Tag: finance

Big banks usually promise their clients all sorts of good things and always continue to issue recommendations to continue to invest in stocks and bonds (obviously to rake in their fees), UBS chartists and technicians Muller and Riesner have now publicly stated we might have seen another top of the S&P 500 index.

And when Muller and Riesner speak up, the investment community listens, as these two technical analysts have correctly predicted the two previous corrections (and the recent increase in the gold price), so they do enjoy some respect in the market. They were already correct in seeing the S&P hitting their target at 2050 points earlier this week, but this target was reached much faster than originally anticipated, and we think it’s now fair to say we have seen two V-shaped corrections on the stock market and these corrections might have been wiped out too fast, too soon. Indeed, apparently to the UBS-analysts, the S&P index has now reached its most overbought situation since 2009, and that’s quite a statement to make!

Source: Stockcharts.com

Of course, at Secular Investor we don’t just act on what just one source claims, but another interesting fact has hit the wires on Friday (and it’s probably not a coincidence this news was released on a day the stock markets were closed). The American economy did grow in the final quarter of last year, but according to the Bureau of Economic Analysis, this did not coincide with an increase in the corporate profits. And that’s not something we should easily ignore, as the BEA said the adjusted pre-tax profit of the companies fell by 7.8% in the fourth quarter.

That could and should be seen as a huge disappointment, and this might indeed rattle the markets and ruin the over-excitement. This also emphasizes the point we have made almost eighteen months ago, in October 2014 (!).

‘Our message is that this can’t continue forever. The stock markets will have to face a reality check somed day as we are on a completely different point in the cycle compared to March 2009.[…] The proportion of the cash flow which is being used to buy back shares has almost doubled in the past decade whilst the capital expenditures have decreased. That’s a very dangerous situation as companies don’t only have to spoil their shareholders, they also need to think about the future and investing in new assets is an absolute necessity. ‘

And indeed. The next chart shows you the share buyback level has reached an alarmingly high level.

Source: FactSet Research

But it gets worse. In excess of 30% of the companies is spending MORE on buybacks than they generated in free cash flow. This means that if you would try to pull up the numbers of companies whose share repurchases + dividend payments are higher than the amount of free cash flow.

Source: ibidem

When the music stops, the impact might be enormous. A substantial part of these buybacks are funded by increasing the total amount of debt on the balance sheet, fueled by the low interest rate environment. Once the interest rates start to increase again, the cost of debt will become more expensive, and companies will have to focus on reducing the net debt again, rather than reducing the share count.

All signs are pointing towards an overbought general market, so be prepared for a correction.

>>> Download our new FREE Secular Gold Report

Secular Investor offers a fresh look at investing. We analyze long lasting cycles, coupled with a collection of strategic investments and concrete tips for different types of assets. The methods and strategies are transformed into the Gold & Silver Report and the Commodity Report.

Follow us on Facebook @SecularInvestor [NEW] and Twitter @SecularInvest

 

via Zero Hedge http://ift.tt/1RupAWc Secular Investor

Submitted by Michael Rubin, orignially published at American Enterprise Institute

The situation in Turkey is bad and getting worse. It’s not just the deterioration in security amidst a wave of terrorism. Public debt might be stable, but private debt is out-of-control, the tourism sector is in free-fall, and the decline in the currency has impacted every citizen’s buying power. There is a broad sense, election results notwithstanding, that President Recep Tayyip Erdogan is out-of-control. He is imprisoning opponents, seizing newspapers left and right, and building palaces at the rate of a mad sultan or aspiring caliph. In recent weeks, he has once again threatened to dissolve the constitutional court. Corruption is rife. His son Bilal reportedly fled Italy on a forged Saudi diplomatic passport as the Italian police closed in on him in an alleged money laundering scandal. His outbursts are raising eyebrows both in Turkey and abroad. Even members of his ruling party whisper about his increasing paranoia which, according to some Turkish officials, has gotten so bad that he seeks to install anti-aircraft missiles at his palace to prevent airborne men-in-black from targeting him in a snatch-and-grab operation.

Turks — and the Turkish military — increasingly recognize that Erdogan is taking Turkey to the precipice. By first bestowing legitimacy upon imprisoned Kurdish leader Abdullah Öcalan with renewed negotiations and then precipitating renewed conflict, he has taken Turkey down a path in which there is no chance of victory and a high chance of de facto partition. After all, if civil war renews as in the 1980s and early 1990s, Turkey’s Kurds will be hard-pressed to settle for anything less, all the more so given the precedent now established by their brethren in Iraq and Syria.

Erdogan long ago sought to kneecap the Turkish military. For the first decade of his rule, both the US government and European Union cheered him on. But that was before even Erdogan’s most ardent foreign apologists recognized the depth of his descent into madness and autocracy. So if the Turkish military moves to oust Erdogan and place his inner circle behind bars, could they get away with it?

In the realm of analysis rather than advocacy, the answer is yes. At this point in election season, it is doubtful that the Obama administration would do more than castigate any coup leaders, especially if they immediately laid out a clear path to the restoration of democracy. Nor would Erdo?an engender the type of sympathy that Egyptian President Muhammad Morsi did. When Morsi was ousted, his commitment to democracy was still subject to debate; that debate is now moot when it comes to the Turkish strongman. Neither the Republican nor Democratic frontrunners would put US prestige on the line to seek a return to the status quo ante; they might offer lip service against a coup, but they would work with the new regime.

Coup leaders might moot European and American human rights and civil society criticism and that of journalists by immediately freeing all detained journalists and academics and by returning seized newspapers and television stations to their rightful owners. Turkey’s NATO membership is no deterrent to action: Neither Turkey nor Greece lost their NATO membership after previous coups. Should a new leadership engage sincerely with Turkey’s Kurds, Kurds might come onboard. Neither European nor American public opinion would likely be sympathetic to the execution of Erdo?an, his son and son-in-law, or key aides like Egemen Ba??? and Cüneyd Zapsu, although they would accept a trial for corruption and long incarceration. Erdo?an might hope friends would rally to his side, but most of his friends — both internationally and inside Turkey — are attracted to his power. Once out of his palace, he may find himself very much alone, a shriveled and confused figure like Saddam Hussein at his own trial.

