Tag: finance

After the success of Putin’s op-ed, Venezuela’s President Nicolas Maduro has put pen to paper in a NY Times op-ed. Calling for “peace and dialogue,” Maduro blames the US government for supporting the 2002 coup and funding the opposition support movements currently. Slamming the US media’s biased perspective on his nation’s “best [electoral] process in the world,” the outspoken leader explains, “the claims that Venezuela has a deficient democracy and that current protests represent mainstream sentiment are belied by the facts. The antigovernment protests are being carried out by people in the wealthier segments of society who seek to reverse the gains of the democratic process that have benefited the vast majority of the people.”

 

Nicolas Maduro Op-Ed (via NY Times),

THE recent protests in Venezuela have made international headlines. Much of the foreign media coverage has distorted the reality of my country and the facts surrounding the events.

Venezuelans are proud of our democracy. We have built a participatory democratic movement from the grass roots that has ensured that both power and resources are equitably distributed among our people.

According to the United Nations, Venezuela has consistently reduced inequality: It now has the lowest income inequality in the region. We have reduced poverty enormously — to 25.4 percent in 2012, on the World Bank’s data, from 49 percent in 1998; in the same period, according to government statistics, extreme poverty diminished to 6 percent from 21 percent.

We have created flagship universal health care and education programs, free to our citizens nationwide. We have achieved these feats in large part by using revenue from Venezuelan oil.

While our social policies have improved citizens’ lives over all, the government has also confronted serious economic challenges in the past 16 months, including inflation and shortages of basic goods. We continue to find solutions through measures like our new market-based foreign exchange system, which is designed to reduce the black market exchange rate. And we are monitoring businesses to ensure they are not gouging consumers or hoarding products. Venezuela has also struggled with a high crime rate. We are addressing this by building a new national police force, strengthening community-police cooperation and revamping our prison system.

Since 1998, the movement founded by Hugo Chávez has won more than a dozen presidential, parliamentary and local elections through an electoral process that former American President Jimmy Carter has called “the best in the world.” Recently, the United Socialist Party received an overwhelming mandate in mayoral elections in December 2013, winning 255 out of 337 municipalities.

Popular participation in politics in Venezuela has increased dramatically over the past decade. As a former union organizer, I believe profoundly in the right to association and in the civic duty to ensure that justice prevails by voicing legitimate concerns through peaceful assembly and protest.

The claims that Venezuela has a deficient democracy and that current protests represent mainstream sentiment are belied by the facts. The antigovernment protests are being carried out by people in the wealthier segments of society who seek to reverse the gains of the democratic process that have benefited the vast majority of the people.

Antigovernment protesters have physically attacked and damaged health care clinics, burned down a university in Táchira State and thrown Molotov cocktails and rocks at buses. They have also targeted other public institutions by throwing rocks and torches at the offices of the Supreme Court, the public telephone company CANTV and the attorney general’s office. These violent actions have caused many millions of dollars’ worth of damage. This is why the protests have received no support in poor and working-class neighborhoods.

The protesters have a single goal: the unconstitutional ouster of the democratically elected government. Antigovernment leaders made this clear when they started the campaign in January, vowing to create chaos in the streets. Those with legitimate criticisms of economic conditions or the crime rate are being exploited by protest leaders with a violent, antidemocratic agenda.

In two months, a reported 36 people have been killed. The protesters are, we believe, directly responsible for about half of the fatalities. Six members of the National Guard have been shot and killed; other citizens have been murdered while attempting to remove obstacles placed by protesters to block transit.

A very small number of security forces personnel have also been accused of engaging in violence, as a result of which several people have died. These are highly regrettable events, and the Venezuelan government has responded by arresting those suspected. We have created a Human Rights Council to investigate all incidents related to these protests. Each victim deserves justice, and every perpetrator — whether a supporter or an opponent of the government — will be held accountable for his or her actions.

