iftttwall

It would appear the Chinese central bank currency squeeze is back as money-market rates are exploding higher once again. With the outpuring of liquidity heading into the new-year holiday, the post-celebration hangover was always likely unless PBOC just kept pumping but judging by the 500bps spike in overnight Yuan interbank rates to 9.3%, more than a few banks are desperate for some liquidity. We note that the last six times that Chinese banks have suffered liquidity constraints, US equities have tumbled…

While not at the extremes of mid December or mid-January’s catastrophes, O/N Yuan depo rates are soaring…

 

As it seems PBOC is not quite as liberal with its liquidty post-new-year…

 

and that bodes ill for US equities as the global liquidity problems this signals send ripples through every conduit (and their corresponding risk asset)…

 

Still 9.3% overnight deposit rates are probably nothing, right?

via Zero Hedge http://ift.tt/2121ewG Tyler Durden

Authored by Eric Zuesse,

Whereas Bernie Sanders claims to represent the bottom 99%, Hillary Clinton claims to represent a coalition of groups who are victimized by bigots (racists, sexists, etc.: she aims at women, homosexuals, Blacks, etc.). Whereas Bernie seeks to mobilize the bottom economic 99% against the top 1% who have scooped up almost all of the economic benefits that Americans have gained since 1993, Hillary seeks to mobilize all bigotry-victims against all of the many types of bigots. These pitches are fundamentally different from one-another. In fact, they’re diametrically opposite diagnoses of the biggest ailment threatening the U.S. future: our perilous economy.

At the close of the Wisconsin Democratic debate on February 11th, Hillary Clinton made an appeal to members of labor unions, and then said:

"I think that a lot of what we have to overcome to break down the barriers that are holding people back, whether it's poison in the water of the children of Flint, or whether it's the poor miners who are being left out and left behind in coal country, or whether it is any other American today who feels somehow put down and oppressed by racism, by sexism, by discrimination against the LGBT community, against the kind of efforts that need to be made to root out all of these barriers, that's what I want to take on. … Yes, does Wall Street and big financial interests, along with drug companies, insurance companies, big oil, all of it, have too much influence? You're right. But if we were to stop that tomorrow, we would still have the indifference, the negligence that we saw in Flint. We would still have racism holding people back. We would still have sexism preventing women from getting equal pay. We would still have LGBT people who get married on Saturday and get fired on Monday.”

Bernie Sanders closed instead with:

“This campaign is not only about electing someone who has the most progressive agenda, it is about bringing tens of millions of people together to demand that we have a government that represents all of us and not just the 1 percent, who today have so much economic and political power.”

Hillary Clinton is saying that what’s “holding people back” is bigotry.

Bernie Sanders is saying that what’s holding people back is concentration of too much power in too few people – not meaning a concentration of too much power in a freely and democratically elected government (which Republicans constantly attack as having too much power), but instead meaning a concentration of too much power in the richest 1% who buy  the government, and who use it to make American workers compete against  the workers in Haiti, Honduras, Vietnam, etc., so as to benefit the global stockholders of international corporations by lowering wages, instead of to benefit American workers by increasing wages. He’s attacking a system that benefits global stockholders by lowering wages everywhere to some lowest common denominator, so as to increase profits and stock-values and executive compensation everywhere. Workers don’t receive the benefits of that; the stockholders and executives in international corporations do. That’s the “1%”, though actually it’s even more concentrated in the top 0.1%.

Hillary Clinton is saying that the main problem in America is America’s bigots — it’s no economic motivation, by billionaires who essentially buy the government, nor by anyone else. This political view, in which there are essentially no economic classes, but only bigots and their victims, is fundamentally different from Sanders’s view. It’s so different that in some other countries they would constitute two different political parties.

Sanders is saying that the main problem in America is actually America’s corruption — a system that he says has been very successfully gamed by “the billionaire class.”

That’s what the Democrats’ Presidential choice comes down to.

This choice is a stark one. Democratic voters are being asked which is the primary issue for government to overcome: countervailing excessive greed by the super-rich, or countervailing all bigotry by anyone? Both greed and bigotry are bad, but which is more the main function of government to countervail? That’s the question.

Hillary Clinton is saying that what American workers are pitted against is, essentially, bigots, individuals who are bigoted — bigoted against gays, against women, against Blacks, against Hispanics, etc.; they’re not  pitted against the controlling stockholders who are collectively represented by their corporation’s management and who want higher profits from paying lower wages. Hillary Clinton focuses on the cultural divide, the  various types of inter-ethnic conflicts, as being “what we have to overcome to break down the barriers that are holding people back.”

