All posts by admin46x

Hyper Mario And Germany On Verge Of All Out Warfare


Back in March we wrote “Mario Draghi Is Becoming Germany’s Most Hated Man” for one reason: a few months after the former Goldman appartchik was sworn in to replace Trichet with promises he would not “print” Draghi did just that in a covert way via $1.3 trillion in LTROs, that immediately hit the economy and sent inflation across Europe soaring. We said that: “Slowly but surely the realization is dawning on Germany that while it was sleeping, perfectly confused by lies spoken in a soothing Italian accent that the ECB will not print, not only did Draghi reflate the ECB’s balance sheet by an unprecedented amount in a very short time, in the process not only sending Brent in Euros to all time highs (wink, wink, inflation, as today’s European CPI confirmed coming in at 2.7% or higher than estimated) but also putting the BUBA in jeopardy with nearly half a trillion in Eurosystem”receivables” which it will most likely never collect.”

It now appears that the simmering hatred between the two is about to upshift to a whole new level, with the threat of open escalation finally arriving. Because if Sueddeutsche Zeitung is correct, via Reuters, in precisely 12 hours, Draghi will proceed with a plan that has neither Germany’s nor Buba’s blessing, in the process effectively isolating the only remaining solvent country in Europe, and its de facto paymaster, and forcing Germany to take a long, hard look at the exit sign (which, however, as reported earlier, with each passing day that drags Germany’s economy is becoming less of an unthinkable outcome). To wit: “Draghi is planning concerted action using both the ECB and the future euro European Stability Mechanism (ESM) to purchase sovereign debt from Spain or Italy in order to help push down borrowing rates for those two countries.” There is one problem: “highly doubtful that the German government would agree to Draghi’s approach. The Bundesbank also is likely to reject the idea, the paper added.

In essence what Draghi will do tomorrow is what Monti did a month ago when together with Rajoy, he presented Germany with one option, and would not back down else risk disintegrating the Eurozone. Merkel then took the diplomatic way out and pretended to agree that the ESM would lose its seniority status, something which as Finland confirmed today, never actually happened after the Nordic country said the ESM still and will always have explicit seniority status. The problem however is that the June summit was political theater. What happens tomorrow will have all too real consequences if and when Monti injects another €1 trillion into the economy. How soon afterward can Germany again expect to once again pay a record amount for a liter of unleaded. And how quick until the latest iteration of attempted inflation fizzles and has to be replicated with a €2 trillion bond monetization episode. Then €4 trillion. Then €8. Etc.

You get the picture.

More from Reuters: which doesn’t tell us anything really new, but merely confirms (allegedly) that Draghi will indeed openly go where so few have gone before – openly against the will of Germany, its Chancellor and banking head, Herr Weidmann:

The ESM would purchase sovereign debt in smaller amounts directly from both countries while the central bank would resume its purchase of debt in the secondary market, the daily wrote in an advance released on Wednesday evening. The Bundesbank has opposed further ECB debt purchases.

 

The ECB Council will meet on Thursday and the Sueddeutsche Zeitung said it looked like a majority was emerging in favour of the ECB resuming its purchases of sovereign debt. It added there will most likely not be any official decision on such a measure.

The ECB’s role would be a stopgap until the ESM is approved by the German constitutional court. Which it very way may never happen.

There is a greater likelihood that Draghi will spell out in more concrete terms what he said last week – that the ECB will do everything within its mandate to support the euro, the paper said. A final decision is not expected until after Sept. 12, after the German Constitutional Court rules on the ESM.

 

The daily said Draghi’s plans could lead to the ESM taking part directly in the auctions of state debt by those countries affected, leading to a reduced interest rate for the auction.

 

The ECB’s task would to be to work before the auctions to push the interest rates down to an acceptable level and to keep them fixed at that lower level for the longer term.

The delusion continues because not only have we shown that the impact of each SMP episode is weaker and weaker, but that absent the ECB officially denouncing its senior status, and thus fears of bondholder subordination, the ECB will achieve absolutely no incremental interest in bond purchases by private investors who are convinced both Spain and Italy will conclude merely as yet another Greece.

