Tag: news

Would Chris Rock’s Edgy Oscars Speech Get Him Banned from a College Campus?

Chris RockChris Rock’s opening monologue at the 2016 Oscars was a revelation: It was funny, it was edgy, and it addressed Hollywood’s race problem without letting liberals off the hook.

Much attention has been paid to the fact that no persons of color were nominated for any Oscars this year, and Rock—as a black comedian—was under some pressure to drop out as the host of the ceremony. Instead, he addressed the controversy head on.

“Everybody went mad this year,” said Rock. “Jada [Pinkett Smith] got mad. Jada said she’s not coming. Isn’t she on a TV show? Jada boycotting the Oscars is like me boycotting Rihanna’s panties. I wasn’t invited.”

He also added a much-needed sense of proportion by recalling that black people used to have more serious problems than a lack of awards.

“We had real things to protest,” Rock said. “When your grandmother is swinging from a tree, it’s really hard to care about Best Documentary Foreign Short.”

The implicit political message of Rock’s monologue was that racism still exists in Hollywood—and we ought to be upset about it—but we shouldn’t pretend that this kind of racism is as consequential as, say, racism in America’s police departments.

Rock also called out the #AskHerMore campaign, which asserts that journalists ask too many questions about female Oscar attendees’ attire. He said the reason women get asked more questions about fashion than men do is obvious: the men at the awards shows are all wearing the same thing.

Rock’s general contempt for political correctness is well known. It’s why he doesn’t bother playing college campuses anymore: liberal students are humorless and easily offended.

I wonder how many students who caught Rock’s monologue had to flee to a safe space because of it?

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China Stocks Crash: Down More Than 4% To Fresh 15 Month Lows

It all started off well-enough: the USDJPY was modestly lower but noting big, then the Yuan was fixed a little less modestly lower – well ok, it was the lowest fixing in 8 weeks confirming China just couldn’t wait for the Shanghai summit to be over – and then suddenly the Chinese market realized what we said earlier in the weekend, namely that with the much anticipated G-20 meeting a complete dud, and with no major stimulus on the horizon, suddenly the trapdoor below Chinese stocks opened and the Shanghai Composite has started the new month tumbling over 4%.

 

With this latest plunge, Chinese stocks are now back to levels last seen in November 2014 when the Chinese “replacement” bubbles (out of shadow banking) was just getting started:

And just in case it wasn’t obvious:

  • CHINA STOCKS’ TECHNICAL REBOUND IS OVER: HENGSHENG’S DAI MING

But perhaps even more important as the G-20 fiasco, Shenwan Hongyuan Group analyst Qian Qimin told Bloomberg that “the red hot property mkt may attract more and more fund inflows and investors worry this might divert liquidity from the stk market” which incidentally is precisely what we said earlier this afternoon when observing the latest iteration of the Chinese housing bubble:

To us, there is nothing surprising in this behavior: now that the Chinese stock market bubble has burst, the local population has to find a new asset class which to chase for the next few months, and for the time being that asset is housing.

It also means that Chinese stocks are done for the time being. It remains to be seen how the rest of the world will digest this unpleasant fact.


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A Coherent Explanation of Obama’s Foreign Policy

Authored by Eric Zuesse,

Foreign policy is both economic and military. An interpretation of U.S. President Barack Obama’s foreign policy will be presented here that explains both his economic and his military decisions to-date, and that shows he’s been carrying out the policies of his predecessors in office.

On economic matters, he has turned out to be the most ambitious ‘free-trader’ of any U.S. President: he has proposed three gigantic international-trade treaties, two with North Atlantic countries (TTIP for products and TISA for services), and one with Pacific countries (TPP), not only in order to serve America’s aristocracy at the public’s expense (an international “race-to-the-bottom” in terms of workers’ wages, and race to the top in terms of stockholders’ profits and executive pay) (like NAFTA on steroids), but in order to extend the NATO military alliance against Russia, to include now these trade treaties as a companion economic alliance against Russia (to reduce Russian trade with Russia’s biggest market, which is Europe).

Obama’s economic initiative with North Atlantic countries is even more intensive than his one with Pacific countries, because his TTIP & TISA would be economic treaties that would extend the North Atlantic Treaty, or NATO, directly from the military realm into the economic realm. With his TTIP & TISA, Obama is pursuing, essentially, a NATO economic  alliance to complement the military one — virtually the same members as NATO. TPP is less important, because that treaty attempts to isolate China, not Russia — and Russia is to be conquered before a conquest of China can be even seriously considered (in some future U.S. Presidency, though Obama is also ratcheting-up the military hostility against China).

NATO was formed in the 1949 North Atlantic Treaty as being nominally an anti-communist mutual-defense treaty against the Soviet Union. But when the Soviet Union and its communism, and that communist group's equivalent of the NATO mutual-defense treaty, their Warsaw Pact, all disbanded in 1991, NATO continued on, now as being a purely anti-Russian military alliance. In 1990, the representatives of U.S. President George Herbert Walker Bush had told Mikhail Gorbachev of the Soviet Union that NATO wouldn’t expand eastward toward Russia, wouldn’t try to do to Russia what Nikita Khrushchev had tried to do to the U.S. in the Cuban Missile Crisis in 1962 (place nuclear missiles right next door), and Gorbachev accepted those assurances and disbanded the Soviet Union and its Warsaw Pact on that basis, but GHW Bush had actually lied there, and NATO not only continued on, it went right up to the very borders of Russia — exactly what the GHWB Administration had promised that the U.S. would never do.