I make no predictions, but given rising discord in Turkey as well as the likelihood that the Turkish military would suffer no significant consequence should it imitate Abdel Fattah el-Sisi’s game plan in Egypt, no one should be surprised if Turkey’s rocky politics soon get rockier.

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

To be sure, there are always going to be financial and geopolitical landmines and every once in awhile we – and by “we” we’re referring to the market, or the country, or humanity, or whatever collective you want to choose – are going to step on one on the way to ushering in a black swan event.

But when we look out across markets and across the political landscape it’s difficult to escape the feeling that there are more black swans waiting in the wings – so to speak – than usual. There’s the threat of a dirty bomb being detonated in a crowded Western European urban center for instance. Or the chance that Turkey ends up “accidentally” killing a Russian or Iranian soldier while shelling the Azaz corridor. And how about the possibility that China tries to save its economy by chancing a 30% devaluation of the yuan and inadvertently plunges the world into a crisis far worse than 2008?

The interesting thing to note about the third crisis event listed above is that an economic implosion in China may spawn a black swan far larger than that which would emanate from a crisis in the country’s banking sector and/or a deeper devaluation of the RMB.

As we’ve discussed on multiple occasions of late, China desperately needs to purge its economy of excess capacity. The industrial sector is weighed down by too much debt and too little demand, but an acute overcapacity problem prevents the market from getting anywhere close to clearing. Either Beijing moves quickly to ameliorate this, or else a wave of defaults will ripple through the industrial complex on the way to crippling the country’s banking sector, where NPLs are probably at least five times greater than the official numbers suggest.

The big question is this: how will China manage to restructure or otherwise wind down insolvent SOEs without triggering a wave of layoffs that will leave millions of Chinese jobless, destitute, and, most importantly, furious? In other words, the biggest black swan of them all – with the possible exception of terrorists detonating an actual nuclear weapon – may be a coup in China stemming from the sweeping layoffs the country must implement to restore the industrial sector to some semblance of solvency.

Indeed we’re already hearing the rumblings of social unrest. Thousands of miners in China’s coal-rich (or poor depending on one’s perspective) north have gone on strike over months of unpaid wages and fears that government calls to restructure their state-owned employer will lead to mass layoffs. Earlier this month, protesters marched through the streets of Shuangyashan city in Heilongjiang province, venting their frustration at Longmay Mining Holding Group, the biggest coal firm in northeast China.

Subsequently, in the country’s southwest, eight construction workers tied to a protest held in Langzhong last August were subjected to a 1950’s-style public sentencing. Their crime: protesting unpaid wages. Their charge: obstructing official business. The verdict: guilty.

“Don’t take the public for fools,” one citizen wrote on Chinese social media. “You think the people don’t understand your purpose in using public sentencing?“

Just to be clear the “purpose” is this: discouraging protests which the politburo rightly views as the precursor to social unrest.

Just this week, “the Communist Party’s Central Committee and the State Council, China’s cabinet, warned party and state officials that they will lose their jobs if they fail to control public unrest,” WSJ writes. And while “that’s not altogether surprising [as it is] on one level,  just a restatement of longstanding practice, [it] marks the first time authorities have come up with a definitive public statement explicitly warning party and state officials ‘at all levels’ that their jobs are on the line.’”

The warning from the politburo is likely tied directly to the abovementioned protests in what The Journal describes as the “gritty” streets of Shuangyashan. “Government officials are likely worried that the Shuangyashan incident and others could inflict a political cost on the leadership by highlighting issues such as the deficit of labor rights in China,” WSJ continues, before delivering the following summary of everything outlined above:

Party chiefs face a difficult task. Over the next five years, they need to shut down millions of tons of industrial capacity that’s making China’s economy inefficient. This means downsizing scores of steel, coal and other large industries that currently employ hundreds of thousands of workers. They have promised to do this without large-scale layoffs. Those displaced, Mr. Li said, would be given new jobs or government assistance.

 

These promises now hang in the balance.

Yes they do, and as we outlined a week ago, reassigning steelworkers and miners to lower paying jobs in sanitation, logging, and other industries may keep the official unemployment rate subdued, but it will do very little to appease workers who are forced to take a 60% pay cut. Strikes, The Journal goes on to note citing China Labour Bulletin, have risen by 200% from July 2015 to January of this year. Click the image below for an interactive map.

Needless to say, we’re highly skeptical that Beijing will be able to avert widespread protests. The question is whether those protests coalesce into an organized, political movement or whether the frustration simply manifests itself in disparate, ad hoc demonstrations against specific SOEs and/or local governments. 

Of course manifestos like that which appeared on March 4 on Wujie News may help to galvanize public opinion and focus frustrations on the central government. On that note we’ll close with what we said earlier this month: “The Party had better figure something out quick. Because while you can make an example out of a handful of construction workers, and while you can “disappear” dissident journalists, the only thing you can do when millions of furious Chinese descend on Zhongnanhai is start shooting.”

*  *  *

Full statement from CPC Central Committee and State Council

Xinhua News Agency, Beijing, March 23 – Recently, the CPC Central Committee and State Council issued the “implementation of a sound social security comprehensive management leadership responsibility rule”, and issued a notice requiring all localities and departments follow.

“Improve the implementation of the comprehensive management of social security provisions of the leadership responsibility,” reads as follows.

General Provisions

The first is to further promote the social security comprehensive management, and improve the implementation of the leadership responsibility, and comprehensively promote the construction of China Ping An, to ensure that people live in peace, social stability and order, stability of the state, enactment of this provision.

These rules shall apply to all levels of the Party organs, the NPC organs, administrative organs, the CPPCC organs, judicial, procuratorial organs and leading bodies and leading cadres.

People’s organizations, institutions, state-owned enterprises and their leadership, cadres, leaders referring to the implementation of this provision.

Article sound implementation of social security comprehensive management leadership responsibility, should adhere to Deng Xiaoping Theory, the important thought of “Three Represents”, the scientific concept of development as guidance, thoroughly implement the General Secretary Xi Jinping series of important speech, focus on building a moderately prosperous social, comprehensively deepen reforms and comprehensive rule of law, comprehensive strategic layout party strictly adhere problem-oriented, rule of law thinking, reform and innovation, seize the “critical few”, served to strengthen the sense of responsibility for the implementation of leadership, the use of scientific assessment, supervision, evaluation, motivation, discipline and other measures, the formation of the correct orientation, at every level, layers of implementation, so that all levels of leadership and leading cadres effectively assume the party to maintain stability and ensure the peace of the great political responsibility to ensure that the party Central Committee, State Council on the implementation of social security comprehensive management decisions and plans.

