Tag: news

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via Zero Hedge http://ift.tt/1lKry3q williambanzai7

Forget the 700-plus-page Piketty 'socialism for all' tome; here is economics that everyone can understand.

Click image for link to website

And here they are… the 5 things they don't tell you about economics…

1. 95% of economics is common sense

You don’t need a degree to understand it

 

We’ve got this profession wrong; a lot of professional economists think what they do is too difficult for ordinary people. You’d be surprised how often these people are stupid enough to say things, at least in private, like ‘you wouldn’t understand what I do even if I explained it to you’. If you cannot explain it to other people, you have the problem.

 

People express strong opinions on all sorts of things despite not having the appropriate expertise: climate change, gay marriage, the Iraq War, nuclear power stations. But when it comes to economic issues, many people are not even interested, not to speak of not having a strong opinion about them. When was the last time you had a debate on the future of the Euro, inequality in China or the American manufacturing industry, despite the fact that these issues can have a huge impact on your life, wherever you live?

 

2. Economics is not a science

Despite what the experts want you to believe, there is more than one way of ‘doing’ economics

 

People have been led to believe that, like physics or chemistry, economics is a ‘science’, in which there is only one correct answer to everything; thus non-experts should simply accept the ‘professional consensus’ and stop thinking about it.

 

Contrary to what most economists would have you believe, there isn’t just one kind of economics – Neoclassical economics. In fact there are no less than nine different kinds, or schools, as they are often known. And none of these schools can claim superiority over others and still less monopoly over truth.

 

I accept that being suddenly asked to taste nine different flavours of ice cream when you had thought that there was only one plain vanilla can be quite overwhelming. In order to help, I attach here a simple table that will help you overcome your initial fear.

 

3. Economics is politics

Economic arguments are often justification for what politicians want to do anyway

 

Economics is a political argument. It is not – and can never be – a science.

 

Behind every economic policy and corporate action that affect our lives – the minimum wage, outsourcing, social security, food safety, pensions and whatnot – lies some economic theory that either has inspired those actions or, more frequently, is providing justification of what those in power want to do anyway.

 

Only when we know that there are different economic theories will we be able to tell those in power that they are wrong to tell us that ‘there is no alternative’ (TINA), as Margaret Thatcher once infamously put it in defence of her controversial policies.

 

4. Never trust an economist

It is one thing not to foresee the financial crisis; it’s another not to have changed anything since

 

Most economists were caught completely by surprise by the 2008 global financial crisis. Not only that, they have not been able to come up with decent solutions to the ongoing aftermaths of that crisis.

 

Given all this, economics seems to suffer from a serious case of megalomania.

 

The financial crisis has been a brutal reminder that we cannot leave our economy to professional economists and other ‘technocrats’. We should all get involved in its management – as active economic citizens.

 

5. We have to reclaim economics for the people

It’s too important to be left to the experts alone

 

You should be willing to challenge professional economists (and, yes, that includes me). They do not have a monopoly over the truth, even when it comes to economic matters.

 

Like many other things in life – learning to ride a bicycle, learning a new language, or learning to use your new tablet computer – being an active economic citizen gets easier over time, once you overcome the initial difficulties and keep practicing it.

 

Unless you are willing and able to challenge the professionals, challenge the experts, what’s the point of having a democracy?

 

There is no excuse for complacency. If you organize and demand reforms then a lot of amazing things happen, but it won’t come easy – we have to fight for it.

And there it is – all you need to know when watching the talking head bloviation and justification day after day…

Source: Penguin Group (buy here)

via Zero Hedge http://ift.tt/UhJiO6 Tyler Durden

Forget the 700-plus-page Piketty 'socialism for all' tome; here is economics that everyone can understand.

Click image for link to website

And here they are… the 5 things they don't tell you about economics…

1. 95% of economics is common sense

You don’t need a degree to understand it

 

We’ve got this profession wrong; a lot of professional economists think what they do is too difficult for ordinary people. You’d be surprised how often these people are stupid enough to say things, at least in private, like ‘you wouldn’t understand what I do even if I explained it to you’. If you cannot explain it to other people, you have the problem.

