Tag: finance

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

Everyone knows America’s campaign in Afghanistan has been an enormous foreign policy success.

The Taliban harbored al-Qaeda before and after 9/11 so naturally, the US had to oust Mullah Omar and company on the way to chasing Osama bin Laden through the mountains whilst laying waste to whatever civilization existed prior to the American invasion.

But the $133.1 billion spent on the war was well worth it. Bin Laden was captured in a matter of months, the Taliban was driven into relative obscurity, a stable government was elected by the people for the people in Kabul, and today, Afghanistan stands as a democratic oasis in an otherwise strife-ridden wasteland.

Oh, wait.

Actually it took a decade to find Bin Laden, the country is still mired in violence, Mullah Omar finally died with his one eye but it wasn’t part of some dramatic US raid, the Taliban is resurgent and now controls more territory than it has since before 9/11, and in October, Obama had to backtrack on his pledge to pull American troops out of the country.

Accoring to Afghan government sources there was a “secret” meeting in Doha in February between the Taliban and officials from Kabul where, according to the government, “they [the Taliban] wouldn’t simply reject that they’re going to meet [us] face to face [for the talks in March].” If that doesn’t sound promising to you, you’re a pragmatist and should be praised for it.

So that of course means more taxpayer dollars will continue to be plowed into this misadventure and before you know it, American boots will have been on Afghan ground for longer than some of the soldiers fighting there will have been alive.

For those who enjoy seeing how their tax dollars are wasted on Washington’s perpetually wrong-footed Mid-East foreign policy, NBC has the following hilarious (and remarkably candid, considering the source) tribute to utter military frivolity.

*  *  *

From NBC

NBC News spoke to SIGAR’s Special Inspector General John F. Sopko about 12 of the most bizarre and baffling cases highlighted by his team’s investigations.

1. $486 million for ‘deathtrap’ aircraft that were later sold for $32,000

“These planes were the wrong planes for Afghanistan,” Sopko told NBC News. “The U.S. had difficulty getting the Afghans to fly them, and our pilots called them deathtraps. One pilot said parts started falling off while he was coming into land.” Sopko called the planes “one of the biggest single programs in Afghanistan that was a total failure.”

2. $335 million on a power plant that used just 1 percent of its capacity

The “modern” diesel plant exported just 8,846 megawatt hours of power between February 2014 and April 2015, SIGAR said in a letter to USAID last August. This output was less than 1 percent of the plant’s capacity and provided just 0.35 percent of power to Kabul, a city of 4.6 million people.

3. Almost $500,000 on buildings that ‘melted’ in the rain

U.S. officials directed and oversaw the construction of an Afghan police training facility in 2012 that was so poorly built that its walls actually fell apart in the rain. The $456,669 dry-fire range in Wardak province was “not only an embarrassment, but, more significantly, a waste of U.S. taxpayers’ money,” SIGAR’s report said in January 2015.

4. $34.4 million on a soybean program for a country that doesn’t eat soybeans

“They didn’t grow them, they didn’t eat them, there was no market for them, and yet we thought it was a good idea,” Sopko told NBC News.

5. One general’s explanation why 1,600 fire-prone buildings weren’t a problem

The U.S. Army Corps of Engineers built some 2,000 buildings to be used as barracks, medical clinics and fire stations by the Afghan National Army as part of a $1.57-billion program. When two fires in October and December 2012 revealed that around 80 percent of these structures did not meet international building regulations for fire safety, Sopko said he was “troubled” by the “arrogant” response from a senior USACE chief.

6. A $600,000 hospital where infants were washed in dirty river water

“Because there was no clean water, staff at the hospital were washing newborns with untreated river water,” SIGAR’s report said in January 2014. It added that the “poorly constructed” building was also at increased “risk of structural collapse during an earthquake.”

7. $36 million on a military facility that several generals didn’t want

The so-called “64K” command-and-control facility at Afghanistan’s Camp Leatherneck cost $36 million and was “a total waste of U.S. taxpayer funds,” SIGAR’s report said in May 2015.

via Zero Hedge http://ift.tt/1U0nBOB Tyler Durden

Submitted by Michael Snyder via The Economic Collapse blog,

What is the worst possible outcome for the presidential election of 2016?  Assuming that an election will actually take place, that is an easy question to answer – Hillary Rodham Clinton as the next president of the United States.  She is truly evil in every sense of the word, and the implications of what four (or eight) years of Hillary would mean for our nation are almost too terrible to imagine.  That is why it is so depressing watching what is happening to the Republican Party right now.  The civil war in the Republican Party is ripping it to shreds, and as a result of all this warfare every plausible scenario for what will happen the rest of the way ends with Hillary Clinton winning the 2016 election.