Bernie Sanders is saying that the big problem American workers are up against isn’t bigots — rich and poor — as much as it’s the unlimited greed of the controlling stockholders who are represented by management (even if they’re not  bigots). His diagnosis is that not only should workers have the collective-bargaining right against the corporation’s owners, just like those corporate owners themselves already possess the collective-bargaining right via managers they hire, but that workers should also be more the focus of government’s concern and sympathy than stockholders are, because there are far more workers than owners, and because a one-person-one-vote democracy is far better than a one-dollar-one-vote ‘democracy’ (the latter of which is otherwise called an “oligarchy” or an “aristocracy”), the latter of which is what Sanders campaigns to put a stop  to.

Hillary Clinton is saying that there is no common and shared enemy that oppressed employees have:  instead, the main problem is racist bigots in the case of Blacks; it’s homophobic bigots in the case of homosexuals; it’s misogynist bigots in the case of females, etcetera; and, if a Black happens also to be a homophobe, or a homosexual happens to be also an anti-Black racist, then each one of those victim-groups will be fighting against the bigoted members of the other  victim-groups. The chief job of the government, led by the U.S. President, is then somehow to punish all types of bigots equally, regardless of their particular  group, so as to minimize the complaints about bigotry from, and by, all Americans. That’s a balancing of groups against groups — a balancing of ethnicities. This is Clinton’s diagnosis and cure for America’s economic problems.

Hillary’s diagnosis isn’t economic or systemic, but instead cultural and individual — it’s actually individual against individual, instead of stockholders against employees. And, just as a particular victim of bigotry can also be a bigot (for example, a Black can be homophobic, sexist, or etc.), a particular employee can also be a stockholder; some individuals stand on both sides at once, there too; but those are all individual matters, not  systemic matters, and so they’re not really authentic issues of governmental policy. Hillary Clinton says that they are themain  issues of governmental policy — that people’s problems are mainly individual  problems, against bigots; not  systemic problems, against stealers-of-the-public’s-government — and she says that the government should focus on individuals’ problems, not on systemic problems. That’s her view, which she expresses on almost every occasion, though she doesn’t put it in quite this way — a systematic way.

Bernie Sanders, in contrast to Hillary Clinton, is saying that the oppressed do  have a common and shared (a systemic) enemy. Here is how he expressed this in a speech to the Democratic National Committee on 28 August 2015:  “We need a political movement which is prepared to take on the billionaire class and create a government which represents all Americans, and not just corporate America and wealthy campaign donors.” He was saying this to individuals — specifically, to the Democratic Party’s chief political agents — most of whose own career success has largely depended upon  that “billionaire class,” but Sanders was up-front to them about it. He even calls this “movement” a “revolution.” He’s not trying to hide his opposition to the staus-quo.

The Democratic Party’s Presidential contest isn’t really a contest between ‘idealism’ versus ‘pragmatism,’ such as some propagandists claim. To characterize either candidate as ‘the idealist’ versus ‘the pragmatist’ is false. That characterization of this contest is actually deeply deceptive, because it focuses on vague abstractions, whereas the real issue in the Democratic Party primaries now is totally nitty-gritty, and it concerns two alternative diagnoses of what has been going wrong with America’s economy in recent decades.

In Bernie’s view, American democracy is now in the emergency room; in Hillary’s view, complainers (against anything other than  bigots) are like mere hypochondriacs who simply don’t understand the experts who say that things aren’t so bad, and that therefore no “revolution” is needed.

Is America’s basic governmental problem bigotry (i.e., certain cultural and ‘values’ problems), as Hillary says;

 

or is it instead corruption (i.e., certain economic and governmental problems), as Bernie says?

These are two very different conceptions of what the U.S. Presidency is about.

And that’s the central choice in the Democratic Presidential primaries. More than anything else, that’s what the choice between Clinton and Sanders comes down to.

*  *  *

Investigative historian Eric Zuesse is the author, most recently, of  They’re Not Even Close: The Democratic vs. Republican Economic Records, 1910-2010, and of CHRIST’S VENTRILOQUISTS: The Event that Created Christianity.

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

There are 60 major stock exchanges throughout the world, and their range of sizes is quite surprising.

As Visual Capitalist's Jeff Desjardin notes, at the high end of the spectrum is the mighty NYSE, representing $18.5 trillion in market capitalization, or about 27% of the total market for global equities.

At the lower end? Stock exchanges on the tiny islands of Malta, Cyprus, and Bermuda all range from just $1 billion to $4 billion in value. Even added together, these three exchanges make up just 0.01% of total market capitalization.

