 1.031m)
• Building Permits m/m, Oct., est. 0.9% (prior 1.5%, revised 2.8%)
• 2:00pm: Minutes of October 28-29 FOMC meeting released

FX

One of the more notable movers in FX markets has been GBP following the BoE minutes. Despite residing at session lows in anticipation of an overtly dovish release, GBP saw a sharp move higher as the report revealed a 7-2 split and was not as dovish as some had expected. More specifically, particular focus was paid on comments that a tighter labour market is likely to lead to wage growth soon and the fact that the MPC majority said there is a risk of inflation overshooting the 2% target. Furthermore, CAD has continued to weaken with weakness being attributed to the failure of the Keystone pipeline bill to be passed in the Senate which would have seen the construction of an oil pipeline from Canada to US gulf refineries. Additionally, the decline in iron ore prices has filtered through to FX markets, with AUD seen lower throughout overnight and European trade with yesterday’s jaw-boning of the AUD and cross-related selling in AUD/JPY also placing further weight on the Antipodean currency. Elsewhere, overnight, USD/JPY broke back above 117.00 to trade at its highest since

COMMODITIES

The slide in iron ore prices has been a particular focus in the commodity complex with Dalian iron futures hitting a second consecutive record low as data in China continues to fail to impress. Nonetheless, precious metal prices have continued to see support with spot gold managing to break out of its tight overnight range to touch the USD 1,200/oz level. In the energy complex, despite opening lower following last nights API inventories which revealed a build of 3700k vs. Prev. drawdown of 1500k, energy prices have ebbed higher throughout European trade as participants look ahead to today’s DoE inventories with the headline expected to reveal a drawdown of 1500k, a number which is higher than initially forecasted.

 

DB’s Jim Reid Concludes the Overnight Recap

So after much excitement yesterday following Prime Minister Abe’s snap election announcement, sales-tax delay and planned stimulus package all eyes have turned to the BoJ meeting this morning. In terms of the headlines, as expected QE has remained steady at ¥80tn annually with the board having voted 8-1 in favour. After last month’s 5-4 vote it seems consensus has been built around the new measures which will be a relief to policy makers, especially after the measures announced this week. Taking a closer look at the details, the central bank notes that the outlook in Japan’s economy is ‘expected to continue its moderate recovery trend, and the effects including those of the subsequent decline in demand following the front-loaded increase prior to the consumption tax hike are expected to dissipate gradually’. CPI is expected to remain at the current level for the time being whilst there is some mention that QQE is so far exerting its intended effects with the Bank expected to continue with stimulus for as long as necessary to achieve the 2% target. The result is certainly a positive for Kuroda following what was largely a split decision last month on extending QE. The press conference takes place as we go to print so this is worth keeping an eye on for Kuroda’s take on this week’s fiscal events.

In terms of how markets are reacting post BoJ, the Nikkei is currently trading -0.14% having opened around +0.7% stronger and then declining to trade -0.3% lower post the decision. The JPY has weakened a further 0.37% versus the Dollar to now trade at 117.29 and mark a seven year low. Elsewhere bourses are mixed around Asia. The CSI 300, Hang Seng and Kospi are +0.11%, -0.41% and -0.01% respectively.

As well as the BoJ news to digest today, we’ve also got the FOMC minutes to look forward to later. It’s easy to make an argument either way with regards to what we might expect. On the one hand, we could make a case that the details could be something of a non-event with the focus shifting immediately to the December meeting. On the other hand DB’s Joe Lavorgna summed it up well at the start of the week, commenting that the statement from the October 28th- 29th meeting was notably more hawkish than expected, particularly with regards to the economy and upgrading its assessment of the labour market. Joe also mentions the lack of commentary around a stronger dollar or recently tightening financial conditions, so conceivably these could be mentioned. All in all the key will be whether the minutes rubber stamp the edging up in hawkishness or whether it will throw the doves an olive branch.

