Garbage In Garbage Out Economics

Garbage In Garbage Out Economics
‘On two occasions I have been asked, ‘Pray, Mr. Babbage, if you put into the machine the wrong figures, will the right answers come out? … I am not able rightly to apprehend the kind of confusion of ideas that could provoke such a question.’ – Charles Babbage, Passages from the Life of a Philosopher.’
Crunching Data to Fix Prices
The fundamental problem facing today’s economy is the flagrant contempt by governments the world over for the free exchange of goods and services and private stewardship of property. Perhaps it is power and control governments are after. Maybe they believe they are improving the economy and making the world a better place for all.
No one really knows for sure. But what is lucidly clear is the muddled disorder modern day economic policies have wrought upon us. You can hardly enter into a transaction without a cluster of intervention mucking with the price of payment.
Taxes, tariffs, wage laws, and subsidies. These all impact prices. But the main culprit affecting prices and trade are central bank interventions into money and credit markets. Relentless actions to control the economy by manipulating money and credit stand the price of everything else on end.
Certainly, government intervention into the U. S. economy is much looser than a Soviet style command and control system. But it does share a common refrain. Price fixing is central to its operation.
The Soviets, armed with their Five-Year Plans and the Theory of Productive Forces, deliberately directed how much wheat should be planted and how much a potato should cost. Conversely, the U. S. approach is mostly hidden from the short sighted view of the average lay person. The Federal Reserve allows the government to bypass the nuisance of tinkering with individual prices…though they still do it through subsidies and appropriations.

This post was published at Acting-Man on November 3, 2015.

US Econ Data Shows Increased Bubbleization and Government Dependancy

If the U. S. economy was really healthy, the closer you looked at the data, the more signs of real vigor you’d see. What a drag, then, to report that evidence of continued, and even increased bubble-ization keeps abounding under the hood.
Last week, I posted on how the details of the latest government report on the gross domestic product (GDP) and its makeup makes clear that the nation’s expansion today is nearly as dependent on the dangerous combination of personal spending and housing as it was during the previous bubble decade – which of course came to an end with the terrifying financial crisis of 2007-2008. Today the trend I’ll highlight is the economy’s growing reliance on government spending, rather than private sector economic activity, for desperately needed growth.
As we saw last week, the Commerce Department’s first (of several) estimates of inflation-adjusted growth in the third quarter of this year came in at a dreary 1.50 percent at an annualized rate. And as a result, the economy remained excessively dominated by that toxic spending-housing combination that helped trigger the crisis. But government spending also showed up as a major growth engine. In fact, it was responsible for more of the quarterly increase in economic activity than at any time since the current recovery was in its earliest stages, and government stimulus was still playing an outsized role propping up the economy.

This post was published at Wall Street Examiner by Alan Tonelson ‘ November 3, 2015.

Why Most Investors Will Never Go Back To Stocks Again, In One Chart

The simple answer: the risk/return is simply not worth it.
Whether it is two recent yet “generational” crashes still fresh in most investors’ minds, or the countless micro flash crashes witnessed daily and countless market fragmentation events thanks to the ubiquitous penetration of HFT in every asset class which have led to partial or wholesale market closures and a risk to principal far beyond what is embedded in the “fundamentals”, not to mention the risk that faith in central planning simply runs out in any given moment, for many equities are simply, as SocGen puts it, “too scary.”

This post was published at Zero Hedge on 11/03/2015.

Currency Controls Strangle Argentina, But Hey, ‘Take it up with the Next Government, We’re on Our Way Out’

Last week wasn’t easy for President-on-her-way-out Cristina Fernndez de Kirchner. On the political front, she treated us with deafening silence following her candidates’ poor performances in the general election. But on the economic front her government was not so quiet.
Remember how Argentina’s reserves, or how much foreign currency the Central Bank holds, has been creeping lower despite foreign currency controls? Last week the Central Bank (BCRA) and National Insurance Regulator jumped back in to keep the country from running out of money for just a little while longer.
First, the BCRA raised interest rates by three percent, the highest in 18 months, to try to make holding pesos more attractive. Shockingly, not many people rushed to buy peso notes. The government sold ARS $11.3 billion, five percent less than the previous week, despite the higher rate.
Next, the Insurance Regulator passed a new law forbidding insurance companies from holding dollar assets in excess of their dollar contracts. English translation: Insurance companies whose clients are in Argentina and thus likely have peso-denominated policies cannot hold dollars even though the peso is likely to depreciate before these policies are paid. Not good news for the peso policy holder.