In the United States, the protesters have been described as “peaceful,” while the Venezuelan government is said to be violently repressing them. According to this narrative, the American government is siding with the people of Venezuela; in reality, it is on the side of the 1 percent who wish to drag our country back to when the 99 percent were shut out of political life and only the few — including American companies — benefited from Venezuela’s oil.

Let’s not forget that some of those who supported ousting Venezuela’s democratically elected government in 2002 are leading the protests today. Those involved in the 2002 coup immediately disbanded the Supreme Court and the legislature, and scrapped the Constitution. Those who incite violence and attempt similar unconstitutional actions today must face the justice system.

The American government supported the 2002 coup and recognized the coup government despite its anti-democratic behavior. Today, the Obama administration spends at least $5 million annually to support opposition movements in Venezuela. A bill calling for an additional $15 million for these anti-government organizations is now in Congress. Congress is also deciding whether to impose sanctions on Venezuela. I hope that the American people, knowing the truth, will decide that Venezuela and its people do not deserve such punishment, and will call upon their representatives not to enact sanctions.

Now is a time for dialogue and diplomacy. Within Venezuela, we have extended a hand to the opposition. And we have accepted the Union of South American Nations’ recommendations to engage in mediated talks with the opposition. My government has also reached out to President Obama, expressing our desire to again exchange ambassadors. We hope his administration will respond in kind.

Venezuela needs peace and dialogue to move forward. We welcome anyone who sincerely wants to help us reach these goals.

via Zero Hedge http://ift.tt/1s9WOjs Tyler Durden

Submitted by David Stockman via Contra Corner blog,

America is being run by an unelected gang of essentially self-perpetuating PhDs. The notion of an economics coup d’ etat is not so far-fetched. After all, the Eccles Building controls the levers of the nation’s fiscal policy; is the pied piper of the entire financial system; intentionally inflates financial bubbles which powerfully impact the distribution of wealth and income; and is the master builder of the nation’s towering edifice of $59 trillion in credit market debt that flattens growth, jobs and incomes on Main Street.

To take one case in point, consider further the matter of fiscal policy and the Washington machinery by which $4 trillion of economic resources are allocated directly, and countless trillions more indirectly owing to tax policy and Federal matching grants.

This entire apparatus is now frozen in place because the Fed’s QE policy amounts to a giant fiscal fraud. Even if it sticks to the taper, the Fed’s balance sheet will have expanded by 5X—from $900 billion to $4.5 trillion—in 70 months. Yet it has no intention whatsoever of unwinding this stupendous emission of fiat credit. Indeed, selling-down its massive piles of treasuries and MBS would ignite the mother of all melt-downs in the fixed income markets, which have gorged on over-valued paper that was priced by the Fed’s huge, artificial bid in the debt markets.

So if this $4.5 trillion balance sheet is permanent, then the Fed’s post-crisis money printing spree amounts to a massive monetization of the public debt. Too be sure, all of this was done in the name of rubbery abstractions like “accommodating” recovery, supporting the “labor market” and “stimulating” consumption and investment spending, but the real world effect was quite different and far more tangible: It allowed Washington to treat the financing cost of our $17.5 trillion national debt as a free good.

In a world in which even the official inflation rate (CPI) has averaged 2.4% during the last 14-years, there is no other way to describe a policy that actually drove the 5-year Treasury note yield to a low of 75 bps, and pulled the weighted average cost of the total Federal debt down to about 2.5%—which is to say, zero, nichts, nada or nothing in real terms.

And part of this fiscal scam is even more egregious than the Fed’s own acknowledgement that is artificially suppressing  the treasury coupons. What the Fed is also doing is issuing second-hand “greenbacks”— those notorious non-interest bearing IOU’s that financed the Civil War. Since the crisis the Fed has returned $400 billion of “profits”, including $80 billion each in the last two years, to the US treasury, thereby off-setting upwards of 25% of the interest cost on the Federal debt.