Whilst on the US, the S&P 500 continues to extend its record closing highs (+0.51%) after trading in a relatively narrow range over the past week. As well as being supported from the positive tone extending from Abe’s announcement, macro data did little to dampen sentiment. The NAHB housing market index surprised to the upside with the 58 print ahead of expectations of a 55 reading. Digging deeper into the details, all three subcomponents of the index – present conditions, expectations and buyers traffic – rose along with gains in all four regions of the country to cause the index to print just short of September’s post recession high (59). Our US colleagues point out that the NAHB series leads housing construction by around six months and so they expect a marked improvement in residential construction over the next couple of quarters, boosting total housing-related spending which they feel is enough to sustain a 3%-plus real GDP growth over next year. – a pretty bold call. Meanwhile the PPI reading for October was relatively strong. The headline (+0.2% mom) reading and ex. food and energy print (+0.4% mom) beat expectations of -0.1% and +0.1% respectively. Away from the macro prints, the Fed’s Kocherlakota was in the press once again, this time commenting that the Fed is risking its credibility by not acting aggressively enough to bring inflation back up to its 2% target. He also reiterated that inflation will not rise back to this target until 2018 with the potential for a turnaround in inflation through 2015 ‘very unlikely’. Treasuries were generally stronger across the board, the 10yr rallying 2bps whilst the DXY closed down 0.33% at the end of play.

Turning our focus to Europe yesterday, the Stoxx 600 closed +0.61% and the Euro rallied +0.67% versus the Dollar following an unexpectedly stronger German ZEW survey print with the 11.5 reading (0.5 expected) marking the first rise in German investor confidence for eleven months. Closer to home, UK CPI data was largely in line. The +1.3% yoy headline figure a touch higher than the +1.2% consensus although the core print came in slightly under expectations at +1.5% yoy (vs. +1.6% yoy expected). DB’s George Buckley noted that despite yesterday’s print showing a slight rise, he is revising his forecasts down to +0.9% by year end, rising to +1.6% in 2015 and then +1.9% in 2016, highlighting in particular that December will be a likely flashpoint for the CPI given the +6.4% rise in household energy bills last year not being repeated and thus taking 0.3% off the headline rate. Interestingly George also points out a move in sterling could take over three years to fully impact CPI inflation, suggesting that the annual rise in Sterling to peak in July this year will likely impact CPI towards the end of 2016. Elsewhere the RPI print came in line at +2.3% yoy whilst PPI input was softer at -8.4% yoy (-8.3% yoy expected). Gilts closed flat and elsewhere 10y Bunds ended 0.5bp firmer. Credit markets generally underperformed, Xover finished 4bps wider over the day although we highlight that this was perhaps due to more technical factors around significant new issuance. New issuance in the US market is also causing some indigestion.

Just wrapping up the market moves yesterday, WTI and Brent extended declines, down 1.68% and 1.21% respectively and have continued to trade weaker overnight. Ahead of the OPEC meeting next week, the FT has reported the apparent lack of consensus between members which is underlying the struggles the group is facing given surging US output. In terms of an outcome for the meeting, a disagreement between members is surely a worst case scenario so it will be interesting to see if we hear any of the major producers align comments in the mean time.

In terms of the highlights today, we kick off in Europe this morning with the September construction output print (market looking for +1.5% mom) along with current account data whilst later in the day we expect to hear from the ECB’s Praet speaking on the ‘long-term financing of the economy’ in Frankfurt. As well as this, we will be keeping an eye on the BoE’s November minutes today. Over in the US and away from the highlighted FOMC minutes we have October building permits and housing starts data (DB expecting 1.1m versus 1.025m consensus) and the MBA’s new mortgage applications. Given the strong NAHB print yesterday it will be interesting to see whether today’s housing data confirms the trend.

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

We’ve known for 5,000 years that mass spying on one’s own people is always aimed at grabbing power and crushing dissent, not protecting us from bad guys.

We’ve known for 4,000 years that debts need to be periodically written down, or the entire economy will collapse. And see this.

We’ve known for 2,500 years that prolonged war bankrupts an economy.

We’ve known for 2,000 years that wars are based on lies.

We’ve known for 1,900 years that runaway inequality destroys societies.

We’ve known for thousands of years that debasing currencies leads to economic collapse.

We’ve known for millennia that torture is a form of terrorism.

We’ve known for thousands of years that – when criminals are not punished – crime spreads.

We’ve known for hundreds of years that the failure to punish financial fraud destroys economies, as it destroys all trust in the financial system.

We’ve known for centuries that monopolies and the political influence which accompanies too much power in too few hands are dangerous for free markets.

We’ve known for hundreds of years that companies will try to pawn their debts off on governments, and that it is a huge mistake for governments to allow corporate debt to be backstopped by government.

We’ve known for centuries that powerful people – unless held to account – will get together and steal from everyone else.

We’ve known for hundreds of years that standing armies and warmongering harm Western civilization.

We’ve known for 200 years that allowing private banks to control credit creation eventually destroys the nation’s prosperity.