This post was published at Wolf Street by Bianca Fernet – November 3, 2015.

NOV 3/ANOTHER 2.98 TONNES LEAVES THE GLD/IN THE PAST 3 DAYS 8.04 TONNES HAVE LEFT/COMEX DEALER (REGISTERED) GOLD DOWN TO ONLY 4.7 TONNES/ GOLD OPEN INTEREST DOES NOT FALL MUCH WITH THE RAID YESTE…

Gold: $1114.20 down $21.60 (comex closing time)
Silver $15.24 down 27 cents
In the access market 5:15 pm
Gold $1117.80
Silver: $15.28
First, here is an outline of what will be discussed tonight:
At the gold comex today, we had a very poor delivery day, registering 0 notices for nil ounces. Silver saw 0 notices for nil oz.
Several months ago the comex had 303 tonnes of total gold. Today, the total inventory rests at 208.32 tonnes for a loss of 95 tonnes over that period.
In silver, the open interest fell by only 1202 contracts despite silver being down 16 cents in Friday’s trading. The total silver OI now rests at 167,743 contracts In ounces, the OI is still represented by .838 billion oz or 120% of annual global silver production (ex Russia ex China).
In silver we had 0 notices served upon for nil oz.
In gold, the total comex gold OI fell by a rather small 533 to 450,584 contracts as gold was down $5.70 yesterday. We had 0 notices filed for nil oz today.
We had another huge withdrawal in gold inventory at the GLD to the tune of 2.98 tonnes (same amount of withdrawal yesterday) / thus the inventory rests tonight at 686.30 tonnes. The appetite for gold coming from China is depleting not only gold from the LBMA and GLD but also the comex is bleeding gold. It sure looks like 670 tonnes will be the rock bottom inventory in GLD gold. It looks to me that China has taken the last amounts of physical gold from the GLD. I guess the only place left for China to receive physical gold will be the FRBNY and the comex. In silver, no change in silver inventory / Inventory rests at 313.817 million oz.
We have a few important stories to bring to your attention today…

This post was published at Harvey Organ Blog on November 3, 2015.

Scorcher 6: Q4 GDP At 1.9 Percent

The news from the Atlanta Fed about the start of Q4 2015 is less than positive. According to their real-time GDP tracker, Q4 GDP growth stands at 1.9%.
The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the fourth quarter of 2015 is 1.9 percent on November 2, down from 2.5 percent on October 30. Following this morning’s Manufacturing ISM Report On Business, the forecast for fourth-quarter real consumer spending growth declined from 2.9 percent to 2.4 percent while the forecast for real equipment investment growth declined from 3.9 percent to 1.3 percent.

Meanwhile, the Wu-Xia Shadow Federal Funds Rate stood at -0.74 percent on September 30.

This post was published at Wall Street Examiner on November 3, 2015.

The Economy Just Hit Rock Bottom, The US Recovery Is An Illusion – Episode 808a

The following video was published by X22Report on Nov 3, 2015
The middle class is broke, the middle class will not be able to support the holiday season. Factories decline as the economy hits rock bottom. The global recession has arrived and the private western central bank countries are collapsing. Illegals are roaming the streets and 180,000 of them are criminals. According to a new poll American’s do not believe the global warming hoax. The stingray device is much worse than everyone expected.

Major US Company Preps for Financial Crisis – Are You Ready?

One of America’s largest online retailers has prepared for a financial crisis. Have you?
During a recent speech (see video below) at the United Precious Metals Association, Overstock.com Chairman Jonathan Johnson said the company has stockpiled $10 million in gold and silver outside of the banking system. He said most of the gold is in the form of ‘button coins’ suitable for payroll:
We want to be able to keep our employees paid, safe, and our site up and running during a time of financial crisis.’
The company also has a plan to ensure employees have access to food in the event of a major economic meltdown. Overstock.com sells freeze dried food. Johnson said the company always maintains inventory on hand to feed every employee plus one other person, such as a spouse, for three months.
Some people may ridicule the company’s preparations as unnecessary, but Johnson is simply responding to history he believes will likely repeat itself. He points out that he predicted the most recent economic meltdown and government policy remains basically unchanged:


This post was published at Schiffgold on NOVEMBER 3, 2015.

