Tag: news

The biggest problem facing investors today is that “the rules” of the game change almost every year.

 

What I mean is that any basic rule investors previously took for granted can and often is thrown out the window by the regulators when they deem it prescient. Indeed, in the last five years we’ve seen:

 

1)   Accounting standards at financial institutions suspended.

2)   Capital requirements for banks (Basel III) postponed multiple times.

3)   Rampant fraud go unpunished.

4)   Obvious insider trading amongst political officials and banking insiders.

5)   Central bankers openly admit that they lie to investors.

 

Why are so many laws and rules being thrown out?

 

The Powers That Be are committed to propping the system up by any means possible.

 

Consider Spain.

 

Spain’s banking system, by any reasonable analysis, is totally bankrupt.

 

The reason for this is that Spanish banks are all packed to the brim with garbage assets (mortgage loans and Spanish Government bonds… both of which aren’t worth the paper they’re printed on).

 

Consider the story of Bankia.

 

Bankia was formed by merging seven bankrupt regional Spanish banks in 2010.

 

The new bank was funded by Spain’s Government rescue fund… which received “preference shares” in return for over €4 billion in funding for the bank (all provided by taxpayers of course).

 

These preference shares were shares that A) yielded 7.75% and B) would get paid before ordinary investors if Bankia failed again. So right away, the Spanish Government was taking taxpayer money to give itself preferential treatment over ordinary investors (including said taxpayers).

 

Indeed, those investors who owned shares in the seven banks that merged to form Bankia lost their shirts. They were wiped out and lost everything when the new bank was created.

 

Bankia was taken public in 2011. Spanish investment bankers convinced the Spanish public that the bank was a fantastic investment. Over 98% of the shares were sold to Spanish investors.

 

One year later, Bankia was bankrupt again, and required the single largest bailout in Spain’s history: €19 billion. Spain took over the bank (again) and Bankia shares were frozen on the market (meaning you couldn’t sell them if you wanted to).

 

When the bailout took place, Bankia shareholders were all but wiped out and forced to take huge losses as part of the deal. The vast majority of these were individual investors, NOT Wall Street or its European equivalent (Bankia currently faces a lawsuit for over 140,000 claims of mis-selling shares).

 

So that’s two wipeouts in as many years.

 

The bank was taken public a second time in May 2013. Once again Bankia shares promptly collapsed, losing 80% of their value in a matter of days. And once again, it was ordinary investors who got destroyed.

 

Indeed, things were so awful that a police officer stabbed a Bankia banker who sold him over €300,000 worth of shares (the banker had convinced him it was a great investment).

 

Which brings us to today.

 

Bankia remains completely bankrupt. But its executives and the Spanish Government continue to claim that things are improving and that the bank is on the up and up. Indeed, just a few weeks ago, the Wall Street Journal wrote an article titled “Investors Show Interest in Bankia.”

 

The story featured a quote from Spain’s Finance Minister that, “… it is logical. The perception of Spain has improved and Banki has improved a lot.”

 

Bear in mind, this is a bank that has wiped out investors THREE times in the last THREE YEARS. So that’s three different rounds of individual investors being told that Bankia was a great investment and losing everything.

 

Every single one of these wipeouts was preceded by both bankers and Spanish Government officials claiming that “everything had been fixed” and that Bankia was a success story.

 

And now the Spanish Government is trying to convince them to line up for a fourth round.

 

This kind of fraud and lawlessness is unbelievable to me. But it is how the world works today. Those who have power will do anything they can to retain it. This includes, lying, cheating, and stealing.

 

And while certain items relating to this story are unique, the morals to Bankia’s tale can be broadly applied across the board to the economy/ financial today.

 

Those morals are:

 

1)   Those in charge of regulating the system will lie, cheat and steal rather than be honest to those who they are meant to protect (individual investors and the public)

2)   Any financial problem that surfaces will be dealt with via fraud or lies rather simply allowing those who screwed up to be fired or go to jail.

3)   When the inevitable collapse finally does hit, it will be individual investors and the general public who get screwed (not bank executives or politicians).

 

If I were to be blunt, the investment world has gone insane. If one were rational, one would think that the entire Bankia episode would have resulted in investors fleeing Spain en masse.