According to the Associated Press, here is how the Republican delegate count stands as of right now…

• Donald Trump: 384
• Ted Cruz: 300
• Marco Rubio: 151
• John Kasich: 37

Ted Cruz looks like he is within shooting distance of Trump, but that is an illusion.  The early part of the schedule was full of states where Cruz was expected to do well, but now the map is going to work very much against him.

At this point, the only candidate that looks like he may be able to accumulate 1,237 delegates before the convention is Trump, and that is far from guaranteed.  So far, Trump has won approximately 44 percent of the delegates during the caucuses and primaries.  By the time it is all said and done, he will need to have slightly more than 60 percent of all the delegates awarded during the caucuses and primaries to guarantee himself the nomination before the Republican convention.  That is because there are hundreds of delegates that are not awarded during the caucuses and the primaries, and almost all of those delegates are members of the Republican establishment.

Trump can still get there by racking up large delegate totals in winner-take-all states such as California, but it will be a challenge.  The entire Republican Party establishment, Fox News, Glenn Beck and a significant number of other prominent conservative voices have all declared war on Trump.  In fact, there are super PACs that are going to spend tens of millions of dollars doing nothing but trying to destroy Trump.

If the Republican Party actually wanted to beat Hillary Clinton in November, they should be rallying around Trump and trying to help him, because he would definitely need a lot of help to win the general election.

According to Real Clear Politics, the latest three polls all have Trump losing to Clinton by at least 5 points.  In key states such as Michigan, the numbers are quite a bit more dismal.  Over the next few months, those numbers are likely to get even worse as Trump is savagely assaulted by the Republican establishment and relentlessly bombarded by tens of millions of dollars of negative attack ads.  Meanwhile, Clinton is cruising along virtually unscathed.

Of course in a just world Hillary Clinton would have already been arrested and put in prison.  There is no possible way that she should be running for president of the United States.  Unfortunately, we live in a deeply corrupt society, and this is the way that things work.

If by some miracle he does survive to become the nominee, a significantly weakened Trump would then have to face the full power of the Clinton political machine.  It is estimated that a billion dollars could be spent on the Democratic side this time around, and Trump does not have the resources to match that.  Normally big Republican donors rally around the nominee, but in this case the big money is fighting like crazy to defeat Trump.  In a general election matchup, it really would be David vs. Goliath, and Trump would not be Goliath.

If Donald Trump does not accumulate 1,237 delegates before the convention, then we would be headed for what is known as a “brokered convention“.  The rules are very complicated, but the key thing to remember is that the delegates are only bound for the first vote.  After that, they can vote for whoever they want.

And it is very important to note that the campaigns don’t pick their delegates.  Becoming a delegate is a long and tedious process in most states, and most of them are party loyalists.

In the end, a “brokered convention” would almost certainly result in an establishment candidate being chosen as the nominee.  Needless to say, the names “Trump” and “Cruz” would not be on that list.

Have you noticed that Mitt Romney has started to put himself out there lately?  His verbal attacks on Trump have been absolutely scathing, and he told Fox News that he would not say no if he was “drafted” to become the nominee at the Republican convention…

Romney, a former Massachusetts governor and the Republicans’ 2012 presidential nominee, repeated remarks from last week, telling “Fox News Sunday” that he wouldn’t launch an eleventh-hour campaign for president. But he declined to reject being “drafted” at the GOP convention in July to be the party’s general election candidate.

 

“It would be absurd to say that if I were drafted I’d say no,” Romney said.

Behind the scenes, much more is going on.  In fact, CNN is reporting that Romney’s team is actively working on a plan to steal the nomination from Trump at the convention…

Mitt Romney has instructed his closest advisers to explore the possibility of stopping Donald Trump at the Republican National Convention, a source close to Romney’s inner circle says.

 

The 2012 GOP nominee’s advisers are examining what a fight at the convention might look like and what rules might need revising.

 

“It sounds like the plan is to lock the convention,” said the source.

If Romney does emerge as the nominee, does anyone actually believe that he will defeat Clinton?

Of course not.  Trump’s millions of supporters will be absolutely infuriated, and many of them would absolutely refuse to cast a vote for Romney in the general election.