Sueddeutsche said it is hoped the plan would restore private investors’
confidence in the bond market. The ESM would probably only have to allot
relatively small sums of money for this or could bow out of bond
auctions at the last minute if the interest rates had fallen to an
acceptable level.

Finally and most crucially:

The daily said it was at the same time highly doubtful that the German
government would agree to Draghi’s approach. The Bundesbank also is
likely to reject the idea, the paper added.

And with that the open warfare between the ECB and Germany will begin. The only question remaining is does Draghi, even if he is truly merely a figurehead for Goldman, really want to launch all out war against Germany?

Especially with his office located in downtown Frankfurt.

Oh, and don’t call him Super Mario any more. The proper prefix now is HyperTM.

Then again, just like today’s violent disappointment by the Fed, all of the above could be merely well positioned media propaganda, and the reality is that Draghi will do absolutely nothing.

Powered by WPeMatico

Stunning Crimes of the Big Banks: Worse than Your Wildest Imagination


Preface:   Not all banks are criminal enterprises.  The wrongdoing of a particular bank cannot be attributed to other banks without proof.  But – as documented below – many of the biggest banks have engaged in unimaginably bad behavior.

Here are just some of the improprieties by big banks:

  • Engaging in mafia-style big-rigging fraud against local governments. See this, this and this
  • Shaving money off of virtually every pension transaction they handled over the course of decades, stealing collectively billions of dollars from pensions worldwide. Details here, here, here, here, here, here, here, here, here, here, here and here
  • Pledging the same mortgage multiple times to different buyers. See this, this, this, this and this. This would be like selling your car, and collecting money from 10 different buyers for the same car
  • Committing massive fraud in an $800 trillion dollar market which effects everything from mortgages, student loans, small business loans and city financing
  • Pushing investments which they knew were terrible, and then betting against the same investments to make money for themselves. See this, this, this, this and this
  • Engaging in unlawful “Wash Trades” to manipulate asset prices. See this, this and this
  • Participating in various Ponzi schemes. See this, this and this
  • Bribing and bullying ratings agencies to inflate ratings on their risky investments

The executives of the big banks invariably pretend that the hanky-panky was only committed by a couple of low-level rogue employees. But studies show that most of the fraud is committed by management.

Indeed, one of the world’s top fraud experts – professor of law and economics, and former senior S&L regulator Bill Black – says that most financial fraud is “control fraud”, where the people who own the banks are the ones who implement systemic fraud. See this, this and this.

But at least the big banks do good things for society, like loaning money to Main Street, right?

Actually:

  • The big banks have slashed lending since they were bailed out by taxpayers … while smaller banks have increased lending. See this, this and this

We can almost understand why Thomas Jefferson warned:

And I sincerely believe, with you, that banking establishments are more dangerous than standing armies ….

John Adams said:

Banks have done  more injury to religion, morality, tranquillity, prosperity, and even wealth of the nation than they have done or ever will do good.

And Lord Acton argued:

The issue which has swept down the centuries and which will have to be fought sooner or later is the people versus the banks.

Powered by WPeMatico

Bianco And Biderman On Earnings Ennui And Obama As The Ultimate Risk-On Trade


A few lines from Hilsenrath and three little words from Draghi last week were enough to offset the reality of 300 corporate results which are indicating a pending US recession (at least empirically as James Bianco points out) given that negative YoY revenues are expected. This fascinating interview between the B-Boys, shifts from the crazy reality above to the incredible correlation between Obama’s probability of being re-elected and the S&P 500 – making the teleprompter-in-chief a clear risk-on trade (which is the exact opposite to the relationship before he was elected) though things are changing. They address Draghi’s heavy-handed approach and ask he if can do whatever it takes, just do it – don’t keep telling us about it (obviously dismissing his capability of fixing anything); and conclude with a discussion of the fiscal cliff (which will be pushed off til after the election) and the reality of spending cuts versus higher taxes (noting that taxes are low since there are no capital gains tax). Seeing Biderman’s Batman to Bianco’s Robin is well worth the nine minutes.

