Tag: finance

Ferguson Riots Again: Police, Looters Exchange Teargas , Rubber Bullets, Molotov Cocktails: Live Webcast

After more than a week of violent confrontations, tensions continues in Ferguson (following the death of Mike Brown – shot at least 6 times, twice in the head). The second night of quasi-martial-law in the Missouri town has once again erupted into riots (the third night in a row) as militarized police response just hours ahead of the midnight curfew. Protesters have looted stores and restaurants (including a McDonalds) and the once again heavily-armed police forces have responded in force with tear-gas and rubber bullets (to which protesters are responding with Molotov cocktails and returning gas canisters). This shows no signs of de-escalation at all as crowds chant “who polices the cops?” CNN reports at least one protester hit by rubber bullets and multiple injuries. Multiple gun shots heard – police: “leave or be arrested.”

 

The police tactical response was triggered, according to a Lieutenant with St Louis city PD, by an attack on the command post with Molotov cocktails…

 

 

 

 

Live Feed 1:

 

Live Feed 2:

 

The images are once again stunning…

 

 

Escape from Ferguson…

As The NY Times reports, the autopsy is quite damning…

 

Michael Brown, the unarmed black teenager who was killed by a police officer, sparking protests around the nation, was shot at least six times, including twice in the head, a preliminary private autopsy performed on Sunday found.

One of the bullets entered the top of Mr. Brown’s skull, suggesting his head was bent forward when it struck him and caused a fatal injury, according to Dr. Michael M. Baden, the former chief medical examiner for the City of New York, who flew to Missouri on Sunday at the family’s request to conduct the separate autopsy. It was likely the last of bullets to hit him, he said.

Mr. Brown, 18, was also shot four times in the right arm, he said, adding that all the bullets were fired into his front.

The bullets did not appear to have been shot from very close range because no gunpowder was present on his body. However, that determination could change if it turns out that there is gunshot residue on Mr. Brown’s clothing, to which Dr. Baden did not have access.

*  *  *

Two examples of police response so far…

“Get the fuck out of here”

and “you’re getting mace next time you pass us”




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Ron Paul: “What Have We Accomplished In Iraq?”

By Ron Paul

What Have We Accomplished in Iraq?

We have been at war with Iraq for 24 years, starting with Operations Desert Shield and Storm in 1990. Shortly after Iraq’s invasion of Kuwait that year, the propaganda machine began agitating for a US attack on Iraq. We all remember the appearance before Congress of a young Kuwaiti woman claiming that the Iraqis were ripping Kuwaiti babies from incubators. The woman turned out to be the daughter of the Kuwaiti ambassador to the US and the story was false, but it was enough to turn US opposition in favor of an attack.
 
This month, yet another US president – the fifth in a row – began bombing Iraq. He is also placing in US troops on the ground despite promising not to do so.
 
The second Iraq war in 2003 cost the US some two trillion dollars. According to estimates, more than one million deaths have occurred as a result of that war. Millions of tons of US bombs have fallen in Iraq almost steadily since 1991.
 
What have we accomplished? Where are we now, 24 years later? We are back where we started, at war in Iraq!
 
The US overthrew Saddam Hussein in the second Iraq war and put into place a puppet, Nouri al-Maliki. But after eight years, last week the US engineered a coup against Maliki to put in place yet another puppet. The US accused Maliki of misrule and divisiveness, but what really irritated the US government was his 2011 refusal to grant immunity to the thousands of US troops that Obama wanted to keep in the country.
 
Early this year, a radical Islamist group, ISIS, began taking over territory in Iraq, starting with Fallujah. The organization had been operating in Syria, strengthened by US support for the overthrow of the Syrian government. ISIS obtained a broad array of sophisticated US weapons in Syria, very often capturing them from other US-approved opposition groups. Some claim that lax screening criteria allowed some ISIS fighters to even participate in secret CIA training camps in Jordan and Turkey.
 