Probability of Dec Fed Funds Target Rate Hike Now Above 50 Percent

According to The Fed Funds futures data, the implied probability of an increase in the Fed Funds target rate at the December meeting is 52%. And the implied probability has been rising over the past month, despite the dismal economic data.

The US Treasury yield curve has risen by over 20 basis points for the 5 and 7 year Treasury yields, indicating that the market assessment of a rate increase in rising.

This post was published at Wall Street Examiner by Anthony B. Sanders – November 3, 2015.

“Shocking And Incredible”: IG Slams DOD For “Having No Knowledge” About $800 Million Program

By now most have heard of the infamous gas station in Sheberghan, northern Afghanistan which “cost” the U. S. Department of Defense nearly $43 million to build, even though its real cost was only $500,000. This “world’s most expensive gas station” has promptly become the latest example of waste and budgetary abuse which comes courtesy of a debt ceiling which is increased by over $1 trillion every year and a government whose only purpose is to spend every dollar budgeted to it or else risk losing future fund allocations.

This post was published at Zero Hedge on 11/03/2015.

What Can’t Go On Won’t Go On, Part 1: Corporate Leverage

By now everyone knows the corporate share repurchase story, about how major companies are engineering higher per-share profits and share prices by buying back their stock and raising their dividends. But just how much they’re spending may still come as a shock.
Today’s New York Times quotes Laurence Fink, CEO of mutual fund giant of BlackRock, bemoaning the short-sighted behavior of his peers: ‘Mr. Fink noted that companies in the Standard & Poor’s 100-stock index are paying out 108 percent of their earnings to shareholders.’
That’s a lot of cash flowing out the door, and leads to the obvious question of where the excess is coming from. This morning Bloomberg provided the answer, via a chart from Citigroup analyst Stephen Antczak, which is of course that they’re borrowing it:

This post was published at DollarCollapse on November 3, 2015.

Wholesale Money Markets Are “Perverted” – US Swap Spreads Hit Record Lows

At the height of the financial crisis, the unprecedented decline in swap rates below Treasury yields was seen as an anomaly. The phenomenon is now widespread, as Bloomberg notes, what Fabozzi’s bible of swap-pricing calls a “perversion” is now the rule all the way from 30Y to 2Y maturities. As one analyst notes, historical interpretations of this have been destroyed and if the flip to negative spreads persists, it would signal that its roots are in a combination of regulators’ efforts to head off another financial crisis, massive corporate issuance (which we are seeing), China selling pressure (and its impact on repo markets) and “broken” wholesale money-markets.

This post was published at Zero Hedge on 11/03/2015.

Presenting 5 1 Ways To Smuggle Billions Out Of China

Last week, we brought you the story of ‘Mr. Chen’ and his ‘yellow loafers,’ tea, and Snickers bars.
Chen is apparently a kind of catch-all for China’s network of underground bank frontmen operating out of kiosks selling candy bars and ‘fizzy drinks’ (to quote WSJ). As long as you know the right shady go-between, you can work with Chen to move money out of the country in violation of the official $50,000/year limit.
The method of choice for these ‘banks’ is apparently “matchmaking”, whereby you simply give Chen some money and the funds show up a few hours later in Hong Kong.
Of course this is an underground business and so things don’t always go as planned, something a ‘Mr. Chan’ (with an “a”) discovered when he attempted to move CNY63 million out of the country via ‘Mr. Chen’ (with an “e”) only to find that once the transaction was complete, he only had CNY8 million left. That’s a pretty hefty fee even in the world of money laundering and so, Chan reported ‘Chen’ to the authorities. The subsequent investigation led to the arrest of some 31 people and netted 1,087 accounts holding some CNY12 billion.
None of the accused were ever heard from again.

This post was published at Zero Hedge on 11/03/2015.

TDV Interview Series: Bo Polny on the Shemitah

The following video was published by TheDollarVigilante on Nov 3, 2015
Jeff interviews Bo Polny of Gold2020forecast.com, topics include: Bo has been following the Shemitah for years picking November this year for the major event, the Shemitah started in September but leads up to the major event in November, historic market cycles and accurate predictions yield consistent returns, markets at the point of a major turn, massive breakout for gold and silver, the only strength left in the world is the US market and that looks like it is topping now, the Jubilee year means the meltdown can occur any through the year up to October 2016, the flight to safety will be into gold and silver, when the moving average fails we are going to have some major movement in the price of gold, watch the price very closely!