 

People express strong opinions on all sorts of things despite not having the appropriate expertise: climate change, gay marriage, the Iraq War, nuclear power stations. But when it comes to economic issues, many people are not even interested, not to speak of not having a strong opinion about them. When was the last time you had a debate on the future of the Euro, inequality in China or the American manufacturing industry, despite the fact that these issues can have a huge impact on your life, wherever you live?

 

2. Economics is not a science

Despite what the experts want you to believe, there is more than one way of ‘doing’ economics

 

People have been led to believe that, like physics or chemistry, economics is a ‘science’, in which there is only one correct answer to everything; thus non-experts should simply accept the ‘professional consensus’ and stop thinking about it.

 

Contrary to what most economists would have you believe, there isn’t just one kind of economics – Neoclassical economics. In fact there are no less than nine different kinds, or schools, as they are often known. And none of these schools can claim superiority over others and still less monopoly over truth.

 

I accept that being suddenly asked to taste nine different flavours of ice cream when you had thought that there was only one plain vanilla can be quite overwhelming. In order to help, I attach here a simple table that will help you overcome your initial fear.

 

3. Economics is politics

Economic arguments are often justification for what politicians want to do anyway

 

Economics is a political argument. It is not – and can never be – a science.

 

Behind every economic policy and corporate action that affect our lives – the minimum wage, outsourcing, social security, food safety, pensions and whatnot – lies some economic theory that either has inspired those actions or, more frequently, is providing justification of what those in power want to do anyway.

 

Only when we know that there are different economic theories will we be able to tell those in power that they are wrong to tell us that ‘there is no alternative’ (TINA), as Margaret Thatcher once infamously put it in defence of her controversial policies.

 

4. Never trust an economist

It is one thing not to foresee the financial crisis; it’s another not to have changed anything since

 

Most economists were caught completely by surprise by the 2008 global financial crisis. Not only that, they have not been able to come up with decent solutions to the ongoing aftermaths of that crisis.

 

Given all this, economics seems to suffer from a serious case of megalomania.

 

The financial crisis has been a brutal reminder that we cannot leave our economy to professional economists and other ‘technocrats’. We should all get involved in its management – as active economic citizens.

 

5. We have to reclaim economics for the people

It’s too important to be left to the experts alone

 

You should be willing to challenge professional economists (and, yes, that includes me). They do not have a monopoly over the truth, even when it comes to economic matters.

 

Like many other things in life – learning to ride a bicycle, learning a new language, or learning to use your new tablet computer – being an active economic citizen gets easier over time, once you overcome the initial difficulties and keep practicing it.

 

Unless you are willing and able to challenge the professionals, challenge the experts, what’s the point of having a democracy?

 

There is no excuse for complacency. If you organize and demand reforms then a lot of amazing things happen, but it won’t come easy – we have to fight for it.

And there it is – all you need to know when watching the talking head bloviation and justification day after day…

Source: Penguin Group (buy here)

via Zero Hedge http://ift.tt/UhJiO6 Tyler Durden

Submitted by Mike Krieger of Liberty Blitzkrieg blog,

What’s a crony status quo to do when it is ultimately confronted with an unruly mob of plebs frustrated with the fact median wages haven’t increased in forty five years, while the 0.01% has stolen everything in sight with the help of the Federal Reserve and corrupt Washington D.C. politicians?

Well, naturally you’d launch the South African made Skunk Riot Control Copter, fully equipped with a suite of high-definition and thermal imagine cameras, strobe lights, speakers and a pepper spray firing paint ball gun which can fire 80 shots per second!

We learn from The Verge that:

Crowds of protesters could soon come under attack from riot control drones outfitted with paintball guns, strobe lights, and speakers. The Skunk Riot Control Copter, built by South African company Desert Wolf, has a suite of cameras and four paintball guns strapped to its chassis to help its operators monitor and control unruly crowds. The guns can fire ammunition from four different hoppers, meaning the drone operators can shoot protesters with dye markers, solid plastic pellets, or small capsules of pepper spray.

 

The first batch of drones will reportedly be deployed to mines in South Africa later this month, where lengthy strikes at some of the country’s biggest facilities have resulted in violence. Mine owners hope that the drones will be able to control and subdue their workers by blasting them with flashing lights, blaring messages of control, and shooting them from the sky. Kieser says he hopes its success in the country will lead to more orders for the gun-toting drone.

