Sicily votes 81% against the EU Status Quo – It Begins!

The contagion from Catalonia is indeed spreading to Italy. The Democratic Party (PD) led by former Italian Prime Minister Matteo Renzi has suffered a severe defeat in Sicily. The Eurosceptic parties have won the election sending yet another warning sign to Brussels that they refuse to accept demand reform.
The Democratic Party has lost the regional elections in Sicily in a very DRAMATIC way. Renzi’s party came in third place with just 19% of the vote. The candidate, supported by Silvio Berlusconi, has won around 40%. I have written before that RELIABLE sources revealed that the EU had staged a coup in Italy to overthrow Berlusconi because he was proposing back then to exit the Euro.

This post was published at Armstrong Economics on Nov 10, 2017.

Is There Any Way Out of the ECB’s Trap?

The ECB faces the Devil’s Alternative that Frederick Forsyth mentioned in one of his books. All options are potentially riskly. Mario Draghi knows that maintaining the so-called stimuli involves more risks than benefits, but also knows that eliminating them could make the eurozone deck of cards collapse.
Despite the massive injection of liquidity, he knows that he can not disguise political risks such as the secessionist coup in Catalonia. The Ibex reflects this, making it clear that the European Central Bank does not print prosperity, it only puts a floor to valuations.
The ECB wants a weak euro. But it is a game of juggling to pretend a weak euro and at the same time a strong economy. The European Union countries export mostly to themselves. Member countries sell more than two-thirds of their goods and services to other countries in the eurozone. Therefore, the more they export and their economies recover, the stronger the euro, and with it, the risk of losing competitiveness. The ECB has tried to break the euro strength with dovish messages, but it has not worked until political risk reappeared. With the German elections and the prospect of a weak coalition, the results of the Austrian elections and the situation in Spain, market operators have realized – at last – that the mirage of ‘this time is different ‘in the European Union was simply that, a mirage.

This post was published at Ludwig von Mises Institute on 11/09/2017.

Bitcoin Price Doubles In Troubled Zimbabwe

A surprise political move by Zimbabwean president Robert Mugabe, who fired his deputy Emmerson Mnangagwa, has played havoc on the US dollar/bond note parallel exchange rate, as well as on Bitcoin price in the country.
As CoinTelegraph reports, Bitcoin was already trading at a highly inflated rate in the troubled African country as its demand skyrocketed as a potential alternative to the dregs of a currency that Zimbabwe has left. However, that inflation has hit almost 100 percent as it trades about $13,000 per coin.
Trading on uncertainty
Unsurprisingly, with this latest political coup by the entrenched president, there is much speculation and worry about the already fragile and almost non-existent fiat currency system. Zimbabwe operates on bond notes linked to the US dollar.
Traders have been trying to move out of monetary assets as even on the dollar there is a 62 percent premium.
It has meant that investors are trapped by the currency shortages, seeking an alternative to exit the country – such as Bitcoin. Despite hitting a price of over $13,000 traders say that Bitcoin is booming as it is the strongest alternative.

This post was published at Zero Hedge on Nov 9, 2017.

Real Motive Behind Saudi Purge Emerges: $800 Billion In Confiscated Assets

From the very beginning, there was something off about Sunday’s unprecedented countercoup purge unleashed by Mohammad bin Salman on alleged political enemies, including some of Saudi Arabia’s richest and most powerful royals and government officials: it was just too brazen to be a simple “power consolidation” move; in fact most commentators were shocked by the sheer audacity, with one question outstanding: why take such a huge gamble? After all, there was little chatter of an imminent coup threat against either the senile Saudi King or the crown prince, MbS, and a crackdown of such proportions would only boost animosity against the current ruling royals further.
Things gradually started to make sense when it emerged that some $33 billion in oligarch net worth was “at risk” among just the 4 wealthiest arrested Saudis, which included the media-friendly prince Alwaleed.

This post was published at Zero Hedge on Nov 8, 2017.