Chapter II Liability content

Article strict implementation of territorial management and who is in charge who is responsible for the principle of building the party leadership, government-led, comprehensive management coordination and concerted efforts of various departments, social security comprehensive management work pattern of the social forces to actively participate.

Article party committees and governments at all levels should strengthen the leadership of the social security comprehensive management, and included in the agenda, into the overall economic and social development planning, work conscientiously study and solve important problems and ensure social security comprehensive in terms of human and material resources the smooth conduct of governance.

Around the main party responsible comrades is the first responsible person’s social security comprehensive management, responsible comrades in charge of the comprehensive management of social security is directly responsible, other members of the leadership team in charge of responsibility within the scope of the comprehensive management of social security.

Article VI of the various departments and units should be responsible for their own, fully perform their functions, and actively participate in social security comprehensive management, good initiative to take responsibility to prevent and reduce crimes, maintaining public order and social stability, a good grasp of the departments and units the comprehensive management, and operations with planning, with the deployment, with the check, the same implementation.

Article committees for comprehensive management of social security at all levels and their offices should be under the unified leadership of party committees and governments to seriously organize the relevant units to participate in social security comprehensive management, strengthen supervision and inspection and investigation, and timely information, analysis of social law and order situation, coordinate and solve prominent problems encountered in the work of popularizing typical experiences, promote co-ordination of social security comprehensive management work.

Chapter supervision and inspection

Article VIII of the regional units and departments should establish and improve the social security comprehensive management of target management responsibility system, the social security comprehensive management tasks broken down into a number of specific goals, develop easy to implement measures to check and establish a strict supervision and inspection system, quantitative appraisal system, evaluation of rewards and penalties, from top to bottom layers of the signing of the comprehensive management of social security responsibility.

Party committees at all levels should Article IX of the Standing Committee on the implementation of social security comprehensive management leadership responsibility as a party to the same level plenary of the Committee Report of the work of important content.

Party and government leading bodies and leading cadres should be fulfilled as an important part of the annual work report of the social security comprehensive management responsibility for the situation.

Article X social security comprehensive management committee member units shall deploy units of the system and to carry out the comprehensive management of social security, and promote peace-building situation is summarized annually, making arrangements for next year’s work and report to the same level of social security comprehensive management Commission.

Under a social security comprehensive management committee should be up an annual social security comprehensive management committee reporting.

Party committees and governments at all levels shall be included in the social security comprehensive management work supervision and inspection range, timely organization to carry out special supervision and inspection.

Levels of social security comprehensive management committee members and their offices should mobilize and organize the masses to participate in order to promote the comprehensive management of social security policy decisions into effect.

Article XII of Party committees and governments at all levels should establish a sound social security comprehensive management evaluation system of mechanisms, improve the examination system of evaluation criteria and indicators, a clear assessment of the contents of the evaluation, methods, procedures.

Article XIII Party committees and governments should strengthen social security comprehensive management appraisal results of use of the social security comprehensive management work performance as an important part of leading bodies and leading cadres comprehensive appraisal of the performance evaluation, job promotion, reward punishment and other hook.Comprehensive management of social security at all levels should promote the establishment of the Office of the Committee and its sound social security comprehensive management work performance files.

Organization and personnel departments at all levels in the study of party and government leading cadres and leaders in charge of social security comprehensive management Cadres, were promoted the use and Jin Zhi promotion, should understand and grasp the situation related to the leadership cadres arrested social security comprehensive management work.

Article XIV above the county level social security comprehensive management committee and central office should be in accordance with the relevant provisions to strengthen with the same level discipline inspection organs, organization and personnel departments coordination, synergy incentive to do a good job.

Chapter IV recognition awards

Article XV for solid work, social security comprehensive management of outstanding achievements of local party and government leading cadres in charge of departments and units and cadres, should be given recognition and awards in accordance with relevant regulations. Was honored for leading cadres, should the relevant materials stored in personal files.

Article XVI Central Committee for Comprehensive Management of Social Security, the Central Organization Department, Human Resources and Social Security Ministry carried out every four years, a national social security comprehensive management of advanced collectives and advanced workers named in recognition of the work.

Article XVII commended national social security comprehensive management of advanced collective party and government leading cadres and leaders in charge of cadres should be rewarded. Commended for national social security comprehensive management of advanced workers, we should implement the provincial model workers and advanced workers treatment.

Article XVIII of more than three consecutive commended national social security comprehensive management of advanced collective, by the Central Committee for Comprehensive Management of Social Security in an appropriate form to be commended.

Article XIX local social security comprehensive management committee and the organization and personnel departments at all levels should cooperate with the national social security comprehensive management of advanced collectives and advanced workers named in recognition of such work.

Chapter V Supervision responsibility and accountability

Article XX party and government leading bodies and leading cadres in violation of the provisions of or failure to perform duties correctly covered by this provision, one of the following circumstances, it shall be the responsibility of supervision and accountability:

(A) does not attach importance to social security comprehensive management and peace building, poor implementation of measures related to work, in the region of the grassroots work of the unit system is weak, serious disruption of law and order;

(Ii) in the region of the system units in a relatively short period of time in a row major criminal cases, group events, public safety incidents;

(Iii) in the region of the present system of the unit causing especially serious criminal cases, group events, public safety incidents;

(Iv) in the region of the social security comprehensive management unit (peace building) Evaluation unqualified, non-compliance;

(V) the masses have strong social security and highlight key areas of public safety, law and order issues, or did not take effective measures to rebound;

(Vi) Party and the Committee for Comprehensive Management of Social Security and government at all levels need to consider other matters of inquiries.

Twenty-one pairs of party and government leading bodies and leading cadres of accountability and responsibility for supervision methods include: communications, interviews, supervise the handling, the implementation of one-vote veto system, resign, ordered to resign, removal and so on. Shall be liable for disciplinary violations, the party and government discipline; constitutes a crime, be held criminally responsible.