 

 

The Trillion Dollar Club

There are 16 exchanges that are a part of the “$1 Trillion Dollar Club” with more than $1 trillion in market capitalization. This elite group, with familiar names such as the NYSE, Nasdaq, LSE, Deutsche Borse, TMX Group, and Japan Exchange Group, comprise 87% of the world’s total value of equities.

Added together, the 44 names outside of this aforementioned group combine for just $9 trillion, or 13%, of the world’s total market capitalization.

Northern Dominance

From a geographical perspective, it is the Northern Hemisphere that is dominant. North America and Europe both hold 40.6% and 19.5% respectively of the world’s markets, and the vast majority of Asia’s 33.3% lies north of the equator in places like Shenzhen, Hong Kong, Tokyo, and Shanghai.

Notable exchanges that are south of the equator include the Australian Securities Exchange, the Indonesia Stock Exchange, the Johannesburg Stock Exchange and the Brazilian BM&F Bovespa.

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

One look at Japan’s bond yields, which moments ago hit a fresh record low for the 20Y maturity as the curve slowly but surely inverts…

 

…. and one would think Haruhiko Kuroda would be delighted.

After all, when he launched NIRP three weeks ago, a world in which negative rates are now a reality, it should have been clear to everyone even children, that yields would collapse as the scramble for any positive yield was unleashed.

The only problem is that Kuroda did not care about yields – positive or negative: what he wanted was to crush the currency and to send the Nikkei soaring – the only two actual “arrows” of Abenomics. Sadly for the BOJ, this time it failed as precisely the opposite of what was expected happened.

 

But, as the WSJ wrote earlier today in an article explaining why the BOJ is baffled (at least before a call from the BOJ forced it to change the title to the far more politically correct “Bank of Japan Faces a New Opponent on Negative Rates: Main Street“)…

 

… Kuroda’s confusion has nothing to do with the market’s reaction; it has everything to do with the reaction by the public.

An appropriately very negative reaction.

Just yesterday, shortly after the BOJ’s shocking announcement, Kuroda found himself dodging a concerted attack in Parliament from lawmakers who charged the policy was “victimizing consumers and sending a message of despair“, the WSJ writes. 

Even a ruling-party member, Masahiro Ishida, called the policy hard to grasp. “It could have the opposite effect of confusing the market,” he said.

It already has. But the problem is not that the market is confused; it is that the market’s reaction to the BOJ’s NIRP, which as we explained previously was largely due to central banker “peer pressure” during this year’s Davos meeting, has led to a global revulsion against negative rates in general, thus validating the BOJ’s error.

The criticism has come as a surprise to central-bank officials who thought their efforts to spark lending and faster economic growth would gain more public support. “Those who understand this policy are criticizing us, and those who do not are also criticizing us,” said one official this week.

Here the WSJ adds something that is patenly wrong: “It is a symptom of a global problem. The more central banks move into unconventional policies, the harder it becomes to get their message across. That is a particular problem when the policies are supposed to work in part by inspiring confidence.”

Dead wrong: central bank policies are supposed to work by boosting the market; the narrative follows from there. It goes without sayinng that had Japan’s NIRP somehow sent stocks soaring and the Yen crashing, the avalanche of praise would have been constant and Kuroda would be deemed a hero in parliament. Alas for the BOJ – which failed at the simple task of manipulating the market higher in the initial kneejerk reaction – that did not happen, and now Kuroda is suddenly fighting for his professional life.

And since the BOJ’s market domination had finally cracked, a new narrative emerged: one which demonstrated the BOJ as being a bunch of “clueless losers”, with no understand of what they are doing.

Although negative interest rates have existed for some time in Europe, the idea was unfamiliar to most Japanese when it burst onto the front pages late last month. Initial accounts focused on what could happen to bank deposit rates. That is a sensitive issue in a society where wages have barely risen since the 1990s and where one in three citizens receives pension income.

 

“Deposit one million yen and earn annual interest of ¥10,” said the headline of an online article Tuesday by Japan’s biggest daily newspaper, the Yomiuri Shimbun, telling savers with nearly $10,000 in the bank that they could expect less than a dime in interest

But nothing demonstrates Kuroda’s bafflement quite as much as the outright hostile reception he got during his speech before parliament on Thursday:

In Parliament on Thursday, opposition lawmaker Shinkun Haku squared off with the Bank of Japan’s Gov. Kuroda on whether commercial banks would effectively introduce negative rates by hitting consumers with fees in excess of the tiny amount of interest paid. “Can you deny that banks will put an additional burden on average depositors?” Mr. Haku said. “If you can’t deny it, don’t. It’s a yes or no.”