This month, ISIS became the target of a new US bombing campaign in Iraq. The pretext for the latest US attack was the plight of a religious minority in the Kurdish region currently under ISIS attack. The US government and media warned that up to 100,000 from this group were stranded on a mountain and could be slaughtered if the US did not intervene at once. Americans unfortunately once again fell for this propaganda and US bombs began to fall. Last week, however, it was determined that this 100,000 was actually only about 2,000 and many of them had been living on the mountain for years! They didn’t want to be rescued!
 
This is not to say that the plight of many of these people is not tragic, but why is it that the US government did not say a word when three out of four Christians were forced out of Iraq during the ten year US occupation? Why has the US said nothing about the Christians slaughtered by its allies in Syria? What about all the Palestinians killed in Gaza or the ethnic Russians killed in east Ukraine?
 
The humanitarian situation was cynically manipulated by the Obama administration —  and echoed by the US media — to provide a reason for the president to attack Iraq again. This time it was about yet another regime change, breaking Kurdistan away from Iraq and protection of the rich oil reserves there, and acceptance of a new US military presence on the ground in the country.
 
President Obama has started another war in Iraq and Congress is completely silent. No declaration, no authorization, not even a debate. After 24 years we are back where we started. Isn’t it about time to re-think this failed interventionist policy? Isn’t it time to stop trusting the government and its war propaganda? Isn’t it time to leave Iraq alone?




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Police Militarization In Ferguson, Missouri

By Walter Olson of Overlawyered

Police Militarization In Ferguson, Missouri

Why armored vehicles in a Midwestern inner suburb? Why would cops wear camouflage gear against a terrain patterned by convenience stores and beauty parlors? Why are the authorities in Ferguson, Mo. so given to quasi-martial crowd control methods (such as bans on walking on the street) and, per the reporting of Riverfront Times, the firing of tear gas at people in their own yards? (“‘This my property!’ he shouted, prompting police to fire a tear gas canister directly at his face.”) Why would someone identifying himself as an 82nd Airborne Army veteran, observing the Ferguson police scene, comment that “We rolled lighter than that in an actual warzone“?

As most readers have reason to know by now, the town of Ferguson, Mo. outside St. Louis, numbering around 21,000 residents, is the scene of an unfolding drama that will be cited for years to come as a what-not-to-do manual for police forces. After police shot and killed an unarmed black teenager on the street, then left his body on the pavement for four hours, rioters destroyed many local stores. Since then, reportedly, police have refused to disclose either the name of the cop involved or the autopsy results on young Michael Brown; have not managed to interview a key eyewitness even as he has told his story repeatedly on camera to the national press; have revealed that dashcams for police cars were in the city’s possession but never installed; have obtained restrictions on journalists, including on news-gathering overflights of the area; and more.

The dominant visual aspect of the story, however, has been the sight of overpowering police forces confronting unarmed protesters who are seen waving signs or just their hands.

If you’re new to the issue of police militarization, which Overlawyered has covered occasionally over the past few years, the key book is Radley Balko’s, discussed at this Cato forum:

 

Federal grants drive police militarization. In 2012, as I was able to establish in moments through an online search, St. Louis County (of which Ferguson is a part) got a Bearcat armored vehicle and other goodies this way. The practice can serve to dispose of military surplus (though I’m told the Bearcat is not military surplus, but typically purchased new — W.O.) and it sometimes wins the gratitude of local governments, even if they are too strapped for cash to afford more ordinary civic supplies (and even if they are soon destined to be surprised by the high cost of maintaining gear intended for overseas combat).

As to the costs, some of those are visible in Ferguson, Mo. this week.




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Chartporn: 18 Charts Exploring How The Ageing World Will Shape The Global Economy

Curious how the demographics of an aging world increasingly impact the economy, the spending, consumption and saving patterns, the earnings and wealth potential of various age groups, and the amount of pension funds available to satisfy an ever growing pie of future welfare recipients? Then the following 18 charts are for just you.