Article 22 Article XX circumstances listed in this region has a predetermined unit, above the county level by the respective social security comprehensive management committee office informed in writing briefing by the social security comprehensive management committee, if necessary, the deadline rectification.

Article 23 After being informed still on schedule to complete the rectification goals, or having the present circumstances as prescribed in Article XX listed and serious harm or affect major regional units from the corresponding higher level of social security comprehensive management committee Office Director of the party and government to conduct interviews of its leading cadres, social security comprehensive management in charge of leading cadres and other leaders responsible team members, if necessary, by the social security comprehensive management committee director, deputy director of the interview, to help analyze the causes and urge deadline for correction.

Article 24 After being interviewed still on schedule to complete the rectification goals, or have these provisions and circumstances set forth in Article XX particularly serious harm or particularly significant influence but not serious enough to implement one-vote veto system areas, units, supervise the handling by the office of integrated governance Committee on an appropriate social order, the deadline for rectification. If necessary, the Working Group stationed in the region to supervise the handling unit inspection supervision.

The Central Committee for Comprehensive Management of Social Security Office annually from public security, law and order problems relative prominence of the city (prefecture, league), it is determined as supervise the handling of a number of focus on remediation units, strengthen supervision and management.

Supervise the handling by the regional unit, within six months to cancel the area selection unit integrated honorary title and qualifications in the area, the unit leading cadres in charge of leading cadres, leading cadres in charge of the first assessment alumni, Jin Zhi promotion eligibility.

Article 25 has not yet been completed on schedule and supervise the handling after the rectification goals, or have the case listed in Article XX of this provision and particularly serious harm or particularly significant impact on the region, units from the corresponding on a comprehensive social security governance Committee in accordance with the relevant provisions of the central and commercial departments jointly decided to implement one-vote veto system.

Article 26 being one-vote veto system processing area, unit, within a year, the abolition of the area, the unit Eligibility comprehensive honorary title by the organization and personnel departments in accordance with relevant authority and procedures; cancel the region unit of leading cadres in charge of leading cadres, leading cadres in charge of the first assessment alumni, Jin Zhi eligible for promotion by the organization and personnel departments handled in accordance with the cadre management authority and procedures, and in conjunction with the office of the Committee for comprehensive management of Social security, in accordance with the provisions of the relevant central to the higher level department report, for the record. The area needs to be investigated, the unit responsible party and government cadres, discipline inspection organs transferred according to discipline according to law.

Article 27 The central unit in place need to implement one-vote veto system by the provincial public security comprehensive management Committee written recommendations to its competent authority and the Central Committee for Comprehensive Management of Social Security.

Article 28 The party and government leaders have the circumstances specified in Article XX, in accordance with the “Interim Provisions on the implementation of party and government leaders accountable” should be taken to resign, ordered to resign, removal and other means of accountability by discipline inspection organs, organization and personnel departments handled in accordance with administrative privileges.

Article 29 Party and government leading bodies and leading cadres have the circumstances specified in Article XX, and one of the following circumstances shall be given a heavier responsibility for supervision and accountability:

(A) interfere with, impede the investigation of and accountability;

(Ii) fraud, to conceal the truth, cheat significant underreporting of cases;

(Iii) prosecutors, complainants and other retaliatory strike;

(Iv) other aggravating circumstances the party regulations and state laws and regulations.

Article 30 Party and government leading bodies and leading cadres of the provisions set forth in Article XX has a case and having one of the following circumstances, may be given responsibility for supervision and accountability:

(A) take the initiative to take measures to avoid losses, to restore the impact;

(B) actively cooperate with the investigation, and take the initiative to assume responsibility;

(Iii) other mitigating circumstances within the party regulations and national laws and regulations.

Chapter VI Supplementary Provisions

Article 31 provinces, autonomous regions and municipalities and Xinjiang Production and Construction Corps, various departments of the central and state organs may formulate implementation measures in accordance with these provisions.

The provisions of Article 32 by the Central Committee for Comprehensive Management of Social Security is responsible for interpretation.

via Zero Hedge http://ift.tt/1Pyx1t7 Tyler Durden

Brussels is restless.

Protesters and demonstrators gathered in the Place De la Bourse on Sunday and riot police were forced to step in when far-right activists pushed out Belgians bearing flowers and lighting candles.

“We don’t believe in candles and flowers. That is for the dead,” one demonstrator, who described himself as a “hooligan from Ghent” told The Telegraph who reports that “nearly 400 far-right “hooligans” have gathered at Place de la Bourse, in what they describe as an “anti-Isil” protest.”

“We want answers from the government. There are too many fanatics in this country,” they said. Here’s more from Bloomberg:

• Belgian riot police respond to riots in downtown Brussels, televised reports show. 
• Police confronting far-right protesters describing themselves as football fans, according to media reports.
• Between 500 and 1,000 people people gathered near Brussels stock exchange, according to RTBF television
• Belgian metro operator STIB says it has stopped service in area where riots are taking place
• BBC shows water cannon fired on protesters in Place de la Bourse

live feed

Hundreds of protesters have now taken over the steps in front of the Bourse. #Brussels http://pic.twitter.com/oVXnR1O3Zf

— James Franey (@jamesfraney) March 27, 2016

Big far right demonstration now in Brussels http://pic.twitter.com/diqEqnm1NG

— Dana Regev (@Dana_Regev) March 27, 2016

http://pic.twitter.com/35lQXMj6gG

— emma murphy (@emmamurphyitv) March 27, 2016

via Zero Hedge http://ift.tt/25qT4gX Tyler Durden

When assessing candidates for elected office, foreign policy is perhaps the single most important consideration in an increasingly interconnected world.

That’s especially true in the 2016 race for The White House. While the vast majority of the Americans will remain blissfully ignorant when it comes to the nuances, the electorate generally understands a handful of very basic concepts: 1) Russia is resurgent; 2) ISIS is bad; 3) there are a lot of refugees in Europe and some of them are terrorists; 4) there’s something going on in Syria that is apparently connected to ISIS and refugees; 5) Iran is evil and will probably try to nuke somebody soon; 6) China is getting stronger.

Given voters’ generalized lack of insight into the specifics and overarching desire to be left in the dark about anything that suggests modern geopolitics can’t be summed up as a black and white, West versus everyone, good versus evil, struggle to restore a benevolent American hegemony, candidates must be careful to convey a deep understanding of the issues without confusing a largely ignorant electorate. That will be difficult for Hillary Clinton, a veteran of modern statecraft who knows a thing or two about how complex the world is and how easy it is to screw things up (see Libya).