Oh you silly little miners want higher wages? You may want to think twice about going on strike, unless you want a couple pepper spray pellets to the dome.

Sky News adds that:

The drone has a payload capacity of around 40kg; it can carry up to 4,000 projectiles and fires up to 80 shots each second.

 

The eight-rotor aircraft also has high-definition and thermal imaging cameras.

 

It needs two people to control it; one to maneuver the aircraft, and one to control the array of tools and weapons on board.

 

Complete with a ground control station, it will cost around 500,000 South African Rand (£27,400).

 

A spokesman for Desert Wolf said more orders were in the pipeline from customers around the world.

 

These include security companies, police units and businesses.

Only two people needed to control it. Just imagine how many protesting slaves you can blast at one time. So efficient! Unfortunately, for pepper spray happy cops like John Pike, who received a $38,000 settlement for pepper spraying seated, peaceful protesters at the University of California Davis, the easy money may be gone. Yes, this guy:

My only question at this point is; can drones collect pensions?

via Zero Hedge http://ift.tt/UhJih0 Tyler Durden

UPDATE: Delayed Until 1315ET

“Boots on the ground” or no boots-on-the-ground? Airstrikes or no airstrikes? Maliki “in” or “out”? ISIS Sanctions? Red lines? YouTube clips? President Obama has his hands full dealing with this self-created SNAFU… but we are sure this press conference will clear it all up (likely as Yellen noted yesterday, it’s just “noise”)…

 

 

Here’s our guide to what to do next…

 

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

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via Zero Hedge http://ift.tt/UhJexZ williambanzai7

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

We will all discover that the economy is much more fragile than advertised by the Central Planners and their media toadies.

This week I have made the case that the past 13.5 years have been the most destructive to the core values of the nation in U.S. history. The same holds true for the economy, which has been critically weakened by 6 years of unprecedented Central Planning.

What do I mean by Central Planning? Here are the key characteristics of Central Planning:

1. The central bank/state intervene in the economy in a dominant fashion, controlling functions such as interest rates by order of central authorities that were once set by decentralized, self-organizing markets.

2. The central bank/state pick winners and losers: for example, the Too Big To Fail Banks (TBTF) were selected to win, as the central bank/state bailed out their private losseswith public-taxpayer money. In effect, the central state/bank enrich cronies at the expense of everyone else.

3. The central bank/state manipulate the nominally "free" market to boost asset valuations as a way of enriching cronies who own most of the financial assets and as a public-relations charade to mask the failure of their picking winners and losers.

In other words, in centrally planned economies, markets are not allowed to discover price–they exist only to reflect positively on Central Planners.

4. The central bank/state use the power of the printing press to create as much money as they need to reward cronies and cram their decisions down the throat of the economy.

5. The central bank/state use the power of their public policy announcements to manipulate behavior and the financial markets while keeping programs that might attract scrutiny secret.

Central planning fails for intrinsic reasons unrelated to the specific policies. The decentralized, self-organizing market is like the immune system for the economy; it keeps the system healthy by burning off the deadwood of failed bets and failed investments and distributing credit and risk on performance rather than cronyism.

By eliminating the economy's immune system, Central Planning dramatically increases vulnerability and guarantees systemic crises down the road. Another way of understanding the destruction wrought by Central Planning is to see the Central Planners as heroin pushers who addict the economy to zero-interest credit and a constant flow of "free money" to the winners selected by the central bank/state.

The Yellowstone Analogy and The Crisis of Neoliberal Capitalism (May 18, 2009)

The economy becomes dependent on the The central bank/state intervention and loses the ability to function in the real world. When the real world finally intrudes, the weakened, strung-out addict, no longer capable of responding to reality in a positive fashion, expires.

A handful of charts illustrates the scope of the Central Planning and the fragility this Central Planning has generated. (Charts are courtesy of Market Daily Briefing. All comments on the charts are mine.)

The Federal Reserve balance sheet: hey, what's $4.3 trillion between pals? Where did all this newly created money go? To inflate asset bubbles that enrich the few at the expense of the many.

That little spot of bother in 2008 that caused credit to contract a bit nearly collapsed the entire U.S. economy. Has expanding credit to subprime banks and borrowers fixed anything, or simply extended the system's already-sky-high fragility?

