The EU Uses Every Crisis To Grab More Power

Submitted by Raúl Ilargi Meijer  –  The Automatic Earth


Thomas Eakins Walt Whitman 1891

Jean Claude Juncker held a speech yesterday that had, oh irony, been labeled a State of the Union. A perfect way of showing how pompous Juncker and his surroundings have become. A perfect way, too, to point out how much the European Union differs from the United States. The gap is so wide it doesn’t need any explaining.

Much of the speech concerned the refugee crisis Juncker and his cronies share a lot of the blame for, and for good measure he managed to get in a vile threat to Greece, in the vein of “Greece must respect the bailout, or the EU reaction will be ‘different’”, and “Greece cannot be kept in the euro at all costs”. In Brussels, democracy is a word fast losing even the last shreds of its meaning.

Juncker’s a very boring speaker -when he’s not been drinking-, but that doesn’t take away from the message. Brussels seeks to use the refugee crisis for the same purpose it uses all crises for: power grabbing. A reaction from Nigel Farage that was dripping with vile bigotry was the best reaction I read about to the speech, and in my not so humble opinion that is desperately sad.

It’s a shame and a disgrace that bigots like Farage, Le Pen, Orban and Wilders will have to decide the future of the EU, but it’s still a mile and a half better than more EU, because the European Union is rapidly turning into a monstrosity the likes of which even Europe has seldom seen in its history, and that’s saying something.

28 separate formerly sovereign nations are coming under the thumb of a de facto occupying force that is squeezing their sovereignty and democracy out of them in boa constrictor fashion, leaving them behind as empty political shells. And every single one of these nations has voluntarily signed up for this treatment, blindly lured by financial promises that the Greek crisis has abundantly exposed as hollow and void. Continue reading

Revolution on the Ranch

Submitted by William Bonner, Chairman – Bonner & Partners

No Surrender

GUALFIN, Argentina – Global stock markets had a strong day of gains on Tuesday.

Bloomberg reported that the Dow rose 390 points – or 2.4% – “on optimism over China.” We’re amazed.

We hold our breath and wonder: What next? The U.S. investor thinks he has some idea of what is going on in China. Good luck to him! And there is no reason for stocks to ALL be worth more money… even if China were looking up.

Primer Conquista del DesiertoJuan Manuel de Rosas, who led the “desert campaign” against natives in Argentina in 1833 (after Spanish colonial rule had ended). This charming fellow had established a “dictatorship backed by state terror” in the province of Buenos Aires before deciding on slaughtering the remaining natives. By 1848 he ruled all of Argentina with an iron fist.

Engraving by Calixto Tagliabúe

Some should go up and some should go down – depending on how investors see new developments affecting their earnings. For some companies, China is a competitor. For others, it is a supplier. Some want China’s costs to go up. Some want them to go down.

DJIA, dailyDJIA, daily – Tuesday’s bounce didn’t last – via StockCharts, click to enlarge. Continue reading

Why The Keynesian Chorus Is Cackling Like Chicken Little

This is getting way too stupid. The Keynesian Chorus has launched a full blast trilling campaign, emitting a shrill cackle of warnings against a Fed rate hike. Yes, 80 months of pumping free money into the canyons of Wall Street is not enough.

Why?

Well, this is hard to type with a straight face, but according to the cackling gaggle of Keynesian Chicken Littles, the Fed has already tightened too much!

Paul Kasriel, the former chief economist at Northern Trust who now writes “The Econtrarian” blog, argues that “in recent months Fed monetary policy has become downright restrictive.”

Would that Kasriel could be dismissed as merely a Wall Street shill, but its seems that he’s taking his cues directly from John Maynard Keynes’ very vicar on earth. That would be Larry Summers, who yesterday blogged an identical bit of tommyrot:

I believe the case against a rate increase has become somewhat more compelling even than it looked two weeks ago…..First, markets have already done the work of tightening.  The U.S. stock market is worth $700 billion less than it was 2 weeks ago and credit spreads have widened noticeably.  Financial conditions as measured by Goldman Sachs or the Chicago Fed index have tightened in the last 2 weeks by the impact equivalent of more than a 25 BP tightening.  So even if resisting inflation required a 25 BP tightening as of two weeks ago, this is no longer the case.

You can’t make this stuff up!  And you don’t have to mince any words, either. This whole mantra that free money is actually tight money is the product of a tiny circle of academic scribblers and Wall Street hirelings who have invented what amounts to an alternate vocabulary of economic newspeak.