Remembering Communism’s Bloody Century

In the 100 years since Lenin’s coup in Russia, the ideology devoted to abolishing markets and private property has left a long, murderous trail of destruction…
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A century ago this week, communism took over the Russian empire, the world’s largest state at the time. Leftist movements of various sorts had been common in European politics long before the revolution of Oct. 25, 1917 (which became Nov. 7 in the reformed Russian calendar), but Vladimir Lenin and his Bolsheviks were different. They were not merely fanatical in their convictions but flexible in their tactics – and fortunate in their opponents.

This post was published at Zero Hedge on Nov 5, 2017.

The Results of Financialization – Part III

THE BIG REVERSAL
After three and half decades the global economy has now entered a three and half year period of slow rotational change which will likely be seen in future years as the “Great Reversal”.
DEBT + DEMOGRAPHICS + DISRUPTION = DEFLATION
We are leaving an era which as witnessed unprecedented global debt growth, work force demographics and the emergence of profoundly disruptive technologies. These trends through globalization, labor arbitrage, and oversupply have coupled to deliver slow inflation, disinflation and even deflation in various areas of the world.
What we have experienced during this era on a global basis is:
A decline in real interest rates (which have been a prime supporter of asset prices), A drop in real labor earnings in advanced economies, and, A meteoric rise in inequality within countries alongside a drop in inequality between them.

This post was published at GoldSeek on 5 November 2017.

This Is The Huge Anti-Trump Protest That Was Organized By… The Russians

From November 2016…
Protesters demonstrating against the election of Donald Trump made their voices heard again Saturday – taking to the streets of New York for the fourth straight day. A crowd of over 5,000 people gathered in Union Square around noon, their ranks rapidly growing and spilling out of the park. Hand-drawn signs floated above the crowd, carrying messages like ‘Love Trumps Hate,’ ‘Unacceptable,’ and ‘Dump Trump.’

This post was published at Zero Hedge on Oct 31, 2017.

What Could Pop The Everything Bubble?

As central bank policies are increasingly fingered by the mainstream as the source of soaring wealth-income inequality, policies supporting credit/asset bubbles will either be limited or cut off, and at that point all the credit/asset bubbles will pop.
I’ve long held that if a problem can be solved by creating $1 trillion out of thin air and buying a raft of assets with that $1 trillion, then central banks will solve the problem by creating the $1 trillion out of thin air – nothing could be easier. This is the lesson of the past eight years: if a problem can be solved by creating new money and buying assets, then central banks will solve that problem. Problem: stock market is declining. Solution: create new money and buy, buy, buy stock index funds. Problem solved! Market stops falling and quickly rebounds as ‘central banks have our backs.’
Problem: interest rates are inhibiting lending and growth. Solution: create a few trillion units of currency and buy enough sovereign bonds to drop interest rates to near-zero.
Problem: nobody’s left who can afford to buy the new nosebleed-priced flats that underpin China’s miracle-grow economy. Solution: create new currency, lend it to local government agencies who then buy the empty flats.
Problem: stagnant employment and deflation. Solution: create a trillion in new currency, buy a trillion in new government bonds that then fund infrastructure projects, i.e. bridges to nowhere.

This post was published at Charles Hugh Smith on SATURDAY, OCTOBER 28, 2017.

Observations on Wealth-Income Inequality (from Federal Reserve Reports)

There’s a profound difference between assets that produce no income and those that produce net income.
To those of us nutty enough to pore over dozens of pages of data on wealth and income in the U. S., the Federal Reserve’s quarterly Z.1 reports and annual Survey of Consumer Finances (SCF) are treasure troves, as are I. R. S. tax and income reports.
Allow me to share a few observations on family wealth and income drawn from my review of these documents:
Changes in U. S. Family Finances from 2013 to 2016 (42 pages)
Financial Accounts of the United States (198 pages)
Corporate profits clock in at $2.135 trillion annually, around 11% of the nation’s GDP (gross domestic product). (Page 10 of Z.1) This has changed very little over the past few years; corporate profits totaled $2.140 trillion in 2014.
Most people who follow financial matters closely probably know corporate profits have been around $2 trillion annually for awhile.
But how many know that proprietors’ income from small businesses ($1.375 trillion) and rental income of persons–i.e. not corporations–($740 billion) together equal corporate profits? ($2.115 trillion for small biz/rentals, $2.135 trillion for corporate profits.