U.S. President Bill Clinton continued this GHWB policy of conquering Russia bit-by-bit by bringing into NATO the Czech Republic, Hungary, and Poland — a direct violation of Bush’s verbal promise to Gorbachev. However, Bush had actually intended  this violation: Bush had told both Helmut Kohl of Germany and Francois Mitterrand of France that the promise made to Gorbachev was only a lie, and that as far as fulfilling it, “To hell with that — we prevailed, they didn’t!” Clinton — and his successors — merely followed through on Bush’s lie. Bush’s son George, in 2004, brought into NATO: Bulgaria, Estonia, Latvia, Lithuania, Romania, Slovakia, and Slovenia.

And that brought us to Obama’s Presidency, which is increasing this assault and threat against Russia to reach now a red-hot, no longer merely Cold, War. The bloody battlefields in this war so far have been in the countries that had been allied with Russia: Libya, Syria, and Ukraine. But the Cold War against Russia became hot in Ukraine first. That’s where Obama crossed Vladimir Putin’s red line.

Russian leader Putin had long set as his red line that the U.S. mustn’t extend its NATO to include Ukraine, which has the longest border with Russia of any European country: 1,576 kilometers. If the U.S. is going to attempt a blitz-attack against Russia from next door, then Ukraine would be the most-dangerous country from which to launch it, and NATO membership for Ukraine would be the key to such success.

In February 2014, Obama arranged a coup that overthrew the Russia-friendly and democratically elected President of Ukraine and replaced his government by one that's headed by the rabidly anti-Russian Arseniy Yatsenyuk. Obama’s operative who selected Yatsenyuk, Victoria Nuland, during the buildup to the coup, explained that, “Since 1991 [the breakup of the Soviet Union] .. we’ve invested over five billion dollars to assist Ukraine” to “build democratic skills and institutions” (which Ukraine already had, and which Obama — via her — was now tearing down).

When she mentioned “1991,” she was thereby acknowledging  that GHWB had actually begun the overthrow of Ukraine. It was an exceedingly bloody coup d’etat in Ukraine, and Putin had always said that if Ukraine were to be added to NATO, that would be totally unacceptable — but now it was already in the process of happening.

Immediately, the nuclear-arms race was resumed. This was very good for America’s ‘defense’ contractors such as Lockheed Martin, but not only for them. Right behind Nuland on the platform when she spoke of “1991” was the “Chevron” sign; and Chevron was the American oil-and-gas company that bought the rights to explore for oil and gas in western Ukraine — the area of Ukraine that had voted the most strongly against  the man whom Obama overthrew. (Chevron thus bought the safest  gas-rights. The locals there were happy to have a U.S. company exploring there.) Subsequently, a son of U.S. Vice President Joe Biden became appointed by the Ukrainian owner of Ukraine’s largest gas-exploration company in eastern Ukraine, to become a board-member. (That area was extremely hostile towards the United States, angry against the overthrow, and the residents there demonstrated against that company’s fracking and wanted to shut them down.) The American VP didn’t object that his son might become a billionaire from America’s Ukrainian coup — this was considered acceptable by the Obama regime and the aristocracy that it served (most of the U.S. public were never even informed of the now-booming Ukrainian-U.S. corruption).

The overthrow of Ukraine’s democratically elected President (who had been corrupt himself, just as all  of Ukraine’s post-Soviet leaders had been) was an effort by Obama not only to take over Ukraine but to further isolate Russia, virtually all of whose former Warsaw Pact allies were by now now firmly in the anti-Russian NATO camp.

However, Obama had actually been preparing for a renewed war against (now) Russia (no longer against the Soviet Union and communism), ever since he first became President in 2009, when his Administration responded to Syria’s drought-provoked 2008 request for food-aid not with food but with scheming to overthrow also that ally of Russia. And, then, Obama dusted off an old CIA plan from 1957, which had been drawn up by the mastermind of the successful 1953 overthrow of Iran’s freely and democratically elected progressive President Mohammed Mossadegh (replacing him with the brutal Shah); and, in this 1957 plan for Syria, the secular Ba’athist Party that ruled Syria was to become replaced by Saudi-allied Sunni fundamentalists — but this plan was placed on-hold until an appropriate time, which finally arrived during the Obama regime, when the widespread ‘Arab Spring’ demonstrations added fuel to the fires of Syria’s drought.

That 1957 plan was itself a part of a longstanding CIA program.

After Putin responded to those recent foreign invasions of Syria by Saudi-backed jihadists, by Russia’s starting on 30 September 2015 an all-out bombing-campaign against those tens of thousands of foreign invaders, Saudi Arabia and its fundamentalist-Sunni ally Turkey tried to draw the United States directly into an all-out invasion of Syria against both the Assad government and its now-committed Russian ally.

In response, the Saud family teamed up with their Sunni-fundamentalist ally-and-NATO-member Turkey, to seek Obama’s support for an all-out ‘Western’ invasion of Syria to defeat both Assad and Russia, as well as to defeat two other allies of Assad: Iran and its Hezbollah ally in Lebanon.

President Obama then reached out to the leaders of various European NATO member-nations, to seek at least one of them to join with the U.S. in making this not only a fundamentalist-Sunni invasion to overthrow and replace Syria’s Ba’athist government — the only remaining secular government in the Mideast. Thus far,Obama has failed to find any; and he seems unwilling to join the Sunni-Islamic countries as the only non-Islamic invader. However, Obama’s Secretary of State, John Kerry, is threatening to complete the 1957 CIA plan without Europe’s participation, if there’s no other way to do it. And the aristocracy’s Council on Foreign Relations recently headlined, “Divide and Conquer in Syria and Iraq; Why the West Should Plan for a Partition.” That ‘partition’ or breakup of Syria is the 1957 CIA plan. But that threat seems likely to be pure bluff from Kerry. After all, Kerry himself also says, “What do you want me to do? Go to war with Russia? Is that what you want?” He doesn’t want that. And he wasn’t bluffing when he said that he doesn’t. And Obama seems to recognize that the U.S. and NATO need at least several more years in order to have all the pieces in place for it to be launched.

