Tag: finance

By EconMatters

Reuters News and Genscape Report attributed to today`s Oil Squeeze Move – couldn`t find more BS if you were assigned with cleaning out your horse`s barn stall. Follow the actual Oil Data Metrics and avoid the Rumor Mongering Market Garbage and Hearsay OPEC Gossip marketed as actual “Market Analytics”.

When OPEC actually gets their collective heads out of the sand and cuts production then this is a newsworthy event, and worth covering from a journalistic standpoint. The big takeaway until proven otherwise is everyone in the Oil Industry is going to make up for lower prices by maximizing volume in any manner possible. There is no such thing as a “fair price” for oil, and OPEC is sure not going to realize this fantasy talk scenario without concrete action, i.e., cutting production from the current daily over-supplied market.

One is sure not going to achieve a “fair price” for oil from a producer standpoint if one continues to produce over 2 million barrels per day over actual demand. Freezing oil output levels at all-time record levels is just further evidence that OPEC is clueless, myopic and just doesn`t have a handle on the market. Wake me up when OPEC actually cuts production, until then they are the boy that cried wolf far too many times!

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Worse than expected is an understatement.

Things are not getting better in China as Exports crashed 25.4% YoY (the 3rd largest drop in history), almost double the 14.5% expectation and Imports tumbled 13.8%, the 16th month of YoY decline – the longest ever. Altogether this sent the trade surplus down to $32.6bn (missing expectations of $51bn) to 11-month lows.

 

 

Stocks are mounting a modest rebound on this terrible data (moar stimulus hopes) but after $1 trillion of new credit in 2 months, is there seriously anyone left who thinks moar will help?

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

Submitted by John Whitehead via The Rutherford Institute,

“That's the way the ruling class operates in any society. They keep the lower and the middle classes fighting with each other… Anything different—that's what they're gonna talk about—race, religion, ethnic and national background, jobs, income, education, social status, sexuality, anything they can do to keep us fighting with each other, so that they can keep going to the bank!”

 

– Comedian George Carlin

“We the people” have been utterly and completely betrayed.

The politicians “we the people” most trusted to look out for our best interests, protect our rights, and ensure that the nation does not slip into tyranny have cheated on us, lied to us, swindled us, deceived us, double-crossed us, and sold us to the highest bidder.

Time and again, they have shown in word and deed that their priorities lay elsewhere, that they care nothing about our plight, that they owe us no allegiance, that they are motivated by power and money rather than principle, that they are deaf to our entreaties, that they are part of an elite ruling class that views us as mere cattle, that their partisan bickering is part of an elaborate ruse to keep us divided and distracted, and that their oaths of office to uphold the Constitution mean nothing.

Incredibly, even in the face of their treachery and lies, the great majority of Americans persist in believing that the politicians have the people’s best interests at heart.

Despite the fact that we’ve been burned before, most Americans continue to allow themselves to be bamboozled into casting their votes for one candidate or another, believing that this time they mean what they say, this time they really care about the citizenry, this time will be different.

Of course, they rarely ever mean what they say, they care about their constituents only to the extent that it advances their political careers, and it never turns out differently. We are as easily discarded the day after the elections as we were wantonly wooed in the months leading up to the big day. Those same politicians who were once so eager to pose for our pictures, smile at our jokes, and glad-hand us for our votes will, upon being elected, retreat behind a massive, impenetrable wall that ensures we are not seen or heard from again—at least, until the next election.

The joke is on us.

As I point out in my book Battlefield America: The War on the American People, all of the caucuses, primaries, nominating conventions, town hall meetings, rallies, meet and greets, delegates and super-delegates are sophisticated schemes aimed at advancing the illusion of participation culminating in the reassurance ritual of voting.

It’s not about Red Republicans or Blue Democrats. It’s about Green Donors—i.e, those with money who can afford to pay for access.

Votes might elect politicians, but as a 2014 field experiment by political scientists at Yale University and the University of California, Berkeley, makes clear, it’s money that talks.

The experiment went something like this: members of Congress were contacted by constituents requesting meetings about pending public policy issues. As the Washington Post reports, “When the attendees were revealed to be ‘local campaign donors,’ they often gained access to Members of Congress, Legislative Directors, and Chiefs of Staff. But when the attendees were described as only ‘local constituents,’ they almost never gained this level of access.”

Conclusion: money buys access to politicians who are otherwise deaf, dumb and blind to the entreaties of their constituents.

It works the same with every politician and every party.

Indeed, the First Amendment’s assurance of a right to petition the government for a redress of grievances has become predicated on how much money you’re willing to shell out in order to gain access to your elected and appointed officials.

Then again, money has always played a starring role in American politics.

The spoils system reared its greedy head under Andrew Jackson, who traded jobs in his administration in exchange for campaign contributions. For $1 million, donors could take part in Warren Harding’s poker parties and enjoy a sleepover at the White House. Lyndon Johnson had a President’s Club that cost donors $1000 a year. Nixon was prepared to sell ambassadorships for $250,000. And Bill Clinton famously allowed top-dollar donors to spend a night in the Lincoln Bedroom at the White House in exchange for roughly $5.4 million in donations to the Democratic National Committee.