This post was published at Charles Hugh Smith on FRIDAY, OCTOBER 27, 2017.

Russia Buys 34 Tonnes Of Gold In September

– Russia adds 1.1 million ounces to reserves in ongoing diversification from USD
– 34 ton addition brings Russia’s Central Bank holdings to 1,779t; 6th highest
– Russia’s gold reserves are at highest point in Putin’s 17-year reign
– Russia’s central bank will buy gold for its reserves on the Moscow Exchange
– Russia recognises gold’s role as independent currency and safe haven
Editor: Mark O’Byrne
Prior to World War I Russia held the world’s third largest gold reserves, behind America and France. In the subsequent Russian Revolution, civil war and the rise of communism, they dropped down the table of nations with large gold reserves and the U. S. became the largest holder of national gold reserves.
In recent years, since 2007, an increasingly powerful and assertive Russia has worked hard to reprise its place in the world’s top gold reserve rankings, quadrupling its purchases in the period to June this year.
A 34 ton purchase of gold (1.1 million ounce) in September has put Russia firmly back in the golden spotlight. The country now holds 1,779 tons of gold, placing it sixth in the world and just behind China.

This post was published at Gold Core on October 27, 2017.

Catalonia is not Just About Spain – it is About Brussels!!

There are of course those in Spain who side against Catalonia. Others write who are in Catalonia yet disagree with the separatists. Let me make this very clear. It is the government of Rajoy who has acted abusively, and this is all about protecting Brussels and federalizing Europe behind everyone’s back.
Rajoy should have allowed a fair referendum and then negotiate if they won. Canada allowed two refferendums in Quebec and Britain allowed the Scottish referendum. This nonsense that the Constitution does not allow any democratic process is pure TYRANNY. That was the same argument in America by England and in France that led to revolution.

This post was published at Armstrong Economics on Oct 23, 2017.

Ah, The Spanish Government CAN Do Math

All revolutions and secession events are prosecuted by small but real minorities. In the US Revolution about three percent of the people actually took arms and fought the British. We won.
Keep that in mind, because Spain is dealing with a secession movement right now, not so much a revolution. There the numbers are somewhat different — but not that much. In the Civil War about 2.5 million out of 18.5 million, or roughly 13% of the population fought on the Union side; on the Confederate side it was in the same general range (accurate records are more-difficult for the Confederacy.) Most of the Union solders were volunteers.
Of course the secession of the Confederacy failed.
Reality is that you often have plenty of people who are very pissed off one way or another but few who will take arms on either side. For this reason it’s not so simple as to say “you need half.” You don’t, in fact, need anywhere near half the population in order to win, but those who choose it must be willing to die for what they believe in. The exact number is hard to pin down, which makes all such movements, to some degree, a game of poker — and you never really know if the other side is bluffing.
Spain has figured out (a bit late, I think) that with about 40% of the population of Catalonia voting (after the Spanish government attempted to brutalize or arrest anyone attempting to vote, with some success) and the vast majority of those voting choosing secession there is a real risk that the “success” threshold is within grasp.

This post was published at Market-Ticker on 2017-10-21.