But then again, how is it that the Fed is more profitable than the  wholesale, retail, entertainment, food service and hospitality industries of America combined? Self-evidently, its the magic of printing press money: The Fed buys treasuries and MBS with a coupon; pays for them by issuing new liabilities without a coupon; collects the spread which gets recorded as a “profit”; and then returns this ‘profit” to Uncle Sam at year-end. Had the Treasury Department dusted off Lincoln’s playbook, instead, it could have simply issued “greenbacks”, and dispensed with the round trip. In less polite company it might be called a fiscal circle jerk.

Based on its historic rate of expansion the Fed’s balance sheet would be about $1 trillion today. So during the past 70 months, the monetary politburo has issued about $3.5 trillion worth of Abe Lincoln’s “greenbacks”.

But here’s the thing: Even as Lincoln took many matters in his own hands like suspending habeas corpus, closing newspapers and imprisoning dissenters, he did bother to get an act of Congress to print his paper money. And as much as the beltway bandits of today’s Washington have enjoyed the quasi-free financing of $9 trillion in new public debt since the crisis—even they would have never passed something called the “Greenback Authorization Act of 2009?.  We do indeed have a rogue central bank operating in the deep waters of extra-constitutionality.

Then consider the orgy of debt issuance in the business sector. During the last year, every single record from the 2007 blow-off top has been exceeded. This encompasses $1.1 trillion of investment grade corporate debt, including a staggering $49 billion issue by Verizon to fund what was essentially an LBO of its own subsidiary. Next in line is about $600 billion in leveraged loans—-more than 60% of which have been “cov-lite” style spit and prayer loans. And then there are $400 billion of new junk bonds proper, along with the return of that bell-ringer for speculative tops called leveraged recaps, wherein the LBO barons freight down their debt mules with even more debt in order to pay themselves a dividend.

In all, business sector debt stood at about $11 trillion on the eve of the 2008 crisis, and has now vaulted upward to $13.5 trillion. Yet nearly the entire gain has gone into the preferred financial engineering games of bubble finance—namely, LBOs, cash M&A deals and stock buybacks. Indeed, in the latter case the big corporates are now borrowing hand-over-fist to fund buybacks at nearly a $1 trillion annual rate. Compare that to investment in productive plant and equipment where real outlays are still running $100 billion or 8% below its late 2007 level.

Needless to say, this massive leveraging and stripping mining of cash from the business economy is not the unseen hand of the free market at work. It is the consequence of the Fed’s very visible pegging and rigging of the financial markets.

Fast money speculators are subsidized by the Greenspan/Bernanke/Yellen put, which drastically compresses the cost of market risk insurance and artificially fattens the margins on carry trades.  So enabled, the hedge funds then bray incessantly for M&A deals and stock buybacks, which option-gorged corporate executives are eager to undertake—especially with more borrowed money.

And then yield-chasing money managers scoop up the resulting junk bonds, cov-lite leveraged loans and investment grade issues alike because the Fed has bought out the belly of the treasury curve, meaning there is nothing else to buy that will keep the fixed income PMs employed.

Likewise, also comes the $5k Wall Street suits—streaming into America’s busted sub-prime neighborhoods fixing to become single family landlords. Yet without the Fed’s gift of cheap financing, there is not a snowballs chance that these clueless spread-sheet jockeys would own a single, single-family home— let alone upwards of 500,000 at last count.

In short, the Fed has interposed itself throughout the very warp and woof of the nation’s business economy. It does this in a manner that makes a mockery of our purported mechanism of economic governance—that is to say, the spontaneous actions and decisions by millions of producers, consumers, investors and savers on the free market in response to honest price signals arising from the vineyards of commerce and industry. Instead, in a manner like the “caribou” soccer of 6-years olds, today’s economic actors have no choice except to ceaselessly chase the Fed around the economic fields.

So where did the Fed get this mind-boggling grant of plenary power?  Fed Chair Yellen explained it succinctly in a recent speech:

The U.S. economy is still considerably short of the two goals assigned to the Federal Reserve by the Congress of low and stable inflation and maximum sustainable employment.