We’ve known for two centuries that a fiat money system – where the money supply is not pegged to anything real – is harmful in the long-run.

We’ve known for 200 years that a two-party system quickly becomes corrupted.

We’ve known for over a century that torture produces false and useless information.

We’ve known since the 1930s Great Depression that separating depository banking from speculative investment banking is key to economic stability. See this, this, this and this.

We’ve known for 80 years that inflation is a hidden tax.

We’ve known for 79 years that war is a racket that benefits the elites but harms everyone else.

We’ve known since 1988 that quantitative easing doesn’t work to rescue an ailing economy.

We’ve known since 1993 that derivatives such as credit default swaps – if not reined in – could take down the economy. And see this.

We’ve known since 1998 that crony capitalism destroys even the strongest economies, and that economies that are capitalist in name only need major reforms to create accountability and competitive markets.

We’ve known since 2007 or earlier that lax oversight of hedge funds could blow up the economy.

And we knew before the 2008 financial crash and subsequent bailouts that:

• The easy credit policy of the Fed and other central banks, the failure to regulate the shadow banking system, and “the use of gimmicks and palliatives” by central banks hurt the economy

• Anything other than (1) letting asset prices fall to their true market value, (2) increasing savings rates, and (3) forcing companies to write off bad debts “will only make things worse”

• Bailouts of big banks harm the economy

• The Fed and other central banks were simply transferring risk from private banks to governments, which could lead to a sovereign debt crisis

Postscript:  Those who fail to learn from history are doomed to repeat it … and we’ve known that for a long time.

 

via Zero Hedge http://ift.tt/1uGEqky George Washington

Just a week after Dr. Craig Spencer was declared ‘Ebola-free’, The Daily Mail reports a woman, who had arrived from Guinea 18 days ago (and was on the NYC Ebola monitoring list), dropped dead in a Brooklyn hair salon this afternoon. FDNY sent their Special Operations and Hazmat units but she was declared dead at the scene. Witnesses said she was bleeding from the “face, nose, mouth, everything.”

 

 

 

As The Daily Mail reports,

There are new fears of a possible Ebola outbreak in New York City after a woman dropped dead on Tuesday afternoon.

 

FDNY activated the Special Operations and Hazmat units after the the woman, who had recently traveled from Guinea according to a source on the scene, died at Amy Professional African Hair Braiding in Brooklyn.

 

He then said he ran in there to find a woman laying on the floor.

 

When asked what she was bleeding from, Costa said, ‘face, nose, mouth, everything.’

 

 

Meanwhile, members of FDNY could be seen carefully changing into Hazmat gear outside before heading into the establishment, for what they referred to as a ‘fever travel illness.’

 

At the same time, individuals could be seen walking in and out of Amy Professional African Hair Braidig wearing no protection at all.

 

It had been reported in October that an FDNY memo instructed all personnel to use more vague terms when discussing Ebola, such as ‘fever travel incident.’

According to a source who was on the scene, the incident occurred just after 3:00 in the afternoon, and the woman was pronounced dead on arrival.

 

As ABC reports, the woman was on the NYC monitoring list…

UPDATE: Source: Woman on NYC monitoring list died of “apparent non-Ebola condition;” test to be performed in “abundance of caution” – @ABC

— ABC News Health (@ABCNewsHealth) November 19, 2014

NEW: NYC Health Dept. investigating death of woman on Ebola monitoring list; at last check, woman did not have symptoms – @ABC

— ABC News Health (@ABCNewsHealth) November 19, 2014

*  *  *

ABC7 reports further that,

The remains of a woman who died of an apparent heart attack at a hair salon in Brooklyn will be tested for Ebola.

 

EMS responded to the hair salon on Belmont Avenue in Brownsville around 2:30 p.m. on Tuesday.

 

She was declared dead at the scene.

 

The woman had been on the list of those being monitored for Ebola exposure.

 

She had recently arrived in the city from Guinea and was one of 350 people on the monitor list.

 

The New York City Health Department said at last check the woman did not have symptoms and was being monitored because of her travel history.

 

She had been back in the country for 18 days.

 

Test results are expected back late Tuesday or early Wednesday.

*  *  *

via Zero Hedge http://ift.tt/1u8JdWQ Tyler Durden

From a reader

ZH:

My wife and I own a small business and we had previously (in 2013)  been buying health insurance on our own for ourselves and our two kids.  The cost was about six hundred per month with a $5200 deductible, $6800 total out of pocket exposure for the family of four. 

