U.S. Customs Destroy Rare Instruments, Livelihood, Won’t Apologize

Holiday travel can be a hassle.
It can be an even bigger hassle when U.S. Customs and Border
Protection (CBP) officials destroy rare instruments on which your
livelihood depends. 

That’s what happened to
Boujemaa Razgui, a renowned musician who was returning from
Morocco to his New York City residence in time for Christmas.
Razgui was transporting 11 rare handcrafted flutes, called neys, some of which he
manufactured in the US. Nevertheless, the CBP “identified the
instruments… as agricultural products that risked introducing
‘exotic plant pathogens’ in to the United States” and destroyed
them,
reports Foreign Policy. 

Razgui was shocked to find his carrying case emptied.“I fly with
them in and out all the time and this is the first time there has
been a problem,” he
told the Boston Globe. “They told me they were
destroyed,” but “nobody talked to me. They said I have to write a
letter to the Department of Agriculture in Washington, D.C. This is
horrible. I don’t know what to do,” Razgui explained, “This is my
life.”

That’s no exaggeration. Razgui, who has performed with various
groups throughout the US for over a decade, is one of only 15
people in the country with this specific kind of flute. Razgui has
not yet determined how he will be able to fulfill his commitments
for upcoming performances.

When asked by Foreign Policy, the law enforcement
agency refuses to apologize to for the mishap. Officials insist
that the action was necessary, because of the potential threat that
“fresh bamboo canes” pose. The CBP’s website
states:

In general, bamboo that is not thoroughly
dried and is therefore still capable of propagation is prohibited
entry into the United States.
Bamboo that is thoroughly dried and split or cut lengthwise
(rendering it incapable of propagation) will be inspected upon
entry and released.

Unsplit dried bamboo canes/stakes/poles also are allowed entry
into the United States after inspection: however, if the bamboo
canes/stakes/poles are intended for garden or nursery use, the
shipment must be fumigated (T404-d treatment extended to 24 hours)
upon arrival at the U.S. port of entry.

Bamboo furniture, bamboo cloth, and other manufactured products
made of bamboo do not require fumigation and will be released upon
inspection.

The problem is, neys aren’t made of bamboo, and even if they
were, simply looking at them would be enough to tell that the
instruments were cut, dried, and obviously incapable of
propagation.

For more head-scratching policies from agencies that operate
under the Department of Homeland Security, watch ReasonTV’s video
on 12 banned
holiday items:

from Hit & Run http://reason.com/blog/2014/01/06/us-customs-destroy-rare-instruments-live
via IFTTT

Head Of China's Railway Company Commits Suicide: First Graft Probe Casualty?

Bai Zhongren, the president of state-run China Railway Group – the state-owned engineering giant behind many of the country’s largest railway projects – committed suicide over the weekend. As SCMP reports, Bai is among several senior railway officials and executives who have committed suicide since corruption scandals implicating the senior railway officials began to come to light three years ago.

However, there have been no direct links between China Railway Group and the corruption cases (yet); but Chinese courts are about to hand down verdicts for Zhang Shuguang, a former deputy chief engineer of the now-defunct Ministry of Railways, and Ding Shumiao, a businesswoman with close tie with disgraced former railway minister Liu Zhijun. Xinhua quotes a colleague as saying that part of the cause of Bai’s depression might be the heavy debts that his company has run up.

Via South China Morning Post,

Bai Zhongren, the president of China Railway Group, a state-owned engineering giant behind many of the country’s largest railway projects, jumped to his death over the weekend, Chinese media reported on Monday.

 

…

 

The 53-year-old executive jumped to his death after suffering from depression in recent years

 

…

 

Economic Information, a newspaper published by the official Xinhua News Agency, quoted a colleague as saying that part of the cause of Bai’s depression might be the heavy debts that his company has run up.

 

…

 

By the end of October, 2013, China Railways Group had total assets worth 626.5 billion yuan, and total outstanding debts of 531.9 billion yuan, with a debt-to-asset ratio of almost 85 per cent, according to the company’s Q3 filings.

 

Bai’s suicide came as Chinese courts are about to hand down verdicts for Zhang Shuguang, a former deputy chief engineer of the now-defunct Ministry and of Railways, and Ding Shumiao, a businesswoman with close tie with disgraced former railway minister Liu Zhijun.

 

…

 

Bai is among several senior railway officials and executives who have committed suicide since corruption scandals implicating the senior railway officials began to come to light three years ago. However, there have been no direct links between China Railway Group and the corruption cases.


