82815 Gleaning Broken Trust Turning To Glass
The United States lags far behind other developed countries in terms of personal, civil and economic freedoms, according to a study released this month. Its neighbor to the north, for example, ranked 14 spots ahead of the so-called “Land of the Free.”
Three international think tanks — the U.S.-based Cato Institute, Canada’s Fraser Institute, and Germany’s Liberales Institut at the Friedrich Naumann Foundation for Freedom — released the Human Freedom Index earlier this month. In addition to major civil liberties, the study considers safety and rule of law, relative size of government and capitalist values like the soundness of money, property rights, and access to international trade. The authors used a total of 70 data sources ranging from 2008 to 2012, the most recent year for which all necessary data is currently available.
According to the report,
“The top 10 jurisdictions in order were Hong Kong, Switzerland, Finland, Denmark, New Zealand, Canada, Australia, Ireland, the United Kingdom, and Sweden.”
The U.S. ranks 20th, while Myanmar, Congo and Iran round out the bottom of the list of 152 countries.
ANTICHRIST NWO 666 PERTUS ROMANUS POPE FRANCIS BELIEVES HE HAS A DIVINE MANDATE TO CONTINUE OBOZO’S DEVILISH JOB OF “RADICALLY TRANSFORMING” AMERICA.
“And the woman was arrayed in purple and scarlet colour, and decked with gold and precious stones and pearls, having a golden cup in her hand full of abominations and filthiness of her fornication: And upon her forehead was a name written, MYSTERY, BABYLON THE GREAT, THE MOTHER OF HARLOTS AND ABOMINATIONS OF THE EARTH.” Revelation 17:4,5 (KJV)
He is not just the Pope of the world’s Catholics, no, not by a long shot. Francis has stepped out of the shadows and with each new undertaking continues to shore up his base of political power and influence. In just the past two years, Pope Francis has championed Climate Change with a papal encyclical, worked covertly with Obozo behind the scenes to restore relations with Antichrist Communist Cuba, and was a secret but key player in the current Iranian Nuclear Deal which will guarantee that a nuke will soon be pointed at Israel. Francis is the man with the New World Order plan, and he shows no signs of slowing down. And oh, yes, he has also signed a treaty with Antichrist Muslim Palestine against Israel.
As he travels all over the world, at each stop he is building his political power base, using Vatican influence to grant favors, and seducing gullible American Christians back into the tent of the Harlot herself, Mother Rome. Even Chrislam founder Rick Warren calls Francis “our pope”. On September 23, Pope Francis will make his boldest move yet when he addresses Congress. A feat never been done by any pope in the entire history of the United States. Here is a preview of what you can expect he will talk about:
Pope Francis is a Socialist, with Communist overtones, and as such he will chastise America for not allowing more illegal aliens through our borders. Honduran Cardinal Oscar Rodriguez Maradiaga, a top adviser to Francis, told an audience at Georgetown University, that Francis would have liked to enter the U.S. by crossing the border with Mexico to make a point about welcoming immigrants, not building walls to keep them out. He said that while time did not allow for a border stopover, the pontiff was certain to raise the issue on Capitol Hill.
“Capitalism is not a god. It is not a divinity. It is not a system that is perfect and does not need any modification,” he said during a luncheon meeting. “This system is fostering tremendous inequalities.” Socialism is not compatible with Capitalism because you cannot have successful people in the New World Order. Everyone needs to be dragged down to the same level of mediocrity, while the ruling elites live like kings.
“The free market economy is not complete. We need a social market economy. This is the big contribution of the Catholic faith to the system — to try to have this social component that will bring more justice to the system,” he said. “It is not fair that a system that is producing so much richness could walk side by side with so much poverty.”
FORCING THE CLIMATE CHANGE AGENDA
To deal with climate issues, he has also called for an “Earth Constitution that would transcend the UN Charter” along with the creation of a “Global Council…elected by all the people on Earth” and a “Planetary Court..a transnational legal body open to appeals from everybody, especially with respect to violations of the Earth Constitution.” The two main issues of “protecting the earth” are climate change and global depopulation. Expect Francis to bring out all the big guns on this favorite hobby horse of the Liberal Socialists who run America.