Fast forward to the present day, and a $500,000 donation might get you invited to a quarterly meeting with Barack Obama. For a mere $5,000 donation, lobbyists are being given exclusive invitations to join Congressmen and senators for weekend getaways that include wine tastings, fly fishing, skiing, golfing, hunting, spas, seaside cocktail parties and more.

If you’re just a lowly citizen with limited cash, however, you’re out of luck.

Try contacting your so-called representatives without paying for the privilege, and see how far that gets you. I can assure you that you won’t be given the kinds of access that lobbyists, special interest groups and top donors enjoy.

Having been saddled with a pay-to-play system that provides access only to those with enough cash to grease the wheels of the political machine, average Americans have little to no say in the workings of their government and even less access to their so-called representatives.

Donald Trump, as he has boasted, might be able to buy and sell politicians of all stripes (including Hillary Clinton), but the average American would be hard-pressed to get the kind of access enjoyed by corporate executives, lobbyists and other members of the moneyed elite.

Indeed, members of Congress have to work hard to keep their constituents at a distance—minimizing town-hall meetings, making minimal public appearances while at home in their districts, only appearing at events in controlled settings where they’re the only ones talking, and if they must interact with constituents, doing so via telephone town meetings or impromptu visits to local businesses where the chances of being accosted by angry voters are greatly minimized.

And under the Trespass Bill, passed by Congress in 2012 and signed into law by President Obama, if you dare to exercise your First Amendment right to speak freely to a politician, assemble in public near a politician, or petition a government official for a redress of grievances, you risk a fine or a lengthy stay in prison.

Talk about self-serving.

Under the guise of protecting government officials from physical attacks, the Trespass Bill, a.k.a. “the Federal Restricted Buildings and Grounds Improvement Act,” criminalizes First Amendment activity by making it a federal offense, punishable by up to 10 years in prison, to protest anywhere the Secret Service might be guarding someone.

Mind you, the Secret Service not only protects the president but all past sitting presidents, members of Congress, foreign dignitaries, presidential candidates, and anyone whom the president determines needs protection, but is also in charge of securing National Special Security Events, which include events such as the G8 and NATO summits, the National Conventions of both major parties, and even the Super Bowl.

The law essentially creates a roving bubble zone where the First Amendment is effectively off-limits, thereby putting an end to free speech, political protest and the right to peaceably assemble in all areas where government officials happen to be present. Thus, simply walking by one of these events could make you subject to arrest.

“What that means in practice,” as The Intercept rightly points out, “is that campaign rallies for Donald Trump, who was granted Secret Service protection in November, and Hillary Clinton, who will be guarded for life as a former first lady, are the very opposite of free speech zones under federal law. (The restrictions also apply to all appearances by former presidents and first ladies, as well as those of two other candidates, Bernie Sanders and Ben Carson, who are currently protected by the service.)”

Consider yourself warned: If you do dare to show up to a Trump or Clinton rally and even appear to be the kind of person who might engage in any kind of protest, lawful or otherwise, you could find yourself quickly dispatched to a “free speech zone” out of sight and sound of the candidates. (“Free speech zones” are government-sanctioned areas located far away from government officials, into which activists and citizens are herded at political rallies and events.) In fact, that’s exactly what happened to a group of black students at a recent Trump rally in Georgia. They were escorted by police to “‘free speech zones’ in a field shielded from the venue by a set of tennis courts, or outside a church about a quarter of a mile away.”

The message is clear: in an age of robber barons, “we the people” are expected to just shut up and vote.

The powers-that-be want us to be censored, silenced, muzzled, gagged, zoned out, caged in and shut down. They want our speech and activities monitored for any sign of “extremist” activity. They want us to be estranged from each other and kept at a distance from those who are supposed to represent us. They want taxation without representation. They want a government without the consent of the governed.

They want the police state.

The system has been so corrupted and compromised that there are few left in the halls of government who hear or speak for us.

Congress does not represent us. The courts do not advocate for us. The president does not listen to us. And the First Amendment’s assurance of the right to speak freely and petition our government for a redress of grievance no longer applies to us.

So if representative government has become an exercise in futility, where does that leave us?

One of the key ingredients in maintaining democratic government is the right of citizens to freely speak their minds to those who represent them. In fact, it is one of the few effective tools we have left to combat government corruption and demand accountability.

If there is to be any hope of righting the wrongs that are being perpetrated against the American people, we must make them—our elected officials—hear us.

But where to begin?

Start by opening up a dialogue within your own community about what’s wrong with this country. Stop focusing on the issues that divide, and find common ground with your fellow citizens about issues on which you can agree. Focus less on politics and more on principles. Stop buying into the false and divisive narratives that are being promulgated by political windbags and start thinking and speaking for yourselves.

Once you’ve found that common ground, whatever it might be, make enough noise at the local level—at your city council meetings, in your local paper, at your school board meetings, in front of your courthouses and police stations—and the message will trickle up. Those in power may not like what they hear, but they will hear you.

