ZeroHedge. Alternative view on facts Zero Hedge http://so-l.ru/news/source/zerohedge_alternative_view_on_facts Sun, 19 Nov 2017 21:00:09 +0300 <![CDATA[Mnuchin On Bond-Villain Comparison: "I Guess I Should Take That As A Compliment"]]> Treasury Secretary and noted Hollywood producer Steven Mnuchin provoked criticisms from his political opponents after photos surfaced last week of Mnuchin and his wife Louise Linton posing with a sheet of newly printed dollar bills bearing Mnuchin’s signature.

Asked by Fox News Sunday host Chris Wallace what it was like being compared with a bond villain after the photos went viral, Mnuchin said he took it as a compliment.

“I heard that. I never thought I’d be quoted as looking like a villain from the James Bond [movies]. I guess I should take that as a compliment that I look like a villain in a great, successful James Bond movie,” Mnuchin said.

 

“I was very excited about having my signature on the money and it’s something I’m very proud of being the secretary and helping the American people.”

Mnuchin said he thought nothing of it at the time the photo was taken, saying he didn’t expect it to be so widely shared on the Internet.

“I didn’t realize the pictures were public and going on the internet and viral but people have the right to do that people can do that that’s the great thing about social media today people can say what they want.”

Asked why he chose to print his signature in script instead of using cursive, Mnuchin explained that he felt his ordinary signature was too sloppy to print on US currency.

“I had a very, very messy signature that you could barely read, and I felt that since it’s going to be on the dollar bill forever that I should have a very clean signature,” Mnuchin said.

An Associated Press photographer captured Mnuchin and Linton posing with the sheet of dollar bills - the first to include Mnuchin’s signature - at the Bureau of Engraving and Printing last week, according to Politico.

After photos of the couple posing with the sheet of newly minted $1 bills went viral, twitter users poked fun at the pair's expensive tastes, with one joking they were shopping for 'bathroom mats' and another calling the sheet of bills, 'their new line of luxury toilet paper.'

This isn’t the first time Mnuchin and his wife have been criticized for appearing out-of-touch: The mockery comes just months after Louise Linton was roundly mocked for a tone-deaf Instagram post authored in response to criticisms of her posing next to a taxpayer funded jet.

Before that, the two were cleared after an investigation into whether they timed a flight in another taxpayer funded chartered jet to coincide with the solar eclipse that happened back in August.

The new bills are expected to enter circulation next month.

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http://so-l.ru/news/y/2017_11_19_mnuchin_on_bond_villain_comparison_i_g Sun, 19 Nov 2017 20:20:50 +0300
<![CDATA[The Stage Has Been Set For The Next Financial Crisis]]> Authored by Constantin Gurdgiev via CaymanFinancialReview.com,

Last month, the Japanese government auctioned off some US$4 billion worth of new two-year bonds at a new record low yield of negative 0.149 percent. The country’s five-year debt is currently yielding minus 0.135 percent per annum, and its 10-year bonds are trading at -0.001 percent. Strange as it may sound, the safe haven status of Japanese bonds means that there is an ample demand among private investors, especially foreign buyers, for giving away free money to the Japanese government: the bid-to-cover ratio in the latest auction was at a hefty US$19.9 billion or 4.97 times the targeted volume. The average bid-to-cover ratio in the past 12 auctions was similar at 4.75 times. Japan’s status as the world’s most indebted advanced economy is not a deterrent to the foreign investors, banking primarily on the expectation that continued strengthening of the yen against the U.S. dollar, the U.K. pound sterling and, to a lesser extent, the euro, will stay on track into the foreseeable future. See chart 1

In a way, the bet on Japanese bonds is the bet that the massive tsunami of monetary easing that hit the global economy since 2008 is not going to recede anytime soon, no matter what the central bankers say in their dovishly-hawkish or hawkishly-dovish public statements. And this expectation is not only contributing to the continued inflation of a massive asset bubble, but also widens the financial sustainability gap within the insurance and pensions sectors. The stage has been set, cleaned and lit for the next global financial crisis.

Worldwide, current stock of government debt trading at negative yields is at or above the US$9 trillion mark, with more than two-thirds of this the debt of the highly leveraged advanced economies. Just under 85 percent of all government bonds outstanding and traded worldwide are carrying yields below the global inflation rate. In simple terms, fixed income investments can only stay in the positive real returns territory if speculative bets made by investors on the direction of the global exchange rates play out.

We are in a multidimensional and fully internationalized carry trade game, folks, which means there is a very serious and tangible risk pool sitting just below the surface across world’s largest insurance companies, pensions funds and banks, the so-called “mandated” undertakings. This pool is the deep uncertainty about the quality of their investment allocations. Regulatory requirements mandate that these financial intermediaries hold a large proportion of their investments in “safe” or “high quality” instruments, a class of assets that draws heavily on higher rated sovereign debt, primarily that of the advanced economies.

The first part of the problem is that with negative or ultra-low yields, this debt delivers poor income streams on the current portfolio. Earlier this year, Stanford’s Hoover Institution research showed that “in aggregate, the 564 state and local systems in the United States covered in this study reported $1.191 trillion in unfunded pension liabilities (net pension liabilities) under GASB 67 in FY 2014. This reflects total pension liabilities of $4.798 trillion and total pension assets (or fiduciary net position) of $3.607 trillion.” This accounts for roughly 97 percent of all public pension funds in the U.S. Taking into the account the pension funds’ penchant for manipulating (in their favor) the discount rates, the unfunded public sector pensions liabilities rise to $4.738 trillion. Key culprit: the U.S. pension funds require 7.5-8 percent average annual returns on their assets to break even on their future expected liabilities. In 2013-2016 they achieved an average return of below 3 percent. This year, things are looking even worse. Last year, Milliman research showed that on average, over 2012-2016, U.S. pension funds held 27-30 percent of their assets in cash (3-4 percent) and bonds (23-27 percent), generating total median returns over the same period of around 1.31 percent per annum.

Not surprisingly, over the recent years, traditionally conservative investment portfolios of the insurance companies and pensions funds have shifted dramatically toward higher risk and more exotic (or in simple parlance, more complex) assets. BlackRock Inc recently looked at the portfolio allocations, as disclosed in regulatory filings, of more than 500 insurance companies. The analysts found that their asset books – investments that sustain insurance companies’ solvency – can be expected to suffer an 11 percent drop in values, on average, in the case of another financial crisis. In other words, half of all the large insurance companies trading in the U.S. markets are currently carrying greater risks on their balance sheets than prior to 2007. Milliman 2016 report showed that among pension funds, share of assets allocated to private equity and real estate rose from 19 percent in 2012 to 24 percent in 2016.

The reason for this is that the insurance companies, just as the pension funds, re-insurers and other longer-term “mandated” investment vehicles have spent the last eight years loading up on highly risky assets, such as illiquid private equity, hedge funds and real estate. All in the name of chasing the yield: while mainstream low-risk assets-generated income (as opposed to capital gains) returned around zero percent per annum, higher risk assets were turning up double-digit yields through 2014 and high single digits since then. At the end of 2Q 2017, U.S. insurance companies’ holdings of private equity stood at the highest levels in history, and their exposures to direct real estate assets were almost at the levels comparable to 2007. Ditto for the pension funds. And, appetite for both of these high risk asset classes is still there.

The second reason to worry about the current assets mix in insurance and pension funds portfolios relates to monetary policy cycle timing. The prospect of serious monetary tightening is looming on the horizon in the U.S., U.K., Australia, Canada and the eurozone; meanwhile, the risk of the slower rate of bonds monetization in Japan is also quite real. This means that the capital values of the low-risk assets are unlikely to post significant capital gains going forward, which spells trouble for capital buffers and trading income for the mandated intermediaries.

Thirdly, the Central Banks continue to hold large volumes of top-rated debt. As of Aug. 1, 2017, the Fed, Bank of Japan and the ECB held combined US$13.8 trillion worth of assets, with both Bank of Japan (US$4.55 trillion) and the ECB (US$5.1 trillion) now exceeding the Fed holdings (US$4.3 trillion) for the third month in a row.

Debt maturity profiles are exacerbating the risks of contagion from the monetary policy tightening to insurance and pension funds balance sheets. In the case of the U.S., based on data from Pimco, the maturity cliff for the Federal Reserve holdings of the Treasury bonds, Agency debt and TIPS, as well as MBS is falling on 1Q 2018 – 3Q 2020. Per Bloomberg data, the maturity cliff for the U.S. insurers and pensions funds debt assets is closer to 2020-2022. If the Fed simply stops replacing maturing debt – the most likely scenario for unwinding its QE legacy – there will be little market support for prices of assets that dominate capital base of large financial institutions. Prices will fall, values of assets will decline, marking these to markets will trigger the need for new capital. The picture is similar in the U.K. and Canada, but the risks are even more pronounced in the euro area, where the QE started later (2Q 2015 as opposed to the U.S. 1Q 2013) and, as of today, involves more significant interventions in the sovereign bonds markets than at the peak of the Fed interventions.

How distorted the EU markets for sovereign debt have become? At the end of August, Cyprus – a country that suffered a structural banking crisis, requiring bail-in of depositors and complete restructuring of the banking sector in March 2013 – has joined the club of euro area sovereigns with negative yields on two-year government debt. All in, 18 EU member states have negative yields on their two-year paper. All, save Greece, have negative real yields.

The problem is monetary in nature. Just as the entire set of quantitative easing (QE) policies aimed to do, the long period of extremely low interest rates and aggressive asset purchasing programs have created an indirect tax on savers, including the net savings institutions, such as pensions funds and insurers. However, contrary to the QE architects’ other objectives, the policies failed to drive up general inflation, pushing costs (and values) of only financial assets and real estate. This delayed and extended the QE beyond anyone’s expectations and drove unprecedented bubbles in financial capital. Even after the immediate crisis rescinded, growth returned, unemployment fell and the household debt dramatically ticked up, the world’s largest Central Banks continue buying some US$200 billion worth of sovereign and corporate debt per month.

Much of this debt buying produced no meaningfully productive investment in infrastructure or public services, having gone primarily to cover systemic inefficiencies already evident in the state programs. The result, in addition to unprecedented bubbles in property and financial markets, is low productivity growth and anemic private investment. (See chart 2.) As recently warned by the Bank for International Settlements, the global debt pile has reached 325 percent of the world’s GDP, just as the labor and total factor productivity growth measures collapsed.

The only two ways in which these financial and monetary excesses can be unwound involves pain.