 

It hasn’t. In fact, Spain’s bonds now have lower yields than Treasuries indicating that Spain is fiscally in a better position than the US and less likely to default (incredible given that Spain cannot print money to repay bondholders while the US can).

 

This concludes this article. If you’re looking for the means of protecting your portfolio from the coming collapse, you can pick up a FREE investment report titled Protect Your Portfolio at http://ift.tt/QHtIFM

 

This report outlines a number of strategies you can implement to prepare yourself and your loved ones from the coming market carnage.

 

Best Regards

 

Phoenix Capital Research

 

via Zero Hedge http://ift.tt/1nuRAsV Phoenix Capital Research

Now that the Iraq proxy war scene is set, and as we reported on Friday, Prime Minister Maliki has become a pawn in yet another middle-east war between the west and the petrodollar (with both Saudi Arabia and the US making it clear Maliki has to go) and Russia (with Putin expressing his full support for the prime minister), events will likely unfold at an even faster pace. Sure enough, even this otherwise quiet weekend, in which the world is supposed to put wars on the backburner and focus on the world cup, is chock-full of Iraq news upates.

Let’s begin.

Perhaps the leading update out of the civil war-torn country is that ISIS militants, whose ultimate goal is to create a caliphate that encompasses Syria, Jordan and Iraq are well on their way to achieving what in Europe would be called a “customs union”, after they captured two border crossings, one with Jordan and another with Syria, as they press on with their offensive -largely unobstructed – in one of Iraq’s most restive regions.

The officials said the militants on Sunday captured the Turaibil crossing with Jordan and the al-Walid crossing with Syria after government forces there pulled out.

 

The officials spoke on condition of anonymity because they were not authorized to speak to the media.

 

The capture of the two follows the fall since Friday of the towns of Qaim, Rawah, Anah and Rutba, all of which are in the Sunni Anbar province where militants of the Islamic State of Iraq and the Levant have since January controlled the city of Fallujah and parts of the provincial capital Ramadi.

As AP notes, with the capture of another town in Iraq’s western Anbar province, the fourth to fall in two days, it appears that the ISIS Baghdad offensive has for now been put on hold, and instead the jihadists are focusing their efforts on a major offensive in the western provinces to cement their control and seamless crossing to and from Syria and Jordan.

The following latest maps from the Institute for the Study of War map out the most recent clashes.

 

This follows the deployment on Friday of volunteer fighters, a mix of new recruits and Shi’a militias, to multiple locations including Tal Afar and Taji. Asa  reminder the cities of Tal Afar and Muqdadiyah, as well as the Baiji refinery town, remain the key front lines against the advance of ISIS from the north. As of late Friday, the ISF had not launched a counter-offensive against ISIS.

 

But why is Iraq not taking advantage of the slowdown in the ISIS offensive and seeking halt the military momentum? Simple: its army is running out of supplies!

As ABC reports, the Iraqi military ran out of Hellfire missiles six days ago, and though the U.S. is rushing more missiles into the country, Iraq has only two modified Cessna aircraft to launch them in their battle against the radical Islamic militia ISIS.

ISIS has damaged 28 tanks and shot down three helicopters, a significant percentage of the government force, and the militia killed an entire Iraqi Security Force brigade in the last couple of days at the border with Syria, which ISIS now controls.

The losses have left the Iraqi military with no offensive capability, and no real air force.

Perhaps this is why, in order to avoid a loss of confidence in the country’s offensive (and defensive) weaponry, the Iraq government released the following video footage on Sunday, which reportedly shows the bombing of suspected ISIS miitant hideouts. In a world in which YouTube has become the biggest propaganda tool, we wouldn’t be too surprised if this footage was doctored by the NSA or merely taken from the archives.

Meanwhile, ISIS is taking advantage of its involuntary restocking by the US army, after its plunder of an unknown number of US Black Hawk helicopters and Humvees (the topic of choice in ISIS’ trolling of Michelle Obama as reported yesterday) during its Mosul offensive several weeks ago.

That wraps up the military deployments (or lack thereof) in the past 48 hours.

Parallel with the fighting, perhaps an even more important development were the statements by the regional religious leaders, those of both Iran and Iraq.

First, it was in Iraq where a Shiite Muslim cleric threatened to attack U.S. military advisers when they arrive in the country to help Iraq’s government fight Sunni extremists.