Catalonia’s Political Crisis Snowballs into an Economic Crisis

Independence would be ‘horrific’ and amount to ‘financial suicide,’ said Spain’s Economy Minister. But financial suicide for whom? It’s not easy being a Catalan bank these days. In the last few weeks the region’s two biggest lenders, Caixabank and Sabadell, have lost 9 billion of deposits as panicked customers in Catalonia have moved their money elsewhere. Many customers in other parts of Spain have also yanked their savings out of Catalan banks, but less out of fear than out of anger at the banks’ Catalan roots.
Moving their official company address to other parts of Spain last week may have helped ease that resentment, allowing the two banks to recoup some 2 billion of deposits. But the move has angered the roughly 2.5 million pro-independence supporters in Catalonia, many of whom have accounts at one of the two banks. Today they expressed that anger by withdrawing cash en masse.
Many protesters made symbolic withdrawals of 155 – a reference to Article 155 of the Spanish constitution, which Madrid activated today to impose direct rule over the semi-autonomous region. Others opted for 1,714 in a nod to the year 1714, when Barcelona was captured by the troops of King Felipe V, who then proceeded to suppress the rights of rebellious regions.

This post was published at Wolf Street on Oct 21, 2017.

Bank Of America: “This Could Send The Nasdaq To 10,000”

Last weekend, One River’s CIO Eric Peters explained what he thought would be the nightmare scenario for the next Fed chair, who as we now know will either be Jerome Powell or John Taylor, or both (with an outside chance of Yellen remaining in her post). According to the hedge fund CIO, the “worst case scenario” is one in which despite an improving economy, yields simply refuse to go up, leading to the final asset bubble and Fed intervention that “pops” it:
‘if we don’t see a sustained cyclical jump in wages, then yields won’t go up. And if yields don’t go up, then the asset price ascent will accelerate,’ continued the strategist. ‘Which will lead us into a 2018 that looks like what we had expected out of 2017; a war against inequality, a battle for Main Street at the expense of Wall Street, an Occupy Silicon Valley movement.’ He paused, flipping through his calendar. “Then you’ll have this nightmare for the next Federal Reserve chief, because they’ll have to pop a bubble.’ While Peters never names names in his pieces, the “strategist” in the weekend letter was BofA’s Michael Hartnett, who several days after Peters penned the above, followed up with some thoughts of his own on precisely this topic, and in a note released this week, described what he believes is the “biggest market risk” for the market. Not surprisingly, it is precisely what Peters was referring to in the above excerpt.

This post was published at Zero Hedge on Oct 20, 2017.

How Gold Bullion Protects From Conflict And War

– Gold and silver’s historical role in conflict shaped the world today and the modern financial system
– Gold played an important function in the great conflicts up to and throughout the 20th century
– Gold and the effective use of bullion played a crucial role in the outcome of the American Civil War
– Gold was an important economic agent in both World Wars, conferring a huge advantage on the allies
– In a world beset with risks of war both in the Middle East and with North Korea, Russia and China … gold will protect
Gold and silver have played important roles during periods of conflict and have protected people but also protected nations and conferred power. HSBC Chief Precious Metals analyst James Steel has written a fascinating piece for this month’s Alchemist about this.
The article takes us through the major wars and conflicts from the 15th century to modern times. Each major war serves as a reminder that success is as much down to the management of bullion and finance as it is about the role of gold and silver.

This post was published at Gold Core on October 19, 2017.

Bank Run Imminent: Catalan Separatists Urge Supporters To Pull Cash From ATMs On Friday Morning

As tensions escalate in Spain, Catalan Separatists are potentially about to do some real damage and hit Madrid where it really hurts.
In a tweeted message to their 270,000 followers, Assemblea Nacional urged supporters to pull cash from CaixaBank and Banco Sabadell branches between 8 am and 9am Friday to protest at their decision to shift their legal domiciles out of the region..
#BREAKING Civil society groups in Catalonia call for mass withdrawal of money from ATMs tomorrow at 8am to pressure Spanish government
— Catalan News (@catalannews) October 19, 2017

This post was published at Zero Hedge on Oct 20, 2017.