He demands action and is commander-in-chief of the world’s largest, most dedicated army: 1.2 billion Catholics worldwide, including 78 million Americans in 17,645 parishes, inspired by a mission to change the world’s political economy and backed by an “officer corps” of 200 cardinals, over 5,000 bishops, 450,000 priests and deacons all dedicated to carry out his mission.
But far more dangerous for American conservatives, this new pope’s message will be regularly delivered by those clerics to America’s power elite: Six of the nine members on the Supreme Court are Catholics, including the chief justice. Three Catholics are in the direct constitutional line of succession if the president dies. Twenty-four of our 100 Senators are Catholic. So are 163 of the 435 members of the House. Add in their Catholic spouses, children, parents and friends, and this new pope is himself a global superpower. His radical, revolutionary “exhortations” will be influencing billions of all faiths worldwide, demanding not pious rhetoric but action to solve world problems.
Are there too many coincidental technological, financial and geopolitical dots lined up to come to any conclusion other than we are already in the early stages of war? I believe this is in fact the case. I still believe the Antichrist Communist Chinese would prefer to “win” via financial means, rather than physical means, but this remains to be seen. Would a ” 9/11 truth bomb,” which is now rumored more often out of Russia, be another way to neuter American hegemony without military use?
As a final thought, I believe global markets are beginning to discount or recognize the war behind the scenes. This is the reason for the chaos in equity and credit markets. Can you imagine what it looks like behind the derivatives curtain? Guaranteed;…. there are dead bodies strewn all over,… with no ability to perform or settle. When history looks back upon August 2015, I believe the consensus view will agree THE WAR had already started!
The $28 Trillion Disaster
Antichrist Communist China has already dumped $100 billion of its $1 trillion of U.S. Treasuries this month and will continue to sell. As the dollar weakens there will be a stampede by foreign investors to get rid of their Treasury holdings as well. The combination of debt that can never be repaid and higher interest rates that no government can afford to pay will create an absolute panic in bond markets. This will of course be very beneficial to gold, just as it was in the 1970s.
But it’s not just the Western asset markets that will suffer. It will be all markets across the globe. The Antichrist Communist Chinese stock market went up over 2.5 times between July 2014 and June 2015. Since then it has collapsed 2,000 points or 40 percent — a loss of $5 trillion. After the United States, Antichrist Communist China will be the biggest collapse in the world as their $28 trillion credit market implodes. We are already seeing the effects of Antichrist Communist China’s problems with the collapse of most commodity prices. And like many other countries, Antichrist Communist China will not just have an economic collapse because the risk of political problems and social unrest is very real.
One narrative we’ve pushed quite hard this week is the idea that Antichrist Communist China’s persistent FX interventions in support of the yuan are costing the PBoC dearly in terms of reserves. Of course this week’s posts hardly represent the first time we’ve touched on the issue. Here, for those curious, are links to previous discussions:
Antichrist Communist China Dumps Record $143 Billion In US Treasurys In Three Months Via Belgium
Antichrist Communist China’s Record Dumping Of US Treasuries Leaves Goldman Speechless
How The Petrodollar Quietly Died And Nobody Noticed
Why It Really All Comes Down To The Death Of The Petrodollar
What Antichrist Communist China’s Treasury Liquidation Means: $1 Trillion QE In Reverse
It’s Official: Antichrist Communist China Confirms It Has Begun Liquidating Treasuries, Warns Washington
Devaluation Stunner: Antichrist Communist China Has Dumped $100 Billion In Treasurys In The Past Two Weeks
And so on and so forth.
In Short, stabilizing the currency in the wake of the August 11 devaluation has precipitated the liquidation of more than $100 billion in USTs in the space of just two weeks, doubling the total sold during the first half of the year.
In the end, the estimated size of the RMB carry trade could mean that before it’s all over, Antichrist Communist China will liquidate as much as $1 trillion in US paper, which, as we noted on Thursday evening, would effectively negate 60% of QE3 and put somewhere in the neighborhood of 200bps worth of upward pressure on 10Y yields.