As The Hill reported, in a sermon on Friday, Nassir al-Saedi, a loyalist to Shiite leader Muqtada al-Sadr, warned of an attack against the U.S., whom he called “the occupier,” Sky News reported.

“We will be ready for you if you are back,” said al-Saedi.

The warning comes days after President Obama announced he was sending 300 U.S. military advisers to Iraq to bolster government security forces and help combat Sunni militant members of the Islamic State in Iraq and Syria (ISIS).

The British Telegraph also reported that tens of thousands of heavily armed fighters from al-Sadr’s militia, the Mahdi army, paraded through the streets of Baghdad Saturday.

The Shiite militia said it does not need or want help from the U.S.

So much for a friendly third welcome of the US “liberators.”

“If the Americans are thinking about coming back here, all of we Iraqis will become time bombs – we will eat them alive,” said Adel Jabr Albawi, who marched in Saturday’s parade, according to the Telegraph. “We can deal with Isis ourselves.”

The threats from al-Sadr supporters could potentially open a second front for U.S. forces heading to Iraq.

But it was not just Iraq clerics who raged against a return of the US. Also joining the anti-US chorus was – perhaps surprisingy all things considered- Iran‘s own top leader Ayatollah Ali Khamenei who has vocally come out against US intervention in neighboring Iraq, where Islamic extremists and Sunni militants opposed to Tehran have seized a number of towns and cities.

Iraqis can overcome this conflict on their own.We’re totally agnst US& others to interfere in #Iraq’s internal affairs& don’t approve of it.

— Khamenei.ir (@khamenei_ir) June 22, 2014

“We strongly oppose the intervention of the U.S. and others in the domestic affairs of Iraq,” Khamenei was quoted as saying by the IRNA state news agency on Sunday, in his first reaction to the crisis.

“The main dispute in Iraq is between those who want Iraq to join the U.S. camp and those who seek an independent Iraq,” said Khamenei, who has the final say over government policies. “The U.S. aims to bring its own blind followers to power.”

Well, he is right after all.

As a reminder, Shiite Iran supports the Shiite-led government in Baghdad, and has said it would consider any request for military aid.

Which covers the religious influence of both Iran and Iraq. But what about that other staple in everything “middle-east”- Israel? Well, they too made an appearance this weekend when it was revealed that the surprise winner from the ISIS surge, the Kurdish Regional Government, which suddenly finds itself as a major oil producer and exporter, has found its first buyer of oil. None other than Israel.

According to the WSJ, oil piped from Iraqi Kurdistan has been successfully delivered directly by the region’s semiautonomous government for the first time, despite opposition from the U.S. and the Iraqi central government. The oil comes from a new pipeline built to bypass Baghdad’s pipeline, which will help maintain Iraqi Kurdistan’s financial independence.

The Kurdish Regional Government said late Friday that one million barrels of its oil piped through the Turkish port of Ceyhan “was safely delivered to the buyers.” The KRG declined to say who the buyers were.

It didn’t take long to discover just who the buyers were thought: “The oil is currently being unloaded at an Israeli port, according to officials at the terminal.”

The U.S. State Department confirmed the delivery, criticizing the semiautonomous region’s unilateral sale without Baghdad’s approval and warning buyers of its oil. “The export or sale of oil absent the appropriate approval of the federal Iraqi government exposes those involved to potentially serious legal risks,” a State Department official told The Wall Street Journal.

But while the US boycotted the Kurdish sale of oil, it had surprisinglylittle to say about the Israel purchase of said product.

Iraq already boycotts Israel, and won’t sell oil to the Jewish state, so Israel is not overly concerned with Iraqi threats of sanctions, unlike other countries who have oil contracts with Iraq.

* * *

Finally, president Obama, in an interview with CBS’ “Face the Nation” airing Sunday, warned that the al-Qaida-inspired militants in Iraq could grow in power and destabilize the region. He said Washington must remain “vigilant” but would not “play whack-a-mole and send US troops occupying various countries wherever these organizations pop up.” Why not, one wonders? What has changed from US’ “whack-a-mole” policies, all “beyond successful” to date?

And that concludes the weekend Iraq event roundup.

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

There are several events in the week ahead, in the addition to the World Cup, that will attract market attention. These events will take place within a general consensus of the outlook for monetary policy.