Remember, there is power in numbers.

There are 319 million of us in this country. Imagine what we could accomplish if we actually worked together, presented a united front, and spoke with one voice?

The police state wouldn’t stand a chance.

via Zero Hedge http://ift.tt/1R208WP Tyler Durden

Earlier today, we explained why so-called “helicopter money” can’t save the world when ZIRP, NIRP, and QE have all failed to revive global demand and boost inflation.

The reason: QE is helicopter money. That is, we’ve been doing this for 8 years and it hasn’t worked yet.

Some readers were reluctant to buy this rationale, but the fact is, just because the bank intermediary failed to do its part for Main Street doesn’t thereby mean this entire experiment isn’t still a farce. Think about the mechanics of it: 1) the government prints a liability (a bond), 2) that liability is sold to a primary dealer, 3) the central bank buys that government liability with yet another liability (dollars) that the government also prints.

That’s a scam. It’s deficit financing with one (very tenuous) degree of separation. The fact that the middlemen (the banks) didn’t pass along the benefits to you doesn’t make the mechanics of it any less ridiculous.

But if that’s helicopter money “v.1,” Main Street thinks it didn’t work out so well. Banks recovered, Jamie Dimon and Lloyd Blankfein became billionaires, financial assets soared, and everyday people got Gene Wilder’d.

Well if helicopter money “v.3” entails flying around and raining actual banknotes onto the hapless masses, then we suppose we should at least try “v.2” first, and “v.2” is what many have called a “basic income.”

The idea is to send everyone a monthly check that would either supplement or replace altogether, complex systems of state benefits thereby making households better off and saving the government money in the process.

As The Independent notes, Ontario is set to become the latest locale to float the idea: “Ontario has announced it could soon be sending a monthly cheque to its residents as it plans to launch an experiment testing the basic income concept.”

Here are some excerpts from Ontario’s budget statement:

“The pilot project will test a growing view at home and abroad that basic income could build on the success of minimum wage policies and increases in child benefits by providing more consistent and predictable support in the context of today’s dynamic labour market.

 

“The pilot would also test whether a basic income would provide a more efficient way of delivering income support, strengthen the attachment to the labour force, and achieve savings in other areas such as health care and housing supports. The government will work with communities, researchers and other stakeholders in 2016 to determine how best to implement a Basic Income pilot.”

Right. So basically they have no idea how this is going to work or how to go about implementing it.

But don’t think Ontario is alone.

“Finland plans to outline a basic income plan for its citizens later this year, while the Dutch city of Utrecht launched an experiment in January, involving welfare recipients, to see what effect a basic income would have,” Huff Post wrote, late last month. And don’t forget, “the Swiss will vote in a referendum in June to decide whether to implement a basic income of some C$3,200 per month.”

We profiled the upcoming Swiss vote here, noting that the plan could make the country the first in the world to pay all of its citizens a monthly basic income regardless if they work or not. 

Amusingly, the Swiss said something similar to the Canadians about the link between the basic income and work. “The initiative’s backers say it aims to break the link between employment and income,” The Daily Mail wrote, of the Swiss plan. Much as Ontario thinks a basic income would “strenghten the attachment to the labor force.” 

Those statements are so counterintuitive as to be laughable. 

As long as federal and local governments are running a surplus that can account for these programs while staying in balance we suppose that’s fine, but what happens when people simply stop working and tax revenues fall? Do you then tax the basic income to pay for the basic income? That seems silly. And if not, do you sell bonds to the central bank to fund the program? And wouldn’t those bonds be claims on tax revenues which would only keep falling as the incentive to work decreases?

Who knows, but we’re sure smarter people than us have thought it through. Or not.

Or maybe we’re asking too many questions and the government would just say this:

As an aside, with property prices soaring as they are in Ontario, they’d better start handing out basic incomes or they’ll have a homeless epidemic on their hands.

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

Following a modest revision to Japanese GDP (still -1.1% and recession-y) and with all eyes glued to China’s trade data, Chinese and Japanese stocks are not folowing the panic-buying short-squeeze-driven lead of US equities. Both are down hard in the early AsiaPac trading (with China down for the first time in six days post-G-20).

It’s not working Mr Kuroda…

 

And the markets are starting to realize it…

 

This is China’s first losing day in 6 since the G-20 meeting ended such a dud…(and the world rallied on ECB hope)

 

Charts: Bloomberg

via Zero Hedge http://ift.tt/1QD5kVm Tyler Durden

Submitted by Jeff Thomas via InternationalMan.com,

Recently, Russian Foreign Minister Sergey Lavrov held a press conference with about 150 journalists from around the world, including representatives of the western media.

Mister Lavrov was brief and concise; however, the question period lasted for some two hours. A breadth of topics was discussed, including the re-convening of the Syrian peace talks in Geneva, diplomatic relations in Georgia and, tellingly, the increasingly fragile relations with the US. This has not been reported on in Western media.

This followed close on the heels of reports (again, not to be found in Western media) that the US has quadrupled its budget for the re-armament of NATO in Europe (from $750 million to $3 billion), most of which is to be applied along the Russian border. The decision was explained as being necessary “to combat and prevent Russian aggression.”