For Trump, on the other hand, developing a foreign policy platform is much easier. His anti-immigration stance fits perfectly with the events unfolding across Europe and his “knock the hell out of ISIS” line resonates with voters who, no matter how much they distrust the government, would rather focus on whether liberals plan to take their guns or the NSA is monitoring their phone than they would on whether the good folks at Langley might have created the terror groups that now threaten to infiltrate and attack Western targets. Further, having never held elected office, Trump has the luxury of appealing to common sense when assessing things like Syria’s five-year conflict. You needn’t know anything about the Sunni-Shiite divide or about the Alawite government or the Baathists or about Assad’s connections to the IRGC and Hassan Nasrallah’s army to understand that America’s attempts to bring about regime change in the Mid-East have gone horribly awry and that fighting Assad while also fighting the people that are fighting Assad makes absolutely no sense.

In other words, when you have no conception of the nuances, you are free to appeal to common sense and that’s exactly what Trump did when The New York Times sat down with the GOP frontrunner to discuss foreign policy. Here’s the exchange between Trump and David Sanger with regard to Bashar al-Assad and Islamic State’s illicit and highly lucrative oil trafficking business which apparently no one but Russia wants to destroy:

SANGER: One more along the lines of your ISIS strategy. You’ve seen the current strategy, which is, you’ve seen Secretary Kerry trying to seek a political accord between President Assad and the rebel forces, with Assad eventually leaving. And then the hope is to turn all those forces, including Russia and Iran, against ISIS. Is that the right way to do it? Do you have an alternative approach?

 

TRUMP: Well, I thought the approach of fighting Assad and ISIS simultaneously was madness, and idiocy. They’re fighting each other and yet we’re fighting both of them. You know, we were fighting both of them. I think that our far bigger problem than Assad is ISIS, I’ve always felt that. Assad is, you know I’m not saying Assad is a good man, ’cause he’s not, but our far greater problem is not Assad, it’s ISIS.

 

SANGER: I think President Obama would agree with that.

 

TRUMP: O.K., well, that’s good. But at the same time – yeah, he would agree with that, I think to an extent. But I think, you can’t be fighting two people that are fighting each other, and fighting them together. You have to pick one or the other. And you have to go at –

 

SANGER: So how would your strategy differ from what he’s doing right now?

 

TRUMP: Well I can only tell you – I can’t tell you, because his strategy, it’s open and it would seem to be fighting ISIS but he’s fighting it in such a limited capacity. I’ve been saying, take the oil. I’ve been saying it for years. Take the oil. They still haven’t taken the oil. They still haven’t taken it. And they hardly hit the oil. They hardly make a dent in the oil.

 

SANGER: The oil that ISIS is pumping.

 

TRUMP: Yes, the oil that ISIS is pumping, where they’re getting tremendous amounts of revenue. I’ve said, hit the banking channels. You know, they have very sophisticated banking channels, which I understand, but I don’t think a lot of people do understand. You know, they’re taking in tremendous amounts of money from banking channels. That, you know, many people in countries that you think are our allies, are giving ISIS tremendous amounts of money and it’s going through very dark banking channels. And we should have stopped those banking channels long ago and I think we’ve done nothing to stop them, and that money is massive. Massive. It’s a massive amount of money. So it’s not only from oil, David, it’s from also the bank, the bank. It’s through banks. And very sophisticated channels. They call them the dark channels. Very sophisticated channels. And money is coming in from people that we think are our allies.

Not to put too fine a point on it, but that’s about the most straightforward, sober assessment of the situation imaginable. However, were Trump to win the national election, he’ll quickly discover – and this is exceedingly unfortunate – that common sense simply cannot be the basis for US foreign policy in the modern world.

That is, a principled, upfront approach to geopolitics is what’s needed, but thanks to the fact that Washington, through decades of underhanded meddling and clandestine dealings, has woven quite the tangled web, common sense will everywhere and always trip over the lunacy that is US foreign policy. Whether or not Trump can change that is debatable and if he can’t, it will be through no fault of his own.

via Zero Hedge http://ift.tt/21NlVr9 Tyler Durden

Via SputnikNews' John Harrison,

Dr. Paul Craig Roberts, who served as an Assistant Secretary of the Treasury for Economic Policy in the Reagan administration, shares his view that there is a real likelihood of a nuclear war breaking out. Below are the main points covered in this radio programme.

(click image for link to full interview)

"Firstly there is the Wolfowitz doctrine, which basically makes it clear that the United States should prevent the rise of any state that could present sufficient power to threaten American unilateral action. Russia has risen and has displayed such power….This is the reason for the constant demonisation of Russia’s leader. We have the number one candidate for the democratic Nomination Hillary Clinton, who now compares the President of Russia with Hitler….So what has happened is that every American president during my lifetime, especially Nixon and Reagan worked to create trust between the two major nuclear powers. But beginning with Clinton, the trust that had been achieved was progressively destroyed."

"When you destroy trust between nuclear powers you recreate the possibility of nuclear war, either by intent, or miscalculation. So this is a reckless and irresponsible act on the part of Washington….The information war that is going on now is to prepare the American population and NATO countries allies for military conflict with Russia. This is part of the preparation of that. We now have high level people in the US government and military who go to Congress and say that Russia is an existential threat. This is rubbish!…You have to remember that before the wars started in Afghanistan, Iraq, Syria, it was the constant demonisation of the leaders of the governments, against Gaddafi, Hussein. When you see these kinds of demonisation it fits a pattern."

"A hot war can come from a new cold war. Another factor is the American military industrial complex, with a turnover of a trillion dollars annually. Their entire revenues come from serving the war capability of US government. They have a huge interest in having a major enemy. They tried to make terrorists that enemy, but that is not serious enough, so this complex has great interest in recreating the Russian threat. From the neo conservative standpoint, they actually regard any country with an independent foreign policy to be a threat to the United States. So that part of the equation means that they can move the cold war into a hot war, it only takes a small amount of miscalculation. I don’t see how the Russian government can believe one word coming out of Washington."