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China Contagion: Diamonds & Wine Plunge To 4-Year Lows

As classic Ferraris break records on the shores at Pebble Beach, the “poor” rich-man’s (and girl’s) best friend (fine-wine and diamonds) has tumbled to 4-year lows. On the heels of a crackdown on corruption in China, as Bloomberg notes, Fine Wine prices have plunged over 30% from July 2011 highs and the end of the “show-off” era in Xi’s new normal has sent 1 carat dimaond prices also down over 30% from their highs. It would appear the world’s wealthiest are done with such small increments of wealth as fine wines and diamonds, preferring $100 million apartments and $38 million ferraris.

 

 

As Bloomberg concludes,

Wang said China’s wealthy are being less ostentatious not only in their choice of ornaments. Bans or limits on official banquets and gift-giving have forced premium wine brands to “re-adjust their positioning and present more middle-end products with lower prices,” he said.

China last year passed France as the largest consumer of red wine, Les Echos reported in January. Under Xi’s anti-corruption campaign, the Central Commission for Discipline Inspection can detain indefinitely and investigate any of China’s roughly 87 million Communist Party members.




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Goldman On The Consequences Of Recent Geopolitical Events

The current US air strikes in Iraq are unlikely to have a significant impact on defense spending or oil prices, Goldman Sachs writes, unless the scale of the conflict changes considerably. Evidence from past US conflicts that were similar in scale also suggests little impact on confidence and at most mixed evidence of a flight-to-safety effect in financial markets. The exchange of sanctions with Russia – a relatively minor US trading partner – is also likely to have only a modest impact on the US economy. Of course, Goldman caveats, both situations are highly unpredictable; as they expect little reaction to recent events from Fed officials, who have generally not discussed conflicts of this magnitude unless accompanied by other economic concerns, such as a large rise in oil prices.

Via Goldman Sachs,

In today’s note, we answer a number of frequent questions about recent geopolitical developments, in particular the recent air strikes in Iraq and the latest rounds of sanctions between the US and Russia.

Q: How are the current air strikes in Iraq likely to affect defense spending?

A: On August 7, President Obama announced that he had had ordered the US military to conduct air strikes in Iraq against forces of the Islamic State (ISIS) and to distribute aid to refugees from the fighting, but said that he “will not allow the United States to be dragged into another war in Iraq” (New York Times). As currently planned, the action would be most similar to previous small-scale air operations, such as a 1998 action in Iraq or the 2011 conflict in Libya, in which costs have run from the hundreds of million to about $1bn, as shown in Exhibit 1. Relative to monthly Department of Defense outlays in excess of $40bn, such costs would not noticeably change the defense spending picture. In terms of timing, national accounts data on sub-categories of defense spending (in particular missiles) surrounding eleven previous conflicts of this magnitude (shown below in Exhibit 3) suggest that the impact is likely to appear in the initial or following quarter, if it is observable at all.

Military actions can of course be highly unpredictable, and past experience suggests that spending risks are slanted to the upside: as economist William Nordhaus has noted, the costs of past US conflicts were frequently underestimated in advance. Previous medium-scale conflicts, such as those in Bosnia and Kosovo, have seen costs in the $5-$10bn range, while larger wars–shown on the right-hand side of Exhibit 1–have seen dramatically higher costs. As a baseline, however, we do not expect the current air strikes to disrupt the recent downward trend in defense spending. Defense spending has fallen by about one-sixth since 2010Q3 in real terms, shrinking from 5.6% of GDP to 4.4% in 2014Q2.

Q: How large of an impact is the conflict likely to have on oil prices?

A: Oil prices rose to a nine-month high in the days of conflict over the Baiji oil refinery, Iraq’s largest. But the increase reversed in the following week without a clear reversal of the situation in Baiji, and most major developments in the conflict with ISIS have not been associated with large daily changes in oil prices, as shown in Exhibit 2. In contrast, larger previous conflicts in Iraq and elsewhere in the Middle East saw much larger swings in oil prices, often with large macroeconomic consequences. One reason for the limited reaction recently is that despite its advances in northern and western Iraq, ISIS remains far from the key southern oil fields and export terminals. A second reason is that shale has reduced the vulnerability of oil markets to supply shocks originating in the Middle East.