The first path – currently favored by the status quo policy elites – is through another transfer of funds from the general population to the financial institutions that are holding the assets caught in the QE net. These transfers will likely start with tax increases, but will inevitably morph into another financial crisis and internal devaluation (inflation and currencies devaluations, coupled with a deep recession).

The alternative is also painful, but offers at least a ray of hope in the end: put a stop to debt accumulation through fiscal and tax reforms, reducing both government spending across the board (and, yes, in the U.S. case this involves cutting back on the coercive institutions and military, among other things) and flattening out personal income tax rates (to achieve tax savings in middle and upper-middle class cohorts, and to increase effective tax rates – via closure of loopholes – for highest earners). As a part of spending reforms, public investment and state pensions provisions should be shifted to private sector providers, while existent public sector pension funds should be forced to raise their members contributions to solvency-consistent levels.

Beyond this, we need serious rethink of the monetary policy institutions going forward. Historically, taxpayers and middle class and professionals have paid for both, the bailouts of the insolvent financial institutions and for the creation of conditions that lead to this insolvency. In other words, the real economy has consistently been charged with paying for utopian, unrealistic and state-subsidizing pricing of risks by the Central Banks. In the future, this pattern of the rounds upon rounds of financial repression policies must be broken.

Whether we like it or not, since the beginning of the Clinton economic bubble in the mid-1990s, the West has lived in a series of carry trade games that transferred real economic resources from the economy to the state. Today, we are broke. If we do not change our course, the next financial crisis will take out our insurers and pensions providers, and with them, the last remaining lifeline to future financial security.

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http://so-l.ru/news/y/2017_11_19_the_stage_has_been_set_for_the_next_fina Sun, 19 Nov 2017 19:51:41 +0300
<![CDATA[Clinton Mocks Trump: "How Does He Get Anything Done Between Tweeting And Golfing?"]]> Just a few short hours after President Trump challenged his former friend-turned-rival Hillary Clinton to run against him again in three years, Clinton shot back by questioning how the president has time to get anything done in between feuding with perceived enemies on twitter and slicing up the back nine.

"Honestly, between tweeting and golfing, how does he get anything done? I don’t understand it," she said, according to the Hill. "Maybe that’s the whole point."

She also claimed that Trump is “obsessed” with her repeated claims that her rival only managed to wi because he had the help of Russia, the FBI, email-gate, systemic misogyny….the list goes on.

Even her own husband broke with her on Saturday when, during an interview, former President Bill Clinton said believed former FBI Director James Comey’s decision to reopen an investigation into her handling of classified information on a private email server just days before the election had little to do with the outcome of the vote, the Hill reported.

Still, Hillary Clinton was undeterred:

"I’m going to keep speaking out," Clinton said at an event celebrating the 25th anniversary of former President Bill Clinton's 1992 electoral victory. "Apparently my former opponent is obsessed with me speaking out."

Since emerging from the woods of Chappaqua, New York, where she had retreated following her embarassing electoral flop, Clinton has tried to position herself as a leader of the “resistance." She has persistently criticized his conduct in office, and repeatedly insisted that the Trump campaign purposefully colluded with Russian President Vladimir Putin.

On Saturday, Trump tweeted: Crooked Hillary Clinton is the worst (and biggest) loser of all time. She just can’t stop, which is so good for the Republican Party. Hillary, get on with your life and give it another try in three years!

 

p>

Bill Clinton said the decision to reopen the investigation wouldn't have been as damaging had the controversy surrounding her emails not been overblown in the first place.

"We have a slight disagreement about this," the former president said, speaking alongside the former secretary of State at an event celebrating the 25th anniversary of his 1992 presidential victory.

"If the voters hadn't really been told that the email ... was the most important issue since the end of World War II, I doubt if the FBI director could have flung the election at the end."

Clinton won the popular vote by 3 million votes, though Trump has disputed this figure by insisting that millions of illegal immigrants likely voted to help their preferred candidate. Yet Trump dominated the electoral college, sweeping swing states in the Midwest and south, and smashing through the Democrats famed “Wall of Blue.”
 

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http://so-l.ru/news/y/2017_11_19_clinton_mocks_trump_how_does_he_get_an Sun, 19 Nov 2017 19:21:08 +0300
<![CDATA[ECB Proposes End To Deposit Protection]]> Submitted by GoldCore

It is the 'opinion of the European Central Bank' that the deposit protection scheme is no longer necessary:

'covered deposits and claims under investor compensation schemes should be replaced by limited discretionary exemptions to be granted by the competent authority in order to retain a degree of flexibility.'

To translate the legalese jargon of the ECB bureaucrats this could mean that the current €100,000 (£85,000) deposit level currently protected in the event of a bail-in may soon be no more. But worry not fellow savers, as the ECB is fully aware of the uproar this may cause so they have been kind enough to propose that:

"...during a transitional period, depositors should have access to an appropriate amount of their covered deposits to cover the cost of living within five working days of a request."

So that's a relief, you'll only need to wait five days for some 'competent authority' to deem what is an 'appropriate amount' of your own money for you to have access to in order eat, pay bills and get to work.

The above has been taken from an ECB paper published on 8 November 2017 entitled 'on revisions to the Union crisis management framework'.

It's 58 pages long, the majority of which are proposed amendments to the Union crisis management framework and the current text of the Capital Requirements Directive (CRD).

It's pretty boring reading but there are some key snippets which should be raising a few alarms. It is evidence that once again a central bank can keep manipulating situations well beyond the likes of monetary policy. It is also a lesson for savers to diversify their assets in order to reduce their exposure to counterparty risks.

Bail-ins, who are they for?

According to the May 2016 Financial Stability Review, the EU bail-in tool is 'welcome' as it:

 
 

...contributes to reducing the burden on taxpayers when resolving large, systemic financial institutions and mitigates some of the moral hazard incentives associated with too-big-to-fail institutions.

As we have discussed in the past, we're confused by the apparent separation between 'taxpayer' and those who have put their hard-earned cash into the bank. After all, are they not taxpayers? This doesn't matter, believes Matthew C.Klein in the FT who recently argued that "Bail-ins are theoretically preferable because they preserve market discipline without causing undue harm to innocent people."

 

Ultimately bail-ins are so central banks can keep their merry game of easy money and irresponsibility going. They have been sanctioned because rather than fix and learn from the mess of the bailouts nearly a decade ago, they have just decided to find an even bigger band-aid to patch up the system.

 
 

'Bailouts, by contrast, are unfair and inefficient. Governments tend to do them, however, out of misplaced concern about “preserving the system”. This stokes (justified) resentment that elites care about protecting their friends more than they care about helping regular people.' - Matthew C. Klein

But what about the regular people who have placed their money in the bank, believing they're safe from another financial crisis? Are they not 'innocent' and deserving of protection?

When Klein wrote his latest on bail-ins, it was just over a week before the release of this latest ECB paper. With fairness to Klein at the time of his writing depositors with less than €100,000 in the bank were protected under the terms of the ECB covered deposit rules.

This still seemed absurd to us who thought it questionable that anyone's money in the bank could suddenly be sanctioned for use to prop up an ailing institution. We have regularly pointed out that just because there is currently a protected level at which deposits will not be pilfered, this could change at any minute.

The latest proposed amendments suggest this is about to happen.

 

Why change the bail-in rules?

The ECB's 58-page amendment proposal is tough going but it is about halfway through when you come across the suggestion that 'covered deposits' no longer need to be protected. This is determined because the ECB is concerned about a run on the failing bank:

 
 

If the failure of a bank appears to be imminent, a substantial number of covered depositors might still withdraw their funds immediately in order to ensure uninterrupted access or because they have no faith in the guarantee scheme.

This could be particularly damning for big banks and cause a further crisis of confidence in the system:

 
 

Such a scenario is particularly likely for large banks, where the sheer amount of covered deposits might erode confidence in the capacity of the deposit guarantee scheme. In such a scenario, if the scope of the moratorium power does not include covered deposits, the moratorium might alert covered depositors of the strong possibility that the institution has a failing or likely to fail assessment.

Therefore, argue the ECB the current moratorium that protects deposits could be 'counterproductive'. (For the banks, obviously, not for the people whose money it really is:

 
 

The moratorium would therefore be counterproductive, causing a bank run instead of preventing it. Such an outcome could be detrimental to the bank’s orderly resolution, which could ultimately cause severe harm to creditors and significantly strain the deposit guarantee scheme. In addition, such an exemption could lead to a worse treatment for depositor funded banks, as the exemption needs to be factored in when determining the seriousness of the liquidity situation of the bank. Finally, any potential technical impediments may require further assessment.

The ECB instead proposes that 'certain safeguards' be put in place to allow restricted access to deposits...for no more than five working days. But let's see how long that lasts for.

 
 

Therefore, an exception for covered depositors from the application of the moratorium would cast serious doubts on the overall usefulness of the tool. Instead of mandating a general exemption, the BRRD should instead include certain safeguards to protect the rights of depositors, such as clear communication on when access will be regained and a restriction of the suspension to a maximum of five working days by avoiding a cumulative use by the competent authority and the resolution authority.

Even after a year of studying and reading bail-ins I am still horrified that something like this is deemed to be preferable and fairer to other solutions, namely fixing the banking system. The bureaucrats running the EU and ECB are still blind to the pain such proposals can cause and have caused.

Look to Italy for damage prevention

At the beginning of the month, we explained how the banking meltdown in Veneto Italy destroyed 200,000 savers and 40,000 businesses.

In that same article, we outlined how exposed Italians were to the banking system. Over €31 billion of sub-retail bonds have been sold to everyday savers, investors, and pensioners. It is these bonds that will be sucked into the sinkhole each time a bank goes under.

A 2015 IMF study found that the majority of Italy’s 15 largest banks a bank rescue would ‘imply bail-in of retail investors of subordinated debt’. Only two-thirds of potential bail-ins would affect senior bond-holders, i.e. those who are most likely to be institutional investors rather than pensioners with limited funds.

Why is this the case? As we have previously explained:

 
 

Bondholders are seen as creditors. The same type of creditor that EU rules state must take responsibility for a bank’s financial failure, rather than the taxpayer. This is a bail-in scenario.

 

In a bail-in scenario the type of junior bonds held by the retail investors in the street is the first to take the hit. When the world’s oldest bank Monte dei Paschi di Siena collapsed ordinary people (who also happen to be taxpayers) owned €5 billion ($5.5 billion) of subordinated debt. It vanished.

Despite the biggest bail-in in history occurring within the EU, few people have paid attention and protested against such measures. A bail-in is not unique to Italy, it is possible for all those living and banking within the EU.

