The Prior Act of Demolition

Submitted by Jeffrey Snider  –  Alhambra Investment Partners

Before the financial disconformities of 2013 can be allowed to rest in the annals of financial history, I think there is still one more piece that needs to be analyzed in the context of where we are now. Convention about liquidity disruptions is again leading back to Dodd-Frank and Basel, rightly so, but that isn’t enough to fully capture the decayed state of systemic liquidity in 2014. As I said yesterday on this topic, that includes the one-way trade that was “induced” by QE3 in September 2012, as clearly shown by the dramatic compression in swap spreads.

ABOOK Dec 2014 Swap Spreads

An interest rate swap is relatively straight-forward by itself and can thus provide, at times, relatively straight-forward analysis. To “take fixed” simply means that you pay a floating rate in exchange for receiving a fixed rate payment from some counterparty. Since this is a private transaction but benchmarked to the relevant UST rate, an interest rate swap “should” trade (it is quoted at the fixed rate payment) at a premium to the UST rate because there is risk involved. In fact, that was such a durable and iron-clad convention that it was once believed impossible to ever see a negative swap spread – that wouldn’t make any sense in this convention since the US gov’t is always viewed to be “risk free.” Continue reading

Russia Has Western Enemies, Not Partners

Submitted by Dr. Paul Craig Roberts – Institute for Public Economy

The US House of Representatives has joined Hillary Clinton, Obama, the neoconservatives, Washington’s vassals, and the American and European presstitutes in demonizing Russia and President Putin. The House resolution against Russia is a packet of lies, but that did not stop the resolution from passing by a vote of 411 for and 10 against.

The entire world should take note that the American people are capable of electing only ten intelligent representatives. Ten people out of 435 is 2 percent. And yet Washington declares itself to be the “exceptional,” “indispensable” country empowered to exercise hegemony over the world!

No one should be surprised to see Washington, its presstitutes and European vassal states using the same propagandistic lies against Russia and Putin as were used against Iraq and Saddam Hussein, Libya and Gaddafi, Syria and Assad, Afghanistan and the Taliban, and Iran. Washington is fearful of the rise of Russia and China, of the leadership demonstrated by Vladimir Putin, of the formation of new organizations independent of Washington, such as the BRICS. While the George W. Bush regime was sidetracked by its “six week, $70 billion war,” which turned out to be, so far, a multi-trillion dollar 13-year losing operation, Putin kicked out some of the American agents who were contaminating Russian sovereignty and rebuilt the country. Continue reading