AFTER THE SDR ANNOUNCEMENT – NOW WHAT?

Submitted by J.C. Collins  –  philosophyofmetrics

dollar-and-renminbi-rollsA major piece of the POM analysis has fallen into place.  As has been predicted here for the last two years, the Chinese renminbi has been added to the Special Drawing Right basket of the International Monetary Fund.  This fundamental change in the composition of the SDR will allow for a more sustained and balanced adjustment to the international monetary system.

This first step towards stabilizing the global system will spur renminbi liquidity growth and begin the process of foreign exchange reserve diversification.  This diversification will ease the international pressure which has been fostered upon the US dollar in its role as primary reserve currency.

Though it will still take years for RMB denominated reserves to equal USD denominated reserves, the process itself will proceed at a faster pace than many other analysts and economists will predict.

For the last few years many expressed their conclusion that the RMB would not be added to the SDR composition.  Now that it has been added these same analysts and economists are attempting to minimize this change by stating that it will take years for the renminbi to equal the dollar in both trade and reserve accumulation.

The growth in RMB liquidity will likely surprise many as massive infrastructure investment projects are funded by the Asian Infrastructure Investment Bank and BRICS Development Bank through loans denominated in yuan.

On top of that, it is now being reported that the US will be setting up a yuan trading and clearing facility which will allow US institutions to make yuan payments.  This action is being supported by all the major players in American banking, business, and other financial institutions.

This integration between international reserve currencies will allow for the further stabilization of the monetary system.  As Managing Director of the IMF, Christine Lagarde stated today:

“The Executive Board’s decision to include the RMB in the SDR basket is an important milestone in the integration of the Chinese economy into the global financial system. It is also a recognition of the progress that the Chinese authorities have made in the past years in reforming China’s monetary and financial systems. The continuation and deepening of these efforts will bring about a more robust international monetary and financial system, which in turn will support the growth and stability of China and the global economy.” Continue reading

China’s Stocks Fall Backward Again

Submitted by Jeffrey Snider  –  Alhambra Investment Partners

Chinese stocks “unexpectedly” plunged last week in a fit of stormed selling that reminded of August rather than the placidity that has been claimed of China since. By mainstream account, China has fixed its bout of “selling UST” and “outflows” while also providing two double doses of “stimulus.” The PBOC had even taken to a higher fix in the middle rate, the policy setting that defines the RMB trading band. In light of all that, the 5.5% crash Friday seems so out of place.

That is why, it appears, commentary has focused upon government investigations into certain large brokerage firms and their “practices.” Like the June peak in Chinese stocks, then blamed on margin rules proposals from CSRC, there seems a bit more to it than that. For all the talk about normalizing financial conditions in China since August, there is very little that actually supports such a conclusion. Again, even the conventional assessments regarding the most visible difficulty are flawed by their cursory nature, and that “outflows”, which are nothing more than shorthand for “dollar” difficulties, remainthe baseline of Chinese financial existence.

ABOOK Nov 2015 China Stocks SSE

Continue reading

The truth about GDP

Submitted by Alasdair Macleod – FinanceAndEconomics.org

“I can prove anything by statistics except the truth” – George Canning

Canning’s aphorism is as valid today as when he was Britain’s Prime Minister in 1817. Unfortunately, his wisdom is ignored completely by mainstream economists. Nowhere is this error more important than in defining economic activity, where the abuse of statistics is taken to levels that would have even surprised Canning.

Today we describe the economy as being in one of two states, growth or recession. We arrive at a judgment of its condition by taking the sum total of the transactions selected by statisticians and then deflating this total by a rate of inflation devised by them under direct or indirect political direction. Nominal gross domestic product is created and thereby adjusted and termed real GDP.

The errors in the method encourage a bias towards a general increase in the GDP trend by under-recording the rate of price inflation. From here it is a short step to associate rising prices only with an increase in economic activity. It also follows, based on these assumptions, that falling prices are to be avoided at all costs.

Assumptions, assumptions, all are assumptions. They lead to a ridiculous conclusion, that falling prices are evidence of falling demand, recession or even depression. Another of Canning’s aphorisms was that there is nothing so sublime as the truth. There’s no sublimity here. If there was, the improvement in everyone’s standard of living through falling prices for communications, access to data, and the technology in our homes and everyday life could not possibly have happened.