As regards Ukraine, Obama seems to have given up there, too. Ukraine is being left to rot, into perhaps sequences of regime-replacements and spiraling chaos: it’s a wrecked country.

The end-result of Obama’s foreign policies, thus far, is to turn Russia’s allied nations into failed states. Whether his successor as the U.S. President will be satisfied with that (after all: it does hurt Russia), or else will ‘go for the gold’ (as Obama has thus far unsuccessfully tried to do) and resume the active quest to conquer Russia, might depend upon whether Obama can get his ‘trade’ deals passed and implemented; because, if that effort fails, then one would be hard-pressed to see any way in which the 1990-Bush-initiated war against Russia will be won, short of some sort of desperate nuclear invasion, for which Russia might be sufficiently well prepared so that whomever the survivors of that war would be (including even the top stockholders in firms such as Lockheed Martin) would wish they weren’t survivors. After all: what would any currency be worth then? Maybe enough to buy a gun and bullet to finish oneself off. Even for those corporate CEOs, their golf-days would be over, and only grim days would remain. But that’s when the true stature of such American Presidents as GHWB, Clinton, GWB, and Obama, would likewise become clear — to those survivors, or at least to the ones that don’t have the gun, or the bullet, or otherwise haven’t yet expired. It’s like the recognition-of-truth that people such as Palestinians, or Auschwitz-victims, or ISIS-victims, might have in their final moments. But here it would be happening even to the few aristocrats who cause such things to occur. Wouldn’t that be “a refreshing change”? After everything is said and done, and no one is around to enjoy it? But, anyway: it would be a change, and it would also be ironic. However, no one would be around to enjoy even the irony of it.

Obama has been carrying out a bipartisan Republican-and-Democratic foreign policy; it’s the policy of America’s aristocracy. Its results have been horrible for the world, but they’ll be even worse if it succeeds. Not only will there then no longer be democracy (but instead a global government by international corporations), but if it succeeds all the way, there won’t even be much of anything except universal misery and mass-death. It is, unquestionably, an extremely ambitious foreign policy. Thus far, it seems to be entirely in accord with the foreign policy of the Saud family. However, that may be about to change: perhaps Obama, and the United States, will simply quit its alliance with the Sauds, and separate from them. But, will Europe separate from NATO? If not, then the anti-Russia policy will continue even if the Sauds’ alliance with the U.S. comes to an end.

*  *  *

Investigative historian Eric Zuesse is the author, most recently, of  They’re Not Even Close: The Democratic vs. Republican Economic Records, 1910-2010, and of  CHRIST’S VENTRILOQUISTS: The Event that Created Christianity.

 


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China Devalues Most In 8 Weeks, Offshore Yuan Slides To 3-Week Lows

Following USD strength last week, China has come back to work after the disappointment of the Shanghai non-accord and weakened the Yuan fix by 0.2% – the most since January 7th.

 

This move follows pressure from offshore Yuan weakness since traders returned from Golden Week – driving the onshore-offshore spread out to its widest since The PBOC stepped in and stomped the shorts.

After a few weeks of stability, it appears China is forced to let the Yuan slip back out to where its CDS (a market it is notr manipulating directly yet) implied it to be after shaking out some weak shorts at the end of January.

Stocks are opening modestly to the downside – following weakness in US from Friday

  • *CHINA'S CSI 300 INDEX SET TO OPEN DOWN 0.3% TO 2,939.58
  • *CHINA SHANGHAI COMPOSITE SET TO OPEN DOWN 0.4% TO 2,754.81


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Central Banks Shiny New Tool: Cash-Escape-Inhibitors

Submitted by JP Koning via Moneyness blog,

Negative interests rates are the shiny new thing that everyone wants to talk about. I hate to ruin a good plot line, but they're actually kind of boring; just conventional monetary policy except in negative rate space. Same old tool, different sign.

What about the tiering mechanisms that have been introduced by the Bank of Japan, Swiss National Bank, and Danmarks Nationalbank? Aren't they new? The SNB, for instance, provides an exemption threshold whereby any amount of deposits that a bank holds above a certain amount is charged -0.75% but everything within the exemption incurs no penalty. As for the Bank of Japan, it has three tiers: reserves up to a certain level (the 'basic balance') are allowed to earn 0.1%, the next tier earns 0%, and all remaining reserves above that are docked -0.1%.

But as Nick Rowe writes, negative rate tiers—which can be thought of as maximum allowed reserves—are simply the mirror image of minimum required reserves at positive rates. So tiering isn't an innovation, it's just the same old tool we learnt in Macro 101, except in reverse.

No, the novel tool that has been created is what I'm going to call a cash escape inhibitor.

Consider this. When central bank deposit rates are positive, banks will try to minimize storage of 0%-yielding banknotes by converting them into deposits at the central bank. When rates fall into negative territory, banks do the opposite; they try to maximize storage of 0% banknote storage. Nothing novel here, just mirror images.

But an asymmetry emerges. Central bankers don't care if banks minimize the storage of banknotes when rates are positive, but they do care about the maximization of paper storage at negative rates. After all, if banks escape from negative yielding central bank deposits into 0% yielding cash, this spells the end of monetary policy. Because once every bank holds only cash, the central bank has effectively lost its interest rate tool.