Yellen was obviously referring to the Humphrey-Hawkins Act of 1977—-one of the most pernicious pieces of legislation ever enacted, and one I am proud to say I voted against as a freshman Congressman. Yet even in those halcyon days of Keynesianism, few in Congress believed that they had mandated the Fed to pursue rigid quantitative targets for inflation and unemployment—let alone precisely a 2% annual gain in the PCE less food and energy or 6.5% on the U-3 measure of unemployment, which didn’t even exist then. By contrast even the voluble Senator from Minnesota saw the law as essentially an expression of congressional sentiment that it would be swell to have more jobs and less inflation.

And most certainly, the Congressional majority that passed the act did not in its wildest imagination foresee that the route to the quantitative inflation and unemployment targets it didn’t mandate would be through the canyons of Wall Street and the made-up monetary doctrine of “wealth effects” as the surest route to their achievement.

So the last 35 years have brought the greatest exercise in mission creep ever undertaken by an agency of the state. That explains why the monetary politburo persists in its absurd quest to force more debt into an economy which is already saturated with $59 trillion of the same. To pretend, as does Yellen and most of the monetary politburo that they must plow ahead printing money at lunatic rates because Congress so mandated it, is the height of mendacity.

The Fed has seized power and is not about to let go—-common sense be damned, and the constitution, too.

via Zero Hedge http://ift.tt/1pQ7IJ8 Tyler Durden

The Fort Hood shooting appears to be over, with the shooter reportedly dead of a self-inflicted wound and according to the latest CNN update, three other people dead, and as many as 14 others injured, some in critical condition. Reports of a second shooter are so far unconfirmed. CNN also reports that the name of the shooter is 34 year old Ivan Lopez.

The official statement by Fort Hood:

Shooting incident at Fort Hood

 

UPDATE: Fort Hood’s Directorate of Emergency Services has an initial report that a shooter is dead but this is unconfirmed.

 

The injured personnel are being transported to Carl R. Darnall Medical Center and other local hospitals. Numerous law enforcement agencies are in support and on the scene. The number of injured are not confirmed at this time. No further details are known at this time.

 

The post is currently still on lock down.

 

FORT HOOD, Texas — There has been a shooting at Fort Hood and injuries are reported. Emergency crews are on the scene. No further details are known at this time.

 

As further details are available, they will be released through FortHoodPressCenter.com.

Obama was at a fundraiser when the shooting happened. He promptly provided several soundbites:

• PRESIDENT OBAMA SAYS HE SPOKE WITH JOINT CHIEFS ABOUT FORT HOOD
• OBAMA `HEARTBROKEN THAT SOMETHING LIKE THIS HAPPENED AGAIN
• OBAMA SAYS SHOOTING `REOPENS THE PAIN’ OF INCIDENT 5 YEARS AGO
• OBAMA VOWS FULL INVESTIGATION INTO FORT HOOD SHOOTING

And last but not least, Obama promises no stone will be unturned in the ensuing investigation.

BREAKING: Obama says he’s following Fort Hood shooting closely, US will get to bottom of what happened.

— The Associated Press (@AP) April 2, 2014

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

Via JPMorgan’s CIO Michael Cembalest,

Meanwhile, I visited New Orleans last month to see clients. One question that always comes up there: why can’t the US spend more on infrastructure? As I first wrote 5 years ago, preventive infrastructure spending can be effective: $120 billion was spent by the US government for relief and reconstruction in the wake of Hurricane Katrina. As is now believed in the geo-forensics community, for just $10 million, the Army Corps of Engineers could have conducted more detailed subsurface exploration beneath flood walls erected in the last 25 years. Instead, to save money, testing intervals were spaced too far apart. This led to faulty extrapolations and canal wall failures that caused 80% of the damage (and which preceded water rising over the levees). Given the dilapidated state of bridges, tunnels, rails, roads and the electricity grid in some places, why is US spending on this category falling? And how does the US avoid the kind of environmental problems facing China cited on page 4 as spending on superfund clean-up and other related programs declines?