And what has all this unprecedented Central Planning done for the GDP? Growth as measured by GDP (a largely bogus metric, as many have pointed out) has been declining since the Central Planners picked their cronies as winners.

How about real median income? Central Planning has greatly boosted the wealth and income of the financier winners picked by the Planners, but sadly this does not include wage earners, who have seen their inflation-adjusted earnings plummet.

Aren't you delighted that Central Planning works so great?

One predictable result of Central Planning is more asset bubbles–or in the case of housing, an echo bubble of the housing bubble created by Central Planners in the early 2000s. Alas, an echo bubble is still a bubble, and so it will pop just like every other financial bubble throughout history.

Just as a refresher on the staggering enormity of Federal Reserve intervention / manipulation in the housing / mortgage market: if the Fed buying $2 trillion of home mortgages (more than 20% of the entire market) isn't Central Planning, then what is it?

The damage done by Central Planning has yet to come home to roost. Six years into the Grand Experiment–that Central Planners can pick winners who just happen to be their cronies–the chickens of consequence are still making their way home.

And when they finally come home to roost, we will all discover that the economy is much more fragile than advertised by the Central Planners and their media toadies.

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

But, but, but… Janet Yellen didn't say precious metal valuations were within historical norms? Gold and Silver are surging today (and have done since the FOMC press conference all-clear) with the latter having its best day in months and back at 3-month highs… Intriguingly, just as we warned, gold and silver have been on a significant tear since the Qingdao CCFD probe began (as synthetic hedges are unwound – which dominate pricing in PMs) while copper and iron ore and so on have all fallen (as the reality of no real demand leaks into these commodities).

 

 

Is the CCFD unwind having its impact?

 

As we commented previously:

When we previously contemplated what the end of funding deals (which the PBOC and the China Politburo seems rather set on) may mean for the price of other commodities, we agreed with Goldman that it would be certainly negative. And yet in the case of gold, it just may be that even if China were to dump its physical to some willing 3rd party buyer, its inevitable cover of futures "hedges", i.e. buying gold in the paper market, may not only offset the physical selling, but send the price of gold back to levels seen at the end of 2012 when gold CCFDs really took off in earnest.

 

In other words, from a purely mechanistical standpoint, the unwind of China's shadow banking system, while negative for all non-precious metals-based commodities, may be just the gift that all those patient gold (and silver) investors have been waiting for.  This of course, excludes the impact of what the bursting of the Chinese credit bubble would do to faith in the globalized, debt-driven status quo. Add that into the picture, and into the future demand for gold, and suddenly things get really exciting.

Here's our previous epxlanation of gold's move… if we are right that somehow China managed to push gold lower via gold CFDs, then the unwind pushes gold higher:

 

Here's how that might work:

In the gold markets, the paper or synthetic 'demand/supply' dominates pricing as opposed to the non-precious metals which have at least a grain of fundamental sense to them still

 

Throughout 2012/2013 – as the gold CFDs were booming, Chinese demand for physical gold was soaring as the price plunged (due to the forward hedging required in the CFD transactions which pressured gold swaps/futures lower and thus dominated pricing)

 

As CFD unwinds hit en masse, these flows must unwind (cover hedges and ensure the underlying physical is there… and if not buy it)

 

This will pressure gold futures prices higher and because unlike in non-precious commodities where spot markets wag the tail of the futures markets – spot gold will likely be dragged higher also (as we know the demand for the physical has been high).

So unlike in the industrial commodities – where the CCFD unwind drives prices down as the image above shows, thanks to synthetic manipulation and domination of the paper gold (and silver) market, the opposite occurs in PMs.

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

UPDATE: Sure enough, this was serious! *FBI, N.Y. POLICE ANNOUNCE FINANCIAL CYBER CRIMES TASK FORCE

Hacking Target… or The Pentagon… or Alcoa… or some Chinese military installation is all well and good; but mess with the US equity markets’ mainstay market structure and it’s getting serious. As BAE Systems reports, hackers slowed down high-speed trading at a large hedge fund last year and rerouted information about the company’s trades to offsite computers. The cyber-attack targeted the hedge fund’s trade order entry system and added gaps to the company’s trading algorithm – delaying orders by milliseconds. The hack went undetected for 8 weeks.  Though the hedge fund was not named, it is believed that ‘organized crime’ is behind the hack – ironic really…

 

As Bloomberg reports,

Hackers rerouted information about a hedge fund’s high-speed trades last year to offsite computers, a security official with BAE Systems Plc said.

