Tag: finance

Both the entire month of March, and its last full week, particularly for biotech investors and especially hedge funds, is a time that many would rather forget and continue pretending that the saying “as January goes, so goes the year” is no longer applicable. Luckily, for all those bulls who have forgotten that in a normal market there is both return and risk, at least in pre-New Normal times, there may be some good news. As Bank of America’s chief technician MacNeil Curry reminds us, April is the least cruel month for stocks, posting the highest monthly average return since 1950, returning just over 2.0%.

From Curry, whose latest track record in market calls has hardly been successful:

We believe NOW ITS TIME TO DO AN ABOUT FACE and turn bullish risk assets for the next several weeks. From both a price and seasonal perspective, evidence says that the consolidation in the S&P500 is nearing completion and the larger bull trend is about to resume. Treasury yields should also participate as the week long consolidation in 5yr yields is drawing to a close.

That said, even the BofA analysts is starting to hedge quite aggressively: “Bigger picture, we are growing concerned that this equity rally is VERY mature and that US Treasury Vol is setting up for a significant breakout. But, to be clear, those are bigger picture concerns and NOT FOR THE HERE AND NOW.“

Maybe. Maybe not. Either way, here is what the historical data says.

April is the strongest month of the year for the S&P500. Since 1950 it has averaged OVER 2.00% for the month with the 3rd highest monthly probability of an advance at 64%

 

Of course, such Old Normal historical patterns are, as the name implies, not part of the New Normal. Because nowhere in the past 64 years of chart data did the market have to deal with an unprecedented increase in the reduction (yes, second derivatives) of the growth of the Fed’s balance sheet. And never before has the entire global economy’s massive carry trade driven purely by several trillion in central bank liquidity injections been on the verge of unwinding, which as we have seen on two occasions already, had very adverse and dramatic consequences for the world’s emerging markets.

So while one should prepare to hear a litany of how April is historically the best month for stocks ahead of the just as infamous “Sell in May and go away” which has not been the case for the past 4 years, the reality is that this historic patterns such as this, or any others, have zero bearing on the current experiment in “confidence boosting” central planning. In other words, the only thing that continues to “matter” for risk, is what the Chairwoman may have had for dinner.

via Zero Hedge http://ift.tt/1fDz3re Tyler Durden

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

The capture of a few pawns has cleared the chessboard, but the strategic choices already made have greatly reduced Putin's room to maneuver.

No tree grows to the sky. Once extremes are reached, trends reverse, often with symmetry: the decline often matches the ascent.

Which leads to an interesting question: have we reached Peak Putin?

Let's start our inquiry by noting that pundits from across the political spectrum are all busily chainsawing events up to fit into their little boxes of existing narratives: Cold War Redux, World War 3, neo-Nazis, etc.

One key driver of this stale parade of pre-packaged opinion is the instinctive urge to cheer for whatever team is on the field opposite the U.S. and President Obama. This natural urge leads to indefensible hypocrisy along the lines of "Brand X Imperialism bad, brand Y Imperialism good." If you oppose Imperialism and Great State meddling, then you can't oppose one brand of Great State meddling and support another brand.

Let's stipulate a few things to get them out of the way, so we can we proceed beyond the chainsaws and little ideological boxes.

1. All nations act in their own self-interest, and all states do so while claiming noble purposes that are patently absurd. To support one nation's actions in its self-interest while decrying another state's actions in its self-interest undermines one's claim to objectivity, to say the least. By all means, be a partisan, but lay open claim to being a partisan; anything less displays the same hypocrisy as that of self-serving states.

2. Crimea: done. the West had no leverage, and the U.S. hypocrisy was blatant: we favor democracy and self-rule only so long as the elections go our way. Uh, right.

3. Just because Ukrainians speak Russian doesn't mean they want to be annexed into Russia. Most Ukrainians speak both Ukrainian and Russian. By the logic of those claiming Russian speakers are naturally part of Russia, the U.S. could annex all of Canada (with perhaps the exception of French-speaking Quebec) on the grounds that Canadians speak English.

4. Desiring cordial economic and cultural ties with Russia is not the same as supporting annexation of Eastern Ukraine to Russia. The memory of those liquidated by Russians or given "tenners" in Siberian work/death camps has not yet been extinguished. All those convinced that Ukrainians want the warm and fuzzy embrace of Russia would do well to read the three volumes of The Gulag Archipelago by Aleksandr Solzhenitsyn:

The Gulag Archipelago: 1918-1956
The Gulag Archipelago 2
Gulag Archipelago 3

5. There is room for a non-neo-Nazi nationalism, but only if every nationalist isn't painted with a Neo-Nazi brush. There are reasonable nationalists in Ukraine but their voices aren't registering in the hyper-coverage of neo-Nazis, Western plans for World War 3, etc.

6. Being rabidly anti-American doesn't necessarily mean you have to automatically be rabidly pro-Putin. If you oppose Imperialism and Great State meddling, then be consistent if you want to retain any credibility.

If we set aside the Cold War Redux narrative, we are clear to see some interesting things that are neither pro nor con, they simply are.

1. Russia used its energy leverage over Europe with such great gusto that the blowback will reduce that leverage. Europe is scrambling to develop other sources of natural gas, and doing anything less would not be acting in Europe's self-interest.

2. Massing conscript troops and an army with limited ability to maintain its supply chain once inside Ukraine is another example of sparking blowback that will last for years and perhaps decades. Pressing your energy boot on Europe's neck was bound to create a strategic response, and massing troops on Ukraine's border has the same consequence.

3. While Putin's popularity is sky-high, domestic support for invading Ukraine is low. Should the poorly paid conscripts start coming home in body bags, Putin's domestic support will be revealed as an inch deep and a mile wide.

4. Russia's energy pacts with China and India are positive developments for Asian peace and development. China and India need more energy, Russia has surplus to sell–it's win-win not just for these nations but for the world. The peaceful trade of energy is a major plus for everyone.