Another question that comes up: why can’t the US spend more on worker retraining? The entry of China into the World Trade Organization in 2001 accelerated a massive decline in US manufacturing jobs, and after the housing bust, the country’s unemployed construction workers need new skills. As shown in the first chart on the next page, why is less money being spent on training, employment and related social services? The second chart on the next page is striking as well: given concerns around peak oil, fracking, climate change, etc., you would think that public sector spending on commuter rails, urbanized natural gas vehicles, carbon capture and storage, safer ways of operating nuclear power (light water reactors), more efficient internal combustion engines, battery/electricity storage R&D and renewable energy integration would be rising. So why is energy spending falling?

Some people ask if the US is prepared for a renewed cold war with Russia alongside its ongoing battles with other ideological enemies. One can debate whether the US has a national interest in getting militarily involved in Syria and Crimea (I don’t think it does), but that’s different from debating how low defense spending can go before it has repercussions in other ways. The first chart below shows spending on national defense.

The answer to all these questions is the same: these categories are declining since they are being squeezed out by the inexorable rise in entitlement payments. There may be negative consequences for productivity, job growth and national income over the short run and over the long run (the New Orleans infrastructure cost/benefit failure is one textbook example). Of course, some argue that there are sufficient incentives for the private sector to solve the transportation, natural resource, infrastructure, job retraining, energy and urbanization challenges facing the US, so that the above trends aren’t a problem. I wouldn’t.

 

Read the full Michael Cembalest note below:

Cembalest – 03-31-2014 – The 15% Solution

via Zero Hedge http://ift.tt/Pky8Wr Tyler Durden

Citi sees a number of parallels, both in terms of the background dynamics and the course of events, seen throughout the 1990s and more recently over the past 7 years. As Tom Fitzpatrick notes, these similarities are not confined to the US economy but incorporate developments on a global scale and stringly support their view that the US dollar should rally for about another two years.

 

 

Via Citi FX Technicals,

Similarities in the course of events and the trends in the USD

US

– 1989-1991: The US housing boom ended with the savings and loans crisis which in turn led to a severe recession. The Fed cut rates and the USD continued lower

– 2005-2007: US housing boom came to an end as over lending could no longer be sustained, especially Sub-prime lending. The USD continued lower and the Fed started its rate cutting cycle in September 2007.

UK

– 1992: UK housing boom also came to an end – the housing and credit cycles in the UK are quite in line with those in the US. The UK was fixed into the Exchange Rate Mechanism at an unsustainable rate and in the end left the ERM. GBPUSD peaked from just above 2.00 and fell to the low 1.40’s in a matter of weeks

– 2008: The UK housing bubble came to an end. Over lending in nearly all parts of the economy, public and private sectors, came to an end and GBPUSD collapsed from a little over 2.00 and fell to 1.35. The downtrend was further exaggerated as the USD rallied across the board during the major financial markets meltdown post Lehman Brothers.

EUROPE

– 1995: All currencies locked into exchange rate bands left the system and it imploded. All European currencies devalued against the German Mark but the USD started to outperform. It was a major platform for a 5 year USD bull market

– 1998: The convergence trade in EU peripheral bonds (and currencies as they converged to the EUR entry rates). During this period into October of 1998 European currencies did better rallying 16.5% against the USD from August 1997-October 1998. As convergence “ran its course” the EURUSD rate fell for 2 years into 2000.

– 2011: No currency in Europe could devalue against each other because of the “fixed exchange rate” system called the single currency. Europe went through a Sovereign bond markets crisis. The EUR posted a significant high against the USD

– 2014: We have witnessed the peripheral Bond markets convergence trade in Europe since the summer of 2012. At this point Spanish and Italian 10 year yields are only about 60 basis points above the US. If, as we expect, long-term yields are set to rise in the US this does not seem to be a sufficient premium to take that risk.

JAPAN

– 1995: USDJPY was already trending down but the Kobe Earthquake led to significant JPY repatriation. USDJPY fell to the trend lows at 79.75.