After spending months trying to register for the ACA in late 2013 and early 2014 my kids got put on our state’s insurance (at “no cost”) and my wife and I bagged an ACA policy at a subsidized cost of $281 per month with a total out of pocket of about $6500 (just for the two of us).

Attached is the ACA notification of next year’s price increase.  As you can see the cost goes from $281 to $555, a monthly increase of $274, a percentage increase of 97%. 

Basically we are now paying the same amount for the two of us that we paid for all four of us one year ago.

How can that increase occur in a “free market” economy?  Did I miss something? Has some input cost leaped exponentially in order to double the price I pay? Or has private industry colluded with government to rig the markets (again) in their favor?

How much longer will the American people allow corporations to rip them off in collusion with the government?  Fuck this bogus economy and government captured by corporations.  Where is the leader who will rise up from the masses and snuff out the corp/govt nexus before it imprisons us all in debt serfdom police state?

Do you think for one minute that freaking Mitch McConnell, Harry Reid, Nancy Pelosi, John Boehner or anyone newly elected or previously elected cares one shit about my wife and kids or what we pay for crappy health care that we cannot afford to access due to high deductibles?  Those fucks cannot see beyond the next donor phone call, and only come clucking out of the hen house in order to give voice to the latest party certified political meme, be it ‘freedom’, ‘liberty’, ‘security” or some other hollowed out focus group tested bullshit sound bite.

via Zero Hedge http://ift.tt/14IszbO Tyler Durden

If only the $3.2 billion Goldman Sachs Global Opportunities hedge fund had listened to the firm’s equity strategists, life would have been great. However, as Bloomberg reports, the so-called ‘best-ideas’ fund dropped 5.6% in October leaving it down 2.6% for 2014 as interest-rate bets went pear-shaped amid the crash-and-dash that was October’s market manipulation. “We believe monetary policy needs to catch up with growth, and that interest rates in the US and UK are likely to rise by a significant amount,” the fund wrote. It seems Goldman ‘muppeted’ itself. Things aren’t working out… and as a gentle reminder, the fund lost 35% in 2008.

 

As Bloomberg reports,

A $3.2 billion Goldman Sachs Group Inc. hedge fund that pools some of the firm’s best ideas declined 5.6 percent last month as a bet on the direction of U.S. interest rates went wrong, two people with knowledge of the matter said.

 

Goldman Sachs Global Opportunities Fund, which invests based on the trade ideas from the money-management unit’s fixed-income team, took a position that interest rates would rise, only to see them decline, said the people, who asked not to be identified because the information is private.

 

…

 

“We believe monetary policy needs to catch up with growth, and that interest rates in the US and UK are likely to rise by a significant amount in the next one to two years,” according to a March paper written by the asset management arm.

 

…

 

The fund, which has counted former presidential contender Mitt Romney among its investors, is a relative value pool that takes positions on rising and falling prices in the global fixed-income and foreign exchange markets. The fund, which was started in 2001, had $3.2 billion in assets as of June, the people said.

 

Since inception, the fund has generated a net internal rate of return of 9.1 percent, said one of the people. It declined 2.6 percent in 2014 through October. If that performance holds, it would lead to the second calendar-year loss in the fund’s history. The fund declined 35 percent in 2008, according to the people.

 

The fund is overseen by Jonathan Beinner, co-head of global fixed income at Goldman Sachs Asset Management, and Samuel Finkelstein, head of macro strategies within the fixed-income team, according to a regulatory filing this year.

*  *  *

Goldman “muppeted” itself…

*  *  *

Don’t these guys get it? You buy stocks, then when they downtick, you buy moar… and if they have a down day you back up the truck… it’s easy.

via Zero Hedge http://ift.tt/11AEMOH Tyler Durden

By: Chris at http://ift.tt/12YmHT5

I’ve long since argued that democracy isn’t necessary for prosperity. Rather than railing against democracy I merely am making the point that economic liberty is more important to wealth creation than political liberty. It is a market economy that is the key to unlocking wealth.

The reason this is so is because humans are, well, human.

Part of being human involves looking out for our own best interests, and accordingly Maslow’s hierarchy of needs provides a good starting point. Any system that halts the progress of any stage in the above diagram will simultaneously halt wealth creation and any system that assists or allows humans to pursue their own needs, ideas, passions and wants will foster wealth creation.