 

Mr. Kuroda said he didn’t want to speculate about fees, but “there’s no chance that deposit interest rates will turn negative.”

Which is a lie – not only will deposit rates ultimately turn negative, the only questions are when and by how much. 

He said negative interest rates had helped spur lending in Europe with few harmful effects. “Europe has much larger minus interest than the Bank of Japan, and I haven’t heard of minus interest rates being applied to individual depositors there,” he said.

Someone please inform the Credit Suisse or Deutsche Bank stock about the “few harmful effects”, or the fact that Europe’s economy is once again slowly relapsing into a recession, only this time with some 1.5 million Syrian refugees to partake in the festivities.

It didn’t stop there:

“Mr. Kuroda’s responses merely inspired further attacks from the opposition, which has been looking with little success for an issue with which to dent Prime Minister Shinzo Abe’s popularity…. a Communist Party lawmaker, Akira Koike, said negative interest rates were bad public relations. “You have sent a message to the people that they had better watch out because Japan’s economy is in trouble,” Mr. Koike said.

Which in itself is a stunning of just how stupid communists, or anyone else for that matter, still are and are utterly incapable of grasping the most simple equality of the post-crisis era, namely that any central banks intervening = the economy is in trouble.

And of course Japan’s economy is in trouble: it has had 6 recessions in the past 6 years as it rushes toward a demographic singularity in which there is simply no longer a Japanese population. Japan’s economy is in so much trouble, the only question is when does it disintegrate into a Venezuela-style supernova.

But we can see where the confusion comes from. As the WSJ conveniently notes, central banks “policies are supposed to work in part by inspiring confidence” and instead “lawmakers charged the policy was victimizing consumers and sending a message of despair.“

No: the message is one of reality, because the can kicking for Japan, having gone on for 40 years, is almost over. The good news about a central bank-free future is that it will hurt – a lot – for a while, and then normal growth can resume, but not before trillions in fake paper wealth are wiped out and quadrillions (in Yen terms) in debt is swept away.

As for Kuroda, we will fondly remember him forever as Peter Panic. There was also this pearl in the WSJ piece: “opposition lawmaker Motoyuki Odachi accused Mr. Kuroda of sounding like a World War II propaganda broadcast.“

Dear Motoyuki, all central bankers sound like a World War II propaganda broadcast, one on which the time has long ago come to pull the plug.

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

Gold is having one of its best starts to a year in history as investors start to lose faith in central bankers’ ability to deal with economic challenges. Fed skeptics as well as capitulating bullion bears are being drawn to the precious metals as Bloomberg reports,

“The safe-haven demand appears to be where people are focused on, and that is on a loss of faith in central banks being able to manage through this period,” said Klein, executive chairman of Australia’s second-biggest producer.

 

Bullion is “certainly getting more attention from people who have generally been bears over the past few years,” Klein said in a phone interview.

Even with the weakness of the last few days, Gold is still up 15% YTD – the best in at least a decade…

Prices have gained as investors scaled back expectations for tighter policy from the Fed…

“There seems to be general skepticism now, both from the Fed’s language and from market participants, as to whether that’s going to be possible,” said Klein, who’s been a gold-industry executive for about 20 years.

 

“All the financial markets, and all the asset classes, seem to be highly sensitive to central-bank policy.”

Gold's standout year is also driving some long-term bears to capitulate… (as Bloomberg details)

For years, ABN AMRO Group NV’s Georgette Boele has been a staunch bear on gold as prices tumbled. Now with gold on the brink of a bull market, she’s changed her tune.

 

Boele changed her year-end forecast to $1,300 an ounce from $900, according to report released Tuesday.

 

 

ABN Amro is becoming more pessimistic about the global economy, especially in the U.S., emerging markets and countries with exposure to oil. Boele no longer expects the Federal Reserve to raise interest rates this year.

 

“Having been long-standing bears we have now turned bullish on precious metal prices,” Boele wrote. “Our new scenario sees a longer period of weaker global growth.”

As Klein concludes, "it does seem like there’s a general review of gold as an investment sector by people who haven’t been interested in it for years." And yet Goldman will still do its best to tell you to sell your gold (to them).

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

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

The stark truth is nobody wants yuan any more.

The U.S. dollar (USD) has gained over 35% against major currencies since 2011.

China's government has pegged its currency, the yuan (renminbi) to the USD for many years. Until mid-2005, the yuan was pegged at about 8.3 to the dollar. After numerous complaints that the yuan was being kept artificially low to boost Chinese exports to the U.S., the Chinese monetary authorities let the yuan appreciate from 8.3 to about 6.8 to the dollar in 2008.