Q: Are other economic or market impacts likely?

A: The modest impact on defense spending suggests that to be economically important, small-scale conflicts would need to affect either confidence or financial conditions. To gauge the likely impact of the current conflict, we look back at eleven earlier US conflicts of similar magnitude. We find no obvious effect on measures of confidence following the start of US involvement, and only mixed evidence of a flight-to-safety effect in market data (Exhibit 3). One obvious limitation of this analysis is that, in contrast to recent events, most of the other events were not particularly surprising by the time US involvement began.

Q: How will recent sanctions affect US trade with Russia?

A: While early rounds of US sanctions targeted Russian individuals and associated companies, new sanctions imposed in July were more severe. The US and EU have imposed sanctions on firms in the financial, energy, arms, and shipping industries, and Russia has responded with import restrictions on agricultural products.

While sanctions are likely to have a larger impact on the Russian economy, the effect on the Euro area economy is likely to be more modest and the effect on the U.S. economy is likely to be smaller still. Russia is a relatively minor US trading partner, accounting for an average of just 1.1% of US goods imports and 0.7% of US goods exports over the last 12 months, of which about $1bn was US food exports (compared to total US exports of over $2 trillion). That said, Russia accounts for a considerably larger share of US trade than most other recent US sanctions targets, and some multi-nationals have already noted a hit to sales.

Q: Will Fed officials seek to counteract geopolitical risks?

A: Last week, European Central Bank President Mario Draghi noted that “geopolitical risks are heightened” (ECB press conference) and said that recent developments potentially pose risks to both growth and price developments in coming quarters. How likely are Fed officials to express similar concerns or act in response to these risks?

In the FOMC meetings immediately following the outbreak of the eleven conflicts shown in Exhibit 3, we find only two occasions on which the minutes, transcripts, or statements referenced the conflict. Following the start of US involvement in the Kosovo conflict, Governor Edward Kelley pointed to the possibility of “a very nasty war in the Balkans” as a reason for the Fed not to hike preemptively, and Chairman Alan Greenspan agreed (transcript). More recently, Chairman Ben Bernanke cited the conflict in Libya as a cause of higher energy prices in his press conference, and the FOMC statement at the time highlighted “concerns about global supplies of crude oil.” This suggests that current geopolitical risks are likely to influence monetary policy only if associated with a sustained spike in energy prices. The Fed’s Monetary Policy Report issued on July 15 noted that oil prices had risen beyond their recent range “only temporarily in reaction to events in Iraq,” and prices have since declined.

The limited response to smaller conflicts reflects their modest economic and financial impact, as well as the concern–noted in 1998 by former Cleveland Fed President Jerry Jordan–that while the Fed has “a long history of responding to … international events such as financial crises and military actions,” it has to “be very, very careful about how much of a response we make because the developments in question tend to be reversed. … We have had a number of episodes in the past where we responded to surprises and overstayed our response”

*  *  *

So summing it all up – don’t sweat it… geopolitics, schmeopolitics… (unless of course things escalate)




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Charting Poverty In Ferguson: Then And Now

While there have been many socio-economic ‘explanations and justifications’ for the recent events in Ferguson, many of which have exceeded the realm of the factual and have brazenly encroached on feelings, emotions, heartstrings, and various other of the media’s favorite manipulative mechanisms to achieve a desired outcome, the unpleasant reality is that much of what has transpired not only in the small 21,000-person St. Louis suburban community, but what is taking place across all of America has to do with a far simpler phenomenon: the rise of poverty and the destruction of America’s middle class.

Here are some facts:

Ferguson has been home to dramatic economic changes in recent years. The city’s unemployment rate rose from less than 5 percent in 2000 to over 13 percent in 2010-12. For those residents who were employed, inflation-adjusted average earnings fell by one-third. The number of households using federal Housing Choice Vouchers climbed from roughly 300 in 2000 to more than 800 by the end of the decade.