If you really want to find something innovative in the shift from positive to negative rate territory, it's the mechanism that central bankers have instituted to inhibit the combined threat of mass paper storage and monetary policy impotence. Designed by the Swiss and recently adopted by the Bank of Japan, these cash escape inhibitors have no counterpart in positive rate land.

The mechanics of cash escape inhibitors

Cash escape inhibitors delay the onset of mass paper storage by penalizing any bank that tries to replace their holdings of negative yielding central bank deposits with 0%-yielding cash. The best way to get a feel for how they work is through an example. Say a central bank has issued a total of $1000 in deposits, all of it held by banks. The central bank currently charges banks 0% on deposits. Let's assume that if banks choose to hold cash in their vaults they will face handling & storage costs of 0.9% a year.

Our central bank, which uses tiering, now reduces deposit rates from 0% to -1%. The first tier of deposits, say $700, is protected from negative rates, but the second tier of $300 is docked 1%, or $3 a year. Banks can improve their position by converting the entire second tier, the penalized portion of deposits, into cash. Each $100 worth of deposits that is swapped into cash results in cost savings of 10 cents since the $0.90 that banks will incur on storage & handling is an improvement over the $1 in negative interest they would otherwise have to pay. Banks will very rapidly withdraw all their tier-2 deposits, monetary impotence being the result.

To avoid this scenario, central banks can install a Swiss-style cash escape inhibitor. The way this mechanism works is that each additional deposit that banks convert into vault cash reduces the size of the first tier, or the shield, rather than the second tier, the exposed portion. So when rates are reduced to -1%, should banks try to evade this charge by converting $100 worth of deposits into vault cash they will only succeed in reducing the protected tier from $700 to $600, the second tier still containing the same $300 in penalized deposits. This evasion effort will only have made banks worse off. Not only will they still be paying $3 a year in negative interest but they will also be incurring an extra $0.90 in storage & handling ($100 more in vault cash x 0.9% storage costs).

Continuing on, if the banks convert $200 worth of deposits into vault cash, they end up worsening their position even more, accumulating $1.80 in storage & handling costs on top of $3.00 in interest. We can calculate the net loss that the inhibitor imposes on banks for each quantity of deposits converted into vault cash and plot it:
 

The yearly cost of holding various quantities of cash at a -1% central bank deposit rate

Notice that the graph is kinked. When a bank has replaced $700 in deposits with cash, additional cash withdrawals actually reduce its costs. This is because once the first tier, the $700 shield, is used up, the next deposit conversion reduces the second tier, the exposed portion, and thus absolves the bank of paying interest costs. And since interest costs are larger than storage costs, overall costs decline.

If banks go all-out and cash in the full $1000 in deposits, this allows them to completely avoid the negative rate penalty. However, as the chart above shows, storage & handling costs come out to $9 per year ($1000 x 0.9%), much more than the $3 banks would bear if they simply maintained their $300 position in -1% yielding deposits.

So at -1% deposit rates and with a fully armed inhibitor installed, banks will choose the left most point on the chart—100% exposure to deposits. Mass cash conversion and monetary policy sterility has been avoided.

How deep can rates go?

How powerful are these inhibitors? Specifically, how deep into negative rate territory can a central bank go before they start to be ineffective?

Let's say our central banker reduces deposit rates to -2%. Banks must now pay $6 a year in interest ($300 x 2%). If banks convert all $1000 in deposits into cash, they will have to bear $9 in storage and handling costs, a more expensive option than remaining in deposits. So even at -2% rates, the cash inhibitor mechanism performs its task admirably.

If the central bank ratchets rates down to -3%, banks will now be paying $9 a year in interest ($300 x 3%). If they convert all $1000 in deposits into cash, they'll have to pay $9 in storage & handling. So at -3%, bankers will be indifferent between staying invested in deposits or converting into cash. If rates go down just a bit more, say to -3.1%, interest costs are now $9.30. A tipping point is reached and cash will be the cheaper option. Mass cash storage ensues, the cash escape inhibitor having lost its effectiveness.

The chart below shows the costs faced by banks at various levels of cash holdings when rates fall to -3%. The extreme left and right options on the plot, $0 in cash or $1000, bear the same costs.
 

The yearly cost of holding various quantities of cash at a -3% central bank deposit rate

So without an inhibitor, the tipping point for mass cash storage and monetary policy impotence lies at -0.9%, the cost of storing & handling cash. With an inhibitor installed the tipping point is reduced to -3.1%. The lesson being that cash escape inhibitors allow for extremely negative interest rates, but they do run into a limit.

The exact location of the tipping point is sensitive to various assumptions. In deriving a -3.1% escape point, I've used what I think is a reasonable 0.9% a year in storage and handling costs. But let's assume these costs are lower, say just 0.75%. This shifts the cash tipping point to around -2.5%. If costs are only 0.5%, the tipping point rises to around -1.7%.

This is where the size of note denominations is important. The Swiss issue the 1000 franc note, one of the largest denomination notes in the world, which means that Swiss cash storage costs are likely lower than in other countries. As such, the Swiss tipping point is closer to zero then in countries like the Japan or the U.S.. One way to push the tipping point further into negative terriotry would be a policy of embargoing the largest note. The central bank, say the SNB, stops printing new copies of its largest value note, the 1000 fr. Banks would no longer be able to flee into anything other than small value notes, raising their storage and handling costs and impinging on the profitability of mass cash storage.