And don’t forget, this is just Antichrist Communist China. Should EMs continue to face pressure on their currencies (and there’s every reason to believe that they will), you could see substantial drawdowns there too. Meanwhile, all of this mirrors the petrodollar unwind. That is, it all comes back to the notion of recycling USDs into USD assets by the trillions and for decades. Now, between crude’s slump, the commodities bust, and Antichrist Communist China’s deval, it’s all coming apart at the seams.
Needless to say, this “reverse QE” as we call it (or “quantitative tightening” as Deutsche Bank calls it) has serious implications for Fed policy, for the timing of the elusive “liftoff”, and for the US economy more generally. Of course we began detailing the implications of Antichrist Communist China’s Treasury liquidation months ago and now, it’s become quite apparent that analyzing the consequences of Antichrist Communist China’s massive FX interventions is perhaps the most important consideration when attempting to determine the future course of global monetary policy.
On that note, we present the following from Deutsche Bank’s George Saravelos.
Beware Antichrist Communist China’s Quantitative Tightening
Why have global markets reacted so violently to Antichrist Communist Chinese developments over the last two weeks? There is a strong case to be made that it is neither the sell-off in Antichrist Communist Antichrist Communist Chinese stocks nor weakness in the currency that matters the most. Instead, it is what is happening to China’s FX reserves and what this means for global liquidity. Starting in 2003, Antichrist Communist China engaged in an unprecedented reserve-accumulation exercise buying almost 4trio of foreign assets, or more than all of the Fed’s QE program’s combined (chart 1). The global impact was indeed equivalent to QE: the PBoC printed domestic money and used the liquidity to buy foreign bonds. Treasury yields stayed low, curves were flat, and people called it the “bond conundrum”.
Fast forward to today and the market is re-assessing the outlook for Antichrist Communist China’s “QE”. The sudden shift in currency policy has prompted a big shift in RMB expectations towards further weakness and correspondingly a huge rise in Antichrist Communist China capital outflows, estimated by some to be as much as 200bn USD this month alone. In response, the PBoC has been defending the renminbi, selling FX reserves and reducing its ownership of global fixed income assets. The PBoC’s actions are equivalent to an unwind of QE, or in other words Quantitative Tightening (QT).
What are the implications? For global risk assets, they are clearly negative –global liquidity is falling. For fixed income, the impact on nominal yields is ambivalent because private safe-haven demand for bonds may offset central bank selling. But real yields should move higher, inflation expectations lower, and there should be steepening pressure on curves. This is indeed how markets have responded over the last two weeks: as if the Fed has announced it is unwinding its balance sheet!
The potential for more Antichrist Communist China outflows is huge: set against 3.6trio of reserves (recorded as an “asset” in the international investment position data), Antichrist Communist China has around 2trillion of “non-sticky” liabilities including speculative carry trades, debt and equity inflows, deposits by and loans from foreigners that could be a source of outflows (chart 2). The bottom line is that markets may fear that QT has much more to go.
What could turn sentiment more positive? The first is other central banks coming in to fill the gap that the PBoC is leaving. Antichrist Communist China’s QT would need to be replaced by higher QE elsewhere, with the ECB and BoJ being the most notable candidates. The alternative would be for Antichrist Communist China’s capital outflows to stop or at least slow down. Perhaps a combination of aggressive PBoC easing and more confidence in the domestic economy would be sufficient, absent a sharp devaluation of the currency to a new stable. Either way, it is hard to become very optimistic on global risk appetite until a solution is found to Antichrist Communist China’s evolving QT.
Saudi Arabia and China are sitting on the first and third largest stores of reserves, respectively, and if these two countries continue to liquidate those reserves, it will amount to “reverse QE” or, “quantitative tightening” as Deutsche Bank calls it.
For Saudi Arabia, the FX reserve pressure comes courtesy of the deathblow the country dealt to the petrodollar system late last year.
In other words, the pain is largely self-inflicted as the kingdom is determined to “preserve market share” by bankrupting US shale drillers. The attendant decline in oil revenue has resulted in a fiscal deficit on the order of 20% of GDP which, in the absence of sharply higher oil prices must either be financed by drawing down reserves or else through the bond market because between the war in Yemen (which escalated meaningfully on Thursday) and the necessity of maintaining the status quo for a populace that’s become used to a certain level of stability and comfort, fiscal retrenchment is a decisively difficult task.