Yet, so far there have been no protests. We're not talking about protesting on the streets, we're talking about protesting where it hurts - with your money.

As we have seen from the EU's response to Brexit and Catalonia, officials could not give two hoots about the grievances of its citizens. So when it comes to banking there is little point in expressing disgust in the same way. Instead, investors must take stock and assess the best way for them to protect their savings from the tyranny of central bank policy.

To refresh your memory, the ECB is proposing that in the event of a bail-in it will give you an allowance from your own savings. An allowance it will control:

"...during a transitional period, depositors should have access to an appropriate amount of their covered deposits to cover the cost of living within five working days of a request."

Savers should be looking for means in which they can keep their money within instant reach and their reach only. At this point physical, allocated and segregated gold and silver comes to mind. This gives you outright legal ownership. There are no counterparties who can claim it is legally theirs (unlike with cash in the bank) or legislation that rules they get first dibs on it. Gold and silver are the financial insurance against bail-ins, political mismanagement, and overreaching government bodies. As each year goes by it becomes more pertinent than ever to protect yourself from such risks.

 

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http://so-l.ru/news/y/2017_11_19_ecb_proposes_end_to_deposit_protection Sun, 19 Nov 2017 18:46:33 +0300
<![CDATA[Crew Of Missing Argentine Submarine Makes Contact Attempt]]> Argentinians breathed a collective sigh of relief Saturday night after authorities revealed that the crew of a missing submarine had attempted to make contact for the first time since communication with the sub suddenly ceased on Wednesday. Defense Minister Oscar Aguad said over Twitter on Saturday night that the submarine, which was carrying a crew of 44 sailors, had sent seven “communication attempts” earlier in the day. He did not provide further details.

“We received seven signals from satellite calls that would come from the submarine San Juan. We are working hard to locate him and we convey hope to the families of the 44 crew members: that they may soon have them in their homes.”

The vessel disappeared from radar last week, forcing the Argentine navy to hastily organize a search and recovery effort. The last registered position of the vessel was on November 15 at 07:30 in latitude 46 ° 44 ‘south and longitude 59 ° 54 West, at the height of Puerto Madryn and off the coast of Patagonia. Since then, the vessel has not reappeared on radar, or been spotted by the search party, according to the Associated Press.

The whereabouts of the vessel, the subject of an intensive search involving eight nations including the US, remains a mystery. Officials don’t even know whether it’s at the surface or underwater.

The submarine ARA San Juan left Argentina Monday to participate in naval exercises off southern Argentina before departing Monday from the city of Ushuaia for a naval base in Mar de Plata. The last contact was made after the northbound vessel passed the Valdes Peninsula about 270 miles off Argentina’s coast.

NASA joined the search effort on Saturday with a P-3 Orion propeller-driven patrol airplane, equipped with magnetometers, infrared cameras and other sensors that can detect a submerged submarine. The aircraft, which can also measure ice thickness, is temporarily based in Ushuaia to take part in a NASA survey of Antarctica.

Argentine naval officials said they received no distress signals from the vessel, a German-built TR-1700 model, before losing contact. Vessels from Chile, Brazil, Peru, Uruguay, South Africa and the United Kingdom are also assisting in the search.

Pope Francis, a native of Argentina, said in a statement issued by the Vatican earlier Saturday that he was praying for the safe return of the submarine and its crew, and for “spiritual serenity and Christian hope” for Argentina. He said he felt especially close to family members “in these difficult moments."

Anguished family members of the crew have gathered at the Mar de Plata base awaiting news.

“It’s agonizing the passing of the hours, a mixture of horrible feelings and silence,” said Marcela Moyano, wife of submarine machinist Hernan Rodriguez, in an interview at the base with TodoNoticias TV channel before Aguad’s announcement. “It’s a situation of desperation and fear. But we’re still hopeful they are returning,” according to the Associated Press.

Of the missing sub’s 44 crew members, one is a woman: Lt. Eliana Maria Krawczyk, 34, the sub’s operations chief. Her father, Eduardo, said in a TV interview Thursday that he last talked to his daughter two weeks ago.

“She told me that after arriving at Tierra del Fuego, that the (female) governor of the state came aboard the submarine and congratulated her because a woman was on the crew,” Eduardo Krawczyk said. He added that he is praying for his daughter’s safe return and that seeing her again will be like “being born again."

Psychologists and a Roman Catholic bishop have arrived at the naval base to counsel family members. Navy spokesman Enrique Balbi said the fleet was “not discarding any hypothesis” on what might have happened to the sub.  “We are going to suppose the submarine had problems of communications, that there might have been a blackout, or power failure, and that it is now adrift,” Balbi said. “From (projected) movement after going adrift, we can estimate the search area."

The diesel-powered sub is one of three submarines in Argentina’s fleet. Measuring 220 feet long, the sub has a range of 13,000 miles. It underwent a major overhaul and reconditioning in 2008 that officials here say qualified it for 30 years more of use.

But weather in the search area has turned rough, with strong winds and waves as high as 20 feet, complicating the rescue operation, Balbi said.

“Remember that the part of the submarine that is above surface is very small, just a third of its length. The color of the vessel doesn’t help either because it mimics that of the ocean,” Balbi told reporters.

Argentine President Mauricio Macri tweeted Friday that the government is doing everything it can to find the sub: “We are in contact with the families of the crew of the submarine ARA San Juan who is missing to inform and support them. We share your concern and that of all Argentines."

Four Argentine ships, various helicopters and 500 marines are participating in the search.

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http://so-l.ru/news/y/2017_11_19_crew_of_missing_argentine_submarine_make Sun, 19 Nov 2017 17:53:31 +0300
<![CDATA["People Ask, Where's The Leverage This Time?" - Eric Peters Answers]]> One of the Fed's recurring arguments meant to explain why the financial system is more stable now than it was 10 years ago, and is therefore less prone to a Lehman or "Black monday"-type event, (which in turn is meant to justify the Fed's blowing of a 31x Shiller PE bubble) is that there is generally less leverage in the system, and as a result a sudden, explosive leverage unwind is far less likely... or at least that's what the Fed's recently departed vice Chair, and top macroprudential regulator, Stanley Fischer has claimed.

But is Fischer right? Is systemic leverage truly lower? The answer is "of course not" as anyone who has observed the trends not only among vol trading products, where vega has never been higher, but also among corporate leverage, sovereign debt, and the record duration exposure can confirm. It's just not where the Fed usually would look...

Which is why in the excerpt below, taken from the latest One River asset management weekend notes, CIO Eric Peters explains to US central bankers - and everyone else - not only why the Fed is yet again so precariously wrong, but also where all the record leverage is to be found this time around.

This Time, by Eric Peters

“People ask, ‘Where’s the leverage this time?’” said the investor. Last cycle it was housing, banks.

 

“People ask, ‘Where will we get a loss in value severe enough to sustain an asset price decline?’” he continued. Banks deleveraged, the economy is reasonably healthy.

 

“People say, ‘What’s good for the economy is good for the stock market,’” he said.

 

“People say, ‘I can see that there may be real market liquidity problems, but that’s a short-lived price shock, not a value shock,’” he explained.

 

“You see, people generally look for things they’ve seen before.”

 

“There’s less concentrated leverage in the economy than in 2008, but more leverage spread broadly across the economy this time,” said the same investor.

 

“The leverage is in risk parity strategies. There is greater duration and structural leverage.”

 

As volatility declines and Sharpe ratios rise, investors can expand leverage without the appearance of increasing risk.

 

“People move from senior-secured debt to unsecured. They buy 10yr Italian telecom debt instead of 5yr. This time, the rise in system-wide risk is not explicit leverage, it is implicit leverage.”

 

“Companies are leveraging themselves this cycle,” explained the same investor, marveling at the scale of bond issuance to fund stock buybacks.

 

“When people buy the stock of a company that is highly geared, they have more risk.” It is inescapable.

 

“It is not so much that a few sectors are insanely overvalued or explicitly overleveraged this time, it is that everything is overvalued and implicitly overleveraged,” he said.

 

“And what people struggle to see is that this time it will be a financial accident with economic consequences, not the other way around.”

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http://so-l.ru/news/y/2017_11_19_people_ask_where_s_the_leverage_this_t Sun, 19 Nov 2017 17:18:49 +0300
<![CDATA["The President Is Gone" - Zimbabwe Ruling Party Officially Ousts Mugabe]]> Update 3: After a meeting with military officials, Mugabe's resignation appears imminent...

 

 

* * *

Update 2: Mugabe, who remains under house arrest, is meeting with the commanders of the country's military shortly after lawmakers approved an ultimatum for the long-time strongman to either resign, or be forced...

 

 

* * *

Update: Initial media reports about Mugabe's ouster were confusing: While the country's ruling party had voted to expel him, several sources quoted by western media outlets said the vote was only the trigger to start the process of removing Mugabe, and that he is still technically president of Zimbabwe. 

Fortunately, the ruling Zanu-PF party has issued a quick clarification: Mugabe - who has obstinantly refused to officially abdicate in accordance with the military's demands - has until noon tomorrow to resign. If he doesn't, he will be impeached.

 

Zimbabwe's ruling party confirmed the news in a tweet...

 

 

 

* * *

A day after thousands of demonstrators took to the streets of Harare to celebrate the imminent removal of Robert Mugabe, the country’s 93-year-old dictator who’d been effectively deposed during a surprise coup earlier this week, the country’s ruling party has officially voted to remove him from office and install his former deputy, Emmerson Mnangagwa, as interim leader.

As we’ve pointed out, Mugabe triggered his own downfall when he fired Mnangagwa last week to try and clear a path for his much-younger wife, Grace, to succeed him as leader of Zimbabwe. Mugabe tried to appoint his 52-year-old wife to Mnangagwa's former position, which would've positioned her to be his successor. However, Mnangagwa’s sudden ouster outraged the leaders of Zimbabwe’s military, who decided to intervene and place Mugabe under house arrest.

Mugabe had resisted the military’s request to step down, so on Friday, the country’s 10 provincial committees resolved to oust Mugabe. That decision was ratified Sunday at a meeting of Zimbabwe’s central executives, according to the head of the country's influential liberation war veterans.

Meanwhile, ABC reported that Mugabe's wife Grace - who reportedly fled the country after the coup - has been officially expelled by ZANU-PF, the ruling party. Veterans leader Chris Mutsvangwa said now that Mugabe’s ouster is official, processes to remove the 93-year-old as President could now begin.

Attendants at the meeting sang and danced in celebration after unanimously voting to remove Mugabe.