Good old fashioned financial innovation will counterbalance the authorities attempts to drag the tipping point deeper. Cecchetti & Shoenholtz, for instance, have hypothesized that in negative rate land, a new type of intermediary could emerge that provides 'cash reserve accounts.' These specialists in cash storage would compete to reduce the costs of keeping cash, pushing the tipping point back up to zero.

The tipping point is also sensitive to the size of the first tier, or the shield. I've assumed that the central bank protects 70% of deposits from the negative deposit rate. The larger the exempted tier the bigger the subsidy central banks are providing banks. It is less advantageous for a bank to move into cash when the subsidy forgone is a large one. So a central bank can cut deeper into negative territory the larger the subsidy. For instance, using my initial assumptions, if the central bank protects 80% of deposits, then it can cut its deposit rate to -4.6% before mass paper storage ensues.

Removing the tipping point?

There are ways to modify these Swiss-designed cash escape inhibitors to remove the tipping point altogether. The way the SNB and BoJ have currently set things up, banks that try to escape negative rates only face onerous penalties on cash conversions as long as the first tier, the shield, has not been entirely drawn down. Any conversion after the first tier has been used up is profitable for a bank. That's why the charts above are kinked at $700.

If a central bank were to penalize cumulative cash withdrawals (rather than cash withdrawals up to a fixed ceiling) then it will have succeeded in snipping away the tipping point. This is an idea that Miles Kimball has written about here. One way to implement this would be to require that the tier 1 exemption, the shield, go negative as deposits continue to be converted into cash, imposing an obligation on banks to pay interest. The SNB doesn't currently allow this; it sets a lower limit to its exemption threshold of 10 million francs. But if it were to remove this lower limit, then it would have also removed the tipping point.

What about retail deposits?

You may have noticed that I've left retail depositors out of this story. That's because the current generation of cash escape inhibitors is designed to prevent banks from storing cash, not the public.

As central bank deposit rates fall ever deeper into negative territory, any failure to pass these rates on to retail depositors means that bank margins will steadily contract. If banks do start to pass them on, at some point the penalties may get so onerous that a run develops as retail depositors start to cash out of deposits. The entire banking industry could cease to exist.

To get around this, the FT's Martin Sandbu suggests that banks could simply install cash escape inhibitors of their own. Miles Kimball weighs in, noting that banks may start applying a fee on withdrawals, although his preferred solution is a re-deposit fee managed by the central bank. Either option would allow banks to preserve their margins by passing negative rates on to their customers.

Even if banks don't adopt cash escape inhibitors of their own, I'm not too worried about retail deposit flight in the face of negative central bank deposit rates of -3% or so. The deeper into negative rate territory a central bank progresses, the larger the subsidy it provides to banks via its first tier, the shield.  This shielding can in turn be transferred by a bank to its retail customers in the form of artificially slow-to-decline deposit rates. So even as a central bank reduces its deposit rate to -3% or so, banks might never need to reduce retail deposit rates below -0.5%. Given that cash handling & storage costs for retail depositors are probably about the same as institutional depositors, banks that set a -0.5% retail deposit rate probably needn't fear mass cash conversions.

So there you have it. Central banks with cash escape inhibitors can get pretty far into negative rate land, maybe 3% or so. And with a few modifications they might be able to go even lower.


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GOP Super Tuesday: The Full Breakdown

Much to the chagrin of the political establishment, Donald Trump is on the verge of locking up the GOP nomination.

New Hampshire: Trump.

Nevada: Trump.

South Carolina: Trump.

Put simply, if the brazen billionaire locks up Super Tuesday, it’s all over for the field. Here’s a preview of next week’s critical polls via Politico:

Alabama primary; 50 delegates

Don’t be fooled by Gov. Robert Bentley’s endorsement of his colleague John Kasich. This is conservative country. It’s the home of immigration hardliner Jeff Sessions, whose endorsement has been courted by both Cruz and Trump. There have been few polls of the largely rural state, but Trump dominated the most recent one, a December poll funded by state lawmakers that showed Trump with a 20-point edge over Cruz.

Brent Buchanan, an unaligned Republican strategist in Alabama, said he expects the state to mirror the results of South Carolina: a strong Trump win, and a Rubio second-place finish. Buchanan noted that Rubio just earned the endorsement of 31 state lawmakers and Cruz pulled out of an Alabama forum set for Saturday, though Rubio still plans to attend. Anecdotally, he said, energy for Cruz has slid. It could leave Cruz empty-handed if he fails to reach 20 percent support in the state, the minimum threshold for receiving delegates.

Alaska caucuses; 28 delegates

The Alaska caucuses are virtually invisible. The low-population state is so far out of the way, few candidates devoted much time there. One potential factor: Sarah Palin. A longtime Cruz ally, Palin endorsed Trump last month. In a small state like Alaska, where Palin was governor before her vice presidential run in 2008, an endorsement could carry weight. The only poll that included Trump, taken in early January, showed a close race between the mogul and Cruz.

Arkansas primary; 40 delegates

One of the few obvious opportunities on the map for non-Trump candidates is here. The only recent poll shows Cruz with a narrow lead and a second-place tie between Trump and Rubio. Rubio is the beneficiary of a recent endorsement by Gov. Asa Hutchinson, part of a wave of establishment support he received after Jeb Bush dropped out of the race last weekend. Trump has spent time here, though. He held a rally shortly before the New Hampshire primary and he returned Saturday for a rally in Bentonville. He also recently hired Sarah Huckabee, daughter of former Arkansas Gov. Mike Huckabee, as a senior communications adviser.