On Thursday, we got the latest data on Saudi Arabia’s FX reserves and, thanks to new debt, the burn rate slowed. Here’s Reuters:
The speed of decline in Saudi Arabia’s foreign reserves slowed in July after the government began issuing domestic debt to cover part of a budget deficit created by low oil prices, central bank data showed on Thursday.
The world’s largest oil exporter has been drawing down its reserves to cover the deficit. Net foreign assets at the central bank, which acts as the kingdom’s sovereign wealth fund, have been sliding since they reached a $737 billion peak last August.
But the latest data showed net foreign assets shrank only 0.5 percent from the previous month to 2.480 trillion riyals ($661 billion) in July, their lowest level since early 2013. They had dropped 1.2 percent month-on-month in June and at faster rates early this year.
In July, the government began selling bonds for the first time since 2007, placing 15 billion riyals ($4 billion) of debt with quasi-sovereign funds; this month it sold 20 billion riyals of bonds to banks.
The domestic debt sales appear to have reduced the need for the government to cover its deficit by drawing down foreign assets. Authorities have not publicly said how many bonds they will issue in future, but the market is expecting monthly issues of roughly 20 billion riyals through the end of 2015.
The foreign assets are held mainly in the form of foreign securities such as U.S. Treasury bonds – securities totalled $465.8 billion at the end of July – and deposits with banks abroad, which totalled $131.2 billion. The vast majority of the assets are believed to be in U.S. dollars.
And while taking on debt to offset the reserve burn is a viable strategy, especially when you’re starting from a debt-to-GDP ratio that’s negligible, the reserves are still at risk of running out, even if 50% of spending is financed in the debt markets.
Here’s more from BofAML on how long the Saudis can hold out under various price points for crude and assuming various mixes of debt financing and spending cuts:
Safeguarding Fx reserves will require deep budgetary cuts at current oil prices, in our view. Our dynamic analysis suggested that current low oil prices could rapidly erode the sovereign creditworthiness, even as the sovereign balance sheet is at its strongest on an historical basis. Despite the rapid drawdown over 1H15, SAMA’s Fx reserves still stood at c100% of GDP in June, and government deposits at SAMA represented US$294bn or 42% of GDP. Another way to look at sustainability is a static analysis to calculate the number of years required to exhaust government deposits under various oil, spending and financing scenarios.
Based on the narrow definition of resources available to the government, we think that there is no realistic mix of debt financing and spending cuts at US$30/bbl that can decrease pressure on Fx reserves, and pressure on the USD peg would be acute if oil prices were to be sustained at this level. However, at US$40/bbl and US$50/bbl, debt financing and deep capex cuts (to bring spending 25% lower) can keep government deposits at SAMA covering 7 years and 11 years of government spending, respectively. Government spending has historically adjusted to oil prices with a variable lag. It is worth recalling that spending was 50% lower in 1988 compared to its 1981 peak as oil prices tumbled, and government spending in 2000 was at the same levels as that of 1980 in nominal terms.
There’s little question that the collapse of the financial universe in 2008 dealt a dramatic blow to retail’s confidence in US capital markets. Taxpayers were forced to foot the bill for a Wall Street bailout just as 45% of their 401ks was being vaporized and to make matters immeasurably worse, CNBC ensured that mom and pop could watch their retirements disappear in real time on the same channel that had, for the better part of a year, been telling them that everything was fine.
To the extent that the Fed-driven, six-year rally restored some semblance of trust between retail investors and Wall Street, it was wiped away for good on Monday when, in a harrowing day of flash-crashing mayhem, the perils of broken, manipulated markets were laid bare for all to see and to add insult to injury, the ETF pricing model blew up causing some funds to trade far below NAV.
Given that, and given how predisposed household investors are to mistrust Wall Street in the post-crisis, post-Flash Boys world, retail outflows during uncertain times (like those that began last month when China’s stock market collapse began to make national news) shouldn’t come as a surprise, but as Credit Suisse notes, something happened in July and August that hasn’t happened since Q4 of 2008: retail investors pulled money from both stocks and bond funds.