Exhibit number one is the Goldman Sachs Financial Conditions Index. As shown below, it purportedly has surged sharply toward “tightening” during the last 15 months. Continue reading

Gallup Suggests More Like Sagging Hires

Submitted by Jeffrey Snider  –  Alhambra Investment Partners

If on the fence trying to decide whether surging job openings or tailing hiring is the true representation of the economy (recognizing that these are not mutually exclusive propositions, just that it isn’t very likely they both coexist in anything but subjectively statistical fancy) Gallup just offered far more of the latter. Should actual job openings hold some kind of economic sway in terms of emotion, which is what economics assigns the higher probative value, you wouldn’t know from spending figures. And that works backward, as spending is supposed to be derived from rising and broadening wages which is what Job Openings (the BLS series) was developed to help determine.

According to Gallup, August was just ugly in a year of ugly. In fact, the August figures might be ugly bordering on concerning which would be an apt description of the economy apart from all the statistical prejudice.

ABOOK Sept 2015 Gallup

August 2014 was already $1 less than August 2013 which qualifies at least for stagnation. That is true even in the longer-term as August 2014 was $3 less than August 2008 when the worst actually started (the economy has shrunk). With that intermediate backdrop, August 2015 was significantly below last year; $5 certainly qualifies as that ugly bordering upon concern given that yearly change but also how it turns lower yet again this year where the only direction was supposed to be up, up and a lot more up. Continue reading

Gold Bullion Allowed As Collateral in China

Submitted by Mark O’Byrne  –  GoldCore

China’s Shanghai Gold Exchange said it will allow physical gold to be used as collateral on futures contracts from September 29, according to a statement posted on its website this morning as reported by Reuters.

Physical gold will be permitted to be used for up to 80 percent of margin value, according to the statement.

Reuters then corrected the story and the second refiled story was changed and given a different focus:

The Shanghai Gold Exchange said on Thursday it will allow A-shares, exchange-traded funds and treasuries to be used as collateral for gold trading.

Shangai Gold Exchange

Reuters then corrected the story and the second refiled story was changed and given a different focus:

The Shanghai Gold Exchange said on Thursday it will allow A-shares, exchange-traded funds and treasuries to be used as collateral for gold trading.  The move comes as Beijing unleashes a slew of measures to stave off a collapse in its stock market and restricts trading in stock index futures.  Continue reading

The Daily Debt Ratle

Submitted by Raúl Ilargi Meijer  –  The Automatic Earth

Japan’s Stock Market is Now Wilder Than China’s (Bloomberg)
China Deflation Risks Grow, Foreign Central Banks On Alert (Reuters)
Beijing Clamps Down On Forex Deals To Stem Capital Flight (FT)
Citigroup Sees 55% Risk of a Global Recession Made in China (Bloomberg)
SocGen Is Very Nervous About The Recent $9 Trillion Global Market Cap Loss (ZH)
UK North Sea Oil Investment to Plunge 80% (Bloomberg)
Europe Faces Political War On Two Fronts As Backlash Builds (AEP)
If This Is The Best Britain Can Do For Refugees, It’s Sickening (Simon Jenkins)
America Owns This Nightmare (Salon)
Thank God for Germany (Robert Fisk)
EU Presents Plan to Distribute Refugees Across Europe (WSJ)
Nigel Farage On Juncker Calling For More EU (EV)
Denmark Blocks Trains, Roads To Germany To Stop Refugees (Quartz)
Orderly German Welcome Masks Chaos For Refugees
Greek Economy Back In Intensive Care (Reuters)
EU Squeezed €7 Billion Greek Bridge Loan Via ESM Loophole (Bloomberg)
Brazil Credit Rating Cut to Junk by S&P Amid Budget Strain (Bloomberg)
UK Immigration Income Threshold Creates Thousands Of ‘Skype Kids’ (Guardian)
Critical Realism & Mathematics versus Mythematics in Economics (SteveKeen)
Downtown Austin Vault Of Precious Metals Turns Up Mostly Empty (AS)
The Civil War In Syria – Part 1 (Beppe Grillo)

Read much more here: Debt Rattle September 10 2015 – TheAutomaticEarth.com

Equity markets and credit contraction

Submitted by Alasdair Macleod – FinanceAndEconomics.org

There is one class of money that is constantly being created and destroyed, and that is bank credit.

Bank credit is created when a bank lends money to a customer; it becomes money because the customer draws down this credit to deposit in other bank accounts and to pay creditors. It is not money that is created by a central bank; it is money that is created out of thin air by commercial banks to lend. Its contraction comes about when it is repaid, or if a customer defaults.

The recent sharp fall in equity markets is leading to two levels of contraction of bank credit. Brokers’ loans to speculating investors are being unwound from record levels, notably in China and also in the US where in July they hit an all-time record of $487bn. Then there is the secondary effect, likely to kick in if there are further falls in equity prices, when equities held as loan collateral are liquidated. This is when falling stock prices can be so destructive of bank credit, and as the US economist Irving Fisher warned in 1933, a wider cycle of collateral liquidation can ensue leading to economic depression. Continue reading