5. But selling energy to Europe and selling energy to China and India are not equal: China and India have seen the way Russia has exploited its energy leverage in Europe, and Russia will find it has precious little political leverage over China and India, who will be sure to develop alternative sources of natural gas. The loss of political leverage over Europe will not be offset by an equivalent gain of leverage over China and India.

6. Russia has ruthlessly exploited its monopoly over natural gas by charging politically influenced prices: Poland, for example, pays a lot more for Russian natural gas than Germany, even though the gas flows through the same pipeline.

7. Once Russia loses pricing power in Europe, it will not gain pricing power over China or India. Those nations have other sources and cannot be held hostage in the same way Poland et al. are currently held hostage.

This means Russia will be earning considerably less per therm of energy once it ships natural gas to China and India.

Slowly but surely, the global natural gas market is becoming more integrated. Those currently charging cartel/monopoly prices will see their energy earnings decline.

8. In terms of national income, Russia is as dependent on energy earnings as any other "resource curse" oil exporter. The loss of pricing power in Europe and a decline in energy income will become headwinds for the Russian state.

9. Putin's domestic popularity flows from nationalist pride in the Olympics and in reclaiming Crimea. But now that those high points are past, Putin's options are not so lopsided in his favor.

Threatening (or invading) Ukraine reminds everyone in Europe why they fear Russia, and why Russia is not truly European. Domestic support in Russia for annexing part of Ukraine is low, for good reason: who wants to be responsible for the costs, financial and political?

10. Reclaiming Crimea makes for good theater and is a geopolitical plus, but it does nothing to reverse Russia's real problems, which include corruption, wealth inequality, low birth rates, etc.

11. Russia's military looks good on paper and in photos, but it's not as prepared to mount a sustained campaign within Ukraine as advertised. Asymmetric warfare doesn't respect lines on a map.

12. If Putin had set out to reinvigorate NATO, he would do exactly what he has done to date. Anyone thinking the U.S. Deep State is in despair about Putin's moves has it backwards: everything Putin is doing is fueling blowback and resistance in nations that were potentially friendly to Russia. Nothing tells you who your friends are quite like troops massing on your neighbor's border.

As a refresher, here's a map of pipelines connecting African natural gas fields to Europe.

 

source:

Given the context laid out above, it seems increasingly likely that we've reached Peak Putin. The capture of a few pawns has cleared the chessboard, but the strategic choices already made have greatly reduced Putin's room to maneuver.

Ukraine: A Deep State Analysis (February 27, 2014)

Ukraine: Follow the Energy (March 4, 2014)

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A week after initial votes showed the far-right anti-Euro National Front party gaining ground in French municipal elections, it appears the ongoing disappointment in the ruling Socialists is increasing (amid record joblessness).

• *FAR RIGHT MAKES FURTHER GAINS IN FRENCH MUNI ELECTIONS
• *MOSCOVICI SAYS TODAY’S  ELECTIONS ‘UNQUESTIONABLY A DEFEAT’
• *MOSCOVICI SAYS IT’S ‘DIFFICULT TO REFORM FRANCE’

These are the first nationwide elections in France since Hollande took office and point to rather concerning lack of support for his party and his policies (and the core of the EU); but a record high 38.5% of votes abstained suggesting major apathy as the country’s north-south divide grows.

Defeat for Hollande…

France’s governing Socialist Party (PS) and its allies have suffered heavy losses in the second round of the country’s municipal elections, exit polls show.

 

President Francois Hollande’s PS lost control of the northeastern city of Reims and the southwestern city of Pau and the western city of Quimper, among others, an Ipsos poll for French television predicted.

But a potentially concerning rise in nationalist fervor…

The main winner was the centre-right Union for a Popular Movement (UMP) but the far-right National Front also consolidated its first-round gains, picking up the southern towns of Frejus and Beziers, the projections showed.

Which seems to be splitting the nation…

Mayoral candidates linked to the National Front won mayoral races in the southern towns of Beziers and Frejus, while the anti-European Union party failed in its goal of winning races in larger cities such as Perpignan and Avignon, according to exit polls.

The gains by the National Front in 36,000 French municipalities on March 23 reflect discontent with Hollande after 22 months in office… as his promise to ‘fix’ joblessness is not going well…

 

Perhaps Hollande should have banned Twitter and YouTube also (for the last 2 years)…

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Last week in the markets was all about what was happening below the calm surface waters, which saw the DJIA post a tiny increase and the S&P dip just a fraction. If one was going off merely by the two main indices, one would certainly have missed the drubbing that tech and specifically biotech stocks suffered. However, nowhere was it worse than in the “hedge fund hotel” basket of names most near and dear to the hearts of hedge funds, and respectively those most hated, one which Goldman defines as the long Very Important Positions <GSTHHVIP> vs. short Very Important Shorts <GSTHVISP>. It was here that P&Ls saw one of the worst weekly losses for hedge fund positions since 2001.

According to Goldman’s David Kostin, the past week has been among the worst 5-day returns for GSTHHVIP relative to the S&P 500 since 2001.  

The past 5 trading days rank in the lowest 2% of returns since May 2001 and are the worst aside from the sharp market retreat in 2002, the 2008 financial crisis, and 2011 debt ceiling debate. A stable S&P 500 makes the current underperformance more notable.”

Especially when after five years of underperforming the market, investors continue to ask themselves just what are they paying hedges 2 and 20 for – obviously it is not to hedge risk, in a market in which the Fed has made it all too clear a market downturn is no longer a possibility. It must be for the “benefits” of the herd effect of everyone loading up on the same positions, and when one sells, everyone sells and leading to sharp losses for the bulk of the “smart money out there.”

What else: “Key stock contributors to hedge fund underperformance were longs in AMZN, GILD, DISH, PCLN, YHOO, and FB that are each down at least 5%. Favorite shorts such as SLB, T, IBM, JNJ and EXC are up more than 4%.”

Where have we seen before? And, more to the point, where have we warned this would happen? Why here: “Presenting The Best Trading Strategy Over The Past Year: Why Buying The Most Hated Names Continues To Generate “Alpha“.”