Well, they have happened, and the falling prices of the products of the greatest private sector corporations on earth are proof that they are both popular and good for business. Furthermore, the either/or condition of inflation/deflation firmly believed by macroeconomists would logically rule out the impoverishment of people in hyperinflations. If rising prices are good for the economy, how come everyone was so unhappy in Germany’s Weimar Republic in 1923, or in Zimbabwe fifteen years ago? Surely, as inflation accelerates the happiness level should rise…… Continue reading

The Story Line Dissolves

Submitted by James Howard Kunstler  –  www.kunstler.com

Sometimes societies just go crazy. Japan, 1931, Germany, 1933. China, 1966. Spain 1483, France, 1793, Russia, 1917, Cambodia, 1975, Iran, 1979, Rwanda, 1994, Congo, 1996, to name some. By “crazy” I mean a time when anything goes, especially mass killing. The wheels came off the USA in 1861, and though the organized slaughter developed an overlay of romantic historical mythos — especially after Ken Burns converted it into a TV show — the civilized world to that time had hardly ever seen such an epic orgy of death-dealing.

I doubt that I’m I alone in worrying that America today is losing its collective mind. Our official relations with other countries seem perfectly designed to provoke chaos. The universities have melted into toxic sumps beyond even anti-intellectualism to a realm of hallucination. Demented gunmen mow down total strangers weekly in what looks like a growing competition to end their miserable lives with the highest victim score. The financial engineers have done everything possible to pervert and undermine the operations of markets. The political parties are committing suicide by cluelessness and corruption.

There is no narrative for our behavior toward Russia that makes sense anymore. Our campaign to destabilize Ukraine worked out nicely, didn’t it? And then we acted surprised when Russia reclaimed the traditionally Russian territory of Crimea, with its crucial warm-water naval ports. Who woulda thought? Then we attempted to antagonize them further with economic sanctions. The net effect is that Vladimir Putin ended up looking more rational and sane than any leader in the NATO coalition. Continue reading

Gold Demand in China Heading For Record and Reserves Increase 14 Tonnes In October

Submitted by Mark O’Byrne  –  GoldCore

While gold prices continue to languish in the doldrums and are on course for their worst month since 2013, global demand and especially Chinese retail, investor and official demand continues to remain very robust. Indeed, China looks likely to see a new record demand for gold annually again in 2015.

GoldCore: Shanghai Gold Exchange Gold Withdrawals

Shanghai Gold Exchange (SGE) deliveries as reported last Friday were again very robust with another 54.063 tonnes of bullion deliveries for the week ending November 20th. Shanghai Gold Exchange (SGE) deliveries remain the best indicator or proxy for actual Chinese demand and appear to show Chinese gold demand is heading for a new record in 2015 (see charts below).

China added another 14 tonnes or 450,000 troy ounces of gold bullion to its foreign exchange reserves in October.

GoldCore: Shanghai Gold Exchange - Gold Withdrawals week 45

Gold reserves rose to 1,722.5 metric tonnes or 55.38 million troy ounces at the end of October. This was up from 54.93 million at the end of September, data from the People’s Bank of China (PBOC) showed today. Continue reading

Refugee Crisis – Tears are Spilled in Sweden

Submitted by Pater Tenebrarum  –  The Acting Man Blog

The Dilemma

Politicians are faced with quite a dilemma over the refugee crisis in Europe: on the one hand, no-one wants to simply send back people fleeing from a brutal civil war or let them freeze to death in the coming European winter. On the other hand, it is crystal clear that many so-called “economic refugees” – which include numerous people who simply want to avail themselves of the welfare state goodies on offer in Europe – are exploiting the situation by riding piggyback on the stream of genuine war refugees.

 

Slovenia-Migrants_Horo-965x516Refugees crossing fields in Slovenia on their way to the Austrian border

Photo credit: Darko Bandic / AP

 

As Mish has correctly pointed out, the political leadership of Germany (and this holds for Sweden as well) has made a major mistake by telling asylum seekers to “just come”, in the process ignoring agreements on asylum policy laid down in the EU treaties. What many people apparently heard was: Welcome to our welfare state goodies, whoever you are!

Not surprisingly, this has not only attracted a huge wave of migrants to Europe, but has made choosers out of beggars. These days migrants tend to be picky about where they want to go. Naturally, they prefer the lands of milk and honey they have heard so much about. Who wouldn’t want as much free stuff as possible?