In the end, it would be the same result – a victory for Hillary Clinton.

The next few weeks are going to be very interesting.  If Trump wins Florida and Ohio, there is going to be a lot of pressure on Marco Rubio and John Kasich to get out of the race, and the path to 1,237 delegates would appear to be clear.

However, Mitt Romney could attempt to derail the Trump bandwagon by jumping in the race after March 15th.  Romney’s goal would be to capture enough delegates in winner-take-all states such as California to keep Trump from getting to the magic number of 1,237.  If Romney could do that, he knows that he would likely come out of a brokered convention as the nominee.

But no matter what happens on the Republican side from this point forward, it is going to take a miracle of epic proportions to keep Hillary Clinton from winning the presidency.  Every plausible scenario ends with her in the White House, and that is a truly horrible thing to imagine.

via Zero Hedge http://ift.tt/1U0lg6b Tyler Durden

Two months back, in a series of lengthy exposes (see here and here), we profiled the ins and outs of the “petrogold” trade that allowed Iran to skirt international sanctions that froze Tehran out of the banking system by way of conduits and shady go-betweens in Turkey and Dubai.

The tale is long and winding and should probably be adapted for the silver screen, but really, the mechanics were pretty simple. Couriers simply carried briefcases full of bullion through Istanbul’s Ataturk Airport and flew to Dubai where the gold was then carted off to Iran.

The Dubai intermediary became necessary because gold exports to then-pariah state Iran were becoming too suspicious. Here’s a bit from Reuters ca. 2012 that details the switch: “Turkey exported a total $2.3 billion worth of gold in August, of which $2.1 billion was gold bullion. Just over $1.9 billion, about 36 metric tons, was sent to the UAE, latest available data from Turkey’s Statistics Office shows. In July Turkey exported only $7 million of gold to the UAE. At the same time Turkey’s direct gold exports to Iran, which had been fluctuating between $1.2 billion and about $1.8 billion each month since April, slumped to just $180 million in August.”

Eventually the world came to know who the people on the Turkish side of the deal were and unsurprisingly the connections went all the way to the top including Turkey’s then-economy minister, Zafer Caglayan and Erdogan himself (wouldn’t you know it). Finally, in July of 2013, the U.S. added precious metals to the list of items that couldn’t be sold to Iran as part of an effort to curtail the country’s nuclear enrichment program.

Party over.

We went on to identify the Dubai middleman involved in the trade and looked into his company Gold AE where, ultimately, all of the gold held on behalf of clients simply disappeared. You’re encouraged to read the entire series linked above, but what’s notable today is that the Iranian side of the business, billionaire Babak Zanjani was just sentenced to death in Iran.

You may remember Mr. Zanjani from 2013, when he was arrested for corruption.

In better times:

Now:

As PressTV reported at the time, “after sanctions were imposed against the National Iranian Oil Company, Iran had to export oil and they gave Babak Zanjani the task of exporting some of this oil worth around USD 3.0003 billion. The problem is that they were supposed to get collateral from him by law and this was not done.”

We asked: “So, Zanjani was tasked to circumvent oil sanctions which he did for over a year, but now, for some inexplicable reason, he is arrested for not ‘getting collateral’?

We suggested at the time that perhaps the US put pressure on Iran to arrest Zanjani in exchange for some manner of sanctions relief and we’ll probably (scratch that, “definitely”) never know the whole story, but the official line now is that he embezzled $2.7 billion from the state-run National Iranian Oil Co. 

“The court found enough evidence to convict Zanjani and two other people, who were also sentenced to death,” Bloomberg reports, adding that “Zanjani, who has denied all wrongdoing, was accused of embezzling $2.7 billion from the state-run National Iranian Oil Co. during transactions intended to circumvent international sanctions on crude exports.”

(Zanjani arrives for court in November)

As you can imagine, being tasked with helping a country evade international sanctions might tempt one to skim a little off the top which is exactly what Zanjani is accused of doing via the Tajikistan branch of his own bank, First Islamic Investment Bank.

But here’s the (politically) interesting part: “The embezzlement occurred under the presidency of Mahmoud Ahmadinejad [but Zanjani] was arrested in December 2013 after the election of President Hassan Rouhani.“

Bloomberg continues: “Zanjani was known to have good contacts with Iran’s Revolutionary Guards, and the decision marks a political and economic “confrontation” within Iran’s political establishment between the legacy of Ahmadinejad and the new era of Rouhani.”