– 1997: Japan raises its consumption tax

– 2011: USDJPY was already in a downtrend as carry trades seen years before had ended and interest rate differentials had moved in favour of the JPY. The Tsunami and subsequent Fukushima disaster send USDJPY to new all-time lows.

– 2014: Consumption tax rise coming in April

LOCAL MARKETS

– 1997-1998: The exchange rate regimes in Asia came to an end with a number of countries defaulting. Russia also defaulted in 1998. While there was volatility in G10 markets as the USD actually went down instead of up because the market was too heavily positioned long the German Mark (As a hedge to the concern that German banks were heavily exposed to Russia), the correction down in the USD was short lived and a platform was set for another 2+ year rally into 2000.

– 2013-2014: A number of Local Markets came and are still under pressure as assets are sold and foreign flows are reversed. This has largely been a direct consequence of changes in Fed policy (tapering) and the economic situation in some of those markets. Further outflows are likely over the course of the months ahead as the Fed finally heads towards a more normalization of monetary policy.

USD Index – back above the previous low

The USD Index posted a decent up week last week and a weekly close above the December 2013 low of 79.68

Weekly momentum is also beginning to cross back up again

Decent resistance levels come in at 81.38-81.45 which are likely to be tested over the coming weeks. A weekly close above those levels would amount to important breaks if/when seen

The setup may be seen as a double bottom pattern with a neckline at 81.48. A weekly close above there would open the way for 83.68 at a minimum.

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

Submitted by World Complex blog,

I've been talking about scale invariance a lot lately. I became interested in the topic quite a few years ago in the context of geological phenomena like earthquakes and avalanches. The Gutenberg-Richter law describing the size-frequency relationship for earthquakes was one of the first natural laws based on scale invariance, but interest in the topic really picked up with the Bak et al. paper in 1987 (pdf – may only be a temporary link).

The cause for this relationship is still foggy, as is the physical mechanism between the small and large earthquakes. The best proposed explanation is that the scale-invariant distibution of events allows for the most efficient flow of energy (and information) through the system (but it isn't clear why that should be so).

So back in the early '90s I was estimating recurrence intervals estimates for certain hazardous events and I started trying to work out a methodology for detecting scale invariance in the geologic record. Using the Gutenberg-Richter Law, you can estimate the likelihood of a large earthquake in an area based on the number of small earthquakes. There were interesting implications for areas where the recurrence interval of large earthquakes is longer than the local recorded history (as in much of Canada). At the time, there were seismic hazard maps produced by the USGS which showed significant earthquake risk in zones which mysteriously ended right at the Canadian border.

One of my classmates in my undergrad days (we're back in the 80s, now) studied the correlation between microquakes and fluid injection at oil extraction operations in southwestern Ontario. The oil companies were surprisingly cooperative until they understood the point of the research, after which they started to withhold data.

And here is the mystery. The principle of scale invariance in earthquakes would suggest that increasing the number of small earthquakes should increase the number of large earthquakes at least in the short term. Yet our understanding of the dynamics of earthquakes tells us that lubricating the fault should allow stresses to be relieved through the small earthquakes, which in the long-run should reduce the chance of a large quake in the longer term. (This idea has been proposed at various times over the past fifty years, but for various obvious reasons, it has never been deliberately pursued).

By the early 2000s, other geophysicists (notably Didier Sornette, but there were others) had moved a portion of their data processing expertise into studying econometric time series. I made this move later as I gradually came to appreciate the key problem with developing quantitative techniques when the data were suspect. First of all, the measurements themselves are inaccurate. More importantly, our estimate of the timing of each observation was just that–an estimate. Most quantitative methods assume that the observations are evenly spaced in time. Failing that, they assume you know the timing of your observations. The consequences of errors in the timing are terrible, and frequently underestimated. The point is that it is difficult to develop excellent quantitative methods when the data are terrible.

The big advantage of working with economic time series–pricing data, in particular, is the elimination of the observational errors. When a transaction occurs, there is no doubt about either the price of the time–right down to the millisecond scale.

