Gold Costs 80oz of Silver, Report 21 Feb, 2016

The big news is that the gold-silver ratio closed at 80. This is not only a new high for the move. It’s higher than it has been since 2008.

It’s also exactly what Monetary Metals has been calling for. Last week, we said the gold fundamental was $1,450 and the silver fundamental was $14.90 (i.e. a fundamental value for the ratio over 97 last week). This week, the ratio moved up, and it’s now 1.3 points closer. In other words, silver got cheaper when measured in gold terms.

We had a soggy dollars spotting this week (our term for an article that’s misleading or based on false assumptions). A gold mining executive declared that the people are losing faith in the central banks. The take-away was clear: the gold trade is on again! buy gold now, to make big profit$.

It should be bloody obvious that he just wants you to bid up the price of the product his company sells (i.e. gold). He wants to make money (i.e. dollars).

But that aside, our larger point is that articles like this (and there are plenty of them) are quite ironic. When there is a loss of faith, there will be a great paradigm shift. No longer will people think of gold going up, but of the dollar going down (and finally, collapsing). That is not occurring today. These articles exist just to rationalize a trade. The dollar still enjoys the full faith of everyone—most especially the gold bugs who need a currency in which to measure the worth of their gold, and in which to take their profit$ when they sell.

Read on for the only true picture of the gold and silver supply and demand fundamentals…

But first, here’s the graph of the metals’ prices.

       The Prices of Gold and Silver
prices

We are interested in the changing equilibrium created when some market participants are accumulating hoards and others are dishoarding. Of course, what makes it exciting is that speculators can (temporarily) exaggerate or fight against the trend. The speculators are often acting on rumors, technical analysis, or partial data about flows into or out of one corner of the market. That kind of information can’t tell them whether the globe, on net, is hoarding or dishoarding.

One could point out that gold does not, on net, go into or out of anything. Yes, that is true. But it can come out of hoards and into carry trades. That is what we study. The gold basis tells us about this dynamic.

Conventional techniques for analyzing supply and demand are inapplicable to gold and silver, because the monetary metals have such high inventories. In normal commodities, inventories divided by annual production (stocks to flows) can be measured in months. The world just does not keep much inventory in wheat or oil.

With gold and silver, stocks to flows is measured in decades. Every ounce of those massive stockpiles is potential supply. Everyone on the planet is potential demand. At the right price, and under the right conditions. Looking at incremental changes in mine output or electronic manufacturing is not helpful to predict the future prices of the metals. For an introduction and guide to our concepts and theory, click here.

Next, this is a graph of the gold price measured in silver, otherwise known as the gold to silver ratio. The ratio was up to a new record weekly close. 

The Ratio of the Gold Price to the Silver Price
ratio

For each metal, we will look at a graph of the basis and cobasis overlaid with the price of the dollar in terms of the respective metal. It will make it easier to provide brief commentary. The dollar will be represented in green, the basis in blue and cobasis in red.

Here is the gold graph.

       The Gold Basis and Cobasis and the Dollar Price
gold

The dollar went up a quarter of a milligram (i.e. the price of gold fell nine bucks). And the scarcity of gold (i.e. the cobasis, shown in red) fell a little.

That said, there’s still quite a bit of scarcity in the gold market. Although our fundamental price of gold is down 13 bucks, it’s still over $1,435. And that’s over $200 over the current market price.

Our prediction of a rising gold-to-silver ratio is not based on the common pattern of both metals going down—in dollar terms—with silver going down more.

As we noted in a prior report, it becomes easier to see in gold terms. The dollar and silver are both going down now—in gold terms.

Now let’s look at silver.

The Silver Basis and Cobasis and the Dollar Price
silver

We finally switched from looking at the March silver contract to the May. First Notice Day for March is a week from Monday and the bases are becoming very volatile. That said, and unlike in the past, the silver basis for March is still positive. We coined the term temporary backwardation, because contracts for gold and silver—and silver much more than gold—tended to tip into backwardation as they approached expiry. Not in silver now, at this price.

Unlike the trivial price move in gold, the one in silver was more substantial—40 cents. The silver cobasis (our scarcity indicator) barely budged. It’s still in the basement, rising from -1.55% to -1.51%. For reference, the gold cobasis is -0.32%.

We have been observing a pattern for several weeks. We wrote about this phenomenon a while back. I am talking about “icicles” on the price chart. They occur in the spot price, but not futures. Here is a picture of most of the trading day (times are Arizona time).

silver icicles

Notice the visual difference between the two. Spot has these dripping lines, where the price temporarily fell but then recovered before the close of the time period. These happen to be 15-minute candles, but the same thing occurs with other periods. If you watch it in real time, you see the price drop, then drop, then drop, then snap back. Repeatedly. This has been going on for weeks.

