Repricing Reality

Submitted by James Howard Kunstler  –  The KUNSTLER Blog

It ought to be a foregone conclusion that Mr. Obama’s replacement starting January 20, 2017 will preside over conditions of disorder in everyday life and economy never seen before. For the supposedly thinking class in America, the end of reality-optional politics will come as the surprise of their lives.

Where has that hypothetical thinking class been, by the way, the past eight years? Don’t look for it in what used to be called “the newspapers.” The New York Times has become so reality-averse that the editors traded in their blue pencils for Federal Reserve cheerleader pompoms after the Lehman incident of 2008. Every information-dispensing organ has followed their lede: The Recovery Continues! It’s a sturdy plank for promoting the impaired asset known as Hillary.

Don’t look for the thinking class in the universities. They’ve surrendered their traditional duties to a new hybrid persecution campaign that is equal parts Mao Zedong, the Witches of Loudon, and the Asylum at Charenton. For instance the President of Princeton, Mr. Eisgruber, was confronted with a list of demands that included 1) erasure of arch-segregationist Woodrow Wilson’s name from everything on campus, and 2) creation of a new all-black (i.e. segregated) student center. He didn’t blink. Note: nobody in the media asked him about this apparent contradiction. That’s how we roll these days.

Don’t look for the thinking class in business. The C-suites are jammed with people still busy buying back stock in their own companies at outlandish prices with borrowed money. Why? To artificially boost share price and thus their salaries and bonuses. Does it do anything for the fitness of enterprise? No, in fact it makes future failure more likely. Why is there no governance of their insane behavior? Because they’ve also bought and paid for boards of directors composed of a rotating cast of praetorian shills, with fresh recruits entering the scene weekly through the fabled “revolving door” between business and government regulators. Continue reading


Submitted by Jim Quinn  –  The Burning Platform

It is now self-evident to any sentient being (excludes CNBC shills, Wall Street shyster economists, and Keynesian loving politicians) the mountainous level of unpayable global debt is about to crash down like an avalanche upon hundreds of millions of willfully ignorant citizens who trusted their politician leaders and the central bankers who created the debt out of thin air. McKinsey produced a report last year showing the world had added $57 trillion of debt between 2008 and the 2nd quarter of 2014, with global debt to GDP reaching 286%.

The global economy has only deteriorated since mid-2014, with politicians and central bankers accelerating the issuance of debt. These deranged psychopaths have added in excess of $70 trillion of debt in the last eight years, a 50% increase. With $142 trillion of global debt enough to collapse the global economy in 2008, only a lunatic would implement a “solution” that increased global debt to $212 trillion over the next seven years thinking that would solve a problem created by too much debt.

The truth is, these central bankers and captured politicians knew this massive issuance of more unpayable debt wouldn’t solve anything. Their goal was to keep the global economy afloat so their banker owners and corporate masters would not have to accept the consequences of their criminal actions and could keep their pillaging of global wealth going unabated.

The issuance of debt and easy money policies of the Fed and their foreign central banker co-conspirators functioned to drive equity prices to all-time highs in 2015, but the debt issuance and money printing needs to increase exponentially in order keep stock markets rising. Once the QE spigot was shut off markets have flattened and are now falling hard. You can sense the desperation among the financial elite. The desperation is borne out by the frantic reckless measures taken by central bankers and politicians since 2008.

  • 637 rate cuts since Bear Stearns
  • $12.3 trillion of asset purchases by global central banks in the past 8 years
  • $8.3 trillion of global government debt currently yielding 0% or less
  • 489 million people currently living in countries with official negative rates policies (i.e. Japan, Eurozone, Switzerland, Sweden, Denmark)
  • -0.92%, the most negative yield in the world (2-year Swiss government bond)

Continue reading

The Neoconservatives Are Brewing A Wider War In Syria

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

While you are enjoying your Sunday, the insane neoconservatives who control Western foreign policy and their Turkish and Saudi Arabian vassals might be preparing the end of the world.