 

In Q3, the Federal Reserve continues to taper at its measured pace. The ECB will monitor the implementation of its new initiative as it prepares for both the targeted LTROs (TLTROs) starting in September, and for the possibility (eventuality?) of purchases asset-backed securities. The BOJ will continue to purchase about $70 bln of assets each month and will closely watch the impact of the recent retail sales tax increase.

 

The BOE’s forward guidance has turned more hawkish, and there is increased speculation of a rate hike toward the end of the year. Sweden’s Riksbank is expected to cut rates next month while Norway’s Norges Bank has opened the door to a rate cut as well. Within the dollar-bloc, New Zealand is in the middle of a rate hike cycle. The Reserve Bank of Australia is on hold with a record low cash rate, but another rate cut cannot be ruled out. The Canadian monetary stance is neutral, especially underscore by the uptick in both retail sales and inflation reported at the end of last week.

 

Emerging market economies are too diverse to make generalizations about the monetary stance. China has selectively cut required reserve ratios. More targeted move seems likely even as the economic growth stabilizes. The HSBC flash manufacturing PMI, to be released on Monday in Beijing, is expected to tick up to 49.7 from 49.4, which would be the highest of the year. The index ended Q1 at 48.0.

 

Three emerging market countries are expected to cut rates this week. Turkey is likely to cut the one-week repo rate by 50 bp to 9.0%. Given its elevated inflation (9.6%-9.7%% headline and core), the risk is that rate cuts are seen as politically motivated and a negative for the lira. For the fourth consecutive month, Hungary is expected to cut its base rate by ten bp to 2.3%. Lastly, the Bloomberg consensus is for no change in the Israeli base rate now at 75 bp. However, there is some speculation that it may in fact deliver a 25 bp cut. The US dollar does look to be carving out a base around ILS2.44.

 

Japan: Japanese consumers are expected to have returned to the shops in May after staying home in April as the sales tax hike took effect. Retail sales are expected to have risen by around 2.8%, and the year-over-year contraction in overall household spending is expected to ease to around -2.1% from -4.6%. Although there has not been much data, and the early signs are ambiguous, there does seem to some confidence (bravado?) on the part of policy makers that the economic recovery will quickly resume. 

 

Separately, Japan also reports May national CPI figures. The core rate, which excludes fresh food, and is officially preferred (targeted) measure, is expected to increase to 3.4% from 3.2% in April, due to higher energy prices. This core rate, excluding the sales tax impact, is expected to be stable around 1.4%. The BOJ’s target is 2%.

 

Toward the end of the week, the government is likely to announce more initiatives under the third arrow of Abenomics, structural reforms. A key component will be a corporate tax cut. The tax schedule (as opposed to the effective tax rate) is 36% in Japan, the second highest, behind the US, among OCED countries. Given the large savings accumulated already in the Japanese corporate sector, we are not convinced that a corporate tax cut will boost investment or growth in Japan. Moreover, it is likely to announce a plan to cut the corporate tax without detailing how it will be funded on a permanent basis, which is needed if the government is going to stick to its fiscal goals.

 

More promising are reports that suggest the Abe government is considering cutting tax benefits the discourages spouses from working. However, simply reducing the benefit may increase family hardships unless accompanied by other social changes, like better and more accessible childcare services.

 

UK: The increase in house prices is regarded as the potential source of the greatest financial risk facing the UK. When it delivers its Financial Stability Report, the FPC (Financial Policy Committee of the Bank of England) is expected to recommend macro-prudential measures to slow the housing market down. 

 

Among the range of recommendations that have been a source of speculation, are curtailing the Help-to-Buy program and tighten requirement regarding loan-to-value and loan-to income metrics. Given the institutional and foreign participation in the UK property market the impact of such macro-prudential steps will impact the middle class domestic demand more than other market segments.

 

Euro zone: There are two economic data points that will be closely watched by investors. The first is the flash PMI for June. Gains in the service sector are expected to more than compensate for softness int he manufacturing sector and allow the composite to post small gains. Such readings are broadly consistent with 0.3-0.4% growth in Q2.