On the futures chart, the drooping lines are much less frequent, and appear more balanced with lines above (like what one would expect with normal market price fluctuations during any 15-minute block on any actively traded security).

What does it mean?

We think it shows in the price chart what we see in the basis. The silver basis is showing weak demand. For the May contract, the basis is 78 bps. This is the yield (quoted as an annualized percentage) that you can earn by carrying silver—buying metal and selling a future against it. It’s a spread, with no price risk, for a 3-month position. For reference, 3-month LIBOR is about 60 bps. The silver carry trade is attractive right now. Certainly, it’s much more attractive than carrying April gold, which yields 13 bps (annualized).

We think that what’s happening is that the price of silver metal is selling down, and every time the carry rises to a threshold, arbitrageurs are buying spot to sell futures and pocket that spread. If they wait for opportune moments, we’re sure they can make over 1%.

The marginal demand for silver is to go into carry trades, into the warehouse (we do not mean necessarily to be stored in a COMEX approved depository and this has nothing to do with those persistent rumors that the COMEX depositories are running out of metal, that they’ve sold the metal 100 times over, etc.) We are looking at marginal supply and marginal demand here.

The risk is that today’s marginal demand—namely the warehouse—can turn off abruptly. And it can become tomorrow’s supply.

Silver in the futures market—silver paper, you will—has more robust demand than silver metal in the spot market.

Metal, of course, is often bought unleveraged by hoarders. Paper is often bought by speculators, who could be using 10:1 leverage. We realize that this is not the Narrative that circulates in the silver bug community. Yet these icicles on the price chart offers another look, using a different data set than what Monetary Metals normally focuses on.

The fundamental price of silver fell a few pennies more than the market price this week. It’s about 80 cents below market.

The fundamental price of the ratio rose even more.

 

© 2016 Monetary Metals


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First Massachusetts Poll Shows Trump With ‘Yuuge’ Lead

With nine days until the Massachusetts Primary on March 1st (Super Tuesday), the first polls show Donald Trump with an enormous lead over his rivals for the GOP nomination (with Ted Cruz suffering the biggest setback). So much for all those Jeb supporters 'swinging' away from Trump.

 

According to The Emerson College Polling Society…

His largest lead yet heading into a vote.

 

On the other side, Bernie and Hillary are all tied up – time for a card-cutting or coin-toss…


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Were We Lied Into War?

Submitted by Justin Raimondo via AntiWar.com,

Donald Trump threw down the gauntlet at the last GOP presidential debate with his declaration that the Bush administration lied us into war, and the reverberations are still roiling the political waters on both the right and the left. If his candidacy does nothing else, it will have performed a great service to the nation by re-litigating this vitally important issue and drawing attention to the outrageous lack of accountability by the elites who cheered as we turned the Middle East into a cauldron of death and destruction. Trump has ripped the bandage off the gaping and still suppurating wound of that ill-begotten war, and the howls of rage and pain are being heard on both sides of the political spectrum.

On the neoconservative right, Bill Kristol’s sputtering outrage is a bit too studied to be taken at face value: is he really shocked that no one is coming to the defense of himself and his fellow neocons, who elaborated (with footnotes) the very lies that led us down the primrose path to what the late Gen. William E. Odom called “the worst strategic disaster in our history”?

Kristol’s Weekly Standard magazine promoted every conceivable narrative pointing to Saddam Hussein as the perpetrator of the 9/11 attacks, no matter how fantastic and bereft of evidence. Here he is accusing the Iraqis of being behind the dissemination of anthrax through the mails. Here is his subsidized magazine denying that the forged Niger uranium documents – the basis of George W. Bush’s claim in his 2003 State of the Union that Iraq was building a nuke – were an attempt to lie us into war. Here is neocon propagandist Stephen Hayes retailing a leaked “secret” memo to give credence to the debunked story of a meeting between 9/11 hijacker Mohammed Atta and Iraqi intelligence.

Every single one of these tall tales has been so thoroughly disproved that it’s enough to recall them in order to embarrass the perpetrators beyond redemption. Kristol & Co. served as a clearing house for these outright fabrications, which were then utilized by the Bush administration to make the case for war. And yet we have Peter Suderman, a senior editor over at Reason magazine, deriding Trump’s calling out of George W. Bush and his neocon intelligence-fabricators as a “conspiracy theory” on a par with birtherism and the weirdo 9/11 “truth” cult:

“[H]e is flirting with a kind of 9/11 trutherism when he accuses the Bush administration of having knowingly lied in order to push the country into war in Iraq, as he did in Saturday’s GOP debate.