In other words, mom and pop were selling everything.
You can’t say Nassim Taleb didn’t warn you: the outspoken academic-philosopher, best known for his prediction that six sigma “fat tail”, or black swan, events happen much more frequently than they should statistically (perhaps a main reason why there is no longer a market but a centrally-planned cesspool of academic intervention) just had a black swan land smack in the middle of the Universa hedge fund founded by ardent Ron Paul supporter Mark Spitznagel, and affiliated with Nassim Taleb.
The result: a $1 billion payday, translating into a 20% YTD return, in a week when the VIX exploded from the teens to over 50, and which most other hedge funds would love to forget.
Incidentally, this is precisely what a “hedge” fund should do: protect against massive, “fat tail” days like this Monday; instead they merely ride the beta train with the most leverage possible, hoping that the Fed will prevent any events that actually need hedging, and blow up in a fiery crash any time the market tumbles. Needless to say this makes most of them utterly useless, especially since one can just buy the SPY for almost nothing, and avoid paying the hefty 2 and 20 (or 3 and 45) fee, which until recently was merely there to fund trading based on inside information aka “expert networks” and “idea dinner” thesis clustering.
A computer glitch is preventing hundreds of mutual and exchange-traded funds from providing investors with the values of their holdings, complicating trading in some of the most widely held investments.
796 funds were missing their net asset values on Wednesday.
. . . Hinder[ing] investors’ ability to trade accurately in and out of popular investment vehicles,. . .
David A. Andelman, 70 years old, of New York City, said he tried to sell $15,000 of Voya Russia fund shares on Monday. By Wednesday morning, the trade still hadn’t gone through, he said. He said he was told by his broker, J.P. Morgan Chase & Co., that it couldn’t receive the funds because the bank hadn’t received pricing information from Voya.
“It’s a nightmare,” Mr. Andelman said.
Totally corrupt. Elites made a fortune this week taking advantage of pre arranged major moves
Mini flash crash? Trading anomalies on manic Monday hit small investors:Millions of these Main Street investors were locked out during the crucial hour when the worst hit, just as markets opened Monday
The queasy chaos of this week’s markets, which has rattled even Wall Street pros, appeared to hit smaller investors especially hard, leaving a fresh dent in their stock market confidence.
Millions of these Main Street investors were locked out during the crucial hour when the worst hit, just as markets opened Monday. Popular trading platforms run by TD Ameritrade, Scottrade and others ran slow or not at all as panic grabbed hold. It took just six minutes for the Dow Jones industrial average to suffer its biggest drop in history. And these investors could only watch.
“It makes me wonder if a guy like me has a fair chance or not,” said Israel Hernandez, a lawyer in Casa Grande, Ariz., who could not log onto his online broker.
In a blink, mayhem descended. Strange glitches emerged. Stocks fell like rocks, only to shoot back up minutes later. Exchanges spit out the wrong prices for widely held funds. These problems are now being fingered as a potential reason many investors could not trade. Some experts are now calling it a flash crash, harking to May 2010 when stocks, largely because of technical problems, instantly plunged for a moment and then recovered, an incident that spurred new market rules.
For the 3rd day in a row, crude oil prices are spiking as the short squeeze morphs into a war premium. Heberler reports that Antichrist Saudi ground troops have entered Northern Yemen and seized control of two areas in the Saada province. WTI is now above $45…
As we noted previously, boots have been on the ground there (and tank tracks) since early July…
But, as Haberler reports, forces seize control of two areas in Yemen’s Saada province in the first actual ground offensive by The Antichrist Saudis…
Antichrist Saudi Arabian ground troops have advanced into northern Yemen, in a bid to push back against Antichrist Houthi Shia militia and forces loyal to ousted president Ali Abdullah Saleh, military and tribal sources said.
This is Antichrist Saudi Arabia’s first ground offensive in Yemen since it launched an extensive military campaign in March targeting Antichrist Houthi positions.
The sources told Anadolu Agency that Antichrist Saudi Arabian troops advanced into Saada province after Houthi militants recently stormed Antichrist Saudi positions in the southern Antichrist Saudi province of Jizan.