It is equally unsurprising that other European countries – which haven’t been consulted about this approach – are extremely reluctant to agree to the quota system for resettling refugees across Europe that has been proposed by Germany and the EU bureaucracy in Brussels. They accuse Germany of having exacerbated the crisis by advertising its open borders policy, which is undoubtedly true.

By now another thing has become clear: the welcoming culture is not only clashing with the wishes of an increasingly resentful and restless electorate, but also with economic realities. The countries that are most popular with asylum seekers have reached, or are close to reaching, the limits of their capacity to accommodate refugees. Continue reading

The Daily Debt Rattle

Submitted by Raúl Ilargi Meijer  –  The Automatic Earth

COP-21 Climate Deal In Paris Spells End Of The Fossil Era (AEP)
Oil’s Big Players Line Up for $30 Billion of Projects in Iran (Bloomberg)
India Opposes Deal To Phase Out Fossil Fuels By 2100 (Reuters)
Beijing Smog Levels So High They Move ‘Beyond Index’ (Bloomberg)
World’s Biggest Pension Fund Loses $64 Billion Amid Equity Rout (Bloomberg)
Iron Ore Falls Below $40 A Metric Ton For The First Time (Bloomberg)
Fed To Take Up ‘Too Big To Fail’ Emergency Lending Curb (Reuters)
Did the Yuan Really Pass the IMF Currency Test? You’ll Know Soon (Bloomberg)
IMF Move Would Pressure China on Management of Yuan (WSJ)
IMF’s Yuan Inclusion Signals Less Risk Taking In China (Reuters)
VW Top Execs Knew Fuel Usage In Some Cars Was Too High A Year Ago (Reuters)
BlackRock Spreads its Tentacles in Brussels (Don Quijones)
The Silk Road Affair: Power, Pop and a Bunch of Billionaires (Bloomberg)
The Strange Case Of Julian Assange (Crikey)
Saudi Arabia’s 2015 Beheadings The Most In 20 Years (Al Jazeera)
EU Split Over Refugee Deal As Germany Leads Breakaway Coalition (Guardian)
European Union Reaches Deal With Turkey on Migration (WSJ)
Tsipras Takes On Turkey’s Davutoglu On Twitter (AP)
As the World Turns Away, Refugees are Still Drowning in the Mediterranean (HRW)

FOURTH TURNING – POLITICIANS DRIVING THE WORLD TOWARDS WAR

Submitted by Jim Quinn  –  The Burning Platform

In Part 1 of this article I discussed the catalyst spark which ignited this Fourth Turning and the seemingly delayed regeneracy. In Part 2 I pondered possible Grey Champion prophet generation leaders who could arise during the regeneracy. In Part 3 I focused on the economic channel of distress which is likely to be the primary driving force in the next phase of this Crisis. In Part 4 I assessed the social and cultural channels of distress dividing the nation. In Part 5 I’ll examine the technological, ecological, political, and military channels of distress likely to burst forth with the molten ingredients of this Fourth Turning, and finally in Part 6 our rendezvous with destiny, with potential climaxes to this Winter of our discontent.

Technological & Ecological Distress

“Technological progress has merely provided us with more efficient means for going backwards.” Aldous Huxley – Ends and Means

The level of distress being produced by technology was probably underestimated by Strauss & Howe when they wrote their book in 1997. The internet, cell phones and e-commerce were still in their infancy, while cyber security was an unknown concept. Huxley would be shocked by how backwards we have “progressed” through the efficient distribution of iGadgets, creating millions of distracted, non-thinking, passive, easily pliable, willfully ignorant sheep who adore their technological servitude.

A vast swath of the populace never reads a book and can’t go more than a few minutes without checking their iGadget to view the latest funny cat video, the latest update on Kim Kardashian’s ass, Bruce/Caitlyn Jenner’s courage, or Lamar Odom’s latest whorehouse escapade. Our country is drowning in a sea of irrelevance as our infinite craving for diversions and triviality overwhelms any thoughts of confronting our oppressors. The adoration of technology has degraded our ability to think and allowed the Deep State to control the masses by amusing them to death.