Finally, the good news: at least hedge funds, which apparently where whipsawed with a big position and pair trade unwind last week, are not levered to the hilt. Oh wait…

 

Nevermind.

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

The ECB meeting and the US jobs data are the two key events in the coming days. At the March meeting, the ECB failed to take fresh action. That broke the equilibrium that had kept the euro in a five cent trading range ($1.33-$1.38). Only now, amid dovish comments from ECB officials and a more hawkish Fed, accompanied by a thus far sustained rise in the Fed funds and Eurodollar futures strips, have managed to push the euro back into its former range. 

The US employment data will be the first since the FOMC de-emphasized the unemployment rate itself in the forward guidance if offered, choosing instead to focus on a wider array of economic variables. Clearly, with the shifts in participation, the unemployment was always a flawed threshold, though useful up to a point. 

The shift in the Fed’s forward guidance may encourage a change in the market’s focus. We suggest that average hourly earnings may be of greater importance than the market often attributes to it. At her press conference, in response to a question, Yellen played down the modest increase seen recently. 

Average hourly earnings had risen by 0.4% in February and some observers have warned that this is a sign of a tightening in the labor market and the beginning of the long called for increase in inflation. However, average earnings seemed to have been inflated by the statistical consequence of the decline in hours. The decline in hours is likely distorted by the weather. 

In any event, the year-over-year pace has been between 1.9% and 2.2% since November 2012. Even if it ticks up in this week’s report, as last March’s 0.1% gain drops out of the measure; the direction is sideways.

A strong report is likely to reinforce the rise in US short-term yields. It will test the idea that the dollar has become more data sensitive. At the same time, there is a presumption that the tapering will continue at the measured pace barring a significant economic shock.

In contrast, with weak money supply growth, a continued contraction in lending, an elevated EONIA (more than twice the effective Fed funds rate), and an economic recovery that remains, as Draghi says, weak, fragile and uneven, the ECB is under pressure to provide additional accommodation. 

The tone of official comments has turned more dovish and the BBK appears to have eased its opposition to QE. However, the ECB still refuses to recognize risks of deflation and sees “light at the end of the tunnel” as the BBK’s Dombret suggested last week. 

There was a decline in short-term interest rates in response. Indeed, last week, the widening of the US premium over Germany on 2-year rates was more a result of the decline in Germany (6 bp) than the increase in the US (2 bp).

Surveys suggest an overwhelming majority do not expect the ECB to cut rates. Expectations could be adjusted after Monday’s release of euro area March CPI. Soft German and Spanish figures before the weekend warn of further disinflationary forces. The year-over-year CPI is likely to slow to 0.6% after a February reading of 0.8%. This would be a third of the pace seen as recently as February 2013 and half the pace seen as recently as August 2013. 

The euro’s pullback appears more related to the loss of upside momentum as the $1.40 level was approached than pricing in a rate cut. In addition, the price action before the weekend warned that short-term European rates (Euribor futures and the German 2-year bond) may have bottomed. 

The failure of the ECB to act may reinforce a cynicism among many observers that Europe got the benefits of OMT, though it has not been operationalized. Investors want to action. That may be a bit harsh, as the Draghi has surprised the market and in a more dovish direction several times. The ECB offered a facility, OMT, but no country has chosen to trigger it. That is not Draghi’s fault. It was not a bluff. 

While a stand pat policy, even if accompanied by dovish rhetoric, would likely see the euro’s upside tested. Euro extremes are often marked by a double top or bottom. If $1.40 is tested and largely remains intact, it may boost confidence that a top of some import is in place. The reaction to a dovish surprise is a more difficult call. Of course, it partly is a function of precisely what is done. However, a relaxation of policy could spur more fund flows, especially into the periphery, which may be euro positive. 

There are a number of other events that, while not having the systemic impact of the ECB meeting and the US employment data, may impact the investment climate. 

First, China’s PMIs will provide a fresh update of the world’s second largest economy. The Chinese economy peaked in 2011, around the time the MSCI Emerging equities peaked. The bulk of the slowdown is behind it. Chinese officials are signaling a desire to stabilize growth. However, to be sure, the focus has shifted from the real economy to finance. Officials are trying to wring out some of the excesses, and this will help reduce excesses in the real economy. 

Lending to industries that suffer from excess capacity is being slashed by 20% this year and again next year. The weakening of the yuan is forcing an unwind of some of the leveraged speculative positions. The apparent increase in corporate failures also re-introduces risk and at least begins to address the ubiquitous moral hazard problem. 

The yuan spent last week consolidating the prior week’s losses. The PBOC drained funds from the banking system and the 7-day repo rate has jumped, finishing last week at near 5.45% after pushing briefly through 6.0%. It was at 2.25% as recently as March 6. 

Second, while the BOJ continues to buy about $75 bln worth of securities a month, the Japanese government is set to hike the retail sales tax to 8% from 5% on April 1.  The anticipation of the tax may have helped boost Q1 GDP at the cost of Q2 activity. The economy’s performance after the tax is key to the policy response (from the BOJ in terms of more monetary stimulus and from the government in terms of a supplemental budget). The tax will steal the limelight (and significance) from the Tankan report, which is likely to show softness in forward looking subcomponents. 

Third, the UK monthly cycle of data begins with three PMIs. While the Japanese economy likely picked up in Q1 after the lackluster 0.2% pace in H2 13, the US economy slowed as in Q1, the UK economy appears to have maintained its momentum. The UK appears to have achieved this and generated less price pressures. UK gilts appear to be trading more in line with US Treasuries and less like a core European bond. 

Sterling itself underperformed most of the month, but this ended last week. A move above $1.6660 could spur a re-test on the $1.6800 area. Euro has approached a trend line near GBP0.8235. A break of this signals a challenge on the February low near GBP0.8160. 

Fourth, the Reserve Bank of Australia meets this week and is widely expected to leave the cash rate at 2.5%. Its displeasure with the strength of its currency has been duly noted, but has lost its sting The RBA will not change policy. Nor is it prepared to significantly step up intervention. That said; it is a bit stretched against the US dollar after a 1.8% rise last week. 