So it would appear that we may have been right three years ago. Is it possible that Rouhani made a deal with the US as part of the sanctions relief to rid the world of this petrogold peddler on the excuse he embezzled money from his own country? 

In other words, was Zanjani simply a casualty of the Nuclear Accord and was he summarily abandoned by the Ayatollah and the IRGC for reasons of geopolitical expediency? 

We’ll leave it to readers to decide.

via Zero Hedge http://ift.tt/1p3hY56 Tyler Durden

Authored by Steve H. Hanke of the Johns Hopkins University. Follow him on Twitter @Steve_Hanke.

The Egyptian pound is plummeting, again, losing 6.1% of its value against the greenback over the past week.  As shown in the accompanying chart, the black market premium has soared to 25.2%.

The plunging pound has dramatically pushed up Egypt’s implied annual inflation rate.  It now stands at 28.9%.  The Egyptian pound might just be General Sisi’s Achilles’ heel.

via Zero Hedge http://ift.tt/1TFJjb2 Steve H. Hanke

Authored by Michael Bloomberg, originally posted at BloombergView.com,

Americans today face a profound challenge to preserve our common values and national promise.

Wage stagnation at home and our declining influence abroad have left Americans angry and frustrated. And yet Washington, D.C., offers nothing but gridlock and partisan finger-pointing.

Worse, the current presidential candidates are offering scapegoats instead of solutions, and they are promising results that they can’t possibly deliver. Rather than explaining how they will break the fever of partisanship that is crippling Washington, they are doubling down on dysfunction.

Over the course of American history, both parties have tended to nominate presidential candidates who stay close to and build from the center. But that tradition may be breaking down. Extremism is on the march, and unless we stop it, our problems at home and abroad will grow worse.

Many Americans are understandably dismayed by this, and I share their concerns. The leading Democratic candidates have attacked policies that spurred growth and opportunity under President Bill Clinton — support for trade, charter schools, deficit reduction and the financial sector. Meanwhile, the leading Republican candidates have attacked policies that spurred growth and opportunity under President Ronald Reagan, including immigration reform, compromise on taxes and entitlement reform, and support for bipartisan budgets. Both presidents were problem-solvers, not ideological purists. And both moved the country forward in important ways.

Over the last several months, many Americans have urged me to run for president as an independent, and some who don’t like the current candidates have said it is my patriotic duty to do so. I appreciate their appeals, and I have given the question serious consideration. The deadline to answer it is now, because of ballot access requirements.

My parents taught me about the importance of giving back, and public service has been an important part of my life. After 12 years as mayor of New York City, I know the personal sacrifices that campaigns and elected office require, and I would gladly make them again in order to help the country I love.

I’ve always been drawn to impossible challenges, and none today is greater or more important than ending the partisan war in Washington and making government work for the American people — not lobbyists and campaign donors. Bringing about this change will require electing leaders who are more focused on getting results than winning re-election, who have experience building small businesses and creating jobs, who know how to balance budgets and manage large organizations, who aren’t beholden to special interests — and who are honest with the public at every turn. I’m flattered that some think I could provide this kind of leadership.

But when I look at the data, it’s clear to me that if I entered the race, I could not win. I believe I could win a number of diverse states — but not enough to win the 270 Electoral College votes necessary to win the presidency.

In a three-way race, it’s unlikely any candidate would win a majority of electoral votes, and then the power to choose the president would be taken out of the hands of the American people and thrown to Congress. The fact is, even if I were to receive the most popular votes and the most electoral votes, victory would be highly unlikely, because most members of Congress would vote for their party’s nominee. Party loyalists in Congress — not the American people or the Electoral College — would determine the next president.

As the race stands now, with Republicans in charge of both Houses, there is a good chance that my candidacy could lead to the election of Donald Trump or Senator Ted Cruz. That is not a risk I can take in good conscience.

I have known Mr. Trump casually for many years, and we have always been on friendly terms. I even agreed to appear on “The Apprentice” — twice. But he has run the most divisive and demagogic presidential campaign I can remember, preying on people’s prejudices and fears. Abraham Lincoln, the father of the Republican Party, appealed to our “better angels.” Trump appeals to our worst impulses.