This peg held steady until mid-2010, at which point the yuan slowly strengthened to 6 in early 2014. From that high point, the yuan has depreciated moderately to around 6.5 to the USD.

Interestingly, this is about the same level the yuan reached in 2011, when the USD struck its multiyear low. Since 2011, the USD has gained (depending on which index or weighting you choose) between 25% and 35%. I think the chart above (trade-weighted USD against major currencies) is more accurate than the conventional DXY index.

Due to the USD peg, the yuan has appreciated in lockstep with the U.S. dollar against other currencies. On the face of it, the yuan would need to devalue by 35% just to return to its pre-USD-strength level in 2011. This would imply an eventual return to the yuan's old peg around 8.3–or perhaps as high as 8.7.

Longtime correspondent Mark G. submitted this article China's Subprime Crisis Is Here:

The dynamic is clear. A splurge of new lending can help to dilute existing bad loans, but only at a cost. This is a game that can't continue forever, particularly if credit is being foisted on to an already over-leveraged and slowing economy. At some point, the music will stop and there will have to be a reckoning. The longer China postpones that, the harder it will be.

Mark also submitted the following commentary:

It seems the best way to assess the likely effects and outcomes is to look at what the Chinese government can control, and at what it can't control. And we should observe at the start that the yuan is not a global reserve currency.

 

1. Beijing can control the amount of yuan in existence. It can therefore easily pay off all these bad internal debts, at least in a strict book keeping sense. And it can also recapitalize its bankrupt banks to any degree necessary, at least in yuan. The process of doing so involves assigning winners and losers. The latter group will comprise anyone earning a subsistence working wage in yuan and anyone whose assets primarily consist of savings in yuan.

 

2. Undertaking #1 will lead to a large increase in the amount of yuan in existence. Here Beijing will be acutely sensitive to any increase in food prices since this can swiftly lead to mass food riots and the concomitant rapid and bloody end of the regime. Therefore food prices have to be insulated somehow from this huge internal devaluation.

 

3. Beijing cannot permanently control the yuan-dollar exchange rate or any other FOREX rate involving yuan. It can do so in the short term but only to the limit of its usable foreign exchange reserves. This total is minus the FOREX working capital China needs to pay for imported raw materials and fuels. And also food: China’s Growing Demand for Agricultural Imports (USDA)

 

It appears that one certain outcome will be a huge depreciation in the value of yuan. Bailout of the bad bank debt is reason #1 to print yuan. The decline of yuan will lead to lower prices and a temporary relief of U.S.-based automation pressure on export market share. This begins to become a Reason #2.

How this will be received outside China is the immediate question. Probably not too favorably.

One way to paper over impaired loans is to issue a flood of new credit: this dilutes the problem and enables defaulted loans to be "paid down" with new loans that are doomed to default once the ink is dry: China Created A Record Half A Trillion Dollars Of Debt In January (Zero Hedge)

Here's the larger context of China's debt/currency implosion. From roughly 1989 to 2014–25 years–the "sure bet" in the global economy was to invest in China by moving production to China.

This flood of capital into China only gained momentum as the yuan appreciated in value against the USD once Chinese authorities loosened the peg from 8.3 to 6.6 and then all the way down to 6 to the dollar.

Every dollar transferred to China and converted to yuan gained as much as 25% over the years of yuan appreciation. Those hefty returns on cash sitting in yuan sparked a veritable tsunami of capital into China.

Now that the tide of capital has reversed, nobody wants yuan: not foreign firms, not FX punters and not the Chinese holding massive quantities of depreciating yuan.

This is why "housewives" from China are buying homes in Vancouver B.C. for $3 million. That $3 million could fall to $2 million as the yuan devalues to the old peg around 8.3 to the USD.

Who's left who believes the easy money is to be made in China? Nobody. Anyone seeking high quality overseas production is moving factories to the U.S. for its appreciating dollar and cheap energy, or to Vietnam or other locales with low labor costs and depreciated currencies.

For years, China bulls insisted China could crush the U.S. simply by selling a chunk of its $4 trillion foreign exchange reserves hoard of U.S. Treasuries. Now that China has dumped over $700 billion of its reserves in a matter of months, this assertion has been revealed as false: the demand for USD is strong enough to absorb all of China's selling and still push the USD higher.

The stark truth is nobody wants yuan any more. Why buy something that is sure to lose value? the only question is how much value? The basic facts suggest a 30% loss and a return to the old peg of 8.3 is baked in.

But that doesn't mean the devaluation of the yuan has to stop at 8.3: just as the dollar's recent strength is simply Stage One of a multi-stage liftoff, the yuan's devaluation to 8 to the USD is only the first stage of a multi-year devaluation.