It should be mentioned that this decision, no matter how rash it may be, is not a random incident. It’s a component of the US’ decidedly imperialist Wolfowitz Doctrine of 1992. This doctrine, never intended for public release, outlined a policy of military aggression to assure that the US would reign as the world’s sole superpower and, in so-doing, establish the US as the leader within a new world order. In part, its stated goal is,

“[That] the U.S. must show the leadership necessary to establish and protect a new order that holds the promise of convincing potential competitors that they need not aspire to a greater role or pursue a more aggressive posture to protect their legitimate interests.”

Of particular importance here is the term, “legitimate interests.” With this term, the doctrine reveals that its goal is the suppression of other nations, regardless of whether their ambitions are reasonable or not. All that matters is US hegemony over the world.

Clearly, relations are reaching a dangerous level. The Russian message has repeatedly been, “Stop, before it’s too late,” yet Washington has reacted by stepping up its threat of hegemony. If the major powers do not call “time out”, world war could easily be on the horizon. Yet, incredibly, it appears that the Russian press conference has received zero coverage in the West. No British, French, German, or US television network has made a single comment. As eager as the Russians have been to get the word out as to their concerns, there has been a complete blackout of reporting it in the West.

Russia Insider has published an article on the internet, but little else appears to be available.

Today, the internet allows us to tap into information from every country in the world. Both official and non-official versions of the reports are available, if we know where to find them. And for those who have the time to do so, and take the time to do so, it’s possible to stay abreast of The Big Picture, although, admittedly, it’s a major undertaking to do so.

Separating the wheat from the chaff is the greatest difficulty in this pursuit; however, as events unfold, a trend is being revealed – that the world is becoming divided with regard to information. In most of the world, there’s an expanse of available information, but, increasingly, the US, EU, and their allies are revealing a pattern of information removal. Whatever does not fit the US/EU position on events never reaches the public.

A half-century ago, this was the case in the USSR, China, and several smaller countries where tyranny had so taken hold that all news was filtered. The people of these countries had a limited understanding as to what was truly occurring in the world, particularly with regard to their own leaders’ actions on the world stage.

However, in recent decades, that tyranny has dissipated to a great degree and those countries that had been isolationist with regard to public information are now opening up more and more. Certainly, their governments still prefer that their press provide reporting that’s favourable to the government, but the general direction has been toward greater openness.

Conversely, the West – that group of countries that was formerly called “the Free World” – has increasingly been going in the opposite direction. The media have been fed an ever-narrower version of what their governments have been up to internationally.

The overall message that’s received by the Western public is essentially that there are good countries (the US, EU, and allies) and bad countries whose governments and peoples seek to destroy democracy. Western propaganda has it that these bad countries will not stop until they’ve reached your home and robbed you of all your freedoms.

The view from outside this cabal is a very different one. The remainder of the world view the attacks by US-led forces (Afghanistan, Iraq, Yemen, Libya, Somalia, Syria, etc.) as a bid for world dominance. In examining the Wolfowitz Doctrine, this would seem to be exactly correct.

This is not to say, however, that the people of the NATO countries are entirely on-board with this aggression. In fact, if they were allowed to know the ultimate objective of the NATO aggression, it’s entirely likely that they would oppose it.

And, of course, that’s exactly the point of the blackout. A country, or group of countries, that seeks peace and fair competition, with equal opportunity for all, need not resort to a media blackout. The average citizen, wherever he may live, generally seeks only to be allowed to live in freedom and to get on with his life. Whilst every country has its Generals Patton, its Napoleons, its Wolfowitzes, who are sociopathically obsessive over world domination, the average individual does not share this pathology.

Therefore, whenever we observe a nation (or nations) creating a media blackout, we can be assured of two things.

First, the nation has, at some point, been taken over (either through election, appointment, or a combination of the two) by leaders who are a danger to the citizenry and are now so entrenched that they have little opposition from those remaining few higher-ups who would prefer sanity.

 

Second, the sociopathic goals of those in power are a clear and present danger to the peace and well-being of the population.

In almost all such cases, the blackout causes the population to go willingly along each time their leaders make another advance toward warfare. They may understand that they will be directly impacted and worry about the possible outcome but, historically, they tend to put on the uniform and pick up the weapon when the time comes to “serve the country.”

Trouble is, this by no means “serves the country.” It serves leaders who have become a danger to the country. The people themselves are the country. It is they, not their leaders, who will go off to battle and it is they who will pay the price of their leaders’ zeal for domination.

via Zero Hedge http://ift.tt/1QD5hZG Tyler Durden

By now, the world is largely familiar with Chinese President Xi Jinping’s fabled “Tigers and Flies” campaign.

Since taking office in 2013, Xi has embarked on an ambitious effort to root out party corruption and ensure that the directives passed down from on high in the Politburo are executed faithfully among the sprawling rank and file. As The Atlantic wrote last year, the discipline “problem” is “made more urgent by a slowing economy,” an economy which desperately needs to be reformed.