"Some neocons say: what’s the good of nuclear weapons if you can’t use them? They have a theory that the US has sufficient superiority to win a strike against Russia. If the US cannot win against a few thousand Taliban, it will not be able to win  a possible conventional war against the Red Army, it will go nuclear rather lose…. A nuclear war cannot be won."

"The neoconservatives now have no competition, there is nobody out there apart from Washington wishing to take over the world… As long as the American vassal states that compromise the NATO accept it, they magnify the chance of a new massive war… Republican candidates are competing with each other to see who can treat Russia the most aggressively."

via Zero Hedge http://ift.tt/1RGSTu4 Tyler Durden

The market for industrial robot installations has been on a skyward trend since 2009, and it is not expected to slow down any time soon. According to the World Robotics 2015 report, the market for industrial robots was approximated at $32 billion in 2014, and in the coming years it is expected to continue to grow at a compound annual growth rate (CAGR) of at least 15%.

As VisualCapitalist's Jeff Desjardin notes, that means between 2015 and 2018, it’s anticipated that 1.3 million industrial robots will be installed worldwide. This will bring the stock of operational robots up to just over 2.3 million, mostly working in the automotive and electronics sectors.

For how long can the global robot population continue to grow?

 

 

ROBOT DENSITY

Perhaps the most interesting way to peek into the future of industrial robot installations is to look at potential sales in China.

Currently, the world’s most populous nation has a density of robots that is about half of the world average, equal to just 36 robots for every 10,000 manufacturing workers in China.

However, this is changing fast. It’s been the largest market for robots since 2013, and in 2014 the country bought 57,100 robots – the highest quantity ever recorded in a year. By 2018, one in every three robots in operation around the world will be in China.

What will happen if China’s density approaches that of other robot industrial centers?

Highly automated countries such as Germany, Japan, and South Korea all have robot densities that are multiples higher. South Korea, for example, has 478 industrial robots for every 10,000 workers – a ratio that is 13x higher than China’s.

With this kind of potential for growth, it’s clear that this is only the start of the robot story.

via Zero Hedge http://ift.tt/1UQe9xK Tyler Durden

Submitted by Mike Krieger via Liberty Blitzkrieg blog,

Allen Dulles, the CIA director under presidents Eisenhower and Kennedy, the younger brother of Secretary of State John Foster Dulles, and the architect of a secretive national security apparatus that functioned as essentially an autonomous branch of government. Talbot offers a portrait of a black-and-white Cold War-era world full of spy games and nuclear brinkmanship, in which everyone is either a good guy or a bad guy. Dulles—who deceived American elected leaders and overthrew foreign ones, who backed ex-Nazis and thwarted left-leaning democrats—falls firmly in the latter camp.

 

But what I was really trying to do was a biography on the American power elite from World War II up to the 60s. That was the key period when the national security state was constructed in this country, and where it begins to overshadow American democracy. It’s almost like Game of Thrones to me, where you have the dynastic struggles between these power groups within the American system for control of the country and the world…

 

Absolutely. The surveillance state that Snowden and others have exposed is very much a legacy of the Dulles past. I think Dulles would have been delighted by how technology and other developments have allowed the American security state to go much further than he went. He had to build a team of cutthroats and assassins on the ground to go around eliminating the people he wanted to eliminate, who he felt were in the way of American interests. He called them communists. We call them terrorists today. And of course the most controversial part of my book, I’m sure, will be the end, where I say there was blowback from that. Because that killing machine in some way was brought back home.

 

– From the post: How America’s Modern Shadow Government Can Be Traced Back to One Very Evil Man – Allen Dulles

Most readers will be familiar with John Perkins and his best-selling novel Confessions of an Economic Hitman. What you may not know, is he’s currently making the rounds warning us that all the corporatist mercenary tactics employed against third-world nations to financially benefit U.S. conglomerates are now being turned inward on American communities.

He discussed some of this in a recent interview with Yes. Here are a few excerpts:

Twelve years ago, John Perkins published his book, Confessions of an Economic Hit Man, and it rapidly rose up The New York Times’ best-seller list. In it, Perkins describes his career convincing heads of state to adopt economic policies that impoverished their countries and undermined democratic institutions. These policies helped to enrich tiny, local elite groups while padding the pockets of U.S.-based transnational corporations.

If economic pressure and threats didn’t work, Perkins says, the jackals were called to either overthrow or assassinate the noncompliant heads of state. That is, indeed, what happened to Allende, with the backing of the CIA.

 

Perkins has just reissued his book with major updates. The basic premise of the book remains the same, but the update shows how the economic hit man approach has evolved in the last 12 years. Among other things, U.S. cities are now on the target list. The combination of debt, enforced austerity, underinvestment, privatization, and the undermining of democratically elected governments is now happening here.

 

Sarah van Gelder: What’s changed in our world since you wrote the first Confessions of an Economic Hit Man?

 

John Perkins: Things have just gotten so much worse in the last 12 years since the first Confessions was written. Economic hit men and jackals have expanded tremendously, including the United States and Europe.

 

Back in my day we were pretty much limited to what we called the third world, or economically developing countries, but now it’s everywhere.

 

van Gelder: So how has this switched from us being the beneficiaries of this hit-man economy, perhaps in the past, to us now being more of the victims of it?

 

Perkins: It’s been interesting because, in the past, the economic hit man economy was being propagated in order to make America wealthier and presumably to make people here better off, but as this whole process has expanded in the U.S. and Europe, what we’ve seen is a tremendous growth in the very wealthy at the expense of everybody else.

 

On a global basis we now know that 62 individuals have as many assets as half the world’s population.

 

van Gelder: Is this the same kind of dynamic about debt that leads to emergency managers who then turn over the reins of the economy to private enterprises? The same thing that you are seeing in third-world countries?

 

Perkins: Yes, when I was an economic hit man, one of the things that we did, we raised these huge loans for these countries, but the money never actually went to the countries, it went to our own corporations to build infrastructure in those countries. And when the countries could not pay off their debt, we insisted that they privatize their water systems, their sewage systems, their electric systems.

 

van Gelder: I want to ask you about the Trans-Pacific Partnership, and other trade deals. Is there any way that we can beat these things back so they don’t continue supercharging the corporate sphere at the expense of local democracies?