 

“Now, as Byron York wrote on Twitter yesterday, you can reasonably interpret that charge as a general nod toward the idea that the Bush administration hyped the war effort beyond what the actual evidence could support, that the case for the war was, well, trumped up and ultimately misleading, built on insufficient proof, overconfidence, and mistaken assumptions. But Trump’s attack also leaves room for more radical, less grounded conspiracies about Bush and the war as all, and I suspect this is not an accident.

I would respectfully suggest that it is Suderman who needs “grounding” in the facts of this case. I would refer him to a project undertaken by our very own Scott Horton, whose radio program is essential listening for anyone who wants to be so educated: Scott has prepared a reading list on the occasion of the anniversary of the Iraq war, one that Suderman might want to make use of.

Of special interest is Seymour Hersh’s account of the Office of Special Plans, run by Abram Shulsky. This denizen of the murkier depths of the US intelligence community is a devotee of the philosopher Leo Strauss, who believed – as one scholar cited by Hersh put it – “that philosophers need to tell noble lies not only to the people at large but also to powerful politicians.” The OSP, set up in order to do an end run around the official intelligence community, specialized in retailing the tallest tales of Iraqi “defectors,” later proven to be self-serving fiction.

In another account of the administration’s tactics, Hersh describes how raw (and cherry-picked) “intelligence” marked “secret” was “funneled to newspapers, but subsequent C.I.A. and INR [State Department] analyses of the reports – invariably scathing but also classified – would remain secret.” Hersh points out that when the crude forgeries known as the Niger uranium papers – the basis for George W. Bush’s contention that Iraq was seeking uranium in “an African country – were exposed by the IAEA, Vice President Dick Cheney went on television and denounced the UN agency as being biased in favor of Iraq. Is this someone who was concerned with the truth?

Karen Kwiatkowski, who worked in close quarters with this parallel intelligence operation, says "It wasn’t intelligence‚ – it was propaganda. They’d take a little bit of intelligence, cherry-pick it, make it sound much more exciting, usually by taking it out of context, often by juxtaposition of two pieces of information that don’t belong together." Those who didn’t toe the neocon party line were purged, and replaced with compliant apparatchiks.

So was this simply ideological blindness, or outright lying? Robert Dreyfuss and Jason Vest, writing in Mother Jones, cite neoconservative foreign policy expert Edward Luttwak, who “says flatly that the Bush administration lied about the intelligence it had because it was afraid to go to the American people and say that the war was simply about getting rid of Saddam Hussein. Instead, says Luttwak, the White House was groping for a rationale to satisfy the United Nations’ criteria for war. ‘Cheney was forced into this fake posture of worrying about weapons of mass destruction,’ he says. ‘The ties to Al Qaeda? That’s complete nonsense.’”

Yet the American people didn’t know that at the time. The pronouncements of the Bush administration, and the War Party’s well-placed media network, led 70 percent of them to believe that the Iraqi despot was behind the worst terrorist attacks in American history – to the point that, even after this canard had been debunked (and denied by the White House) a large number of Americans still believed it. Not only that, but they believed the Iraqis had those storied “weapons of mass destruction,” and that the Bush administration was entirely justified in launching an invasion.

This is what Max Fisher’s account of the Trump-generated imbroglio fails to take into account. Fisher, who analyzes foreign policy issues for the left-of-center Vox.com, writes:

“Trump’s 10-second history of the war articulated it as many Americans, who largely consider that war a mistake, now understand it. And, indeed, Bush did justify the war as a quest for Iraqi weapons of mass destruction, which turned out not to exist.

 

“The other Republican candidates, who have had this fight with Trump before, did not defend the war as their party has in the past, but rather offered the party’s standard line of the moment, which is that Bush had been innocently misled by ‘faulty intelligence.’

 

“But neither version of history is really correct. The US primarily invaded Iraq not because of lies or because of bad intelligence, though both featured. In fact, it invaded because of an ideology.”

 

“…This is perhaps not as satisfying as the ‘Bush lied, people died’ bumper sticker history that has since taken hold on much of the left and elements of the Tea Party right. Nor is it as convenient as the Republican establishment’s polite fiction that Bush was misled by "faulty intelligence."