 

The second are the preliminary inflation reports from Spain and Germany at the end of the week. The Bloomberg consensus expects Spain’s year-over-year reading to ease to 0.1% from 0.2%. It has the German harmonized measure to rise 0.2% on the month for a 0.7% year-over-year gain. In May, it fell 0.3% and rose 0.6% on a year-over-year basis. The risks seem to be on the downside. Although no policy changes should be expected in the coming months, until the impact of the negative deposit rate and TLTROs are understood, a worsening of the disinflation can only strengthen ideas that the ECB will have to resort to an asset purchase program.

 

EU Summit: The heads of state meet on Thursday and Friday. There are two issues: economics and politics Fiscal and structural reform plans will be reviewed. Here, France, Spain and Italy, in what appears to be more concert of interests rather than a coordinated position (which is why it is difficult to conceptualize this as a bloc), are pressing, in different ways, for a more liberal interpretation of the fiscal mandates. Germany may be able to make some concessions on the condition that the Stability and Growth Pact is itself not amended.

 

The high drama may be seen in the political agenda. The immediate issue is the European Commission President. The operative treaty requires the heads of state to take into account the parliamentary election results in naming the new president. The two main blocs in the European Parliament chose lead candidate to represent them. The center-right (EPP) won a plurality, but not a majority of votes. About one if four votes were cast for parties that are anti-EU. Juncker, who was the EPP’s candidate, due to his extensive experience in European politics, identified with the status quo. Moreover, even though Juncker was a head of state for many years, he seen as a federalist, who seeks greater authority for the European Union.

 

Juncker may not be very well liked, but the UK’s prerogative and obstructionism is less well liked. As more decisions are decided on a qualified majority basis rather than unanimity, the value of the UK’s veto is eroded. In the past, it has effectively vetoed EC presidential candidates. UK Prime Minister Cameron’s public objections may be a part of a principled position (against federalism), but seems poor politics and exposure the UK’s isolation. If Cameron had been more adept at negotiating and trading horses, as the case, many be, he might have been able to have greater influence.

 

Recall that Cameron took the Tories out of the EPP coalition, in which Merkel’s CDU is a key participant, and recently formed an alliance with the AfP (Germany’s anti-EU party). There are three state elections in Germany in Q3 and the AfP, which did not meet the threshold for participation in the national parliament, will likely win some seats in these state elections. The AfP campaigns to the right of Merkel and may take votes from the CDU.

 

Cameron faces his own challenge in the form of the UKIP, which did well in the recent local and EU Parliament elections. Cameron has promised a referendum on the EU if he is reelected next year. There is a not very subtle threat: If there are not concessions forthcoming for the UK, it will withdraw from the EU, for which is accounts for a third of the budget, and this includes the EC President.

 

Yet, a recent YouGov poll (conducted for The Sun) found that by a 44-36 margin, British people wanted to remain in the EU. This was the widest margin since the survey began in September 2010. This dovetails with other reports that suggested that many who voted for the UKIP also want the UK to remain in the EU. Ironically, the kind of federalism Cameron eschews in Europe, he wants Scotland to accept within the UK.

 

US: The first quarter was more dismal than anyone anticipated. The recently reported decline in health care spending means that GDP is likely to be revised to something on the magnitude of -2.0% (annualized). The rebound in Q2 is just as impressive and is where the real focus is now, especially given that economists, including at the IMF and Federal Reserve have already adjusted their 2014 forecasts to reflect the horrible Q1 results.

 

The housing market remains a disappointment, but weakness in capital expenditures in Q1 appears to have been erased in Q2. That said, the headline durable goods orders will likely be restrained by fewer aircraft orders, the underlying details should bolster confidence of a capex rebound.

 

The US also reports personal income and consumption data for May. Income growth has been strikingly stable. The 6, 12, and 24-month average is 0.3%. There has been a slight increase recently and a 0.4% increase in May will keep the 3-month average at 0.4%. 

 

Consumption should rebound smartly from that fluke 0.1% decline in April (which followed a 1.0% gain in March). Household consumption has been trending slightly higher. The 24-month average is 0.3%. Over the past 6 and 12-months, it has average 0.4% and over the past 3-months 0.5%. What is remarkable is that this consumption has occurred with little increase in revolving debt (credit cards).