Fifth, we note two highlights in emerging markets. Turkey held local elections on Sunday and they are being heralded as a referendum on Prime Minister Erdogan.  The early results suggest the AKP is losing the mayor contests in Istanbul and Ankara.  The opposition CHP is doing well in the preliminary results.  The Turkish lira is trading on the firm side of a 7-week trading range against the dollar (~TRY2.17) 

Brazil’s central bank meets and is widely expected to hike the Selic rate by 25 bp to 11.00%. The real has strengthened following S&P’s decision to cut the country’s rating. The change to a stable outlook may have been more important. The real traded at 4-month highs against the dollar at the end of last week (~BRL2.25). It looks particularly stretched and closed both Thursday and Friday last week beyond two standard deviations from its 20-day moving average (Bollinger band).

 

via Zero Hedge http://ift.tt/1of7PR0 Marc To Market

While many have pointed out that the Middle-East/Far-East are drifting to a more "Orwellian" world and the West is a more "Huxleyan" environ, the merger of the two dystopias is seemingly growing each day. As The Guardian previously noted, Huxley's dystopia is a totalitarian society, ruled by a supposedly benevolent dictatorship whose subjects have been programmed to enjoy their subjugation through conditioning and the use of a narcotic drug – the rulers of Brave New World have solved the problem of making people love their servitude. On the Orwellian front, we are doing rather well – as the revelations of Edward Snowden have recently underlined. We have constructed an architecture of state surveillance that would make Orwell gasp.

The most striking parallel of course is that both men foresaw the future as totalitarian rather than democratic and free.

Both Big Brother’s world and the Brave New World are ruled by authoritarian elites of a basically socialist/communist nature, whose only real purpose is the maintenance of their own power and privileges.

 

 

We discussed this a year ago but it seems an opportune time – with the world's brainwashing and control accelerating – to revisit the two

 

Decades ago they saw it all coming…

As The Guardian so appropriately summed up,

Huxley's dystopia is a totalitarian society, ruled by a supposedly benevolent dictatorship whose subjects have been programmed to enjoy their subjugation through conditioning and the use of a narcotic drug – soma – that is less damaging and more pleasurable than any narcotic known to us. The rulers of Brave New World have solved the problem of making people love their servitude.

 

Which brings us back to the two Etonian bookends of our future. On the Orwellian front, we are doing rather well – as the revelations of Edward Snowden have recently underlined. We have constructed an architecture of state surveillance that would make Orwell gasp. And indeed for a long time, for those of us who worry about such things, it was the internet's capability to facilitate such comprehensive surveillance that attracted most attention.

 

In the process, however, we forgot about Huxley's intuition. We failed to notice that our runaway infatuation with the sleek toys produced by the likes of Apple and Samsung – allied to our apparently insatiable appetite for Facebook, Google and other companies that provide us with "free" services in exchange for the intimate details of our daily lives – might well turn out to be as powerful a narcotic as soma was for the inhabitants of Brave New World. So even as we remember CS Lewis, let us spare a thought for the writer who perceived the future in which we would come to love our digital servitude.

And Chris Hedges' infamous comparison of the two frightening visions of the future…

The two greatest visions of a future dystopia were George Orwell’s “1984” and Aldous Huxley’s “Brave New World.” The debate, between those who watched our descent towards corporate totalitarianism, was who was right. Would we be, as Orwell wrote, dominated by a repressive surveillance and security state that used crude and violent forms of control? Or would we be, as Huxley envisioned, entranced by entertainment and spectacle, captivated by technology and seduced by profligate consumption to embrace our own oppression? It turns out Orwell and Huxley were both right. Huxley saw the first stage of our enslavement. Orwell saw the second.

 

We have been gradually disempowered by a corporate state that, as Huxley foresaw, seduced and manipulated us through sensual gratification, cheap mass-produced goods, boundless credit, political theater and amusement. While we were entertained, the regulations that once kept predatory corporate power in check were dismantled, the laws that once protected us were rewritten and we were impoverished. Now that credit is drying up, good jobs for the working class are gone forever and mass-produced goods are unaffordable, we find ourselves transported from “Brave New World” to “1984.” The state, crippled by massive deficits, endless war and corporate malfeasance, is sliding toward bankruptcy. It is time for Big Brother to take over from Huxley’s feelies, the orgy-porgy and the centrifugal bumble-puppy. We are moving from a society where we are skillfully manipulated by lies and illusions to one where we are overtly controlled. 

 

…

 

The corporate state does not find its expression in a demagogue or charismatic leader. It is defined by the anonymity and facelessness of the corporation. Corporations, who hire attractive spokespeople like Barack Obama, control the uses of science, technology, education and mass communication. They control the messages in movies and television. And, as in “Brave New World,” they use these tools of communication to bolster tyranny. Our systems of mass communication, as Wolin writes, “block out, eliminate whatever might introduce qualification, ambiguity, or dialogue, anything that might weaken or complicate the holistic force of their creation, to its total impression.”

 

The result is a monochromatic system of information. Celebrity courtiers, masquerading as journalists, experts and specialists, identify our problems and patiently explain the parameters. All those who argue outside the imposed parameters are dismissed as irrelevant cranks, extremists or members of a radical left. Prescient social critics, from Ralph Nader to Noam Chomsky, are banished. Acceptable opinions have a range of A to B. The culture, under the tutelage of these corporate courtiers, becomes, as Huxley noted, a world of cheerful conformity, as well as an endless and finally fatal optimism. We busy ourselves buying products that promise to change our lives, make us more beautiful, confident or successful as we are steadily stripped of rights, money and influence. All messages we receive through these systems of communication, whether on the nightly news or talk shows like “Oprah,” promise a brighter, happier tomorrow. And this, as Wolin points out, is “the same ideology that invites corporate executives to exaggerate profits and conceal losses, but always with a sunny face.” We have been entranced, as Wolin writes, by “continuous technological advances” that “encourage elaborate fantasies of individual prowess, eternal youthfulness, beauty through surgery, actions measured in nanoseconds: a dream-laden culture of ever-expanding control and possibility, whose denizens are prone to fantasies because the vast majority have imagination but little scientific knowledge.”