 

 

After the vote, members of the central committee started singing “Chengetedza” by Jah Prayzah, a popular Zimbabwean musician. According to local media, the song has become an anthem for the de facto anthem of the movement to oust Mugabe.

 

 

Before voting, members of Zimbabwe’s central committee sung the national anthem.

 

 

According to one BBC reporter, journalists were asked to leave the room after the vote as the party set about formalizing the decision.

 

In his opening remarks at a meeting of ZANU-PF's Central Committee, Obert Mpofu, the official chairing the gathering, said the party had come together with "a heavy heart,” adding that Mugabe’s wife, Grace, and others in his orbit had taken advantage of his age and feebleness to loot the country’s national resources. Mpofu then hailed the beginning of "a new era, not only for our party but for our nation Zimbabwe,” according to ABC.

Mpofu said Mugabe was responsible for "many memorable achievements.”

Mugabe, who remains under house arrest, was reportedly supposed to meet Sunday with the military for a second round of talks to negotiate his departure. It’s unclear if this meeting has taken place.

While Zimbabwe lawmakers have voted to begin the process of Mugabe’s ouster, he technically remains the president of Zimbabwe. However, the vote greatly increases the pressure on him to abdicate, the BBC reported.

Veterans leader Mutsvangwa expressed his excitement over Mugabe’s ouster in an interview with local media.

“The president is gone! Long live the new president!”

 

 

Shortly before the vote, local media captured this iconic video of demonstrators tearing down a billboard advertising the Zimbabwe Youth League, a pro-Mugabe group.

 

 

Mugabe has ruled Zimbabwe since the country won its independence from the UK in 1980. Under his watch, the economy has imploded, leaving 95 percent of the workforce unemployed, according to Zimbabwe Congress of Trade Unions estimates, and forcing as many as 3 million people into exile.

While Zimbabwe's ruling party led the effort to oust Mugabe, opposition lawmakers had threatened to begin impeachment proceedings if he was not swiftly removed, according to Fox News.

"If Mugabe is not gone by Tuesday, then as sure as the sun rises from the east, impeachment process will kick in," said Innocent Gonese, a member of the opposition MDC-T party.

Hope for a better future crested on Sunday. But whether life will measurably improve for the people of Zimbabwe remains to be seen…

 

 

 

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http://so-l.ru/news/y/2017_11_19_the_president_is_gone_zimbabwe_rulin Sun, 19 Nov 2017 15:43:57 +0300
<![CDATA[Russia-Gate Spreads To Europe]]> Authored by Robert Parry via ConsortiumNews.com,

Ever since the U.S. government dangled $160 million last December to combat Russian propaganda and disinformation, obscure academics and eager think tanks have been lining up for a shot at the loot, an unseemly rush to profit that is spreading the Russia-gate hysteria beyond the United States to Europe...

British Prime Minister Theresa May

Now, it seems that every development, which is unwelcomed by the Establishment – from Brexit to the Catalonia independence referendum – gets blamed on Russia! Russia! Russia!

The methodology of these “studies” is to find some Twitter accounts or Facebook pages somehow “linked” to Russia (although it’s never exactly clear how that is determined) and complain about the “Russian-linked” comments on political developments in the West. The assumption is that the gullible people of the United States, United Kingdom and Catalonia were either waiting for some secret Kremlin guidance to decide how to vote or were easily duped.

Oddly, however, most of this alleged “interference” seems to have come after the event in question. For instance, more than half (56 percent) of the famous $100,000 in Facebook ads in 2015-2017 supposedly to help elect Donald Trump came after last year’s U.S. election (and the total sum compares to Facebook’s annual revenue of $27 billion).

Similarly, a new British study at the University of Edinburgh blaming the Brexit vote on Russia discovered that more than 70 percent of the Brexit-related tweets from allegedly Russian-linked sites came after the referendum on whether the U.K. should leave the European Union. But, hey, don’t let facts and logic get in the way of a useful narrative to suggest that anyone who voted for Trump or favored Brexit or wants independence for Catalonia is Moscow’s “useful idiot”!

This week, British Prime Minister Theresa May accused Russia of seeking to “undermine free societies” and to “sow discord in the West.”

What About Israel?

Yet, another core problem with these “studies” is that they don’t come with any “controls,” i.e., what is used in science to test a hypothesis against some base line to determine if you are finding something unusual or just some normal occurrence.

Israeli Prime Minister Benjamin Netanyahu speaking to a joint session of the U.S. Congress on March 3, 2015, in opposition to President Barack Obama’s nuclear agreement with Iran. (Screen shot from CNN broadcast)

In this case, for instance, it would be useful to find some other country that, like Russia, has a significant number of English speakers but where English is not the native language – and that has a significant interest in foreign affairs – and then see whether people from that country weigh in on social media with their opinions and perspectives about political events in the U.S., U.K., etc.

Perhaps, the U.S. government could devote some of that $160 million to, say, a study of the Twitter/Facebook behavior of Israelis and whether they jump in on U.S./U.K. controversies that might directly or indirectly affect Israel. We could see how many Twitter/Facebook accounts are “linked” to Israel; we could study whether any Israeli “trolls” harass journalists and news sites that oppose neoconservative policies and politicians in the West; we could check on whether Israel does anything to undermine candidates who are viewed as hostile to Israeli interests; if so, we could calculate how much money these “Israeli-linked” activists and bloggers invest in Facebook ads; and we could track any Twitter bots that might be reinforcing the Israeli-favored message.

No Chance

If we had this Israeli baseline, then perhaps we could judge how unusual it is for Russians to voice their opinions about controversies in the West. It’s true that Israel is a much smaller country with 8.5 million people compared to Russia’s 144 million, but you could adjust for those per capita numbers — and even if you didn’t, it wouldn’t be surprising to find that Israel’s interference in U.S. policymaking still exceeds Russian influence.

Russian President Vladimir Putin with German Chancellor Angela Merkel on May 10, 2015, at the Kremlin. (Photo from Russian government)

It’s also true that Israeli leaders have often advocated policies that have proved disastrous for the United States, such as Prime Minister Benjamin Netanyahu’s encouragement of  the Iraq War, which Russia opposed. Indeed, although Russia is now regularly called an American enemy, it’s hard to think of any policy that President Vladimir Putin has pushed on the U.S. that is even a fraction as harmful to U.S. interests as the Iraq War has been.

And, while we’re at it, maybe we could have an accounting of how much “U.S.-linked” entities have spent to influence politics and policies in Russia, Ukraine, Syria and other international hot spots.

But, of course, neither of those things will happen. If you even tried to gauge the role of “Israeli-linked” operations in influencing Western decision-making, you’d be accused of anti-Semitism. And if that didn’t stop you, there would be furious editorials in The New York Times, The Washington Post and the rest of the U.S. mainstream media denouncing you as a “conspiracy theorist.” Who could possibly think that Israel would do anything underhanded to shape Western attitudes?

And, if you sought the comparative figures for the West interfering in the affairs of other nations, you’d be faulted for engaging in “false moral equivalence.” After all, whatever the U.S. government and its allies do is good for the world; whereas Russia is the fount of evil.

So, let’s just get back to developing those algorithms to sniff out, isolate and eradicate “Russian propaganda” or other deviant points of view, all the better to make sure that Americans, Britons and Catalonians vote the right way.

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http://so-l.ru/news/y/2017_11_19_russia_gate_spreads_to_europe Sun, 19 Nov 2017 06:30:00 +0300
<![CDATA[Back-To-Back Hindenburg Omens]]> About a week ago, we warned about the infamous bearish stock market pattern developing in US equities coined by some as the ‘Hindenburg Omen’. The pattern is known for its bearish tendencies developed after the Hindenburg disaster of 1937. The key understanding is breadth deterioration, when more stocks hit 52-week lows than 52-highs. Since the warning, a liquidity gap has developed in stocks thwarting any attempt at new all time highs.

Fast forward to this morning and a very ironic situation has unfolded in the skies 50-miles north of London. And no – it’s not a giant penis drawn by US-Navy pilots in F-18s - it’s a true ‘Hindenburg Omen’ as the world’s longest airship crashed early this morning. The £25m airship called ‘Airlander 10’ appeared to “break in two,” a witness told the BBC. Reports suggest the airship broke free from mooring less than 24-hours after a successful test. At the time, no-one was on board of the aircraft, but Bedfordshire police, paramedics and fire crews were alerted and treated a women who suffered minor injuries.

According to the Guardian,

The roads around the airfield were closed amid concerns that aviation fuel and helium could escape from the airship. However, police said they believed the helium would soon dissipate.

 

Hybrid Air Vehicles (HAV), the company that developed the airship confirmed there had been an incident. It said the craft was not on a flight at the time and had since been deflated.

 

An investigation has been launched to find out what happened.

Local residents took to social media and snapped shocking pictures of the crashed airship appearing to be more deflated than Tom Brady’s footballs.

Another concerned resident indicated ground crews rushed to slice open the aircraft to release helium after the crash.

Airship community is in tears this morning...

The Airlander 10 is/was the world’s largest aircraft produced by Hybrid Air Vehicles. The airship is classified as a helium airship powered by four diesel engines driving large propellers on each side of the craft. Hybrid Air Vehicles originally built this aircraft for the United States Army’s Long Endurance Multi-intelligence Vehicle (LEMV) program in 2012, but was cancelled one-year later.

To give perspective of the Airlander’s size, a Boeing 747 can pretty much fit inside the craft.

Perhaps the United States Army made the right decision in 2013, as it appears the Airlander 10 has many kinks that still need to be worked out. In late 2016, the Airlander 10 had a slow motion crash during a landing approach where damage to the cockpit was heavily sustained, but the crew of two was untouched.

Bottomline: Back to back ‘Hidenburg Omens’ for US-stocks and now the largest aircraft in the world crashing this morning is an ominous sign and we hope it’s not a redux of 1937 where markets crashed in excessive around 50%.

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http://so-l.ru/news/y/2017_11_19_back_to_back_hindenburg_omens Sun, 19 Nov 2017 06:00:00 +0300
<![CDATA["Gasping For Air" - Atlanta Nursing Home Staff Laugh As WWII Veteran Dies After Calling For Help]]> Authored by Mac Slavo via SHTFplan.com,

Staff at the Northeast Atlanta Health and Rehabilitation Center laughed as a decorated World War II veteran took his last gasps of air after frantically calling for help six different times, according to a shocking new investigation from 11Alive.com.

The investigation included the release of a never before seen hidden camera video that not only completely contradicted statements given by the nursing home staff but also proved, without a shadow of doubt, that the nursing home essentially let the decorated veteran die as if it were a joke.