“Reform, however, requires the ability to enact policy,” The Atlantic flatly adds. “That in turn necessitates bureaucrats who follow the central government’s orders.”

Publicly there have been more than 1,500 announced cases against party officials. But that’s just “publicly.” Knowing the Party’s reputation for “disappearing” those who “disappoint” or otherwise act in morally objectionable ways, the real number is impossible to know but is likely orders of magnitude higher.

When China’s stock market began to crash last summer as the country’s margin “miracle” finally buckled under the weight of the millions of illiterate daytrading housewives who poured their life savings into everything from umbrella manufacturers to industrial companies-turned P2P outfits, Beijing extended the corruption probe to those “responsible” for the equity meltdown.

Soon, the quest for stock market “manipulators” and those (like journalists) who would otherwise seek to harm the national interest by, well, by reporting the facts became part and parcel of a kind of mini Tigers and Flies campaign focused specifically on China’s financial markets. That campaign eventually ensnared quite a few officials, prominent money managers, and eminent businessmen, including Guo Guangchang, a self-styled “Chinese Warren Buffett.”

But all of this wasn’t good enough for China. No, a “true” police state must be able to monitor all things at all times and prevent transgressions against the prevailing order before they happen. So more “Minority Report” than NSA.

This is especially true now that Beijing’s quest to rein in “zombie companies” and curb overcapacity is likely to mean hundreds of thousands of industrial job losses and thus quite a bit of grumbling among the downtrodden (and recently jobless) masses.

Well don’t look now, but China is attempting to use big data, a military contractor, and a camera network known as “Skynet” to predict crimes before they happen.

“China’s effort to flush out threats to stability is expanding into an area that used to exist only in dystopian sci-fi: pre-crime,” Bloomberg reports. “The Communist Party has directed one of the country’s largest state-run defense contractors, China Electronics Technology Group, to develop software to collate data on jobs, hobbies, consumption habits, and other behavior of ordinary citizens to predict terrorist acts before they occur.”

(“Big Uncle” Xi is watching)

Make no mistake, China is a fertile testing ground for such an experiment because, well, because the public has no rights.

“The program is unprecedented because there are no safeguards from privacy protection laws and minimal pushback from civil liberty advocates and companies,” Lokman Tsui, an assistant professor at the School of Journalism and Communication at the Chinese University of Hong Kong, who has advised Google on freedom of expression and the Internet tells Bloomberg.

Here’s a bit more:

China was a surveillance state long before Edward Snowden clued Americans in to the extent of domestic spying. Since the Mao era, the government has kept a secret file, called a dang’an, on almost everyone. Dang’an contain school reports, health records, work permits, personality assessments, and other information that might be considered confidential and private in other countries. The contents of the dang’an can determine whether a citizen is eligible for a promotion or can secure a coveted urban residency permit. The government revealed last year that it was also building a nationwide database that would score citizens on their trustworthiness.

 

New antiterror laws that went into effect on Jan. 1 allow authorities to gain access to bank accounts, telecommunications, and a national network of surveillance cameras called Skynet.

 

Much of the project is shrouded in secrecy. The Ministry of State Security, which oversees counterintelligence and political security, doesn’t even have its own website, let alone answer phone calls. Only Wu, the engineer at China Electronics Technology, would speak on the record. He hinted at the scope of the data collection effort when he said the software would be able to draw portraits of suspects by cross-referencing information from bank accounts, jobs, hobbies, consumption patterns, and footage from surveillance cameras.

 

The program would flag unusual behavior, such as a resident of a poor village who suddenly has a lot of money in her bank account or someone with no overseas relatives who makes frequent calls to foreigners.

But don’t worry, this isn’t a “big data platform” designed to incriminate people before they’ve actually committed a crime (because that would be unequivocally bad, not to mention incredibly frightening).

This, China Electronics Technology will tell you, is merely “a united information environment.” Where the Politburo knows everything about you. And is watching you. All the time. And while the old system in China would happily scapegoat you for something you haven’t done and make you confess to it in a televised address, the new “united information environment” will convince you that unless you are buried under the jail now, you will do something wrong in the future. 

Come to think of it, we’re not sure which is worse…

*  *  *

via Zero Hedge http://ift.tt/1LNp605 Tyler Durden

Submitted by Mac Slavo via SHTFPlan.com,

In 2011, as gold prices rocketed to $1900 and oil was trading above $120 a barrel, there were few analysts who saw anything but further gains. But Marin Katusa of Katusa Research had a different opinion. At a major commodity conference Katusa, to boos and jeers from the audience, held strong to his analysis that an imminent deflationary collapse in commodity prices was on the horizon. And collapse they did.

According to Katusa, who is closely involved in the Canadian resource sector, most people simply assumed the good times would go on forever… because it was different this time. But like any uninhibited party fueled by unlimited cash, the hangover was sure to follow.

There’s no doubt you had massive high paying jobs. In Canada, the province that benefited the most is Alberta… In the last twelve months they’ve had 70,000 layoffs of jobs paying over a hundred grand a year.