Threatening to bar foreign Muslims from entering the country is a direct assault on two of the core values that gave rise to our nation: religious tolerance and the separation of church and state. Attacking and promising to deport millions of Mexicans, feigning ignorance of white supremacists, and threatening China and Japan with a trade war are all dangerously wrong, too. These moves would divide us at home and compromise our moral leadership around the world. The end result would be to embolden our enemies, threaten the security of our allies, and put our own men and women in uniform at greater risk.

Senator Cruz’s pandering on immigration may lack Trump’s rhetorical excess, but it is no less extreme. His refusal to oppose banning foreigners based on their religion may be less bombastic than Trump’s position, but it is no less divisive.

We cannot “make America great again” by turning our backs on the values that made us the world’s greatest nation in the first place. I love our country too much to play a role in electing a candidate who would weaken our unity and darken our future — and so I will not enter the race for president of the United States.

However, nor will I stay silent about the threat that partisan extremism poses to our nation. I am not ready to endorse any candidate, but I will continue urging all voters to reject divisive appeals and demanding that candidates offer intelligent, specific and realistic ideas for bridging divides, solving problems, and giving us the honest and capable government we deserve.

For most Americans, citizenship requires little more than paying taxes. But many have given their lives to defend our nation — and all of us have an obligation as voters to stand up on behalf of ideas and principles that, as Lincoln said, represent “the last best hope of Earth.” I hope and pray I’m doing that.

*  *  *

And as if Bill Ackman's stock market forecasts were not bad enough, he said this in October:

"I’m not supporting any other candidate. I’m all in for Mike Bloomberg."
 

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

When it comes to concerns about their professional future, few things faze Wall Streeters: mass layoffs – no big deal, someone else will hire; empty steakhouses – that’s ok, Hustler Club is packed (and expense accounts are accepted just fine). But lower compensation and all hell breaks loose. Which is why quite a few hearts must have been pounding today when New York state Comptroller Thomas DiNapoli released his annual Wall Street compensation report in which we revealed that average Wall Street bonuses for 2015 will drop by a quite substantial 9% to “only” $146,200, the second consecutive year of declines, and the lowest since 2012 when average bonuses were $142,860.

According to DiNapoli, “Wall Street bonuses and profits fell in 2015, reflecting a challenging year in the financial markets. While the cost of legal settlements appears to be easing, ongoing weaknesses in the global economy and market volatility may dampen profits in 2016.” This is bad news for New York because “both the state and city budgets depend heavily on the securities industry and lower profits could mean fewer industry jobs and less tax revenue.

The total bonus pool for securities industry employees declined by 6 percent to $25 billion in 2015 during the traditional December-March bonus season. The Comptroller’s estimate includes cash bonuses for the current year and bonuses deferred from prior years that have been cashed in.

Curiously, DiNapoli said that while profits in the securities industry declined for the third straight year, reaching their lowest level since 2011, industrywide employment increased 2.7% in 2015, averaging 172,400 jobs for the year.  As a result, the average bonus declined by 9 percent in New York City to $146,200 in 2015 and the decline in the average bonus was larger than the decline in the total bonus pool because the pool was shared among a larger number of employees than last year.  As a result, the average bonus in 2015 was slightly larger than the average of the seven prior years (adjusted for inflation).

However, anyone seeking a big pick up in wages will have to look elsewhere: ideally minimum wage waiters, bartenders and retail workers who now make up the bulk of Obama’s “recovery.”

One also wonders how long before Wall Street switches from bonus cuts to even more wholesale terminations. Indeed, as DiNapoli notes, “it remains to be seen whether the recent job gains can be sustained in 2016 given the weakness in the global economy and financial markets, and increased provisions for bad loans related to the energy sector. A number of large financial firms have already announced plans to reduce costs to improve profitability, which could lead to fewer employees in New York City and smaller bonuses next year.”

And that is what the recovery has to look forward to: not only fewer of the best paid employees in the US, but another year of smaller bonuses. At least the price of oil has soared enough to where that quarter of a million of laid off O&G workers will be promptly rehired, or else very soon the US will run out of waiters.

Finally, don’t cry for Wall Street: like every other utility, increasingly more of the comp is paid in the form of base pay and less in the bonus: according to DiNapoli the average salary (including bonuses) for securities industry employees in New York City rose 14% in 2014 to $404,800, setting a new record (data are not yet available for 2015). This was nearly six times higher than salaries in the rest of the City’s private sector ($72,300).