The video is so disgusting that attorneys for the nursing home repeatedly tried to stop its release, going through a series of court battles with the local news station in which they hoped that the media would be ordered to censor the footage.

Thankfully, the judge in the case ruled in favor of actual journalism and the nursing home, after seeing no other possible outcome, eventually dropped their appeal to the Georgia State Supreme Court.

In the 11Alive investigation, the news outlet details the fact that a nurse who was on duty at the time directly lied about what actually happened before being confronted with the hidden camera video.

In the video deposition, former nursing supervisor Wanda Nuckles tells the family’s attorney, Mike Prieto, how she rushed to Dempsey’s room when a nurse alerted her he had stopped breathing.

 

Prieto: “From the time you came in, you took over doing chest compressions…correct?”

 

Nuckles : “Yes.”

 

Prieto: “Until the time paramedics arrive, you were giving CPR continuously?”

 

Nuckles : “Yes.”

 

The video, however, shows no one doing CPR when Nuckles entered the room. She also did not immediately start doing CPR.

 

“Sir, that was an honest mistake,” said Nuckles in the deposition. “I was just basing everything on what I normally do.”

 

[…]

 

When nurses had difficulty getting Dempsey’s oxygen machine operational during, you can hear Nuckles and others laughing.

 

Prieto: “Ma’am, was there something funny that was happening?”

 

Nuckles : “I can’t even remember all that as you can see.”

“The video shows the veteran calling for help six times before he goes unconscious while gasping for air. State records show nursing home staff found Dempsey unresponsive at 5:28 am. It took almost an hour for the staff to call 911 at 6:25a.m,” the 11Alive report read.

Amazingly, the Georgia Board of Nursing told 11Alive that the nurse seen in the above video, as well as another nurse on duty at the time, were only forced to surrender their licenses in September of this year, almost three years after the disgusting incident!

“Nursing board president Janice Izlar says she cannot confirm when the state knew about the video, but the board’s action came shortly after 11Alive sent her and other board staff a link to view the video,” 11Alive continued.

The deceased veteran, 89-year-old James Dempsey was a decorated World War II veteran who was from Woodstock, Georgia. Dempsey’s family received a settlement from the nursing home in 2014 so were unable to comment on the investigation.

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http://so-l.ru/news/y/2017_11_19_gasping_for_air_atlanta_nursing_home Sun, 19 Nov 2017 05:30:00 +0300
<![CDATA[The U.S. Is Crushing Its Clean Energy Forecasts]]> Paris, schmarish...

In a February 2007 report, the United States Department of Energy made thirty-year predictions for the country's energy usage and production. As Statista's infographic below shows, using data from the non-profit international environmental pressure group Natural Resources Defense Council, these forecasts have so far been smashed.

Infographic: The U.S. Is Smashing Its Clean Energy Forecasts | Statista

You will find more statistics at Statista

Martin Armstrong details that actual CO2 emissions in 2016 have undercut the 2006 predictions by 24 percent.

In terms of the energy mix, power generated from coal was 45 percent beneath the forecast while clean(er) alternatives natural gas and wind/solar power saw overshoots of 79 and 383 percent, respectively.

Renewable energy infrastructure is also expanding at a much faster rate than was thought ten years ago. 2006's prediction for installed solar was a massive 4,813 percent shy of the 2016 reality. The U.S now also has installed wind capacity of 82 gigawatts, 361 percent more than had been hoped for.

In fact, energy consumption in total was also 17 percent lower than expected... which is odd and perhaps a better indication of the recovery-less recovery's reality?

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http://so-l.ru/news/y/2017_11_19_the_u_s_is_crushing_its_clean_energy_fo Sun, 19 Nov 2017 05:00:00 +0300
<![CDATA[We're Living In The Age Of Capital Consumption]]> Authored by Ronald-Peter Stöferle via The Mises Institute,

When capital is mentioned in the present-day political debate, the term is usually subject to a rather one-dimensional interpretation: Whether capital saved by citizens, the question of capital reserves held by pension funds, the start-up capital of young entrepreneurs or capital gains taxes on investments are discussed – in all these cases capital is equivalent to “money.” Yet capital is distinct from money, it is a largely irreversible, definite structure, composed of heterogeneous elements which can be (loosely) described as goods, knowledge, context, human beings, talents and experience. Money is “only” the simplifying aid that enables us to record the incredibly complex heterogeneous capital structure in a uniform manner. It serves as a basis for assessing the value of these diverse forms of capital.

Modern economics textbooks usually refer to capital with the letter “C”. This conceptual approach blurs the important fact that capital is not merely a single magnitude, an economic variable representing a magically self-replicating homogenous blob but a heterogeneous structure. Among the various economic schools of thought it is first and foremost the Austrian School of Economics, which stresses the heterogeneity of capital. Furthermore, Austrians have correctly recognized, that capital does not automatically grow or perpetuate itself. Capital must be actively created and maintained, through production, saving, and sensible investment.

Moreover, Austrians emphasize that one has to differentiate between two types of goods in the production process: consumer goods and capital goods. Consumer goods are used in immediate consumption – such as food. Consumer goods are a means to achieve an end directly. Thus, food helps to directly achieve the end of satisfying the basic need for nutrition. Capital goods differ from consumer goods in that they are way-stations toward the production of consumer goods which can be used to achieve ultimate ends. Capital goods therefore are means to achieve ends indirectly. A commercial oven (used for commercial purposes) is a capital good, which enables the baker to produce bread for consumers. 

Through capital formation, one creates the potential means to boost productivity. The logical precondition for this is that the production of consumer goods must be temporarily decreased or even stopped, as scarce resources are redeployed toward the production of capital goods. If current production processes generate only fewer or no consumer goods, it follows that consumption will have to be reduced by the quantity of consumer goods no longer produced. Every deepening of the production structure therefore involves taking detours.

Capital formation is therefore always an attempt to generate larger returns in the long term by adopting more roundabout methods of production. Such higher returns are by no means guaranteed though, as the roundabout methods chosen may turn out to be misguided. In the best case only those roundabout methods will ultimately be continued, which do result in greater productivity. It is therefore fair to assume that a more capital-intensive production structure will generate more output than a less capital-intensive one. The more prosperous an economic region, the more capital-intensive its production structure is. The fact that the generations currently living in our society are able to enjoy such a high standard of living is the result of decades or even centuries of both cultural and economic capital accumulation by our forebears.

Once a stock of capital has been accumulated, it is not destined to be eternal. Capital is thoroughly transitory, it wears out, it is used up in the production process, or becomes entirely obsolete. Existing capital requires regularly recurring reinvestment, which can usually be funded directly out of the return capital generates. If reinvestment is neglected because the entire output or more is consumed, the result is capital consumption.

It is not only the dwindling understanding of the nature of capital that leads us to consume it without being aware of it. It is also the framework of the real economy which unwittingly drives us to do so. In 1971 money was finally cut loose entirely from the gold anchor and we entered the “paper money era.” In retrospect, it has to be stated that cutting the last tie to gold was a fatal mistake. Among other things, it has triggered unprecedented instability in interest rates. While interest rates displayed relatively little volatility as long as money was still tied to gold, they surged dramatically after 1971, reaching a peak of approximately 16 percent in 1981 (10-year treasury yield), before beginning a nosedive that continues until today. This massive decline in interest rates over the past 35 years has gradually eroded the capital stock.

An immediately obvious effect is the decline in so-called “yield purchasing power”. The concept describes what the income from savings, or more precisely the interest return on savings, will purchase in terms of goods. The opportunity to generate interest income from savings has of course decreased quite drastically. Once zero or even negative interest rate territory is reached, the return on saved capital is obviously no longer large enough to enable one to live from it, let alone finance a reasonable standard of living. Consequently, saved capital has to be consumed in order to secure one's survival. Capital consumption is glaringly obvious in this case.

It is beyond question that massive capital consumption is taking place nowadays, yet not all people are affected by it to the same extent. On the one hand, the policy of artificially reducing the interest as orchestrated by the central banks does negatively influence the entrepreneurs’ tasks. Investments, especially capital-intensive investments seem to be more profitable as compared to a realistic, i. e. non-interventionist level, profits are thus higher and reserves lower. These and other inflation-induced errors promote capital consumption.

On the other hand, counteracting capital consumption are technological progress and the rapid expansion of our areas of economic activity into Eastern Europe and Asia in recent decades, due to the collapse of communism and the fact that many countries belatedly caught up with the monetary and industrial revolution in its wake. Without this catching-up process it would have been necessary to restrict consumption in Western countries a long time ago already.

At the same time, the all-encompassing redistributive welfare state, which either directly through taxes or indirectly through the monetary system continually shifts and reallocates large amounts of capital, manages to paper over the effects of capital consumption to some extent. It remains to be seen how much longer this can continue. Once the stock of capital is depleted, the awakening will be rude. We are certain, that gold is an essential part of any portfolio in this stage of the economic cycle.

 

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http://so-l.ru/news/y/2017_11_19_we_re_living_in_the_age_of_capital_consu Sun, 19 Nov 2017 04:30:00 +0300
<![CDATA[Who's Next? Venezuela's Collapse Puts These Nations At Risk]]> "It's a wake-up call for a lot of people who will say ‘Look, the stuff I own is actually very risky'..." warns Ray Jian, who oversees about $6 billion at Pioneer Investment Management Ltd. in London. "People have been ignoring risks in places like Lebanon for a long time," and the official default of Venezuela this week has emerging-market money managers are looking to identify countries that might run into trouble down the road.

While Bloomberg reports that while none are nearly as badly off as Venezuela - where a combination of low oil prices, economic mismanagement and U.S. sanctions did the country intraders are scouting for credit risk, from Lebanon, where Prime Minister Saad Hariri’s sudden resignation has once again thrust the nation into a Saudi-Iran proxy war, to Ecuador, where recently elected President Lenin Moreno continues to expand the debt load in a country with a history as a serial defaulter.

1. Lebanon:

One of the world’s most indebted countries, Lebanon may hit a debt-to-gross domestic product ratio of 152 percent this year, according to International Monetary Fund forecasts. That’s coming at a time when political tension is rising. Hariri’s abrupt resignation, announced from Riyadh on Nov. 4, triggered about $800 million of withdrawals from the country as investors speculated that the nation would be in the crosshairs of a regional feud between the Saudis and Iranians. While the central bank says the worst may be over, credit-default swaps have hit a nine-year high.