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/KrhVNMAIGtM/story01.htm Tyler Durden

Head Of China’s Railway Company Commits Suicide: First Graft Probe Casualty?

Bai Zhongren, the president of state-run China Railway Group – the state-owned engineering giant behind many of the country’s largest railway projects – committed suicide over the weekend. As SCMP reports, Bai is among several senior railway officials and executives who have committed suicide since corruption scandals implicating the senior railway officials began to come to light three years ago.

However, there have been no direct links between China Railway Group and the corruption cases (yet); but Chinese courts are about to hand down verdicts for Zhang Shuguang, a former deputy chief engineer of the now-defunct Ministry of Railways, and Ding Shumiao, a businesswoman with close tie with disgraced former railway minister Liu Zhijun. Xinhua quotes a colleague as saying that part of the cause of Bai’s depression might be the heavy debts that his company has run up.

Via South China Morning Post,

Bai Zhongren, the president of China Railway Group, a state-owned engineering giant behind many of the country’s largest railway projects, jumped to his death over the weekend, Chinese media reported on Monday.

 

…

 

The 53-year-old executive jumped to his death after suffering from depression in recent years

 

…

 

Economic Information, a newspaper published by the official Xinhua News Agency, quoted a colleague as saying that part of the cause of Bai’s depression might be the heavy debts that his company has run up.

 

…

 

By the end of October, 2013, China Railways Group had total assets worth 626.5 billion yuan, and total outstanding debts of 531.9 billion yuan, with a debt-to-asset ratio of almost 85 per cent, according to the company’s Q3 filings.

 

Bai’s suicide came as Chinese courts are about to hand down verdicts for Zhang Shuguang, a former deputy chief engineer of the now-defunct Ministry and of Railways, and Ding Shumiao, a businesswoman with close tie with disgraced former railway minister Liu Zhijun.

 

…

 

Bai is among several senior railway officials and executives who have committed suicide since corruption scandals implicating the senior railway officials began to come to light three years ago. However, there have been no direct links between China Railway Group and the corruption cases.


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/KrhVNMAIGtM/story01.htm Tyler Durden

A.M. Links: FBI Quietly Changes Primary Function, Senate Democrats To Focus on Middle Class, Angela Merkel Fractures Pelvis

  • The FBI has quietly replaced “law enforcement” with “national
    security    ” as its declared primary function.
  • Senate Majority Leader Harry Reid (D- Nev.) said Sunday
    that Democrats will focus on the middle class in 2014 and attempt
    to extend emergency
    unemployment benefits    .
  • The Senate is poised to confirm Janet Yellen as the next

    Federal Reserve chair    , making her one of the most powerful
    figures in world economic circles.
  • Citing health concerns in her family, Liz Cheney is
    ending her campaign     for Senate in Wyoming.
  • German Chancellor Angela Merkel
    fractured her pelvis     while skiing, forcing her to cancel
    meetings for the next three weeks.
  • A senior Iranian military official offered
    limited military
    aid to Iraq     in order to battle Al Qaeda fighters in the
    neighboring country.

Follow Reason and Reason 24/7 on
Twitter, and like us on Facebook.  You
can also get the top stories mailed to
you—sign
up here.

from Hit & Run http://reason.com/blog/2014/01/06/am-links-fbi-quietly-changes-primary-fun
via IFTTT

Investors Literally "Worried Sick" About Stock Losses

“It’s a very straightforward result,” UCSD professors Joseph Engleberg calmly states, hospitalizations rise on days when shares fall, and “people are hospitalized disproportionately for mental conditions.” Equity-market losses appeared to induce 3,700 market-related hospitalizations a year in California, which implies visits add roughly $650 million a year to U.S. health-care costs when data from the most-populous state are extrapolated nationally – another additional cost of QE? The findings, Bloomberg reports, show a one-day drop in equities of around 1.5% is followed by about a 0.26% increase in hospital admissions on average over the next two days.

 

Via Bloomberg,

Declining stocks worry people sick, if hospital records are any guide.

 

A one-day drop in equities of around 1.5 percent is followed by about a 0.26 percent increase in hospital admissions on average over the next two days, according to a March 2013 study by Joseph Engelberg and Christopher Parsons, associate professors of finance at the University of California at San Diego. The impact on psychological conditions such as anxiety or panic attacks is even stronger and more immediate, with admissions jumping twice that much in one day.