Over the last 100 years or so Europeans and Americans have been fortunate enough to have been born with their bum in the butter so to speak. They have enjoyed:

1. Leadership in economic liberty
2. Political liberty
3. Superior judicial systems
4. High standards of education, and thus leaders in technology
5. And also, although it seems laughable when considering FACTA, capital controls, MF Global and any myriad other frauds, a superior financial system with banking, stock exchanges and financial instruments, which ostensibly assisted in the US Dollar and Euro becoming reserve currencies

This superior status has led to all sorts of ludicrous assumptions being made from those who typically know little of history, geopolitics and economics, which typically includes congress, the Troika and entire swathes of the media fed populace. It is how once great powers wither into the dust bowl of history. The populace blissfully unaware of what has happened, or worse yet believing that something has happened to make their lives miserable which is completely divorced from reality.

The media is so astonishingly powerful over a populace fast asleep and trusting. I present one such example: I still come across people telling me about global warming. Haven’t they heard of climate gate? Haven’t they figured out that Al Gore duped the world? Yes, the ice caps are safe and smiling polar bears are to be found frolicking with their little cubs. Turn the heat up.

Looking at the recent G20 meeting it’s astonishing that an air of superiority remains. You can see it written all over the faces of western leaders: “We do things differently” or “we’re smarter, more sophisticated, it’s in our genes”.

I can see how it happens. I recall the first time I visited the Pyramids in Giza. I thought to myself, how the hell did Egyptians build these amazing buildings when today they clearly can’t put up anything that will last more than a few short years? The place is now falling apart. I’m sure at some point Egyptians were nodding appreciatively to one another over a hooka pipe saying “We’re Egyptian, of course we’re smarter, of course we’re better”.

This is what is happening in the West today.

Try starting up and running a new business in Europe. Heck, I’ve a friend who is simply trying to build a home. When you see the enormous barriers to economic activity you begin to understand how this happens. By the time you’ve complied with the hundreds of asinine laws, hired yourself your tradespeople who typically can only now do very specific jobs, for fear of being caught wiring a plug without the correct license to do so, then it’s not hard to see how Europe is decaying with such breathtaking speed. The punitive tax system together with regulation of staggering magnitude have quenched any entrepreneurship, while concessions for what is left are awarded to large corporations in multiple fields of activities. The ability for small business, which is coincidentally the lifeblood of any and every vibrant economy, is stymied.

The truth, as always, lies in the facts. The West is in its death throes and we see this in Western powers pressuring Russia or striking out in the Middle East. This is an attempt to remain relevant and establish hegemony. Why this desperation?

Consider that in 1990 the combined GDP of the G7 countries stood at US$14.4 trillion. At the same time the “emerging 7” (China, India, Russia, Brazil, Indonesia, Mexico and South Korea) sported a GDP of US$2.3 trillion. Last year the figures stood at US$32 trillion for the G7 and US$35 trillion for the “emerging 7”.

These are massive global shifts that are taking place right in front of us. What this looks like in 10, 20 years time is a factor of that which it is today. Within 15 years the Asian middle class alone will make up over 2/3rds of the global middle class. Today it is 1/3rd.

Our friend Doug Casey likes to joke that Europeans are going to be predominantly used as housemaids for the Chinese. When he says it in front of Europeans and Americans they still laugh. They shouldn’t. It’s happening.

Western politicians, as thick as they may be, can see their power ebbing away at every turn and their reaction has been to drive the dagger deeper into their economies increasing regulation, cramping entrepreneurship, raising taxes, taking on obscene debt loads and centralizing rather than decentralizing their economies.

Consider the points 1 through 5 I’ve made above.

1. Leadership in economic liberty. Hong Kong and Singapore are at number 1 and 2 spots respectively with the USA down at 12th spot, trailing Estonia and much of Europe so far down the scale they’re hardly even worth mentioning . Portugal, France, Spain lower down the economic freedom ranking than Rwanda, Kazakhstan.
2. Political Liberty. This one I know I’ll get flak for so let me just say this: just because you get to vote for a few podium donuts who are trotted up in front of you every few years, doesn’t mean your vote means a damn.
3. Superior Judicial System. Whoa, where to start. The complete dismantling of habeas corpus, militarizing of the police force, civil asset forfeitures, a bought and paid for congress via lobby groups.
4. Education. Asia is racing ahead. A recent report produced by Pearson Education in their annual global education performance report shows once again that Asians are racing ahead. I’ll spare you reading the entire report. The top ranking countries are (# 1) South Korea, (#2) Japan, (#3) Singapore and (#4) Hong Kong,

The fact is that the West used to be superior to the rest of the world but the competitive advantage has eroded substantially. At the same time emerging economies have embraced the market economy, strengthened judicial systems, enhanced education and most importantly of all managed to increasingly get out of the way of individuals looking to transact with one another.