2. Ecuador:

After a borrowing spree, the Andean nation’s external debt obligations over the next 12 months ballooned to a nine-year high relative to the size of its GDP. Ecuador probably has the highest default risk after Venezuela, according to Robert Koenigsberger, the chief investment officer of Gramercy Funds Management. The country will be vulnerable “when the liquidity environment changes and they can no longer go to the market to get $2.5 billion to plug the hole," he said. Finance Minister Carlos de la Torre told Bloomberg in an email on Thursday that there is "no default risk" for any of Ecuador’s debt commitments and the nation’s indebtedness is nowhere near "critical" levels.

3. Ukraine:

While the Eastern European nation’s credit-default swaps have declined from their 2015 highs, persistent economic struggles are giving traders reason for caution. GDP expansion has slowed for three consecutive quarters and the World Bank warns that the economy is at risk of falling into a low-growth trap. Ukraine’s parliament approved next year’s budget on Tuesday as it eyes a $17.5 billion international bailout.

4. Egypt:

Egypt’s credit-default swaps are hovering near the highest since September. The cost for protection surged in June as regional tensions heated up amid a push by the Saudis to isolate Qatar. While Egypt has been able to boost foreign-currency reserves and is on course to repay $14 billion in principal and interest in 2018, its foreign debt has climbed to $79 billion from $55.8 billion a year earlier.

5. Pakistan:

Pakistan’s credit-default swaps surged in late October and linger near their highest level since June. South Asia’s second-largest economy faces challenges as it struggles with dwindling foreign reserves, rising debt payments and a ballooning current account deficit. Pakistan is mulling a potential $2 billion debt sale later this year. Speaking at the Bloomberg Pakistan Economic Forum last week, central bank Deputy Governor Jameel Ahmad played down concerns over the country’s widening twin deficits.

6. Bahrain:

Bahrain’s spread rose dramatically in late October to the highest since January after it was said to ask Gulf allies for aid. The nation is seeking to replenish international reserves and avert a currency devaluation as oil prices batter the six Gulf Cooperation Council oil producers. Although its neighbors are likely to help, Bahrain could still be left with the highest budget deficit in the region, according to the IMF.

7. Turkey:

Despite high yields, investors are still reluctant to buy Turkish bonds. The nation has been caught up in a blur of political crises, driving spreads on credit-default swaps to their highest level since May. Turkey was the only holdover on S&P Global Ratings’s latest “Fragile Five” list of countries most vulnerable to normalization in global monetary conditions.

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http://so-l.ru/news/y/2017_11_19_who_s_next_venezuela_s_collapse_puts_th Sun, 19 Nov 2017 04:00:00 +0300
<![CDATA[The Coming Economic Downturn In Canada]]> Authored by Deb Shaw via MarketsNow.com,

  • Canadian GDP growth has outperformed this year, helping the Canadian dollar
  • As GDP growth slows and the Bank of Canada turns neutral, catalysts turning negative
  • Crude oil and real estate look set for a downturn, with negative implications for the currency

Given its natural resource-based economy, Canada is a boom and bust kind of place. This year, the country has enjoyed a significant boom. Thanks to a government stimulus program, rising corporate capital expenditures and consumer spending, Canada’s GDP growth has been nothing short of spectacular in 2017. According to Statistics Canada, the latest reading for year-over-year GDP growth is a healthy 3.5% (as of August 2017). While this is stronger than all major developed countries, growth is decelerating from its most recent peak in May 2017 (when GDP growth was an astounding 4.7%). A visual overview of historical GDP growth is shown below for reference:

Turning a corner: Canadian growth comes back down to earth

11-17-2017 CAD GDP growth

Source: Statistics Canada

Following the crude oil bust in the second quarter of 2014, Canadian growth rates cratered. While the country avoided a technical recession, the economic outlook was poor until early 2016. After crude oil returned to a bull market in the first quarter of 2016, the fortunes of the country turned. Given limited growth in 2015, the economy had no problem delivering 2%+ year-over-year growth rates in 2016. As a substantial stimulus program ramped up government spending in 2017, growth rates have continued to accelerate this year.

Storm clouds on the horizon: crude oil and real estate

While Canada has delivered exceptional growth in the last two years, the future outlook is much more challenging. Beyond the issue of base effects (mathematically, year-over-year GDP growth will be much tougher next year), key sectors including the oil & gas industry and Canadian real estate look ripe for a downturn.

Crude bull market intact today, but at risk in 2018

As WTI crude strengthens beyond $55, crude oil is clearly in a bull market today. Looking at figures from the International Energy Agency, global demand growth continues to run ahead of supply growth. Thus the ongoing bull market is supported by fundamentals. Thanks to the impact of hurricanes and infrastructure bottlenecks in 2017, US shale hasn’t entirely fulfilled its role as the global ‘swing producer’ this year. The dynamics of supply growth versus demand growth are shown below:

Who invited American shale? US supply ruins the crude oil party

10-13-2017 crude oil supply demand

Source: International Energy Agency, forward OPEC supply estimates via US EIA

Unfortunately, the status quo looks set to change as US supply returns with a vengeance. According to estimates from the IEA, supply growth will outstrip demand growth in the first quarter of 2018. Digging deeper into supply estimates, US shale is once again to blame. Our view is that this changing dynamic will lead to a new bear market in crude oil. Looking back at recent history, crude prices formed a long-term top in the second quarter of 2014 once supply growth overtook demand. Similarly, crude prices bottomed in the first quarter of 2016 once supply growth fell below demand in early 2016. Given Canada's dependence on crude oil exports, a bear market for the commodity is likely to result in a weaker currency.

As China enters its latest real estate downturn, Canada not far behind

While Canadian real estate has enjoyed a great year, the future outlook is much tougher. Similar to its peers in Australia and New Zealand, Canadian real estate prices tend to lag real estate prices in China. This is both because Canada’s economy is deeply intertwined with China, and because the country is a big destination for overseas investment from China. While overseas investors make up a relatively small portion of buyers (around 5% according to government estimates), they serve an important role by acting as the marginal buyer for prime property. A comparison of new house prices in China versus Canada is shown below for reference:

Canadian real estate boom set to run out of steam

11-17-2017 China Canada real estate

Source: Statistics Canada, China National Bureau of Statistics

As Chinese new house prices accelerated significantly in early 2015, Canadian real estate prices followed in 2016. As the Chinese market is now decelerating, negative growth appears to be on the horizon. In March 2015, Chinese house price growth bottomed at -6.1%. While the Canadian bull market continues for now (September new house prices registered at 3.8%), a downturn is likely over the next 6-12 months. As real estate makes up 13% of Canadian GDP, a significant decline in the fortunes of the industry are likely to spill over to the broader economy.

Implications for the Canadian dollar

At the beginning of the year, the Canadian dollar enjoyed a wide number of bullish catalysts including accelerating GDP growth, rising rate hike expectations, a relatively strong crude oil market and speculator sentiment that was at a bearish extreme. These catalysts, and the Bank of Canada’s actions in particular, helped the currency strengthen until late September.

Today, almost every factor that drives the Canadian dollar is working against it. Future GDP growth rates are set to keep decelerating. Looking at the Bank of Canada, its outlook for future rate hikes is now “cautious”. This is a big change from its hawkish tilt earlier this year. While speculator sentiment is no longer at bullish extremes, waning interest in the Canadian dollar is weighing on the currency. The ongoing NAFTA negotiations are another source of potential political risk. Finally, an impending downturn for both crude oil and Canadian real estate further worsen the picture. Thus, our longer term outlook on the Canadian dollar is bearish.

 

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http://so-l.ru/news/y/2017_11_19_the_coming_economic_downturn_in_canada Sun, 19 Nov 2017 03:30:00 +0300
<![CDATA[Apple Diversity Chief Forced Out After Saying White Men Can Also Be 'Diverse']]> Silicon Valley's disdain for its mostly white, mostly male tech workforce has reached absurd new heights.

The New York Post is reporting that, after just six months on the job, Apple Diversity Chief Denise Young Smith, who was named vice president of diversity and inclusion in May, has resigned her post after making a “controversial” comment last month during a summit in Bogota, Colombia.

What was Young’s crime? She insinuated that “diversity” can still exist among a group of white men because of their different life experiences.

“There can be 12 white, blue-eyed, blond men in a room and they’re going to be diverse too because they’re going to bring a different life experience and life perspective to the conversation,” the inaugural diversity chief said.

“Diversity is the human experience,” she said, according to Quartz. “I get a little bit frustrated when diversity or the term diversity is tagged to the people of color, or the women, or the LGBT."

That’s right: Young, who is – for the record – a black woman, has been forced out of Apple because her views on diversity were too inclusive.

As the Post pointed out, Young’s comments appeared to defend Apple’s overwhelmingly white and male leadership at a time when the company’s makeup is markedly uneven. This begs the question: What, exactly, was she defending them from?

Young, a 20-year Apple veteran who previously served as the company’s head of worldwide human resources (a senior level position), was later forced to apologize for her remarks, telling Apple staff that her comments “were not representative of how I think about diversity or how Apple sees it."

“For that, I’m sorry,” she said in an email. “More importantly, I want to assure you Apple’s view and our dedication to diversity has not changed."

“We deeply believe that diversity drives innovation,” an Apple spokesman told TechCrunch in a statement. “We’re thrilled to welcome an accomplished leader like Christie Smith to help us continue the progress we’ve made toward a more diverse workplace."

In 2017, only 3 percent of Apple’s leaders were black, and women held just 23 percent of tech jobs, according to Fortune. Female leadership stood at 29 percent, Apple said.

“Meaningful change takes time,” the company said in its diversity report. “We’re proud of our accomplishments, but we have much more work to do."

Smith will leave the company at the end of the year. Taking over as VP of inclusion and diversity will be Christie Smith, who spent 17 years as a principal at Deloitte.

She is also a white woman.
 

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http://so-l.ru/news/y/2017_11_19_apple_diversity_chief_forced_out_after_s Sun, 19 Nov 2017 03:00:00 +0300
<![CDATA[Golden Catalysts]]> Authored by James Rickards via The Daily Reckoning,

The physical fundamentals are stronger than ever for gold.

Russia and China continue to be huge buyers. China bans export of its 450 tons per year of physical production.

Gold refiners are working around the clock and cannot meet demand.

Gold refiners are also having difficulty finding gold to refine as mining output, official bullion sales and scrap inflows all remain weak.

Private bullion continues to migrate from bank vaults at UBS and Credit Suisse into nonbank vaults at Brinks and Loomis, thus reducing the floating supply available for bank unallocated gold sales.

In other words, the physical supply situation has been tight as a drum.

The problem, of course, is unlimited selling in “paper” gold markets such as the Comex gold futures and similar instruments.