 

With the personal consumption data, the Fed’s preferred inflation measure, the core PCE deflator will also be reported. It is expected to have risen to 1.5% in May from 1.4% in April. Recall that last week, the government reported that core CPI rose from 1.8% to 2.0% in May. The discrepancy between the two will be widely discussed in the coming days. Suffice for our purposes here to note that the PCE measure covers a wider range of goods and services. The weighting of its components comes from businesses while household surveys shape the CPI weightings.

via Zero Hedge http://ift.tt/1m12KEG Marc To Market

Orighinally posted at Economic Noise blog,

A country dies slowly.

Those living during the decline of Rome were likely unaware that anything was happening. The decline took over a couple of hundred years. Anyone living during the decline only saw a small part of what was happening and likely never noticed it as anything other than ordinary.

Countries don’t have genetically determined life spans. Nor do they die quickly, unless the cataclysm of some great war does them in. Even in such extreme cases, there are usually warning signs, which are more obvious in hindsight than at the time.

Few citizens of a dying nation recognize the signs. Most are too busy trying to live their lives, sometimes not an easy task.  If death occupies their mind, it is with respect to themselves, a relative or a friend. Most cannot conceive of the death of a nation.

A Country Dies Slowly First

For those interested, signs or symptoms precede death for a country often as they do for a person. There is a pattern that involves the following:

1. The Economy

Economically, people become poorer. It becomes harder to feed a family. Economic growth stalls and then reverses. Work opportunities decline. Disincentives to work rise as government tries to ease the burden on the unemployed and lower skilled. These efforts require more revenues which means higher taxes or debt financing. Disincentives to create jobs are magnified by attempts to address the problem. Higher taxes and other burdens are imposed on the productive making work less attractive.

The response should not be surprising. Capital flees first. It goes to areas where adequate returns are still available. Jobs are created but not in the host country. Finally a “brain drain” begins. Talented people leave the country for places that offer greater opportunity. In the case of the US, to escape US taxes these people must renounce their citizenship. Citizenship renouncements are currently at the highest levels in the history.

The flight of capital, both real and human, further  lowers standards of living. Signs of stagnation become more apparent. They may begin as seemingly benign as roads which have too many potholes. “For rent” signs are seen more frequently. Classified job ads  decrease. “Going out of Business” sales are no longer marketing gimmicks.

Initially, people dig into their savings or begin to borrow in order to retain their standard of living. Most believe it is a temporary situation. Eventually bankruptcies increase. Strip or full malls close. Large areas like Detroit become close to uninhabitable.

These conditions characterize the beginnings of the decline. As the decline continues, things get much worse.

2. The State

The State is threatened by a decline. Generally it moves into full pretend mode. Three behavioral traits characterize its behavior. The State must convince citizens:

1. things are not as bad as they seem.
2. the State is not responsible for the situation.
3.  the State must do more (grow bigger) in order to solve the problems.

Statistics issued by the State are fudged to convey a false image of well-being. Government spending soars in an effort to juice reported economic activity. Much of the spending is unproductive in terms of providing things that would have otherwise been bought. It is also counterproductive to a proper functioning economy as price discovery is disrupted and consumer and investment decisions are based on false signals.

Incentives are  provided to encourage people to live beyond their means.  Debt appears nearly free and readily available. Bubbles occur and then burst. New bubbles are necessary to replace old bubbles. People and businesses are encouraged to make imprudent decisions, all in the attempt to make the economy appear better.

The State has one objective and that is to remain in power. Laws and regulations  multiply at ever faster rates. Tyrannical rules and legislation are passed under the pretense of protecting the people against some threat. In reality, these laws are passed to protect the leaders against the public when they finally understand what has been done to them.

“Bread and circuses” increase to divert peoples attention from the developing problems. Dependency increases reflecting an attempt to placate the masses. A “wag the dog” war or crisis is often used as a means to rally the public against some phony enemy.

3. Society

Society becomes coarsens as this process progresses. People increasingly are unable to provide properly for their families. Some desperately turn to unethical behavior, even criminal acts.   Common decency declines.

The regulations imposed from above reduce the sphere of voluntary interactions between people. The government decides more and more what you must do, when and how you must do it. What you can say comes under attack. Finally how you must live is increasingly determined.

Free markets are slowly replaced by a command and control ordering of society. Coercion displaces freedom as the coordinating force for society. People increasingly do what they must rather than what they want.

Interest groups, i.e. politically preferred constituents, created in good times don’t demand less when there is less available. The inability to meet their demands creates political strife and eventually civil problems. Honoring their demands divides society even more. Not honoring demands may produce rioting and civil unrest.