 

…when I’d go to these oil towns you’d sit down at the casinos with them and these guys were all about the hookers and blow… they were all about their toys… big fancy trucks… snow mobiles… and they’re in the field for two weeks and they make $20,000 and blow it all at the casinos.

 

You knew it couldn’t last. 

As Katusa notes in his latest interview with Future Money Trends, though the crash has been brutal for the sector, it’s not over yet and it’s going lower for longer.

 

They [OPEC] can survive at $20 oil…

 

For two years everyone’s been saying, “OPEC’s going to cut back.”

 

The reality here is, why would OPEC cut production? That would only prop up the Russians and the shale sector.

And while most will argue that low oil prices will wipe out most of America’s shale industry, Katusa has a contrarian view, suggesting that shale sector debt, while significant, is not necessarily going to cause these companies to go under in the immediate future.

Why?

 

Because what banker in their right mind wants to get dirty and actually operate an oil field?

 

So the debt will be amended, extended and then they’ll pretend.

 

… Because you can’t just shut down an oil field. You have to reclaim those wells, which means you have to shut them down and environmentally reclaim them… and it costs more to do that today than what the actual value is.

 

The bankers know that.

 

… With innovation, in the Western world, costs will decrease and the bankers have no choice but to amend, extend and pretend the debt.

 

So they’re going to go lower for longer.

In short, going forward we should expect widespread manipulation from the producers and the banks themselves to keep the bankruptcies at bay.

But recession still looms, and Katusa says that there are two things we can count on in the near future and why people need to rethink their investments:

The economy is changing… In a zero-interest rate policy world people have to rethink their investments… You’re looking at higher volatility, lower returns, but much higher risk.

 

With all this going on in the world there are only two things that can happen.

 

We continue with negative interest rates, which I see the trend globally… 35% of Eurozone countries already have negative interest policies…

 

And there’s going to be quantitative easing for the people… QE4-P… and that’s the reality here.

 

Negative interest rates are a tax on wealth… a tax on savers.

And if you haven’t already guessed, amid all the volatility and debasement of currencies, one asset class, according to Katusa, will survive and counter the coming helicopter drop of freshly printed dollars:

There’s a great way to make money on this if you get ahead of QE4P… the quantitative easing for the people… and gold is one of the ways to do that.

In his must-see interview, Katusa expands on this forecast by noting that, on top of all the bailouts, trade tariffs, and quantitative easing to follow, China, in an effort to maintain the perception of stability in their economy and financial markets, will soon begin flooding the global economy with commodities like aluminum, steel, iron ore and coal, which will continue to have a deflationary impact on broader commodity markets.

But the one sector they can’t flood – precious metals – is the very sector investors should be looking at as a way to not only preserve wealth going forward, but to grow it exponentially as crisis continues to hammer the global marketplace. That’s why Katusa has disclosed he is writing million dollar checks to one specific gold acquisition company, in similar fashion to other noteworthy insiders who are moving heavily into gold including Doug Casey, Eric Sprott, George Soros, Stanley Druckenmiller and Carl Icahn.

via Zero Hedge http://ift.tt/1puN5Hm Tyler Durden

It's not the economy, it's the debt, stupid…

 

h/t @NorthmanTrader

via Zero Hedge http://ift.tt/1R41M0t Tyler Durden

The G-20 Shanghai summit was a dud; China’s People’s Congress fizzled (even if it unleashed the biggest iron ore rally in history, however brief); and so – in a month full of expectations for major policy stimulus (which have so far been vastly disappointing), we approach the one event that is most actionable: the ECB’s March 10 meeting and press conference, where expectations are, just like back on December 3, so great – some expect up to a 20 bps rate cut to -0.5%, others expect QE to be increased from €60BN to €70BN per month, yet others believe that Draghi will either extend the TLTRO, expand the pool of eligible collateral or introduce tiering in the negative rates schedule like Japan; Credit Suisse believes the ECB will start buying corporate bonds – that the market’s pent up hope for stimulatory relief can only lead to disappointment, especially after a bear market rally as furious as this. 

Indeed, some such as SocGen, admit as much: as Michala Marcussen says, “our view remains that monetary policy is near the limits of what it can achieve in isolation; structural reform and fiscal stimulus is required next.” 

Bloomberg’s Richard Breslow was particularly poetic this morning when he wrote that “meddling with the monetary system had its day. The ECB, and the BOJ, among others, are increasingly looking like one trick ponies. Even if you agree it was a really good trick, at some point it losses all impact on the audience. And that is a real danger as the QE transmission mechanism can’t work if it fails to impress. From Davos to Shanghai we have been treated (tortured) with hearing central bankers talk longingly about fiscal policy. And then go off and ramp up monetary policy. The tact they employ in criticizing their governments is utterly the wrong tack.“

We wholeheartedly agree with this searing observation, because Breslow is 100% correct: even as they blame the fiscal authorities for not doing their job (and the Fed has been particularly vocal in bashing Congress), central bankers do everything in their power to prevent the “risk off” market selloff that could finally force the required fiscal change and awake governments from their stupor. We highlighted this paradox 5 years ago when the Fed was launching QE2 and nothing has changed since even though now both the BIS (whose directors ironically are the same central bankers its economists love to criticize each quarter), and the Davos billionaire set, both agree that central planning has not only gone on for too long, but has lead to unprecedented and adverse consequences.