Fisher’s long account of how the neoconservatives agitated for war in the name of an “idealistic” ideology that sought to transform the Middle East into a “democratic” model is accurate as far as it goes. Yet the idea that the neocons were – or are – above fabricating evidence to make their case is naïve, at best. “If the problem were merely that Bush lied,” says Fisher, “then the solution would be straightforward: Check the administration’s facts. But how do you fact-check an ideology …?”

 What if the ideology justifies lying for a “noble” end? And of course the Bush administration’s facts were checked, both during and after the war (see above): what we can conclude from this fact-checking is that the policymakers 1) Started out with an agenda, 2) Suppressed all evidence that contradicted it, and 3) Made up “factoids” out of whole cloth, the most egregious being those contained in the Niger uranium forgeries and the outright lies disseminated by Ahmed Chalabi and his Iraqi National Congress.

We can see how the neoconservatives within the administration constructed a parallel intelligence-gathering apparatus, independent of – and usually in opposition to – the CIA and the rest of the intelligence community. We can further see how their intelligence product was “stovepiped” up to the highest echelons, and landed on the President’s desk unvetted and unconfirmed. All the safeguards against compromising the US intelligence stream were dismantled – to what purpose? Fisher doesn’t think to ask this vital question. Instead, he attributes it to “ideology”;

“It does not appear that the administration encouraged them to lie, but rather that deep-rooted biases led top officials to dismiss the mountains of intelligence that undercut their theories and to favor deeply problematic intelligence that supported it.

 

“… By all appearances, administration officials believed their allegations of Iraqi WMDs were true and that this was indeed sufficient justification. Why else would the US launch a desperate, high-profile search for WMDs after invading – which only ended up drawing more attention to how false those allegations had been?

 

“Rather, they had deceived themselves into seeing half-baked intelligence as affirming their desire for war, and then had sold this to the American people as their casus belli, when in fact it was secondary to their more high-minded and ideological mission that would have been too difficult to explain. That, more than overstating intelligence on WMDs, was the really egregious lie.”

But of course they had to launch a hunt for the WMD they knew weren’t there – after all, they had justified the war on this basis. And so what if they were never found? They got away with it, didn’t they? There was never any real investigation into the intelligence-gathering activities of the Office of Special Plans, or of efforts to suppress dissent within the mainstream intelligence agencies. This was scotched by the politicians, who never followed through with their “phase two” investigation of the murky circumstances surrounding the administration’s activities.

By the time it was revealed that the war critics were right and that there weren’t any WMD in Iraq, the neocons’ goal had already been accomplished – the destruction of Iraq and the establishment of a permanent pretext for a US military presence in the region. Whatever consequences would follow the revelation of the deception – and deception it was – would be borne by the hapless George W. Bush, who was never the sharpest blade in the drawer to begin – and whom the neocons soon threw overboard as someone not willing or able to carry out their full agenda.

The US intelligence stream had been contaminated for a purpose: some entity with an agenda that included getting us inextricably involved in the Middle East over the long term. But who?

Karen Kwiatkowski, who worked in the office that was to become the Office of Special Plans, is an eyewitness:

“In early winter, an incident occurred that was seared into my memory. A coworker and I were suddenly directed to go down to the Mall entrance to pick up some Israeli generals. Post-9/11 rules required one escort for every three visitors, and there were six or seven of them waiting. The Navy lieutenant commander and I hustled down. Before we could apologize for the delay, the leader of the pack surged ahead, his colleagues in close formation, leaving us to double-time behind the group as they sped to Undersecretary Feith’s office on the fourth floor. Two thoughts crossed our minds: are we following close enough to get credit for escorting them, and do they really know where they are going? We did get credit, and they did know. Once in Feith’s waiting room, the leader continued at speed to Feith’s closed door. An alert secretary saw this coming and had leapt from her desk to block the door. ‘Mr. Feith has a visitor. It will only be a few more minutes.’ The leader craned his neck to look around the secretary’s head as he demanded, ‘Who is in there with him?’

 

This minor crisis of curiosity past, I noticed the security sign-in roster. Our habit, up until a few weeks before this incident, was not to sign in senior visitors like ambassadors. But about once a year, the security inspectors send out a warning letter that they were coming to inspect records. As a result, sign-in rosters were laid out, visible and used. I knew this because in the previous two weeks I watched this explanation being awkwardly presented to several North African ambassadors as they signed in for the first time and wondered why and why now. Given all this and seeing the sign-in roster, I asked the secretary, ‘Do you want these guys to sign in?’ She raised her hands, both palms toward me, and waved frantically as she shook her head. ‘No, no, no, it is not necessary, not at all.’ Her body language told me I had committed a faux pas for even asking the question. My fellow escort and I chatted on the way back to our office about how the generals knew where they were going (most foreign visitors to the five-sided asylum don’t) and how the generals didn’t have to sign in.”