Amid these changes, poverty skyrocketed. Between 2000 and 2010-2012, Ferguson’s poor population doubled. By the end of that period, roughly one in four residents lived below the federal poverty line ($23,492 for a family of four in 2012), and 44 percent fell below twice that level.

These changes affected neighborhoods throughout Ferguson. At the start of the 2000s, the five census tracts that fall within Ferguson’s border registered poverty rates ranging between 4 and 16 percent. However, by 2008-2012 almost all of Ferguson’s neighborhoods had poverty rates at or above the 20 percent threshold at which the negative effects of concentrated poverty begin to emerge. (One Ferguson tract had a poverty rate of 13.1 percent in 2008-2012, while the remaining tracts fell between 19.8 and 33.3 percent.)

Below are charts of Ferguson poverty in 2000 and 2012:

Then: Census Tract-Level Poverty Rates in St. Louis County, 2000

 

and Now: Census Tract-Level Poverty Rates in St. Louis County, 2008-2012

The biggest concern, however, is that Ferguson is merely the canary in the coalmine. According to Brookings, within the nation’s 100 largest metro areas, the number of suburban neighborhoods where more than 20 percent of residents live below the federal poverty line more than doubled between 2000 and 2008-2012. Almost every major metro area saw suburban poverty not only grow during the 2000s but also become more concentrated in high-poverty neighborhoods. By 2008-2012, 38 percent of poor residents in the suburbs lived in neighborhoods with poverty rates of 20 percent or higher. For poor black residents in those communities, the figure was 53 percent.

Like Ferguson, many of these changing suburban communities are home to out-of-step power structures, where the leadership class, including the police force, does not reflect the rapid demographic changes that have reshaped these places.

 

Suburban areas with growing poverty are also frequently characterized by many small, fragmented municipalities; Ferguson is just one of 91 jurisdictions in St. Louis County. This often translates into inadequate resources and capacity to respond to growing needs and can complicate efforts to connect residents with economic opportunities that offer a path out of poverty.

 

And as concentrated poverty climbs in communities like Ferguson, they find themselves especially ill-equipped to deal with impacts such as poorer education and health outcomes, and higher crime rates. In an article for Salon, Brittney Cooper writes about the outpouring of anger from the community, “Violence is the effect, not the cause of the concentrated poverty that locks that many poor people up together with no conceivable way out and no productive way to channel their rage at having an existence that is adjacent to the American dream.”

We have warned all along that the Fed’s disastrous policies are splitting the nation in two, creating a tiny superclass of uber-wealthy oligrachs, and a vast majority of disgruntled, disenfranchised poor. It is the latter, whose life of squalor and poverty, has left them with little if anything to lose. Unless dramatic and rapid changes take place within the executive levels of the US corporato-banking oligrachy and its D.C. puppets, very soon “Ferguson-type” occurences, where participatnts could care less if the S&P 500 closed at a fresh all time record high,  will become a daily, and very deadly, occurence. All thanks to the Fed’s dual mandate of “maximum employment and stable inflation.”

* * *

And as a tangent, we must say that we find the fact that none other than former Fed chairman Ben Bernanke is now a Distinguished Fellow in Residence with the Economic Studies Program at the Brookings Institution, the source of most of the above data, to be ironic beyond words.




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Guest Post: If Not Trusting This Market Makes Me An Idiot, Then Call Me Crazy!

Submitted by Mark St. Cyr

If Not Trusting This Market Makes Me An Idiot: Then Call Me Crazy!

I was left slack-jawed as I listened to an interview on financial media between the host and guest. I have always enjoyed as well as respected the host even though many times I may totally disagree. However, as for the guest being interviewed, not only did I disagree: I lost quite a bit of respect for.

During the interview the questions were posed as to why people (investors et al) harbor these feelings of angst as to whether or not they should get in, get out, etc,, etc. The guest then went on to use data points, math, trend references, and any other metric available within a snake oil sales bag as to prove his point: Where people not believing in this market rally along with those who’ve not participated are, (and I quote) “Idiots.”

I have only one answer to that statement: What you’ve just demonstrated is exactly why people with more than half a brain aren’t buying your message: You are insulting their/our intelligence.