Any person who relies on Western media has no accurate idea of what is happening in Syria.
I will provide a brief summary and then send you to two detailed accounts.

The neoconservative Obama regime set-up the Syrian government headed by Assad for overthrow. A long propaganda campaign conducted in Washington’s behalf by the Western media portrayed the democratically-elected Assad as a “brutal dictator who uses chemical weapons against his own people.” Washington organized and supported a front group posing as democrats and involved them in conflict with the Syrian military.

With conflict underway, Washington began predicting that something had to be done to overthrow Assad before he used “chemical weapons against his own people.” Obama turned these predictions into a “red line.” When Assad used chemical weapons against Washington’s puppets, the US would invade Syria.

With the “red line” drawn, a false flag chemical weapons attack was staged, or an accident occurred, that Washington used to say that Assad, despite the US warning, had crossed the “red line.”

Preparations for an invasion began, but hit two roadblocks. David Cameron, Washington’s puppet prime minister of Great Britain was unable to deliver British support for the invasion as the Parliament voted it down. This left Washington uncovered and vulnerable to the charge of naked aggression, a war crime.

Russian diplomacy threw up the other road block by securing the removal of all chemical weapons from Syria.

Their invasion plan frustrated, the neoconservatives sent the jihadists they had used to overthrow Gaddafi in Libya to overthrow Assad. Initially known as ISIS, then ISIL, then the Islamist State, and now Daesh, a term that can be interpreted as an insult. Perhaps the intention of the name changes is to keep the Western public thoroughly confused about who is who and what is what. Continue reading

EM Corporate Debt Is Not A Local Problem

Submitted by Jeffrey Snider  –  Alhambra Investment Partners

If we have at least a good idea about the gross exposure to US junk if not who ultimately holds and funds it, the emerging markets infiltration is much more difficult to parse. There are only a handful of estimates that appear reliable enough to obtain a decent range estimate. The first comes from the BIS and was written in 2013. At the time, the paper caused some stir as it announced what many had expected mostly about China – it had participated fully in the “dollar” short through several conduits, including the financial sector which was borrowing (through loans and bonds) offshore to fund client activities onshore (in dollars).

Given the ongoing hysteria in Chinese markets vis-à-vis the “dollar”, I tend to believe their estimates were understated to considerable degree. Still, in terms of trying to find exposure among even the general “offshore” suppliers of “dollars” it is a helpful beginning.

As a consequence, a significant share of Chinese corporate debt securities issued in OFCs [offshore financial centers], 16%, is denominated in renminbi. That said, the US dollar remains by far the most important currency of issuance for Chinese firms, accounting for 77% of corporate issuance in OFCs. Again, this could reflect differences in the cost of funding. Dollar-denominated rates are below comparable renminbi rates and many players expect an appreciation of the Chinese currency.
What do Chinese corporations do with the dollars raised by issuing debt securities in OFCs? First, around one third of offshore issuance is by Chinese financial institutions that fund dollar lending in China. Second, nonfinancial issuance could reflect the internationalisation of Chinese firms. Chinese corporations have been purchasing assets around the globe recently, and at least part of these purchases appears to have been financed by borrowing abroad. This could explain the relatively high share of firms in the oil and gas sector in Chinese non-financial corporations’ offshore issuance. In addition, a good part of the firms in the “Other” sector appear to be manufacturers with overseas operations. [emphasis added]

The paper estimated that from July 2012 through June 2013 Chinese firms had issued a bit less than $50 billion in debt securities, gross, of which $20 billion was made up of those “other” firms including financials. About $4 billion of that was denominated in RMB, leaving the rest foreign and mostly US$.

The other large issuer offshore was, of course, Brazil. While Chinese firms had been self-funded onshore (whether or not through financial conduits for “dollars” onshore isn’t clear) prior, Brazilian firms never had the luxury. That means, straight away, the largest pools of offshore EM debt securities are going to be heavily Chinese and Brazilian, with really little else in concentration. Continue reading

This Time Is Different!