Gratefully the world is an incredibly multi cultural place and with a little effort we can invest globally, we can domicile globally and in many instances live in places which please us and these various choices need not be the same. When it comes to investing capital the trends in motion are hard to ignore and this is but one reason that we’re focused on emerging markets and Asia in particular. Given the balance of world population together with the growth and increasing dominance of the emerging markets it is I believe pure folly to ignore.

– Chris

 

“History is filled with the sound of silken slippers going downstairs and wooden shoes coming up.” – Voltaire

via Zero Hedge http://ift.tt/1ylDiSv Capitalist Exploits

Submitted by Daniel Cloud

The authorities in Hong Kong are once again threatening to clear the protest sites. They have a legal pretext, in the form of court orders issued in response to complaints from the owners of buildings, who are losing traffic. The powers that be are in no mood for compromise. “Police urge the illegal road occupiers to obey the court order, remove obstacles and personal belongings, and stop the illegal occupation soonest.”

Momentum has been lost, for the time being, so the government has decided to put on a little more pressure, to see if it can’t finally end the whole incident. That may work, in the short term, or it may backfire again. But in the medium and long term, the protestors aren’t really going to go away permanently, because their perfectly legitimate grievance – no democracy, therefore no real rule of law or protection for basic human rights – isn’t going to go away. The people of Hong Kong are thoroughly familiar with the modern word, and they know what they deserve. There just isn’t any way to get a whole city full of highly educated modern people to accept that they can’t have the same rights as everyone else in the developed world. There isn’t any legitimate reason the authorities could possibly give for why that should be – none that’s more sophisticated than “because I’m going to kill you if you don’t shut up about it.” But that means that no matter how many times the protestors are removed, they’ll always come back, sooner or later. The government can’t win a long war of political attrition with the protest movement, though they may think they can now, because, according to the basic social contract of a modern society, they’re simply in the wrong. There’s no way for them to fix that, and there’s no way for them to stop people from noticing it. So the injury will keep being insulting, and protests will keep flaring up until the problem is fixed or they’re violently crushed.

But let’s give the Devil his due. The authorities must still suppose that they have some plausible excuse for their actions, some reason, which they hope Hong Kong people will eventually accept, that justifies their repeated attempts to deprive their citizens of the basic right of assembly. The crucial question for predicting the ultimate outcome of this protracted confrontation is whether that story actually makes any sense, whether it is something educated people in a modern society could possibly remain convinced of for very long. What is it? What do they say when they do these things, if it isn’t simply the familiar “shut up or I’m going to kill you” which we all remember so fondly from Tiananmen? What’s their excuse?

In fact, the Hong Kong government keeps trying to explain its various attempts to deprive Hong Kong people of their civil rights by saying that they’re needed to preserve “public order”. But is that really a legitimate reason? What is the actual relationship between civil rights and public order? And what makes this kind of non-violent mass protest happen in the first place? What are the protestors trying to achieve? Is it or is it not something that justifies a disruption of public order? Confronted with these questions, different people might come up with different answers, at least at first, so let me try to give you a rational account of the considerations involved, as I understand them, and we’ll see if you agree with me that the Hong Kong government’s justification for its actions is ultimately unconvincing.

The instinct to gather a quorum when confronted by a tyrant is deeply engraved in the human genome. We evolved in small societies, roving bands of hunter-gatherers. Christopher Boehm shows, in Hierarchy in the Forest, that those societies tend to be very egalitarian, with a strong emphasis on personal autonomy. Occasionally domineering individuals do appear, but it’s easy for everyone to meet behind their back and decide that they must be exiled or killed. Sometimes the relatives of the man being dealt with in this way are the ones who actually have to do the deed. The important thing is that the decision must be made and executed by the whole community, acting in concert. Individually each member would be afraid to oppose the bully, but together they have courage.

In larger human societies, this instinct for collective resistance to illegitimate authority can make coordination difficult. Strangers must interact with each other, and disputes arise that can’t be resolved by consensus. Conventional laws must be created to supplement our shared preferences, and authority must be delegated to those who enforce them. But this results in societies that are ordered by two very different principles, which can easily come into conflict.