Over and over again data samples were used as to fortify the argument why it is not only perfectly logical to be at heights never before seen in the history of the financial markets, but we’re here based on the sound argument of earnings and profits. (right here I nearly lost my coffee!)

So good are these earnings it was noted, “The analysts had to revise their numbers up!” This was stated as ipso facto the financial markets are ready to power on even higher.

I’m sorry, but I’m a businessman, not a “Wall Street-er.” And I know first hand: Data points, trend-lines, projections, extrapolations, and more can be made to look and sound more in line with watching a fairytale presentation about unicorns and rainbows. Add to this from actual experience and knowledge most don’t (or wont) stand up to the first truly hard reality based objective analysis poked anywhere deeper than superficial presentations and analysis.

When asked to define who constitutes the “Idiots,” the reply came back (I’m paraphrasing but not by much if at all) “The people who are giving into their worst human instincts allowing their emotions to control their perspectives and attitudes their comments and their portfolio are ignoring the data.”

No, we are not ignoring the data. We understand the what, where, and how the data that you are providing as proof positive is being created and cherry picked.

What’s glaringly obvious to anyone with any common sense is that all the data as to back up the position by the so-called “smart crowd” that it isn’t the Federal Reserve’s intervention moving this market willfully omits: None of their historic data contains the Fed., its direct intervention of balance sheet purchasing within the markets of today! I mean seriously – we’re the “idiots?”

What’s being completely ignored via the data is that you believe we are idiots for knowing the difference. It would seem we as investors, business people, entrepreneurs, mom or pops are looked upon as just not being able to understand fairy tales and fables. The issue for Wall Street is many of us are a lot smarter than they give us credit for.

I know it’s only in a Wall Street brokers office where I’ll be shown reason after reason why I should invest my money in their newest (ridiculous) scheme. For again, only on Wall Street can the case be made (with a straight face): “This company is now selling dollar bills at 99 cents. However, with improved efficiencies, synergies, a workforce downsizing and more: they’ll be able to offer even more of a discount creating even more top line growth. Currently using GAAP accounting, sure they’re running at a loss, but via their new accounting firm and restructuring their Non-GAAP earning shows them making money hand over fist next quarter! This company is destined to be the hottest thing since ________(add last greatest bankruptcy here) Just look at this chart! But you need to take the long-term approach here, you need to ride the waves, so don’t look to pull out at the first sign of trouble, as a matter of fact: that’s when you should buy more!” And I’m the one who’s an idiot?

Getting back to why we’re crazy for not buying in (especially at the highest level the markets have ever been in the history of mankind) to this financially engineered market can be precisely correlated to the very people who are in charge of it!

Speeches and more pointing to “over confidence” have been coming straight from some of the very people who are themselves Federal Reserve Bankers. (You know, the very people in charge of providing all this juice!)

Many are both publicly stating or eluding too in no uncertain terms that it is the very people telling others such as myself we’re “idiots” that are acting, talking, suggesting, and making recommendations with total abandonment and self-directed obliviousness to the potential dangers within the markets themselves.

Let’s just highlight for example why people like myself who the so-called “smart crowd” refer to as “idiots” won’t invest in the markets as they currently are.

First: Any (and I mean any) so-called “financial expert” that can sit there with a straight face and use metrics from one time period while glossing over the glaringly obvious that most of those very same metrics have been completely adulterated, and are representative in name only of what they first reported.

If an “expert” wants to defend how today’s unemployment headline number is comparable in representation for what it was in all the charting periods they want to hang their hats on as proof positive employment is getting healthy – I have some ocean front property in Kentucky I would love to sell you. Or, better yet – for you to “invest” in.

Next: If the markets at present heights are representative of a “healthy” economy and not a product of the Fed.’s intervention (Aren’t financial markets supposedly a form and representative of economic health?): Then why in the world can’t the Federal Reserve not only end all the forms of QE currently in the markets, but end them early? (Oh the humanity!!!)