 

The hackers sought out monetary gain, targeting the hedge fund’s trade order entry system and adding gaps to the company’s trading algorithm, Paul Henninger, global product director at BAE Systems Applied Intelligence, said in an interview.

 

The attack slowed down high-speed trading at the hedge fund, which BAE wouldn’t name.

 

“This is the first time we’ve seen criminals actively go after a business system and effectively take over that system and create sabotage,” said Paul Henninger, global product director for BAE Systems Applied Intelligence.

 

The attack was going on for eight weeks and BAE was called in by the company at the end of 2013, Henninger said.

 

“It has all the signatures of an organized crime attack,” he said.

 

• *HACKERS PENETRATED A LARGE HEDGE FUND, BAE SYSTEMS TELLS CNBC
• *BAE SAYS HACKERS STALLED HIGH-SPEED TRADES AT FUND: CNBC
• *ATTACKS DELAYED TRADES BY MILLISECONDS, BAE’S HENNINGER SAYS
• *HACKERS SAID TO SEEK MONETARY GAIN IN ATTACK ON HEDGE FUND: BAE
• *HEDGE FUND HAD TRADING SLOWED BY HACKERS IN 2013, BAE SAYS
• *HACKERS REROUTED HIGH-SPEED TRADING INFORMATION, BAE SAYS
• *ATTACK ON HEDGE FUND WENT UNDETECTED FOR EIGHT WEEKS, BAE SAYS
• *ORGANIZED CRIME SAID TO BE BEHIND HEDGE FUND HACKER ATTACK

 

What better way to crash a stock market than to hack the HFTs?

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

UPDATE: Sure enough, this was serious! *FBI, N.Y. POLICE ANNOUNCE FINANCIAL CYBER CRIMES TASK FORCE

Hacking Target… or The Pentagon… or Alcoa… or some Chinese military installation is all well and good; but mess with the US equity markets’ mainstay market structure and it’s getting serious. As BAE Systems reports, hackers slowed down high-speed trading at a large hedge fund last year and rerouted information about the company’s trades to offsite computers. The cyber-attack targeted the hedge fund’s trade order entry system and added gaps to the company’s trading algorithm – delaying orders by milliseconds. The hack went undetected for 8 weeks.  Though the hedge fund was not named, it is believed that ‘organized crime’ is behind the hack – ironic really…

 

As Bloomberg reports,

Hackers rerouted information about a hedge fund’s high-speed trades last year to offsite computers, a security official with BAE Systems Plc said.

 

The hackers sought out monetary gain, targeting the hedge fund’s trade order entry system and adding gaps to the company’s trading algorithm, Paul Henninger, global product director at BAE Systems Applied Intelligence, said in an interview.

 

The attack slowed down high-speed trading at the hedge fund, which BAE wouldn’t name.

 

“This is the first time we’ve seen criminals actively go after a business system and effectively take over that system and create sabotage,” said Paul Henninger, global product director for BAE Systems Applied Intelligence.

 

The attack was going on for eight weeks and BAE was called in by the company at the end of 2013, Henninger said.

 

“It has all the signatures of an organized crime attack,” he said.

 

• *HACKERS PENETRATED A LARGE HEDGE FUND, BAE SYSTEMS TELLS CNBC
• *BAE SAYS HACKERS STALLED HIGH-SPEED TRADES AT FUND: CNBC
• *ATTACKS DELAYED TRADES BY MILLISECONDS, BAE’S HENNINGER SAYS
• *HACKERS SAID TO SEEK MONETARY GAIN IN ATTACK ON HEDGE FUND: BAE
• *HEDGE FUND HAD TRADING SLOWED BY HACKERS IN 2013, BAE SAYS
• *HACKERS REROUTED HIGH-SPEED TRADING INFORMATION, BAE SAYS
• *ATTACK ON HEDGE FUND WENT UNDETECTED FOR EIGHT WEEKS, BAE SAYS
• *ORGANIZED CRIME SAID TO BE BEHIND HEDGE FUND HACKER ATTACK

 

What better way to crash a stock market than to hack the HFTs?

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