 

Our manufacturing base has been dismantled. Speculators and swindlers have looted the U.S. Treasury and stolen billions from small shareholders who had set aside money for retirement or college. Civil liberties, including habeas corpus and protection from warrantless wiretapping, have been taken away. Basic services, including public education and health care, have been handed over to the corporations to exploit for profit. The few who raise voices of dissent, who refuse to engage in the corporate happy talk, are derided by the corporate establishment as freaks.

 

…

 

The façade is crumbling. And as more and more people realize that they have been used and robbed, we will move swiftly from Huxley’s “Brave New World” to Orwell’s “1984.” The public, at some point, will have to face some very unpleasant truths. The good-paying jobs are not coming back. The largest deficits in human history mean that we are trapped in a debt peonage system that will be used by the corporate state to eradicate the last vestiges of social protection for citizens, including Social Security. The state has devolved from a capitalist democracy to neo-feudalism. And when these truths become apparent, anger will replace the corporate-imposed cheerful conformity. The bleakness of our post-industrial pockets, where some 40 million Americans live in a state of poverty and tens of millions in a category called “near poverty,” coupled with the lack of credit to save families from foreclosures, bank repossessions and bankruptcy from medical bills, means that inverted totalitarianism will no longer work.

 

…

 

The noose is tightening. The era of amusement is being replaced by the era of repression. Tens of millions of citizens have had their e-mails and phone records turned over to the government. We are the most monitored and spied-on citizenry in human history. Many of us have our daily routine caught on dozens of security cameras. Our proclivities and habits are recorded on the Internet. Our profiles are electronically generated. Our bodies are patted down at airports and filmed by scanners. And public service announcements, car inspection stickers, and public transportation posters constantly urge us to report suspicious activity. The enemy is everywhere.

 

…

 

“Do you begin to see, then, what kind of world we are creating?” Orwell wrote. “It is the exact opposite of the stupid hedonistic Utopias that the old reformers imagined. A world of fear and treachery and torment, a world of trampling and being trampled upon, a world which will grow not less but more merciless as it refines itself.”

Watching Aldous Huxley describe the world we have now a stunning 60 years ago is horrific…

h/t Kirk

Though, in our view, Emmet Scott summed up the present in relation to Huxley and Orwell's prophecies best:

The most striking parallel of course is that both men foresaw the future as totalitarian rather than democratic and free. Neither presumably believed their vision of the future to be inevitable, though it is equally clear that each saw aspects of mid-twentieth century life which clearly pointed in the totalitarian direction. Thus 1984 and Brave New World may be seen as warnings against what might be if the trends identified by the two authors persisted. What these trends were and why the authors saw them leading towards totalitarianism is an important question and one that will be addressed presently.

 

The totalitarian states described by Orwell and Huxley differed in most details, though there were also many correspondences. Both Big Brother’s world and the Brave New World are ruled by authoritarian elites of a basically socialist/communist nature, whose only real purpose is the maintenance of their own power and privileges.

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

In a country which has banned the free flow of information via social networks and other venues in order to preserve the corrupt government, why one would believe any official data is unclear, but for those who are curious, here are the early results from today’s municipal elections (where eight people have already died as fights broke out between rival candidates in two villages near the southeastern border with Syria): with 12.4% of ballots counted, the ruling AKP party appears to be a blowout victory, with 48.1% of the vote, while CHP has 24% and MHP is at 13.8%, based on CNNTurk reporting. Bloomberg confirms the official “results”:

• TURKEY’S AKP LEADS WITH 50% OF VOTE AFTER 12% OF BALLOTS OPENED
• TURKEY RULING AK PARTY LEADS IN ANKARA, ISTANBUL: NTV

More from Euronews:

The election is being viewed as a crisis referendum, say analysts on Prime Minister Recep Tayyip Erdogan’s 10-year-rule. He was not standing but criss-crossed the country in the build up to Sunday’s vote campaigning for his Justice and Development Party – the AKP. Tensions had risen in advance of the ballot and the PM was in a defiant mood when he cast his vote.

 

“So far in political rallies there have been undesirable statements and speeches, our public today will have the last word, they will express themselves. Despite those political meetings, their last word will be decisive,” he said.

 

Voting went ahead peacefully in most parts and the clashes which led to the eight deaths were over local council positions and not directly linked to the wider tensions in the country.

 

Erdogan is hoping the election will boost his standing after allegations of a corruption scandal and string of damaging security leaks.

 

The main opposition, the Republican People’s party portrays him as a corrupt dictator ready to hang on to power by any means.

 

The Islamist – rooted AK Party is aiming to equal or better its 2009 vote of 38.8 percent. A vote below the 36 percent mark would be considered a huge blow to the PM.

As expected, there are huge discrepancies between the numbers provided state run news agencies, and the pro-Gulen, Cihan, news agency. Its data, courtesy of Ilhan Tanir is shown below:

Another way of showing the official data, is with live updates from the polls throughout Turkey: 19:34 – Turkey local election map as of now… (AKP: Yellow – CHP: Red – MHP: Maroon – BDP: Blue) (source)

And just in case there are those who don’t buy the official “numbers”, there is this:

• TURKISH POLICE STATION RIOT VEHICLES NEAR TAKSIM SQUARE: DHA

Perhaps the most memorable thing about these elections are the following protest photo by protest-group Femen.

#Turkey begins voting & FEMEN protesters show up with “Ban Erdo?an” written on their chests. http://t.co/gvjYE7NNEH http://ift.tt/1iOPynZ

— Jim Roberts (@nycjim) March 30, 2014

Erdo?an muhaliflere aylard?r “Sand?kta görü?elim” diyordu.
Bu bizim ilk uyar?m?z. Yak?nda tekrar görü?ürüz, Erdo?an! http://ift.tt/1iOPyo1

— FEMEN Turkey (@FEMEN_Turkey) March 30, 2014

“Ahlak” anlay???n?z yerin dibine bats?n! http://ift.tt/1iOPAwj

— FEMEN Turkey (@FEMEN_Turkey) March 29, 2014

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

Submitted by Logan Albright via Mises Canada blog,

American exceptionalism is a common theme in any policy debate surrounding the United States. We have to protect American manufacturing, protectionists ignorant of economics argue, because America is exceptional. We have to pass expansive welfare programs to care for the poor, because America is exceptional. Most recently, we have to intervene in the conflict between Russia and Ukraine, because America is exceptional. Why the imputed exceptionalism requires one country to police the world and meddle in matters that do not concern them remains unexplained.