And while there appears to be a disturbing, and 7 years late, break out of common sense among even the tenured “intellectual oligarchy”, one bank refuses to hand over control, and instead has released a note telling Mario Draghi in no uncertain terms, that it is “Time for the ECB to step it up.”

In the note by Robin Brooks, whose abysmal FX recommendations in past few months, and whose epic, and just as overoptimistic misread of the December ECB meeting left Goldman clients with billions in losses, have made many ask if he is the next incarnation of the inimitable Tom Stolper, he admits that “one year since the start of ECB QE, the program is in trouble.” What he means is that his recommendation for EURUSD parity, and even as low as 0.90 by the end of 2017, is in just as big trouble.

So, in order to avoid disappointing his former employer – recall that Draghi himself worked as Goldman when he was selling Greece those infamous currency swaps – once again, this is what Goldman’s FX strategist recommends the ECB should do.

But first, this is how Goldman suggests Draghi pitch his case to his ECB peers:

On perhaps the most important metric – inflation – we are almost back to where we started, with core near last year’s low of 0.6 percent. Looking through the lens of the inflation mandate, sequential (month-over-month) inflation needs to triple from its pace over the past year for the ECB to meet its already low forecast for core of 1.3 percent in 2016 (Exhibit 1). Put another way, our European economics team forecasts core at just 0.9 percent this year. There is therefore little doubt in our minds that the ECB is missing its mandate and – given the miss on core – that this is not just a story about lower oil prices. Instead, the Phillips curve in the Euro zone may have shifted down, which would explain why core has failed to pick up even as the unemployment gap has closed (Exhibit 2). The fact that this downshift originates in southern Europe, as we have shown, suggests that structural reforms are pushing wages and prices lower, giving a deflationary bias to the periphery, such that Euro zone inflation is now lower ceteris paribus. If this is true, low inflation is a more serious problem than the ECB believes and requires forceful action. In this FX Views, we lay out scenarios for EUR/$ for different outcomes on Thursday. Above all, after a year of mixed messages, the ECB needs to signal that it is serious about pursuing its inflation mandate, including via a stepped up pace of monthly QE purchases.

 

 

Or else? And here is where it gets good, because Goldman basically lays out, point for point, what Draghi should do on Thursday if he wants to remain in his cephalopod master’s good graces:

There is little doubt in our minds that the ECB wants to surprise this week, not just because of the inflation picture, but also because it disappointed in December, inadvertently tightening financial conditions materially. The question is whether it will choose to do that on the deposit rate and/or sovereign bond buying. From the perspective of EUR/$, we think it is helpful to go back to first principles. The main goal of any QE program is to encourage a portfolio shift from the safe haven asset – Bunds in the Euro zone – to risky assets, including foreign currencies. The sharp Bund sell-off a year ago, not to mention the volatility since then (Exhibit 3), have impaired the functioning of ECB QE, as can be seen from the pull-back in residents’ portfolio outflows following President Draghi’s comment that “markets should get used to periods of higher volatility” at the June press conference (Exhibit 4). Our first preference is therefore for the ECB to simply stabilize Bund yields at a relatively low level, similar to what the BoJ has done since the start of QQE. This is the most powerful option for Euro down and would require the Bundesbank to adjust the maturity of its Bund purchases to market conditions. A shift from Bunds to more periphery debt, for example by relaxing the capital key, is next up in our list of preferred measures, where our rule of thumb is that an EUR 100 bn surprise is worth one big figure downside in EUR/$. Another cut in the deposit rate is our least preferred option, because we see the effect from negative interest rates as relatively limited. We think a 10 bps surprise is worth two big figures downside in EUR/$. Given how much is priced and the negative perception of tiering, this is the least powerful option.

 

Goldman has spoken and it demands more QE. NIRP is its least favorite option.

In the next paragraph, the vocal “urges” of what the ECB should do continue, and here we find that according to Goldman, that major Bund selloff of last April, was precisely at the behest of the ECB as we suggested, and as many accused us of the usual tinfoilhattery. We were right.

Any QE program has distributional consequences, by penalizing savers at the expense of debtors. At the ECB, the interests of savers (and the financial sector that serves them) are represented by the Bundesbank, perhaps the single most important constituency within the central bank. As we showed last year, the Bund sell-off in April/May coincided with the Bundesbank reducing the maturity of its purchases (when to anchor yields it should have done the opposite), so that – in our minds – the sell-off was partly a policy decision. We see this as a form of “financial dominance,” with savers impeding forceful QE, a concept our European team discussed in early 2014. Meanwhile, shifting purchases towards periphery debt is less powerful for Euro downside, especially if it coincides with a steeper and more volatile Bund curve, because it more closely resembles a quasi-fiscal operation, helping the periphery sustain large debt burdens, aka “fiscal dominance.” Finally, the debate over tiering, which aims to shield banks from the adverse fall-out of negative interest rates, is just another example of “financial dominance.” The fact that monetary policy is subject to lobbying from different vested interests is of course nothing new. But in the case of the ECB, this is coming at the expense of “monetary dominance,” meaning that policy is not quick and forceful enough to boost inflation back to the mandate (Exhibit 5). Ultimately, we think monetary dominance will reassert itself, given that the ECB has only inflation as its target. That is the underlying reason why we continue to hold to our 0.95 forecast for EUR/$ in 12 months.