“Antichrist Saudi ground forces seized control of two areas in Saada province and intend to advance toward Antichrist Houthi positions,” sources said.
Yemen descended into chaos last September, when the Antichrist Houthis overran capital Sanaa and other provinces, prompting Antichrist Saudi Arabia and its Arab allies to launch a massive air campaign against the Antichrist Shia group.
Pro-Hadi forces – backed by Antichrist Saudi-led air power – have managed recently to retake Aden and Taiz from the Houthis.
There are two critical questions here going forward.
First, is this: will this “initial” incursion morph into something much larger, which will put further pressure on Antichrist Saudi Arabia’s already strained budget, requiring still more bond issuance to offset the FX reserve burn?
Second: if this does snowball into an all-out ground invasion will Antichrist Iran decide that it’s finally time to provide more than “logistical support” to the Houthis who, as of late July, were on their heels after losing control of Aden?.
While all eyes are on the front-end of the VIX term structure, today’s volatility term structure in the out-dates is now higher than they were at the close on Monday at “peak crisis.” VXX – the VIX ETF – is still surging, as the massive short position continues to get squeezed amid the ongoing backwardation in VIX…
6th day of short squeeze in a row… It sems picking up pennies in front of the steam roller does have consequences…
And VIX is now higher than in it was during Monday’s crisis in the out-months…
This is the longest period of sustained bakcwardation since 2011…
and The skew (cost of downside tail risk vs ‘normal’ risk) is extreme…
Gov. Jerry Brown says California’s drought and the wildfires it has spawned are wake-up calls about the potentially cataclysmic effects of climate change.
That may be true. But they are not the only indications of potential disaster that could devastate a state perched, however precariously, on the continent’s western edge.
California has been experiencing a series of moderate earthquakes this month — coinciding, somewhat eerily, with the first anniversary of a temblor that severely damaged downtown Napa.
In a way, these earthquakes are good news because they relieve pressure on the numerous faults that underlie California and thus may — emphasis, may — obviate the monster quake that seismologists say will happen sooner or later.
Mobile internet services have been blocked in the Indian state of Gujarat (home to nearly 63 million people), following violent protests led by the Patel community after one of its leaders was detained by local police in Ahmedabad.
22-year-old politician Hardik Patel, the convener of the Patidar Anamat Andolan Samiti, led a rally to demand Other Backward Class (OBC) status for members of the Patidar community, in order to level the playing field in the competition for enrollment at universities and jobs in government organizations.
After he was detained on Tuesday, Patel sent out messages via WhatsApp urging citizens to maintain peace:
I make an appeal to maintain peace and keep calm. I give a call for Gujarat bandh tomorrow (Wednesday). This decision has been taken by Patidar Anamat Andolan Samiti considering widespread violence in the state.
Patel’s supporters have been using WhatsApp extensively to broadcast videos and make media announcements.
According to NDTV, a police officer said, “Last night, there were concerns of rumour-mongering and crowd mobilization through WhatsApp.”
The officer added that the service will resume only after the situation returns to normal. However, other reports indicate that all mobile internet services have been blocked across the state.
Patel’s agitation aims to draw the nation’s attention to one of India’s major quandaries. While many members of his community are wealthy and politically influential, thousands of families are poor and don’t have easy access to quality education and high-paying jobs.
As the Patels are regarded as well off, all members of the community — including those from lower income groups — have to compete with citizens from across the country for a chance at proper schooling and lucrative careers.
It’s easier for groups with OBC and similar statuses, as seats at universities and jobs are reserved for them and often have significantly lower educational requirements.
Restricting access to internet services isn’t the answer to such issues. Indian politicians need to encourage public debate and participation in creating policies that ensure equal opportunities for everyone.
On August 28, 2015, departing Region 2403 produced its 10th and 11th M-class solar flare since it rotated onto the Earth side of the Sun. The first event started at 13:04, peaked at 13:16 as M2.2, and ended at 13:23 UTC. The second event started at 18:56, peaked at 19:03 as M2.1, and ended at 19:06 UTC.
Reading for August 29, 2015 ~ Elul 14, 5775
Deut. 21:10-25:19 ~ Is. 54:1-10 ~ Acts 13-15