As an American myself, I do not dispute that claim that the it is, in many ways, an exceptional country. What I do object to is the use of that claim to justify bad policy. America is exceptional because of policy, not as a justification for it.

The exceptional situation America finds itself in is a result of the exceptional circumstances of its founding and the way it has treated its people throughout the years. No other country was created under the specific intention to limit government and preserve individual liberty.

These circumstance are what allowed the country to grow into an economic powerhouse, a world superpower, and a bastion of freedom that draws immigrants from all over the planet, seeking a better life.

But every time the government cites these exceptional qualities as the reason to curtail liberty, to expand government, or to drop bombs around the world, all the things that make America great are subtly diminished.

Those who are advocating for the U.S. to take military action in Ukraine, either directly or indirectly, seem to think there is a moral duty to so, and that to do otherwise somehow diminishes the nation’s greatness. But it must be remembered that these international interventions would not be voluntary, and therefore could not properly be described as moral. The people who make the decisions about whether to act or not are not the ones who do the actual fighting. They do not volunteer their own money to support the cause. They are not the ones who face the consequences of economic sanctions such as embargoes, imposed on others against their wills. All of these policies involve a few designated potentates using force and coercion to dictate what others should do. It’s hard to take the moral high ground in such a situation.

But even if we overlook the rather major point that the lives in play are the unwilling pawns of government force, what does exceptionalism have to do with moral duty? Does great power, as the Spider Man films assert, come with an obligation of great responsibility? Or to put it another way, does weakness excuse inaction? If exceptionalism uniquely demands action, then surely we must also conclude that ordinariness absolves a nation of moral responsibility. That does not seem to me to be a logical conclusion.

A weak man is not excused for failing to stand up to injustice when he sees it. Similarly, a powerful man is not uniquely obligated to take action simply because he can. Morality is a constant that doesn’t depend on the relative power of a moral agent vis a vis his circumstances.

None of this is meant to comment on the relative justice or injustice of Vladimir Putin’s actions or the situation in Crimea – I am not in a position to know the extent to which the peninsula’s secession was voluntary as opposed to coerced – but I am merely making the point that “American exceptionalism” is not a sufficient justification for an interventionist foreign policy.

When discussing American exceptionalism, we should always frame it in the context of the statement: “America is exceptional because we don’t tell people what to do.” Not: “America is exceptional, so we should get to tell people what to do.” The more public policy is guided by the latter statement, the less true the former becomes.

via Zero Hedge http://ift.tt/1gQna6v Tyler Durden

Widening income disparity has been a feature of many advanced and developing economies for the past few years and has myriad investment implications. As we noted yesterday, the USA is at levels of income disparity not seen since the roaring 20s (and by some counts worse) but how does that stack up to the rest of the world? Fed fans will be proud to say that once again USA in Number 1… in global income inequality.

Consumer-facing businesses are naturally among the most directly exposed to shifts in income distribution, while new revenue opportunities in welfare areas, such as education, should emerge as policy focus increases on solutions to ease income inequality. On the other hand, steps taken by governments to restore more equitable income distribution can foster new risks for corporates, in the form of higher taxes, restricted access to global goods, talent and capital.

As Goldman notes,

Where has income inequality changed?

In most countries it has widened over the past two decades, and in a few it has narrowed from high levels (Latin America). But global income inequality between people of different countries has narrowed, as China’s and India’s middle-class income growth has outpaced the West’s.

What has caused this?

Globalisation and technology have been two drivers: wages for highly skilled labour expanded as demand exceeded supply, while lower skilled labour has been arbitraged globally, damaging middle incomes in DMs.

What are the investment opportunities?

Providers of education and broader welfare, and consumer-facing companies that are favourably exposed to changes in real growth for different income levels (trading down to discounters) and ongoing income growth for higher earners (prime residential real estate, high-end retail and luxury)

The investment risks?

Restricted people, capital and goods flow; higher taxes, either indirect or direct for individuals and corporates. An exodus of talent from countries with less opportunity can have long-term negative consequences too.

Unequal income, unequal risks

There are also numerous risks that arise from responses to wide income and wealth disparity, both at a micro and macro level. There is an element of self-fulfilling prophecy here – the very high focus on inequality means it becomes a very important issue and policy challenge. And in democracies, voters can force the hand of the government to act.

A minimum wage, or incorporating limits on pay, are perhaps the most direct way of shrinking the range of income distribution in an economy, given that they apply a floor or a cap to incomes.

If globalisation is seen as one of the causes of widening income inequality then it is possible that deglobalisation is seen as a solution to it. i.e. limiting the flows of goods, people and capital across borders. This would be damaging to many industries and companies, particularly those that have invested much capital in global assets and facilities.

Taxation is the most commonly used means of redistribution and there is much debate here around its effectiveness and fairness.

Social Unrest

A sweeping look at longer-run history tells us that income disparity has been much higher in earlier societies. England in the early 19th century had a GINI of around 50% as a consequence of the industrial revolution, while if we look further back, Holland had even greater inequality (estimated at 55%) prior to the Dutch Revolt in the 16th century. Today, South Africa is the only country with a population of more than 10 mn with a GINI co-efficient higher than that. But, in terms of assessing where sustained and rising inequality may result in social unrest, historical ranges may be less relevant now, as the spotlight of transparency shines brighter thanks to the ubiquity of information and in particular the torchlights of social media.

And the myriad connections and speed of communication means that people can come together quicker and organise themselves more efficiently. Protests can also leap across borders with greater alacrity and the beacons of protest can form a global chain within hours

Of course, it seems Goldman is a little shy of pointing out the true driver of this…

++++++++++++++++++

Thank you Ben!