Georgia primary; 76 delegates

Donald Trump holds massive leads over his rivals in recent polls of Georgia, the second-largest prize on Super Tuesday. It may be the reason that Trump will spend his night of the week in Valdosta. The state also has a 20 percent support threshold for doling out delegates, a dangerous dynamic for Cruz and Rubio who have both floated around that level in recent polls. Rubio recently opened his first office in the state, though Trump and Cruz have had a presence there for a while.

Massachusetts primary; 42 delegates

Trump is poised to run away with a win in Massachusetts. The main question is by how much. A resounding victory that features buy-in from the state’s significant contingent of blue-collar, Reagan Democrat/independent voters is already spooking Democrats about Trump’s strength for the general election. It’s also bad news for Kasich, whose team and supporters hoped his second-place finish in New Hampshire would come with Massachusetts coattails. Kasich is expected to get crushed in the South and hasn’t had the resources to build much of an organization, so he’s been counting on victories on less conservative turf to carry him through Super Tuesday. He won’t find much shelter here though. He will, however, likely pick 

The only Midwestern state on the calendar Tuesday, Minnesota will be a true wildcard. Trump reportedly has limited organization in the state, and the most recent poll there actually puts Rubio and Cruz in a statistical tie with Trump. That might explain Rubio’s recent visit there. He’s in search of any state to notch an outright win, so he’s not swept on Super Tuesday as he was in the early states. Rubio received endorsements last week from two prominent Minnesota Republicans, former Gov. Tim Pawlenty and former Sen. Norm Coleman. Trump didn’t schedule any time in Minnesota over the past week, as he barnstormed the South.

State GOP chairman Keith Downey said Minnesota is one of the few mysteries on the map. He’s urged party officials to prepare for up to twice their record-level of turnout reached in 2008. “I think Cruz, Rubio and Trump might be a little more bunched together in Minnesota, similar to Iowa,” he said. Downey added that Trump, of late, has begun assembling a field team that could help him corral more votes on Tuesday.

Oklahoma primary; 43 delegates

Oklahoma is looking like the “bragging rights” state. That’s the way Party Chairwoman Pam Pollard sees it. Pollard noted that Oklahoma, one of three most conservative states in the country, also holds the first totally “closed” primaries — meaning only voters who registered as Republicans by Feb. 5 can cast ballots. Earlier states and even other Super Tuesday states allow some crossover voting by Democrats or voting by independents.

That means, the winner here can demonstrate he won a stte in which only “Republicans voted for Republicans.” That might explain the late flurry of activity here. Trump was in Oklahoma City on Friday, and Pollard said Rubio would be in the state for two stops on Monday. Cruz, she said, had visited three times and would be back again before Tuesday’s primary.

Polls have shown Trump holding a solid but potentially surmountable lead. The Oklahoman poll put Trump ahead with 29 percent support to Rubio’s 21 percent. According to the State Elections Board, as of Friday afternoon, mail-in absentee ballots in Oklahoma hit 13,600, already significantly outpacing the 10,500 in 2012, and early voting hit 15,700, already beating 2012’s 14,500

Tennessee primary; 58 delegates

The state — whose elongated geography drew candidates due to its overlap with media markets in a slew of surrounding states — is something of an ideological mystery. The state’s governor, Bill Haslam, was reelected resoundingly in 2014, but he drew ire from conservatives during a failed attempt to expand Medicaid. Haslam endorsed Rubio last week. An MTSU poll taken in mid-January showed Trump lapping the field with 33 percent to Cruz’s 17 percent, though more than a quarter of voters were still undecided.

Texas primary; 155 delegates

This is must-win turf for Cruz. In fact, anything other than a huge victory would be a problem for his campaign. Cruz’s path to the nomination revolves around dominance in the South, starting in his home state. If he doesn’t come away from Super Tuesday with a delegate lead, it will raise enormous questions about his viability going forward. Absent that kind of showing, his best hope may be a divided electorate that sends the contest to a floor fight at the July convention. Cruz has shown strength in recent polls, leading by double digits in a new Monmouth University survey.

The state party requires a 20 percent threshold of support for candidates to receive delegates. Trump and Cruz may be the only two who come away with delegates if current polling trends hold.

Vermont primary; 16 delegates

The tiniest pot of delegates up for grabs Tuesday, Vermont hasn’t gotten much attention. But Trump did hold a rally here in January, and Kasich has argued that like Massachusetts, this generally liberal state could be a pickup opportunity for a more moderate candidate. The state’s only recent poll tells a different story. Trump is dominant, and trailed distantly by a second-place Rubio. If these, as well as Massachusetts poll results hold, Kasich could come away winless on the day. The state only doles out delegates to candidates who earn 20 percent support or more — meaning Trump could shut out his rivals if he holds his large lead.

Virginia primary; 49 delegates

Donald Trump held a double-digit lead over Rubio and Cruz here in recent polls of the state. But the state’s impact will be diluted because it doesn’t have a delegate threshold, ensuring that even lower-performing candidates will come away with a share of delegates. Kasich made three stops here last week, and his team has cast Virginia as a state where he could prove sneaky-strong, but polls don’t bear that out. A Roanoke College poll out Friday gives Trump a 23-point edge over Cruz, who is statistically tied with Rubio. Carson and Kasich lag the field with just 8 percent support apiece.

Wyoming convention; 29 delegates

No drama here. Wyoming will send its 29 delegates to the July convention unbound. It holds no presidential preference poll or vote of any kind, a decision shared only by North Dakota and Guam. If the Republican convention becomes a first-ballot nail-biter, these unbound delegates could help tip the balance.