One of the flash crashes this year was precipitated by the instantaneous sale of gold futures contracts equal in underlying amount to 60 tons of physical gold. The largest bullion banks in the world could not source 60 tons of physical gold if they had months to do it.

There’s just not that much gold available. But in the paper gold market, there’s no limit on size, so anything goes.

There’s no sense complaining about this situation. It is what it is, and it won’t be broken up anytime soon. The main source of comfort is knowing that fundamentals always win in the long run even if there are temporary reversals. What you need to do is be patient, stay the course and buy strategically when the drawdowns emerge.

Where do we go from here?

There are many compelling reasons why gold should outperform over the coming months.

Deteriorating relations between the U.S. and Russia will only accelerate Russia’s efforts to diversify its reserves away from dollar assets (which can be frozen by the U.S. on a moment’s notice) to gold assets, which are immune to asset freezes and seizures.

The countdown to war with North Korea is underway, as I’ve explained repeatedly in these pages. A U.S. attack on the North Korean nuclear and missile weapons programs is likely by mid-2018.

Finally, we have to deal with our friends at the Fed. Good jobs numbers have given life to the view that the Fed will raise interest rates next month. The standard answer is that rate hikes make the dollar stronger and are a head wind for the dollar price of gold.

But I remain skeptical about a December hike. As I explained above, the market is looking in the wrong places for clues to Fed policy. Jobs reports are irrelevant; that was “mission accomplished” for the Fed years ago.

The key data are disinflation numbers. That’s what has the Fed concerned, and that’s why the Fed might pause again in December as it did last September.

We’ll have a better idea when PCE core inflation comes out Nov. 30.

Of course, the Fed’s main inflation metric has been moving in the wrong direction since January. The readings on the core PCE deflator year over year (the Fed’s preferred metric) were:

January 1.9%

February 1.9%

March 1.6%

April 1.6%

May 1.5%

June 1.5%

July 2017: 1.4%

August 2017: 1.3%

September 2017: 1.3%

Again, the October data will not be available until Nov. 30.

The Fed’s target rate for this metric is 2%. It will take a sustained increase over several months for the Fed to conclude that inflation is back on track to meet the Fed’s goal.

There’s obviously no chance of this happening before the Fed’s December meeting.

A weak dollar is the Fed’s only chance for more inflation. The way to get a weak dollar is to delay rate hikes indefinitely, and that’s what I believe the Fed will do.

And a weak dollar means a higher dollar price for gold.

Current levels look like the last stop before $1,300 per ounce. After that, a price surge is likely as buyers jump on the bandwagon, and then it’s up, up and away.

Why do I say that?

There’s an old saying that “a picture is worth a thousand words.” This chart is a good example of why that’s true:

Gold Breakout Chart

Gold analyst Eddie Van Der Walt produced this 10-year chart for the dollar price of gold showing that gold prices have been converging into a narrow tunnel between two price trends - one trending higher and one lower - for the past six years.

This pattern has been especially pronounced since 2015. You can see gold has traded up and down in a range between $1,050 and $1,380 per ounce. The upper trend line and the lower trend line converge into a funnel.

Since gold will not remain in that funnel much longer (because it converges to a fixed price) gold will likely “break out” to the upside or downside, typically with a huge move that disrupts the pattern.

At the extreme, this could imply a gold price on its way to $1,800 or $800 per ounce. Which will it be?

The evidence overwhelmingly supports the thesis that gold will break out to the upside. Central banks are determined to get more inflation and will flip to easing policies if that’s what it takes.

Geopolitical risks are piling up from North Korea, to Saudi Arabia, to the South China Sea and beyond.

The failure of the Trump agenda has put the stock market on edge and a substantial market correction may be in the cards. Acute shortages of physical gold have also set the stage for a delivery failure or a short squeeze.

Any one of these developments is enough to send gold soaring in response to a panic or as part of a flight to quality. The only force that could take gold lower is deflation, and that is the one thing central banks will never allow. The above chart is one of the most powerful bullish indicators I’ve ever seen.

Get ready for an explosion to the ups ide in the dollar price of gold. Make sure you have your physical gold and gold mining shares before the breakout begins.

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http://so-l.ru/news/y/2017_11_19_golden_catalysts Sun, 19 Nov 2017 02:30:00 +0300
<![CDATA["We're Not Stupid" - Top US Nuclear Commander Would Disobey "Illegal" Trump Orders]]> A few short months after Admiral Scott Swift, Commander of the US Navy’s Pacific Fleet, said he would obey a hypothetical order to launch a nuclear strike against China if the president chose to give it, Air Force Gen. John Hyten - America's top nuclear commander - said Saturday he would push back against President Trump if the president ordered a nuclear launch the general believed to be "illegal."

When an audience member asked Hyten, who was speaking at a national security conference in Halifax Canada, about the hypothetical scenario, he responded by assuring his interlocutor that military commanders “aren’t stupid.”

Here's CBS:

Air Force Gen. John Hyten, commander of the U.S. Strategic Command (STRATCOM), told an audience at the Halifax International Security Forum in Halifax, Nova Scotia, on Saturday that he has given a lot of thought to what he would say if Mr. Trump ordered a strike he considered unlawful.

 

"I think some people think we're stupid," Hyten said in response to a question about such a scenario. "We're not stupid people. We think about these things a lot. When you have this responsibility, how do you not think about it?"

 

Hyten explained the process that would follow such a command. As head of STRATCOM, Hyten is responsible for overseeing the U.S. nuclear arsenal.

 

"I provide advice to the president, he will tell me what to do," Hyten added. "And if it's illegal, guess what's going to happen? I'm going to say, 'Mr. President, that's illegal.' And guess what he's going to do? He's going to say, 'What would be legal?' And we'll come up with options, with a mix of capabilities to respond to whatever the situation is, and that's the way it works. It's not that complicated."

Hyten said he has been trained every year for decades in the law of armed conflict, which takes into account specific factors to determine legality - necessity, distinction, proportionality, unnecessary suffering and more. Running through scenarios of how to react in the event of an illegal order is standard practice, he said.

And Hyten is not the only one who’s been thinking about how they might react to a hypothetical order to launch a nuclear strike. A few months ago, Vanity Fair reported that Defense Secretary Mattis, Chief of Staff John Kelly and Secretary of State Rex Tillerson had discussed the issue, though it’s unclear, exactly, how they would respond.

Hyten apparently believes that an order from the president could be illegal, under certain unspecified circumstances. And if you execute an illegal order, he said, you could be prosecuted.

John Hyten

"If you execute an unlawful order, you will go to jail. You could go to jail for the rest of your life," Hyten said.

As CBS pointed out, Hyten’s comments come at a time when Congress is reexamining the authorization of the use of military force and power to launch a nuclear strike.

In a hearing earlier this week, Sen. Ed Markey, D-Massachusetts, said Mr. Trump "can launch nuclear codes just as easily as he can use his Twitter account."

Hyten said the military is always ready to respond to the threat of North Korea, even at that very moment. Trump has been embroiled in a war of words with North Korean leader Kim Jong Un since shortly after taking office, and has repeatedly threatened to respond with overwhelming force if he the North continues to threaten the US.

"And we are ready every minute of every day to respond to any event that comes out of North Korea. That's the element of deterrence that has to be clear, and it is clear," Hyten said.

But Hyten also said handling North Korea and its unpredictable leader Kim Jong Un has to be an international effort. Mr. Trump has continued to put pressure on China to help manage its tempestuous neighbor.

"President Trump by himself can't change the behavior of Kim Jong Un," Hyten said. "But President Trump can create the conditions that the international community can reach out in different ways where we can work with the Republic of Korea, where we can work with our neighbors in the region."

However, Admiral Swift, who has led the Pacific Fleet since 2015, has a very different view of the obligations that come with being a military commander in charge of the US’s nuclear arsenal.

“Every member of the US military has sworn an oath to defend the constitution of the United States against all enemies foreign and domestic and to obey the officers and the president of the United States as commander and chief appointed over us.”

When it comes to nuclear war, North Korea, for many, is the first adversary that comes to mind. But in the long run, China, which is reportedly developing hypersonic fighter jets that would be able to reach the Continental US within 14 minutes and has been slowly expanding its military footprint in the Pacific, may pose the bigger threat.

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http://so-l.ru/news/y/2017_11_19_we_re_not_stupid_top_us_nuclear_comm Sun, 19 Nov 2017 02:00:00 +0300
<![CDATA[The 'Junkie' Market Is Back]]> Via Dana Lyons' Tumblr,

The past few days have seen a reversal from substantial net New lows to substantial net New highs – a condition that has preceded poor performance in the past.

We’ve posted several pieces in the past regarding what we’ve termed “Junkie Markets” – junctures characterized by a substantial number of both New 52-Week Highs and New 52-Week Lows.

Such conditions represent a key component of various and notorious market warning signals, such as the Hindenburg Omen and others. As the ominous sounding names would imply, the historical stock market performance following such signals has been poor. We have found the same to be true with respect to our “Junkie Markets”. Today’s Chart Of The Day deals with a new variation of the Junkie Market.

Specifically, we have seen an unusual development over the past 2 days. On Wednesday, the number of net New Lows on the NYSE, i.e., New Lows minus New Highs, exceeded 2% of all exchange issues, a fairly large amount. The very next day, yesterday, conditions completely reversed as we saw net New NYSE Highs, i.e. New Highs minus New Lows, actually account for more than 2% of all issues. If you think that sounds strange, you’re correct. It is just the 15th such occurrence since the start of our data in 1970.

image

Here are the dates of these reversals:

3/25/1970
4/14/1972
7/11/1974
10/20/1977
1/2/2001
4/22/2004
5/11/2004
4/18/2006
6/28/2007
7/19/2007
9/19/2008
5/30/2013
10/10/2013
1/15/2015
11/16/2017

What would cause such a phenomenon? Well, the only thing we can offer is that a Junkie Market, i.e., one with lots of New Highs and Lows, is really the only type of market in which such a reversal is even possible. Thus, it should not be surprising that the S&P 500’s aggregate performance going forward following these precedents has been less than stellar (incidentally, aggregate performance is similar following the 19 occasions of the opposite reversals, i.e., >2% Net New Highs to >2% Net New Lows).

image

With median returns negative from 1 week to 6 months, this appears to be another version of the Junkie Market that, for whatever reason, has not been kind to stocks going forward. Obviously, the presence of signals near cyclical peaks in the early 1970’s as well as 2001 and 2007-2008 do not help the aggregate returns (average returns are even worse than median).