As a reminder, we explained before how Central Banks are among the major culprits…

Submitted by Frank Hollenbeck via the Ludwig von Mises Institute,

The gap between the rich and poor continues to grow. The wealthiest 1 percent held 8 percent of the economic pie in 1975 but now hold over 20 percent. This is a striking change from the 1950s and 1960s when their share of all incomes was slightly over 10 percent. A study by Emmanuel Saez found that between 2009 and 2012 the real incomes of the top 1 percent jumped 31.4 percent. The richest 10 percent now receive 50.5 percent of all incomes, the largest share since data was first recorded in 1917. The wealthiest are becoming disproportionally wealthier at an ever increasing rate.

 

Most of the literature on income inequalities is written by professors from the sociology departments of universities. They have identified factors such as technology, the reduced role of labor unions, the decline in the real value of the minimum wage, and, everyone’s favorite scapegoat, the growing importance of China.

Those factors may have played a role, but there are really two overriding factors that are the real cause of income differentials. One is desirable and justified while the other is the exact opposite.

 

In a capitalist economy, prices and profit play a critical role in ensuring resources are allocated where they are most needed and used to produce goods and services that best meets society’s needs. When Apple took the risk of producing the iPad, many commentators expected it to flop. Its success brought profits while at the same time sent a signal to all other producers that society wanted more of this product. The profits were a reward for the risks taken. It is the profit motive that has given us a multitude of new products and an ever-increasing standard of living. Yet, profits and income inequalities go hand in hand. We cannot have one without the other, and if we try to eliminate one, we will eliminate, or significantly reduce, the other. Income inequalities are an integral outcome of the profit-and-loss characteristic of capitalism; they cannot be divorced.

Prime Minister Margaret Thatcher understood this inseparability well. She once said it is better to have large income inequalities and have everyone near the top of the ladder, than have little income differences and have everyone closer to the bottom of the ladder.

Yet, the middle class has been sinking toward poverty: that is not climbing the ladder. Over the period between 1979 and 2007, incomes for the middle 60 percent increased less than 40 percent while inflation was 186 percent. According to the Saez study, the remaining 99 percent saw their real incomes increase a mere .4 percent between 2009 and 2012. However, this does not come close to recovering the loss of 11.6 percent suffered between 2007 and 2009, the largest two-year decline since the Great Depression. When adjusted for inflation, low-wage workers are actually making less now than they did 50 years ago.

This brings us to the second undesirable and unjustified source of income inequalities, i.e., the creation of money out of thin air, or legal counterfeiting, by central banks. It should be no surprise the growing gap in income inequalities has coincided with the adoption of fiat currencies worldwide. Every dollar the central bank creates benefits the early recipients of the money—the government and the banking sector — at the expense of the late recipients of the money, the wage earners, and the poor. Since the creation of a fiat currency system in 1971, the dollar has lost 82 percent of its value while the banking sector has gone from 4 percent of GDP to well over 10 percent today.

The central bank does not create anything real; neither resources nor goods and services. When it creates money it causes the price of transactions to increase. The original quantity theory of money clearly related money to the price of anything money can buy, including assets. When the central bank creates money, traders, hedge funds and banks — being first in line — benefit from the increased variability and upward trend in asset prices. Also, future contracts and other derivative products on exchange rates or interest rates were unnecessary prior to 1971, since hedging activity was mostly unnecessary. The central bank is responsible for this added risk, variability, and surge in asset prices unjustified by fundamentals.

The banking sector has been able to significantly increase its profits or claims on goods and services. However, more claims held by one sector, which essentially does not create anything of real value, means less claims on real goods and services for everyone else. This is why counterfeiting is illegal. Hence, the central bank has been playing a central role as a “reverse Robin Hood” by increasing the economic pie going to the rich and by slowly sinking the middle class toward poverty.

Janet Yellen recently said “I am hopeful that … inflation will move back toward our longer-run goal of 2 percent, demonstrating her commitment to an institutionalized policy of theft and wealth redistribution.” The European central bank is no better. Its LTRO strategy was to give longer term loans to banks on dodgy collateral to buy government bonds which they promptly turned around and deposited with the central bank for more cheap loans for more government bonds. This has nothing to do with liquidity and everything to do with boosting bank profits. Yet, every euro the central bank creates is a tax on everyone that uses the euro. It is a tax on cash balances. It is taking from the working man to give to the rich European bankers. This is clearly a back door monetization of the debt with the banking sector acting as a middle man and taking a nice juicy cut. The same logic applies to the redistribution created by paying interest on reserves to U.S. banks.

Concerned with income inequalities, President Obama and democrats have suggested even higher taxes on the rich and boosting the minimum wage. They are wrongly focusing on the results instead of the causes of income inequalities. If they succeed, they will be throwing the baby out with the bathwater. If they are serious about reducing income inequalities, they should focus on its main cause, the central bank.

In 1923, Germany returned to its pre-war currency and the gold standard with essentially no gold. It did it by pledging never to print again. We should do the same.

via Zero Hedge http://ift.tt/1gQck0e Tyler Durden

Submitted by Jim Quinn of The Burning Platform blog,

“War is a racket. It always has been. It is possibly the oldest, easily the most profitable, surely the most vicious. It is the only one international in scope. It is the only one in which the profits are reckoned in dollars and the losses in lives.” –

General Smedley Butler – War is a Racket

I peruse a number of websites everyday as I look for interesting articles to post or reference in one of my articles. I agree with many conservative leaning websites when it comes to economic issues, but when it comes to war mongering and wave flagging, I go my own way. Any site that supports our empire building and excessive spending on war is not a conservative website. You can’t act in a fiscally responsible sustainable manner without dismantling our war machine and taking on the military industrial complex. You’re a faux fiscal conservative if you think we can continue to spend $800 billion per year on war with no financial implications. The entire Federal budget was $800 billion in 1983.