Submitted by Pater Tenebrarum  –  The Acting Man Blog

Experts Agree: It Is Not 2008

If someone were to ask us what year it was, we would probably politely answer that it was 2016, curious to find out whether the inquirer was a) very confused, b) had only recently awoken from a coma and was still unsure of his when-abouts, or c) was a time traveler who got temporarily lost.

In the unlikely case that we should find ourselves unable to remember the year with sufficient precision to ensure a reliable answer, we’d probably consult a calendar. We recently found out that a great many people actually seem to be uncertain about what year it is. Or at least many mainstream media appear to think so, as they have launched an intense awareness campaign.

Specifically, numerous people seem to think it is still 2008. Wish that it were so – we’d be eight years younger. It all started on 24 August 2015, when two publications apparently discovered independently of each other that is was no longer 2008 and decided that this information should be urgently imparted to the rest of humanity. It all started with admonishing its readers to engage in mnemonic exercises so as not to forget:

1-Marketplace-dot-org-Aug-24-2015If you repeat it often enough, remembering it will eventually become second nature…

Photo via Continue reading

Gold Price Pulls Back As “Bad Actor” Fed Signals Slower Rate Hike Cycle

Submitted by Mark O’Byrne  –  GoldCore

Volatility, loss of confidence and central bank impotence stalk the capital markets. Gold pulls back in an expected retrenchment. Equity markets are still digesting what the world looks like: absence of a strong Chinese domestic economy, developing economies losing their easy credit, oil prices adjusting to demand levels indicative of economic activity and, most tragically, the continuing proxy wars fought in the middle east as warmongers continue to slaughter innocent civilians.

Gold in USD – 1 Week

Monetarily speaking the markets are just not playing to the script. It must be infuriating for the unelected officials at our all-powerful central banks to have to take steps to remind or tell, nay, instruct the markets what is correct and what is not. By enforcing interest rates on the market, the Fed, and by extension every other central bank, has denied the market its internal risk rebalancing mechanism. They have manhandled the markets into short term submission, created unintended bubbles which inconveniently burst and exposed the sheer madness and short-sightedness of the modern Keynesian-based monetary model.

When the markets do not buy the message, central banks summon their proxies to bid up or smack down the markets for debt, equities and commodities. They write the script, provide insiders sight of their plans and coordinate market manipulation to give the script meaning and the impression of their competence and foresight. Continue reading

The Daily Debt Rattle

Submitted by Raúl Ilargi Meijer  –  The Automatic Earth

• Japan’s Economy Shrinks 1.4% As Abenomics Is Blown Off Course (Guardian)
• China Imports Plunge -18.8% YoY In January, Exports Fall -11.2% (FT)
• Yuan Rises Most Since 2005 as PBOC Voices Support, Raises Fixing (BBG)
• PBoC Governor Zhou Breaks Long Silence (BBG)
• Chinese Start to Lose Confidence in Their Currency (NY Times)
• China Markets Brace for Wild Swings in Year of the Monkey (WSJ)
• Selloff Plus A Market Holiday Make China Stocks Look Even More Expensive (BBG)
• Hong Kong Land Price Plunges Nearly 70% in Government Tender (BBG)
• Pakistan Default Risk Surges as $50 Billion Debt Bill Coming Due (BBG)
• ECB In Talks With Italy Over Buying Bundles Of Bad Loans (Reuters)
• Italy’s Banking Crisis Spirals Elegantly out of Control (WS)
• Nuclear Fuel Storage in South Australia Seen as Economic Boon (BBG)
• Oil Resumes Drop as Iran Loads Europe Cargo (BBG)
• Condensate Vs Crude Oil: What’s Actually in Those Storage Tanks? (Westexas)
• Renewables: The Next Fracking? (JMG)