 

“It’s a very straightforward result,” Engelberg said yesterday at the American Economic Association’s annual meeting in Philadelphia, where he presented the findings. The results were based on almost three decades of daily admission data for California hospitals. Hospitalizations rise on days when shares fall, and “people are hospitalized disproportionately for mental conditions.”

 

Equity-market losses appeared to induce 3,700 market-related hospitalizations a year in California, which implies visits add roughly $650 million a year to U.S. health-care costs when data from the most-populous state are extrapolated nationally, Engelberg and Parsons estimated. They cited Census Bureau data showing an average hospitalization event costs around $21,000.

 

…

 

“People get stressed out and anxious and depressed when the stock market performs poorly,” Engelberg said in an interview after his presentation. “That may be very obvious, but I think this is the first paper to come along and try to take a good step at quantifying how big that is.”

 

The effect of a large market drop is twice as strong during periods of low volatility because “extreme returns are more surprising to investors,” Engelberg and Parsons concluded.

 

“Your expectations are set by what you experienced in the recent past,” Engelberg said in the interview. “If it wasn’t very bumpy and you see a big bump down today, that’s more likely to get you depressed or stressed or anxious than if you saw a lot of bumps in the past year.”

 

…

 

“When the market tanked, heart attack rates went up,” she said.

 

…

 

“A lot of behavioral finance is about how your mind affects markets and very little talks about the other way around,” Engelberg said in the interview. “We have evidence of causality coming from markets coming back to investor psychology, and that’s been a missing component in terms of empirical findings in a lot of prior research.”

So it would seem that Obamacare is perfectly timed as the bubbles the Fed has blown (and volatility suppression) will end up causing widespread illness…?


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/dPis8ELiuOo/story01.htm Tyler Durden

Investors Literally “Worried Sick” About Stock Losses

“It’s a very straightforward result,” UCSD professors Joseph Engleberg calmly states, hospitalizations rise on days when shares fall, and “people are hospitalized disproportionately for mental conditions.” Equity-market losses appeared to induce 3,700 market-related hospitalizations a year in California, which implies visits add roughly $650 million a year to U.S. health-care costs when data from the most-populous state are extrapolated nationally – another additional cost of QE? The findings, Bloomberg reports, show a one-day drop in equities of around 1.5% is followed by about a 0.26% increase in hospital admissions on average over the next two days.

 

Via Bloomberg,

Declining stocks worry people sick, if hospital records are any guide.

 

A one-day drop in equities of around 1.5 percent is followed by about a 0.26 percent increase in hospital admissions on average over the next two days, according to a March 2013 study by Joseph Engelberg and Christopher Parsons, associate professors of finance at the University of California at San Diego. The impact on psychological conditions such as anxiety or panic attacks is even stronger and more immediate, with admissions jumping twice that much in one day.

 

“It’s a very straightforward result,” Engelberg said yesterday at the American Economic Association’s annual meeting in Philadelphia, where he presented the findings. The results were based on almost three decades of daily admission data for California hospitals. Hospitalizations rise on days when shares fall, and “people are hospitalized disproportionately for mental conditions.”

 

Equity-market losses appeared to induce 3,700 market-related hospitalizations a year in California, which implies visits add roughly $650 million a year to U.S. health-care costs when data from the most-populous state are extrapolated nationally, Engelberg and Parsons estimated. They cited Census Bureau data showing an average hospitalization event costs around $21,000.

 

…

 

“People get stressed out and anxious and depressed when the stock market performs poorly,” Engelberg said in an interview after his presentation. “That may be very obvious, but I think this is the first paper to come along and try to take a good step at quantifying how big that is.”

 

The effect of a large market drop is twice as strong during periods of low volatility because “extreme returns are more surprising to investors,” Engelberg and Parsons concluded.

 

“Your expectations are set by what you experienced in the recent past,” Engelberg said in the interview. “If it wasn’t very bumpy and you see a big bump down today, that’s more likely to get you depressed or stressed or anxious than if you saw a lot of bumps in the past year.”

 

…

 

“When the market tanked, heart attack rates went up,” she said.

 

…

 

“A lot of behavioral finance is about how your mind affects markets and very little talks about the other way around,” Engelberg said in the interview. “We have evidence of causality coming from markets coming back to investor psychology, and that’s been a missing component in terms of empirical findings in a lot of prior research.”

So it would seem that Obamacare is perfectly timed as the bubbles the Fed has blown (and volatility suppression) will end up causing widespread illness…?


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/dPis8ELiuOo/story01.htm Tyler Durden

Major Nations Have Debts At 200 Year Highs

Today’s AM fix was USD 1,238.00, EUR 909.56 and GBP 756.54 per ounce.
Friday’s AM fix was USD 1,232.25, EUR 903.01 and GBP 748.45 per ounce.