Israeli generals walking in and out of Feith’s office was the least of it. Feith himself, along with Richard Perle, David Wurmser and his wife Meyrav (all with links to Feith’s Office of Special Plans), had once prepared a strategy paper for Prime Minister Benjamin Netanyahu during his first term in office. Entitled “A Clean Break: A New Strategy for Securing the Realm,” the paper recommended a general offensive against Israel’s neighbors:

“Israel can shape its strategic environment, in cooperation with Turkey and Jordan, by weakening, containing, and even rolling back Syria. This effort can focus on removing Saddam Hussein from power in Iraq – an important Israeli strategic objective in its own right – as a means of foiling Syria’s regional ambitions.”

Stephen Walt and John Mearsheimer showed in their book, The Israel Lobby and US Foreign Policy, that the Jewish state’s American amen corner played an instrumental role in agitating for the Iraq war. As they pointed out, “A Clean Break”

“[C]alled for Israel to take steps to reorder the entire Middle East. Netanyahu did not follow their advice, but Feith, Perle and Wurmser were soon urging the Bush administration to pursue those same goals. The Ha’aretz columnist Akiva Eldar warned that Feith and Perle ‘are walking a fine line between their loyalty to American governments … and Israeli interests.’”

Whose interests were they pursuing while they manufactured talking points based on “faulty” intelligence in order to bamboozle Congress and the American people into fighting Israel’s war on Saddam Hussein?

But that was just the beginning of the long tortured road they led us down. As Ariel Sharon told a visiting delegation of American congressmen at the time, Iran, Libya, and Syria were next on Israel’s agenda:

“’These are irresponsible states, which must be disarmed of weapons mass destruction, and a successful American move in Iraq as a model will make that easier to achieve,’ said the Prime Minister to his guests, rather like a commander issuing orders to his foot-soldiers. While noting that Israel was not itself at war with Iraq, he went on to say that ‘the American action is of vital importance.’”

Two down, one to go.

Much of the “faulty” intelligence that found its way to the desks of Bush and Cheney originated with foreign intelligence agencies, and there is plenty of evidence that much of it came straight from Tel Aviv. Certainly the Israelis had an interest in using the United States military as a cat’s-paw against their traditional Arab enemies, notably Iraq. And the defense of Israel was often cited by the administration as a justification for targeting Saddam Hussein. This wasn’t the first time a foreign entity launched a covert operation to lure the United States into an overseas conflict, and it certainly won’t be the last – that is, unless and until we learn the real lesson of the Iraq war.

Yes, it was ideology that led us to commit ourselves to become the policemen of the Middle East – but the adherents of that ideology utilized methods that included fabricating “evidence” of Iraqi WMD. One aspect of neoconservative ideology conveniently left out of Fisher’s otherwise comprehensive analysis of the neocon mindset is their dedication to Israel as a model “democracy” and our ideal ally which must always be defended. An odd omission, to say the least.

If we look at the Iraq war as a wildly successful covert operation to lure us into a position from which it is almost impossible to extricate ourselves – all to the advantage of a certain Middle Eastern “democracy” beloved by the neocons – then the whole disastrous episode begins to make sense. If such is the case, then why should the perpetrators care if no WMD were found after the invasion? It would be no skin off the Israelis’ noses: Bush would get the blame, not Bibi. And of course the operatives inside the administration responsible for skewing the intelligence could always claim to have been mistaken: after all, everybody thought the WMD were there, and in any case they would never be held to account. Since when is anybody in our government held accountable for anything?

Yes, I know, this is a “conspiracy theory,” and therefore we aren’t allowed to consider it, let alone examine the facts that back it up. Nations never engage in conspiracies, and government officials never lie.

And if you believe that, there’s a bridge in Brooklyn you might be interested in purchasing….


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South Dakota Is The ‘Sleepiest’ State In America

Americans are not getting enough sleep, according to a new report from The CDC. More than one-third of adults in the US get less than the 'required' 7 hours sleep per night, leading to greater chance for obesity, high blood pressure and other diseases related to the digestion of food into energy. Interestingly it is the laid-back Hawaiians that get the least sleep, but South Dakota has the highest percentage of those getting seven hours of sleep each night, at 71.6%.

“People just aren’t putting sleep on the top of their priority list,” Dr. Anne Wheaton, an epidemiologist at the CDC, told CNN.