 

Perkins: They’re devastating; they give sovereignty to corporations over governments. It’s ridiculous.

 

I was just in Central America and what we talk about in the U.S. as being an immigration problem is really a trade agreement problem.

 

They’re not allowed to impose tariffs under the trade agreements—NAFTA and CAFTA—but the U.S. is allowed to subsidize its farmers. Those governments can’t afford to subsidize their farmers. So our farmers can undercut theirs, and that’s destroyed the economies, and a number of other things, and that’s why we’ve got immigration problems.

 

van Gelder: Can you talk about the violence that people are fleeing in Central America, and how that links back to the role the U.S. has had there?

 

Perkins: Three or four years ago the CIA orchestrated a coup against the democratically elected president of Honduras, President Zelaya, because he stood up to Dole and Chiquita and some other big, global, basically U.S.-based corporations.

 

He wanted to raise the minimum wage to a reasonable level, and he wanted some land reform that would make sure that his own people were able to make money off their own land, rather than having big international corporations do it.

 

The big corporations couldn’t stand for this. He wasn’t assassinated but he was overthrown in a coup and sent to another country, and replaced by a terribly brutal dictator, and today Honduras is one of the most violent, homicidal countries in the hemisphere.

 

It’s frightening what we’ve done. And when that happens to a president, it sends a message to every other president throughout the hemisphere, and in fact throughout the world: Don’t mess with us. Don’t mess with the big corporations. Either cooperate and get rich in the process, and have all your friends and family get rich in the process, or go get overthrown or assassinated. It’s a very strong message.

That is how a once proud nation gets transformed into a rancid, oligarch-controlled Banana Republic.

via Zero Hedge http://ift.tt/1PxE45b Tyler Durden

Once upon a time Hugh Hendry was one of the world’s most prominent financial skeptics, arguing with anyone who would listen that the status quo is doomed and that central planning will never work.

Most famously, back in 2010 during a BBC round table discussion with Jeffrey Sachs and Gillian Tett when discussing Europe’s crashing experiment with the single currency, he said that we should “purge this system of its rottenness. Let’s take on a recession. It’s going to be tough, people are gonna lose their jobs. They are going to lose their jobs anyway. We can spread this over 20 years, or we can get rid of it over 3 years” before concluding “I recommend you panic.”

Ultimately everyone did panic, which led to the single biggest episode of global QE and negative rates ever seen, resulting in ever louder speculation even among the most “serious” people that central bankers are now powerless.

But perhaps most notably, Hendry was one of the biggest China bears, certain that the country’s massive overcapacity, insolvency and bad debt problems will result in disaster (back then China only had about 200% debt/GDP, it has since risen to over 350%). His Chinese skepticism led to his fund generating a 40% profit by late 2011.

And then after a poor two year performance spell, Hendry had a historic burnout and threw in the towel on bearishness, infamously saying he can no longer “look at himself in the mirror“:

“I may be providing a public utility here, as the last bear to capitulate. You are well within your rights to say ‘sell’. The S&P 500 is up 30% over the past year: I wish I had thought this last year… Crashing is the least of my concerns. I can deal with that, but I cannot risk my reputation because we are in this virtuous loop where the market is trending.”

He proceeded to buy momentum stocks and 3D printer companies.

Fast forward to the present, when countless hedge funds – key among them Kyle Bass’ Hayman Capital and Mark Hart’s Corriente – have become China megabears, expecting the country’s financial collapse and trading it by shorting the Yuan expecting a massive Yuan devaluation.

It is here that Hugh Hendry has once again proven contrarian, even if it means agreeing with the dominant textbook meme of the day, namely that China can contain its economic hard landing, and in his most recent interview with RealVision’s Raoul Pal, he cautions against a Chinese devaluation saying that “tomorrow we wake up, I mean, I would jump out the hotel window if this was the scenario, but we wake up and China has devalued 20%. The world is over. The world is over.”

What makes this interview doubly ironic is not just that Hendry is wildly contradicting everything he himself believed in a few short years ago, but disagrees with his interview host himself – recall that one month ago, we showed an excerpt from a Raoul Pal interview in which he previewed “the Big Reset” and laid out how the Kondratieff Winter would unwind, one in which China would play a prominent part.

Whether Hendry is right or wrong remains to be seen: for now he has the powerful People’s Bank of China at his back which has been especially active recently especially after the PBOC stated recently it intends to crush all hedge funds who have shorted the Yuan even if it means slamming Chinese trade and the economy once again (as a reminder, one of the biggest reasons why China needs a weaker Yuan is not just the stronger dollar to which it is pegged but because its exports have been crashing against all of its trading partners making the need for a weak currency paramount).

For now, as we showed just ten days ago, those short the Yuan have swung to wildly profitable to losing money as both the USD has slid and the Yuan has spiked, although both of these trades appear to be reversing now.

Needless to say, Hendry disagrees with the China contrarians and believes that the way to fix the Chinese economy is through a stronger currency, even if there is no logical way how that could possibly work when China’s debt load is 350% of GDP while its NPLs are over 10% and rising.

So, borrowing form a favorite Keynesian trope, one where when the countrfactual to his prevailling – if incorrect – view of the world finally emerges, Hendry is convinced that a 20% devaluation would lead to global devastation; the same way if Paulson did not get Congress to sign off on his three page term sheet that would lead to the “apocalypse.” Only unlike Paulson who only hinted at a Mad Max world, for Hendry the alternative to him being right is a very explicit doomsday scenario, as he explains in the following excerpt from his RealVision interview:

Tomorrow we wake up and China has devalued 20%, the world is over. The world is over. Euro breaks up. The world is over. The euro breaks up. Everything hits a wall. There’s no euro in that scenario. The US economy, I mean everything hits a wall! Everything hits a wall!

 

The dollar strength that you imagined is devastation because you just eliminated dollars. They’re a scarce commodity. You’ve wiped them out. And China is a pariah state.

 

It’s a ‘Mad Max’ movie, right. OK, China gets to be the king in ‘Mad Max’ world. How appealing is that? There is no world after the tomorrow where China devalues by 20%. There is no world. Yeah, it’s looney tunes to believe that, people say, ‘oh wow, they needed to catch a break.’

 

Their share of world trade has never been higher. They’re facing no pressure, immense terms of trade improvement, and you would destroy world trade. World trade is down 25%. You would probably have passport restrictions, the world is over.