Most of us share a preference that nobody should commit murder. That is an unconditional shared preference about everyone’s behavior. Even if most other people started committing murders, we would still feel that everyone really should refrain. We can think of the preferences about how everyone should behave which most people share as the social contract. This shared sense of justice and propriety is the original principle of order in human societies, but in societies too large and complex to be managed entirely by peer pressure, enforceable, somewhat arbitrary conventions are needed to make it effective.

For example, most of us, in North America, would prefer that each other person follow the convention of driving on the right side of the road. But if everyone else started driving on the left hand side of the road, we would prefer that the person switch to the left hand side. Our preferences about their behavior, in this case, are conditional – they depend on what everyone else is doing, unlike our unconditional preference that everyone refrain from murder. There is supposed to be a particular relationship between these two different kinds of social rule. It’s part of the social contract that people ought to drive down the same side of the road as everybody else, because to do otherwise might result in negligent homicide, but the rule that it must be the right side in particular is just a convenient convention for implementing the social contract, one of two equally good alternative ways of doing that.

The same thing is true of any traffic rule. It could have been otherwise, but it’s part of the social contract that whatever it actually is must be conformed to. Laws in general have this same conventional character. They always could have been otherwise, and yet following them is still obligatory. Even constitutions and the whole systems of government they underpin are also basically just systems of somewhat arbitrary conventions for implementing the society’s underlying social contract.

If everyone else is driving on the right, most people would prefer to do the same, but a few drunks or scofflaws might flout the rule, if there were no traffic police. The social contract requires adherence to conventional laws under normal circumstances, so it supports the existence of police to enforce this convention. The problem in a society that doesn’t have regular, meaningful, free and fair elections and an independent judiciary is that there is no similar group of people whose job it is to defend the underlying social contract. If the laws or the system of government come into conflict with the social contract, if they become arbitrary in the bad sense of the word, there are police (and soldiers) to enforce the laws, but there is no conventional arrangement for stopping the police from enforcing them, even though the laws are supposed to be mere ways of implementing the social contract.

A society in that situation is like an unsafe coal mine. As long as everyone else is still working, I may need to go on working there, so I can feed my family. And as long as I’m still working, I want each other person to come to work, because the mine would be even less safe with a skeleton crew. So I conform to the convention of continuing to work. But though I want each other person to continue conforming as long as everyone else is, I would be much happier if all of us didn’t come to work one day, because then we might be able to force the owner to improve the safety of the mine. My fellow workers probably feel the same way, they probably wish we could all strike. If we could all gather together somewhere, we could easily see that everyone else was just as willing to strike as we were, and management would be in trouble. So management doesn’t want us to gather a quorum, and they’re likely to send goons to break up our meetings.

And this is just exactly what the preservation of public order at the expense of a basic human right, the right of assembly, is all about. It’s all about preventing the formation of a quorum, a visible critical mass of disaffected citizens for mass disobedience to crystallize around. It’s precisely the conventions of public order, the unelected government that’s constituted by them, and the violations of basic rights they entail that the protestors are threatening to unravel with their protest, so that a new set of conventions more consistent with the social contract can be adopted in their place.

Usually the social contract requires us to follow those conventions, and obey the law, but when the government violates our civil rights by denying us the right of assembly, that obligation can become reversed. Then we must not conform to them, though we’re still bound by the social contract.

In a democratic revolution, the protestors have the goal of creating a new set of conventional arrangements for periodically allowing a quorum of citizens to accept or reject their government and their laws. That is supposed to ensure that the laws don’t conflict with the social contract most of the time, and it will make it possible for citizens to do something about the situation when they do. If such a mechanism is already in place, the social contract is already adequately protected, so the gathering of citizens in public does nothing to erode the legitimacy of the government, and protests are harmless. Occupying Wall Street doesn’t cancel the last election, as long as there’s a next one coming, and as long as that next election will be free and fair and genuinely meaningful, and not a sham, like Hong Kong’s “elections”.

The use of force to disperse peaceful protestors is normally an attempt to prevent the assembly of a quorum, in a situation where that must be prevented to preserve an ongoing violation of the society’s social contract, or to disperse a quorum that has already formed. But it’s risky, because if it becomes too obvious that the government’s goal is preserving its ability to flout the social contract, it can lose legitimacy. The violence cuts two ways, undermining the state’s authority even as it deters the protestors.