 

“They know they should eat right, get exercise, quit smoking, but sleep just isn’t at the top of their board. And maybe they aren’t aware of the impact sleep can have on your health. It doesn’t just make you sleepy, but it can also affect your health and safety.”

The breakdown of who gets most (and least) sleep is as follows…

On a geographic level, those in South Dakota have the highest percentage of those getting seven hours of sleep each night, at 71.6%, while those laid back Hawaiians living on the islands are getting the least amount, with just 56.1% getting seven hours of slumber. Virginia, Washington D.C. and those in the New England region are getting decent amounts of nighttime regeneration, while people in Indiana, Ohio, Michigan, Kentucky, and West Virginia are not getting much slumber.

 

 

White Americans are getting the highest level of sleep, at 66.8%, followed by Hispanics with 65.5%, Asians 62.5%, American Indians and Alaska Natives 59.6% and non-Hispanic blacks at 54.2% and Native Hawaiians and Pacific Islanders at only 53.7%.

 

Those with college degrees are resting at night seven hours at higher than average numbers, at 71.5%, as do those who are married, at 67.4%, while only 55.7% of those divorced, widowed or separated sleep seven hours.

As The CDC explains:

To promote optimal health and well-being, adults aged 18–60 years are recommended to sleep at least 7 hours each night. Sleeping <7 hours per night is associated with increased risk for obesity, diabetes, high blood pressure, coronary heart disease, stroke, frequent mental distress, and all-cause mortality.

 

Insufficient sleep impairs cognitive performance, which can increase the likelihood of motor vehicle and other transportation accidents, industrial accidents, medical errors, and loss of work productivity that could affect the wider community.

Perhaps that is why US productivity is so poor?

The solution is entirely untenable… Put The Gadgets down!!

 recommended lifestyle changes including going to bed at the same time each night, rising at the same time each morning as well as removing televisions, computers, mobile devices from the bedroom.

Where does your state rank?


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Germany’s Looming Demographic Cliff

Having shown that the world is turning Japanese with tales of economic malaise, extreme monetary policy, and negative rates, Visual Capitalist's Jeff Desjardins shows that Germany, with its 5-yr government bond currently trading at a -0.33% yield, is no exception to this story. However, negative yields are not the only concern that the country has in common with Japan.

It’s the overall demographic picture that is worrying, and it could have a big effect on Germany’s economic future as well as the tough choices that must be made today.

 

Courtesy of: Visual Capitalist

 

GERMANY’S IMPORTANCE

Germany is the most populous and productive economy in Europe, with 80 million people and a GDP of almost $4 trillion. It’s also the world’s third largest exporter, and that’s why it had the largest trade surplus globally in 2014 with $285 billion.

For all of its economic power, Germany has a key weakness that could potentially be its Achilles heel: it’s projected that Germany’s population will decline significantly over the coming decades, and the ratio of workers to dependents will become one of the worst in the world.

THE MATH

Every year, there are 8.4 births and 11.3 deaths per 1,000 people in Germany. The way this plays out over time is that the percentage of Germans under 15 will fall to 13% of the population by 2050, while the amount of people over 60 years old is to rise to 39%.

In the future, it is likely that there will not be enough youth or workers in the country. As Baby Boomers retire, there will be a larger burden placed on those paying into the government’s social safety net and other programs. Further, this widening gap will also mean a significant loss of experience, skill, and know-how in the workforce that will create coinciding economic challenges for the population.

In many Western nations, immigration plays a key role in keeping a population with low birth rates to be sustainable. However, in Germany’s case, both the high and low immigration scenarios look dire for future numbers. Germany’s state statistical authority currently projects a “high immigration” trend resulting in a drop to 73.1 million people by 2060, while a low-end estimate sees the population falling all the way to 67.6 million.

CHOICES

The U.N. projects that one in every six Germans will be over 80 years old by 2050. Are Germans comfortable with their nation remaining on this path?

If yes, then they must also be comfortable with a significant decrease in Germany’s economic role in the future. The country will almost certainly be on a more level stage with the U.K. and France, and it will have a diminished place on the world stage as Asia and Africa continue their rise. Tax rates will surge as a decreasing amount of workers pay into the system, and economic growth could stall in such a way that Germany has its own “Lost Decade”.

 

If no, then Germans must accept that there is only one realistic way to combat this trend: to open the immigration floodgates even more. While this is not what many Germans want to hear, especially as the current migrant and refugee crisis progresses, it is an option that must be weighed with careful consideration.