Gold rose $12.10 or 0.99% Friday, closing at $1,236.40/oz. Silver edged up $0.19 or 0.95% closing at $20.16/oz. Platinum climbed $6.24, or 0.4%, to $1,406.74/oz and palladium fell $0.53 or 0.1%, to $725.72/oz. Gold and silver were both up on the week at 1.83% and 0.63%.

Gold rallied for its fifth day and last week showed its highest margin growth since October on signs of stronger demand from China. Gold ETF products have dropped to levels not seen since the 2008 financial crisis. With speculative hands exiting the market, physical demand may again drive prices.

The IMF published research by Harvard professors, Carmen Reinhart and Kenneth Rogoff, that highlighted that most countries in the Western world will require defaults, higher inflation and a savings tax to save their economies as debt levels reach an astounding 200 year high.

The debt crisis crippling sovereign economies may even require 1930’s style write offs or IMF tools for austerity as seen in the past.  The authors are familiar to the IMF, Rogoff was a former chief economist. They were lauded for their work, This Time is Different: Eight Centuries of Financial Folly,  but stirred controversy latter by suggesting that that growth slows sharply once public debt exceeds 90pc of GDP.

The crux of the paper highlights the following:
 
1. Wealthy nation’s policy makers are in denial that they are different than poorer nations and feel that their debt can be reduced by austerity cuts, growth, and tinkering.

2. Advanced economies wrote of debt in the 1930s. First World War loans from the U.S. were forgiven when the Hoover Moratorium ended in 1934, giving debt relief worth 24% of GDP to France, 22% to Britain and 19% to Italy.

3. During a further restructuring of the war reparations regime on Germany under the Versailles Treaty, the U.S. itself imposed haircuts on its own creditors worth 16% of GDP in April 1933 when it abandoned the Gold Standard.

4. The policy is essentially a confiscation of savings, mostly achieved by increasing inflation while rigging the system to stop markets taking evasive action. The UK and the U.S. ran negative real interest rates of -2% to -4% for several years after the Second World War. Real rates in Italy and Australia were -5%.

The Telegraph article by Ambrose Evans-Pritchard, illuminates that opponents of the present system find that extreme austerity without offsetting monetary stimulus is the main reason why debts have been spiralling upwards even faster in parts of Southern Europe.

Unstable eurozone states are particularly vulnerable to default because they no longer have their own sovereign currencies, putting them in a similar position as emerging countries that borrowed in U.S. dollars in the 1980s and 1990s. The eurozone is further troubled with an unstable banking system that may still require significant recapitalization.

As seen with the 2008 financial crisis, a catastrophe across the pond will ripple and affect all trading partners in our interdependent world. These type of macro economic risks continue to support the need for safe haven investments like gold and precious metals.

Click Gold News For This Week’s Breaking Gold And Silver News
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via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/FBzWDbuC2pM/story01.htm GoldCore

$500 Billion In 2013 Corporate Buybacks: Half Of QE

Everyone knows that the Fed, through the bank excess reserves/cash deposit pathway, participated in indirectly purchasing some $1 trillion in risk assets in 2013 through POMO – a process that many have confused with economic recovery. It is also known that corporate stock buybacks have managed to keep S&P500 EPS rising by removing the total number of shares outstanding (and thus lowering the S in EPS in a world where absolute E stubbornly refuses to grow): after all, someone has to keep those activist shareholders happy or else they release unpleasant letters about corporate CEOs.

However, what may not be known is just how large the total amount of corporate buybacks in the past year was. The answer: the second highest in history, just shy record of 2007 (when there was no additional $1 trillion in stock purchases coming from the Fed/Primary Dealer complex), amounting to $500 billion (even if non-US buybacks have been a tiny fraction of US).

Presented otherwise, corporations injected roughly half of the total POMO cash used by the Fed to push the S&P straight-line higher.

For the sake of stocks, and with QE tapering, let’s hope that this critical buyer remains in the market or else the tapped out retail investor may have a tough time to keep the S&P at its now more expensive than 2007 level for long.


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/KAd1Pa-E5xc/story01.htm Tyler Durden

In Terms of Real Stuff, The Dow's "New High" Is Pure Illusion

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

The rise in equities does not mean stocks "buy" more commodities in the real world–they buy less.