The high correlation between the economy stock market and Obama’s chances of re-election are significant but what is perhaps more interesting is that while stocks have reached back up to near recent highs – Obama’s InTrade odds remain flat to those June lows (green and red arrows) – is Obama losing the marginal believer in prosperity?

 

Powered by WPeMatico

Why Another Major China Stimulus Package Is Not Coming


When might the government roll out another stimulus? Have local governments already announced major stimulus? Will the economy grow at a much slower pace than targeted by the government if no new stimulus is adopted soon? Could the country/industries/companies survive without another stimulus? These are some of the recent more frequently asked questions.

UBS: Don’t Hold Your Breath for another Stimulus in China

Indeed some market participants seem to be eagerly anticipating or hoping for another stimulus in China, and each day that has passed without a big policy announcement seems to have depressed the market further. While the Chinese government has been very concerned about the economic slowdown and has taken policies to support growth, we would not be holding our breath for another big stimulus. The previous stimulus in 2008-09 did lift growth much higher than otherwise would have been, but the excessive credit expansion also worsened the imbalance in the economy and left serious negative consequences which are still been dealt with today. Chinese government has clearly recognized this and is keen to avoid making a similar mistake this time. Of course, the slowdown in export and in the overall economy is also much milder compared with 2008-09. Importantly, the lack of labour market distress so far has made it less urgent to come up with any big stimulus.

This is not to say that the government has done little or will do little to support growth. Indeed macro policies have changed to supportive of growth since early this year and this has intensified since mid-May. The policies taken so far include fiscal (tax cuts for small businesses, subsidies for some appliances, pension increase, and more spending on social housing), monetary (increase of base money supply through RRR cuts and reverse repos, increase of banks’ lending quota, and 2 interest rate cuts), and credit and quasi-fiscal (easing of lending to the property sector, local government platforms and some sectors, approval and launch of more government investment projects). Among all these, we continue to believe that the measures to increase public investment, to be financed largely by bank credit, will be the most important ones in the near term.

The government has also been trying to encourage private investment in energy, utility, transport and service sectors including by promising easier entry and access to credit, but we think it may take some time before such investment can take off. Most recently, the State Council announced on July 30 that the government will support industrial upgrading including by providing interest subsidies for enterprises to invest in new technology and techniques, more advanced equipment, energy saving process and materials, and advanced information and automation systems. Banks are also encouraged to increase lending to such investment projects.

What about the many “regional stimuli”, including in Changsha and Guizhou? Should we tally up the regional investment plans and count these as stimulus? Not really. While the central government is clearly trying to support growth and investment in the inland regions, we think the many regional stimuli are largely wishful thinking of local governments. The realization of such ambitious investment plans depends crucially on sufficient financing, but banks have been more cautious this time and the overall credit policy is still closely managed by the central government. In addition, the central government’s insistence on not relaxing the property policies wholesale has put limited local governments’ ability to use land/property to finance ambitious investment projects.

Nevertheless, with the continued implementation of the existing pro-growth measures we think GDP growth can still be close to 8% in 2012. In the coming months, we should see bank lending to expand at a steady pace, with the share of medium and long term loans rising gradually, which should help support a modest and investment-led recovery in Q3 and Q4 2012. Industrial profits are down and may continue to be depressed for 1-2 quarters with the ongoing decline in some prices and inventory adjustments, and some companies may not survive this cycle, but we do not foresee major macro risks because of this. Some adjustment and industry consolidation in an economic downturn may not be bad, and many listed companies may emerge from this cycle stronger and more efficient. The ride, of course, may not be pretty.

Powered by WPeMatico

Guest Post: The Most Often Forgotten Survival Preparations


Submitted by Brandon Smith from Alt-Market

The Most Often Forgotten Survival Preparations

I think it’s safe to say with some conviction that in the year of 2012 the concept of survival prepping is NOT an alien one to most Americans.  When National Geographic decides there is a viable market for a prepper TV show (no matter how misrepresentative of true preppers it may be), when Walmart starts stocking shelves with long term emergency food storage kits, when survivalism in general becomes one of the few growing business markets in the midst of an otherwise disintegrating economy; you know that the methodology has gone “mainstream”.  There is a noticeable and expanding concern amongst Americans that we are, indeed, on the verge of something new and unfortunate. 