And while it is clear on which side of the Yuan Hugh is currently positioned, either directly or synthetically, we can’t wait to see who is right in the end: China and its central bank (as well as Hugh Hendry) or reason and common sense (as well as some of the smartest hedge funds in the world).

The RealVisionTV interview excerpt is below:

To view the full interview, subscribe to Real Vision Television, which offers Zero Hedge readers a 7-day free trial.

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

Authored by Chris Campbell, via LFB.org,

“Of all tyrannies,” C.S. Lewis once wrote, “a tyranny sincerely exercised for the good of its victims may be the most oppressive.

 

“It would be better to live under robber barons than under omnipotent moral busybodies.

 

“The robber baron’s cruelty may sometimes sleep, his cupidity may at some point be satiated; but those who torment us for our own good will torment us without end, for they do so with the approval of their own conscience.”

There’s a sculpture on display in front of the Federal Trade Commission building in D.C.

It was erected when Roosevelt was in office, depicting a man holding back a wild horse. It is called “Man Controlling Trade.”

It, of course, implies that we need institutional protection from the overwhelmingly wild force of grocery lists and car salesmen.

But, we know what you’re thinking. This metaphor is full of plotholes.

For one: “Since trade is not really a wild horse,” Sheldon Richman points out in Reason, “but rather a peaceful and mutually beneficial activity between people, the Roosevelt administration’s propaganda purpose is clear.

“A more honest title would be ‘Government Controlling People.’ But that would have sounded a little authoritarian even in New Deal America, hence the wild horse metaphor.”

The idea that government is necessary to “tame the beast” is not an unpopular one. But, Richmond goes on, “What’s looked over — intentionally or not — is that the alternative to a government-regulated economy is not an unregulated one.

“The term ‘free market’ does not mean free of regulation. It means free of government interference, that is, legal plunder and other official aggressive force.”

Rather than having a centralized decision-maker, individuals can (and should) voluntarily participate and create regulatory environments on their own. These voluntary decisions are what make up and regulate the market — not arbitrary and outdated restrictions and barriers.

And, though a free market will have its bad players, they will be in the minority. The incentive to cheat and defraud, without a centralized power structure, will be lower and far less disastrous. And, better yet, the threat of violence won’t be baked into the cake.

Rather, rules will be created by consent and not by agenda-driven third-parties with goons with guns and big cages.

“Bureaucrats,” Richmond writes, “who necessarily have limited knowledge and perverse incentives, regulate by threat of physical force. In contrast, market forces operate peacefully through millions of cooperating participants, each with intimate knowledge of her own personal circumstances and looking out for her own well-being.”

People, naturally, tend to value order and peace to chaos. And free markets, in the pursuit of self-interest, provide a way for humans to interact, create order and foment peace. But, Richmond goes on, those who forget that “liberty is the mother not the daughter of order, will be tempted to favor state-imposed order. How ironic since the state is the greatest creator of disorder of all.”

Today, to drive this point home, we turn to Mr. Thomas Sowell.

Sowell’s here to rap about his transformation from Marxism to the Markets. And show us why a robber baron is a much safer foe than a meddling bureaucrat… or worse, someone who sincerely believes they’re helping.

Read on…

From Marxist to the Market

(by Thomas Sowell, via Capitalism Magazine)

How and why had I changed from a young leftist to someone with my present views, which are essentially in favor of free markets and traditional values?

In a sense, it was not so much a change in underlying philosophy, as in my vision of how human beings operate.

Back in the days when I was a Marxist, my primary concern was that ordinary people deserved better, and that elites were walking all over them.

That is still my primary concern, but the passing decades have taught me that political elites and cultural elites are doing far more damage than the market elites could ever get away with doing.

For one thing, the elites of the marketplace have to compete against one another.

If General Motors doesn’t make the kind of car you want, you can always turn to Ford, Chrysler, Honda, Toyota, and others. But if the Environmental Protection Agency goes off the deep end, there is no alternative agency doing the same thing that you can turn to.

Even when a particular corporation seems to have a monopoly of its product, as the Aluminum Company of America once did, it must compete with substitute products.

If Alcoa had jacked up the price of aluminum to exploit its monopoly position, many things that were made of aluminum would have begun to be made of steel, plastic and numerous other materials.

The net result of market forces was that, half a century after it became a monopoly, Alcoa was charging less for aluminum than it did at the beginning. That was not because the people who ran the company were nice. It was because market competition left them no viable alternative.

How you look at the free market depends on how you look at human beings. If everyone were sweetness and light, socialism would be the way to go.

Within the traditional family, for example, resources are often lavished on children, who don’t earn a dime of their own. It is domestic socialism, and even the most hard-bitten capitalists practice it.

Maybe some day we will discover creatures in some other galaxy who can operate a whole society that way. But the history of human beings shows that a nation with millions of people cannot operate like one big family.

The rhetoric of socialism may be inspiring, but its actual record is dismal.

Countries which for centuries exported food have suddenly found themselves forced to import food to stave off starvation, after agriculture was socialized. This has happened all over the world, among people of every race.

Anyone who saw the contrast between East Berlin and West Berlin, back in the days when half the city was controlled by the Communists, can have no doubts as to which system produces more economic benefits for ordinary people.

Even though the people in both parts of the city were of the same race, culture and history, those living under the Communists were painfully poorer, in addition to having less freedom.

Much the same story could be told in Africa, where Ghana relied on
socialistic programs and the Ivory Coast relied more on the marketplace, after both countries became independent back in the 1960s. Ghana started off with all the advantages.

Its per capita income was double that of the Ivory Coast. But, after a couple of decades under different economic systems, the bottom 20% of people in the Ivory Coast had higher incomes than 60% of the people in Ghana.

Economic inefficiency is by no means the worst aspect of socialistic government. Trying to reduce economic inequality by increasing political inequality, which is essentially what Marxism is all about, has cost the lives of millions of innocent people under Stalin, Mao, Pol Pot, and others.

Politicians cannot be trusted with a monopoly of power over other people’s lives. Thousands of years of history have demonstrated this again and again.

While my desires for a better life for ordinary people have not changed from the days of my youthful Marxism, experience has taught the bitter lesson that the way to get there is the opposite of what I once thought.

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