Some other observations from the report:

• Although the securities industry is smaller, it is still one of New York City’s most powerful economic engines. The industry accounted for 22 percent of all private sector wages paid in New York City in 2014 even though it accounted for less than 5 percent of the City’s private sector jobs. An estimated 1 in 9 jobs in the city are either directly or indirectly associated with the securities industry;
• Unlike in prior economic recoveries, the securities industry has not been a driving force in the current jobs recovery in New York City. So far, the industry has accounted for less than 1 percent of the private sector jobs added, compared with 10 percent during the two prior recoveries;
• Securities-related activities are a large contributor to state and city tax revenues. DiNapoli estimates that securities-related activities accounted for 7.5 percent ($3.8 billion) of all city tax revenue in city fiscal year 2015 and 17.5 percent ($12.5 billion) of state tax collections in State Fiscal Year (SFY) 2014-15. The state also expects to receive more than $8.5 billion in settlement payments from financial firms during SFY 2014-15 and SFY 2015-16; and

Finally, this is the history of average Wall Street bonuses over the years:

via Zero Hedge http://ift.tt/1Svqki2 Tyler Durden

Authored by Robert Evans, originally posted at Cracked.com,

We like apocalypse fantasies because a part of us thinks it would be kind of fun. No bills to pay, no job to drag yourself to — life goes back to basics. You don't watch The Hunger Games and really think about what it would be like to have a toothache or yeast infection you can't treat. And you certainly don't think of it as something that can actually occur.

Opposition to America and capitalism is a huge part of Venezuelan politics, partially because America makes a convenient scapegoat and partially because we did kinda try to overthrow or kill Hugo Chavez a few times.

 Our bad. "One of [Chavez's] biggest and earliest achievements was creating a national mindset in which the 'People' were poor, needy, and supporters of his ideals, and the rest were dissidents, traitors, or 'Pitiyanqui.'"

That means "little Yankee," and Chavez started using the term in 2008, when the economy began to weaken. The implication was if you're a patriotic Venezuelan, these shortages won't bother you because you don't care about material possessions, man (at which point Chavez presumably took a huge bong hit). But that's all part of how everything is politicized in Venezuela. The Venezuelan government uses scarcity to identify and shame "dissidents" — which in this context means anyone who wants a kitchen with snacks in it.

Chavez's no-snack policy was a "Do as I say, not as I do" thing.

We interviewed our source in the middle of an election, and government propaganda claimed that the opposition was teaming up with the US to create the scarcity. In one TV ad, a humble poor woman is waiting for her free government house. She asks when it will be ready, only to be told that she now has to pay for it. Then she wakes up from her horrible nightmare and resolves to vote for the government before the opposition takes charge and dooms her. "If you vote for the opposition, you're [told you're] going to lose your houses, your privileges, that you won't be able to buy [food staples]. It's a very powerful message."

But not quite powerful enough, as those elections have since happened and saw the opposition party make significant gains. The government didn't sit back and accept defeat, though. Two days later, our source told us that toilet paper was mysteriously impossible to find again, even on the black market. Remember that when you vote for president, Americans. No matter how much you may hate one candidate, they're not going to take away your TP out of spite.

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

There’s a Petition at Change.org to suspend Turkey’s membership in NATO.

Why kick Turkey out of NATO?

Because:

• Turkey just shut down the largest Turkish newspaper using tear gas, water canons and brutality:

• Turkey has destroyed free speech and freedom of the press

• Turkey imprisons more journalists than any other country in the world

• Journalists – such as Dutch reporter Frederike Geerdink or Vice News’ Mohammed Rasool – are regularly detained on spurious charges

• Anyone who criticizes Turkey’s president is arrested

• Twitter reports that the Turkish government makes more content removal requests than any other in the world

• After reporters, local police and Turkish generals caught a weapons shipment from Turkey into Syria, they were all arrested on “treason” charges for exposing the shipment

• Turkey’s president says he doesn’t have to follow the rulings of Turkey’s top court

• Turkey is one of the main supporters of ISIS and Al Nusra

• Turkey provided the chemical weapons used in the famous attacks which killed hundreds in Syria. Pulitzer-prize winning investigative reporter Seymour Hersh – who uncovered the Iraq prison torture scandal and the Mai Lai massacre in Vietnam  – previously reported that high-level American sources tell him that the Turkish government carried out the chemical weapons attacks blamed on the Syrian government

Why are we allowing such an antidemocratic, tin pot dictatorship stay in NATO?

via Zero Hedge http://ift.tt/21TBJxU George Washington