Bank Run Imminent? Catalan Separatists Urge Supporters To Pull Cash From Bank

As tension escalate in Spain, Catalan Separatists are potentially about to do some real damage and hit Spain where it really hurts.
In a tweeted message to their 270,000 followers, Assemblea Nacional urged supporters to pull cash from CaixaBank and Banco Sabadell branches between 8 am and 9am Friday to protest at their decision to shift their legal domiciles out of the region…
Dem , priorit riament de 8 a 9 h, ves a un dels 5 principals bancs i retira la quantitat que vulguis en efectiu. Sn els teus diners! pic.twitter.com/TqQUESFOZJ
— Assemblea Nacional (@assemblea) October 19, 2017

This post was published at Zero Hedge on Oct 19, 2017.

$1 Trillion In Liquidity Is Leaving: “This Will Be The Market’s First Crash-Test In 10 Years”

In his latest presentation, Francesco Filia of Fasanara Capital discusses how years of monumental liquidity injections by major Central Banks ($15 trillion since 2009) successfully avoided a circuit break after the Global Financial Crisis, but failed to deliver on the core promise of economic growth through the ‘wealth effect’, which instead became an ‘inequality effect’, exacerbating populism and representing a constant threat to the status quo.
Fasanara discusses how elusive, over-fitting economic narratives are used ex-post to legitimize the “fake markets” – as defined previously by the hedge fund – induced by artificial flows. Meanwhile, as an unintended consequence, such money flows produced a dangerous market structure, dominated by both passive-aggressive investment vehicles and a high-beta long-only momentum community ($8 trn and rising rapidly), oftentimes under the commercial disguise of brands such as behavioral Alternative Risk Premia, factor investing, risk parity funds, low vol / short vol vehicles, trend-chasing algos, machine learning.
However as Filia, and many others before him, writes, only when the tide goes out, will we discover who has been swimming naked, and how big of a momentum/crowding trap was built up in the process. The undoing of loose monetary policies (NIRP, ZIRP), and the transitioning from ‘Peak Quantitative Easing’ to Quantitative Tightening, will create a liquidity withdrawal of over $1 trillion in 2018 alone. The reaction of the passive community will determine the speed of the adjustment in the pricing for both safe and risk assets.

This post was published at Zero Hedge on Oct 18, 2017.

The Crash Of ’87 Remembered: “It Was Clear The Acapulco Cliff-Dive Was On For Monday”

‘The markets in a panic are like a country during a coup, and seen in retrospect that is how they were that day,’ wrote a young Salomon bond salesmena named Michael Lewis, of the chaos he witnessed. ‘One small group of people with its old, established way of looking at the world is hustled from its seat of power.’
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As Bloomberg details, most of the people willing to share their memories count themselves as winners who seized the moment as an opportunity not only to make money, but also to insert themselves in the new financial order – Paul Tudor Jones, Stanley Druckenmiller, Nassim Nicholas Taleb. Their story, and the story of Black Monday, is the birth story of modern financial markets – a wild ride of shock, angst, and, for some, glory.
In the weeks before Black Monday, a few investors spotted patterns that gave them pause.
The most confident were Paul Tudor Jones and Peter Borish, young partners at a small hedge fund in Lower Manhattan. In a prescient Sept. 24 note to investors, Jones even signed off with ‘caveat emptor’ – buyer beware.

This post was published at Zero Hedge on Oct 16, 2017.

Finally Belgium Speaks Out Against Spanish Oppression

The Belgium Prime minister Charles Michel has come out against Spain and now other European leaders applaud him for taking a position against the repressive action by Spain’s Civil Guard and National Police despite the fact that those in Brussels remain silent because they care only about their own jobs. Brussels has been silent fearing others will rise up as separatists against their rule. So Brussels has demonstrated to the world that human rights come second to self-interest. This oppression in Spain has done far more damage to the EU than most people realize. Their silence has been taken as proof that they too would resort to violence to protect their jobs as well.

This post was published at Armstrong Economics on Oct 16, 2017.