Is it the big bad hoodoo of the soon to expire Mayan Calendar?  For a few, maybe, but for the majority of us, no.  That jazz is a carnival sideshow designed to make the prepping culture appear ridiculous.  We don’t need to believe in magical prophecies to know that there is a catastrophic road ahead; all we have to do is look at the stark realities of our current circumstances.  It does not take much awareness anymore to notice looming fiscal volatility, social unrest, the potential for unrestrained war, and the totalitarian boldness of our government.  I’ll take the wrath of Quetzalcoatl any day over the manure storm that is approaching us currently. 

With some estimating a count of 3 million prepper families and growing in the U.S., the motto of “beans, bullets, and band-aids” is finding a home amongst legions.  However, being closely involved in the survivalist movement during the past six years and speaking with literally thousands of preppers, it has become clear to me that we still have a long journey ahead of us before we can claim true efficiency and mastery.

Sadly, having a stockpile of food, weapons, and some slick tactical gear is not enough to ensure a high likelihood of survival, at least not in any of the social collapses that have occurred in the past century around the world.  It’s a start, but only just…

There are a number of detrimental weakness to the survivalist movement and considerable holes in prepper knowledge that must be addressed now while we have the time and relative safety to do so.  The greatest threat to the common survivalist is not economic collapse, roving bandits, Blackwater mercenaries, or predator drones; those dangers are a piece of cake compared to the threat of an overblown ego, which will get a man killed faster than the most sophisticated smart bomb.  If we cannot accept that there is always more to learn, and room to improve, we have been defeated before we have begun.

The following is just a short list of the many areas in which there is obvious and acute inadequacy in the movement overall…

Secondary Retreat Locations

Never put all your eggs in one basket.  I hear a lot of tough talk from some survivalists who claim they would rather die than leave their property.  Of course, I suspect they will see the error in this brand of bravado when the legitimate chance of death actually arises.  There is no harm whatsoever in having a backup plan.  I’m not sure any survivalist who doesn’t is really a survivalist.  Stand your ground when necessary, but don’t let pure pride and stupidity prevent you from living to fight again another day. 

Physical Fitness And Health

You may be the Tom Berenger-like master sniper of your particular county, but if you can’t run a hundred yards with your rifle rig without going into coronary thrombosis, then you aren’t going to live long during a collapse scenario.  Even those preppers who have age as an excuse…don’t really have an excuse.  I personally know survivalists and homesteaders in their 60’s and 70’s who could physically outmatch numerous other preppers of the same age or younger without much effort.  The difference?  They make a concerted effort to take care of their health.

Sometimes certain wise-cracks made by the insipid yuppies of our modern era against suvivalists are true, and we should take serious note when this occurs.  The primary insult being that many of us are far too fat to outrun or outfight a paper sack, let alone a determined opponent.  I have, to be honest, seen chest beating antics from more than a few clinically obese “preppers” that were truly embarrassing.  On the bright side, this does not have to be a permanent hindrance to our success.

The solution is simple:  Eat less.  Eat healthier.  Exercise more.

A person who has attained a high level of physical fitness has done more than prove his prowess.  He has also proven he has the will and the passion to pursue a directed goal and achieve it, regardless of difficulty.  This is where the adults are separated from the children in this world.  Are you willing to endure extreme difficulty to win something of legitimate value?  Do you have the self discipline to forgo certain luxuries and comforts to gain long term advantages?  Or, would you rather take the path of least resistance and certain doom?  Personal health is no joke for the survivalist.