Societybecomes increasingly divided in terms of the “makers” and the “takers.”  As the takers grow in numbers, the makers shrink in numbers. Soon the parasites overwhelm the productive. Society collapses at that point.

Are The People Aware?

The United States, the once beacon of freedom and wealth, shows advanced deterioration  in all three areas above. The rate of deterioration is accelerating. To paraphrase Ernest Hemingway’s response to a bankruptcy question:

How did your country die? Two ways. Gradually, then suddenly.

Do people understand what is happening to them and their country? I suspect they are not aware of the full consequences. Most people are not trained to think in these terms, nor should they be. For most of us, it is a chore to get through each day. That is true of the dullards and the brilliant, for most of us end up at levels that tax our abilities.

People sense there is something wrong even though they may be unable to identify what that something might be. Many probably believe that whatever is happening is temporary, sort of like an economic slowdown that reverts back to normal. For them, it is tighten the belt until the good times return.

The results from a recent Gallup poll are interesting and illustrate the increasing dissatisfaction:

Numerous observations could be made regarding many of these institutions. All have decreased in favorability. Gallup was definitive in this regard:

The current 7% of Americans who place confidence in Congress is the lowest of the 17 institutions Gallup measured this year, and is the lowest Gallup has ever found for any of these institutions. The dearth of public confidence in their elected leaders on Capitol Hill is yet another sign of the challenges that could face incumbents in 2014′s midterm elections — as well as more broadly a challenge to the broad underpinnings of the nation’s representative democratic system.

The  poll is not a direct measure of the health of the nation. However, it provides a very negative composite of public satisfaction.  People know they are unhappy even if they don’t know the cause of their unhappiness.

This confusion and distrust always  precedes the death of a nation.

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

We are sure this will end well. Just as China took the ‘if we build it (on free credit), they will come’ growth model to extremes in real estate; it appears their ambitions in nuclear energy production are just as grandiose. However, just as they lost control of the real estate market, Bloomberg reports China is moving quickly to become the first country to operate the world’s most powerful atomic reactor even as France’s nuclear regulator says communication and cooperation on safety measures with its Chinese counterparts are lacking. France has a lot riding on a smooth roll out of China’s European Pressurized Reactors (EPRs) as it is home to Areva, which developed the next-gen reactor, and utility EdF, which oversees the project. French regulators, speaking in parliament, warned, “the Chinese safety authorities lack means. They are overwhelmed.”

 

 

Not what you want to hear as the nation embarks on the biggest nuclear energy facility creation ever, “if too many nuclear power projects are started too quickly, it could jeopardize the healthy, long-term development of nuclear power…” and the Chinese (just ask the Japanese).

 

As Bloomberg reports, China is moving quickly to become the first country to operate the world’s most powerful atomic reactor even as France’s nuclear regulator says communication and cooperation on safety measures with its Chinese counterparts are lacking.

Chinese builders are entering the final construction stages for two state-of-the-art European Pressurized Reactors. Each will produce about twice as much electricity as the average reactor worldwide.

The French are in charge… kinda…

France has a lot riding on a smooth roll out of China’s EPRs. The country is home to Areva SA (AREVA), which developed the next-generation reactor, and utility Electricite de France SA, which oversees the project. The two companies, controlled by the French state, need a safe, trouble-free debut in China to ensure a future for their biggest new product in a generation. And French authorities have not hidden their concerns.

And are not happy…

“Unfortunately, collaboration isn’t at a level we would wish it to be” with China, Jamet said. “One of the explanations for the difficulties in our relations is that the Chinese safety authorities lack means. They are overwhelmed.”

 

…

 

“the state of conservation” of large components like pumps and steam generators at Taishan “was not at an adequate level” and was “far” from the standards of the two other EPR plants,

China is rushing…

Some 28 reactors of various models are currently under construction in China. That’s more building than any other nation on the planet, and the country hasn’t reported a serious nuclear accident in the 22 years it has operated nuclear plants for commercial use.

 

“If the current momentum of development continues, if too many nuclear power projects are started too quickly, it could jeopardize the healthy, long-term development of nuclear power,” Fan Bi, a deputy director at the State Council Research Office, wrote in an article for Outlook Magazine, published by the official Xinhua news agency, two months before the Fukushima disaster.

