Germany blocks TTIP, now it is up to Italy

Submitted by Beppe Grillo  – The Beppe Grillo Blog

The TTIP is a trade agreement between the US and EU of which we know little or nothing. Not only because of the Italian media (at 73 th place in the world ) that avoids raising the debate on the issue, but also because the documents relating to the agreement are kept secret . The negotiation of the terms of the Treaty took place between a group of bureaucrats. EU member states have not entered the negotiating process and are now being questioned for the ratification.

Without going through the approval of the people, just the signature of heads of government not elected by anyone (in the case of Italy and Portugal ), that national interests do not care.
In Germany a few weeks ago two hundred thousand people took to the informed Square say no to TTIP with a massive demonstration that invaded the city of Berlin with hundreds of initiatives between flashmob, principals, seminars and public events.

Pictures of the event in Berlin NoTTIP

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It did not go unnoticed because right after Norbert Lammert , President of the Bundestag (Federal Parliament of Germany), said: ” I exclude categorically that the Bundestag will ratify a trade agreement between the European Union and the United States never having participated in the negotiations and not having even been able to consider alternative options ”. Together with Economy MinisterSigmar Gabriel , Lammert believes that ” so far limited access to information on the US side is unacceptable, both for the government and for Parliament ”.

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FOMC: One Month in a Submarine with a Defect Radio

Submitted by Pater Tenebrarum  –  The Acting Man Blog

Bureaucratic Fantasies

As trained Kremlinologists we were truly baffled by yesterday’s FOMC statement. Yes, we know, they are eager to hike rates at least once, just so they can prove they can still do it, but the comments on the US economy in yesterday’s statement sounded as if the entire committee had just spent the past month in a submarine with a defect radio.

yellow submarineImage credit: Heinz Edelmann

Here is a chart posted by John Hussman in his recent weekly missive, that illustrates US economic activity on the production side, a topic we have recently discussed extensively as well (see: “US Economy – Close to a Bust?” and “More Ominous Data Points” for details).

wmc151026aAn amalgamation of incoming data from the Fed’s own district surveys via John Hussman

As we have pointed out, in terms of total spending and output, the manufacturing sector is the US economy’s largest sector by far (even if it is just 13% of “GDP”). It seems therefore pretty clear that when its most important components are in the kind of free-fall normally seen only in recessions, that something is seriously amiss.

It does not matter what has caused this. It is not somehow made “better” by the fact that the only just beginning bust in the oil patch is one of the main triggers. After all, this is how all economic busts begin: the sector with the largest extent of malinvestment keels over first. Moreover, the fracking boom was the by far greatest contributor to capex and employment during the entire post crisis recovery, so its demise is bound to make waves.

You can compare the once gain relatively terse FOMC statement with the previous one with the help of the WSJ’s trusty FOMC statement tracker. What makes it so funny is that all words of warning or caution are gone – the US economy’s soggy performance is described as “solid”, the troubles in submerging markets, which exercised Mr. Draghi less than a week earlier, no longer even rate a mention. In short, it’s really bizarre. Continue reading

Fiat money quantity update

Submitted by Alasdair Macleod – FinanceAndEconomics.org

Chart 1 29102015

After a few months of slower growth, FMQ has picked up again.

FMQ is the sum of True Money Supply (as defined by the Austrian School of Economics), plus the banking system’s reserves and other banking-related liabilities on the Fed’s balance sheet. Account is taken of temporary adjustments that otherwise distort the picture, such as the Fed’s repurchase agreements and reverse repurchase agreements. See here for a fuller description of FMQ.

The intention is to quantify fiat money both issued into public circulation and also held in reserve within the federal banking system. Fiat currency was originally issued in return for gold deposited with the commercial banks in return for bank notes and deposits. This gold was then passed to the Fed in return for cash and reserves, subsequently handing it on to the US Treasury in return for a certificate, which appears on the Fed’s balance sheet to this day. FMQ quantifies the full reversal of this process.

The chart above shows that the growth in FMQ since 1960 followed an exponential path until the banking crisis in 2008. Subsequently, it has accelerated to the end-September 2015 level of $14.39 trillion, considerably above its long-term historic path, and reflects the monetary hyperinflation initiated by the Fed in its attempts to rescue the financial system from the last banking crisis, and then to revive the US economy. Continue reading

Durable Goods Get Even Uglier, More Meaningful

Submitted by Jeffrey Snider  –  Alhambra Investment Partners

Anyone looking to buck the “dollar’s” direction in September has been sorely disappointed by almost every single data point so far. The latest is durable goods which was even more ugly across-the-board than August – and that includes the rather stark downward revisions for last month. Year-over-year, new orders (ex transportation) fell almost 6% after declining a revised 3.74% in August; shipments have begun to track orders, as expected, falling 3.59% in September for the third consecutive month of contraction and four of the past five. Capital goods, a proxy for business capex, were even worse: new orders dropped just shy of 8% while shipments declined by more than 3%, forming what looks to be a steep downward slope.

