The Outlook for the New Year

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

Washington has shaped 2015 to be a year of conflict. The conflict could be intense.

Washington is the cause of the conflict, which has been brewing for some time. Russia was too weak to do anything about it when the Clinton regime pushed NATO to Russia’s borders and illegally attacked Yugoslavia, breaking the country into small easily controlled pieces. Russia was also too weak to do anything about it when the George W. Bush regime withdrew from the ABM treaty and undertook to locate anti-ballistic missile bases on Russia’s borders. Washington lied to Moscow that the purpose of the ABM bases is to protect Europe from non-existent Iranian nuclear ICBMs. However, Moscow understood that the purpose of the ABM bases is to degrade Russia’s nuclear deterrent, thereby enhancing Washington’s ability to coerce Russia into agreements that compromise Russian sovereignty.

By summer 2008 Russian power had returned. On Washington’s orders, the US and Israeli trained and equipped Georgian army attacked the breakaway republic of South Ossetia during the early hours of August 8, killing Russian peacekeepers and civilian population. Units of the Russian military instantly responded and within a few hours the American trained and equipped Georgian army was routed and defeated. Georgia was in Russia’s hands again, where the province had resided during the 19th and 20th centuries.

Putin should have hung Mikheil Saakashvili, the American puppet installed as president of Georgia by the Washington-instigated “Rose Revolution”, and reincorporated Georgia into the Russian Federation. Instead, in a strategic error, Russia withdrew its forces, leaving Washington’s puppet regime in place to cause future trouble for Russia. Washington is pushing hard to incorporate Georgia into NATO, thus adding more US military bases on Russia’s border. However, at the time, Moscow thought Europe to be more independent of Washington than it is and relied on good relations with Europe to keep American bases out of Georgia. Continue reading

Brazil’s Economy Just Imploded

Submitted by Tyler Durden  –  ZeroHedge

China may have mastered the art of fabricating economic data to a level unmatched by anyone except the US Department of Labor, but its derivative countries have much to learn. And none other more so than one of China’s favorite sources of commodities over the past decade: Brazil. It is here that things are going from worse to catastrophic, as disclosed in today’s update of Brazil’s fiscal picture.

Here are the disturbing facts showing that behind the world’s propaganda growth facade, it is all hollow: Brazil’s consolidated public sector primary fiscal balance, which posted a significantly worse than expected R$8.1bn primary deficit in November driven by the R$6.7bn deficit of the Central Government, dipped into negative territory: -0.18% of GDP, driven by the significant deterioration of the Central Government finances.

This is the worst fiscal outturn since November 1998. Furthermore, the primary surplus of subnational government (States and Municipalities) has also been eroding, a reflection of the authorizations given by the Treasury since 2011 for increased borrowing by the States. For instance, the States and Municipalities posted a negligible 0.08% of GDP surplus during Jan-Nov 2014, down from 0.46% of GDP during Jan-Nov 2013. Continue reading

Things To Do In 2015 When You’re Not Yet Dead

Submitted by Raúl Ilargi Meijer  –  The Automatic Earth

Unknown GMC truck Associated Oil fuel tanker, San Francisco 1935

America has managed to construct an entirely one-dimensional political system. There’s no discernible difference left between left and right, other than in spin language pre-cooked for the sole purpose of faking the concept of elections. There’s very right and ultra right. America is living proof that once money is allowed into politics, the accumulation of it, and of the power it can buy, will and eventually must fully control a democratic system, which in the process, of necessity, suffocates and dies a painful death.

What once was a proud American democracy has been turned into a circus that rolls into town every four years, filled with clowns that pretend to fight each other with over the top grotesque contraptions, but sleep in the same bed once the show is over and the audience has gone home.

In Europe that process has not yet been completed, but with the inception of the EU it is well on its way. It is a predictable process, in that the concentration of power, and of money, is irreversible as long as it’s allowed to continue its course, and the system succeeds in making people believe they still have a say in their own lives. As long as that belief is in place, it’s just an ongoing – relatively – slow corrosion that sets in and then takes its time, but never stops. Continue reading

The Trigger

Submitted by James Howard Kunstler  –

The futility of politics in America these days has driven the public into exactly the dream-state of zombie blood-lust depicted in so many popular video fantasies, a nightmare of decay, powerlessness, and degeneracy matching the actual condition of a disintegrating polity that has lost collective consciousness and seeks only to infect the dwindling numbers of the still-sentient. Almost nobody in this country believes we can manage our affairs anymore.