Why can’t the Fed. right now announce it is stopping all its programs, give dates as to when so the market knows, begin immediately to reduce its balance sheet, and raise interest rates say by some staggering amount of let’s say 1/2 of 1%? That would bring us up to (wait for it….) 1%!

Everyone knows the reason why: It can’t or the markets would freak out – and everyone on Wall Street knows it.

It’s in that statement above where the crux of all us “idiots” issues lie with the so-called “smart crowd.” If it can’t be done, that alone proves ipso facto that all the facts, figures, trend lines, charts, sentiment, blah, blah, blah that are thrown at us to muddy true objective analysis are worthless. Period.

We have never had this type of interventionist monetary policy actively participating within the capital markets. So much so that again I’ll state: Some of the very people responsible for it (at the Federal Reserve itself) are calling for the manning and lighting of the signal fires for caution.

There is nothing wrong with someone turning from a bearish posture to a bullish posture as far as market positioning for the reasons that: They’ve been wrong – for all the right reasons.

There are those times where educated and savvy investors and individuals can and will put money to work where they need to hold their nose. The difference is: if it all blows up, we’re adults, we understand, we knew the risks and can live with the consequences. We might not agree on everything, but it’s a pragmatic use of both money and investment guidance that’s truthful. e.g., Hugh Hendry’s flip in market position and candid explanation.

Again, I may not agree with everything he might espouse, but if everything blew up and went to zero, my door and checkbook would remain open if he were looking to start again. The people who seem to disparage my thinking as an “idiot” for not trusting their view? I’ve never taken such pride or felt as smart in being called an “idiot.”

It is absolutely unimaginable to me as one who has both ran businesses as well as started them to hear someone who’s income is derived from the very customers they need to refer to them as: “Idiots.”

In business that is absolutely the worst of all sins. Again to blatantly, unabashedly, disparage, and demean the very people needed to make both the markets stronger as well as grow their own business: I can’t put into words how utterly foolish and stupid it sounded.

If not listening, let alone putting my money to work in the hands of the likes of these people makes me an idiot? Than sign me up for the crazy train: For listening to this trite has become an exercise in futility. Or better yet – idiocy.




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Passport’s John Burbank: “The Next Crisis May Look Like A 1987 Crash”

John Burbank, whose Passport Capital has grown from $800K to $3.9 billion in 14 years (not your typical basement-dwelling, tinfoil blogger) was interviewed by Bloomberg TV on Friday, discussing his outlook on the US economy (bullish on San Francisco, bearish on the rest) which he defines as an “anomalous high change, low GDP” environment: “a lot of the change that is happening is degrading the GDP.”

And while he is generally bullish on US companies, he is “very bearish” about liquidity, driven by what he calls a “tightening environment” (even with the Fed and BOJ still injecting billions under ZIRP and the ECB expanding its LTRO for the second time in 3 years, having pushed ZIRP into NIRP) and bad liquidity in the market.

Where it gets interesting: asked what could happen during the next crisis, Burbank’s response: “it could fall fast”… “there is the possibility of a 1987 dislocation that does not reflect long-term economic stress but could reflect illiquidity in the market.”

Furthermore it is good to see that unlike a legion of clairvoyants who “know” with pinpoint accuracy just where the S&P will close the year, Burbank does not fall for the usual predictive BS: “It’s impossible to easily say: here what’s going to happen because we’re in a situation that nobody predicted and we’ve never confronted before…. The Fed’s Fisher will be leading a tightening effort that Yellen may not have wanted.” Asked if that could be the catalyst for a 1987-style correction, Burbank is laconic: “Could be. Illiquidity is a primary driver; it works both ways: can drive prices up and drive prices down.”

His conclusion: “When there is a signal to sell, there won’t be a lot of buying.” That is assuming selling hasn’t been made illegal by then or, as the recent bankruptcy of Banco Espirito Santo showed, if and when the time to sell comes, all sellable stocks are suddenly halted indefinitely while a committee of conflicted banks decides behind the scenes that no event of default has actually occurred.

Full interview below:




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