Community Building And Networking

Organization is not the strongest suite of the survivalist movement for a number of reasons.  The first being that our paranoia completely impedes our ability to work with others.  Now, to be clear, it is not paranoia if they are really out to get you, and with multiple leaked documents like the MIAC Report, the Virginia Fusion Center Report, and the DHS reports on “right wing extremism”, it is not as if our concerns are unfounded.  However, the movement needs to realize that the primary object of labeling us as “extremists” and categorizing us as potential threats to national security is to create crippling fear.  Their main goal is to condition preppers to censor themselves, and to stifle their own organizational efforts. 

Solid community, even open formation of community, is necessary for countless reasons.  The more we isolate ourselves from one another now, the more alone and vulnerable we will be tomorrow.  Calls for “OPSEC” should be embraced to a point, but they can also become an excuse for laziness and inaction.  No prepper who goes it alone during crisis is going to come out unscathed, if they come out alive at all.  This is the great forgotten lesson of survival, from the Depression and Weimar Germany, to Argentina and Bosnia; those persons and families who were isolated simply did not make it.  The wide spectrum of skill sets and supplies needed to establish a survival foundation are far too many for any single prepper to attain.

The logical fallacy that usually prevents survival networking is the argument that if you are a bigger group, you are a bigger target.  This thinking shows a lack of prioritization.  During a social or economic collapse, EVERYONE is a target.  National chaos does not make distinctions between those who never shared their survivalist tendencies and those who did.  The DHS might, but they are not the biggest threat to the common prepper.  The most dangerous environment for the prepper, no matter what the circumstances may be, is one in which he has no support.  

If you do not have ample neighbors and friends on board with the prepper lifestyle, and who can be counted on in an emergency, then you are not ready, nor are your chances very good.  Period.

Barter Markets And Trade Skills

At Alt-Market we relentlessly promote the idea of decentralized trade markets because, to be frank, they are going to spring up one day soon whether the IRS, the DOJ, or the Federal Reserve likes it or not.  The crisis in the EU has proven my position on the inevitability of the barter dynamic conclusively.  These private trade networks are becoming the new foundation for countries like Greece, Italy, and Spain, and it should be noted that the financial instabilities in America far outweigh any of the problem in those places.  If we know that economic danger is on the horizon, and we know that barter markets will be the immediate result, then why not build them now, instead of waiting and scrambling after disaster strikes?

Any survivalist that does not know who he will be trading for essential supplies, and who does not know what skills he will use to garner those supplies, is in for a world of hurt.

Overlooked But Vital Items

There is a saying in the survival movement:  You’re never done prepping.  I absolutely agree.  Unless you are a millionaire with a highly organized brain, there will always be some other piece of equipment that you’ll discover you need down the line.  That said, there are some things every prepper should have, but many, from my observations, do not.  I have also heard every excuse imaginable and some unimaginable when such people are presented with the recommendation that they obtain these items, lack of money being the usual suspect. 

Yes, many of us are broke, or feel broke, these days  Invariably, though, when most survivalists examine their financial situation carefully, they will discover a host of peripheral expenses that are unnecessary or outright extravagant.  I once had a would-be survivalist make the argument that he could not afford a year’s supply of food, then admit that he had just went on a Carnival Cruise to the Caribbean.  This is an extreme example, but it illustrates a common hang up.  Now is not the time for people to live beyond their means, or to shrug off their preps so that they can have a new La-Z-Boy, cable TV, an internet gaming account, a high priced vacation, a six day a week stockpile of beer (hey, cut back a day, guys!  Try it out and see how it fits) etc.  Times are changing, and they will definitely change without us if we are not careful.

There is always a way to get the preps you need, if you are motivated enough to make it happen.  Here are a few items that seem to escape from people’s lists:

Extra Survival Clothing:
Clothing is a real pain for a lot of survivalists because it is one prep that they must absolutely purchase doubles and triples of.  Good durable shoes, pants, even socks, can get expensive.  Base layer clothing like Smart Wool sometimes costs in the range of $100 or more for a single set.  Take the pain, bite the bullet, and get the absolute best clothing you can find in multiples.  It may have to last you quite a long time without replacement, especially the artificial fabrics.  Imagine having to wear the same vapor producing sweat drenched crusty duds day in and day out while sharing a retreat location with some less than amused buddies.  They may end up coming after you before the looters do.