Well, can we? One of the hallmarks of an imploding culture is that people lose a sense of consequence. Things just seem to happen and unhappen, and nobody really cares about chains of decision and event. Anything goes and nothing matters.

One reason this is happening to us is that we allowed reality to be divorced from truth. Karl Rove wasn’t kidding back in the Bush-2 days when he quipped that “we create our own reality.” The part old Karl left out is that there’s a price for doing that. In the short run, it allows you to pretend that you have superpowers and can act in defiance of the way things really are. In the longer run, your view of the world comports so poorly with the facts of the world that things stop working. Continue reading

Ave, Ave, Ave Janet

Submitted by Bill Bonner – Chairman, Bonner & Partners

And so it came to pass that investors saw a bright star in the East… directly over the Marriner S. Eccles Federal Reserve Board Building, at the corner of 20th Street and Constitution Avenue in Washington, D.C.

“What comes after me goes before me,” said Janet Yellen, so confusing investors that they bid up the Dow over the 18,000 mark, a new milestone and a new record.

It is the season of miracles. Investors are convinced that Ms. Yellen can perform a trick worthy of Christ Himself.

It was He who multiplied the loaves and the fishes… made the blind see and the lame walk… and turned water into wine. It is She who creates real wealth out of nothing.

At least, that is what the common folk believe. And the wise men too.

For it was neither something solid nor important that made stocks more valuable last week; it was something gassy and impossible.

Wealth Without Work

Federal Reserve policy is the opiate of the people, the cynics will say. Maybe so.

They may not understand its mysteries, but they like it. After all, it promises wealth without work… or saving… or self-discipline… or investment. The wealth just comes, by the grace of Janet Yellen and her fellow Fed governors.

Last week, it came in abundance.

“Hallelujah,” said equity investors.

Ms. Yellen let it be known that she would be patient about letting interest go whither they wouldst.

She’s got them right where she wants them. And she intends to hold them there until she’s sure the lean years are over… or until Kingdom Come… whichever comes first.

We are convinced that holding interest rates down does indeed increase the likelihood of a bubbly stock market. But we are damned if we can understand how twisting interest rate arms makes businesses more valuable. As near as we can make out, it merely puts their shoulders out of joint.

This is an age of wonders. Anything is possible. Continue reading


Submitted by JC Collins  –  philosophyofmetrics

EngineeringNo analysis of the current macroeconomic and geopolitical situation in the world can be thoroughly complete without considering the role of Global Public Goods, or GPG.  In contrast, private goods are considered to be produce, bread, televisions, etc.., items that are purchased individually for the enjoyment and consumption of the individual solely.

As opposed to Global Public Goods, there are “local” public goods, such as police departments, health services, fire and hazardous response departments, and public utilities, such as water, electricity, and natural gas.  An argument can be made for the determination of “national” public goods, such as the RCMP here in Canada, or the FBI in America, and even the national banking sector as represented by each nations central bank.

The concept of Global Public Goods are trans-border and supra-sovereign in nature, and require international engagement and consensus on matters such as the following:

1. Environmental Commons, which we see manifested as the climate change conditioning of mass populations around the world.

2. Communicable Diseases, as represented by the yearly flu vaccination programs, Ebola propaganda, and numerous other vaccination programs in both developed countries and undeveloped countries.

3. International Trade, a broader process which is being developed through international and regional trade agreements.

4. International Financial Architecture, the item which we have been following closely here in the form of IMF Reform and SDR bond liquidity, moving away from the USD unipolar system.

5. Global Knowledge of Development, the purpose of which is to expand infrastructure projects internationally to ensure balance in local and regional public goods.

It immediately comes clear that the implementation of a multi-polar financial system is only one of many components of a larger consolidation and centralization of Global Public Goods, from which an international empire structure can emerge in the coming years. Continue reading

Another Bucket of Fish for BMO’s Belski

Submitted by Thad Beversdorf  –  The First Rebuttal Blog

We are 6 years into a 20 year bull run says BMO Capital Market’s CIO, Brian Belski during aCNBC interview on Monday.  I find televised comments such as this to be so blatantly dishonest they border on criminal.  In the same way I find an activist investor being given nationally televised air time to make unsubstantiated claims against a specific company for which they have a position against also criminal.  Impartial opinions are useful while partial opinions are not useful and can be damaging to those not recognising the conflict of interest.  But so let’s look at Belski’s suggestion of a 20 year bull run.  Is this just an honest educated opinion or is this Belski doing his part to perpetuate the manipulation of the financial markets?