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The Central Bankers’ Greatest Blunder Yet: Negative Rates = Deleveraging

In a world which has long since crossed the monetary twilight zone of negative rates, and which is spiraling ever deeper into NIRP, below we present some quite fascinating observations on debt, NIRP and how the latter leads to the deleveraging of the former, and thus encourages global deflation – something which in retrospect will be (and in many cases already has been) seen as a central bank fatal flaw, and confirmation said central bankers have zero understanding of the process they have unleashed.

From HSBC’s Anton Tonev.

Negative rates = deleveraging

  • Negative interest rates on developed world sovereign bonds could reduce debt burdens and may be a market solution to overleveraging
  • While the side effect of extreme money creation is inflation, the side effect of extreme debt creation is deflation
  • We argue that the need for further deleveraging may be a reason why negative interest rates persist in sovereign bond markets

Bonds and deleveraging

While conventional theory suggests that central banks set base interest rates and that negative rates are a result of low inflation and slow economic growth, we suggest there may be an alternative explanation. Drawing on historical and cultural analogies, we view negative rates as a possible market response to the growing levels of debt and inequality in income and wealth.

In April last year, Switzerland became the first country to issue a 10-year sovereign bond at a negative yield. By the end of 2015, about a third of newly issued eurozone sovereign bonds came with a negative yield. Investors who buy these bonds and hold them to maturity will receive less than they put in and the issuer will ultimately pay back less than borrowed. Through this mechanism, we believe that negative interest rates can be a useful tool for deleveraging.

We recognise that the challenge to this view is that the objective of this policy has been to encourage even more leverage; the case of the Swedish housing market comes to mind. The majority of the countries with negative yields on their government bonds have high levels of either government or private debt (or in some cases both). Historically, one would expect government yields to go up to discourage the issuance of more debt. This is not happening now. Why? We suggest that, precisely because of the high level of debt and the need to deleverage, nominal yields in those countries have become more and more negative to encourage the issuance of more debt and slowly roll down the existing debt stock.

This suggests the market may be indicating there is too much debt. But this has an implication for the creation of new money, which is essential for the normal functioning of the economy. Most of the money creation in the developed world is done by the private banking  system through issuing loans. If there is no demand for new debt, the money creation process stalls. In other words, while under the gold standard our money creation was constrained by the availability of gold, in the current “fiat” monetary system, we cannot issue new money without the issuance of new debt. However, the system after 1971 was much more flexible than the metallic standard before because, as long as the economy was expanding, the banks could always find someone willing to borrow from them and thus increase the money supply.

Nevertheless, there is a natural limit to how much debt an economy can sustain. The time after the financial crisis of 2008 coincided with ever decreasing rates of growth and, as a result, not only could the banks not find people to lend to (thus money supply growth slowed down) but people started deleveraging (which caused total liquidity to contract – see Figure 12).

The US, and by extension most of the developed world post 2008, was in a very similar situation to where it was for most of the nineteenth or the early twentieth centuries, i.e. a deflationary environment characterised by intense progress (in our case we are starting to finally see the benefits of the Internet) and the inability to boost the money supply and thus create inflation.

Figure 12. Total US liquidity decreased after the 2008 crisis

It is this economic necessity and the mathematical impossibility of paying interest continuously which has created the present situation of negative interest rates: in our view the market has found a way to keep the monetary system going but this time without the risk of ever increasing debt.

In the past, we used to deal with too much debt either using market forces, like growth and inflation, or non-market forces, like debt jubilees, debt restructurings or excessive seigniorage. History is full of examples which reinforce the notion that putting an unbearable burden on debtors would ultimately send the whole economy into a depression. Debt jubilees were very common in Mesopotamia, for example, where, by some accounts there were around thirty episodes of general debt cancellations from 2400 to 1400 BC.

In 1819, as agriculture prices dropped, US state governments imposed moratoria on farmers’ debt payments and some debt was even completely forgiven. During the Great Depression, the US government, through the Home Ownership Loan Corporation, helped struggling homeowners by sometimes substantially lowering their mortgage payments. “One of the largest transfers of wealth (from creditors to debtors) in the history of the world”, however, happened when the US government broke off the gold standard in 1933. This was equivalent to restructuring its debt as, by removing the gold clause in US Treasury securities and devaluing the dollar, creditors’ claims were cut by more than 40%.

None of these options was used after the Great Recession of 2008. In addition, the developed world economies seem unable to generate growth and inflation sufficient to offset the rise in debt. Without a policy response, the market is taking the matter in “its own hands” by starting to reduce the level of debt (in present value terms) via negative yields on sovereign bonds.



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The Agriculture Space – Grains (Video)

By EconMatters

The effects of a strong dollar the last 3 years can be seen quite dramatically in the Grain space – to the tune of 20 plus percent. People haven`t stopped eating, and there are more and more people on this planet every year, so the grains are probably a long term buy here over a five year time frame.

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EU’s Evil Plan B: Cutting The Balkan Route Has Stranded 1000s Of Migrants In Greece

Via KeepTalkingGreece.com,

The closure of borders in the north of Greece has created chaos: thousands of refugees and migrants wandering from Athens to Idomeni without knowing where to sleep and what to eat, where to lay their kids and elderly to sleep.

 

FYROM, Croatia, Slovenia and Austria has closed their border today. Slovenia, Croatia and Serbia said on Friday they would each restrict the number of migrants allowed to enter their territories to 580 per day, while Austria already introduced a daily cap of 80 asylum-seekers and said it would only let 3,200 migrants pass through each day. However, FYROM’s borders remained close all day Friday, onloy 150 crossed on Thursday. Albania, that had earlier said to accept refugees, decided otherwise at the end of the day, after the West Ballkan Conference initiated by Austria. Prime Minister Eddi Rama said that his country will not accept any refugees.