 

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

Regular readers are no doubt familiar with Bilal Erdogan.

Bilal is the son of Turkish dictator President Recep Tayyip Erdogan who is on the verge of kicking off World War III by invading Syria in what is sure to be an ill-fated effort to shore up rebel forces and preserve the Azaz corridor, the last remaining supply line for the opposition which is staging what amounts to a last stand at Aleppo.

Erdogan’s family was put under the microscope by the Russian defense ministry in the wake of Ankara’s decision to shoot down a Russian Su-24 on the Syrian border in late November. “What a brilliant family business!,” Deputy Minister of Defence Anatoly Antonov remarked, at a press briefing documenting Turkey’s connection to Islamic State’s illicit oil trafficking operation. 

For those who might have missed the backstory, you’re encouraged to read the following articles in their entirety:

• The Most Important Question About ISIS That Nobody Is Asking
• Meet The Man Who Funds ISIS: Bilal Erdogan, The Son Of Turkey’s President
• How Turkey Exports ISIS Oil To The World: The Scientific Evidence
• ISIS Oil Trade Full Frontal: “Raqqa’s Rockefellers”, Bilal Erdogan, KRG Crude, And The Israel Connection

Put simply, there are any number of reasons to believe that AKP and the Erdogan family are complicit in the sale of illicit crude not only from Massoud Barzani and the Iraqi Kurds, but from Islamic State as well. 

ISIS oil and Erbil’s crude are both technically “undocumented” and considering that “the terrorists” are only producing around 45,000 b/d versus the 630,000 b/d the Iraqi Kurds are churning out, it’s easy for Islamic State’s product to get “lost” or to disappear as a rounding error, as it were. 

Some say Bilal Erdogan is directly involved in getting ISIS crude to market via the Turkish port of Ceyhan, where tanker rates mysteriously spike around siginificant oil-related events involving Islamic State. 

Bilal owns a Maltese shipping company which is almost certainly involved in the transport of stolen (and yes, regardless of whether the Iraqi Kurds’ claims to statehood are legitimate, they are for the time being anyway, stealing oil form Baghdad) Iraqi oil to global markets. The question is whether the same connections and routes used to transport Barzani’s oil are being used to transport Islamic State’s product. 

We won’t recount the whole story here as you can read the entire account in the articles linked above, but we were amused to discover that Bilal Erdogan is now being investigated by Italian authorities for money laundering. “Prosecutors in Bologna have opened an investigation into the financial dealings of Bilal Erdogan, 35, who is currently living in the city with his family while he studies for a doctorate at an offshoot of Johns Hopkins University,” The Telegraph reports, adding that “the investigation was opened after Murat Hakan Uzan, a businessman and political opponent of the Erdogan family, made the allegations about money laundering to the Italian authorities.” Here’s more:

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Submitted by Brandon Smith via Alt-Market.com,

Normalcy bias is a rather horrifying thing. It is so frightening because it is so final; much like death, there is simply no coming back. Rather than a physical death, normalcy bias represents the death of reason and simple observation. It is the death of the mind and cognitive thought instead of the death of the body.

Ever since the derivatives collapse of 2008 the public has been regaled with wondrous stories of recovery in the mainstream to the point that such fantasies have become the "new normal". These are grand tales of the daring heroics of central bankers who “saved us all” from impending collapse through gutsy monetary policy and no-holds-barred stimulus measures.

Alternative economists have not been so easy to dazzle. Most of us found that the recovery narrative lacked a certain something; namely hard data that took the wider picture into account. It seemed as though the mainstream media (MSM) as well as the establishment was attempting to cherry-pick certain numbers out of context while demanding we ignore all other factors as “unimportant.”

We just haven’t been buying into the magic show of the so called “professional economists” and the academics, and now that the real and very unstable fiscal reality of the world is bubbling to the surface, the general public will begin to see why we have been right all these years and the MSM has been utterly wrong.

Mainstream economists have done absolutely nothing in the way of investigative journalism and have instead joined a chorus cheerleading for the false narrative, singing a siren’s song of misinterpreted statistics and outright lies drawing the masses ever nearer to the deadly shoals of financial crisis.

Why do they do this? Are they part of some vast conspiracy to mislead the public?

Not necessarily. While central banks and governments have indeed been proven time and again to collude in efforts to cover up financial dangers, most economists in the media are simply greedy and ignorant. You have to remember, they have a considerable stake in this game.