I started looking at market macrostructure–because (several years ago) nothing interesting ever happened on a scale of less than about an hour. Until just the past few years. Suddenly, strange, rich, unusual behaviours began to occur in individual stock prices, and even indices, on the millisecond scale. I didn't know what was causing it–but it sure was interesting.
 

This was the signature of onset of HFT. I was initially interested in it for entirely different reasons than most of you. After Crutchfield's (1994) paper (pdf) on emergence, I had been pondering the idea of how to recognize a fundamental change in a complex system. Again, my interest was in the earth system as a whole, and how to recognize whether or not new observations were pointing to a fundamental change in its mode of operation.

Given our understanding that the number of large avalanches is positively correlated to the number of small avalanches, it seems pretty clear that (as Nanex and Zerohedge has been saying) the damaged market microstructure is mirrored in the increasing number of flash crashes since Reg NMS. Unfortunately, our murky understanding of how the microstructure causes the macrostructural changes can be used by the regulatory authorities to avoid investigation. They can't see a smoking gun.

We would normally expect the micro-crashes to eventually relieve imbalances in the system, improving its long-run stability. (Perhaps this is how the SEC justifies the practice). But unlike earthquakes and avalanches, these uncountably many small crashes are not reducing the imbalances. One reason is that the cause of the imbalances is separate from HFT–the dollars keep being shoveled to the top of the mountain as fast as, if not faster, than HFT brings them cascading down. Another reason is that the trades (mostly) get unwound–so the exchanges push most of the snow back to the mountaintop after the avalanche.

HFT certainly benefits unfairly from the system, but isn't responsible for it. If anything, it is a symptom of corruption–but the cause of the corruption is elsewhere.

Accordingly, my modest proposal for dealing with HFT is this–nothing. Don't bust trades–let them stand. I'd be curious to see the response of the various Ivy-League endowment funds and pension funds when they suffer brutal, near-instantaneous, multi-billion-dollar losses. At a guess, I would probably hear the screaming up here. How would real companies, producing real products, react to a sudden monkey-hammering of their stock price, especially if it triggered debt covenants? Maybe they would all exit the market en masse. It might even force a real change.

via Zero Hedge http://ift.tt/1h4zbW0 Tyler Durden

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Surprise, surprise! Federal Reserve Chair Janet Yellen stated on Monday 31st March that the Federal Reserve shall have to continue bolstering the US economy while it remains stuck in the rut of economic slump. Just as well she made the statement yesterday and not today, as everybody would have taken it for an April Fool’s Day prank…or she would have ended up with egg on her face.

Yellen stated (at the 2014 National Interagency Community Reinvestment Conference, March 31st) that the conditions for the labor market were tougher today than at any other time in any other recession. Of course, she would say that in exoneration of responsibility of the role of the Federal Reserve and the US government and their apparent lack to get the US economy moving despite spending immeasurable amounts to bolster the banks and inflate the stock markets. She spoke of the “extraordinary commitment” of the Fed. But, me thinks the lady has not understood. We don’t need commitment, we need action and results.

She spoke of the economy being far from where it should be right now and that the expectations of the Federal Reserve were failing to come to fruition. She said: “The past six years have been difficult for many Americans, but the hardships faced by some have shattered lives and families. Too many people know firsthand how devastating it is to lose a job at which you had succeeded and be unable to find another; to run through your savings and even lose your home.” But, again, it’s not compassion that we need, it’s action and results, once again. 
We have neither of those two and so all the compassion and understanding however (in)sincere it may be is of no good whatsoever.

But, it does have everything to do with spin-doctoring. The Federal Reserve has now moved into a new era of communication and the compassionate understanding Yellen is now story-telling her life away in the hope that the image changes for the Fed and the people get some spin on them and change opinion.

The Fed has rolled off some $3 trillion in easy money. Interest rates are nearly non-existent and have been for five years. She even said that “recovery still feels like a recession to many Americans, and it also looks that way in some economic statistics.” Feels like? It’s far more than just a feeling.