Also the push-backs have started: Austria sent back 50 Syrians two days ago, they arrived in Idomeni , Greece a couple of hours ago. According to latest information, Serbia is going to push-back 1,000 people to FYROM and FYROM will forward them to Greece.

Refugees, asylum-seekers, migrants: all in one pot. End of  story:

 

 

The Balkan Route is cut.

20,000-25,000 people are trapped in Greece.

Allegedly concerned that a humanitarian crisis may occur, the European Commission is working out a contingency plan to tackle the crisis and avoid the disaster.

“At this time we are preparing an emergency plan, ‘a humanitarian aid mechanism’ in order to avoid a humanitarian crisis in Greece,” European Commission spokesperson Natasha Bertaud said on Friday, however without elaborating on details. Correspondents of Greek TV channels in Brussels reported later that the “Emergency plan” would rather be in form of financial aid for food, logistics etc of even up to 3 billion euro. Greece has reportedly already submitted the relevant request to Brussels. According to Greek media, the Greek request aims to tackle the Refugee Crisis until March 7th.
 
 
For one more time masks are fallen: the Wall Street Journal wrote on Friday:

“Senior European officials are embracing the so-far taboo idea of cutting off the migrant trail in Greece, a step that they acknowledge could create a humanitarian crisis in the country, says a report in the Wall Street Journal.

 

This so-called Plan B, floated until now only by Europe’s populist leaders, is a sign of rapidly waning confidence in other European Union policies to deal with the migration crisis—in particular in German Chancellor Angela Merkel’s game plan of relying mainly on Turkey to stem the human tide.”

Apparently the EU are looking into the EU-Turkey Leaders Summit scheduled for March 7th. I saw on TV, German Chancellor Angela Merkel saying that “results of NATO mission have to be awaited, first.” NATO’s sea-monitoring mission has been officially launched in the eastern Aegean today.

Should NATO’s mission fail and Turkey would show show much willingness for cooperation,  refugees and migrants will be keep coming form Turkey to Greece. “And this has to be stopped” the EU officials think and they argue that bottling up the migrants in Greece would be more manageable than having them stranded in poorer, non-EU neighboring countries in the Balkans.

This is an odd EU-thinking, then none of the refugees or migrants plans to stay in FYROM or in any othe rnon-EU Balkan countries. The majority of them declares, they want to Germany or in Scandinavian countries.

“Greece wouldn’t be the worst place to have a humanitarian crisis for a few months,” one EU official told WSJ, adding that the population there was much more refugee-friendly than those in the Balkans or Eastern Europe.”Four senior EU officials said that Greece, as an EU member state, could receive more bloc funding and other practical help to cope with the stranded migrants than its Balkan neighbors, where ethnic conflicts could flare up anytime. Once the message trickles through that migrants are stuck in Greece, the officials said the hope is that fewer people would attempt to come in the first place.”

An evil plan smitten in devils’ rooms in Brussels, behind closed doors., by those EU “partners” who do not want to stand to their responsibilities. thus violating the sames rules and the same decisions have have signed and agreed upon.
 
The European Commission Legal Departmental reportedly consider the border closure by Austria, Croatia and Slovenia as “illegal”.
 
United Nations Secretary-General Ban Ki-moon expressed concern on Friday over the increasing number of border restrictions targeting migrants in the Balkans and said they ran contrary to the international refugee convention.
 
The border rules in Austria, Slovenia, Croatia, Serbia and Macedonia “are not in line” with the 1951 convention “because individual determination of refugee status and assessment of individual protection needs are not made possible,” said UN spokesman Stephane Dujarric.
 
It looks as if the EU and Commission will certainly tolerate the closure of borders. Unofficially. But they will do, for the sake of protecting “migrants get stuck in non -EU Balkan countries,” as the joke in Brussels claims.
 
At the end of the Balkan Route, the truth is this: Austria’s domino-effect initiative for borders closure serves primarily Germany’s interests for fewer refugees and migrants. Mutti (translated as 'Mom' – implying Merkel as "mom of the nation") will keep polishing around her image as political correct leader with a vision.


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Military Would Revolt Against Trump, Former CIA Director Says

Earlier today, we noted that America’s presumed candidate for the GOP nomination is busy retweeting Mussolini quotes.

That’s not necessarily a reflection of an explicit desire to move America towards fascism.

It’s not entirely clear that Donald Trump understands the movement he’s started. But America’s entrenched political establishment is now scrambling to understand how to deal with the Trump juggernaut and it’s not just politicians who are concerned. 

Indeed, former intelligence officials now say the brazen billionaire could face a veritable security rebellion if he’s elected. 

“I would be incredibly concerned if a President Trump governed in a way that was consistent with the language that candidate Trump expressed during the campaign,” Former CIA director Michael Hayden said, in an interview with Bill Maher. Hayden also says that the armed forces would simply refuse to follow Trump’s orders were he to be elected and follow through on his campaign promises.  

Here’s what Hayden had to say about Trump’s promise to kill family members of ISIS: “God, no! Let me give you a punchline: If he were to order that once in government, the American armed forces would refuse to act. You cannot—you are not committed, you are not required, in fact you’re required to not follow an unlawful order. That would be in violation of all the international laws of armed conflict. There would be a coup in this country.”

Would Trump face a military coup or would Trump simply commandeer the military? You decide. Here’s the clip: 


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