A bull in a bearish Gold market

After a tough summer that saw erratic price movements across commodities, spot gold hit a four-week low on Monday. But that has not deterred one German gold bullion dealer from expanding into Asia for the first time.
Degussa Goldhandel opened its first Asia Pacific office, in the heart of Singapore’s shopping and lifestyle district, Orchard Road, last week. Degussa chief executive Wolfgang Wrzesniok-Rossbach said that he was upbeat about the precious metal’s future.
‘If you ask me where from here in the next year, I think $1,500 is more likely than a $1,000 in the next 12 months,’ he said.
Gold prices reached a high of $1,294.15 per ounce in January, before hitting the year’s lowest at $1,093.8 in August. On Tuesday during Asian trade spot gold was hovering close to Monday’s four-week low of $1,132.25.
Goldman Sachs said in a recent note that short rallies in gold prices did not change the dull outlook for gold over the longer term, especially as the Federal Reserve normalizes U. S. monetary policy. Like the expected Fed rate hikes, Goldman said the decline in gold prices would be gradual, with the metal sliding to $1,100, $1,050 and then $1,000 over the next three, six and 12 months.
Degussa’s Wrzesniok-Rossbach, however, puts up a strong argument against this view.
Excess supply of scrap gold and a disinvestment in gold exchange-traded funds in western countries have kept gold prices low in the past, he said, but these ‘two major factors actually depressing the price in the last two years have fallen away’.
Political uncertainty and volatility in capital markets were creating a need for diversification in investment portfolios, and gold was considered a safe haven for investors, said Wrzesniok-Rossbach, adding ‘there is higher demand [for gold] on the retail side,’ a segment that makes up a majority of the company’s business.
The company sells gold bars and coins to individual retail investors and has a growing jewelry and lifestyle business, said Wrzesniok-Rossbach. Degussa also buys scrap gold – old, worn jewelry, or bars and coins – in Europe; the service is not yet available in Singapore.

This post was published at TruthinGold on November 3, 2015.

Bond Yields Grind Higher As December Rate Hike Suddenly All Too Real

It’s different this time… The last two times that Fed hike probabilities (and thus timing of liftoff) surged, the long-end of the bond market rallied (suggesting a premature hike would slow the economy medium-term). The last few days, since The FOMC Statement, Treasury yields have surged (with the short-end underperforming) as 10Y tops 2.25% and 30Y nears 3.00%. As BofAML noted, “if The Fed hikes rates and the long end yield tumbles, that means policy failure,” and so we suspect, in all its confirming-bias perfection, the long-end is being sold to ‘convince’ the world that The Fed is right to raise rates.

This post was published at Zero Hedge on 11/03/2015.

A Furious Trump Goes After Janet Yellen: “She Is Not Raising Rates Because Obama Told Her Not To”

Having gone after the entire GOP primary playing field, earlier today during a press conference held in his very own Trump Tower, Donald Trump decided to target his ire at a more worth adversary:US monetary policy in general, and Janet Yellen in particular.
This is what he said:
“The question is should the Fed raise rates? They are not raising them because Obama has asked them not to raise them. In my opinion, he wants to get out of office, because we’re in a bubble and when those rates are raised, a lot of bad things are going to happen. In my opinion Janet Yellen is highly political and she’s not raising rates for a very specific reason: because Obama told her not to because he wants to be out playing golf in a year from now and he wants to be doing other things and he doesn’t want to see a big bubble burst during his administration.

This post was published at Zero Hedge on 11/03/2015.

US Factory Orders Miss Again, Drops Year-Over-Year For 11th Month In A Row

It’s just factory orders…ignore it. For the 11th month in a row, US Factory Orders have fallen year-over-year, re-acclerating the most recent drop to -6.9%, something that has not happened outside of a recession in history. In fact, adjusting for the one-off Boeing surge in July 2014 this is biggest Y/Y drop since October 2008. Month-over-month, orders fell 1.0% (more than expected), down for the 11th month in the last 14. The good news is that inventories dropped 0.4% (for the 3rd month in a row) but that will further hurt GDP, but, unfortunately, inventories-to-shipments remain at 1.35x cycle highs.

This post was published at Zero Hedge on 11/03/2015.