 

 

Goldman’s conclusion is that “the ECB needs to surprise this week, not because of markets, but because – given the trend in core inflation – the existing policy mix is behind the curve.” Translation: the ECB has to surprise because of markets.  Brooks continues:

Given the political economy within the ECB and what is now priced in money markets, we think the biggest margin for surprise will be to step up monthly purchases and signal that “scarcity” is not a constraint [ZH: even though it clearly is]  including via shifting away from the capital key. Our rule of thumb is that an EUR 100 bn surprise on sovereign bond buying translates into one big figure down in EUR/$. Most important, beyond specific measures, we believe it is time for the ECB to step it up and reassert “monetary dominance” over all other interests.

Which is how Goldman lays down its ultimatum to a central banker whom it itself spawned.  Then again, Draghi already defied Goldman once in December. Would he dare to do it twice? For one thing, Robin Brooks career at Goldman would certainly be over if he were to once again lead Goldman’s muppets into the ECB slaughter. Another 3-4 big figure search in the EURUSD, and Goldman wouldn’t have to fire Brooks: his former clients may just take matters into their own vigilante hands.

And therein lies the rub, because implied threats or not, according to MarketNews, the possibility of an ECB disappointment is all too real. This is what MNI reported last week:

The European Central Bank is likely to add a further deposit rate cut to its fight against low inflation and tepid growth in the currency area next week, but multiple conversations with a variety of Eurosystem sources indicate little or no consensus yet for action beyond a ‘plain vanilla’ rate move. While market expectations of a comprehensive easing package from the Governing Council are on the rise, policymakers from the world’s biggest economies warned last week at the G20 meeting in Shanghai that monetary efforts alone cannot address the issues of confidence and demand that are currently stifling growth.

Oops. If true, and going back to Breslow’s point, that would mean that Draghi will disappoint on purpose, precisely to stimulate a fiscal intervention and to keep the monetary toolkit at bay. If so, Goldman is in for a huge disappointment.

Against that backdrop, conversations with several senior Eurosystem sources indicate that while most are open to moves that can ignite growth and inflation without creating further risks to the region’s financial stability, there remains a great deal of uncertainty with respect to the viability of specific policy options and much will depend on both the Executive Board’s proposals and the new staff macroeconomic forecasts to be presented at the meeting.

The quotes confirm as much:

“I don’t think that monetary policy has reached its limits, but it’s a question of whether it marginally adds to the efficiency of what we’re doing with the instruments we have,” said one senior Eurosystem source. “There is a pretty much unlimited arsenal of instruments we can use. But the question I see and always ask myself is whether we are hitting the right buttons.”

To be sure, nobody doubts the ECB can do more, the question is whether it should do more:

Multiple conversations with Eurosystem sources revealed some concern with respect to the limits of monetary policy, although a large majority agreed there were still plenty of options for the Governing Council, even as they lamented the lack of fiscal support from Eurozone governments.

 

“Monetary policy isn’t paralyzed, but it’s not the only game in town,” said a second senior Eurosystem source. “Within our limits and competencies, I think we do have influence, and we have proven efficient in terms of reducing long-term interest rates, improving credit conditions and stabilizing inflation expectations.”

 

“The huge handicap I’m seeing now is the European political environment; Europe is going through one of its major crises, I’m afraid, with even Schengen on the table.” The first source agreed.

And herein lies the rub: even the ECB realizes that the time for passing the buck to Frankfurt is over.

“I had hoped the ‘Juncker Plan’ would be there already, but it’s not yet,” the source said, referring to the E315 billion European Fund for Strategic Investments championed by Commission President Jean-Claude Juncker. “And every month that the Plan is not there, we are missing opportunities to have an impact from it. I have no idea what the European Commission is doing about that.”

 

The same source also indicated a certain degree of remorse with respect to market expectations and the burden being placed on central bankers – largely as a result of the Bank’s previous activism.

 

“There is a refugee crisis; what could the ECB do? There is climate change; oh, the ECB needs to do something. I have the hiccups; oh, the ECB should do something … it’s crazy,” the source said. “I find this completely ridiculous and irresponsible. But we got ourselves into this.“

Yes, an ECB source said that, and he or she is right: you got yourselves into this, and there is only one way to get out – by demonstrating that you will no longer operate at the markets’ every whim and allow Brussels to punt at a time when they have to make decisions. To do that you will have to disappoint not only the market, but the banks that is confident it owns your boss.

Will the ECB finally have the guts to say no to Goldman? We doubt it, but just in case, we are going long the EURUSD if only for symbolic support value…

via Zero Hedge http://ift.tt/21i2dUn Tyler Durden