Authority in modern human societies results from a combination of legitimacy – the shared sense that most people probably are willing to accept some act or some law or some government, that it’s in accordance with the social contract and our accepted conventions for implementing it – and power, having traffic police to deal with those few people who don’t. If legitimacy evaporates as a result of brutal and unsuccessful attempts to prevent or break up a peaceful assembly, authority disappears with it, and all the government is left with is power. Often this is not enough to allow it to hold together as an entity. People begin to refuse orders, there’s no way to shoot all of them, and it dissolves. Then, if the social contract of the society is consistent with democracy and the rule of law, a new government can be formed, and plans for elections can be put in motion.

In a modern society, the social contract itself is a fluid, constantly evolving thing, because our shared preferences and values are always evolving as our way of life changes. Changing preferences mean that the laws and conventions by which a modern society is governed must change constantly as well. The whole apparatus of democracy and the rule of law is there to keep the conventions of public order in harmony with the evolving social contract, and rapidly and efficiently resolve conflicts between them. Only the rule of law in the fullest possible sense – real legislators chosen by free and fair elections, an independent judiciary, and a modern, constantly evolving legal code, which is enforced in an impartial and reasonable manner – can create a long-lasting harmony of this kind in a modern society, so it is only where the rule of law is enshrined in the social contract, where all of these things are widely shared societal values, that a revolution against a tyranny can produce anything but more tyranny.

Unfortunately, there are several things that can go wrong with this process. If the government is ruling not one natural society but several, stripping away the conventions that allow them to avoid fighting each other may result in a civil war, rather than the formation of a new government. Or there may be an underlying social contract – but not one consistent with democracy and the rule of law. In this case, unless that changes, sooner or later the people will simply elect another tyrant. (In Egypt, it was sooner.)

In Syria, the government lost legitimacy when it began using snipers against peaceful protestors. (Deliberately and publicly murdering your own citizens tends to be perceived as a violation of the social contract in almost any society.) Its authority as the government of Syria collapsed – but it continued to exist as an extremely well-armed militia for the Alawite minority that controlled it. The national government became the government of a single ethnic group, but retained its legitimacy within that group. That residual power was enough to prevent the formation of a new national government, and created the Hobbesian hell that is Syria today.

Sadly, Hong Kong faces a somewhat similar situation. It isn’t the capital of China. No matter what happens there, the authority of the Chinese government is unlikely to be shaken. They are uniquely well positioned to get away with murder, to repeat Tiananmen and crush the protests, if they get out of hand. So the government of Hong Kong is right, there really is a grave danger that would result from a breakdown of public order. What they’re not saying, though, is that the danger actually comes from them, and their backers in Beijing, rather than from anything the demonstrators are doing. What they’re telling the protestors still really does just boil down to “shut up or I’ll kill you”, which is unfortunate, since it means that they actually will have to be willing to publicly murder their own citizens, in the end, to make the threat credible, with all the further risks to public order and their own legitimacy that that course of action entails.

The problem, of course, is what would happen afterwards. Hong Kong would be badly damaged. China, with its economy already in trouble, would then also be on an irreversible collision course with the rest of the world, with our emerging world society and its own nascent social contract. (This is why the Chinese government was so angry about Kenny G’s visit with the protestors. The last thing they want is for foreigners to begin to join them, because it will make killing them harder, if it ever comes to that.) The Chinese people themselves would be bitterly disappointed. A massacre in Hong Kong now would be the beginning of endless troubles for the Party.
 
Waiting and doing nothing is dangerous, because the demonstrations awaken and tantalize the human appetite for justice, tempting others in China to try to steal that delicious fruit. But doing what would be necessary to permanently shut the people of Hong Kong up, now that they’ve started talking back, would also be incredibly dangerous, since it could seriously damage the central government’s legitimacy. With the economy going sour, things were already pretty bad. Now the Party faces a problem that leaves them no good options.

If the protests gain momentum again, as they will sooner or later, accepting the students’ demands would in fact probably be their best choice, out of the unappetizing menu of choices in front of them, since it would preserve their legitimacy long enough to allow them to regain the initiative. Taiwan is already irreversibly a liberal democracy – letting Hong Kong be one as well would bring reunification one step closer, and decisively preventing that will make reunification permanently impossible. But it would be very surprising to see the current government of China make that wise and bold decision. There really is no justification for trying to preserve public order at the expense of fundamental civil rights – but the Party’s whole excuse for existing, at this point in its history, is the fiction that there is.

Daniel Cloud teaches philosophy at Princeton University. Other things he has written can be found in the ZH archives, and at http://ift.tt/1wTA0WP

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