Many mainstream economists tend to have sizable investment portfolios and they base their careers partly on the successes they garner in the annual profits they accumulate playing the equities roulette. They also have invested so much of their public image into their pro-market and recovery arguments that there is no going back. That is to say, they have a personal interest in using their positions in the media to engineer positive market psychology (if they are able) so that their portfolios remain profitable. Not to mention, their professional image is at stake if they ever acknowledge that they were wrong for so long about the underlying health of the real economy.

This atmosphere of deluded self interest also generates a cult-like collectivist attitude. There is a lot of mutual back scratching and mutual ego stroking in the MSM; a kind of inbred conduit of regurgitated arguments and unoriginal talking points, and people in the club rarely step out of line because they not only hurt their own investment future and career, they also hurt everyone in their professional circles.  Meaning, no more cocktail party invitations to the Forbes rumpus room…

This is not to say that I am excusing their self interested lies and disinformation. I think that many of these people should be tarred and feathered in a public square for attempting to dissuade the public from preparing in a practical way for severe economic instability. I do not think they see themselves as being responsible to the people who actually take their nonsense seriously and their attitude needs adjustment. I am only explaining how it is possible for an entire profession of supposed “experts” to be so wrong so often. Mainstream financial analysts WANT to believe their own lies as much as many in the public want to believe them.

Like I said, normalcy bias is a rather horrifying thing.

One of the root pieces of disinformation in the mainstream that feeds all other lies is the disinformation surrounding falling global demand. MSM pundits cannot and will never fully admit to the cold hard reality of collapsing demand within the global economy. If they are forced to admit to falling demand, then the facade of a steady or recovering U.S. economy crumbles.

I covered the facts behind falling global demand for raw goods and consumer goods last year in part one of my six-part article series, 'One Last Look At The Real Economy Before It Implodes.' The hard evidence and numbers I presented have only become more important in recent months.

For example, U.S. inventories are building and freight shipments are declining in the U.S. as retailers cite falling demand for goods as the primary culprit. Official retail sales numbers for the holiday season of 2015 have come in flat. When one takes into account real inflation in prices, consumer sales are actually far in the negative. According to the more accurate methods the U.S. government used to use in their calculations of CPI in the 1980’s, we are looking at annual price inflation rate of around 7%. Price inflation does not necessarily equal improved sales.

Energy usage has been crushed since 2008. Despite a growing population and supposedly a growing economic system, oil consumption in 2014 according to the World Economic Forum dropped to levels not seen since 1997.

This is the exact opposite of what should be happening and it is the opposite of mainstream projections for oil consumption made back in 2003. This is why inventories and storage for oil across the globe are reaching capacity in a manner never seen before. American demand for oil is not growing exponentially as expected because Americans cannot afford to support such growth anymore. Falling energy demand at these extreme levels is an undeniable indicator of a failing economic system.

Of course, mainstream economists in their desperation to keep market psychology rolling forward and the equities casino producing profits seek to spin this problem as an “oversupply” issue rather than a demand issue. And this is where the disparity in their arguments begins to bleed through.

Here is the problem presented in the mainstream; what came first, the chicken or the egg? Did falling demand lead to oversupply and thus a fall in prices? Or, is demand remaining steady and is overproduction the cause of falling prices?  Yes, let's confuse the issue instead of looking at the obvious.

As already linked above, it was falling demand which came first in 2008, and demand which continues to fall in relation to past trends. Have producers failed to reduce oil production to match falling demand? Yes. But this does not change the fact that oil demand today is well below levels needed to sustain the kind of economic growth markets have come to expect. Mainstream economists attempt to distract by hyper-focusing on supply, or twisting the discussion into an either/or scenario. Either it is a supply problem, or it is a demand problem, and they assert it is only a supply problem. This is not reality.

In fact, both can and often do exist at the same time, though one problem usually feeds the other. Falling demand does tend to result in oversupply in any particular sector of the economy. The bottom line, however, is that in our current crisis demand is the driving force and supply is a secondary issue. Supply is NOT the driving force behind the volatility in oil markets. Period.

This same chicken and egg distraction rears its ugly head in discussions on shipping markets as well.

The mainstream claim that the historic implosion of the Baltic Dry Index is nothing more than a problem of “too many ships” operating in the cargo market has been throttled, dissected and debunked so many times that you would think that it is surely dead. But the lie just will not die.

Mainstream propaganda houses like The Economist and Forbes continue to produce articles on a regular basis which deny the issue of falling demand for raw goods and claim that oversupply of vessels is the root cause of the BDI losing around 98 percent of its value since its highs in 2008.

I haven’t seen any of these articles offer actual stats or evidence to back their claims that oversupply of ships is the culprit and that demand is not a legitimate issue. But beyond that, why does the mainstream seem so hell bent on dismissing the BDI as a reliable economic indicator? Well, because shipping rates fall when demand falls, thus, when the BDI falls, it signals a lack of global demand. This is a fact they refuse to accept. When the BDI falls by 98 percent since the 2008 highs preceding the derivatives crisis, this signals a disaster in the making.