There are 7 million people working part-time according to her figures in the US and that would like to have a full-time job. Labor-force participation is down from pre-2008 levels of 66% to today’s level of 63%.

Ben Bernanke was economically condescending. Janet Yellen is now on her road-trip around the US visiting schools and talking about people she uses as endearing examples of the weighty burden of the economic crisis to show just how much she cares for the people down below: “For Dorine Poole, Jermaine Brownlee and Vicki Lira, and for millions of others dislocated by the Great Recession who continue to struggle, the cause of the slow recovery is enormously important.”

I wonder who will be shouting out “April Fool!” today when they look at the sorry state of affairs that the Federal Reserve is in and has got the people into! Is Janet Yellen the April Fool? It certainly looks as if Ben Bernanke stitched her up ‘good and proper’ by handing her the hot potato of the resolution of theQuantitative-Easing problem. There’s no chance of doing anything except making the people laugh, Janet. You’re not going to get yourself out of what Ben got you into. Anybody could have seen that. Still, you must have seen it coming. Keep the printing presses rolling, especially now that the European Union’s ECB is starting to fire up its own printing presses as they fall into deflationary pressure and stop spending. Or, maybe all of this was just a sad joke that the Federal Reserve wanted to play on the world today. Not funny!

Originally posted: Yellen on US Economy

 

via Zero Hedge http://ift.tt/1h4vBLF Pivotfarm

Fort Hood, Texas, was was the place of an infamous mass murder that took place in November 2009, when 13 people were shot by a US Army major in what is the worst shooting to ever take place at an American military base.  Moments ago news hit that there is another reported shooting situation at Fort Hood with the shooting suspect said to still be at large.

• FORT HOOD, TEXAS, CONFIRMS SHOOTING INCIDENT ON POST: KVUE NEWS
• FORT HOOD, TEXAS, ON LOCKDOWN AMID SHOOTING REPORTS: KCEN TV
• FORT HOOD, TEXAS, SHOOTING SUSPECT STILL AT LARGE: KCEN TV   
• FORT HOOD, TEXAS, VICTIMS IN BATTLE SIMULATION CENTER: KCEN TV
• FORT HOOD, TEXAS, HAS `MULTIPLE VICTIMS’ AMID SHOOTING: KCEN TV

Live webcast from KCEN.TV below:

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While the recently awakened dormant Russian bear appears content for now having digested the Crimea with barely a burp, Russia’s immediate neighbors know all too well that appeasement – which is precisely how the west in its own eyes is viewing Putin’s actions even if they will never admit it publicly – never works, most, especially the Baltic states, Finland and not to mention Poland, which was the country that got the raw end of the deal the last time European appeasement failed, are getting increasingly nervous.

So much so that some, in this case Poland, are already preempting the next escalatory steps in what some believe is a hyperbolic attempt to accelerate events so much so that a NATO build up in Eastern Europe forces Russia into a provocative first step so that said neighboring countries can get the backing of NATO instead of them too being sacrificed at the altar of appeasement. Nothing earthshattering here, and all in a day’s work when it comes to realpolitik game theory.

So what has Poland in this case done? As the graphic below shows, Polish magazine “Fakt” has laid out the following scenario of just how a Russian invasion would look like, sweeping the Baltics, Belarus, and all of Ukraine, in one offensive wave. Obviously the implication is that Poland would be next.

 

What next: will this spark nationalist fervor in the potentially targeted countries leading to even further escalation, and more importantly, will NATO indeed proceed with a military build up which will almost certainly provoke Russia into even further action, which it itself would view as defensive and justified in light of “unwarranted” NATO expansion?

Obviously, nobody knows yet, although news earlier today that the US is sending yet another warship into the Black Sea at just a time when the tension over the annexation of Crimea appeared to be boiling over, is hardly the de-escalation signal that is needed to make sure the map above never becomes a reality.

via Zero Hedge http://ift.tt/1h4qivB Tyler Durden