The totalitarian Orwellian utilization of technology was exposed by a millennial with courage, intelligence, and love of his country – Edward Snowden. His revelations were very distressful to the felonious government apparatchiks who blatantly flaunt their disregard for the Fourth Amendment to the Constitution. The criminals at the NSA, fully supported by Obama and Congress, have made Big Brother look like an amateur, as they siphon up every phone call, text, email, and facebook entry made by each person in this country and for good measure the political leaders of our allies and enemies. Continue reading

Black Weekend

Submitted by Raúl Ilargi Meijer  –  The Automatic Earth


Sign on Greece/FYROM border Nov 2015How black would you like your Thanksgiving Friday slash weekend? Many Americans don’t even appreciate the term, or the events, at all anymore (or so they say), but the idea of getting what you don’t need, or want, on the cheap, will still prove irresistible. But then, when all of your desires have been fulfilled, food wise and gadget wise, and you’re still feeling empty, maybe we can help and offer a sweeping redefinition of the term Black Friday.

Since we live in times that see many other things on the verge of being sweepingly redefined, too, and imminently so, perhaps that’s only fitting. How about this, for starters? Black enough for you?

Six Migrant Children Drown On Way To Greece

Turkish state media say six children have drowned when boats carrying migrants to Greece sank in two incidents off the Turkish coast. A wooden boat smuggling some 20 people to the island of Kos capsized in bad weather off the Aegean resort of Bodrum early on Friday. The state-run Anadolu Agency says most of the migrants made it to shore with the help of rescuers, but two sisters aged 4 and 1 drowned. Their nationalities were not immediately known. The agency says a second boat carrying as many as 55 migrants from Syria and Afghanistan sank hours later off the town of Ayvacik, further north. Four Afghan children drowned in that incident, Anadolu reported. Ayvacik is a main crossing point for migrants trying to reach the island of Lesvos.

Or have we already all gotten too blasé about those dead babies by now? They’ve been washing up on those beaches for half a year or so, after all. How about those who survive the seas, and then get stuck behind a razor wire fence halfway to their preferred destinations?

Remember the men who had sewn their lips shut? Not even that is enough for more than a few hours of media attention anymore. Not nearly as much as being suspected of terrorism; that sells much better than desperation. So, presumably, will being in the way of goods of ‘important’ companies like Sony and HP’s goods reaching their destination, even if you can’t reach yours. Life is all about priorities. Continue reading

“Evil Muslims” and Untrustworthy GDP Figures

Submitted by William Bonner, Chairman – Bonner & Partners

“Muslims Are Evil”

BALTIMORE – Manuel Valls, the prime minister of France, says the risk of terrorism will hang over the country for many years. Whether this is prophecy or wishful thinking, we don’t know.

But it seems at odds with the recent promise to “annihilate” ISIS made by French president François Hollande. But the fight against terrorism is full of contradictions and paradoxes.

 

coverimage2Cartoon via spectator.co.uk

 

In Fredericksburg, Virginia, for example, plans to expand the local mosque were met with a torrent of objections. All of Christendom – or at least that part of it in central Virginia – was horrified.

Some of the protesters shouted, to Muslims who had celebrated Thanksgiving in their midst for as many as 20 years, that “Muslims are evil!” Others urged listeners to “look at history… the Muslims have always been our enemies.”

This sentiment is so widely shared – not just by rednecks and yahoos in remote and benighted precincts of the Republic, but also by some of its leading historians, presidential candidates, and state governors – that we thought we should give it more consideration. Continue reading

Capitalism At Work

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

Zero Hedge reports a story from “Keep Talking Greece” that first appeared in The Timeshttp://www.thetimes.co.uk/tto/news/world/europe/article4624755.ece

According to the story, the plummeting living standards forced on the Greek people by German chancellor Merkel and the European banks have forced large numbers of young Greek women into prostitution. The large increase in the supply of women offering sexual services has dropped the price to 4 euros an hour. That’s $4.24, enough for a cheese pie or a sandwich, the value that bankster-imposed austerity has placed on an hour’s use of a woman’s body. The half hour price is $2.12. They don’t even get the minimum wage.

When one reads a story such as this, one hopes it is a parody or a caricature. Although the London Times has fallen a long way, it is not yet the kind of newspaper that can be purchased at grocery store checkout counters.

The story gains credence from the websites in the US on which female university students advertise their availability as mistresses to men who have the financial means to help them with their expenses. From various news reports, mistress seems to be a main occupation of female students at high-cost universities such as NYU.

The NYU girls have it far better than the Greek ones. The mistress relationship is monogamous and can be long-lasting and loving. Prudes make an issue of the disparity in ages, but disparity in age was long a feature of upper class marriages. Prostitutes have large numbers of partners, each possibly carrying disease, and they receive nothing in return except cash. In Greece, if the report is correct, the payment is so low that the women cannot survive on the money beyond lunchtime. Continue reading