So, let’s stamp out the “too many ships came first” disinformation once and for all, shall we?

Shipping companies like Maersk Lines have already publicly admitted that falling global demand is the core problem behind falling rates and that supply is a secondary driver. They view the current financial crisis to be “worse than 2008”.

The fact that the largest shipping company in the world is warning of falling demand does not seem to be having any effect on the mainstream talking heads, though.

So, what do major shipping companies do when demand is falling and too many ships are operating on the market? Do they field those ships anyway and drive rates down even further? No, that makes no sense.

What companies do is either leave ships idle in port or scrap them. According to BIMCO (Baltic And International Maritime Council), 2015 was the busiest year since 2012 for the scrapping of older ships to make way for new arrivals. This process of scrapping ships or storing them idle destroys the argument that too many ships are driving falling rates in the BDI. In fact, as chief shipping analyst Peter Sand of BIMCO stated last year:

“The increase in Capesize scrapping comes at a much needed time for the market. Looking at the development so far this year the fleet growth has actually been negative, with a reduction of 0.8 %.”

I hope the garbage peddlers at Forbes and The Economist caught that — NEGATIVE growth of ship supply, not massive over-growth of ship supply. The scrapping increase was also across the board for other models of ships, not just the Capsize, and the increase of cargo capacity by new ships has been negligible.  Yet, shipping rates continue to plummet to historical lows.  Only falling demand, as Maersk Lines admits, explains the crash of the BDI in light of this information.

China in particular has been offering considerable incentives to those companies that do scrap older ships, to the point that some are even scrapping semi-new ships in order to cash in.

Now, this is not to say there is not an “oversupply” of ships. There are indeed many ships within cargo fleets that are not in operation. But again, this is because demand has declined so completely that even with increased scrapping and idling, shipping companies cannot keep up.  Falling demand OCCURRED FIRST, and oversupply is nothing more than a symptom of this root problem.

So, mainstream hacks, can we please put the “too many ships” nonsense to rest and get on with a real discussion on obvious issues of demand?  Stop focusing on the symptoms and examine the cause for once.

These are just a few of the hundreds of fundamental problems plaguing the global economy today, and they are all problems that the mainstream continues to ignore or dismiss out of hand. Which brings us to the now accelerating volatility in stock markets.

Stock markets are crashing, there is no other way to paint it. They are crashing incrementally, but crashing nonetheless. When you have violent swings in equities and commodities between 5 percent and 10 percent a day, then something is very wrong with your economy and has been wrong for some time. If global consumption and demand were really steady or growing, then you would not see the kind of systemic backlash in the financial system that we are now seeing.  If companies listed on the Dow were making legitimate profits due to a healthy consumer base and enjoying solid expansion, stocks would not be increasingly volatile.  If investors and mainstream analysts actually looked at the real numbers in demand (among other things), then the strange behavior in markets would be easy for them to understand. They will not look at such numbers until it is too late.

Instead, markets have chosen to chase headlines, and here is where the ugly circle of normalcy bias and cognitive dissonance completes itself. There are no positive indicators within the fundamentals today to energize market faith or market investment. So, investors and algorithmic trading computers track news headlines instead. The MSM hacks now have the power (along with central banks and governments) to create massive stock rallies with one or two carefully placed news tags, such as “Russia To Discuss Oil Production Cuts With OPEC.”

Market speculators and trading computers jump on these headlines without verifying if they are true. In most cases, they end up being false or just hearsay from an “unnamed source.” And so, the markets then crash further down into the abyss, waiting for the next headline to bolster activity even for a day.

The sad truth is, if any of these headlines turned out to be legitimate, their effect would still be meaningless in the long run as the overwhelming weight of the fundamentals continues to topple poorly placed optimism. Now that the investment world no longer has the certainty of central bank intervention as a useful tool, they don’t know if bad news is good news or if good news is bad news. The fact that the system is moving into a death spiral without the psychological crutch of central bank stimulus measures should tell you all you need to know about the supposed recovery since 2008.

No society wants to admit economic failure or economic sabotage, and this is why the con-game is able to continue in the face of so much concrete truth. Ultimately, the market trends and economic trends will flow into the negative. In the meantime, expect massive market rallies, rallies which will then disintegrate in a matter of days. And, whatever happens, never take what mainstream economists say very seriously. They have failed the public for long enough.

via Zero Hedge http://ift.tt/211RN0m Tyler Durden