The latest storyline being propagandized by Mad Dog McCain and his band of merry neo-cons is that Obama’s latest defense budget will gut our military and make us susceptible to attack from all of our enemies. The mainstream media mouthpieces like Fox News repeat these boldfaced lies without seeking facts or real data. The power of the military industrial complex is dangerous to our citizens. They have bought off Republicans and Democrats in Congress and they control journalists who get paid to write scary articles about the horrific budget cuts and danger to our nation. It’s all lies. Spineless corrupt politicians like Bush and Obama do and say whatever is necessary to win the most votes. Statesmen like Dwight D. Eisenhower stood up to the military industrial complex and their bought off lackeys in Congress.

“In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military industrial complex. The potential for the disastrous rise of misplaced power exists and will persist.We must never let the weight of this combination endanger our liberties or democratic processes. We should take nothing for granted. Only an alert and knowledgeable citizenry can compel the proper meshing of the huge industrial and military machinery of defense with our peaceful methods and goals, so that security and liberty may prosper together.”

Statesmen are like bald eagles around here – almost extinct.

The United States spends more per year on war than the next thirteen countries combined. That imminent attack by the Iranian navy may be overblown. Our generals blather about the threat from China, that spends 18% of our budget, and threat from Russia, that spends 7% of our budget. The mainstream media articles and fear mongering drivel from our corrupt bought off politicians are nothing but propaganda designed to keep the billions flowing to the arms peddlers like Lockheed Martin, Northrup Grumman, Raytheon, Boeing, and the rest of the dealers of death. Politicians who have been bribed with decades of “political contributions” won’t even vote to get rid of weapons programs the military no longer wants.

It’s interesting how politicians are able to tell citizens they are only spending $520 billion per year on war when the true figure is $820 billion. Obama’s FY15 budget says we are going to spend $520 billion. He conveniently leaves out the cost of ongoing wars and the cost of past wars. We are still spending over $100 billion per year on our ongoing wars in Afghanistan, occupation in Iraq, and provocations in Libya and Syria. We are also providing military support of $50 billion to Egypt, Israel and dozens of other countries around the globe. Lastly, we spend over $150 billion per year on veterans of past wars. Our beloved leaders move that expense to another line item in the budget and pretend it is not a cost of war. The American people have short attention spans and once our wars of choice aren’t on the nightly news anymore they think it’s over. Tell that to the families of the 7,100 dead soldiers killed in our Middle East invasions, along with the 50,000 badly wounded servicemen, and the thousands more mentally damaged by the ordeal.  The cost of war goes on forever. Government obfuscation does not fool anyone with critical thinking skills.

The dogs of war – McCain and Graham,  along with hundreds of other war mongering pricks in Congress claim Obama is some pacifist attempting to dismantle our beloved military. These traitors of truth evidently can’t understand math or charts. Bush’s last war budget was $731 billion. The Iraq war has ceased and Obama is still spending $820 billion per year on war. Does it sound like the military is being gutted? Are we more in danger of being attacked by another country today than we were in 1999? That is the question that should be asked. They call it the DEFENSE budget because it is supposed to be used to defend us from attack, not to bully countries throughout the world and attack sovereign countries who are no threat to our security. Isn’t it convenient that the U.S. provoked overthrow of the democratically elected government of the Ukraine has initiated a new media created “Cold War”?

The country was sufficiently defended with a war budget of $333 billion in 1999. No one invaded us or threatened to invade. The Cold War was long over. The military industrial complex needed a 9/11 to revitalize their profits. The neo-con/military industrial complex created War on Terror has opened the door to never ending wars of choice around the world with no consent or approval from the people. War spending grew to $879 billion by 2011, a 164% increase in 13 years. Over this same time frame GDP grew by 74%. Does this sound like the military has been short changed? The fear mongering neo-cons and conservative websites are nothing but nattering nabobs of nonsense. Even the hint of slowing in spending on our empire building creates an urgency for a new evil enemy. Is it a coincidence that Vlad Putin has now emerged as an existential threat to our freedom and liberty according to the den of vipers in Congress, the military industrial complex, and the corporate media mouthpieces?

Even the dreaded sequester would have done nothing but slowed the rate of growth in war spending. You have to understand that a Federal government spending “cut” isn’t really a cut. It means the increase in spending you anticipated will be slightly lower. Of course, the one party system in Washington DC compromised and eliminated the sequester “cuts”. Those politicians need those “political contributions” to get re-elected in 2014. Defense spending will be far higher over the next decade, not including the inevitable wars of choice we are led into by our noble leaders. Putin must be stopped. Assad must be stopped. Iran must be stopped. China must be stopped. The world policeman must do his job and bankrupt the empire. War is highly profitable for peddlers of debt, corporate dealers of death, and the politicians getting bribed by Wall Street and the military industrial complex. The peasants who are sent off to die are nothing but cannon fodder for the power brokers of death, destruction and debt.

The war mongers will continue to use propaganda and misinformation to convince you we are in danger if the war budget is cut by 2%. The truth is that we need to cut the military by 50%, stop trying to operate a world empire, and withdrawal our troops from Germany, Japan, and the dozens of other countries around the globe. We need to stop handing billions of dollars we don’t have to Israel, Egypt and dozens of other countries so they can buy arms from our arms dealers. We are the cause of all the war and violence in this world. The job of our military is to protect our borders, not to police the world. Hubris, arrogance, and overreach, financed by central bank created debt, is how empires die.

“As many frustrated Americans who have joined the Tea Party realize, we cannot stand against big government at home while supporting it abroad. We cannot talk about fiscal responsibility while spending trillions on occupying and bullying the rest of the world. We cannot talk about the budget deficit and spiraling domestic spending without looking at the costs of maintaining an American empire of more than 700 military bases in more than 120 foreign countries. We cannot pat ourselves on the back for cutting a few thousand dollars from a nature preserve or an inner-city swimming pool at home while turning a blind eye to a Pentagon budget that nearly equals those of the rest of the world combined.” – Ron Paul

Understand where they are spending your money:

http://ift.tt/1gQ3dg0

via Zero Hedge http://ift.tt/1hP15Au Tyler Durden