In terms of accumulating weakness, the 6-month averages in those series are either worse than the 2012 trough or matching it. It was that feebleness that surely convinced the Fed to engage in a third QE (and then another when the downside remained stubborn) at that time, a rather poignant comparison to the interest rate debate at the FOMC taking place today. Economists and policymakers have been at great pains to downplay the significance in manufacturing retrenchment as either unimportant or “transitory”, but the trajectory of the economy provided by this persistent downslope will not allow it.

Treasury prices are higher after the US durable goods orders report showed doubt about the economy’s performance during the third quarter. While September’s decline in orders wasn’t as steep as expected, prior months were revised much lower. This is leading investors to bring down their estimates of U.S. third-quarter economic growth, says Credit Agricole’s David Keeble, adding that Treasurys got a lift as a result.

When the dreariness of the end of “transitory” forces even economists to deploy anything other than glowing metaphors and descriptions of the economy you know it is quite serious:

Durable goods orders have been down in four of the past six months, a sign of the problems facing manufacturers as they struggle with economic weakness in key export markets like China. A stronger dollar has also been a drag, making American products less competitive overseas.
Economists said the new report provided further evidence of the headwinds. They were especially concerned by downward revisions in previous months showing weaker overall orders and a larger decline in the business investment category.

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Gold Up 3% In October and Enters “Seasonal Sweet Spot”

Submitted by Mark O’Byrne  –  GoldCore

– Gold down 1.3% this week on Fed “noise”
– Gold up 3% in October on robust demand
– Stronger gains in euros, Swiss francs, Japanese yen
– October poor month for gold seasonally
– November, December, January and February the “seasonal sweet spot”
– Confirmation of surging demand for bullion in Germany, India and China in Q3

Gold is headed for a 1.3% fall this week after the Fed’s latest suggestion that they may increase interest rates in December or in the New Year. However, for the month of October gold is 3.1% higher from $1,115/oz to $1,150/oz and has seen even larger gains in other currencies.

GoldCore: Gold Spot Prices Seasonal

Gold’s Seasonal Performance – U.S. Global Investors (1969-2010)

This strong performance in October comes despite October being traditionally a weak month for gold. This bodes well as we enter the “seasonal sweet spot” for gold. Continue reading

The Latest (and Dumbest) Central Bank Fraud

Submitted by William Bonner, Chairman – Bonner & Partners

A Financial Reckoning

WATERFORD, Ireland – You go for a nice picnic on the slopes of Vesuvius… You spread out your tablecloth. You open your picnic hamper. You prepare for a relaxing afternoon in the warm October sun.

And then someone comes running down the mountain, warning that the volcano is going to blow up. You pack up your sausages and put a cork in the wine bottle… and rush to the car and drive away. Better to be safe than sorry. And then? Nothing happens.

Mt.OntakeWhen these ominous columns of smoke become visible, it may be time to make tracks. Or not. This image shows Mt. Ontake in Japan, which tends to erupt occasionally …

Photo credit: Kyodo / Reuters Continue reading

The Daily Debt Rattle

Submitted by Raúl Ilargi Meijer  –  The Automatic Earth

• It Is Already Too Late To Scrap China’s One-Child Policy (AEP) 
• Li Floats New China Five-Year Growth Minimum of Around 6.5% (Bloomberg) 
• China Steel Industry Outlook ‘Worst Ever Amid Unprecedented Losses’ (Zero Hedge) 
• 28 Chinese Investors In Fanya Metal Exchange Go Missing After Protest (Quartz) 
• Shell Has Biggest Loss in More Than a Decade on Price Slump (Bloomberg) 
• London House Prices Most Overvalued In The World, Says UBS (Guardian) 
• Why Investors Are Shorting Canada’s Housing Market (CNBC) 
• Great Expectations: The Driving Force Behind Latest Property Crisis (McWilliams) 
• Bank of Japan Keeps QE On Hold As It Hopes For Recovery (Reuters) 
• Britain’s Youth At Risk Of Being ‘Lost Generation’ (Guardian) 
• US Special Ops Have Been Fighting ISIS On The Ground For Months (Bloomberg) 
• In Defeat For Beijing, Hague Court To Hear South China Sea Dispute (Reuters)
• European Parliament Votes To Urge Protection for Edward Snowden (NY Times) 
• Two Boats Carrying Refugees Sink Off Greece, Leaving 21 Dead (AP) 
• Greek Coast Guard Seeks Dozens Of Migrants Off Lesvos After Wreck (Kath.) 
• Germany To Spend Up To €16 Billion On Refugees Next Year (Reuters) 
• Refugees Risk Freezing To Death In Germany, Too (Local.de) 
• EU Nations Have Relocated Only 86 Refugees From 160,000 Pledged (Bloomberg) 
• Lesbos Volunteer Says Huge Amount Of Trauma As Refugee Boats Capsize (Guardian) 
• Lesbos Braces For Winter As Refugees Keep Coming (Gill)