I would love to sit down with a guy like Belski.  I mean if he’s just another market tool then whatever, I get it.  Banks absolutely need the market to stay propped up.  With everything else in the economy (and I mean everything) on life support banks recognise that market failure sends us right back to 2008 or worse.  All those collateralised ‘assets’ being passed off as collateral for interbank lending would be rendered priceless again.  And by priceless I don’t mean the touching MasterCard kind of priceless I mean zero bids for the securities being backed by defaulting loans kind of priceless.  I recently had a look at Deutsche Bank’s level II and III collateral assets and well what I found is that just a 20% decline in the bid for those assets will render Deutsche Bank insolvent.  Given that during the last credit bubble burst those assets declined 80% to 100% I would say Deutsche and at least four US banks could not withstand a market collapse.  And the sheer size of these holdings this time around, having increased by about 40% since 2008 mean there isn’t enough ink in the printing presses to cover the losses.

But back to the point here.  If Belski really does believe in another 14 years of daily market highs I want to talk to him.  Because it would mean I have never been so misguided in all my life about something so significant.  Something I thought I had a very strong grasp on.  And all those things I learned over the years including my coursework at Booth Business School have become entirely irrelevant.  Now if I am nothing else, and I may be nothing else, I am a true student of things.  And so I want to learn this new universe with its new set of physical laws that are guiding us. Continue reading

When Fearmongering Goes Bad: Greece Scrambles To Prevent Deposit Run Goldman Warned About In Its “Worst Case”

Submitted by Tyler Durden  –  ZeroHedge

Earlier today we got a classic, if rare, example of what happens when bankers bluff with a 2-7 off suit… and the people call it.

Recall that just over two weeks ago, none other than Greek currency swap expert Goldman (alongside Jean-Claude Juncker who quite explicitly warned Greeks not “to vote wrong“) came out with a fire and brimstone worst-case scenario for Greece, which was nothing but an attempt at fearmongering designed to scare Greek MPs into doing Samaras’ bidding, in which it said not electing the designated presidential candidate may lead to a worst-case scenario which involves a “Cyprus-style prolonged bank holiday.”
Continue reading

The Daily Debt Rattle

Submitted by Raúl Ilargi Meijer  –  The Automatic Earth

Greece Faces Snap Election as Samaras Fails to Install President (Bloomberg)
Greek Stocks Tank After Presidential Vote (CNBC)
‘Life Will Go On’ Thesis About Global Economy Might Not Work In 2015 (Guardian)
Distressed Debt Losses Worst Since ’08 Credit Crisis on Oil Rout (Bloomberg)
US Bond Sentiment Worst Since Disastrous ’09 as Fed Shifts (Bloomberg)
The 94% Plunge That Shows Abenomics Losing Global Investors (Bloomberg)
Japan’s Regional Banks Face Stress Test For Ultra-Low Rates (Reuters)
Zombie Bankruptcies Top New Year Wish-List for China’s Brokerages (Bloomberg)
China Slashes Trade Target For 2015 To 6% (MarketWatch)
China Looking At Deal With US To Recover Dirty Assets (Reuters)
China First-World Quandary Exposed as $800 Billion Lending Freed (Bloomberg)
Kiev Targets Oligarchs With Budget Bill (FT)
Fed and ECB: Kudos And Problems Ahead (CNBC)
The Liberal Idiocy on Russia/Ukraine (Robert Parry)
In Reversal, Germany Cools to Russian Investment (NY Times)
Russia Must Influence Separatists To End Ukraine Crisis, Says Merkel (Reuters)
In Lieu Of Best Wishes: The Euro’s First Inkling (Varoufakis)
Winston Churchill’s Family Begged Him Not To Convert To Islam (Ind.)
The American Civil War: The Bloody Anniversary We All Forgot (Fisk)

Continue Reading: Debt Rattle December 29 2014 – The Automatic Earth