Body Armor: This stuff is going to be at a premium in the near future.  I have already seen price spikes in good body armor in the days after the Aurora Theater shootings.  Why?  Because the fear is that the establishment will move to try to ban said gear in response, causing a rush to purchase.  That fear is not misplaced.  Plus, I would imagine a bullet to the gut, whether accidental or intentional, is not an event to celebrate with a rootbeer float.  Believe it or not, body armor rigs that include rifle plates are extremely sparse amongst preppers right now, and this simply can’t continue.           

Gas Masks And Filters: Not long ago I wrote about the revolutions and rebellions that took place in Russia after the formation of the Soviet Union against the abuses of communism.  At that time, the more successful the rebellion, the more apt the Soviets were to dump chemical weapons over entire towns, mountains, and valleys, to erase the problem.  Never expect that a tyrannical government is going to fight fair.  In fact, expect that they won’t.  Even if you don’t foresee such an event taking place in the U.S., it is imperative that every person owns not just a gas mask, but extra filters as well.  Plan on dealing with multiple incidences in which your air will be unsafe to breath. 

NBC Alert Items: How many preppers do you know with a Geiger Counter?  I know three, out of the hundreds I speak with regularly.  This is not a good sign.  If the Fukushima disaster has taught us anything, it is that radiological threats are not just relegated to the realm of nuclear bombs.  Every community should have several Geiger Counter devices handy, along with chemical warfare strips which change color when exposed to an offending airborne agent.  Remember the panic buying that ensued in Japan for these kinds of goods after the reactor meltdown?  Don’t overlook radioactivity.  Knowing what has been hit by concentrated fallout and what hasn’t is a tremendous advantage.

Thermal Countermeasures: A box of road flares, IR flashlights, and IR floodlights, should be in every survivalists home.  With the advent of predator drones armed with night vision and thermal vision, as well as numerous other nasty weapons platforms, the need for countermeasures that create false thermal signatures to confuse an attacker with this kind of technology is a must.

Extra First Aid Supplies: During a collapse, you become the hospital, and no amount of Obamacare is going to help you.  Almost every prepper has a first aid kit, but few have one that will really last through a prolonged crisis.  Collapse brings with it all kinds of injuries and sicknesses we never think of facing in our current atmosphere, with more frequency than I believe many would like to admit possible.  A sterile bandage may be as sought after and as rare as a warm shower in the near future, so stock an ample supply.

Solar Panels: I am astonished at how many preppers still do not have any solar power capability today.  It’s FREE off grid power, for god’s sake!  Pay the initial costs, and at at least buy a system that is capable of charging and running batteries and essential electronics that will aid you in your survival.

Greenhouse: When discussing the idea of relocation, I sometimes hear the assertion that places like Montana are terrible for growing food (usually from people who have never lived in Montana).  In fact, a survival garden could be grown almost anywhere, regardless of region or climate, if you use the right methods.  One of the best methods is the use of a greenhouse, which many preppers do not have.  Set aside your preconceptions of what gardening is, and do what works.  Even in winter, some plants can be grown in a greenhouse environment to provide you and your family with precious vitamin rich food.  Just build it.

Raw Building Materials: Do you have a stockpile of lumber and nails?  What about raw iron and steel?  Sealants to repel pests and maintain your home?  Bags of concrete to reinforce a new addition?  Think about how much you will need to build after the final shoe drops.  Probably a lot more than you have ever built in your life…

No Room For Error

Time is running short, and if we are to succeed as a movement, we must be ready to hold a candle to ourselves, admit where we are lacking, and fix the problem while we have the luxury to do so.  Ultimately, the most important and most ignored aspect of prepping is our own mindset.  Do we have the correct sense of urgency, and are we acting on it?  Have we prepared ourselves psychologically for the difficulties ahead?  Are we ready to make sacrifices for survival and victory?  Will we have what it takes at our core to see this thing through?  At this very moment, many do not.  But, they have the potential to rise to the occasion.  The decision is theirs to make…

Powered by WPeMatico