Now, not all signals have occurred at the beginning of cyclical bear markets. However, as the chart shows, one interesting observation is that all of the occurrences have occurred during secular bear markets (that is, of course, if one accepts that we are still within the confines of the post-2000 secular bear market, as is our view – that is a topic for another time, though). The point is that, if true, the ramifications may reinforce the negative tendencies associated with Junkie Markets.

The bottom line for now is that, while it is certainly possible that stocks can continue higher in the interim, this condition of elevated New Highs and New Lows is a potential unhealthy headwind in the longer-term.

*  *  *

If you’re interested in the “all-access” version of our charts and research, please check out The Lyons Share. Find out what we’re investing in, when we’re getting in – and when we’re getting out. Considering that we may well be entering an investment environment tailor made for our active, risk-managed approach, there has never been a better time to reap the benefits of this service. Thanks for reading!

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http://so-l.ru/news/y/2017_11_19_the_junkie_market_is_back Sun, 19 Nov 2017 01:30:00 +0300
<![CDATA[NYC Subway Managers Receive $300,000 Salaries While MTA Cuts Mechanics]]> During a  long-ranging investigation, The New York Times interviewed more than 300 people and poured over thousands of documents to sketch out the history of neglect, abuse and mismanagement that fostered the New York City subway's current state of crisis in what's probably the most comprehensive explanation of the woes plaguing the MTA.

Century-old tunnels and track routes are crubling, but the Times found that the MTA’s budget for subway aintenance has barely grown, in inflation adjusted terms, since 1992.

Signal problems and equipment failures are occurring twice as frequently as they did a decade ago – a sign of just how rapidly the transit system is deteriorating.

What’s worse, is that hundreds of mechanic positions have been cut even as the century-old system groaned under the damage caused by Superstorm Sandy. Meanwhile, compensation for managers has ballooned to nearly $300,000 a year.

Daily ridership has doubled in the past decade to 5.7 million people. Yet, New York City is the only city in the world with fewer miles of track than it had during World War II.

Given the unconscionable state of neglect paid to its budget, it should come as no surprise that New York City’s subway system has the worst performance of any major urban transportation system in the world. Only 65% of weekday trains make it to their destination on time.

The Times claims that the deplorable state of the city’s transit system is the result of negligence by both Republican and Democratic politicians, including former Gov. George Pataki, former mayor Rudolph Giuliani, as well as Mayor Bill De Blasio and Gov. Andrew Cuomo.

Over the past two decades, politicians have diverted a whopping $1.5 billion in tax revenue from the MTA to other political priorities. Politicians are also largely responsible for pressing the agency to spend money on opulent station makeovers, like the new Fulton Street station, that do little to improve service. Politicians also locked the MTA into an unfavorable agreement with creditors that secured a needed short-term cash infusion but left it saddled with $5 billion in interest payments.

Perhaps most egregiously, Gov. Cuomo recently forced the MTA to send $5 million to three upstate ski resorts that were struggling with a warm winter.

The MTA has also suffered from high turnover in its senior ranks, as dozens of high-level officials have taken advantage of a lucrative revolving door whereby they leave jobs at the MTA for high-up jobs at contractors that do business with the MTA.

Seemingly at every turn, politicians have failed to act on a series of chances to turn things around. They ignored decades of warnings from state and city comptrollers about MTA funding. They failed to pass a congestion pricing plan in 2008. Thy chose not to give mass transit much of the proceeds from bank settlements after the financial crisis. And they brushed off findings from official commission reports pointing out the system’s defects.

All of this has amounted to a shocking development: The number of subway riders declined slightly last year, even as the population of NYC has continued to expand rapidly.

Problems worsened under Cuomo as the governor tried to micromanage decision making at the agency, a move that only worsened its problems. For example, a few months ago, the MTA cut $500 million from the signal-repair budget to fund other projects that are more important to Cuomo. For context, signal malfunctions are the biggest contributing factor in train delays.

But perhaps the most fundamental flaw in how the MTA is managed is the fact that many of its most high-level decisions are made by a committee of bureaucrats and politicians, the Times reported.

“A camel is a horse designed by committee, and the MTA is a train service run by committee,” a Cuomo spokeswoman said.
 

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http://so-l.ru/news/y/2017_11_19_nyc_subway_managers_receive_300_000_sal Sun, 19 Nov 2017 01:00:00 +0300
<![CDATA[Another Step Towards The Sovietization Of American Media]]> Authored by James George Jatras via The Strategic Culture Foundation,

This week the US Department of Justice Criminal Division forced the Russian-funded television network RT (formerly Russia Today) to register as a “foreign agent” under the Foreign Agents Registration Act (FARA). Failure to comply would have risked arrest of RT’s management and seizure of its assets. The move comes on the heels of Senators’ recent demands that terrified tech giants Twitter, Facebook, and Google act as ideological filters.

With no discernable defenders among America’s media establishment, RT rightly denounced the selective FARA mandate as an attack on media freedom – which it is. But more ominous is what the move against RT says about America’s rulers’ further intention to limit the sources of information available to its subjects.

As Daniel McAdams of the Ron Paul Institute writes:

“RT America is a news organization operating in the United States that is funded at least partly by a foreign government. So is the BBC. So is Deutsche Welle, France24, Al-Jazeera, and numerous other foreign media organizations. It is assumed that they all to a degree reflect the editorial interests of those who pay the bills.

 

“The same is true with other, non-state funded media outlets, of course. It’s up to us to factor these things in when we consume media. That’s what it means to be a free people.

 

“A core value in a free society is that our own government has zero power over what we read, what we watch, how we think, how we come to interpret current events, the conclusions we draw based on these inputs, and so on. These are private matters over which any government that is not tyrannical should have no sway.

 

“The real insidiousness of tyrannical systems is that the government most lasciviously seeks control over most private spaces — including the most private space called our brain, our intellect, our conscience. We must be free to follow our interests down whatever path they may lead us so that we may reach our own conclusions and then perhaps test them ourselves in the marketplace of ideas.”

The attack on RT (and another Russian network, Sputnik, which evidently has not yet been given a deadline for registration) is a milestone in the degeneration of the American official (call them what you want – corporate, legacy, mainstream) media into PR agencies for the governing establishment and its ideological imperatives. We’ve been moving along this path for a while now, and it’s going to get worse.

Long gone are those halcyon days of yore when Americans could just sit back and watch CBS’s Walter Cronkite with total confidence they were getting the truth, the whole truth, and nothing but the truth. (For youngsters who have no idea who the hell Cronkite was, just Google “most trusted man in America.”) Back in the naïve infancy of the TV age, from about the 1950s until the beginning of the 1990s, there was a common national media culture that reflected the established, generally liberal, mainly Democratic tilt of the American inteligentsiya that was almost uniform among the (then only) three networks and a handful of major newspapers and magazines. To be sure, that was also a ruling class media of a sort, but it reflected a broad and deep social consensus.

Those days are no more. Perhaps the unraveling of media trust and social consensus alike started in earnest with Vietnam. But still, for decades afterwards there still seemed to be plenty of empty cranial receptacles for government and corporate propaganda of the first Gulf War under Bush 41, Bill Clinton’s phony humanitarian wars in the Balkans, Bush 43’s Iraq War, and Obama’s Libyan and Syrian imbroglios. Sadly, there are many such cranial receptacles even today.

By its attack on RT, the US government is officially telling us that only the mainstream media (MSM) can be regarded as are purveyors of Truth (with a capital T) and that anybody not on the approved list is fake. How do we know? Why, the MSM themselves tell us! The Washington Post’s “Democracy Dies in Darkness.” CNN’s “Facts First.” The New York Times’ “The Truth is Hard.” (The fact that certifiably authoritative and truthful media are militantly hostile to Russia, not to mention to Donald Trump, is purely coincidental.)

A lot of Americans don’t buy it anymore, though. Some of the skepticism falls along purely partisan lines reflecting increasing moral and political polarization: our media (which I exclusively consult) tells the truth, but your media (which I don’t consult) are liars. About one-third of Americans get their talking points from, say, Michael Moore, and from Rachel Maddow on MSNBC, with their related internet echoes, while another third gets theirs from Rush Limbaugh, and from Sean Hannity on Fox News, and their internet echo chambers. Increasingly, there is nothing like a national dialogue on anything, but rather two entirely separate, diametrically opposed ideological cultures – and alternate realities – each demonizing “them.” This is why when after Barack Obama’s election the Tea Party appeared, the GOP fell over itself trying to co-opt them, while the Democrats denounced them as a mob of racists and subversives. When later the “Occupy” and Black Lives Matter movements broke out on the Left, the Democrats tried to figure out how to channel it while top Republicans denounced it as gang of commie anarchists and losers.

With the election of Donald Trump the divide intensified further to one of latent civil war.

At some point the false picture of pseudo-reality (as Alain Besançon called it in the late Soviet propaganda context) diverges so far from real reality that the official media narrative becomes useless and even counterproductive. While a majority of Americans probably are still glued to the partisan outlets of “their” side of the political divide, there is a growing sense across the spectrum that not only the MSM but even partisan media like Fox News and MSNBC are untrustworthy.

In the past, notably in the totalitarian societies of the 20th century, maintaining the credibility of official media required the physical repression of alternatives. Today, such a crude approach is unnecessary and almost technologically unfeasible, even for such undemocratic countries as Iran, Cuba, and Saudi Arabia (though North Korea may be successful through the sheer unavailability of modern communications technology to most of the population). Instead of suppressing dissent, is it sufficient to maintain major media’s role as gatekeeper and certifier of reliability.

Which brings us back to the impact of foreign media like RT, Sputnik, Strategic Culture Foundation, Al-Jazeera, CGTN, Press TV, often in parallel with alternative media like Zero Hedge, Lew Rockwell, Antiwar.com, Ron Paul Institute, and others, to break through the information firewall but arguably then being influenced by the agenda of the sponsoring foreign governments. In any case, a growing segment of the American public is discovering a skill once well-honed by the citizens of the former communist countries: reading between the lines of the official media (which is assumed to be full of lies) and making informed comparisons to samizdat alternative media, foreign sources, and the rumor-mill to guess what the truth might be.

Make no mistake – what has started with RT won’t end with RT. Our betters have decided they need to protect our minds from “propaganda” penetration that might cause us to doubt the truth of what CNN and the Washington Post tell us.

Citizens! Be grateful for such wise leaders and dedicated information workers! Smash the enemy voices that seek to undermine our democracy as we march boldly into the radiant future!

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http://so-l.ru/news/y/2017_11_19_another_step_towards_the_sovietization_o Sun, 19 Nov 2017 00:30:00 +0300