Either way, there are difficult choices to be made. How Germany proceeds with this question has implications both today and tomorrow on cultural, economic, and political levels.


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NYSE Short Interest Nears Record, Pre-Lehman Level

In the last two months, NYSE Short Interest has risen 4.5%, back over 18 billion shares near the historical record highs of July 2008 (and up 7 of the last 9 months).

 

There are two very different perspectives on could take when looking at this data…

  • Either a central bank intervenes, or a massive forced buy-in event occurs, and unleashes the mother of all short squeezes, sending the S&P500 to new all time highs, or
  • Just as the record short interest in July 2008 correctly predicted the biggest financial crisis in history and all those shorts covered at a huge profit, so another historic market collapse is just around the corner.

The correct answer will be revealed in the coming weeks or months… but we know what happened last time…

 

Charts: Bloomberg


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Liberal Activism Is Giving Students Panic Attacks, Depression, Failing Grades

CollegeIt’s exhausting work, being offended all the time. But is activism actually ruining college kids’ mental health? A report on the emotional state of Brown University student-protesters—who suffer from suicidal thoughts, sleeplessness, panic attacks, and failing grades as a result of their advocacy—paints a weirdly alarming picture. 

Brown University’s inattentiveness to students’ demands for greater diversity is slowly killing them, according to The Brown Daily Herald: 

“There are people breaking down, dropping out of classes and failing classes because of the activism work they are taking on,” said David, an undergraduate whose name has been changed to preserve anonymity. Throughout the year, he has worked to confront issues of racism and diversity on campus. 

His role as a student activist has taken a toll on his mental, physical and emotional health. “My grades dropped dramatically. My health completely changed. I lost weight. I’m on antidepressants and anti-anxiety pills right now. (Counseling and Psychological Services) counselors called me. I had deans calling me to make sure I was okay,” he said. 

As students rallied to protest two racist columns published by The Herald and the alleged assault of a Latinx student from Dartmouth by a Department of Public Safety officer, David spent numerous hours organizing demonstrations with fellow activists. Meanwhile, he struggled to balance his classes, job and social life with the activism to which he feels so dedicated. Stressors and triggers flooded his life constantly, he said. 

I don’t begrudge students choosing activism over classes. If that’s what they want to spend their time on, fine. 

But their anguish seems grossly disproportionate to their situation. The publication of two racially problematic columns does not exactly suggest that Brown is in the midst of a great civil rights crisis. In fact, if this is students’ paramount concern, then they are enormously fortunate and privileged people. 

National Review‘s Katherine Timpf suggests that students struggling to balance their mental and emotional needs with the demands of their coursework might consider giving up on school entirely. One doesn’t need a degree to be a full-time activist, after all. 

But there’s a problem with that idea: when separated from their precious campus safe spaces, ex-students might encounter some actual injustices in the real world (police brutality, the War on Drugs, warrantless government spying, unauthorized foreign interventions—you name it). And I’m just not sure people who burst into tears every time they encounter some mild pushback on a relatively trivial issue—like an offensive column—are ready to turn pro.

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French President Threatens To “Suspend” Nations That Elect “Far-Right” Polticians

Last month, we documented the burgeoning spat between Brussels and Poland over the latter’s move to approve new laws that allow the conservative (and eurosceptic) Law and Justice (PiS) government to name the chiefs of public TV and radio, and select judges for Poland’s constitutional court.

In response to a bloc-wide backlash, Polish minister Zbigniew Ziobro sent a letter to EU commissioner Gunther Oettinger in which Ziobro dismissed criticism of the new laws as “silly.”

Oettinger earlier suggested that Poland be put under supervision for possible violations of democratic principles and after the Polish Wprost weekly ran a cover depicting Angela Merkel, Jean Claude-Juncker, and other eurocrats as Nazis who “want to supervise Poland again,” Brussels hit back by launching a review of the country’s new media laws. Under the “rule of law” mechanism, the EU Commission can compel member states to change measures that pose “a systematic threat” to democracy.

But that’s not all. According to comments from French President Francois Hollande on Friday, Europe could move to “suspend” countries in which far-right governments rise to power.

French President Francois Hollande warned Friday that an EU member state could be sanctioned if the extreme-right came to power there — and could even be suspended from the bloc,AFP reports.

“A country can be suspended from the European Union,” the President told France Inter radio.

“Human rights watchdog the Council of Europe last week expressed concern at legislative changes proposed by Poland’s new right-wing government that have been described both at home and abroad as unconstitutional and undemocratic,” AFP goes on to say, adding that “similar concerns have been expressed about Hungary’s right-wing Prime Minister Viktor Orban.”