 
If the new highs in the Dow Jones Industrial Average (DJIA) are so wonderful, why does one share of the Dow-30 buy less than it did 14 years ago? What does a nominal new high in the stock market mean in the real world? The only way to know is to ask if the purchasing power of a share of the Dow buys more than it did when the Dow was at lower levels.
 
If one share of the Dow (defined as one share of each of the constituent 30 companies) buys less than it did when the Dow was as lower levels, the nominal new high is a mirage in terms of increased purchasing power of equities.
 
Another way of assessing the real-world impact of a nominal new high in equities is to perform a relative strength analysis: did equities outperform essential commodities, or did equities underperform these essentials? If the Dow underperformed, then a new high is an illusion: if equities buy less stuff in the real world, the nominal new high is misleading.
 
Longtime correspondent Harun I. recently shared a series of charts which reveals what's real and what's false about nominal new highs in the Dow:
 
Wonderful post, What's Real? What's Fake? (December 16, 2013). Below you will find some charts that may answer: What is real?
 
RS charts are not new to us, but they need constant study. Nobody eats, clothes, shelters, heats their shelter or fills their gas tank with equity shares. Therefore, when we convert those shares to currency in order to purchase things that are generally useful, their real value is revealed. Purchasing power cannot be faked.
 
There are several questions that can be explored, however, today I wish to point out the most obvious.
 
The trend in commodities relative equities over the period ranging from 1970-2000 was down. This indicated that the Dow outperformed commodities, or put another way, was able to purchase more per unit during this time. It is useful to remember that, as you and many others have pointed out, that during this time debt expanded as well. Two wage earners were required per household to produce a standard of living that once required only one wage earner. This effectively was a 50% loss of purchasing power.
 
However, the fact that household debt expanded to the extent that it has in order to maintain a particular standard of living with even two wage earners suggests an even greater decline in net purchasing power. But I digress.
 
The downtrend lines drawn on the charts below indicate secular trends that were in place for approximately a thirty year period, much like the decline in interest rates. With equities at new nominal highs, there are many who argue that the worst is behind us.
 
However, as I point out on the first chart (Gold/Dow Ratio), the amount of debt that created the secular bull market previously is dwarfed by the amount of debt that it has taken to create what may be a normal correction in what appears to be a secular bear phase. Despite new historic nominal highs, despite parabolic increases in public debt, not one chart displayed indicates the Dow as having recovered its purchasing power which peaked roughly in 1999.
If we are to believe that the worst is over, we must at the very least answer a few basic questions:
 
–How much debt is required to get back to the peak in equity purchasing power in 1999?
 
–Assuming the next leg down is the same as the previous leg down, how much debt would be required to produce such a move?
 
Conversely, if they are wrong, if the commodity cycle has reversed and the bear phase in equities resumes, how much debt will be incurred while fighting the commodity cycle all the way back to its historic highs?
 
In either scenario, who is going to take on what will be stupefying levels of debt (after all, it is a geometric progression), and how will it be paid back?
 
What is real? These charts that lay bare the falsity that "everything is just peachy" are real. Central bank activity is real. Their activity allows nations to bid for commodities for which they produce too little to pay for outright. They have created multigenerational obligations that will likely never be repaid. Keeping commodities well bid based on improbable (impossible?) promises is causing real global instability.
 
The Fed is leverage 72 to 1. Either way these cha
rts break will represent reality, a reality that will become increasingly unstable.
 
As for the status quo’s defense of the farce being perpetrated, they will do what we all have observed in children caught doing something naughty. They will lie. It may be understandable in children but in adults selected for national leadership it is gravely disturbing. From Nixon’s, “I’m not a crook”, to Clinton’s, “I didn’t have sex with that woman”, and Nancy Pelosi's defense of the ACA, "the more we see of it the more we will like it" (paraphrased).
 
It is all very disturbing. Whether there exists a pathological disconnect with reality, intentional deception, or a tendency to revert to childhood psychological defense mechanisms, such behavior from those entrusted with so much is a blaring warning signal.

Thank you, Harun, for an insightful assessment of value and the unsustainable absurdity of a political and financial system dependent on debt, propaganda and falsehoods for its survival. Here are the charts, with comments by Harun and myself as noted.


Federal debt:

The rise in equities does not mean stocks "buy" more goods in the real world–they buy less. So much for "new highs"–the nominal new highs in equities is pure illusion in terms of purchasing power.


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/t4rXzKG9Q8U/story01.htm Tyler Durden

In Terms of Real Stuff, The Dow’s “New High” Is Pure Illusion

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

The rise in equities does not mean stocks "buy" more commodities in the real world–they buy less.