 

China General, the country’s biggest atomic operator is forging ahead with EDF. It will begin critical tests on the most advanced of the 1,650-megawatt Taishan EPRs before start-up in 2015

But the Chinese nuclear regulator is a “total black box”

The Chinese regulator’s website contains relatively little information about safety issues. The most recent post on Taishan is a 2009 report on the start of cement work at the reactor referring to “problems left over from early-stage construction.” It said all current work was up to standards, without elaborating. In total just nine posts on the website mention Taishan, and many are blank apart from the title.

Critics of China’s nuclear safety regime, including Albert Lai, chairman of The Professional Commons, a Hong Kong think tank, says that lack of information risks eroding confidence in safety controls in what’s set to be a 14-fold increase of atomic capacity by 2030.

“The workings of China’s atomic safety authority are a ‘‘total black box,’’ said Lai. ‘‘China has no transparency whatsoever.”

And even the Chinese are nervous…

And in a rare public comment about safety concerns, China’s own State Council Research Office three years ago warned that the development of the country’s power plants may be accelerating too quickly.

We are sure this will all end well…

via Zero Hedge http://ift.tt/1m0OkEm Tyler Durden

Submitted by Mike Krieger of Liberty Blitzkrieg blog,

One of my favorite lines about the current oligarch theft continuing to occur throughout the world is courtesy of the “Artist Taxi Driver,” who likes to state:

“This is not a recession its a robbery.”

Truer words were never said, but this theft goes back a lot further than the latest economic catastrophe. As we all know by now, real median wages haven’t increased in the U.S. for the past 45 years, while at the same time, so-called economic growth according to traditional metrics has exploded higher. As yesterday’s article from the Guardian below demonstrates, this is not just an American problem. It is pervasive throughout the Western world.

So what happened? I think it’s best to put things in terms of Middle Age feudalism, since the majority of the Western world has indeed entered a modern type neo-serfdom. Essentially, think about this in terms of a king in 1085 who just doubled the land under his control. At the same time, his serfs are likely still tilling the same plots, and in order to consolidate his holdings, the king might demand increased tribute from his peasants. So the economy of the kingdom has doubled, but the serf is worse off than before. This is more or less what has happened to the West over the past several decades.

So what has allowed this tragedy to happen in modern times. My answer is clear: Financialization. It’s no coincidence that median real wages stopped increasing at the exact same time as Richard Nixon defaulted on the gold standard in 1971. This is not to say I think the “gold standard” is the answer. I don’t. Yet, it is important to understand that rampant fiat money manipulation by the Fed and its owners on Wall Street is at the very core of everything that has gone wrong.

Now, from the Guardian:

The number of British households falling below minimum living standards has more than doubled in the past 30 years, despite the size of the economy increasing twofold, a study on poverty and deprivation in the UK claims .

 

According to the study, 33% of households endure below-par living standards – defined as going without three or more “basic necessities of life”, such as being able to adequately feed and clothe themselves and their children, and to heat and insure their homes. In the early 1980s, the comparable figure was 14%.

 

The research, billed as the most detailed study ever of poverty in the UK, claims that almost 18 million Britons live in inadequate housing conditions and that 12 million are too poor to take part in all the basic social activities – such as entertaining friends or attending all the family occasions they would wish to. It suggests that one in three people cannot afford to heat their homes properly, while 4 million adults and children are not able to eat healthily.

 

Their findings will be seized on by opponents of the coalition, who argue that good news about the economy does not mean living standards are improving for most people. This will be a key Labour message in the run-up to next year’s election.

 

Oh right, the Labour Party. The folks who brought you war criminal, banker puppet and man-child Tony Blair. Why no mention of the UKIP I wonder…

 

Other figures being published include the claims that 5.5 million adults go without essential clothing; that 2.5 million children live in damp homes; that 1.5 million children live in households that cannot afford to heat them; that one in four adults have incomes below what they themselves consider is needed to avoid poverty, and that more than one in five adults have to borrow to pay for day-to-day needs.

 

Led by the University of Bristol and funded by the Economic and Social Research Council, the PSE project’s research will be presented to the conference and published in full this week. Gordon said he had been shocked by some of the findings. “In the early 1980s we assumed life was going to get better. For many it has, for many it hasn’t.”

Serfs up!

Full article here.

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