“When the freedom of the media is in danger, when constitutions and human rights are under attack, Europe must not just be a safety net. It must put in place procedures to suspend (countries) — it can go that far,” Hollande said.

“Checks,” he said, are necessary on Poland. 

There are a couple of things to note here. First, it’s not at all clear why it should be up to France how another country’s citizens vote. Indeed, there’s something terribly ironic about the idea of punishing a country for their voting preferences in the name of democracy. There’s certainly nothing democratic about telling entire countries who they’re allowed to elect. 

Second, Hollande’s comments seem to reflect fears that the worsening refugee crisis has led to a revival of nationalism in Europe. Between the growing support for PEGIDA, which staged bloc-wide rallies earlier this month)…

…and the popularity of groups like the “Soldiers of Odin” in Finland…

…it’s clear that the far-right is indeed staging a comeback. One wonders how many nations Hollande and Brussels are prepared to “suspend.”

Or perhaps it’s the other way around. Given the shifting sentiment, perhaps the far-right will “suspend” the bloc’s Francois Hollandes for failing to keep Western Europe secure in the face of myriad threats to the bloc’s territorial inegrity and cultural heritage.


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Iraqis Celebrate As Threat Of 3rd Bush Presidency Is Over

The New Yorker’s Andy Borowitz unleashes his satirical tongue after Jeb’s departure from the Presidential race…

Baghdad – Thousands of Iraqis poured out into the streets to celebrate in the early hours of Sunday morning, as the threat of a third Bush Presidency was declared over at last.

 

 

Iraqis, on edge about the prospect of another Bush in the White House since former Governor Jeb Bush entered the race last year, had been watching returns from the South Carolina primary with a mixture of anxiety and cautious optimism.

 

Moments after the first evidence of Bush’s dismal finish began trickling in, however, Iraqis roared with glee as spontaneous festivities erupted across the country.

 

Observers were stunned to see Sunnis, Shiites, and Kurds dancing together in the streets, putting aside their enmity to celebrate an outcome that they never dreamed possible.

 

“You must understand, we Iraqis have been living with the fear of a third Bush Presidency for months now,” Sabah al-Alousi, a Baghdad shoemaker, said. “Now we can begin to think about a future, for ourselves and our families.”

 

Asked about the possibility of a Trump Presidency, he waved off the question. “This is the greatest day for my country,” he said. “I will let nothing spoil this day.”

Fact or Fiction?


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Germans Cheer As Refugee Center Burns, Crowds Stop Firefighters From Extinguishing Blaze

Over the past two months, Europeans have become completely fed up with the wave of refugees streaming into the bloc from the Mid-East.

After demonstrating a remarkable degree of restraint and tolerance in the wake of the attacks that left 130 people dead in Paris in November, the string of sexual assaults that swept Cologne, Germany on New Year’s Eve was the last straw for a German populace that had, until this year anyway, largely remained supportive of Angela Merkel’s “yes we can” approach to settling the 1.1 million asylum seekers that the country took in last year.

That’s not to say that there aren’t still large swaths of the German population that support the migrant cause. It’s simply to note that the general consensus is no longer teddy bears, water bottles, and hugs. Discontent with the Iron Chancellor’s approach is growing and the tension is palpable. Renewed support for PEGIDA is emblematic of the direction in which the country is headed and this weekend we got the latest evidence that Germany’s patience with migrants is wearing increasingly thin.

Residents of Bautzen (in Saxony) cheered on Saturday night as a planned migrant center burned in what very well may have been an arson. “Some people reacted to the blaze with derogatory comments and undisguised joy,” Deutsche Welle notes, before adding that “the incident in Bautzen comes shortly after a mob shouting anti-migrant slogans blocked a bus full of refugees in Clausnitz, also in Saxony.” Here’s the video of the Clausnitz incident:

Reports indicate that a number of witnesses in Bautzen attempted to prevent firefighters from extinguishing the blaze.

Saxony’s chief minister, Stanislaw Tillich, called both incidents “disgusting and hateful.

Yes, “disgusting and hateful,” which is precisely what the German people are saying about the string of sexual assaults and the threat of Islamic terrorism.

Needless to say, when German citizens are actively attempting to keep firefighters from curtailing a blaze, it says something profound about public opinion. Then again, we suppose this isn’t anything new. As Deutsche Welle goes on to report, “there were more than 1,000 arson attacks on planned and completed refugee shelters across Germany in 2015.”

Perhaps support for Merkel’s open-door approach was never that strong in the first place.


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