 
If the new highs in the Dow Jones Industrial Average (DJIA) are so wonderful, why does one share of the Dow-30 buy less than it did 14 years ago? What does a nominal new high in the stock market mean in the real world? The only way to know is to ask if the purchasing power of a share of the Dow buys more than it did when the Dow was at lower levels.
 
If one share of the Dow (defined as one share of each of the constituent 30 companies) buys less than it did when the Dow was as lower levels, the nominal new high is a mirage in terms of increased purchasing power of equities.
 
Another way of assessing the real-world impact of a nominal new high in equities is to perform a relative strength analysis: did equities outperform essential commodities, or did equities underperform these essentials? If the Dow underperformed, then a new high is an illusion: if equities buy less stuff in the real world, the nominal new high is misleading.
 
Longtime correspondent Harun I. recently shared a series of charts which reveals what's real and what's false about nominal new highs in the Dow:
 
Wonderful post, What's Real? What's Fake? (December 16, 2013). Below you will find some charts that may answer: What is real?
 
RS charts are not new to us, but they need constant study. Nobody eats, clothes, shelters, heats their shelter or fills their gas tank with equity shares. Therefore, when we convert those shares to currency in order to purchase things that are generally useful, their real value is revealed. Purchasing power cannot be faked.
 
There are several questions that can be explored, however, today I wish to point out the most obvious.
 
The trend in commodities relative equities over the period ranging from 1970-2000 was down. This indicated that the Dow outperformed commodities, or put another way, was able to purchase more per unit during this time. It is useful to remember that, as you and many others have pointed out, that during this time debt expanded as well. Two wage earners were required per household to produce a standard of living that once required only one wage earner. This effectively was a 50% loss of purchasing power.
 
However, the fact that household debt expanded to the extent that it has in order to maintain a particular standard of living with even two wage earners suggests an even greater decline in net purchasing power. But I digress.
 
The downtrend lines drawn on the charts below indicate secular trends that were in place for approximately a thirty year period, much like the decline in interest rates. With equities at new nominal highs, there are many who argue that the worst is behind us.
 
However, as I point out on the first chart (Gold/Dow Ratio), the amount of debt that created the secular bull market previously is dwarfed by the amount of debt that it has taken to create what may be a normal correction in what appears to be a secular bear phase. Despite new historic nominal highs, despite parabolic increases in public debt, not one chart displayed indicates the Dow as having recovered its purchasing power which peaked roughly in 1999.
If we are to believe that the worst is over, we must at the very least answer a few basic questions:
 
–How much debt is required to get back to the peak in equity purchasing power in 1999?
 
–Assuming the next leg down is the same as the previous leg down, how much debt would be required to produce such a move?
 
Conversely, if they are wrong, if the commodity cycle has reversed and the bear phase in equities resumes, how much debt will be incurred while fighting the commodity cycle all the way back to its historic highs?
 
In either scenario, who is going to take on what will be stupefying levels of debt (after all, it is a geometric progression), and how will it be paid back?
 
What is real? These charts that lay bare the falsity that "everything is just peachy" are real. Central bank activity is real. Their activity allows nations to bid for commodities for which they produce too little to pay for outright. They have created multigenerational obligations that will likely never be repaid. Keeping commodities well bid based on improbable (impossible?) promises is causing real global instability.
 
The Fed is leverage 72 to 1. Either way these charts break will represent reality, a reality that will become increasingly unstable.
 
As for the status quo’s defense of the farce being perpetrated, they will do what we all have observed in children caught doing something naughty. They will lie. It may be understandable in children but in adults selected for national leadership it is gravely disturbing. From Nixon’s, “I’m not a crook”, to Clinton’s, “I didn’t have sex with that woman”, and Nancy Pelosi's defense of the ACA, "the more we see of it the more we will like it" (paraphrased).
 
It is all very disturbing. Whether there exists a pathological disconnect with reality, intentional deception, or a tendency to revert to childhood psychological defense mechanisms, such behavior from those entrusted with so much is a blaring warning signal.

Thank you, Harun, for an insightful assessment of value and the unsustainable absurdity of a political and financial system dependent on debt, propaganda and falsehoods for its survival. Here are the charts, with comments by Harun and myself as noted.


Federal debt:

The rise in equities does not mean stocks "buy" more goods in the real world–they buy less. So much for "new highs"–the nominal new highs in equities is pure illusion in terms of purchasing power.


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/t4rXzKG9Q8U/story01.htm Tyler Durden